
    Samuel Fosdick v. William Greene.
    G., owning shares of the Marietta and Cincinnati Railroad stock, in 1856-7, transferred the same to 37., who gave to G. written obligations for its return, substantially as follows: “ Borrowed of'William Greene one hundred and nine shares of Marietta and Cincinnati Railroad stock, drawing interest at eight per cent., to be returned on demand.” Afterward, the Marietta and Cincinnati Railroad Company, having become hopelessly insolvent, in 1860, a mortgage on the road was foreclosed; all its property and rights sold; sale confirmed, and deed made to the purchaser; and afterward all the property, rights, and franchises of the Marietta and Cincinnati Railroad Company, having been conveyed to a new corporation, and the old corporation ceased to exist in fact, and its stock, from that time on, ceased to have a legal existence, and had no value. Held—
    1. The transaction between G. and 17. was in the nature of a mutuum, and payment in discharge of the loan, could be made by a return of an equal number of shares of stock of the Marietta and Cincinnati Railroad Company, without regard to its market value.
    '2. When, by the terms of the contract, the borrowed stock is to be returned on demand, it is meant that an equal number of shares of stock of the same company shall be returned, and no cause of action accrues to G. until demand is made or waived, or fact exists that avoids the necessity for demand.
    3. The financial condition of the Marietta and Cincinnati Railroad Company ; the subsequent existence, or non-existence of the corporation, or its stock as a representative of value, will not afleet the construction of the contract. Its terms determine the duties and liabilities of the parties each to the other.
    4. If the lender has made no demand during the legal existence of such old company, or of its stock, and until after a return of such stock has become impossible, without fault of the borrower, his right to a return of such stock is gone, and he is not damaged by a failure afterward to return the same.
    ■5. When a cause of action does accrue in such case, the measure of damage will be the market value of such stock at the time the cause of action accrued. If at that time the stock was worthless, only nominal damages can be recovered.
    Error to the Superior Court of Cincinnati.
    May 29, 1856, Samuel Eosdick transferred to William Greene “railway stocks and bonds” to the estimated sum of $32,271.50, and at the same time Greene transferred to Eosdick, in payment," notes secured by mortgage on Chicago property estimated at $30,735.63. This transfer of stocks to Greene included two hundred and twenty shares of stock in the Marietta and Cincinnati Railroad Company, which, at par with accrued interest, amounted to $11.319.27, but in the transfer was put down at fifty-five peícent. or $6,225. June 1, 1856, Eosdick borrowed one hundred and nine shares of this stock from Greene, evidenced by the following writing:
    “ Borrowed of William Greene, Esq., one hundred and nine shares ($5,450) of the capital stock of the Marietta and Cincinnati Railroad Company, returnable on demand, with interest on said stock at the rate of eight per cent, per annum from the first day of February last. June 1, 1856.
    Samuel Fosdick.
    109 shares, $5,450
    111 shares', 5,550 .
    $11,000
    298.38. 4 months’ interest at 8 per cent»
    25.94. Marginal interest.
    $11,319.27. Or $6,225.60.”
    The note and memorandum at the foot was written by Fosdick. On January 12,1857, Fosdick borrowed from Greene-one hundred and eleven shares of the stock of said company, and as evidence thereof gave Greene a writing as follows:
    “ Borrowed of William Greene, Esq., certificate for one hundred and eleven shares of Marietta and Cincinnati Railway stock, drawing interest at eight per cent, from June 1,1856; marginal interest, $25.94. To be returned on demand, January 12, 1857.
    Samuel Fosdick.
    Ill shares, $5,550.
    Interest from June 1, 1856.
    Marginal interest, $25.94.”
    The transaction stood in this way until October, 1868, when a settlement was had between the parties for all matters, except this matter relating to the stock of the Marietta and Cincinnati Railroad Company, borrowed by Fosdick. About the same time, Greene, through his attorney, demanded payment for this Marietta and Cincinnati stock borrowed by Fosdick. No demand was ever made for a return of the stock. It is disclosed in the evidence that the stock of this company at the time of the borrowing was worth from fourteen to sixteen per cent., and remained on the market with some value attached for a time after this transaction, but with a downward tendency, until about the beginning of the year 1865, when it became wholly worthless, and has remained so ever since ; the company became embarrassed and finally insolvent. In 1858-9, under certain decrees of court rendered against the company, its property and rights were sold to Eirene and others, and after that such other proceedings were had in law and by acts of parties that, in 1865, the company was reorganized and known as the Marietta and Cincinnati Railroad Company as reorganized. Afterward the stock of the company was known as “ old stock ” and “ new stock.” The “ new stock ” was that issued by the company as reorganized; thenceforward the old stock had no intrinsic value — was worthless. In 1869, Greene commenced this action, in the Superior Court of Cincinnati, on the aforesaid written loan agreements, to recover the estimated price of the stock at the time of the loan, and eight per cent, interest on the respective loans from dates named in the petition. In the view taken of the case by this court, it is not necessary to state any further facts in relation to the pleadings. On the issue-joined between the parties, plaintifi‘recovered a judgment for $3,816.73. Neither party being satisfied with this judgment, each party moved for a new trial. Motions overruled. And thereupon parties took bills of exception embodying all the testimony, which were allowed and filed in the action. Eosdick filed a petition in error for hearing in general term, and Greene filed a cross-petition in error. On the hearing at general term the court found there was no error as alleged by Greene in his eross-petit.ion in error. And, as to the rights of Eosdick, no error had intervened to his prejudice save that the judgment had been for too high a rate of interest. The judgment was corrected in that particular, and a judgment in general term rendered in favor of Greene for $3,302.42.
    The plaintiff* in error prosecutes his petition in error in this court, seeking to reverse both the judgment of the Superior Court rendered at special term, and also in general term.
    The errors assigned against the judgment and proceedings of the court at special term, are re-assigned in this court with some additional alleged causes of error. The following‘cover the questions involved in this decision, and we will notice none of the others :
    
