was a nonresident of the state and insolvent, and there was no personal estate from which, on distribution, the indebtedness might be deducted. That this conclusion is correct is the contention of counsel for the defendant in error. Many of ne cases cited in its support consider whether the sums paid by the father were gifts or advancements, and they decide nothing more than that gifts cannot be deducted from the share. Some of them, however, are to the effect claimed by counsel. But, in so far as the reports inform us as to the grounds of the conclusions reached, they either deal with facts substantially different from those disclosed by the record before us, or proceed upon legal considerations not reconcilable with our policy with respect to the subject of descent and distribution. A proposition necessarily involved in the decision of the circuit court is that in a case of this character a son who owes a debt, which is payable at all events, occupies a better position than one who has received an advancement, which is not payable otherwise than as it may serve to diminish his inheritance. The conclusion does not contribute to the equality of inheritance which is made so prominent in the legislation and the decisions of this state. The statute upon the subject of advancements distinguishes gifts by way of advancement from other gifts. It does not make a gift by way of advancement more onerous to the child who receives it than is a debt to the child who owes it. It is not important whether, to secure equality in cases of this character, we adopt the doctrine of equitable set-off, as has been done by some courts, or, for that purpose, regard the debt as an advancement, as has been done by others. The ground of decision is that it is inequitable, and at variance with the policy defined in our statutes, to permit one to share in an estate which is diminished by his default, and to the prejudice of those whose rights are equal to his. A consideration of the provisions of our statutes adds force to the conclusion which Judge Woerner has drawn from an analysis of the cases: "The distinction between debts owing by an heir, and advancements made to him by the intestate, is sharply drawn. In some states debts so owing cannot be deducted from the share of the heir in the real estate, and from the personal estate only by way of set-off; but the true principle seems to be that a debt owing by an heir constitutes part of the assets of the estate, as much as that of any other debtor, for which he should account before he can be allowed to receive anything out of the other assets, and it is so held in the United States." Woerner, Adm'n, § 71. It is suggested that the conclusion of the circuit court is required by the consideration that the debt is due to the administrator of Henry Keever, while the land descends to his children. It is quite obvious, however, that the administrator, not being a party here, is not precluded from selling the real estate,

if that be required for the payment of the debts of the decedent, and that, as to what may remain after the payment of debts, the persons interested in descent and distribution are the same. That the consideration suggested should not prevent the equal sharing of the property of the decedent by his children is quite apparent from section 4171 of the Revised Statutes, which provides, in substance, that, if an advancement is made in real estate, the value thereof shall be taken to be a part of the real estate to be divided, and that, if in personal estate, it shall be taken to be a part of the personal estate to be distributed, and if, in either case, it exceeds the heir's share of the estate of like character, it shall be deducted from the other. The question here considered was involved in the case of Martin v. Martin, 56 Ohio St. 333, 46 N. E. 981. The question there debated by counsel and decided by the court was whether the children of Alexander Martin, deceased, should submit to a diminution of the estate which they derived through him in consequence of his indebtedness, as he would have been if he had survived to assert the claim in his own person. The law was there conceded by counsel, and assumed by the court, to be precisely the reverse of that of the holding of the circuit court in this case. Judgment reversed, and judgment for plaintiffs in error.

1. A surety on a promissory note became such on the agreement of the principal to transfer to him as collateral security against loss a certificate of stock he then held within a short time. Held, that the surety thereby acquired an equity in the stock which he could enforce for his indemnity against all persons having notice.

2. The rule that he who is prior in time is prior in right applies only between equities that are equal in merit. If the junior equity is superior in merit, and was acquired without notice of the prior equity, it has priority.

3. For the purpose of qualifying a certain person to be one of its directors, a corporation issued to him a certificate of its stock, he agreeing to reconvey it on ceasing to be a director. The trust was a secret one, and the person so holding the stock agreed to assign it to another as collateral security, on the latter's becoming his surety on a note; and the latter did so on this promise, and without notice of the terms on which the stock was held. Held that, as between the company and the surety, the equity of the latter is superior in merit.

4. The holder of an equity may, by clothing himself with the legal title, secure priority over an earlier equity, where he acquired his equity. without notice of the earlier one, though at the time he acquired the legal title he had such notice.

(Syllabus by the Court.)

Error to circuit court, Stark county.

