*

thereby became his debtor, and placed him upon the footing of an ordinary creditor entitled only to dividends when declared by the trustee of the company. But as the trust company bad failed before the draft was collected, and received the benefit of it after failure, in the form of a credit by Brown Bros. & Co., its agency to make itself a general debtor to Fosdick, by crediting him with the proceeds of the draft, had terminated. In Levi v. Bank, 5 Dill. 109, 110, it is said by the court: "When the money was received, and not before, the agency of the defendant bank to collect terminated, and its authority to credit the amount to the plaintiffs, and to make itself an absolute debtor therefor, would then arise, provide ed it was still a going concern; but, inasmuch as before it received the money it had failed, its agency to constitute itself a general debtor for the amount had ceased to exist. It would hold the amount as the agent of the plaintiffs, or in trust for it, subject to any balance due it from the plaintiffs. The force of the argument of the defendants' counsel, that the defendant bank, on the very day of its failure, and when it was in articulo mortis, had the right, by a credit in advance of collection, or by its unauthorized act in receiving the check and in procuring its certification, to terminate, without the plaintiffs' consent, the agency, and to constitute itself the actual debtor for the amount, against the plaintiffs' will, and against their interest, I must confess I have been unable to perceive." See, also, the case In re Armstrong, 33 Fed. Rep. 405, and authorities there cited, in which the above doctrine is enunciated. Indeed, the rule seems to be well settled that, after a bank has suspended, it ought not to receive payments upon business paper previously deposited with it for collection, in such a manner that the money so received by it will pass into its general assets, and the owner of the paper be placed in the position of one of its creditors, entitled only to take his dividend; and proceeds received after the bank becomes insolvent will be held in trust, and may be recovered in full. Morse, Banks, § 248a.

The record plainly discloses that the Dows & Co. draft was placed with the trust company for collection. It is true that while in the trust company's hands it was attached by a creditor, and, when paid at maturity by the drawees, the proceeds were accounted for by the sheriff to the attaching creditor. But the trust company received the full benefit of the draft. It went to pay a portion of its indebtedness. The company and trustee might have opposed its application by the attaching creditor as being the property of another, but they did not see fit so to do. On the contrary, Kilbreth, as a trustee, made an adjustment with Brown Bros. & Co., by which the firm's attachment was released, and the proceeds of the draft were applied in part payment of the trust company's indebtedness. The estate of the trust company was thereby increased to the extent of the amount of the draft, for the benefit of all its creditors. But the creditors could not, with a

show of equity, ask that the proceeds of a draft, clearly identified as not the property of the trust company, but of Fosdick, be applied to swell the trust fund for their benefit. To all intents and purposes, the proceeds of the draft went into the assets of the trust company, as much so as if the company had first collected the draft, and then paid over its contents to Brown Bros. & Co. The paper was impressed with a trust when received for collection, and its proceeds, bearing the same impress, are traceable and identifiable as having been used by the trust company in place of its own assets to pay a specific creditor. "Where the rightful owner is in pursuit of trust funds, he need not point out the very goods or bills or coin. He does all the law requires if he shows that the goods or bills or coin came to the hands of the defendant impressed with a trust to his knowledge. In every such case the holder must respond either in the article taken or its value." Thompson v. Institution, (N. J. Ch.) 8 Atl. Rep. 97.

If upon the maturity and payment of the Dows & Co. draft in the middle of September, 1857, the proceeds thereof were credited to the trust company before the date of its assignment for the benefit of creditors, that fact would not release the assignee from the performance of a trust impressed upon the paper or its proceeds prior to the assignment. The general assignee of a debtor in failing circumstances stands in the same condition as the debtor himself; he is deemed to possess the same equities only as the debtor himself would possess. Story Eq. Jur. § 1228; First Nat. Bank v. Mastin Bank, 2 McCrary, 438, 48 Fed. Rep. 433.

When paper is deposited for collection, the relation between the depositor and bank is that of principal and agent. If an agent for that special purpose collects or sells the paper of his principal, he becomes a fiduciary, and will hold the proceeds in trust for the principal; and if the agent fails, there will be no reason why his general creditors should invade such proceeds to satisfy their claims, if the principal can trace or ascertain his property in the substituted form. Whether, in a given case, the proceeds have been sufficiently traced and identified, must rest in the judgment of the chancellor who is called upon to declare the proceeds subject to a distinct trust. In the case at bar we think that, in the light of undisputed facts, and upon_equitable principles, the proceeds of the Dows & Co. draft should be deemed held in trust for the estate of Samuel Fosdick, and payable in full out of the assets of the trust company.

