Case ID: ohio-st_16/html/0515-01.html
Source: Caselaw Access Project
Author: {"author": "Day, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Israel Marienthal et al. v. Gustav Mosler et al.
    The payment of a dividend by the assignee of an insolvent debtor, is not such a park payment as will, under section 24 of the code, take the residue of the debt out of the statutory limitation as against such debtor.
    Error to the Superior Court of Cincinnati.
    The plaintiffs brought their action against the defendants, in the Superior Court of Cincinnati, February 6, 1864, on an account, the last item of which was dated April 28, 1857, a period of more than six years before the commencement of the suit. Among the credits on the account, the last is dated June 24,1858, within six years before the commencement of the action, and was paid by the assignee of the defendants.
    The defendants answer that the cause of action set forth in the petition, did not accrue within six years before the commencement of the suit.
    The case was reserved by the court in special term, for hearing at the general term, on an agreed statement of facts, which is as follows:
    “ Mosler & Co. were doing business in Cincinnati as merchants, and purchased goods from the plaintiffs at the several dates referred to in the account, annexed to the plaintiffs’ petition, and made payments as set forth therein, from January 5, 1857, to April 19,1857, inclusive.
    
      “ Mosler & Co. failed in May, 1857, prior to which time D. Adler, one of the defendants in this suit, ceased to be a member of the firm. On the 8th day of May: 1857, Mosler & Co. made an assignment, a copy whereof is appended hereto, marked ‘ A.’ On the 2d day of January, 1858, and the 24th day of June, 1858, the assignee of Mosler & Co. paid dividends *out of the estate of said G-. Mosler & Co. to the plaintiffs, of ten per cent, and five per cent, of their claim.
    “If, upon the above facts, the court is of opinion that the plaintiffs ought to recover against either or all of the defendants, a judgment for the amount claimed, with-interest, is to be rendered; but if the court is of the opiinion that no recovery should be had, a judgment shall be entered for the defendant.”
    The assignment was a general conveyance of alltb^merchandise and other property of the defendants to Nathan Moses, for the purposes therein stated, as follows:
    “ This assignment being made, nevertheless, in trust for the benefit of the creditors of said G-. Mosler & Co., and upon the following conditions: Out of the proceeds of stock and chattels so assigned, said Nathan Moses is to pay:
    “ 1. The expenses of carrying out this trust.
    “ 2. To distribute pro rata the proceeds of sale, as made from time to time, to the creditors of G-. Mosler & Co.
    “ 3. To take an account of stock now contained in said store, and hereby delivered to said Moses.
    “4. To return to us any surplus, after payment being made as aforesaid.”
    [Dated May 8, 1857, and signed and sealed by the parties.]
    “I accept the above trust. Nathan Moses.”
    Judgment was rendered for the defendants.
    The plaintiffs moved for a new trial, which was overruled. To all which they duly excepted, and now prosecute this petition in error to reverse said judgment :
    
      J. Abraham, for plaintiffs in error:
    It is not claimed here that the assignee had power to revive a debt once barred. The real point is, whether the payment made, has the effect to prevent the running of the statute until six years thereafter. The court below, as it seemed to me, lost sight of the real question, and decided that an assignee, as such, had no power to revive a debt barred by limitation, and in support of this refei’red to section 24 of the code. S. & C. 951. This section does not warrant the conclusion *drawn from it. The action is not claimed to bo brought on any such new promise as is mentioned in the section; but if it were, such promise or acknowledgment signed by one duly authorized, would be as effective as though signed by the party. This action is brought for a cause which never was barred, and, therefore, the section does not apply. -Again, it does not provide that any evidence of payment shall be in writing-signed by the party to be charged; and if such evidence is necessary, it is furnished by the assignment made by the defendants, authorizing their assignee to make payments from time to time.
    The inquiry is, does the payment of a claim, by one duly appointed, formally under seal, by a principal, bind that principal, or not?
    The only case in Ohio touching the question at bar, is, The Executors of Neimcewicz v. The Administrator of Dayton, 13 Ohio, 271, 297, 298, and it is conclusive of the question.
    An acknowledgment made by an agent in respect to demands relating to concerns within the scope of his authority, is binding upon the principal. Ang. on Dim., sec. 261. The case of Barger v. Durbin et al., 22 Barb. 68, is directly in point. See also Burk, Adm’r, v. Palmer, 5 Esp. 145; Burk v. Howard, 13 Mo. 241; Hart v. Stevens, 6 Q. B. 937; Winchell, Ex’r, v. Hicks et al., 18 N. Y. (4 Smith) 560. The assignee was such duly authorized agent. Story on Agency, Sec. 3.
    
