Case ID: ohio-st_26/html/0483-01.html
Source: Caselaw Access Project
Author: {"author": "White, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

DeWitt C. Spinning v. The Home Building and Saving Association of Dayton, Ohio, et al.
    In organizing a building association under the act of February 21, 1867 (64 Ohio L. 18), the certificate of incorporation was by mistake acknowledged before a notary public, instead of being acknowledged before a justice of the peace as then required. In proceedings instituted under the act of March 10, 1859 (8. & 0.1172), the mistake was subsequently corrected—B'eld, that the effect of the correction was to make the association a corporation de jure from the date of its organization, not only as against persons dealing directly with the association, but aa against all others. '
    Motion for leave to file petition in error to reverse the judgment of the Superior Court of Montgomery county.
    The Home Building and Saving Association of Dayton, Ohio, was organized under the act of February 21, 1867, entitled “An act to enable associations of persons for raising funds, to be loaned among their members, for building them homesteads, and other purposes, to become bodies corporate.” (64 Ohio L. 18.) The certificate under which the association was organized was defective, in being aeknowledge*! by tbe corporators before a notary public, instead of a justice of the peace, as then required. The organization was, in all other respects, in conformity with thá statute. Under this organization, the association proceeded to transact business as a corporation, under the statute. During the years 1868 and 1869, Jacob A. Smith, and Isaac M. Smith, members of the association, executed to it three several mortgages on certain real estate, to secure loans which they had obtained from the association.. These mortgages were duly recorded.
    Subsequently, on the 4th of October, A. D. 1870, said Jacob A. and Isaac M. Smith executed to DeWitt 0. Spinning, the plaintiff in error, a mortgage upon the same premises, to secure an indebtedness to him. This mortgage was also duly recorded.
    Afterward, under the act of March 10, 1859, entitled “ an act to authorize courts to give effect to the intention of parties and officers by curing defects, omissions, and errors in instruments and proceedings” (2 S. & C. 1172), proceedings were instituted in the Court of Common Pleas of Montgomery county, on behalf of the association, to cure the defect in the certificate. And, at the January term, A. D. 1872, the following order was made by the court in such proceeding: “ This day came John J. Ackerman, attorney for the Home Building and Saving Association of Dayton, Ohio, and produced to the court here a petition by said association, setting forth that an error was made and existed in the certificate of incorporation of said association, as follows : That said certificate of incorporation was acknowledged by the corporators thereof before a notary public, when by law the said acknowledgment ought to have been taken before a justice of the peace, and praying an order of this court to correct said error; and it being made to appear to the satisfaction of the court here that notice of said application specifying the error complained of in the said petition, and of the time and place of hearing the same, has been duly published for six consecutive weeks in a newspaper of general circulation in Montgomery ■county, Ohio; and the court being satisfied that said error •complained of in said petition has been made as therein set forth, it is therefore ordered by the court here that said error be and the same is hereby corrected; and said eertifi■cate of incorporation, so acknowledged before said notary public, shall have the same effect, and be held and considered in all respects the same as if acknowledged before a justice of the peace of said county of Montgomery, the ■same as if said error had never been made.”
    A certified transcript of said order was duly filed and recorded in the recorder’s office of said county.
    At the time of taking his mortgage the plaintiff in error •had no actual notice of the existence of said association or -of the mortgages held by it on said premises.
    In a suit instituted by the plaintiff in error to foreclose his mortgage, to which the association was made a defendant, the premises were sold; and, in distributing - the proceeds of sale, the court adjudged the mortgages held by the association to be valid and prior liens to that of the mortgage of the plaintiff' in error.
    In thus holding, it is claimed the court erred; and the ■present proceeding is prosecuted to obtain a reversal of the judgment.
    