      The court (in general term) erred in affirming the judgment of the court in special term.
    The court at special term erred in overruling this plaintiff’s motion for a new trial in said cause made at special term.
    The judgment in special term was for the defendant in error, when upon the law and evidence it should have been for the plaintiff in error.
    
      8tallo $ Kettridge, for plaintiff' in error:
    I. No breach of the contract set forth in the petition occurred, whereon an action could be maintained, until a demand was made of Fosdick for the return of the stock named in the contracts. It is the demand and refusal which constitutes the breach of the contract and does the damage. Lobdell v. Hopkins, 5 Cowen, 516; Vance v. Bloomer, 20 Wend. 196; Moore v. Hudson River R. R. Co., 12 Barb. 156; Norman v. Isley, 17 Wis. 314, and same case 21 Wis. 138; Thrall v. Meade's Estate, 40 Vt. 544; Newman v. McGregor, 5 Ohio, 349; Russell v. Ormsby, 10 Vt. 274; Frazer v. McChord, 1 Carter (Ind.) 224; Ewing v. French, 1 Blackf. 170; Martin v. Charins, 7 Miss. 277; Kotchkiss v. Newton, 10 Geo. 560; Wyatt v. Bailey, 1 Morris, 396; Hill v. Henry, 17 Ohio, 9; Darling v. Wooster, 9 Ohio St. 517.
    II. The measure of damages for a breach of the contract set forth in the petition is the value of the stock at the time of the breach of the contracts, which, from the preceding proposition, was the time of such demand and refusal. Chase v. Washburn, 1 Ohio St. 244; C. & P. R. R. Co. v. Kelly et al., 5 Ohio St. 180; Robinson v. Noble, 8 Peters, 181; Eastern R. R. Co. v. Benedict, 10 Gray, 212; Smith v. Berry, 6 Shepley, 122; Bush et al. v. Canfield, 2 Conn. 485; Wells v. Abernathy, 5 Conn. 222.
    
