Case ID: ohio-st_12/html/0624-02.html
Source: Caselaw Access Project
Author: {"author": "By the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Trustees of Goshen Township in Champaign County v. The Springfield, Mt. Vernon and Pittsburg Railroad Company, and R. M. Shoemaker.
    The plaintiffs filed a petition, showing that under certain acts of the general assembly, and upon certain conditions prescribed in those acts, the trustees of Goshen township were authorized to subscribe stock in'the Springfield and Mansfield Railroad Company. The petition stated the mode in which a subscription was in form made and paid for in bonds of the township, but alleged that these acts were not in pursuance of the law, but illegal and created no obligation on the township. It appeared that the bonds had been delivered, and had been assigned by the railroad company, with a guaranty of their payment, and that the interest, accruing upon them for several years, had been paid, without objection.. There was no charge of fraud against the defendants. Held:
    That, under these circumstances, the plaintiffs were not in a position to ask the affirmative relief of a rescission of the contract and the cancellation of the instruments they had issued.
    Reserved in the district court of Champaign county.
    
      The plaintiffs filed a petition, showing that under certain acts of the general assembly, and upon certain conditions prescribed in those acts, the trustees of Goshen Township were authorized to subscribe stock in the Springfield and Mansfield Railroad Company, the name of which was after ward changed to the Springfield, Mt. Yernon and Pittsburg Railroad Company. The petition proceeds to state the mode in which a subscription was in form made, and paid for in bonds issued by the then trustees of Goshen township. The petition alleges that these acts were not in pursuance of the law, but were invalid and illegal, and created no obligation on the township. The petition states that the defendant, Shoemaker, holds $>4,500 of the bonds, and that he had actual notice of the steps taken in procuring the subscription of the stock, and the issuing of the bonds. That in the submission of the question of subscription to the voters of the township, one of the conditions required by the law, the defendant, Shoemaker, directed and prepared certain unauthorized terms and conditions, coupled with and made part of the question submitted. One of these conditions was, that “ after four years the township to have the option whether to keep the stock, to require of the railroad company to take the stock and redeem the'bonds.” This condition was stated and shown on the face of the bonds.
    It further appears, from the petition, that on the 3d of August, 1852, the bonds were-issued, bearing date the 1st of March, 1852, and that all the interest accruing pp to the 1st of March, 1856, has been paid. That the last payment of interest on the 2d April, 1858, was made under protest as to the legality of the bonds. That at the same time, the plaintiffs required of the defendant, Shoemaker, that he should take of them stock to the amount of the bonds, and surrender the bonds as he was bound, under the condition shown on the face of the bonds, which he refused to do ; that a notice was also served on the company, requiring it to take the stock, and redeem the bonds, protesting at the same time that the bonds were illegal and void, which the company neglected and refused to do; that the company is unable to make the road, and wholly insolvent.
    The petition states the form of the bonds to be the same as that of one of them annexed to the petition. From this it appears that the township promises to pay to the Springfield and Mansfield Railroad Company, or its assigns, the sum of ten dollars, at the office of the treasurer of the township, on the 1st of November, 1871, with interest at seven per cent., annually, the first payment to be made on the 1st of March, 1853, and on each 1st day of March thereafter. Then follow the conditions, and a statement that the bond is in part payment of a subscription of stock in the railroad company," made in pursuance of the provisions of several acts of the general assembly, and of a vote of the electors of the township. The bond is signed and sealed by the trustees. Attached to the bond is the following assignment and guaranty of the railroad company : The Springfield and Mansfield Railroad Company, for a valuable consideration, hereby assigns the within bond to George Wallace, or assigns, and for value received as aforesaid, and hereby guarantees the final payment of this bond, principal and interest, on or before the first day of November, A.D. 1871. By order of the directors of said company. C. Anthony, President, March 24, 1852.”
    The petition asks that the bonds held by the defendant Shoemaker, may be delivered up to be canceled; and if that relief can not be granted, that the railroad company may be decreed to take the stock, and redeem the bonds, and that Shoemaker be decreed to take payment of the bonds held by him in said stock at par.
    To this petition the defendants severally demur, on the ground that it does not state facts sufficient to constitute a cause of action.
    The questions arising on this demurrer, were, in the district court of Champaign county, reserved for decision in this court.
    
