
    The Union Central Life Insurance Company v. Elijah P. Jones.
    1. “Where the condition of defeasance in a mortgage is that the note secured thereby be paid within sixty days after demand, and a demand is made by a person claiming to act as agent for the owner, but whose agency is denied, the mere possession of the note by the party making demand, is not proof of his agency.
    2. “Where a subscription to the stock of a corporation is paid by the note of the subscriber, money subsequently paid by the stockholder to the corporation for the purpose of repairing its capital stock, un der an agreement that as between the corporation and its creditors the payment is a donation, but as between the stockholders a debt, and upon the further agreement that such payment is to be regarded as a satisfaction pro tanto of the individual liability of the stockholder to creditors, can not, after the corporation has become insolvent, be set off against the' stock note.
    8. “Where such insolvent corporation assigned all its assets and property in consideration that the assignee would pay all its debts and save the stockholders from individual liability, and the assignee brings divers actions to collect the assets assigned, in one of which the receiver of the corporation is made a party and files a cross-petition making other debtors on assigned claims parties, and prays that in tbe event the assignee, by reason of the invalidity of the assignment, is not entitled to recover, then that judgment be rendered in his favor against the debtors of the assigning corporation: Held, that the pendency of such cross-petition is no defense to the prosecution of other actions by the assignee to collect the assigned assets.
    Error to the District Court of Hancock county.
    The original action was brought to foreclose a mortgage executed to secure the payment of a promissory note given by the defendant, the mortgagor, to the Home Mutual Life Insurance Company, in payment of stock subscription.
    The plaintiff below sued as assignee of the note and mortgage. The mortgage deed was upon this express condition :
    “ Provided, nevertheless, that if the note for the sum of eight hundred dollars, bearing date August 8, 1867, signed by E. P. Jones and R. B. Hurd, and payable to the said Home Mutual Life Insurance Company on demand, shall be paid, with interest, within sixty days after such demand is made by the auditor of the State of Ohio, for the said Home Mutual Life Insurance Company, then these presents shall be void.”
    To this action divers defenses were set up, viz.:
    1. It was denied that the plaintiff had any interest in or title to the note or mortgage, by reason of the fact that the transfer from the Home Mutual Life Insurance Company to the Union Central Life Insurance Company was ultra vires as to both companies, and, therefore, absolutely null and void.
    2. It was also denied, that a demand for the payment of the note had, at any time before the commencement of the action, been made by the auditor of state or any other person authorized to make such demand.
    The following defenses were also set up, to wit, that previous to the assignment of the note and mortgage to the plaintiff by the Home Mutual Company, the defendant had paid, to the Home Mutual, four hundred dollars. This payment was induced by the action of the Home Mutual Company, viz.:
    [Extract from Minutes of Home Mutual Life Ins. Co., of June 13, 1871.}
    “ Whereas, By reason of continued heavy losses which the company has sustained, the recent act of the Michigan legislature, requiring a deposit of $50,000 United States or state bonds, in order to enable the company to continue to-do business in that state; the raising of the valuation on-policies in this state from four and a half per cent, to four per cent., and thereby impairing or reducing the capital of the company nearly $50,000, it has become necessary that some-action shall now be had, or some new method adopted, in order to enable the company to continue in business, and' entitle it to the confidence and respect of the community therefore,
    “Resolved, That the board of directors now present to-the stockholders of the company the alternative either to pay in an amount in cash equal to fifty per cent, of the-amount of the reduced certificates of stock held by them respectively, or to pay fifty per cent, on their respective-certificates of reduced stock to some person who will assume and take their place in the company, and return to-them their notes and mortgages now on deposit, at Columbus, with the state auditor, upon the receipt of the fifty percent. of their said certificates of reduced stock, and thereby release them from all further liability.
    