      Rufus King and 8. J. Thompson, for defendant in error :
    I. This loan was a mutuum, and in legal effect a sale, changing the property, throwing upon the borrower all the risks attending its return, and creating a debt. Chase v. Washburn, 1 Ohio St. 249; Exchange Bank of Columbus v. Hines, 3 Ohio St. 1, 27; Story on Bailments, secs. 283, 370a, 415a. Demand of the stock was not necessary to the action. Demand of its value, as alleged in the petition, was sufficient. 1 Chitty on Pl. 159; Thompson v. Shirley, 1 Esp. 31; Jones v. Chamberlain, 30 Vt. 196; Kenner v. Goodloe, 2 Handy, 283.
    II. The value at the time of the demand, or suit brought, is not the measure of damages in such a case. The rule is not general. It does not apply to stock contracts. Bates v. Wiles, 1 Handy, 532; and see 26 N. Y. 309; 31 N. Y. 676; 26 Penn St. 143; 19 Conn. 212; 23 Ind. 1. Nor to real estate contracts. Buck v. Waddle, 1 Ohio, 357; and see 34 Penn. St. 418, and 35 Penn. St. 23, which are both directly against the decisions in 5 Conn 222, cited by plaintiff in error. Nor to contracts for merchandise when the price has been paid in advance. 3 Cowen, 82; 27 Barb. 424; 12 Cal. 171; 17 Cal. 415; 4 Texas, 289; 13 Ib. 324. Nor is it true that in an action upon a contract the original consideration can not be recovered. 15 Ohio, 123 ; 3 Jones’ (N. C.) Law, 550; 2 Man. (G. & S.) 905.
    III. But the rule claimed can not apply here, because at the time of demand no such stock -was in existence. That is the peculiar and controlling feature of the case. That the stock of the Marietta and Cincinnati Railroad had become extinct is proved by the foreclosure and sale of their road and all its appurtenances, in 18SO, to the new “Marietta and Cincinnati Railroad Company as reorganized,” followed by the deed conveying its franchise and all its corporate rights and privileges to the new company, by virtue of the general act of April 4,1863 (S. & S. 131.) The ' corporate capacity of the new company can not be collaterally impeached or questioned. Webb v. Moler, 8 Ohio, 548; 5 Ala. 787. The record of the suit of Noah L. Wilson, trustee, against the stockholders and creditors of the original company also proves that nearly all the old stock was surrendered in exchange for stock in the new com* pany. The effect of all this was, the old company and its stock were defunct prior to 1868. Its charter was virtually surrendered.
    IV. The risk of returning the stock being on the plaintiff in error, and the stock destroyed, the only possible measure of damages was its value at the time of the loan. The court had no other alternative. No intermediate time between the loan in 1857 and the demand in 1868 could be selected. The court was, therefore, unavoidably remitted to the value of the stock at the time of the loan. The plaintiff in error, as vendee, is bound for compensation. He owes the plaintiff, and the stock has been lost without any fault of the latter.
    V. The value at the time of the loan being the measure of damages, and the parties, by their memorandum made at the time on the loan note, having put their own valuation upon the stock, that should govern. Why else was it put there ? Taft v. Wildman, 15 Ohio, 123; Barrett v. Allen, 10 Ohio, 426; Story’s Bailments, secs. 253, 253a. And see 2 Man. (G. & S.) 905; 3 N. H. 299; 12 Pick. 562; 10 Met. 481; 1 Ohio, 189; Ib. 524; 4 Ohio St. 38; 12 Ohio St. 158; 5 Ohio St. 180.
   Ashburn, J.