Action by Daugherty and others against the Dueber Watch-Case Manufacturing Com

This was a suit by plaintiffs below, claiming to be pledgees of certain stock, against the company issuing it. for a sale of the stock, and an application of the proceeds to their claim, the company itself claiming to own the stock, and refusing to recognize the plaintiff's right to it by a transfer on the books of the company. Judgment was rendered in the common pleas in favor of the plaintiffs, which, on error, was affirmed by the circuit court. The evidence is all contained in a bill of exceptions taken in the common pleas. It appears that on November 23, 1891, the plaintiffs Daugherty and Michner, for the accommodation of John A. Coburn and James W. Dulaney, indorsed a note for $1,000, payable to the City National Bank of Akron; and that Coburn agreed and promised at the time, in order to secure the plaintiffs against loss, that he would transfer and assign to them a certain certificate of stock he then owned in the company, and that on January 7, 1892, he did assign and transfer the stock to the plaintiffs, with authority to have the same transferred to them on the books of the company. The plaintiffs were compelled to pay the note, and have been only partially indemnified. There is still due them something over $200. The issues in the case arise upon the following answer and cross petition of the company: "Said Coburn had and held said share of stock upon the following terms, and not otherwise: At the time of the transfer to said Coburn of said share of stock the said Coburn was then living in the city of Canton, and, for the purpose of qualifying said Coburn to act as one of the directors in said corporation, there were transferred to said Coburn four shares of the capital stock of said corporation, to be by him held for said purpose, and for which said Coburn paid no manner of consideration whatever; and the same was to be surrendered to the company when said Coburn's services as a director were not required. Said transfer to said Coburn was in fact without action of said corporation by its board of directors or stockholders. Said Coburn did act as one of the stockholders for a time, but on or about January, 1892, said Coburn left the city of Canton, and state of Ohio, and ceased to be eligible as a director, and because of nonresidence was disqualified from acting as such. Said Coburn promised to return, and reassign said shares of stock, but failed to do so. At the time and before the plaintiffs acquired said stock, if they have any interest therein, the said plaintiffs were advised and well knew that said Coburn had no interest în said stock; that he had paid no consideration for the same; that he had agreed to reassign the same as aforesaid, and had no interest or equity therein, but the same be

Case Manufacturing Company; and, except as herein admitted, this defendant denies the allegations of the petition. The defendant prays that said four shares of stock, including the one claimed by the plaintiffs, may be decreed to belong to the defendant, the Dueber Watch-Case Manufacturing Company; that said plaintiff and said John A. Coburn may be decreed to have no interest therein; that they be ordered to assign and transfer the same to the said defendant corporation, or, in default thereof, said decree operate as a conveyance; and for all proper and just relief." A reply was filed, denying for want of knowledge most of the allegations; particularly that at the time they acquired the stock they were advised and knew that Coburn had no interest in the stock. The evidence, however, clearly discloses that while at the time the note was given and the agreement to transfer the stock as collateral was made, November 23, 1891, the plaintiffs had no knowledge of the claim of the company to be the equitable owner of the stock, yet at and some time before it was transferred to them by assignment they had such knowledge. It was shown at the trial that the object of the company in issuing a certificate of stock to Coburn was to comply with the statutes of the state, which require a majority of the directors of a corporation for profit to reside in the state. It was such a corporation, and the issuing of the stock to Coburn alone enabled it to comply with the statute, he being a resident. Unless Coburn was a stockholder, the company had no right to be a corporation and do business in the state as such. So that, on the claim of the company, Coburn was simply a nominal stockholder, with no real interest whatever in the stock held by him.

Lynch & Day and R. A. Harrison, for plaintiff in error. Clark, Ambler & Clark and A. A. Thayer, for defendants in error.

MINSHALL, J. (after stating the facts). These questions arise upon the case: (1) Did the agreement to transfer give to the plaintiffs any equitable interest in the stock? (2) If so, was their equity superior in merit to that of the company? (3) Did the assignment of the stock made January 7, 1892, with knowledge of the claim of the company, give them a superior right to the latter, though the equities were equal? (4) Can the company, under the circumstances disclosed by the answer, be heard to make a claim to the stock against an innocent third person?