      A. Q. Thurman and I. Corwen, for plaintiffs.
    
      
      Mason, Bowman Sp Mason, and James Murray and B. B. Warden, for defendants.
   By the Court.

A question arises in this case, preliminary to the examination of the legal questions presented upon the construction of the acts of the general assembly, authorizing a subscription of stock by the trustees of Goshen township in the Springfield and Mansfield Railroad Company. The plaintiffs, in effect, ask the court to rescind the contract, between the railroad company and the trustees, which has been executed by a subscription of stock and the payment therefor, in the bonds of the township. The bonds have not only been delivered, but have been assigned with a guaranty of their payment by the railroad company, and the interest, accruing upon them for several years, has been paid, without objection. Under these circumstances, we do not think that the plaintiffs are in a position to ask the extraordinary relief of the rescission of the contract, and the cancellation of the instruments they have issued, but, if they are not bound for the payment of the bonds, must await a decision to be made in a proceeding, or action, in which they occupy the position of defendants.

Where all the parties concerned in a transaction, alleged to be illegal, have participated in that illegality, though it may be available as a defense, it by no means follows, that it can be made the ground for affirmative relief, dependent, as is the relief asked in this case, upon the discretion of the court. There may be exceptions, where the law offended has been made to prevent oppression, and the oppressed party is seeking relief, or where public policy will be advanced by allowing the relief. Adams on Equity, 175; Reynell v. Speye, 1 De G. M. & G. 660, 679. An application for relief of this kind will also be affected by laches and acquiescence. Such acquiescence, while it may confer no right on the other party, will preclude the plaintiff from relief in a court of equity. Hilton v. Earl of Granville, 1 Cr. & Ph. 283, 292.

We see no good reason why the plaintiffs should' escape from the application of these rules. These bonds if illegal, are so, not because they are prohibited by any statute, but in consequence of a misapprehension or misconstruction of certain acts of the general assembly. For we do not understand that there is any charge of fraud, against either the railroad company or the defendant, Shoemaker. Fairness and good faith on their part are consistent with every allegation in the petition. It may be that they, as well as the trustees and the electors of Goshen township were mistaken in their construction of the powers conferred by the acts of the general assembly. But there is no legal reason, why in the absence of fraud or undue means, one party should be held to a more perfect knowledge of the law than another.

That acts of acquiescence on the part of the trustees, and even the electors of the township, will affect the plaintiffs, is shown by the cases of Garrett v. Van Horne, 7 Ohio St. Rep. 827; Smead v. Union Township, 8 Ohio St. Rep. 394. We do not understand those cases as deciding, that acts of acquiescence will bind the township, in its corporate capacity, if the claim alleged be in its inception illegal — if there be a defect of power; but the cases show that townships, like individuals, may be affected by acts of acquiescence, in cases where such acts may properly have effect. We think they will have their proper effect in precluding a resort to the remedy adopted in this case. If the right of defense to the bonds has not been affected by the acts of acquiescence, because founded on illegality or want of power, we see no reason to suppose that such a .defense would not be effectual and available against any holder. Not only do these bonds show to any one who may become their holder, full notice of their origin, but no township in this state could issue such instruments without special authority from the general assembly, and any party asserting a liability on them, would be bound to show such authority.

The prayer in the petition for a specific performance of the condition, which is shown on the face of the bonds, we think, is not sustained by a fair construction of the terms of that condition. It contemplates a disposal of the bonds by the railroad company, and binds the railroad company in the contingency stated, to redeem them, that is, to pay the holders, and so exonerate the township; but it does not bind the holders to accept stock in payment, though it might, to receive payment before their maturity. The prayer is, that Shoemaker may be required to deliver up the bonds on receiving their amount in stock. There is no prayer that the railroad company may be required to redeem by payment. The railroad company being, as stated in the petition, wholly insolvent, no such relief is asked, and certainly could not be exnected beyond the idle form of rendering a judgment.

Demurrers to petition sustained.