This action, as developed in the facts, is peculiar, and so far as we have been able to discover, has no mate in the books. The authorities cast light upon some of its features, but in the main it rests upon its own facts. On May 29, 1856, Eosdick traded to Greene two hundred and twenty shares of Marietta and Cincinnati Railroad stock, estimated at fifty-five cents on the dollar, or in gross $6,225.60. The actual market value of the stock, at that time, was from fourteen to sixteen cents on the dollar. June 1,1856, Eosdick borrowed from Greene one hundred and nine shares of the same stock, and on the 12th of January, 1857, he borrowed the remaining one hundred and eleven shares. At each borrowing Eosdick gave Greene a written obligation showing the number of shares of stock borrowed, and a promise to return the-shares of stock on demand.

By the writing Eosdick placed it in the power of Greene-to require him to return the shares of stock at his pleasure, on demand. It was not the ordinary contract, familiar-in t-he books, of a promise to pay a given sum or debt in specific articles, but was a loan of railroad stocks greatly depreciated. Stocks of this kind have ever been subject to such fluctuations in price that their market value could 'not and now can not be estimated with any certainty at any time in the future. Like their creator, man, they are-alive to-day and dead to-morrow. This fact was doubtless well known to these parties, who are business men of good capacity. We assume as a fact that this contract, with its-conditions, was made with reference to this financial fact. They then knew the market value of this stock, gave to it a. trading price, and each for himself calculated the chances of its appreciation and depreciation in the market. It was then heading downward. Greene, for reasons satisfactory to-him, believing the stock would appreciate, armed himself with the power to demand a return of Marietta and Cincinnati Railroad stock at his pleasure. On the other hand, Eosdick had faith that the market price of this stock would depreciate, and agreed to return Marietta and Cincinnati Railroad stock when demand should be made, as he could pay them back at a less cost.

We are in harmony with the facts and relations of these parties in treating them as acting with full knowledge of the facts as they existed, and accepted the conditions that-might transpire, in the financial and political community, in relation to what might be the future character and value of this railroad company’s stock. The transaction, in the writing,- is denominated a borrowing of stock; yet no doubt exists but that Eosdick acquired a present title to-the stock and could transfer to his purchaser a good title. Eosdick’s acquisition of title raised an obligation in favor of Greene, to be liquidated, according to the terms of the-■contract, by a return, on demand, of Marietta and Cincinnati Railroad stock in like quantity and quality.

This loan of stock, while not strictly a mutuum, assimilates nearer in principle to that doctrine of the law than any other. A mutuum “ is a loan for use and consumption, the thing being bailed to be consumed and an equivalent' in kind subsequently returned.” 2 Addison on Contracts, 462. “ In case of a loan, by way of a mutuum, the borrower is bound to restore, at the time agreed upon, or ■within a reasonable period after request, an article of the same kind and quality as originally lent to him.” Idem, 468. Applying this doctrine of mutuum, Fosdick would be required, ■ within a reasonable time after demand, to return to Greene an equal number of shares of the stock, or certificate of old stock, of the Marietta and Cincinnati Railroad Company, because that would represent the quality and quantity of the thing borrowed.

In consonance with this doctrine it has been held, in numerous cases, that where payment in specific articles forms a material element of the written obligation, and no time is named for performance, before the promisor can be put in default and made liable to respond in money, there must be a demand and refusal. 20 Wend. 193; 5 Cowen, 516; 10 Vt. 274; 1 Carter (Ind.), 224; 1 Blackf. 174; 10 Ga. 560; Morris (Iowa), 396. On the question of the measure of damages in such cases there is some difference of opinion. We think, however, the rule should be the market value of the specific thing in kind at the time ■default is made, whether default be made by act of the parties or by operation of law.

In this case the parties have contracted that Fosdick may discharge the obligation by a return of stocks when they are demanded, and Greene has reserved to himself the right to demand a return of stocks. As no default on the part of Fosdick can occur until demand is made of him for a return of stocks, Greene can have no cause of complaint, if by reason of his own neglect to make the demand •the stocks depreciate. He is to fix a time for their return, and if at or before that time the stocks become worthless he must bear the loss. No claim for a recovery of money, in such case, can arise until demand is made, and if no demand is made until the commencement of the action, and that act is treated as a demand, and then the stocks are worthless, nominal damages can only be recovered.

