Case ID: ohio_13/html/0217-01.html
Source: Caselaw Access Project
Author: {"author": "Birchard, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Ebenezer Martin v. The Trustees of the Belmont Bank of St. Clairsville.
    A warrant given to a bank for tbe entry of judgment, may be used by the trustees authorized by statute to close the affairs of the bank, after its charter has expired.
    The trustees may sue in their collective names, not in their individual names.
    It is error to include attorney’s fees in a judgment confessed
    This is a writ of error to the court of common pleas of Harri-son county.
    From the record, the following facts appear:
    On Jun.e 25, 1840, Smith, Boardman & Co., Joseph Hargrave, and the plaintiff in error, made their bond for $700, at 120 days, payable to “the president, directors, and company of the Belmont Bank of' St. Clairsville,” to which bond was attached a warrant of attorney executed at the same time, in the usual bank form; in its terms, authorizing any attorney to enter up judgment for any •sum due thereon, “at the suit of the president, directors, and company of the Belmont Bank of St. Clairsville,” on said bond; ,also¡ to confess judgment for costs, and for two and a half per ■cent, on the amount due on said bond, as attorney’s fees.
    *The charter of said bank expired, by limitation, on Jan-nary 1, 1843.
    Afterward, on April 26, 1843, the following written notice was given to the plaintiff:
    “ Belmont Bank of St. Clairsville.
    “ To Messrs. Smith, Boardman & Co., Joseph Hargrave, and Ebenezer Martin : You are hereby notified, that on your bond, duly executed and delivered to the president, directors, and company of the Belmont Bank of St. Clairsville, ior the payment to-the said bank of $700, dated on June 25, 1840, and payable one hundred and twenty days after the said date thereof, there‘remains due the sum of $670, as principil, with interest thereon from May 15, a. d. 1842. And that unless the same is sooner paid, a motion will be made at the May term of the court of common-pleas-of Harrison county, in the State of Ohio, for the year 1843, which commences on May 1, a. d. 1843, at Cadiz, in said county, and on May 3, a. d. 1843, or so soon thereafter, during the said term of said court, as the same can be heard, that a judgment may be rendered in favor of the trustees of the president, directors, and company of the Belmont Bank of St. Clairsville, against you, either jointly or severally, for the amount of the principal and interest due on said bond, together with two and one-half per cent, thereon, for attorney’s fees, and the costs of suit by virtue-of the said bond, and by virtue and in pursuance of the provisions of the warrant of attorney thereto attached for confessing judgment, by you also signed, sealed, and delivered to the said bank. ’ t “J. 0. Ramsey,
    “ Agent for the Trustees of said Bank
    
