author: DEW, Special Commissioner.

text:
    The UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, DISTRICT COUNCIL OF KANSAS CITY AND VICINITY, an Unincorporated Labor Association, by J. O. Mack, Its President, W. C. Munroe, Charles Brewer, Daniel O’Connell, R. F. Addington and Henry O. Selig, Petitioners-Respondents, v. The INDUSTRIAL COMMISSION of Missouri, Defendant-Appellant. In the Matter of Special Wage Determination No. 1041 for the School Board of District R-11, Galena, Stone County, Missouri.
    No. 23637.
    Kansas City Court of Appeals. Missouri.
    Oct. 1, 1962.
    Motion for Rehearing or to Transfer to Supreme Court Denied Nov. 14, 1962.

      Lloyd G. Poole, Jefferson City, for appellant.
    Gibson Langsdale, Kansas City, for respondents.
   DEW, Special Commissioner.

On a petition to review an order of the Industrial Commission of Missouri, in a proceeding under the statutes to determine the prevailing wage rate to carpenters in Stone County, Missouri, the Circuit Court of Jackson County, Missouri, remanded the cause to the Industrial Commission for further proceedings consistent with such judgment.

Present Section 290.220, RSMo 1959, V. A.M.S., effective at all times concerned in this proceeding, established the policy of Missouri requiring a wage rate “no less than the prevailing hourly rate of wages for work of a similar character in the locality in which the work is to be performed, shall be paid to all workmen employed by or on behalf of any public body engaged in public works exclusive of maintenance work”. Sections 290.210 to 290.310 prescribe the procedure for the determination of such hourly rates upon the application therefor to the Department of Labor and Industrial Relations, prior to the awarding of any contract for the construction of the public project. Insofar, however, as a review of such determination by the court is concerned, such procedure is subject to Chapter 536 of the Compiled Statutes, V.A.M.S. regulating administrative procedure. Section 290.260, subd. 7. In such proceedings the Department acts by and through the Industrial Commission. Chapter 286, RS Mo 1959, V.A.M.S.

Reference will be made hereinafter in greater detail to one or more of the foregoing statutes as occasion requires.

The record discloses the following undisputed facts:

The School Board of District R-H, Stone County, Missouri, contemplated the construction of a new gymnasium and a new class room at Galena, Stone County, for which funds in the amount of $110,000 had been made available by the district. Pursuant to the statutes first above referred to pertaining to prevailing wage rates, the School Board, on October 16, 1958, requested of the appellant (hereinafter referred to as the “Commission”) a determination of the prevailing hourly rate of wages for various crafts specified, for work of a similar character in the locality. Such determination was necessary for incorporation of the wage rate in the ordinance calling for bids and in any contracts to be let on the job. Section 290.250. The present proceeding relates only to the prevailing hourly rate for carpenter work.

On October 23, 1958, the two commissioners present (one not sitting) certified to the School Board the Commission’s decision in the proceeding, which was designated as Determination No. 1041, finding that the prevailing rate for carpenters in the locality for work similar to that to be performed in the school house project to be $1.50 per hour.

On November 19, 1958, the respondents (hereinafter referred to as the “Objectors”), filed objections to the Commission’s determination referred to, and contended that the proper prevailing rate in question was from $2.65 to $2.75 per hour on a 40 hour work basis, 8 hour day and time and a half for overtime. Upon notice given, the objections were heard by the Commission on January 13, 1959.

At this juncture we note a material provision of this novel administrative proceeding, explanatory of the status of the Objectors. Section 290.260 requires the Department of Labor and Industrial Relations to make annual determinations about July 1, of the prevailing rates of wages in the various crafts in the “localities”, which rates shall remain in effect until superseded by new determinations and, in so doing, “the department shall ascertain and consider applicable wage rates established by collective bargaining agreements, if any, and such rates as are paid generally within the locality”. Subparagraph (7) of the above section accords to any person affected by any such determination, whether or not such person has participated in the original determination proceeding, the right to have the same reviewed by the court. The present Objectors, composed of certain individual members of the carpenter craft in Stone County, Missouri, and others represented by their labor union organization, assert that they are interested parties in the present review of the determination of the prevailing hourly rate of wages paid in the locality for carpenter work. Such, as we have seen, is authorized by statute.