1. At the time the parties became sureties for Coburn and Dulaney, Coburn agreed that the stock he then held should be transferred as security to them against loss, and this induced them to become sureties on the note. The promise was a written one,

as follows: "The collateral described by Mr. Dulaney will be turned over to Mr. Michner at any time desired,-this week. [Signed] John A. Coburn." We do not, however, attach any importance to the fact that it was in writing, beyond the fact that it indicates with certainty the agreement of the parties. It is not necessary, as we think, to determine whether this agreement constituted a present pledge of the stock. Strictly speaking, stock, being of an incorporeal nature, is not capable of being pledged, as there cannot be a delivery of intangible property. It may be, and frequently is, hypothecated, which is a pledge in a secondary sense. An hypothecation is defined as a right which a creditor has over a thing belonging to another, and which consists in a power to cause it to be sold in order to be paid his claim out of the proceeds. Bouv. Law Dict. "Hypothecation." Whatever the agreement between the parties should, in legal propriety, be termed, it was such an agreement as could have been specifically enforced, because designed to afford security against liability as sureties assumed on faith of the promise; and this gave to them an equity in the stock that would avail against all persons with notice. Gibler v. Trimble, 14 Ohio, 323.

2. The question, then, arises, was this equity superior to that of the company based on its agreement with Coburn for a reassignment of the stock? It is the undoubted rule that as between equities that are equal in merit, the one that is prior in time is prior in right. So that, before the priorities of competing equities can be determined, their respective merits must be considered, and, if it be found that the latter equity is superior in this regard, it must be awarded priority in right. Hume v. Dixon, 37 Ohio St. 66; Campbell v. Sidwell, 61 Ohio St. 179, 55 N. E. 609. In Hume v. Dixon, supra, the learned judge, in delivering the opinion, adopting what is said by the vice chancellor in Rice v. Rice, 2 Drew. 73, says: "The true meaning of this rule [that prior in time is prior in right] is that time, as a ground of equity, is to be last resorted to as between equities, and that a court of equity will not prefer one to another, on the ground of time, until it has been found by an examination that there is no other sufficient ground of preference, and that if one has, on other grounds, a better equity than the other, time is immaterial. In examining the relative merits of opposing equities, no technical rule, nor one of partial application, should be applied; but the same broad principle of right and justice peculiar to courts of equity should guide the chancellor." The contest in this case was between one who had a vendor's lien and one who subsequently purchased and paid for the land, but who, by reason of a defect in the execution of the deed, held simply an equitable title. From this case it appears the fact that one who has

placed it in the power of another to deal. with his property as his own is inferior in right to one who has been misled thereby. Speaking of the facts, the judge says: "Here Dixon voluntarily placed in the hands of Kirkpatrick the legal title. He clothed him with the power or sale. He was in a degree accessory to the act of selling to Mrs. Hume. Instead of taking a mortgage, and placing his lien on record, so that all might know of it, it was kept secret." While every case must be decided upon its own peculiar facts, and it will be difficult to give a more definite rule than is given in Hume v. Dixon, adopting the principle of that case and the solution of this one is not difficult. For purposes of its own, and which, we need not here comment upon, it placed the legal title to the stock in question in Coburn. He held a certificate to the effect that he owned it. On the faith of what this certificate purported, and on the promise to transfer it in a week as collateral security, the plaintiffs accommodated the principals on the note by becoming their sureties. The principals have not fully indemnified them. Unless they are permitted to avail themselves of this collateral, they must suffer a loss. To permit, under the circumstances, this secret equity, if it may properly be termed one, to be asserted as prior in right to that of the plaintiffs, tends to shock the natural sense of justice. One who, for his own purposes, places the legal title to his property in another, must take the hazard of any loss that may result from his dealing with it as his own, so far as innocent third persons are concerned. On principles of natural justice his equity is inferior to that of any person who acquires in good faith any title to the property.

3. It is now generally conceued that the assignment of a certificate of stock with power of attorney to have it transferred on the books of the company gives to the assignee the status of a legal owner of the stock. It conforms to the practice and general understanding of the commercial world. Pom. Eq. Jur. § 710; Cincinnati, N. O. & T. P. Ry. Co. v. Citizens' Nat. Bank, 56 Ohio St. 351, 383, 47 N. E. 249, 43 L. R. A. 777. Hence, on January 7, 1892, when the stock was assigned by Coburn to the plaintiffs, and delivered to them, they became clothed with what is regarded as the legal title, or, in other words, held as against the company a title by estoppel to the stock superior to any right of the company to set up in its own favor a secret equity. Cook. Stock & Stockh. § 416. It is true that at this time they had knowledge of the claim of the company, but had no such knowledge at the time the agreement was made for the transfer. And here it will be observed that the claim of the company is not that of an innocent purchaser for value. Its claim is that of a mere equity for a reconveyance, prior in time to the equity of the plaintiffs.