3. But it is urged that the claim of the plaintiffs in error has been adjudicated against them by the superior court, in the judgment at general term quashing the execution, and also in the judgment at special term. The execution was levied upon real estate, the individual property of James P. Kilbreth, but, in the decision of the motion to set aside and quash, the only question directly involved and necessarily tried and determined was whether the judgment was against Kilbreth individually. The court held that the judg

ment was not against him individually, and for that reason quashed the execution. But no other controversy was properly concluded by the decision of the motion. The judgment rendered at special term was "that the defendant recover of the plaintiff, as trustee, the sum of seven thousand and seven dollars and thirtyfour cents, with interest," etc. If it was thereby designed that execution should issue only for the amount of dividends declared or to be declared upon claims against the trust company, the form of judgment prescribed by statute would naturally be suggested, that the assignee or trustee "allow the claim in settlement of his trusts." The judgment contains no limitation or qualification as to the amount to be paid by Kilbreth "as trus. tee." By its terms, it may apply to a trustee who, in his representative or fiduciary capacity, has come into the possession of property or money found upon legal inquiry to belong to a particular claimant, and not subject to division among creditors of the insolvent. Conger v. Atwood, 28 Ohio St. 134. The purpose of the suit at bar is to obtain equitable relief in aid of the judgment recovered in the superior court, upon which there was a failure to realize anything by levy of execution. It is claimed that a trust attached to the proceeds of the Dows & Co. draft, which were wrongfully placed in the trust estate, and which cannot be reached without the interposition of a court of equity. In seeking equitable relief in such case, we do not think that the plaintiffs in error are estopped by the judgment rendered in favor of Samuel Fosdick in the superior court. In our opinion, therefore, the judgment of the circuit court should be reversed, and the cause remanded for further proceedings. Judgment accordingly.

PITTSBURGH & W. R. Co. v. PERKINS.
(Supreme Court of Ohio. April 26, 1892.)

EMINENT DOMAIN-COMPENSATION.

In a proceeding under sections 6448, 6449, Rev. St., by an owner of land wrongfully occupied by a railroad company, to compel the company to appropriate and pay for the same, the measure of compensation is the value of the land at the time it is assessed in the proceeding.

(Syllabus by the Court.)

Error to circuit court, Trumbull county. Proceeding by Perkins against the Pittsburgh & Western Railroad Company to compel it to appropriate and pay for certain land occupied by the company as a right of way. Verdict and judgment for plaintiff. Defendant brings error. Affirmed.

A. W. Jones, for plaintiff in error. L. C. Jones and Taylor & Upton, for defendant in error.

upon the charge of the court as to the measure of compensation to be awarded the owner. The land was first entered upon and taken by the Painesville & Youngstown Railroad Company, the predecessor of the defendant company, in 1873, without any agreement with the owner or lawful authority whatever, and has been so occupied and used by it and its successors to the present time. The court charged the jury that the owner was entitled to recover the value of the land at the time of the commencement of the proceeding. The company claimed that it should be the value at the time the land was taken, with interest to the present time, and asked the court to so charge the jury, which was refused. Exceptions to the charge of the court and its refusal to charge were properly reserved at the time. The verdict was for $6,300, on which the court rendered judgment, after overruling a motion for a new trial. The judgment was, on error, affirmed by the common pleas, and also by the circuit court. It is claimed that, where a railroad com. pany wrongfully enters upon and appropriates land to its uses as a roadway, the only remedy of the owner, who stands by and permits it to be done without resorting to legal proceedings to prevent it, is to have his compensation and damages assessed to him and paid by compulsory proceedings in appropriation against the company, under sections 6448, 6449, Rev. St.; and therefore that the amount of his compensation and damages is to be ascertained with reference to the time of the wrongful entry; that being, as claimed, the time when the injury was completed, and the time which, according to the gen. eral rule, is to be regarded in estimating damages for an injury.

It would seem that the mere statement of this claim should furnish its own refutation. One of two things would seem to be true, either the statutory remedy against the company is a substitute for the right to recover the possession, or it is cumulative, and in either case the measure of compensation should be the same. The more rational construction is that it was intended to be cumulative, as affording the owner a speedier and more efficient remedy than an action in ejectment, and, at the same time, productive of less inconvenience to the public, interested in the road as a means of travel and transportation. It could hardly have been intended to authorize railroad companies to enter upon lands and appropriate them, without first making compensation to the owner, as required by the constitution of the state. It may well be doubted whether, in view of section 5, art. 13, of the constitution, it is in the power of the legislature to deprive the owner of the right to recover the possession of lands of which he has been deprived by the wrongful entry of a railroad company. In such case the company is a disseisor, and no lapse of time, short of 21 years, can avail as a defense against the right of the owner to recover the possession of his lands, on the ground that he has acquiesced in the appropriation. The term is here used in an ambiguous

