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Huron Circuit Court.
association, and a loan based upon such shares is legal and will not be held void. It is also an authority for a second proposition that the debtor is estopped from making this defense.
I do not care to rest the opinion entirely upon the authority of that case. I say this with reference to it. There is no case that I know of anywhere, that denies the soundness of the doctrine stated in 151 Illinois.
It is in line with the authorities which I have just read ; and every book I have been able to lay my hands on in discussion of this question, is an authority in the same line, to wit: That a debtor, and no one hold. ing or claiming under him or through him, or holding or claiming an interest in his property, will be heard to deny the right of the debtor to borrow money where the debtor has received the full value of his loan and has expended it-I don't care what the debtor is-what his organization is; 'inless there is a statute prohibiting him from borrowing money, that would be notice to all the world; but, in the absence of express law prohibiting the debtor from borrowing money, any person engaged in the business of loaning money, may loau him money and he may borrow, and having borrowed-even though it is in excess of the statutory power-in excess of the power by its charter, if a corporation, it will not be heard to deny that power; having received the money, it must repay the loan accredited by the contract and it will be enforced by all the courts and by all the authorities.
An authority to that effect is Bates v. Loan Association, 42 O. S., 655 to 671. That was a case in which money was borrowed of a building and loan association when the law authorized loans to depositing members. The court say:
“A person who applies to a building and loan association for a loan of money, and deposits therewith a sum of money however small, for the purpose of making himself eligible as a borrower, and thereby re ceives a loan, isestopped, when sued for the money by the association from denying that he was, in fact, a depositor of the association."
The first question made in the case was, that the statute required them to be members or depositors, and the proof showed that they deposited two dollars with the loan company and took out a loan of severathousand dollars, and it was claimed that they were not existing deposl itors.
A case which is more in point, is the case reported in 10 Am. Law Rec, 485, (6 Dec. R. 1108). It was the case of The Victoria Building Association v. The Arbeiter Bund, decided by the Hamilton county district court, December 2, 1881. The Arbeiter Bund was a corporation, but the question of its right to borrow and mortgage, was not raised in the case. It became a member of the loan company and no question was made in the case about its authority to do so.
The court found that it was the owner of twenty-five shares of stock, and that that loan had been made to it upon that basis. action to foreclose the mortgage, the company set up that it had no power to make the loan. The court, by Judge Burnet, say:
“Now, the Arbeiter Bund has received the money loaned. It has given its mortgage. It never proposed” (it had gone into the hands of a receiver), "and now it is not in its power to refund the money received and to cancel the transaction. It is estopped, therefore, to deny that The Victoria Building Association might make a loan which it received, and third parties who would make the defense in the interest of the Arbeiter Bund, in order that their claims may come in and have precedence,
Norwalk Saviaga Bank Co. r Nywalki Mstai wpinning and Stamping Co. et al.
tiro equally estopped, unless they tulfill the equitable obligation which rests upon the Bund, to reinstate the building association in its former rights, its former position."
The court say that question was recently decided by the Supreme Court of the state, in the case of Samuel W. Elliott, v. The Greeufield Buildmg and Savings Association, and the Supreme Court hold that the mortgage that Elliott gave was good as against a subsequent mortgagee who had advanced his money upon the faith of a mortgage.
So that, according to this authority, the Supreme Court has held that a debtor who had no power to borrow from such an association on more than twenty shares of stock would not be heard to claim that he had not that power, when he had borrowed upon a larger number of shares, towit: thirty-seven.
The statutes of Ohio, and the general law of manufacturing corporations authorize loans to be made; authorize corporations to borrow money. The statute authorizes building and loan companies to loan to its members only, or to depositors.
In the 42 0. S., however, we find that a debtor will not be heard to deny that he is eligible to receive the loan which he has made, and if he is a member and receives a loan on account of such membership, on which he still pays dues, he will not be heard to deny his membership.
Take this case: This manufacturing corporation was never a stockholder in this loan company; never subscribed nor received any stock. But it became nominally a subscriber for stock when its necessity to borrow money arose. It made a formal application for the issue of stock. It did nothing else; it paid no money for any stock. I am not sure whether a certificate was issued, or not; it makes no difference whether there was, or not. It became upon the books of the company a stockholder entitled to vote, according to the statute of the state, twenty votes on account of this loan; but the money paid by it went into the treasury of the loan company, and this loan being satisfied and extinguished-the moment that the loan is extinguished, the stock is extinguished and the borrower's rights in the company immediately cease.