Certain further limitations, restrictions, definitions and other provisions are contained in the statutes which clarify the nature and scope of the hearing of the objections in the case. Section 290.210 defines “locality” to be “the county where the physical work upon public works is performed, except that if there is not available in the county a sufficient number of competent skilled laborers, workmen and mechanics to construct the public works efficiently and properly, ‘locality’ may include two' or- more counties adjacent to the one in which the work or construction is to be performed and from which such workers may he obtained in sufficient numbers to perform the work * * At such a hearing of objections conducted by the Department by and through the Industrial Commission, under authority of Chapter 286, RSMo 1959, V.A. M.S., the Commission may introduce in evidence its previous investigation, if any, and “such other facts which were considered at the time of the original determination which formed the basis for its determination. The Department (Industrial Commission) or any objectors thereafter may introduce such evidence as is material to the issues.” Section 290.260, subd. 5.

At the hearing of the objections in the present case the Commission introduced as evidence the record therein to date, and the entire transcript of a previous hearing before it in another case, also held in Stone County (at Crane) Missouri, on October 9, 1958, known as Determination No. 710. That hearing likewise involved the prevailing wage rate for carpenters on a school building, namely the construction of a new elementary school in the town of Crane, at an estimated cost of $120,000. In addition, the Commission introduced a letter from Wilson Lumber Company of Crane, stating that the prevailing hourly wage rate in Stone County for carpenter work was $1.50 and an affidavit by one Don Eubanks to the same effect.

The record of the prior hearing No. 710, introduced as evidence in the present proceeding, as stated, discloses the fact that the Commission in that case had first ruled that the prevailing hourly rate of wages to carpenters in Stone County, Missouri was $2.65 per hour and for carpenter foremen, $2.90; that thereafter, upon objections filed by the School Board in that case the finding was modified to $1.50 per hour for carpenters; that thereupon objections were filed to the modified determination in that case by the same union as the one objecting in the present case, and it contended therein that the rate should be $2.65 per hour for carpenters. The final determination in that prior case reaffirmed the finding of the Commission of $1.50 per hour for carpenters, from which no appeal was taken.

The transcript in the previous case No. 710, referred to, included also the testimony of 10 witnesses on the question of the prevailing rates of wages per hour to carpenters in Stone County, Missouri. According to their testimony all of them were residents of Stone County or nearby, and had had experience in the carpenter trade in the building of houses and other structures over various numbers of years. Some stated they had worked as carpenters on schools, commercial buildings, houses, motels, library and other structures in Stone County ; some said they did work on jobs other than carpenter work when it was necessary; some testified they devoted parts of seasons to operating farms or raising cattle. One witness estimated that 75 percent of the carpenters in Stone County made their trade their chief occupation. Their testimony was that the prevailing rate paid them for carpenter work in Stone County was $1.25 to $1.50 per hour; that no overtime was charged or paid, and that the 8 hour day and 40 hour week were observéd.

In the present case, at the hearing of the objections, the Commission also introduced two photostatic copies of statements — one from a carpenter and one from a contractor — to the effect that $1.50 was the prevailing rate per hour to carpenters in Stone County.

The School Board also introduced at the hearing of the objections in the present case 6 witnesses, all of whom lived in Stone County and all of whom testified that they either did carpenter work in that county in recent years or had supervised carpenter work there, or had employed carpenters on jobs in that county. The various jobs described were a 15-unit motel, a 5-unit motel, resort cabins, dwellings, barns, beauty shops and house repairs. Some testified that they operated their farms or cafe or had other occupations for part time. Some said they assisted in other work than carpenter work on jobs when necessary. They all said that the rate of wage paid to them for carpenter work was from $1.25 per hour to some, and $1.50 to others.