    At the May term, 1843, of the common pleas for Harrison-county, judgment was entered upon .the bond, warrant of attor. ney, and notice, for $670 in debt, $56.35 in damages, and $7.75 in costs.
    There was due on May 1, 1843, $670 of the principal, the sum of $37.67 interest, and to make up the sum of damages, $17.68, the-attorney’s fees were included.
    The errors assigned are:
    1. That the warrant of attorney was not an authority for any attorney to confess judgment on the bond in favor of the trustees of the dissolved corporation.
    *2. That the trustees could notsuo by their collective name.
    3. It was erroneous to render judgment for the attorney’s fees^
    D. Peck, for plaintiff in error:
    The question made by the third assignment has been settled by this court, and requires no further notice.
    The warrant of attorney is a special authority to any attorney to appear and waive process at the suit of the president, directors* and company of the Belmont Bank of St. Clairsville, to confess judgment in its favor, and for no other purpose whatever.
    The warrant of attorney in this case was made specially to the bank; it was not an authority to enter up judgment in favor of any other person or persons. The appearance of an attorney in such a case must be by virtue of the special warrant of attorney. This power can not be enlarged, and must be strictly followed. 5 Hill’s N. Y. 497.
    At the time of the entry of this judgment, the party to whom the warrant of attorney was made had ceased to exist, and it would seem to follow that the warrant of attorney died with the party in whoso favor it was made. The power could not be ex ecuted strictly after the dissolution of the corporation.
    This bank lost, to all intents and purposes, its corporate char* acter upon its dissolution, and the debts due the stockholders and creditors could not have been collected but for the special acts of the legislature for that purpose.
    On March 7, 1842, an act was passed to enable the stockholders to settle up the business of dissolved corporations. 40 Ohio-Laws, 72, see. 14. This section provides, in substance, that the-directors, and the survivors of them, in office at the time of the dissolution of the corporation, shall be the trustees of the creditors and stockholders, with power to settle up the affairs of the corporation and distribute the effects ; and that the persons so constituted trustees shall have authority *to sue for and recover the debts and property of the dissolved corporation, by the name of the trustees of such corporation, describing it by its corporate name, and shall be jointly and severally liable to the creditors and stockholders. The trustees may be made parties by scire facias to suits pending. If the directors refuse, the court may appoint other persons to act as such trustees.
    On March 10, 1843, this act was amended. 41 Ohio Laws, 52. This act provides that no action pending shall abate by the dissolution of the corporation ; that those persons having the-legal charge of the assets, whether creditors, assignees, or trustees, might cause execution to issue on judgments, in the corporate name; that suits which had abated should be revived; that the title of all the real estate belonging to such corporation should-pass to the trustees, and that they should have power to sell the same, and to make a good title therefor.
    
      The counsel for the defendants in error claims that these acts extended the life of the corporation, and only added a new name to it — that it is the same artificial person. He contends that it is like a natural person whose name had been changed by the legislature.
    I can hardly suppose that the legislature would be guilty of the folly of creating one corporation to settle the affairs of another, nor can I Roe anything in those acts which might bear any such construction.
    If the life of the corporation had been prolonged, why interpose trustees? The trustees were only to administer the assets, and for that purpose, where suits were pending or abated, they could use the corporate name. If there were no suit pending, they could sue in their own names as trustees, and not otherwise.
    Tho whole legal estate of the corporation, both real and personal, vests in the trustees on the dissolution of the corporation, and they have the full control of it.
    This judgment was rendered in favor of the trustees, as such trustees, and is not a judgment in favor of the bank.
    *It seems to be clear, that the warrant of attorney would not authorize the appearance and judgment in this case. The trustees are not the party in whose favor it was made, though they represent the bank as much as an administrator represents his intestate., There can be no hardship in holding the trustees of dissolved corporations to the ordinary suits; such were, no doubt, contemplated by the acts above referred to.
    There is another question as to the construction of the act of 1842, of much importance; that is, in what manner shall the trustees sue for debts due the corporation? Shall it be sufficient that they sue as they have in this case, by their collective name as trustees, or must they sue by their natural names as such trustees ?
    I do not see how they can be exempt from the ordinary rules applicable to other parties. They are not a corporate body; and none but corporations can use a corporate name.
    Can they be sued by tho name simply of trustees? "Who are they, and where would they be found ? No process could bo served on them. No judgment could be rendered against them -by such collective name that would not be void for uncertainty.
    The trusteeship is a traversable fact, as much as that of executorship. If suits could be. maintained by sucb uncertain or unknown persons, the parties interested in the assets would not know where to look for their effects.
    Will it be contended that by such a collective name the trustees could make a good title for the real esta'e of such corporation? And yet one would think that they could convey by the same name that would enable them to recover judgment for money, or in ejectment.
    It is not perceived that the trustees have one single attribute of a corporation. They have no common seal, nor can they make-one. They must make their conveyances and their settlements-, with the creditors and stockholders in their natural names, and each one may be severally and differently liable.
    It is very desirable that both these questions be settled, on account of the settlement now in progress of many dissolved corporations.
    *R. J. Alexander, for defendant in error:
    The charter of the Belmont Bank of St. Clairsville expired m January, 1843, and the bond and warrant of attorney, as copied in the record, were executed and delivered by the plaintiff in error to the bank prior to that time. And the act of March 7, 1842, provides, among other things, that the trustees “shall sue for and recover the debts, by the name of the trustees of such corporation, describing it by its corporate name.” Ohio L. 72, sec. 14.
    As to the first error assigned, it is claimed by the attorney for the plaintiff in error that the trustees, in such cases, are to be regarded in the light of administrators of deceased persons, and that, consequently, a warrant of attorney would not authorize a judgment by confession in favor of such administrator. This, then, is the substance of the claim of the plaintiff in error on this ground; but, on the other hand, it is claimed that there is but little, if any, analogy in the two cases.
    The defendants in error had their original existence by virtue of an act of the legislature, and have had that existence as a corporate body extended or prolonged by the act of March 7, 1842. Their corporate existence is the same, or rather they are the same artificial persons now that they were before the expiration of their original charter, and when the bond and warrant of attorney in question were executed and delivered to them. Even their' name is the same, except that in bringing suit the word “trustees ” is to be inserted before their original corporate name. Not so in the case of the decease of a natural person.
    It will then be perceived that it is claimed by the defendants in error, so far at least as this question is concerned, that it was the intention of the legislature, in passing the act of March 7, 1842, to prolong dr continue the corporate existence of the defendants in error for some purposes, and among others to enable .all the banks embraced by the act to collect their debts, and give them, for that purpose, all the securities and facilities which they had at the time of the expiration of their several charters.
    *In this view of the case, the warrant of attorney did authorize the judgment as rendered in this case, not in favor of the trustees as such trustees, but, substantially, in favor of the president, directors, and company of the Belmont Bank of St. Clairsville, which was the original corporate name of the defendants in error.
    This judgment, then, is just as valid as a judgment would be, rendered in a like case, in favor of a natural person whose name might be changed by an act of the legislature after the execution and delivery of a like bond and warrant of attorney, and before the entry of a judgment thereon in favor of such natural person by his new name. The person being the same, though of another name, such warrant of attorney would undoubtedly fully .authorize the entry of a judgment thereon; this can not be well controverted.
    It certainly can not be claimed that the warrant of attorney would have been rendered de.ective or inoperative if the act of March 7, 1842, had authorized suits to be brought in the original corporate name of the defendant in error. Such claim would evidently be most preposterous; and is it not clear that in this case there has been, at most, but a mere slight change in name? The change in name being the only change which the defendants in error have undergone, and the judgment sought to be reversed having been rendered substantially in favor of the same artificial person, and its proceeds having to go to the same identical persons, the warrant of attorney fully authorized the judgment.
    