It is urged in argument that the stock Greene transferred to Eosdick in 1856-7, had become in 1868 worthless ; had become extinct defacto and dejure by reason of the hopeless insolvency of the company and forced sale of its franchises and property, and that this avoids all necessity for a demand. ¥e do not think that is the law of this case. Where the mutuary is chargeable with no fault in relatipn to the article borrowed; has concealed no vice in the mutuum; has done no act himself, nor been the agency in procuring others to depreciate its value, and the mutuum to be discharged in kind becomes depreciated in value, less or more, the measure of damages is not the original consideration, but the value thereof on demand and refusal or day of restoration, in kind or money. As disclosed, by the facts in this action, Eosdick had no more agency in depreciating the value of Marietta and Cincinnati Railroad stock,, than Greene. In fact, neither of them contributed directly to that result. It was depreciated and became valueless by reason of its representing a something destitute of intrinsic value.

Where the mutuum is in special railroad stocks, greatly below par in value, subject to the well-known financial vicissitudes of that commodity in the market, the creditor must exercise reasonable diligence in the assertion of his rights. What is safe diligence for him in such case will depend upon the facts and law of each case. Where, by the terms of his contract, he is charged with the act of putting the debtor in default, he cannot safely lay by for many years, and until the railroad company is obliterated — its stock ceases to be of any intrinsic value — its rights and property all sold under decrees of court — deeds of conveyance, by the company, made, of all its rights, property and franchises — its very existence, in every element, absorbed .in another and different railroad organization. Such laches is fatal. The fact that Greene delayed commencing an ■action until, performance on the part of Fosdick was impossible, is a ^potential fact of willful negligence, destructive of any right of action he once may have had.

• It is argued with ability that notwithstanding the de■struetion of the stock, the mutuary’s risk continues, and his liability continues. That having lost the option to pay in stock his liability to pay in money remains. Council ■seem to loose sight of the fact that by the contract of the parties, the first movement in relation to payment is to come from Greene. Fosdick may safely lie still in the matter until spoken to by Greene in relation to the payment. By no principle of the law does the fact, as claimed by plaintiff, that the stock was valueless or had become extinct by the sale of the road, enlarge his rights; but, on the contrary, such negligence as his in the matter was fatal to his •cause of action.

The court is not authorized to make a better case for the plaintiff' than he made for himself. The parties may know ■that no such stock could be had in 1868. But the plaintiff failing to make a demand for the stock is in no situation to legally require Fosdick to return the stock. For any •thing we know, from the facts disclosed in this case, Fosdick may now be in possession of the identical stock he borrowed from Greene in 1856-7.

If demand had been made or circumstances existed that would avoid the necessity of a demand, what would be the •measure of damages?

The decisions in the states on this question are not uniform. In some it has been held, where a note is payable in specific articles, bank notes, stocks or scrip, at a stipulated price, the party may recover, upon a breach of the ■contract, the sum named in the contract, and will not be remitted to the market value on .the day of payment. In other states the reverse of this is held to be the true rule.

In this case, had demand been made, or if the facts and ■circumstances of the case rendered a demand unnecessary, Eosdick would be required to pay Greene so many shares of stock, or dollars counted on the face of the stock, as when estimated at par, would be two hundred and twenty shares of old stock, or $11,000 with the accruing interest, payable in money or stock according as the original issue of stock required. This, we think, was the meaning of the parties and the sense of the contract. This would have satisfied the loan, whether the stock was, in the market, above or below par.