In behalf of the Objectors there was introduced a copy of a collective bargaining agreement (Objectors’ Exhibit No. 17) between the Associated General Contractors of Springfield, Missouri, and the union (Objector herein), dated July 23, 1957, covering commercial or industrial work done by its members in an area including Stone County, which contract provided for an hourly wage beginning July 9, 1957, of $2,775 to carpenters performing residential and industrial work and $2.50 per hour for residential work, with provisions for increases after June 1, 1958 and June 1, 1959. Also there was introduced a list of names of members of the union who lived in Stone County, Missouri.

Thirteen witnesses testified in this case on behalf of the Objectors as to the prevailing rate of wages to carpenters in Stone County. According to their testimony 12 of them were members of the Carpenters’ Local Union No. 738 at Springfield, Missouri; practically all of them followed no other occupation than the carpenter trade; most of them had been employed on the Table Rock Dam project, or Kimberling Bridge; about one-third of them lived in Stone County, Missouri; their work on the two projects named had consisted largely of building and setting wooden forms for concrete for the piers and other concrete construction; some had done work on schools in other counties. They testified that the rate of wages paid' and received by them on those jobs was $2.65 per hour for carpenters and $2.90 for foremen, with time and a half for overtime. On one job, under certain conditions, the foreman said he received $3.32)4 per hour.

The Objectors introduced 15 signed statements of hourly wage rates paid to carpenters on various projects. Ten related to construction in Stone County. Seven specified bridge construction and the estimated cost of the projects named ranged from $440,000 to $1,185,000 in round numbers. One bridge construction job was in adjoining Barry County, with an estimated cost of $660,000. The probable cost of the highway construction work referred to was from $57,692 to $450,000. The rate of wages paid to the carpenters on these jobs was shown to range from $2.57)4 to $2,775 per hour. One job mentioned was a shoe factory in Monett, Missouri, at a cost of about $450,000.

It appears undisputed that the construction of the Table Rock Dam, Kimberling Bridge and the Cape Fair Bridge, on which many of Objectors’ witnesses had been employed at the hourly wages mentioned, were federal projects done under authority of the United States Army Corps of Engineers, and that the federal agencies made the wage rate determinations on them.

On January 23, 1959, the Commission, by a majority of its members (one dissenting), made its “Final Determination After Public Hearing” in the present case. The report reviewed the proceeding, as herein-above described, including a résumé of the evidence received in the matter. In the finding of facts it found that the term “prevailing hourly wages” means “the wages paid generally in the locality (county) in which the public work is being done or to be done, to workmen engaged in work of a similar character”; that Stone County, Missouri, was the “locality” in this case, and that the wage rate to be determined is that which is paid to carpenters only

The Commission in its decision stated that it “took judicial notice” under Section 536.070, that the construction work done on Table Rock Dam, Kimberling Bridge and Cape Fair Bridge was done by the United States; that the Commission is not authorized or obliged to make wage determinations for such projects; that such projects are not similar but dissimilar to the $110,000 school project at Galena, Missouri, which is to be paid for by the local School Board district property owners in School District R-II. The determination further stated that the carpenter rate in the instant case was $1.50 per hour based on testimony of witnesses living and working in Crane and Galena, Stone County, Missouri; that carpenter work on highway construction was dissimilar to that on the school building under consideration and is done under contract with the Missouri Highway Commission, under an annual wage determination by this Commission and is based on collective bargaining agreements made between large numbers of contractors and various interested unions; that the local taxpayers had no notice of such collective bargaining agreements made in Stone County, and are entitled to a voice in determining the cost of their proposed school project to be paid for by them, and whether or not they desire to proceed with it.

The Commission further found that, according to the evidence, Table Rock Dam employed as many as 1500 carpenters and many more were employed on Kimberling Bridge and Cape Fair Bridge; that the wages paid to workers on such large federal projects were not the proper measuring stick in determining the proper prevailing wage scale on a locally taxed project such as under consideration, but that if it were, the prevailing rate beyond question would be $2.65 per hour. The determination concluded with a finding that reaffirmed its previous finding that the prevailing wage rate to carpenters in Stone County, Missouri, for similar work was $1.50 per hour. It stated, however, that a higher rate could be paid in conformity with the law.