sense. A man does not acquiesce, in law, by merely neglecting to assert his rights. No acquiescence, in this sense, affects his right of action short of the period prescribed for its commencement. "Improvements made by a disseisor or trespasser, upon the land of another, can never give him a title at law nor in equity; unless, perhaps, in a case of gross fraud on the part of the real owner, and under very peculiar circumstances." 21 Myers, Fed. Dec. § 2054. Unless by its own perversity, no injustice or inconvenience can result from the application of this principle to a railroad company, wrongfully in the possession of land as a right of way. In such case it may at once commence proceedings to appropriate the land, and thus prevent any interruption of its use. The question has never been directly decided by this court. In Hornback v. Railroad Co., 20 Ohio St. 81, an action was brought against the company to recover the possession of land used by it as a railway. The recovery was denied; not, however, on the ground that such an action would not lie in a proper case, nor was such point made, though the company was represented by able counsel, but upon the ground that the com. pany had entered under an agreement with the owner, by which, among other things, it was to fence the track, and that a breach of this stipulation did not divest its right to the easement. The earliest statute giving the right to the owner to compel appropriation, passed April 6, 1865, (62 Laws, p. 85,) was then in force. In Railroad Co. v. Robbins, 35 Ohio St. 531, it was held that an action could not be maintained by the owner for the value of his land wrongfully taken and appropriated by a company, on the ground that there is no action for a conversion of land; that the remedy, in such case, is either to compel an appropriation by a proceeding uner the statute, or to recover the land itself, as in other cases of unlawful entry. Goodin v. Canal Co., 18 Ohio St. 169, where it is said that the owner of land, who stands by and sees, without objection, a public railroad constructed over it, and large expenditures made upon the faith of his apparent acquiescence, cannot recover the land, or enjoin its use by the company, is much relied on. What is there said must be confined to the facts of that case. The railroad company was in possession under a claim of right based upon proceedings in condemnation had against the canal company. The plaintiffs, who were stockholders and creditors of the canal company, claimed that there was fraud in the proceeding; that the directors of the canal company had been chosen by the railroad company, or by persons acting in its interest, and had used the power thus acquired to obtain a settlement of the proceedings in condemnation for a sum much less than the real value of the property. This the court found was a fraud, but held the parties estopped from claiming a recovery of the and or an injunction against its use by the railroad company, by having stood by, with a full knowledge of the facts, until the road had been completed. It

was adjudged, however, that the canal company should recover the full value of the property taken, less the sum that had been paid. Here it will be observed that the railroad company had a legal title to the property acquired by the proceedings in condemnation; and, while in equity this title was bad for fraud, the court held that the land could not be recovered under the circumstances of the case; and, as it was not a case in which the land could be recovered, it was not a case in which appropriation could be compelled by proceedings under the statute; for the remedy under the statute applies only where there has been no appropriation, and the company is in possession without any agreement in writing with the owner; in other words, is in possession as a wrongdoer or as a disseisor. And in such case we fail to perceive why the remedy of the owner should be any more restricted than if the entry had been made by a natural person; and, in view of the provision of the constitution regulating the right of appropriation by corporations, that "full compensation shall be first made in money," it would seem that, if anything, it should be less. Certain it is that a company by its own wrong cannot be placed in a better position, and, when required, must either yield the possession or pay the value of the land at that time. While, under the occupying claimant's act of 1831. it was held that payment for the permanent improvements of the bona fide occu pant under color of title might be required. as a condition to a recovery of the land, yet the amendatory act of 1849, which gave to the claimant the option of retaining the land by paying for it, less the improvements, or of surrendering it on being paid for the improvements, was held to be a palpable invasion of the right of private property, and therefore invalid. McCoy v. Grandy, 3 Ohio St. 463. If the right to retain the land on paying for it cannot be given to one who, under color of title, enters and possesses in good faith, much less can it be given to one who wrongfully enters and possesses without any title. It is a mistake to say that by the wrongful entry of the company the right of the owner to his land is turned into a mere chose in action for the value of it; and that his only remedy is a proceeding under the statute to compel its appropriation. If that were so, the legis lature has selected very inapt language to express it. It will be observed that the statute only applies where "a corpuration, authorized by law to make appropri ation of private property, taken possession of and is occupying or using the land of any person," which has not been appropriated and paid for, or is not held by an agreement in writing "with the owner," and the remedy given is to the "owner," to compel its appropriation as therein provided. The language imports a legislative understanding that the land remains the property of the owner until it has been condemned and paid for as therein provided. This could not be if the wrongful entry of the company worked an appropriation in law, and converted the claim of the owner for

has

land into one for money only. Again, to carry out the reasoning on which this view proceeds, the action, being simply a personal one for money, would have to be commenced in at least six years froin the entry of the company: whereas it was held by this court in Railway Co. v. O'Harra, 48 Ohio St. 343, 28 N. E. Rep. 175, that the right is not barred in less than 21 years.