      Jloadly, Jackson & Johnson, for defendants in error;
    We claim that the payment by the assignee of an insolvent debtor, is not such a partial payment as will take the residue of the debt out of the statute of limitations, as against the original debtor, and cite Stoddard v. Doane, 7 Gray, 387; Pickett v. King, 34 Barb. 193; Roosevelt v. Mark, 6 Johns. Ch. 266; Davies v. Edwards, 6 E. L. & Eq. 520 ; Seaman, ex parte, 15 Vesey, Jr. 480.
    An assignee is not, in law, the agent of the debtor. . The assignee, when he accepts the trust, under the laws of Ohio, becomes a trustee for both debtor and creditor, and not the agent of either, but in fact a mere creature of the law, to carry Out its provisions in the-disbursement of the assets of the insolvent *in the payment of old debts, and not for the creation of new ones.
    The decision in the case of The Executors of Neimcewicz v. Dayton’s Adm’r, 13 Ohio, 271, has been questioned in Jackson v. O’Brannin (14 Ohio St. 177), and has no application to the ease at bar. Moreover, the code has been adopted since that decision, and it requires (sec. 24), by very clear analogy, that payment must be made by the party to be charged thereby expressly for the purpose of creating a new liability, in order to take the case out of the statute of limitations.
   Day, J.

It is claimed that the court below erred in holding that the plaintiffs’ action is barred by the statute of limitations. It is conceded, however, that the holding is right, unless the payment made upon the claim of the plaintiffs, by the assignee of the defendants, within six years before the commencement of the suit, takes it out of the statute under the provisions of the 24th section of the code, which is as follows:

“In any case founded on contract, when any part of the principal or interest shall have been paid, or an acknowledgment of an existing liability, debt, or claim, or any promise to pay the same, shall have been made, an action may be brought on such case within the period prescribed for the same, after such payment, acknowledgment, or promise, but such acknowledgment or promise must be in writing, signed by the party to be charged thereby.”

The question,’then, presented for determination is, whether the payment of a dividend by the assignee of a debtor is such part payment of a debt as will take the residue out of the statute of limitations against such debtor.

The solution of this question depends upon the construction to be given to the foregoing section of th’e statute. By comparing this section with the one for which it is substituted in the limitation act of 1831, and the judicial constructions given to the act of 21 James, it is apparent that the legislature did not intend to enlarge the facilities for taking *cases out of the statutory bar. Before this can now be effected by the acknowledgment of an existing debt, or a promise -to pay the same, it “ must be in writing, signed by the party to be charged thereby.” No change is made in the effect of a part payment of a deht. It will be seen, however, that the same effect is given to such part payment as is given to a written promise signed by the party to be charged thereby.” It would seem, therefore, from analogy, that the payment must be made by the party to 'be affected thereby, or by an agent authorized for that express purpose. In the contemplation of the statute, the part payment of a debt is regarded as evidence of a willingness and obligation to pay the residue, as conclusive as would be a personal written promise to that effect. It could not, then, have been intended to give this effect to payments other than those made by the party himself, or under his immediate direction. Surely nothing short of this would warrant the assumption of a willingness to pay equal to his written promise to that effect.

Aside from the restrictions made by the code, this construction is consistent with that given to former acts upon this subject. Angel on Dim., sec. 240.

It is said by Chief Justice Shaw in the case of Stoddard v. Doane, 7 Gray, 387: “ The ground of this exception and of the ancient rule of law, is that the voluntary payment of part of a debt by the debtor is a strong, if not conclusive admission that the debt is still due, and from this the law infers a new promise to pay it. To have this effect, it is manifest that' the payment must be made by the debtor, or by his order, or by an agent fully authorized for that purpose. It is the act of his mind from which the implied promise to pay the residue of the debt arises. We are of opinion that a payment by an assignee in insolvency is not a payment by the insolvent or his order within the meaning of the rule. The assignee is bound by law to pay the dividehd which has been declared ; he is the debtor to that amount. The original debtor can not prevent or delay such payment, if he would. It is not a personal or voluntary act of the insolvent.”