Upon the filing of the Commission’s final determination, the Objectors filed their petition for review by the court. It alleged that the determination was not supported by competent and substantial evidence upon the whole record and was unauthorized by law; that the findings were arbitrary, capricious and unreasonable; that the Commission received and used as evidence testimony of persons not competent and skilled in carpenter work, many of whom did not engage solely in carpenter work as their means of livelihood; that the Commission rejected and refused to consider the evidence of persons competent and skilled and engaged solely in the carpenter trade for a livelihood; that the Commission rejected and ignored evidence which established that carpenter work on the school building in question was similar to carpenter work shown in evidence to be done on bridges, powerhouses, dam and other construction projects in Stone County, Missouri; that the Commission refused to consider evidence relating to wage scales for carpenters established by collective bargaining agreements applicable to Stone County, Missouri; that the competent and substantial evidence was that the existing prevailing wage rate for carpenters in Stone County, Missouri, for similar work was $2.65 per hour and not $1.50, as found by the Commission.

The petition for review further alleged that the action of the Commission did not involve the exercise of administrative discretion, but only the application of the law to the facts; that the court should weigh the evidence for itself and determine the facts accordingly from its own review of the evidence; that the opinion of the dissenting commissioner is correct and justified.

The answer of the Commission to the petition for review admitted the uncontro-verted portions of the petition and specially denied that the court could weigh the evidence and determine the facts for itself, and denied that the court could substitute its discretion for that vested by law in the Commission. It averred that, based upon the whole record, the Commission could reasonably have made its findings and reached its results; that such finding of facts was supported by competent, material and substantial evidence and is conclusive upon the court.

The case was submitted to the court on June 19, 1959. Thereafter three additional petitioners were added. On September 7, 1960, the court rendered its decision. The court in the first paragraph of its opinion in the case found that the “Commission could reasonably have made the finding of facts and reached the conclusions of law that it did, based upon the whole record, but that the Industrial Commission did not consider all competent evidence before it”. The opinion proceeded to declare that the Commission should consider wage rates established by collective bargaining agreements as well “as such rates as are paid generally within the locality as provided by Section 290.260, and neither element should be regarded as more than a factor by the Commission in. making its determination”. The opinion further stated that there was no evidence before the Commission that would justify a decision that there was an inadequate supply of carpenters in S.tone County, Missouri, and that consequently the “locality” as defined by Section 290.-210, subd. 4 must be construed in this case to be Stone County, Missouri. The court further ruled that Sections 290.210 ét seq. do not provide that “Federal projects mentioned in the evidence and the wages paid to workers on such works should be used as the proper measuring stick in' determining the wage scale to be paid for this locally taxed project”; that “the Commission should not regard such wages so paid as the proper measuring stick in determining the prevailing wage for carpenters in Stone County, Missouri, hut merely as one of the factors to be considered in making such determination”.

The court further found that the questions involved were not moot because of the subsequent completion of the school project, since under Section 290.260, the determination remains in effect until superseded by a new determination. The final ruling was that the cause be remanded to the Commission for further proceedings consistent with the views expressed in the opinion. Motion for new trial having been overruled, this appeal was perfected.

Because of. its nature we direct .our attention first to the second point of error urged by the Commission. That, point is. that it was error for the court to remand the case when the court found and .stated in its opinion that “the Industrial Commission could reasonably have made its. findings of facts and reached, the conclusions of law that it did, based upon the-whole record, but the Commission did not. consider all competent evidence before it”. Under such ruling, appellant asserts, the-only function of the court was to affirm the Commission. It is true that such a general statement by the court of .its findings and disposition of the case is, if literally construed, self-contradictory and paradoxical. . If it be correct, as the court found, that “the.Commission could reasonably have-made the findings of fact and reached,the conclusions of law that it did, based upon, •the whole'record”, then'-the-fact that it failed tef consider a part of the récord could not have affected the reasonableness of the Commission’s determination, and the court’s only function would be to affirm the ruling of the Commission. Had the coiirt ruled that the failure by the Commission to consider a part of the record could have reasonably authorized a different determination, the situation would have- been different.

