The case is remanded to the court of common pleas with the direction that the modification of the sentence be made as herein indicated. The remainder of the sentence is in force as pronounced. The costs of the proceedings in error will be taxed to the defendant in error.

W. R. Talbot, for plaintiff in error.

II. M. Hagelbarger, Prosecuting Attorney, for defendant in

error.

BUILDING ASSOCIATIONS—USURY.

[Circuit Court of Lucas County.]

HASKEL A. SPIES ET AL V. SOUTHERN OHIO LOAN & TRUST CO.

Decided, 1902.

Premiums and Fines-Imposed by Building Associations-When Reasonable are Not Usury-Section 3836-3 Not Unconstitutional. The provision of Section 3836-3, declaring that dues, fines, premiums or other assessments imposed by building and loan associations shall not be deemed usury, although in excess of the legal rate of interest, is not unconstitutional. Mykrantz v Globe Building & Loan Association, 19 C. C., 51, not followed.

In this action the Southern Ohio Loan & Trust Company, a building and loan association organized under the laws of Ohio, brought suit against Spies and others to foreclose a mortgage executed by Spies and his wife to this company, securing a loan of $1,000, advanced to him on his stock for that amount in the company, and also to secure the payment of interest, premium, fines and other charges which might be assessed against him by the company. Default having occurred the company sued for the principal of $1,000, together with $17.71 interest and premium and $3 fines, and further alleged that there would become due and payable from and after July 13, 1900, fifty cents. a month as dues on each $100 share of stock, and also interest at the rate of six per cent. per annum, premium at the rate of 16 2-3 cents per month on each share, and fines at the rate of

Spies et al v. Southern Ohio L. & T. Co. [Vol. IV, N. S.

ten cents a month on each share, so long as the defendant remained in default for payments. The defense set up on behalf of Spies was that the fines were unreasonable, and that Section 3836-3 under which building and loan companies collect premiums is unconstitutional. Judge Pugsley in the common pleas court sustained the constitutionality of the statute and entered judgment for the full amount claimed.

HAYNES, J.; PARKER, J., and HULL, J., concur.

In this case suit was brought to foreclose a mortgage upon a loan made by the defendant company, which is an incorporated building and loan association of the city of Cincinnati. A judg ment was taken for the full amount prayed. The case is brought up on error raising questions as to whether certain payments made by way of premiums and fines charged by the company are in the nature of usury; and whether the law of Ohio regulating these companies is unconstitutional. The case of Mykrantz v. Building & Loan Assn., 19 C. C., 51, has been cited by plaintiff in error. We have not time to discuss this case at length, but we have investigated this matter fully and carefully under the decisions of the Supreme Court, and are satisfied that the decisions of the Supreme Court are in favor of the companies. We have heretofore sustained cases in which the building and loan association law has been held constitutional; and now sustain these charges in this case as being reasonable under a constitutional law.

The judgment of the court of common pleas will be affirmed. Herbert Orr, for plaintiff in error.

Orville S. Brumback, for defendant in error.

Agency-Where the Agent Represented Both Parties-Sale of an Oil Lease-Subterfuge and Misrepresentation—Inspection Prevented— Fraud Upon Co-partners-Rights of Innocent Purchasers-The Sale Rescinded.

1. To relieve an agent from the suspicion of inconsistent duties, which prima facie will be assumed from the fact that he represents both parties, it is necessary that every circumstance connected with his employment by either party should be communicated to the other; and where the basis of the commission to be paid for his services was changed from usage to contract, and the amount to be paid from $3,000 to $6,500, such change was a circumstance affecting the action of the agent, and the failure to disclose it was a fraud in law.

2. The reply to a direct question as to what was the production of certain oil wells, that "I run two one-hundred barrel tanks a day," was a subterfuge and misrepresentation, where the fact was that the production alluded to was some weeks previous, while the production at the time the inquiry was made with a view of purchase was only fifty-three barrels a day.

3. If an inspection was prevented or its completeness defeated by the acts, arts or words of the seller, the reliance of the purchaser upon the statements of the seller without such investigation or after an incomplete investigation, would be justified.