In a case where it was provided in the mortgage that it should be security for fines as well as the loan, the court, in Hagerman v. Building and Sayings Association, 25 0. S., 186, 204, say:
"Before the loan is advanced, the stock of the member is a security in the hands of the company for the payment of fines. By making the loan, that security is lost; and we see no reason why the taking of mortgage security in such case, for the payment of future fines, should not be regarded as a transaction in due course of its business. The power to assess and collect a fine, reasonably implies a power to take security for its payment.'
I only read that because of the expression of the court, that the moment a loan is made, the security which the company had previously, to enforce the payment of its fines, ceases. So that, all the money paid in is to apply upon the loan. The contract in this case provides that all the money, save and except that amount which they agree to pay for the privilege of getting this money, shall be credited upon the interest and upon the principal,
as well as all dividends, which moneys so paid may earn. So that the borrowing member has two sources of income to pay upon his debt; the money which he pays is not only credited upon the
Erie Circuit Court.
loan, but becomes a source of earning power, and that which it earns is also credited upon the loan.
We think this corporation might lawfully become a member of the loan company for the purpose of borrowing money for any use that it had; but, if it did not have that power expressly or by law, still, having borrowed the money and received its benefits, and having contracted and agreed to pay it back and also agreed that it should be a lien upon its property, that contract a court of equity will execute, and they will not listen to the plea of the manufacturing corporation after it had used the money--much less that of another general creditor—that the corporation originally had no power to borrow.
We say, as in the language quoted in the 127 N. Y., supra, that to hold otherwise would not advance justice, but it would accomplish a legal wrong, and that a court of equity does not sit to do. Therefore, the decree may be drawn giving the loan company the first lien and the bank the second.
MASTER AND SERVANT-NEGLIGENCE.
[Erie Circuit Court, April 21, 1897.]
King, Haynes and Parker, JJ.
L. S. & M. S. Ry. Co. v. EDWARD Litz. 1. AN EMPLOYEE IS BOUND TO OBSERVE THE RULES OF His EMPLOYER.
An employee is bound to exercise ordinary care to ascertain and observe
the rules of his employer, and it will not excuse him for a violation that the employer or his agent, superior to the plaintiff, bas at some time
disobeyed such rules, 2. VIOLATION OF PRINCIPAL'S INSTRUCTIONS.
If an employee has suffered an injury brought about by violation of the plain
instructions of his principal, he cannot hold his principal liable there
for. 3. CONTRIBUTORY NEGLIGENCE.
If an employee, with knowledge of the habitual and continued negligence
of his superior fellow employee in some matter acquiesces therein and continues in the service of his employer without objection or effort toward correction of such neglect, he thereby waives his right against the company
and takes the risk upon himself. KING, J. (orally.)
The plaintiff brought his action to recover damages for an injury he sustained from falling off a handcar and having his leg broken, either by reason of falling from the handcar and striking upon the ground or because after falling a handcar following the one he was riding upon ran over his leg.
The allegations of negligence in the petition are that a gang of men who were working upon a section near Bay bridge were returning home and were in charge of ope McCann, foreman; that the foreman failed to require or have the handcars, of which there were three, run in accordance with the rules of the company, which were to the effect that they should, when following each other, not run closer than 300 feet; that McCann was also negligent in riding upon the forward one of the three cars rather than upon the middle one, and that they were negligent in not having proper lights.
L. S. & M. S. Ry. Co. v. Litz.
All of these allegations of negligence, however, amount to only one gri and of negligence, to wit: The negligence of the defendant as represented by its foreman in charge of this work and of this gang of men, in not requiring that the handcars be kept a proper distance apart.
On the occasion in question they were following each other and were loaded with five to seven men each. When they had traveled some three or four miles from the place they started in the direction of Sandusky, one of the men upon the forward car fell off. The forward car ran over him, was thrown from the rails and ran some little distance off the track. The second car was following and ran over this man, and also was thrown off the rails and ran off the track for a short distance. By the force of that collision and by reason of the car going from the rails, the plaintift below was thrown from the second car upon which he was riding to the ground, either between the rails of the track upon which they were riding or between the tracks at that point. A third car was following closely and it seems to have run over the person who fell off the first car, and was also thrown from the rails and ran a short distance.