However, since the court proceeded to rule that the Commission did not consider all the competent evidence before it and infers that such evidence was the collective bargaining agreement in evidence, and thereupon remanded the case, we conclude that the language quoted was not intended to be construed in the inconsistent sense attributed to it by the Commission.

The remaining point assigned by the Commission is that, based upon the whole record, the Commission could reasonably have made its findings of fact and reached its conclusions, and the court therefore erréd in not affirming the determination. Under that heading it is asserted that, in .arriving at its determination of the prevailing'ráte of wages to he paid to carpenters ■on the school house job at Galena, the Commission considered all the relevant factors ■such as (1) the wages generally paid in •the locality in which the public project was located for services similar in character ■and (2) if there were applicable wage rates •established by any collective bargaining •agreements; and that in the exercise of its . administrative discretion it could reasonably have found from the evidence, as it- did, •that the services on the highway construction and the federal projects — Table Rock Dam, Kimberling Bridge and Cave Fair Bridge — were not similar to those required ■on the $110,000 school house job under consideration.

It will be noted that the findings of the court supported the Commission in the designation of the “locality” involved, the .adequacy of the supply of carpenters in .'Stone County, and the inapplicability of the ■wage rates paid.to carpenters employed on the federal projects and highway construction. The only definite finding of the court ■that is adverse to the determination of the 'Commission is that it should have considered applicable wage rates established '.by the collective wage agreement (Objectors’ Exhibit 17), to be regarded, however, as “no more than a factor in the making of the determination”.

The Objectors maintain here in their ’brief that the witnesses for the Commission and the School Board were “an aggregation of part-time farmers-jack-of-all-trades laborer-block layers-plumber-electrician-roof-hammer and saw carpenters”; that the Commission refused to consider the relevant facts in evidence, as pointed out; that the determination is, therefore, ■unauthorized by law; that the case did not require the exercise of discretion on the part of the Commission, but merely the application of the law to the facts in evidence, and that the reviewing court had authority to weigh and to review the evidence and to make its own determination of the facts, citing Section 536.140, subd. 3. That section and paragraph permit the court in such review proceedings to weigh the evidence for itself and to determine the facts, if the action being reviewed does not involve the exercise by the agency of administrative discretion, giving deference to the opportunity of the agency to observe the witnesses, and the experience and expertness of the agency. The section, however, in paragraph 5, provides that the reviewing court “shall not substitute its discretion for discretion legally vested in the agency”.

The Commission in the instant case was required by statute to determine whether the “locality” to be considered should be confined to Stone County; whether there was a sufficient supply of carpenters in that county to efficiently perform the work on the school property at the prevailing rate of wages to carpenters as claimed by the School Board and the Commission; whether the prevailing rates in evidence were generally paid to carpenters for carpenter work similar in character to services to be performed upon the school at Galena. These and other issues were matters reposed by law in the Commission for determination, clearly requiring the exercise of its discretion. Hence we rule that the reviewing court in this case has no authority to weigh the evidence and to determine for itself the facts in the case. Koplar v. State Tax Commission, Mo., 321 S.W.2d 686, 697; State ex rel. Chestnut Inn, Inc. v. Johnson, Mo.App., 297 S.W.2d 576, 577.

The function of the reviewing court in this case is to decide if the determination of the Commission was authorized by law and was supported by competent and substantial evidence upon the whole record. In so doing, it may determine whether the Commission could reasonably have made its findings and reached its results upon consideration of all the evidence before it. A decision clearly contrary to the evidence should be set aside. Art. V, Sec. 22, Const. of Mo.1945, V.A.M.S.; Wood v. Wagner Electric Corp., en Banc., 355 Mo. 670, 197 S.W.2d 647; Groce v. Pyle et al., Mo.App., 315 S.W.2d 482, 485; Sections 536.100, 536.140, RSMo 1959, V.A.M.S.