4. Where evidence is introduced tending to show that one member of a firm committed or consented to the commission of a fraud upon his co-partners, notice on his part is not notice to them.

5. Nor will equity refuse aid to innocent purchasers because of a fraud committed upon them by a co-purchaser, and if their rights can not be secured without releasing him, they will not be allowed to suffer on that account.

6. Allegations having been established to the satisfaction of the court, that the plaintiffs were induced by the paid agent of the defendant, who they supposed was their agent, to purchase for $60,000 an oil property which was only worth $15,000, that the representations upon which they relied were untrue, and that their investigations

as to the value of the property were checked and prevented by the defendant. Held: That the contract of purchase be decreed void and the conveyance rescinded, and the money paid be restored with interest at 6 per cent., the purchase money notes canceled, and for the money expended by plaintiffs in putting the lease in condition to operate and in improvements, which have increased the value of the lease, they are to be given a lien on the lease and property. MOONEY, J. (sitting in place of Parker, J.); HULL, J., and HAYNES, J., concur.

This case is here on appeal from the court of common pleas. Plaintiff's in their petition allege, in substance, that some months prior to November 8, 1902, they undertook the promotion of a corporation to be known as The Cleveland-Scranton Oil Company, designed to engage in the business of developing, operating for, and producing oil in the Ohio oil fields, and to that end solicited numerous persons to subscribe and pay for stock of the corporation to be organized, said payments to be made to plaintiffs, as trustees, to purchase oil producing properties and to hold title to the same until such time as the proposed corporation should be organized and empowered to do business in Ohio, when said title should be conveyed to the corporation and stock therein issued to the contributors of the purchase price of said properties; that plaintiffs were then without experience in the oil business and had then no knowledge of the market value of oil producing properties in this state, and for these reasons they associated themselves with and employed as their trusted and confidential agent, to examine and select such oil properties to be purchased, one A. J. Thomas, of Findlay, Ohio, a man of great experience in the business of producing oil in the Ohio fields, and plaintiff's relied exclusively upon the business judgment and fidelity of said Thomas in making said selection and in closing said purchases; that among the properties selected by said Thomas as said agent were certain oil leases with the wells, machinery, fixtures and appliances then situated thereon owned by defendant at the price of sixty thousand dollars ($60,000); that at the time of said selection by Thomas, and at all times thereafter until December 18, 1902, the wells on said leases were out of repair and not in actual operation, and for that reason it was impossible to

ascertain what said wells were capable of producing when in repair and in proper working order; that defendant represented to plaintiff that said wells were then capable of producing at least forty barrels of oil daily, and that no wells had ever been drilled upon any part of said land except upon the outside edges thereof, and that the whole central area of said land was virgin oil territory with many inside locations defined and known to be prolific territory which had never been drilled to drain or deplete the oil in said land, upon all of which statements so made by defendant, these plaintiffs and their beneficiaries relied; that after all this and on November 8, 1902, said Thomas as said agent and confidential adviser recommended to plaintiffs, as said trustees, the purchase by them of said property of defendant for $60,000; that on said day plaintiff's did accept a conveyance of said property for said price, less $300 deducted therefrom for repairs, and then paid to defendant in money $9,700, and delivered to defendant their notes aggregating $50,000, which notes and money are still retained by defendant; that on said day plaintiffs took possession of said property, and thereafter expended a large sum of money to put said property in condition to operate and to determine the character and capacity of said wells; that plaintiffs have just discovered and now charge: First, that defendant paid said Thomas a large commission to induce him to recommend said property to plaintiffs and to procure said purchase by plaintiffs: Second, that the statement that no wells had been drilled within the central area of said land was and is untrue; Third, that the wells on said lease were not and are not capable of preducing forty barrels of oil per day, nor any amount in excess of ten or twelve barrels per day; fourth, that both defendant and said Thomas at the time "they beguiled plaintiffs into making said fraudulent contract" well knew that the market value of said property did not exceed $15,000; that plaintiff's before the commencement of this action tendered to defendant a reconveyance of said property and demanded a return of the money paid and notes delivered by them to defendant as heretofore stated, and defendant declined to accept said reconveyance or to comply with said demand.