I think the evidence probably shows these facts without very much dispute. It is disputed whether the plaintiff below was run over by a third car or not, and it is claimed that a contributing cause of his injury was the negligence of the company in allowing the cars to run too ciosely together, or, as alleged in the petition and as claimed upon the trial, in allowing them to disobey the rules of the company that they should rup 300 feet apart. In other words, that if they had been 300 feet apart the men upon the second car upon which the plaintiff was riding would have had an opportunity to observe the obstruction on the track and stop the car before it had reached it, and thus the accident would not have happened.
So far, of course, as the allegations in the petition and the proof is concerned, as to McCann riding upon the first car rather than the second, that amounts to nothing, except that it is argued that if he had been upon the second car he might have prevented the running in the manner in which they did run, but that all relates to the method in which the cars were being run at the time, so that the kind of negligence is that the cars were runving too closely together. No negligence is alleged nor shown in the company as to causing the man on the first car to fall from it. So far as the evidence in the case discloses, that was a pure accident, and it was generally treated so on the trial. No claim is made in the petition, nor, I think, by the plaintiff in making out his case, that the man on the front car fell off because of any particular act of negligence on the part of the defendant. How he fell is not very clearly disclosed, only the fact that he fell off and he fell off the front end of the car and the car ran over him and it was thrown from the track.
Now this case was tried in the court of common pleas one time, and a verdict rendered for Litz, and brought to the circuit court and there reversed, o C. D., 285, and returned to the common pleas, and perhaps, tried twice, one time the jury disagreeing and finally a second verdict was rendered in favor of Litz, and a judgment rendered upon it; and it is that judgment this petition in error seeks to-reverse.
We have read the testimony, all of it that bears upon the questions that have been made by the bill of exceptions in this case, both as to the weight of the evidence and as to the particular errors assigned. We do
Erie Circuit Court.
not find an error in the admission of testimony, and I need not spend any time ia discussing any questions that were raised here in the argument.
Sore point was made that the court, after the argument of the case had been begun, interrupted counsel and made a statement to them with reference to the consideration which they should give to a photograph of a handcar. We do not find any error in that. It is nothing but what the court might have said—might have said in its general charge if it saw fit to say it, or at the time when it was undoubtedly alluded to by counsel in argument.
There are, however, a great many exceptions to the charge of the court and to the refusal of the court to give certain requests which were asked in writing to be given and submitted to the jury before argunient and after the evidence had been concluded. One of the objections to the charge of the court, and which has been argued here with considerable force, is found on page 423 of the bill of exceptions, and I desire to notice that. The court in speaking of the duty of the railroad company in its general charge said: The railroad company is only required to use ordinary care and exercise ordinary precaution and prudence and employ and adopt ordinary agencies and means to prevent injuries to its employees. It is bound to adopt such regulations or provisions for the safety of its employees as will afford them reasonable protection against the dangers incident to the performance of their respective duties, and it is bound to use ordinary care and diligence to secure obedience to such regulations on the part of its employees."
It is very strenuously objected here that the use of the phrase "secure obedience” is putting a rule and obligation on the company stronger that it ought to be. If understood by the jury with reference
. to the facts of the case, we are not prepared to hold now that that expression would be in this case erroneous. The supreme court have in. cidentally referred to that question and it may be found referred to in 4 C. D., 19, in a case that went to the supreme court from a decision of the circuit court in Lucas county, and the decision of the circuit court was reversed. The case was again sent back for trial and after its second trial it came again before the circuit court and it is that opinion that is reported in 4 C. D., 19. The court in this case says:
“In his petition against the company, Fox charged that the company was negligent in the person of the yardmaster, in not performing his duty and tollowing a long observed custom known to Fox, and upon which he relied, of having on the front of cars moving about the yard, as these empty passenger cars were, a brakeman to stop them and warn persons to get out of the way. Though no brakeman was on the front of the cars on this occasion, the evidence showed that the yardmaster had assigned a sufficient number of competent men to move and switch the empty cars, and did not know that they were not doing their duty. The company denied that it or the yardmaster was negligent, charged that Fox himself was guilty of negligence in standing where he did, or not keeping constant watch for his safety. On the first trial of the case a verdict and judgment were rendered for Fox, which the circuit court, by a majority opinion, affirmed. These judgments were afterwards reversed by the Supreme Court, on the ground that the court of common pleas refused to charge the jury as requested in the 8th request of the Pennsylvania Company.