
    State of Ohio ex rel. Attorney General v. Tontine Insurance Co., Etc. State ex rel. Attorney General v. Diamond Contract Company.
    
      Deposit required of bond and investment companies — Act of April 25, 1898■ — Corporations agreeing for payment of certain instalments to deliver a bond to payer to receive articles of value.— Subject to above act.
    
    Corporations, which in consideration of stipulated instalments of money paid to and to be paid, deliver to the payer a bond entitling him upon conditions named to receive an article of value and requiring the payer to contribute to the payment of the expenses of the corporation are subject to the provisions of the act “to regulate certificate, bond and investment companies,” etc., passed April 25, 1898 (93 O. L., 401).
    (Decided April 10, 1900.)
    'iN QUO WARRANTO.
    The defendants are corporations organized under the laws of other states, the former under the laws of Michigan, the latter under those of Illinois. The actions are brought to oust them from the further exercise of their corporate franchises and privileges within this state because of their failure to deposit money or bonds with the treasurer of the state and to comply in other respects with the act of April 25, 1898, entitled “An act. to regulate certificate, bond and investment companies, partnerships and associations other than building and loan companies, and to regulate investment guaranty companies, partnerships and associations doing business on the service dividend plan, and to protect holders of their certificates, debentures and securities” (93 O. L., 401). The nature of the business carried on in this state by the defendants is shown by the contracts for bonds which they respectively execute to residents of the state who enter into business relations with them. The contract of the Tontiae Surety Company is as follows :
    “Incorporated under the laws of the state of Series.... Michigan.” Number....
    THE TONTINE SURETY COMPANY.
    I-IOME office:
    
      Suite 12, Whitney Oyera House Bloch, Detroit, Mich. Capital Stock, $50,000.00.
    DIAMOND INVESTMENT CONTRACT.
    This contract is one of a series of contracts of like tenor numbered 1 to 100.
    Know all men by these presents, That in consideration of..................., the holder hereof, well and truly making each and all of the payments herein provided for, to be made by him at the time and in the manner herein specified, time, manner and amount of payment being of the essence hereof, The Tontine Surety Company, of Detroit, Michigan, will purchase from its redemption fund, sell and deliver to him or to his legal representative and assigns, a commercial white, clear and perfect diamond of the weight of two carats, the same to be deliyered at any time when presented at this office, within three months after making the 63rd payment on this contract. The Tontine Surety Company is hereinafter designated as the company and the person to whom this contract is issued is hereinafter designated as the holder.
    The holder hereof, hereby promises and agrees to pay the company, at its home office in the city of Detroit, as and for the consideration hereof, the full sum of $80.00 in the following manner, to-wit: $1.25 on delivery hereof, the receipt of which is hereby acknowledged, and $1.25 on or before the. last day of each calendar week, following the date hereof for sixty-three consecutive weeks thereafter. If he shall fail to pay any of said installments within the week in which it is payable, the said delinquent installment, together with the additional sum of twenty-five cents, may be paid at any time before the end of the next succeeding calendar week. But if he shall fail or neglect to pay any of said weekly installments at the time and in the manner herein provided, and. shall continue in such default for more than one week, then, and in that case, this contract shall, because of said default, become and be wholly null and void and all payments made thereon shall be forfeited and said sums so paid shall be. retained by the company as agreed liquidated damages for the non-performance therof by the holder. The holder shall, within three months after making his 63rd payment hereon, present this contract to the company’s office for redemption, and in case of failure so to do, then said contract holder waives all rights under this contract and. the same becomes null and void.
    “The Tontine Surety Company is authorized to pay or retain from its redemption fund, $200.00 for each and every diamond delivered in performance of this and similar contracts.
    The company shall employ $1.00 out of each weekly installment after the fourth payment, paid on this and similar contracts, in the purchase and delivery of a diamond required for the fulfillment of these contracts, and said $1.00 shall be kept in what is known as the redemption fund of said company, but it is hereby expressly authorized to retain the first four weekly payments, paid on this and similar contracts, being $5.00 in all, and twenty-five cents from each weekly payment after the fourth, together with all fines and other receipts, for the purpose of paying the company’s running expenses.
    “In case the party does not desire his two-carat diamond after the same is delivered to him, the Ton-tine Surety Company agrees to buy it back, at the same time of delivery, for $160.00 in cash.
    “This contract is transferable, but no transfer will be recognized by the company unless first registered with the company, for which a registration fee of $1.00 will be charged.
    “In witness whereof, the Tontine Surety Company has caused this contract to be signed by its president and secretary and its corporate seal to be hereto attached, this......day of........, 18....
    
      iSecretary.” President.”
    
    The contract of the other defendant is as follows:
    “Contract No........
    “Series No..........
    “United States of America.
    “DIAMOND CONTRACT COMPANY.
    “Incorporated under the laws of the State of Illinois, A. D., 1897.
    
      Some Office, Chicago.
    
