136 Armstrong, Receiver, v. Warner. tor's claim which was due before the assignment, was a just set-off against the notes, and by negotiation he would be deprived of that right The injunction was sustained on the ground that, in equity, the insolvency justified the creditor, whose claim was due, in using that to pay his debt before it was due. Exactly the same case was decided the other way in England, in In re Commercial Bank Corporation of India, L. R. 1 Ch. Ap. 538, where the court of chancery overruled the vice chancellor who granted such an injunction. See also Eastern Bk. v. Capron, 22 Conn. 639. But, whatever the English view, Lindsay v. Jackson has been approved in New York in a great number of cases. See especially Bradley v. Angel, 3 Comst., 475. The principle has been applied in Smith v. Felton, 43 N. Y., 419, and in Smith v. Fox, 48 N. Y., 674. See also Colt v. Brown, 12 Gray, 233. It is approved in Receivers v. Paterson Gas Light Co., 3 Zabriskie, 283, and in Reppy v. Reppy, 46 Mo., 571. Our own Supreme Court, in Bank v. Hemingray, 34 Ohio St., 381, approve and follow Smith v. Felton, 43 N, Y., 419. Smith v. Felton was a case where a firm had a deposit account with a bank, and the members of the firm were indebted on a note to the bank, the proceeds of which had gone into firm transactions. The bank became insolvent and stopped payment before the note fell due. The firm demanded a set-off of the deposit against the note. In a day or two an assignee took charge and the set-off was refused. The Court of Appeals held that the set-off should be allowed. In Skiles v. Houston, 110 Pa. St., 254, A., a banker died insolvent. At the time of his death B. had $760.00 on deposit with him subject to check. Prior to A.'s death B. had a note discounted at A.'s bank for $850.00 which matured about a week after A's death. Held that a set-off should be allowed. See also Jordan v. Sharlock, 84 Pa. St., 366; Smith v. Mosby, 9 Heisk., 501; Platt v. Bentley, 11 Am. Law Reg., N. S., 171; Morse on Banking, sec. 338; Pomeroy Remedies and Rights, 163; Waterman on set-off, sec. 431. Reference to the cases cited will show that the equitable set-off of a debt due against a debt not due, in case of insolvency is worked out on the theory that the solvent party has the right to have his claim paid at once and waiving his right to delay the payment of his own debt until it is due, can apply the debt due him to the debt he owes at once. It has sometimes been questioned whether a deposit can be said to be a debt due until demand for payment or set-off. Fort v. McCully, 59 Barb. 87. There are some remarks of Judge Folger in Munger v. City of Albany Bank, 85 N. Y., 580 to this effect, where the deposit is evidenced by a negotiable certificate of deposit in the hands of the depositor. See to the contrary Seymour v. Dunham, 24 Hun., 93; Smith v. Fox, 48 N. Y., 674, can not be sustained, however, except on the theory that a simple bank deposit, not evidenced by a negotiable certificate, for the purposes of a set-off, is due at the time the bank stops payment, without demand, and such is clearly the opinion of the Pennsylvania Supreme Court, the New Jersey Supreme Court, the Tennessee Supreme Court and the Missouri Supreme Court from the cases cited. It is true that, in this country, the statute of limitations does not run on a deposit debt until demand unless the bank stops payment. Such an event, however, dispenses with the necessity for demand (see Morse on Banking, sec. 322), so that, at the time the assets vest in the creditors on insolvency, the deposit of each creditor is due and entitles its owner to use it as a set-off against any debt held by the bank at the time of the transfer, whether due then or not. In the one case his right would be legal, in the other equitable, but none the less to be protected, because the statute law of Ohio recognizes the existence of equitable set-off. Section 5076, Rev. Stat.; Baker v. Kinsey, 41 Ohio St., 403, 409. This being our conclusion as to the law of Ohio in both causes of action, we now come to the question whether the United States statutes as to winding up national banks has taken away this equitable right of set-off. Section 5234, U. S. Rev, Stats, and amendments, provide that the comptroller of the currency may appoint a receiver of a national bank whenever he becomes satisfied of its insolvency, or upon its default in paying its circulating notes "Such receiver, under direction of that comptroller, shall take possession of the books, records and assets of every description of such association, collect all debts, dues and claims belonging to it, and upon order of court may sell or compound bad debts and may sell the real and personal property of the bank and may enforce the individual liability of the stockholders. He is to pay over all the money so made to the treasurer of the United States, subject to the order of the comptroller. Section 5236 provides that the comptroller after paying any deficiency in redeeming notes of the bank shall make a ratable dividend of the money so paid over to him on the claims of creditors proven to his satisfaction or adjudicated in Superior Court of Cincinnati. 