      “Hesoloed, That, in the opinion of the board of directors,, should the stockholders fail to comply with either of the foregoing alternatives, the only course then left to pursue,, will be to reinsure its policies upon the most favorable terms, and wind up its affairs and business, which will, in the opinion of the board, not only take the full amount off the notes and mortgages on deposit with the state auditor, but will require, from the stockholders, the payment of an additional amount.”
    [July 13, 1871.]
    “Resolved, That all the money furnished the company by the stockholders, under and in pursuance 'of the action of the hoard of directors of June 13, 1871, is to be treated as .•a donation as to all policy holders and creditors, and k to ■be treated as a loan as between the stockholders. Unanimously adopted.”
    [August 1, 1871.]
    “ On motion, it was unanimously resolved that the payment of E. P. Jones of fifty per cent, upon his forty shares of reduced stock in this company, amounting to four hundred dollars, made to the company under the provision of the resolution of this board, under date of June 13, 1871, if not returned, on demand, to said E. P. Jones, is hereby declared (so far as said directors, in their official capacity .as a board of directors of said company, have power so to do) be in satisfaction to the amount of said sum of four hundred dollars, of the individual liability of said E. P. Jones for the debt of said company under the laws of the State of Ohio, providing for the individual liability of stockholders iu incorporated companies created under the laws ■of the State of Ohio.”
    The amount paid under these circumstances, was claimed ■•as a counterclaim against the sum secured by the mortgage.
    Also, that in September, 1868, the defendant, who was the principal debtor in said note, before the transfer of the note and mortgage to plaintiff loaned the Home Mutual ■Company one hundred dollars, which was to have been repaid or credited upon the note.
    Also, that in January, 1868, the Home Mutual Company declared a dividend to its stockholders, to be credited upon the stock notes, whereby the defendant became and was ■entitled to a credit of twenty-one dollars and thirty-seven ■cents upon said note of that date.
    By a supplemental answer, the following was set up by way of defense, namely, that after the commencement of the original action, one John Cochnower, a receiver of all the property of the Home Mutual Life Insurance Company, duly appointed as such, was made a party to an action by the plaintiff against James Turner, pending in the Superior Court of Montgomery county, wherein said receiver filed an answer and cross-petition, making the defendant, Elijah E. Jones, a party who was duly served with summons, in which cross'-petitiou of said receiver, the circumstances of the transfer of the defendant’s note and mort- . gage by the Home Mutual Company to the Union Central Company, as part of the entire assets and property of the II ome Mutual, were set forth. And it was also averred, in said cross-petition, that doubts had arisen as to the validity of such transfer ; whereupon, said receiver prayed that, in ■case the Union Central Life Insurance Company should be held not to be entitled to the assets and property so transferred by the Home Mutual Life Insurance Company, that judgment might be rendered in his favor against the debtors of the Home Mutual, to the end that he, as such receiver, might administer his trust, etc., and that said action in said Superior Court of Montgomery county was still pending.
    Judgment having been rendered in the court below in favor of the defendant, this proceeding is prosecuted by the plaintiff to reverse the judgment below.
    
      Matthews, Ramsey & Matthews, and J. A. Bope, for plaintiff in error.
    J. F. Burket, for defendant in error.
    (Counsel in this case submitted briefs discussing the points here decided and making, also, substantially the same argument as is reported in the Fhrman case, ante 324. — Rep.)
   McIlvaine, J.

The principles upon which the right of the plaintiff, as assignee of the Home Mutual Life Insurance Company, to enforce the foreclosure sought, must be resolved in its favor, are fully stated in Ehrman v. Union Central Life Insurance Co., ante p. 324.

That a condition in a mortgage, like the one before us, is not broken, except by a failure to pay w'ithiu sixty days after demand of payment is duly made upon the mortgagor, although such demand may be made by any person entitled to collect.the money clue on the note and mortgage, has been decided and reported in Union Central Life Insurance Co. v. J. P. Curtis, ante p. 343.

In the case before us, the testimony showed that, more than sixty days before the action was commenced, one Harris, who had possession of the note, and claimed to be the agent of the plaintiff, made demand of payment from the makers ; but, inasmuch as his authority as such agent was denied, and there was no testimony offered tending to show his agency as a matter of fact, a majority of the court (myself doubting) are of opinion that the mere possession of the note-by Harris, and his claim of agency, did not prove his authority to make the demand for the plaintiff.

The counterclaim, or set-off, of four hundred dollars paid by the defendant to the Home Mutual Company, under the resolutions of June 13, July 13, and August 1, 1871, can not be maintained. The Home Mutual Company being insolvent — that is to say, the value of all its property assigned to plaintiff being insufficient to pay its creditors— there were no assets to be divided between the stockholders ; and, as to its creditors who are represented by the plaintiff, the payment of the four hundred dollars did. not create an indebtedness against the assigning corporation, under the resolutions of June 13 and July 13, 1871.

The defendant can take nothing under the resolution of August 1, for the plain reason that no individual liability is sought to be enforced against him. In fact, he was relieved from such liability by the contract under which the note and mortgage were transferred to the plaintiff, it having been shown by the proof that all the liabilities of the Home Company have been discharged by the Union Central Company. As to the alleged off-sets of one hundred dollars paid in September, 1868, and the dividend of January, in the same year, no question of law arises. If the facts be as stated in the answer, no reason appears why these sums should not be allowed to the defendant.

As to the pendency of the cross-petition of the receiver of the Home Mutual Company, in the Superior Court of Montgomery county, it is enough to say that the receiver makes no claim inconsistent with the plaintiff’s right to recover.

The judgment of the district court will be so modified as to show that the petition is dismissed upon the sole ground that no action will lie to foreclose the mortgage, until sixty days after demand of payment of the debt has been duly made.

Judgment accordingly.  