The contest is simply between equities. In such cases the settled doctrine is stated by Pomeroy to be: "That if a second or other subsequent holder, who would otherwise be postponed to the earlier ones, obtains the legal estate, or acquires the best right to call for the legal estate, he thereby secures an advantage which entitles him to priority. It is absolutely essential, however, that he should have acquired his equitable interest without any notice of the prior claims." Pom. Eq. Jur. §§ 727, 729; Adams, Eq. 161, 162. The language of the last author is: "It has been already stated that, in order to avoid the postponement of the latter equity, freedom from notice is indispensable. The notice, however, here referred to, is a notice existing at the acquirement of the equity, not a notice at the completion of the right. The latter purchaser or incumbrancer, on payment of his money, becomes an honest claimant in equity, and is entitled, if he can, to protect his claim. But he is not bound to look for protection until he has ascertained that danger exists; and his right to obtain it will continue notwithstanding the institution of a suit to settle the priorities of the conflicting claimants." The plaintiffs seem to be clearly within the rule here stated. They had no knowledge of the company's claim when they acquired their equity, and had a right to protect it by taking an assignment of the stock for that purpose, which they did on January 7, 1892, though at that time they had knowledge of the company's claim. This gives to them an unquestioned priority over the company, and the right to a sale of the stock for the satisfaction of their claim. Gibler v. Trimble, supra. This case clearly supports the doctrine that, where the equity is acquired without notice, the owner may protect himself against an earlier equity by acquiring the legal title, though, at the time of so doing, he had notice of the earlier equity.

4. We are not disposed to go into the fourth question further than to observe that the transaction by which the stock was issued to Coburn reflects most unfavorably upon the merits of the company's equity, if one exists which could be protected under any circumstances in a court of equity. The transaction was a fraud upon the law, and contravened the declared policy of the state, if Coburn was intended to be a nominal, and not the real, owner in fact of the stock placed in his name. Cases to the effect that one may be made eligible as a director by simply placing shares in his name which he does not own are not in point here. In this case the purpose was to make one a director who was a resident of the state, and, without his being such resident, the increase of stock-the purpose desired-could not have been obtained. It is hardly to be allowed that a court of equity would, under such circumstances, assist a

company in recovering its stock against one who had acquired an interest in it acting in good faith, and without knowledge of the facts. Affirmed.

(62 Ohio St. 529)

TRAVELERS' INS. CO. v. MYERS et al. (Supreme Court of Ohio. May 8, 1900.) INSURANCE POLICY-CONTRACT-LIABILITY OF EMPLOYER TO EMPLOYE-NOTICE OF ACCIDENT-WAIVER BY AGENT-LAW OF AGENCY. 1. Policies of insurance should be construed, like other contracts, so as to give effect to the intention and express language of the parties. West v. Insurance Co., 27 Ohio St. 1, approved and followed.

2. In a policy which insures against loss from liability to employés of the insured who may accidentally sustain bodily injury while in the employ of the insured "under circumstances which shall impose upon the insured a commonlaw or statutory liability to such employés_by reason thereof," a stipulation as follows: "Immediate written notice shall be given this company of any accident and of all alleged injuries, together with copies of all statements made by employés, and all other information in possession or knowledge of the insured in any way relating to such accident or liability therefor," is of the essence of the contract, and cannot be waived by an agent of the company without authority therefor.

3. When such policy contains a stipulation that "no agent has authority to waive or alter anything in this policy contained," and the same is accepted by the insured, it is both notice to and an agreement by the insured that an agent has no authority to waive or alter anything contained in the policy. Insurance Co. v. Hook, 56 N. E. 906, 61 Ohio St. 256, approved and followed.

4. "Immediate written notice" in such stipulation means written notice within a reasonable time under the circumstances of the case; and, where the facts are not disputed, what is a reasonable time is a question of law.

(Syllabus by the Court.)

Error to circuit court, Ashland county.

Action by Myers and others against the Travelers' Insurance Company. Judgment for plaintiffs was affirmed in the circuit court, and defendant brings error. Reversed.