136 a court, and the remainder shall be distributed to the shareholders in proportion to their stock. Section 5242 provides that all transfers of the notes, bonds, bills of exchange or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion or other valuable thing for its use or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, shall be void." It is apparent from reading these sections that a receiver of a national bank occupies a position analogous to an assignee in insolvency under our state law. In the case of Hade v. McVay, 31 Ohio St., 231, our Supreme Court expressly say so and hold that a right of set-off available against a national bank is available against the receiver. It may be conceded that this remark was meant to apply to a case where both debts were due before the transfer, because that was the case the court were considering. The statute of set-off does not execute itself however. The debts remain until by the election of the party one is set off against the other. The effect of the decision in the case cited, then, is that the debt transferred to the receiver has attached to it the right of set-off to be exercised on suit brought at the election of the other party. Now what is the difference in the time the right of set-off attaches between a legal and equitable set-off with reference to the assignment. There can be none. Both attach before the assignment and the debt passes by the assignment subject to the legal right or the equity of set-off. The right is, therefore, prior to any rights which vest by the assignment or transfer. Under the first cause of action the equity grew out of the original transaction, and though not developed until after the failure of the bank relates back and affects the check delivered from the beginning. In the second, the equity of set-off attached on the insolvency of the bank, to the bill of exchange. It was by operation of law. It was not by a transfer of any right of the bank in violation of the section quoted, In Colt v. Brown, supra that suit was by the receivers of an insolvent bank on a note falling due after their appointment. The maker sought to set off bank bills held by him before the bank had been enjoined from paying any bill, deposit or other debt, negotiating, assigning or transferring any security and transacting business except receiving payment in cash of any debt falling due, and also bills bought by him after the issuing of such injunction, but before the appointment of the receiver. Shaw, C. J,, deciding the case, says: "The first injunction, having been from time to time continued and ultimately made perpetual, had the effect of sequestrating and setting apart the assets of the bank as they stood at that time. The defendant having then bills of the bank taken in the course of business to the amount of $1,200, this was an equitable set-off and the receivers took the estate subject to that equity. To allow any further set-off would be inconsistent with the spirit and intent of the statutes and would essentially effect a preference in favor of debtors to the bank by enabling them to pay in a depreciated medium." Aud so it will be found that whenever the doctrine of equitable set-off has been enforced against an assignee for the benefit of creditors, it has always had to meet not only the equity of equality among the general creditors but an express statutory direc tion of equal distribution. In every such case, unless the equity of set-off attached to the debt before passing into the hands of the creditors, it could not have been upheld. It is claimed, however, that the case of Venango National Bank ▼. Taylor, 56 Pa. St., 14, is opposed to this view. An examination of that case shows that the set-off sought to be enforced there was of a claim against the bank purchased by the defendant after the bank had closed its doors. It would of course, disturb the ratable distribution of the assets of the bank if its debtors could buy up claims against it for the purpose of setting them off. Such a course is denied in Colt v. Brown, 12 Gray 233, although in the same case, as has been shown, the view we take of the right of equitable set-off was fully sustained. We are also referred to the decision of Judge Sage, concurred in by Judge Jackson of the United States