"When, by its terms, a contract is to be paid in the notes of a particular bank, stock, or scrip in the similitude of bank notes, the market value of the bank notes, stock, or scrip, at the time they are required to be paid, is the measure of damages. And a sufficient reason for the rule is that, when a party engages to pay so many dollars in bank notes, stock, or scrip, the articles described are numerically •calculated by the numbers they express on their face, so that the sum of money named in the railroad stock is understood to mean that amount as expressed on the face of the stock certificate, and not an amount that will be equivalent to that number of cash dollars. $11,000 in the stock of the Marietta and Cincinnati Railroad Company does not mean $11,000 in money, but $11,000 as expressed on the face of the stock, the nominal sum of that much interest in the franchises of the company. An instrument drawn for so many dollars, payable in wheat or other commodity, means so much of the article named, as will, in the market, amount to the sum of the dollars* named in the contract. And this is so, because the things themselves can not be •counted by dollars, since the name of dollars is never applied to them. 10 Ind. 20; 1 Blackf. 346; 2 S. & M. 485; 7 Humph. 33; 3 Littell, 246.

The case of Wm. Robinson, Jr. v. Wm. Noble’s Adm’r, 8 Pet. 181, decided by Judge McLean, gives the true rule for the measure of damages. Noble, by a written agreement, was to transport, on a steamboat, certain stores to St. Louis, the agreed price for the transportation to be paid, one-half at St. Louis and one-half at Cincinnati, in paper of banks current there at the time of the delivery of the stores at St. Louis. To the written agreement was attached a memorandum in writing, as follows : “ It is understood' that the payment to be made in Cincinnati is to be in the paper of the Miami Exporting Company, or its equivalent.” On the trial, the defendant asked the court to charge the jury that the plaintiff could not recover more than the actual value of the paper of the Miami Exporting Company at the time it became due, according to the scale of depreciation. The court refused to give this, but did instruct the jury that the true measure of damages was the numerical value of the paper of the Miami Exporting Company, in specie with interest. When disposing of the case, on error, Judge McLean says: “ The express provisions of the contract, show that the payment at Cincinnati was not to have been made in specie. The notes of the Miami Exporting Company were substituted by the parties as the standard of value which shall discharge this part of the agreement; and the payment of these notes, or any others of equal value, was all that Noble had the right to demand. But it is contended that, as the payment was not made at the day, it must needs be made in specie, and to the full amount of the sum agreed to be paid in depreciated paper. . . . The notes of the Miami Exporting Company purported to-be money, and may, to some extent, at the time, have circulated as such in business transactions ; but it is manifest they were not considered as money by the parties to this contract, but as a commodity, the value of which is to be ascertained by the amount of specie it will bring in the-market. . . . Had these notes been equal to specie, on the day of the payment, Lobinsón was bound to pay them, or what was of equal value. If they had depreciated tc fifty cents on the dollar, Noble was bound to receive them in discharge of the covenant. Each party incurred a risk in the fluctuation of the value of the notes specified. . . . Robinson can only be held liable to make good the damages sustained through his default; and the specie value-of the notes, at the time they should have been made, is the rule by which such damages are to be estimated.” 2 Addison on Contracts, 473.

We conclude: Railroad stock loaned to be returned on demand is in the nature of a mutuum, and is governed by like legal principles, so far as they apply to the facts of the case. The solvency or insolvency of the company, and worthlessness of the company’s stock, when caused by no-agency of the borrower, neither increases nor diminishes the rights or liabilities of the parties, in respect to the stock, under the contract. When the lender has been so-far guilty of negligence that he has seen the road company become insolvent, its rights and property publicly sold under decrees of court, the company become extinct and its stock of no intrinsic value, without asserting any of his legal rights, he loses his right of, action against the borrower, both as to return of stock and pecuniary damages. When, by the terms of the agreement, the stock is to be returned on demand, no right of action accrues-until demand is made. And when such cause of action does accrue, the measure of damages is the value of the-stock at the time the cause of action accrued.

Judgment of Superior Court in general term reversed,, and also judgment at special term reversed, and cause remanded for further proceedings.

Scott, Chief Judge, Day, Weight, and Johnson, JJ.,. concurred.  