    “contract.
    “Know all men by these presents, That the Diamond Contract Company, of Chicago, Illinois, promises to deliver at its home office in Chicago Illinois, to............or............assigns, a diamond at the time and on the following conditions, to-wit:
    “This contract is one of a series of contracts of like tenor, numbered from number one to fifty, each with four coupons attached (which constitute a part of each contract).
    “The original holder hereof has paid the sum of five dollars to apply on said diamonds, and in accepting this contract agrees to pay to the company at its home office, on or before the last day of each week after date, until the conditions herein are complied with, the sum of one dollar and twenty-five cents, to be applied as herein stated, of which amount the sum of twenty-five cents, together with said sum of five dollars, and all fines collected hereon, shall be retained by the company for its expenses.
    “It is further agreed that the failure to pay said .weekly sums as stated, shall subject the holder hereof to a fine of twenty-five cents, and said delinquent installment, with said-fines must be paid on or before the last day of the following week, or his contract shall thereupon become null and void for such default in payment, and all money so paid shall be forfeited at (the option of the company), time being the essence of this agreement. Out of the weekly installments paid as aforesaid, one dollar shall be set aside to constitute a Merchandise Fund to be used for the redemption of coupons as they shall mature.
    “Merchandise Fund: As soon as two hundred and fifty dollars shall have accumulated in said fund, the company shall apply it upon, the purchase price of the diamonds described in the said coupons, at the rate of $83.33 per carat, to redeem its contracts and coupons as herein provided, and it is further agreed between the company and the holder of this contract that the holder hereof shall pay one hundred and four weekly installments on each contract, then the company will deliver to said holder diamonds as specified in said coupons out of the first money accumulating in the Merchandise Fund in the order of their issue, and such specified payment shall constitute the preferred order of redemption of contracts in this series. Each coupon is one-fourth part of this contract and will be redeemed accordingly. It is estimated they will be reached for redemption every twenty-six weeks after date of issue,' but should the coupons be reached in either order of redemption hereinafter described, before the said number of weekly installments specified are paid in, then the holder hereof shall pay to the company an amount sufficient to make up the difference.
    “The company may redeem contracts in this series in addition to the preferred order of redemption described above, on an alternating plan as follows: The first coupon redeemed shall be the first coupon on contract No. 1, the second coupon redeemed shall be the first coupon on contract No. 2 in the same series, and contihuing in like manner throughout the first series until all of the first coupons in the first series are redeemed as herein provided. The next coupon in the order of redemption shall be the first coupon attached to contract No. 1, in series No. 2. The next coupon to be redeemed shall be the second coupon attached to contract No. 1 in series No. 1; the next coupon to be redeemed shall be the first coupon attached to contract No. 2, in series No. 2, and continuing throughout the second series, on the first coupons alternating with the second coupon in the first seriés, until all of the first coupons in the second series are redeemed as herein provided. The next coupon in the order of redemption shall be the first coupon attached to contract No. 1, in series No. 3, alternating consecutively with the second coupons attached to contract No. Í in series No. 2, and the third coupon attached to contract No. 1 in series No. 3, and continuing throughout the third series until all of the first coupons have been redeemed as herein provided.
    It is agreed between the company and the holder of this contract, that when the first coupon hereto attached, is reached in either order of its redemption, the holder hereof shall be entitled to the delivery to him of a diamond as specified on said coupon, when the holder hereof may continue this contract in force by making his payments hereon regularly as aforesaid until his second, third and fourth coupons aro reached in the order of their redemption, when he shall be entitled to the delivery to him of diamonds as specified on said coupons, when this contract shall be delivered to the company, cancelled and be retired. This contract is transferable only on the books of the company, under the signature of the secretary, for* which a transfer fee of fifty cents shall be charged.
    “In witness whereof, the said Diamond Contract Company has caused its corporate seal to be hereunto affixed, and this contract to be signed by its president and secretary at the offices of the company, in the city of Chicago, state of Illinois, this.....day of .........., A. D. 189. ..
    “DIAMOND CONTRACT COMPANY,
    ..............., President.”,
    
    ...................., Secretary.
    
    The first section of the act which the defendants are charged with violating is as follows:
    “Section 1. Be it enacted by the General Assembly of the State of Ohio, That every corporation, partnership and association, other than a building and loan company, doing in this state the business of placing or selling certificates, bonds, debentures, or other investment securities of any kind or description, on the partial payment or installment plan, and every investment guaranty company doing business on the service dividend plan, shall, before doing business in Ohio, deposit with the state treasurer twenty-five thousand dollars either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, for the protection of the investors in such certificates, debentures or other investment securities. Andinadditionthereto, the said company, partnership or association shall, on or before the 10th day of January of each year, deposit with the said treasurer, either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, ten per cent, of tbe gross receipts on tbe amount of business done by it in tbe state of Ohio for tbe twelve months next preceding the thirty-first day of December. The said deposit shall be made each year as aforesaid, until the total amount of such cash or bonds deposited shall be worth one hundred thousand dollars.”
    Other sections of the act impose further duties upon the corporations to which it applies as conditions precedent to their doing business in this state. There is, however, no further description of the corporation whose business the act undertakes to regulate. The defendants admit that they have not complied with any of its requirements and deny that they are within its provisions.
    
      J ohn M. Sheets, Attorney General, and J. E. Tocld, Assistant Attorney General, for the state.
    
      Winch & Thompson, and Huggins, Sowers & Watson, for the defendants.
   By the Court :

The contracts or bonds delivered by these companies to persons who pay to them the contemplated installments are not contracts of sale in the view of commercial law. In one case the price to be paid is contingent, and in both the payer shares in the operating expenses of the corporation. The companies within the terms of the statute.

Judgment of ouster.  