Case Name: Harner v. Batdorf
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1878-12
Citations: 35 Ohio St. 113
Docket Number: 
Parties: Harner v. Batdorf.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 35
Pages: 113–119

Head Matter:
Harner v. Batdorf.
1. A judgment rendered on a special finding of facts made by the court may be reviewed on error, although such finding was not made at the request of either party.
2. The holder of a promissory note, accepted in good faith, from one of the principal makers thereof, who, to the knowledge of the holder, was insolvent at the time, a conveyance of a parcel of land in payment of the note. Subsequently, and within four months from the time of the conveyance, the holder of the note, on demand therefor, surrendered the property conveyed to an assignee in bankruptcy of the grantor: Beld, That such conveyance did not operate as payment of the note, nor to discharge a surety thereon.
Error to the District Court of Montgomery county.
Jobn Batdorf, tbe defendant in error, brought an action against Fuller, Batdorf & Co., Jacob Harner, the plaintiff in error, and Peter Batdorf, on a promissory note, of which the following is a copy :
“ $3,400. Dayton, 0., August 27,1867.
“ One year after date, we promise to pay to the order of John Batdorf thirty-four hundred dollars, drawing ten per’ cent, interest from date, for value received.
“ Fuller, Batdore & Co..
“ Jacob Harner,
“ Peter Batdore.”
The firm of Fuller, Batdorf & Co. was composed of Albert Fuller, "W. H. Batdorf, and said Jacob Harner. Harner,'in answer to the petition, alleged, among other things, that he signed said note individually as surety, and not as principal, and that Fuller, Batdorf & Co., on the 18th day of April, 1869, sold their stock of goods to said Peter Batdorf, who was only surety on said note, for $19,000; and who, as part consideration for the goods, assumed the payment of the note, and that the plaintiff below, John Batdorf, accepted said Peter as his sole debtor, and released Harner from all liability. He further alleged, that “on the 22d day of October, 1870, the said Peter Batdorf paid to John Batdorf the sum of three thousand dollars ($8,000),” to apply on the note.
The plaintiff, in reply, denied that he ever released said Harner from liability on the note, or that he accepted said Peter Batdoi'f as his debtor, as alleged; or that he was a party to the transaction set up in the answer, or ever assented thereto. But in respect to the alleged payment of $3,000 by Peter Batdorf, on the 22d day of October, 1870, he alleged that said payment was made in a transfer of sixty acres of land, by said Peter Batdorf to the plaintiff"; but that subsequently, and. within four mouths thereafter, said Batdorf was adjudged a bankrupt, and said conveyance, by reason of being given by way of a preference to said plaintiff by said Peter Batdorf, was void, and of no effect as against said assignee of said Peter, and said plaintiff" re-conveyed said lands aforesaid to said assignee in trust for the creditors of said Peter Batdorf.
A jury was waived, and the cause submitted to the court,who, the record showing no request therefor, found specially as follows:
1. That at the time of the sale of the stock' of. goods by Fuller, Batdorf & Co. to Peter Batdorf, and the-agreement -of Peter Batdorf to pay said note to the plaintiff, as set up in the answer, the plaintiff, John Batdorf, had no knowledge of said transaction, and did not assent thereto, nor accept said. Peter Batdorf as his debtor on said note, nor agree to discharge said Harner therefrom.
2. That on the 22d day of October, 1870, said Peter Batdorf was hopelessly insolvent, and that he then executed and delivered to said plaintiff a deed for sixty acres of land, with the understanding that the plaintiff should take the said land at fifty dollars an acre, and credit the said amount on said note then held by the plaintiff, for $3,000, as a payment thereon ; the said plaintiff received said deed, and entered the credit upon said note, in good faith, so far as any law of the State of Ohio is concerned, but with the knowledge that said Peter was then largely indebted upon claims past due ; that very soon after said laud was conveyed to said plaintiff, said Peter Batdorf made an assignment for the benefit of creditors, and thereupon the creditors of said Peter Batdorf filed their petition in bankruptcy against said Peter, and he was adjudged a bankrupt by the United States Court for the Southern District of Ohio; that thereupon one Edward L. Rowe was elected assignee of said Peter, and within four months after the execution and delivery of said deed by said Peter Batdorf to said plaintiff, and the entering of said credit of $3,000 on said note, said Rowe, as such assignee, demanded and received from said John Batdorf, plaintiff’, a reconveyance of said sixty acres of land to himself, for the use and benefit of said creditors of said Peter.
3. That said plaintiff surrendered said land upon the demand of said assignee, accompanied with the assurance that he had prepared and was about to file a petition to recover said land from said plaintiff, and upon the advice of competent counsel that it was right and proper to surrender it.
As a conclusion of law upon such finding, the court adjudged that said payment of $3,000, in land, was not a valid payment upon said note, and did not release Harne? therefrom.
Judgment accordingly, and an exception by Harner.
On error, the judgment of the common pleas was affirmed by the district court. By. the present proceeding it is sought to reverse it.