      Conover § Craighead, for the motion:
    1. The association was not a corporation, either de jure -or defacto, at the time -it took its mortgages, or Spinning his mortgage, because the certificate of incorporation was acknowledged before a notary instead of a justice of the peace. Section 1, act of February 21, 64 Ohio L. 18; ■sections 63, 64, and 65, act of May 1,1852, S. & 0. 303 ; sec-lion 2, act of May 1, 1852, S. & C. 271.
    Such a certificate is fatally defective. Attorney-General v. Lee, 21 Ohio St. 662; A. &¡ 0. B. B. Co. v. tiullwant, 5 ■Ohio St. 276; Atkinson v. M. C. B. B. Go., 15 Ohio St. 21.
    Acts required of a corporation by the statute to give it being must be shown to have been done. Angelí & Ames ■on Corp., sec. 83; Bank of Auburn v. Aiken, 18 Johns. 137; 
      Fire Department v. Kipp, 10 Wend. 266; Field, ‡ Co. v. Coch, 16 L. Am. 153; Harris § Strickle v. McGregor, 29 Cal. 125; Mockelermme v. Woodbury, 14 Cal. 424.
    It follows that, there being no corporation, there was no-legally existing grantee to the mortgages executed to the-said pretended corporation. Bank of Augusta v. Earle, 13 Pet. 120; 2 Washburne on Neal Prop. (2 ed.) 589; Sloane v. McConaly, 4 Ohio, 167; Burrell v. Tapping, 5 McLean,. 202; Jackson v. Coy, 8 Johns. 385; HowbeckY. Westbrooke, 9 Johns. 73; Bank of Chillicothe y. Swayne, 8 Ohio, 257;. Muskingum Turnpike Co. v. Ware, 13 Ohio, 120.
    2. The correction of the defective act of incorporation could not relate back and affect prior vested rights. Cooley’s Const. Lim. (2 ed.) 378; Brinton v. Seeven, 12' Iowa, 389; Southane v. Central B. B. Co., 2 Dutch. 22.
    
      William Craighead, contra:
    By the proceedings under the act of March 10, 1859 (S. & C. 1172), the defective certificate was corrected, and such correction related back to the acknowledgment before the notary. And this curative law having been passed prior to the commission of the error by these incorporators, and prior to the execution of the mortgage under which Spinning claims, the question of retroactive law does not arise. Burgett v. Norris, 25 Ohio St. 309 ; Warner v. Cal-lender, 20 Ohio St. 190.
    The amendment to the act of 1852 (69 Ohio L. 14) also applies to this case, and is not retroactive as to Spinning. Burgett v. Norris, 25 Ohio St. 309.
   White, J.

We agree with the court below as to the-validity and priority of the mortgages held by the association.

These mortgages are attacked on two grounds: 1. That owing to the defect in acknowledging the certificate of incorporation, the association was not, at the time the mortgages were made, a corporation; and, consequently, there-Was no mortgagee in whom they could take effect.

2. That the order of the court correcting the defect, could not affect the then existing mortgage of the plaintiff in error.

Neither of these positions is in our opinion tenable.

At the time of the passage of the act under which the association was organized, the act of March 10, 1859, under which the defect in the certificate was corrected, was in force. That act, in declaring the effect of the correction, provides that the record of the certificate “and the order correcting the same shall be received as evidence in all cases in all courts, the same as if no such error, omission, or defect had ever existed.”

The act of February 21, 1867, providing for the incorporation of such associations, and the act of March 10, 1859, which provides for curing defects in the mode of organization, are to be taken together; and they have the same effect as if they constituted but one act.

The law, therefore, under which the association was ere-. ated, contemplated the occurrence of errors and mistakes in organizing such associations, and provided for their cor-’ rection. It furthermore declared that when the correction should be made, the effect should be the same as if the defect had never existed. Thus the association, notwithstanding the defect in the certificate, was endowed by the law of its creation with the capacity, by availing itself of the provisions of the curative act, of becoming a corporation de jure, as from the date of its organization.

"Without, therefore, considering what would have been the effect of the defective certificate in the absence of the curative act, it seems to us there can be no donbt that the authority conferred by that act on the association of perfecting its organization, is effective not only against those dealing directly with the association, but also against all other parties.

It is a mistake to suppose, as seems to be contended for the plaintiff in error, that this is a case in which it is sought by retroactive legislation to interfere with existing rights. There is here no attempted invasion of vested rights. Roth parties stand on their strict legal rights, as these rights are defined by statutes antedating any of the transactions now in question.

The motion is therefore overruled.

Welch, C.J., Rex, Gilmore, and McIlvaine, JJ.,.concurred.