      The second cause of error assigned is, that “ the names of the trustees do not appear.”
    . Is it necessary that this should have been the case? The act of March 7, 1842, as already cited, provides that suits shall be brought “in the name of the trustees of such corporation, describing it by its corporate name.” The act does not read in the names of the trustees, but is in tbe singular number, when it was known that all the corporations embraced by this act had at least from nine to thirteen, or some considerable number. And wherein would be the necessity of requiring the *names of the trustees to be used or disclosed in bringing suit? It would certainly be of no advantage to either plaintiff or defendant. At all events, I apprehend it is now too late for the plaintiff in error to take such exception. The time to. make the objection has elapsed, and the objection, if otherwise valid, is now waived. However, it can not be necessary, even if admissible, to name the trustees individually; and in other analogous cases, such as suits by the trustees of townships, it is recommended that the names of the trustees be omitted in the institution of suits.
    The third and last cause of error assigned is, “that it was erroneous to render judgment for the two and a half per cent, attorney’s fee.”
    So far as this cause of error is concerned, I apprehend that, if it was erroneous to include the two and a half per cent., the court will only reverse the judgment pro tanto, and affirm it otherwise. The transcript shows the amount, which is $17.71, and the court can rectify it, as has been done by the same court on the circuit in other cases.
    On examination of the notice given to the plaintiff in error, as copied into the transcript, the court will perceive that the plaintiff in error had due notice in regard to the two and a half per cent, and that the warrant of attorney authorized the judgment for it. And the notice having been given according to the requirements of a subsequent act of the legislature, I apprehend that it was not. erroneous to include the two and a half per cent, in the judgment under these circumstances.
    It also appears to me that the warrant of attorney in this case is a part of the contract, and is binding upon general principles, and may be in this way enforced, as a borrower from a bank may undoubtedly make a valid contract with such bank to pay two and a half per cent, for attorney’s collection fees if any suit should have to be brought for the collection of the money borrowed. Why not? And if so, why not make such contract, and make it enforceable in this way? It is not taking more than “six per cent, in advance,” and ought not to be so considered, unless the attorney’s collection fee agreed upon ^should be considered so extravagant as to amount to evidence of a mere device, upon the part of such bank, to realize over six per cent, upon its discounts. As the plaintiff in error has been the occasion of the expenditure, he.certainly ought to pay it.
   Birchard, J.