Houk & McMahon, and Gunckel Rowe, for plaintiff in error:
Jacob Harner, individually, was a mere surety when the note was signed. The firm of Fuller, Batdorf & Co. became mere sureties by the subsequent arrangement, in which Peter Batdorf became' the sole paymaster as between the makers of the note. Kerr on Injunctions, § 78; Bank v. Hoge, 6 Ohio, 18. By reason of the payment the sureties were deprived of the right to step in and pay off the note and sue Batdorf for the whole amount of the note. They were therefore released. 13 Ohio, 104; 18 Ohio, 6; 5 Selden, 242; 10 Paige, 76; Chitty on Contracts, 701; 2 Daniels on Neg. Inst. 225; Arnold v. Camp, 12 Johns. 409.
William Craighead, for defendant in error:
1. The question, whether the common pleas erred in entering its judgment in favor of the plaintiff, is not made by the record, in that the record fails to show that either party, on the trial, requested the court to state its finding, with a view of excepting to the decision of the court upon the questions of law involved on the trial, as required by section 280 of the code. Lawrence v. The State, 12 Ohio St. 1; Indiana Code, § 341; Cruzon v. Smith, 41 Ind. 288; Bainter v. Foeltz, 15 Kan. 323; Moore v. Barnett, 17 Ind. 349.
2. The transaction between Peter Batdorf and the other members of the firm did not change the relations of any of the makers of the note toward the payee. Wilson v. Lloyd, 6 Eng. Cases, 643. If we regard Harner as a surety, it is only by a valid payment, made by the principal debtor, that a surety is discharged. But this payment was invalid under the bankrupt law, by reason of its having been a fraudulent performance. De Colyar on Principal and Surety, 425; Petty v. Cooke, L. R., Q. B. 790; Pritchard v. Hitchcock, 46 E. C. L. 149.

Opinion:
Boynton, J.
The defendant in error contends that no question arises upon the record, because neither party requested the court to state its conclusions of law separately from its conclusions of fact. It is true that section 280 of the civil code does not require the court, where it tries a question of fact, to state its finding specially, unless one of the parties request it, with the view of excepting to the decision of the court upon the questions of law involved in the ease.
Its language is, that it shall not be necessary for the court to state its finding, except generally, unless such request is made. The object of this provision is to give a party a right to require a special finding, by requesting it with the view of excepting to the judgment. But where the court, without such request, finds and states the facts separately, from its conclusions of law, an exception to the judgment rendered upon such finding is as available to the excepting party as if the finding were made at his instance or request. Section 293 provides, that " where the decision objected to is entered on the record, and the grounds of objection appear in the entry, the exception may be taken by the party causing to be noted, at the end of the decision, that he excepts."
No bill of exceptions in such case is necessary; and for the reason that the facts disclosing the alleged error are already where it is the office of a bill of exceptions to bring them, namely, upon the record. So, where the case is one in which a party has the right to require a separate finding, by virtue of section 280, and such finding is made, the same thing is accomplished that would have been, if the findings had been made pursuant to a request of the party.
We, however, find, on looking into the record, that there was no error in the judgment of the court. The agreement between Euller, Batdorf & Co. and Peter Batdorf, by which the latter assumed the payment of the note here sued cn, in nowise affected Harner's liability thereon to the plaintiff below. Counsel for the plaintiff in error are mistaken in the statement that John Batdorf, the holder of the note) accepted Peter Batdorf as principal, and the firm and Earner as sureties. The court found exactly the reverse — that the plaintiff below was not a party to the arrangement, and that he gave no assent to its terms. Hence, the agreement in no manner affected his relation to the paper, nor, as to him, that of the makers.
The attempted payment of the note by Peter Batdorf in land failed by reason of being a fraudulent preference within the bankrupt act. Such payment was necessarily contingent, its validity depending on the non-institution of proceedings in bankruptcy, within four months next succeeding the time of the conveyance. That it operated to discharge the principal makers of the note, no one will pretend. But Hamer contends that he is a mere surety; that, in signing the note individually under the name of the firm, he, to the knowledge of the payee, assumed only the obligations of a surety; and that the acceptance by the plaintiff below of the conveyance of land, had the effect to suspend his right to pay the note, and to proceed against his principal, and hence operated to discharge him from liability thereon. But the fact must not be overlooked that as a member of the firm of Puller, Batdorf & Co., he was a principal maker of the note; hence, if by his individual signature he became a surety only, he occupied the anomalous position of being, at once, both the principal debtor and surety on the same instrument. But, if he were a surety only, and not a principal maker, the result would be the same. "What appeared to be a payment of the note turned out to be illusory. In legal effect, it was a mere transfer of title to the land, to John Batdorf, for the use of the assignee in bankruptcy. But instead of being an act injurious to Earner, it was calculated to benefit him. Had no proceedings in bankruptcy been instituted, the debt would have been paid. The only consequence which the bankrupt act attaches to the fraudulent conveyance is, to declare it void, and to subject the property conveyed to the payment of the debts of the insolvent debtorand if the creditor accepting the preference, although with knowledge of the debtor's insolvency, surrender the property received, as was here done, to the assignee, he may still prove his claim against the bankrupt's estate. Rev. Stat. TJ. S., § 5084. The law does not hold the creditor bound by the payment, where he has surrendered the property to the estate, from the mere fact that he had knowledge of the debtor's insolvency. Pritchard v. Hitchcock, 6 Mann. & Gran. 151; Watson v. Poague, 42 Iowa, 582 ; Brandt on Suretyship and Guaranty, § 290.
Judgment affirmed.