Case Name: The United Protestant Evangelical German Congregation of Cincinnati v. Henry Stegner and William Huber
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1871-12
Citations: 21 Ohio St. 488
Docket Number: 
Parties: The United Protestant Evangelical German Congregation of Cincinnati v. Henry Stegner and William Huber.
Judges: Welch, C. J., and White, Day and McIlvaine, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 21
Pages: 488–492

Head Matter:
The United Protestant Evangelical German Congregation of Cincinnati v. Henry Stegner and William Huber.
While a promissory note given to and discounted by a corporation for a loan of money, in the course of an unauthorized banking business, will not be enforced, yet where the treasurer of such corporation has taken and appropriated to his private use moneys deposited with it contrary to the statute against unauthorized banking, and being unable, when called on, to refund the same, secures it by his promissory note, such note will not be held to have been given in the course and furtherance of an illegitimate business, and an action will lie thereon.
Error to the superior court of Cincinnati.
This case, and two others like it, were formerly before this court, and are reported in 16 Ohio St. 371 et seq.
The plaintiff in error brought an action in the superior court of Cincinnati, on a promissory note for $1,000.00, made in 1853, by Stegner as principal, and Huber as surety.
Defendants answered, in substance, that the plaintiff was a religious society incorporated by a special act in 1843, with limited powers to acquire property, of a kind, in amounts, and for the purposes specified in its charter; that without authority the society constituted itsself into a savings bank contrary to the act of March 12, 1845, “ to prohibit unauthorized banking,” and that the note was given to and discounted by it for a loan of money in the course of its banking business.
The superior court having overruled a demurrer to this answer, the record was brought here on error, the ruling of the superior court reversed, and the cause remanded for further proceedings.
In the court below the plaintiff then replied: “ That it is true that plaintiff had established in connection with itself a savings bank ; that thereupon it appointed a treasurer to take charge of the deposits and other moneys of the church; that defendant Henry Stegner, prior to the 15th day of May, 1853, had been duly appointed treasurer of plaintiff, and, by virtue of his office, had possession of the moneys of plaintiff, whether consisting of deposits, or of moneys plaintiff obtained from other sources; that the deposits made were not special deposits but general deposits, the depositors not expecting to get back the identical moneys deposited, all the deposits being put together in a common fund and in the possession of the treasurer; that on all the moneys so deposited said plaintiff paid interest to the depositors at the rate of four per cent., loaning out the money to other parties at a higher rate of interest; that about the 15th day of May, 1853 (some short time previous thereto), said Henry Stegner ceased to be the treasurer of plaintiff, and another person was appointed to that office ; that when said Stegner ceased to be treasurer as aforesaid, he had in his possession seventy thousand dollars of the moneys of plaintiff, being moneys which plaintiff had obtained from and through deposits, and which had come into the possession of said Stegner as treasurer of the plaintiff; that said Stegner having thus obtained said money with the assent of said plaintiff, used this money in his private business, instead of lending it out to others, and thereupon it was agreed between said plaintiff and said Stegner, that said Stegner might use said money in his private business while treasurer, he paying interest thereon, at the rate of seven per cent, per annum ; and in this condition was this money, when said Stegner was required to pay the same over, and made the settlement, and made the notes as hereinafter stated; that plaintiff ordered said Stegner, upon his ceasing to be treasurer as aforesaid, to pay over said moneys in his possession to it; that said Stegner re ported himself unable to do so ; but admitting said money to be due, proposed to pay over $20,000 in cash, and to give his notes at different periods of time with sureties for the remaining $50,000, which proposition plaintiff accepted, and said Stegner on the 15th day of May, 1853, paid over to plaintiff said $20,000 in cash, and gave his notes with different sureties for the remaining $50,000, among which was the note sued upon in this case ; that this note was not therefore a discounted note, nor was it presented to said plaintiff or to its said savings ■ bank to be discounted ; nor was money loaned on it to said Stegner, except as hereinbefore stated ; and said Stegner was in law bound to pay over said money for which this note was given to plaintiff, and the note thus given in lieu of said payment was a legal obligation, binding on said Stegner and on his said surety, William Huber; and all the statements of said answers contradictory of the facts set forth in this reply are untrue.”
The superior court having sustained a demurrer to this reply, the record is again brought here on error, to reverse that holding.
Dickson & Murdock for plaintiff in error :
The case made by the replication is different from the case made by the answer, and does not conflict with the law against unauthorized banking.
However unauthorized it may have been for the plaintiff to receive deposits, yet, when the deposits were received, the title to them vested in the plaintiff. “ Fieri non debet, sed factum valet.” Gholson & Okey’s Dig. p. 490, sec. 46 ; 2 Ohio St. 203, 206.
If a corporation, in violation of the law against unauthorized banking, receives deposits,, and places these in the hands of a treasurer, that treasurer is bound to account to the corporation for this money.
O. D. Goffin for defendants in error.
No brief for defendants in error has come to the hands of •the reporter.

Opinion:
West, J.
The plaintiff's reply, though more circumstantial than is necessary, traverses, in effect, a material part of the defense. The facts pertinent to the issue are admitted by the demurrer. These show that the note in controversy was not given or discounted in any banking transaction. It is, therefore, not void, unless the title of the society to the fund misappropriated by Stegner, was, because of the unauthorized mode of acquiring it, without the pale of judicial protection.
This cannot be admitted. The money received on deposit by the society, in the course of its unauthorized banking operations, did not, for that reason, become the subject of legitimate plunder. We cannot think that a prosecution might not have been sustained for its larceny or embezzlement, averring its ownership in the society: nor can we perceive why it might not have maintained an action for restitution against such wrong-doer.
Stegner was an officer of the society. He may have been chiefly instrumental — he certainly co-operated — in procuring it to engage in an unlawful business. He is not in a position to be regarded with favor. Having secured the confidence of depositors, by the prostitution of the society's credit, this court, unless constrained thereto by overruling considerations of public policy, will not permit him to prejudice their interests by withholding from it the means of restitution. While the parties to a contract, given in the cause and furtherance of an unlawful business, will not be judicially aided, we are unwilling, in a state of facts not necessarily requiring it, to extend, the rule to the protection of official delinquency, in the enjoyment of its illegitimate acquisitions.
The facts pleaded do not show a case for the withholding of process. Stegner ought to have refunded the money misappropriated by him in his official position. The note in controversy was given to secure a legal liability, not in furtherance of an unlawful transaction. To withhold process would not subserve but outrage public policy.
The reply is sufficient, and, if sustained by evidence, the plaintiff should recover.
The ruling of the superior court will be reversed, and the cause remanded for further proceedings.
Welch, C. J., and White, Day and McIlvaine, JJ., concurred.