The suit below was an amicable action of debt apon a joint and several bond, executed by plaintiff and others, to which was attached a power'of attorney, authorizing any attorney "of record in this state to appear in any court of this state, with or without process, “at the suit of the president, directors, and company of the Belmont Bank of St. Clairsville, upon the said bond, at any time after the same shall become payable, and confess judgment for the sum due, with two and a half per cent, attorney’s fees.”

The charter of the Belmont Bank expired on January 1, 1843. After the bond fell due, on April 26, 1843, the- agent of the trustees served a notice, agreeably to the provisions of the statute, of his intended motion to enter up judgment upon the bond, at the May term, 1843, and judgment was accordingly entered for the sum due, and two and a half per cent, attorney’sf'ees.

The following are assigned for error:

1. That the warrant was not an authority for the attorney to-confess judgment in favor of the trustees.

2. That the trustees could not sue by their collective name.

3. It was erroneous to include the attorney’s fees.

The case of the State of Ohio v. Taylor, 10 Ohio, 378; of Shelton v. Gill, 11 Ohio, 417, and Spalding v. The Bank of Muskingum, 12 Ohio, 544, settle the principle that an agreement to pay a percentage as collection fees, in addition to the legal rate of interest, is against public policy, and void. With those decisions wo are satisfied. It follows that this judgment was erroneous, and the third error well assigned.

The validity of the second assignment depends upon a construotion of section 14 of the act, passed March *7, 1842. 40 Ohio L. 72. This section provides that upon the dissolution of a corporation, the directors acting last before the time of its dissolution, and the survivors of them, unless otherwise provided for by legislative enactment, or by'some court of competent authority, shall be the trustees of the creditors and stockholders of the corporation dissolved, “and the persons so constituted trustees shall have authority to sue for, and recover the debts and property of the dissolved corporation, by the name of the trustees of such corporation, describing it by its corporate name.” If it be fair ttt interpret this language according to its common acceptation, there would seem to be little room left for argument against the right to maintain this suit in the name in which it was brought. Had the legislature designed that the names of the several directors should be used, specifying that they were trustees, would they not have employed different and more apt words to convey that meaning? Certainly they would. It may be admitted that inconveniences may arise from allowing a collective name to be used, instead of the individual names of the directors. Doubtless the legislature considered all questions of this nature, and balanced the evils of permitting suit in a particular name, against those which might arise from requiring, in all cases, the names of numerous directors. Be that as it may, arguments from inconvenience can have no effect to vary the interpretation of words of plain and natural meaning.

Upon the point first assigned for error, the inclination of my own mind is, that it is well taken, and for the reason stated by plaintiff’s counsel. Tet my brethren are all of a different opinion-The reason upon which they instruct me to place their opinion is, that the operative effect of the act of March 7, 1843, is to keep alive, substantially, so far as this debt was concerned, the original corporation ; that this suit is, substantially, a suit of the corporation, and that therefore the authority contained in the power was ample to justify the entry of an appearance and the confession of a proper judgment. On the first ground judgment will be reversed. Judgment accordingly,