The action was brought in the court of common pleas of Ashland county to recover under a policy of insurance issued to the defendant in error "against loss from liability to employés of the insured who may accidentally sustain bodily injuries while on the pay roll of the insured, and while actually occupied by the performance of duty in the trade or occupation for which they have been employed by the insured, and under circumstances which shall impose upon the insured the common-law or statutory liability to such employés by reason thereof." This policy contained the following stipulation: "Immediate written notice shall be given this company of any accident, and of all alleged injuries, together with copies of all statements made by employés and all other information in possession or knowledge of the insured in any way relating to such accident or liability therefor." And also the following stipulation: "No agent has authority to waive or

alter anything in this policy contained." During the term of this policy, that is, on October 27, 1894,-Simon Custer, an employé of the defendants in error, sustained certain personal injuries. This fact was communicated verbally by the insured to one Mason, who was at that time the local soliciting agent of the plaintiff in error at Ashland, in Ashland county, Ohio. Mason told the plaintiffs (defendants in error here) not to do anything further at the present time, for likely the man would never say anything, and that such an investigation into the circumstances of the accident as would be necessary in procuring statements of witnesses and employés might arouse the suspicion of Custer, and cause him to make a claim for damages, and that, if any claim was made by Custer, the plaintiffs should inform Mason of the same and he would attend to it. Acting on this suggestion of Mason's, the insured gave no notice to the insurance company until July 22, 1895,-nearly nine months after the accident to Simon Custer had occurred. Custer made no claim upon his employers for the injury until July 16, 1895, and then claimed that the injury which he had received had developed into a serious difficulty. Promptly on receipt of the notice given July 22, 1895, -that is, on July 23, 1895,-the insurance company declined to recognize the claim of the insured on the ground that the insured had not complied with the stipulations of the policy that immediate written notice be furnished to them of all accidents, and with the necessary statements of the circumstances relating to the liability. The case was tried in the common pleas court upon an agreed statement of facts, a jury being waived. The court gave judgment for the plaintiffs, and upon petition in error to the circuit court the judgment was affirined. The case comes into this court upon petition in error to reverse the judgments of the common pleas and circuit courts.

Day, Lynch & Day, for plaintiff in error. H. A. Mykrantz, for defendants in error.

DAVIS, J. (after stating the facts). Policies of insurance, like other contracts, should be reasonably construed, so as not to defeat the intention and express language of the parties. West v. Insurance Co., 27 Ohio St. 1. It was agreed by the parties to this contract of insurance that immediate written notice should be given to the company of any accident and of all alleged injuries, together with copies of all statements made by employés, and all other information in possession or knowledge of the insured in any way relating to such accident or liability therefor. It is obvious that this stipulation is of the essence of the contract in insurance of this kind. It is not merely a stipulation as to the form of bringing to the notice of the insurer the fact of a loss, as in policies of fire and life insurance. It is clearly a matter

of substance in the contract, because the obligation of the insurer is not against the mere happening of an accident or an injury, but against "loss from liability" to employés who may be accidentally injured while in the employ of the insured "under circumstances which shall impose upon the insured a common-law or statutory liability to such employés by reason thereof." The occurrence of an accident and injury, however slight, if it may result in a legal liability to an employé of the insured, would necessarily involve an inquiry into the facts and circumstances which may make the insured liable; and these must be communicated to the insurer, else there would be no notice to the insurer that there had been anything more than an accident without liability. In insurance of this character it is a matter of the first importance to the insurer, who may be forced to become the real defendant in a lawsuit against the insured employer, to be speedily informed of all the facts and witnesses concerning a possible litigation. In a very little time the facts may, in a great measure, fade out of memory, or become distorted; witnesses may go beyond reach; physical conditions may change; and, more dangerous than all, fraud and cupidity may have had opportunity to perfect their work. Therefore this stipulation is vital to the contract; and it need not be surprising that the policy contains an agreement that it shall not be waived by any agent, for it is declared by the insurer and accepted by the insured that "no agent has authority to waive or alter anything in this policy contained." It is not claimed that written notice was given to the company at the time of the alleged accident and injury, nor for almost nine months thereafter; and it does not appear from the record that the company was at any time furnished with copies of all or any statements made by employés, and all other information in possession or knowledge of the insured in any way relating to such accident or liability therefor. Immediate notice means notice within a reasonable time, and, when the facts are not disputed, what is a reasonable time is a question of law. Insurance Co. v. Hazen, 110 Pa. St. 530, 1 Atl. 605; Kimball v. Insurance Co., 8 Gray, 33; Bennett v. Insurance Co., 67 N. Y. 274. There was nothing in the circumstances of this case to require or justify the delay of such notice for a period of nine months, and much to indicate that such delay was positively prejudicial to the insurer. But it is answered that the insured gave to the insurer immediate written notice of the claims of the employé who was injured, as soon as the insured had any knowledge of any claim being made by the employé. Notice of the claims of the injured employé, however, is not the thing stipulated for. The contract is that immediate written noticethat is, within a reasonable time-shall be given of any accident and of all alleged injuries, together with information relating to