circuit court, in the case of Scott v. Armstrong, recently decided and found in 36 Fed. Rep. 63. The opinion certainly sustains the claim of counsel for the receiver, but highly as we respect the opinion of the judges of that court, we are unable to agree with their conclusion. Judge Sage says: "When the plaintiff was appointed receiver, the defendant was in the list of unsecured depositors to whom payment, the bank being insolvent, was prohibited. The defendant, had then no right of set 136 Armstrong, Receiver, v. Warner. off, nor any equity against its note, not then matured, which passed to the receiver. To allow the set-off, now that the note has matured, and thereby make payment in full to the defendant, in part discharge of its obligation to the bank, would be contrary, not only to the policy of the law, but also to the plain meaning of its provisions." It will be seen that the whole theory of Judge Sage's view rests on the statement that the right which is sought to be enforced against the receiver arises only upon the bringing of the suit. This, we think, the authorities cited, show to be erroneous. They could not be sustained, unless the right was an equity attaching before the assignment. Judge Hammond, of the United States Court, dissents from his brethren. See Snyder's Sons v. Armstrong, Rec'r., 37 Fed. Rep., 18. There is no express provision in the statute against set-off. And the authorities cited show that the equity of set-off is not defeated by the equity of equality, however stringently and intensely that may be enforced. The decree of the court below is affirmed. PECK and MOORE, JJ., concur. Kittredge & Wilby, and Burnet & Bruce, for plaintiff in error. CHATTEL MORTGAGES. [Hamilton Probate Court.] IN RE ASSIGNMENT OF ELIAS EHLER. 140 Choses in action are not the subject of chattel mortgages, but where a chattel mortgage, among other things, included are the book accounts due the mortgagor, the mortgage operates as an assignment so as to give a priorty as against the mortgagor's assignment for creditors. GOEBEL, J. C. Crane & Co. represented to the court that they were the holders of a note executed by Elias Ehler for $12,769, secured by a chattel mortgage conveying to them, among other property, "all the accounts due Elias Ehler on book accounts." The assignee has disposed of all the property which came into his hands, except the accounts due to Elias Ehler, and has distributed the proceeds, and has collected a large amount of the said accounts. The claim of Crane & Co. has not been paid in full, and they claimed to have a lien upon said accounts or the proceeds thereof, and asked that the assignee be ordered to pay over to them the amount which he has collected on the accounts. The assignee denied that Crane & Co. have a lien upon the accounts. Held: 1. The words "goods and chattels" in the chattel mortgage do not include choses in action; such words refer to and include personal property which is visible, tangible or movable. Hence book accounts are not the subject-matter of a chattel mortgage. 2. When such accounts are specifically included in a chattel mortgage, it operates as an assignment, whatever may be its form, and it is in legal effect a mortgage creating a specific lien on the accounts assigned, or the proceeds thereof. Follett, Hyman & Kelly; for plaintiff. Drausin Wulsin, Archer & McNeill; for defendant. Hamilton Probate Court. 161 161 EMBEZZLEMENT. [Hamilton Probate Court.] IN RE CITATION OF ANNA Sattler et al. S. died without debts, his sole property consisting of bonds which by his will were to be divided among certain of his children. These children met and divided up the bonds, each taking away his share. An administrator subsequently appointed demands a delivery of the bonds to him. Held: 1. The legal title of all personalty vests in the representative, and he is entitled to judgment against each child for what such child took away, but not against any of them for the bonds taken with his connivance by such other children as are non-residents or refuse to return them. 2. Rev. Stat., secs. 6053-6059 do not authorize judgment against those who assist in the taking of the assets. GOEBEL, J. This case is submitted to me on an agreed statement of facts, from which it appears that Ernst Sattler was the owner, at the time of his death, of twenty-two (22) bonds of the par value of five hundred dollars ($500.00) each. At the time of the death of Ernst Sattler, these bonds were in his room; after his death, they were taken by his daughter Anna, to the residence of Alvena Wagelin, also a daughter. Ernst Sattler left a will and numerous codicils, written by him in the German language. From the reading of the will and codicils (somewhat ambiguously), it