Again, it is said, by way of argument, that the proceeding must be brought by the owner of the land at the time it is taken by the company, and that it does not pass as a right to his grantee. This is based upon the mistaken assumption that the wrongful entry of the company constitutes an appropriation of the land, and converts the claim of the owner into one for its value merely. This is not so; and as any grantee can maintain an action to recover lands wrongfully held against his grantor, where the lands are included in his grant, the proceeding may be maintained by whoever is the owner of the property at the time of its commencement. The case of Hatry v. Railroad Co., 1 Cir. Ct. Rep. 427, 446, is also relied on. The judgment was affirmed by this court upon the opinion of the learned judge who delivered it.1 The question, however, of the measure of compensation to an owner whose lands have been wrongfully taken by a company was not involved in the case. The point decided was that one whose lands had been so taken could not present a claim for payment from the funds arising from a sale of the road under a mortgage. This could only have been upon the principle that the claim, in such case, is in the nature of a claim to recover land, as distinguished from a demand for money. Our conclusion, then, is that in a proceeding under the statute by an owner of lands, Occupied by a corporation without any right, legal or equitable, to compel it to appropriate and pay for the same, the measure of the owner's compensation is the value of the lands at the time the same is assessed in the proceeding; and that the court did not err in so instructing the jury, and in refusing to charge that it is the value of the land at the time of the entry of the company, with interest add. ed. Judgment affirmed.

STATE ex rel. HARTFORD V. CRAIG. (Supreme Court of Indiana. May 24, 1892.) CITIES-RESIDENCE OF COUNCILMEN-REMOVAL FROM WARD-VACANCY.

Const. art. 6, § 6, provides that "all county, township, and town officers shall reside within their respective counties, townships, and towns." Rev. St. 1881, § 3043, relative to incorporation of cities, provides that a councilman must, "at the time of his election, be a resident of the ward from which he is elected," and, if he thereafter removes from such ward, the council "shall have power to declare his office vacant, and order a special election to fill the vacancy. Held, that the mere act of removal of a councilman to another ward will not create a vacancy, and the right to declare such vacancy is a matter in the discretion of the council.

1 No opinion filed.

Appeal from circuit court, Jay county; D. D. HELLER, Judge.

State of Indiana ex rel. Richard H. Hartford against Riley H. Craig. Judgment for defendant. Plaintiff appeals. Affirmed.

R. H. Hartford and D. H. Taylor, for appellant. Frank H. Snyder and Geo. W. Bergman, for appellee.

MCBRIDE, C. J. The appellee was duly elected a councilman for the Third ward of the city of Portland. He qualified, and entered upon the duties of the office. He was at that time a resident of said ward, and was otherwise qualified. Afterwards he removed from the Third to the Second ward, where he resided when this suit was commenced, which was a proceeding against him in the nature of quo warranto. Since his removal he has still assumed to be councilman for the Third ward, and has been acting in that capacity. The only question we are required to decide is, did his removal from the Third ward vacate the office? The court before held that it did not. The precise question has never heretofore been before this court. Indeed, no authority is cited, and counsel present the question as one of first impression. The law providing for the incorporation of cities requires that the city shall be divided into wards, and that two councilmen shall be elected from each ward, by the 'legal voters of their respective wards. Section 3043, Rev. St. 1881. The section referred to contains the following provision: “No person shall hold the office of councilman unless, at the time of his election, he is a resident of the ward from which he is elected, and, in case of the removal of any councilman from the ward from which he was elected, the common council shall have power to declare his office vacant, and order a special election to fill the vacancy." It is conceded that the city council has never taken any action in the matter. The only constitutional restriction upon the residence of officers of municipal corporations is found in section 6, art. 6, of the constitution, which provides that "all county, township, and town officers shall reside within their re spective counties, townships, and towns." The word "town" is generic, and includes cities. Flinn v. State, 24 Ind. 286. It is, however, competent for the legislature to impose additional conditions and restric tions not in conflict with any express provision of the constitution. It may, without doubt, as is done in the statute now under consideration, prescribe that only those shall be eligible for election as councilmen who are at the time residents of the ward for which they are elected. We think it equally clear that it may provide that removal from that ward will of itself operate as a vacation of the office. We do not think, however, that it has done In our opinion, it has not only committed to the city council the power to declare a vacancy in such a case, but it has also left the exercise of that power to the discretion of the council. Until that body has acted, the mere fact of removal to another ward will not of itself have the effect to create a vacancy. The law pro

So.