This decision, it is true, was made in relation to an assignee *under the insolvent laws of Massachusetts; but the reasons [571 given for it are applicable to this case. After the assignee of the defendants accepted the trust, he was bound bylaw both to declare dividends and to pay them. “ The original debtor could not prevent or delay such payment, if he would.” This was a personal obligation resting on the assignee, and he was as much under the control of the creditor as of the debtor. The assignment was general in its terms, without appropriating the property assigned to the payment of this or any particular claim. The allowance of the plaintiff’s claim and payment thereon were acts of the assignee : neither was a “ personal or voluntary act of the insolvent.” If the assignment could be regarded, in any sense, as a recognition of the plaintiff’s claim and willingness to pay it, “ it must be confined to the point of time when the assignment was made ” Picket v. King, 34 Barb. 193. This, however, was more than six years before the action was brought.

It is claimed that the assignee was the agent of the defendants, and that they are, therefore, bound by his acts. This position is not tenable upon either reason or authority. Did an assignee occupy that position, it would be within the power of the assignor to exercise a control over his acts, and to remove him at his pleasure. On the contrary, the debtor has no control over him; he can neither compel him to admit or reject a claim presented for allowance ; nor can he enforce dividends and payments otherwise than may be done by any one having an interest in the fund. The assignee, when he accepted the trust, became in law (as he is called in the instrument of assignment) a trustee for both debtor and creditor, rather than the agent of either; and the law imposed upon him the duty of carrying out the trust in the proper appropriation of the assets of the assignors to the payment of their existing debts. The assignment conferred no power upon the assignee, either to create new debts against the assignors, or to extend their legal obligations to their creditors.

This view of the case is in.accordance with the more modern authorities in this country and in England.

It is said, by Chancellor Rent, in the case of Roosevelt v. *Mark (6 John. Ch. 266) : “It is going unreasonably far to construe payments by assignees or trustees who are not parties to the contract, or under any personal obligation to pay or contribute, as meaning more than they plainly import, or as carrying with them sufficient evidence of a renewed personal promise of the original debtor to pay. Such special trusts were not created for any such purpose, and it is perverting the intention of the parties, and it is plainly repugnant to. the reason and equity of .the trust, to make the ordinary execution of the trust the ground of a constructive new assumption of the debt by the debtor. The language of the transaction would seem to be. directly otherwise.

The case of Picket v. King, before cited, was similar to this in its facts, and is directly in point. In the opinion it is said: “ Upon making such assignment the defendant parted with all control of the property assigned, and appointed his assignees his trustees, to apply the proceeds thereof as directed in said assignment; but I can not think they became his agents in such a sense as to have authority to make a new contract or promise binding on him, or to make a payment on any of Ms debts which should be equivalent to a new and express promise by him; and such must be the consequence if partial payments made by them are to have the same effect as if made by the debtor himself. The assignee is not an agent foi any such purpose. He is authorized and appointed to apply the money in his hands in a specified way, and has no other power or authority in behalf of his assignor; and he has no power to express for his assignor a subsisting or continuing willingness to pay any further sums to the creditor on account of the debt than is expressly provided for that purpose.”

It is insisted in argument that the case of The executors of Neimcewicz v. The Administrator of Dayton (13 Ohio, 271), is decisive of this case. It was held in that case that part payment of a debt by an administrator will take the residue out of the statute. There is a plain distinction between the two classes of eases. An administrator is the party himself, having full control of the debt; moreover, it is not decided in that'ease that his acts would affect other parties further *than they may be interested in the assets in his hands. From the nature of the case, his payments can not create or perpetuate personal liabilities against others, and, therefore, just where the question in this case arises the analogy ceases

The judgment of the court below is affirmed.

Scott, C. J., and White, Welch, and Brinkerhoee, JJ., concurred.