may be said, that he intended to divide his property, consisting exclusively of bonds, among his children in equal parts, except as to his son Hugo, he gives a less sum to be held in trust for him; and excepting also, the children of a deceased daughter. After the probate of this will and before the appointment of an administrator, Anna Sattler, Alvena Wagelin, Hugo Sattler and Ida Voges being the children of Ernst Sattler, deceased, and the legatees under the will, met and divided the bonds between them as follows: Anna Sattler, six; Alvena Wagelin, six; Ida Voges, six; Hugo Sattler, four; each of the parties taking said bonds at par value. Subsequently an administrator was appointed with the will annexed, and Anna Sattler and Alvena Wagelin delivered the bonds so taken by them, to the administrator. Hugo Sattler refused to turn over to the administrator, the bonds received by him, and Ida Voges is a non-resident of the county. There are no debts of the estate. On the thirty-first day of January, the children of a deceased daughter of Ernst Sattler, through their guardian, filed their petition for citation. under section 6053, Rev. Stat., charging Anna, Alvena and Hugo with having carried away assets of said estate, and maintaining that the administrator is entitled to all of the assets belonging to said estate; that Anna and Alvena, notwithstanding the return by them to the administrator of the bonds so taken, are liable to the administrator for the value of the bonds taken by Hugo, they having knowledge of the facts. Held: 1st. On the death of Sattler, the legal title to all his personal property vested in his personal representative as a trust estate for the benefit of creditors and distributees. 2d. The administrator is entitled to a judgment against Hugo Sattler for the value of the bonds so taken by him. 161 In re Citation of Anna Sattler et al. 3d. The provisions of section 6053 to 6059 do not permit of a judgment in favor of the executor or administrator, against any person or persons aiding and assisting the person so charged in obtaining possession of such assets. The provisions are intended only to furnish a speedy remedy, in favor of the executor or administrator, against any person charged with concealing, embezzling or conveying away assets of the estate. 4th. A statute providing for a judgment, without pleadings or the right of trial by jury, ought not by construction, to be extended beyond its plain and obvious terms. Coppock & Hammel, Palmer W. Smith; Warner W. Brown, attorneys. CIVIL RIGHTS. [Hamilton Common Pleas.] JOHN W. HARGO V. HARF & CRAMER. 165 The civil rights act, (81 O. L., 90), cannot be made to apply to an incorporated restaurant business, where its existence is not dependent upon obtaining a license from the authorities. Such business is a private enterprise, and hence the owner has exclusive control as to whom he will admit and may exclude any person, whether white or colored, reasonably or unreasonably. BATES, J. A suit for recovery of the $100 penalty provided by the state statute for refusal to furnish the same accommodations to colored people that are furnished to whites, tried before Judge Bates and a struck jury, Hargo, who is a colored lawyer of Springfield, entered the restaurant of the defendants and ordered a meal. He was told to go down stairs, where there was a room specially provided for colored people. He refused to do so and left the restaurant. The statute under which the suit for recovery was brought (81 Ohio L., 90), specifies restaurants. In deciding the case, Judge Bates said: "Undoubtedly every person who keeps a store, restaurant or other place dependent on miscellaneous patronage is deemed to extend an implied invitation to each member of the public to come and buy, and if after the customer has entered the premises the owner wishes to refuse his patronage and does so in a way to mortify or wound his feelings or violate his sensibilities, such owner probably would be liable for that reason apart from his right to recall the implied invitation. But where it is not claimed that such ground of recovery exists, and the owner explains to the proposed customer in a proper way that he does not desire his custom, the question of the application of this statute arises. And the question here is whether a restaurant-keeper's business is of such a private nature that he may choose his customers and exclude whom he pleases. If he can not exclude whom he pleases, he certainly can not exclude on the ground of color, and is liable if he does so, for the statute does not allow such discrimination. But if he can exclude whom he pleases, the statute can not effect him. †See also decision in Hargo v. Meyers, 2 Circ. Dec., 513. |