The Commission’s chief point of error, however, is that the court erred in remanding the case on the ground that the Commission failed to consider the collective wage bargaining agreement referred to. The record is replete with references to the collective bargaining agreement in evidence. The entire instrument was introduced in evidence and a part of it was read orally to the Commission. The chairman announced that it would be received. The president of the carpenters’ district council and two others of its officials testified to the execution and scope of the agreement. It was frequently referred to in the testimony as the “union scale”. Twelve witnesses testified as union carpenters who had received wage rates in the amounts which the Objectors claim were authorized by the agreement; At one point the chairman of the Commission stated that there was no doubt about the $2.65 union scale.

In its determination the Commission referred to the collective wage bargaining agreement as having been introduced in evidence; that under it overtime was paid at time and a half. The decision made note of the Objectors’ exhibit and evidence showing federal, state and other projects on which the hourly rate of $2.65 to $2.77 had been paid to carpenters, and the Commission ruled, in effect, that on account of the nature and size of such projects, the prevailing hourly wage rates for carpenter work thereon, based on such bargaining agreement, would not be applicable nor the services similar to the carpenter work required for the school job at Galena.

In City of Joplin v. Industrial Commission, Mo., 329 S.W.2d 687, cited by the Objectors, the prevailing rate for workmen for services on relief sewers and mains in Joplin was sought, and the Commission received much evidence of wage rates for work on heavy construction; discouraged the introduction of evidence of rates for lighter types of work, and determined the. case on the basis of the rate for heavy construction work. The Supreme Court held that the Commission should have considered the evidence showing that the work on heavier construction was not similar to the work on the sewers.

In the case at bar, however, not only did: the Commission receive and admit evidence- - of the collective bargaining agreement and ' of the prevailing rates paid to carpenters - thereunder for work on bridge, dam and • highway, but discussed and ruled upon the contention that such services for which the collective bargaining rates were paid were not similar to the carpenter work required for the school job.

We note the statute (290.260, subd. 1) states that the Department “shall ascertain and consider the applicable wage rates established by collective bargaining agreements, if any, and such rafes as are paid generally within the locality”. The Commission, in its final decision in this case, ascertained that the services to which the collective bargaining agreement in evidence had been applied were dissimilar to the services required for the school project involved, and explained why, in its judgment, there were no “applicable wage rates established by collective bargaining agreements”. In such case, we believe, the statute requires no more consideration of the collective bargaining agreement in evidence than was given in the above ascertainment.

But even if, in isolated cases, the services to which the rates fixed by the bargaining agreement were applied be deemed similar to the services required on the school job, the statute requires only that the Commission “consider” such agreements, if any, as to whether such rates are the prevailing rates in the locality. It does not require the Commission to follow or adopt the rates so stipulated if not found to be the prevailing rates for such services. If it may reasonably be claimed that the Commission was required by the statute to give the collective bargaining agreement in evidence greater consideration than it did, we note the legal definition of “consider” in such sense:

“Consider. To fix the mind on, with a view to careful examination; to examine; to inspect. Eastman Kodak Co. v. Richards, 204 N.Y.S. 246, 248, 123 Misc. 83. To deliberate about and ponder over. People v. Tru-Sport Pub. Co., 291 N.Y.S. 449, 457, 160 Misc. 628. To entertain or give heed to. Rodolf v. Board of Com’rs of Tulsa County, 122 Okla. 120, 251 P. 740, 741”. Black’s Law Dictionary. See 15 C.J.S. p. 984.

For the court to take issue with the Commission under the record in this case, on its finding of dissimilarity of services and of the inapplicability of the rates fixed by the collective bargaining agreement in evidence, would be to substitute the court’s judgment for that vested exclusively in the Commission by law.

From the foregoing, we conclude that the judgment of the circuit court should be reversed and the cause remanded with instructions to enter judgment affirming the determination of the Commission. The Special Commissioner so recommends.

PER CURIAM.

The foregoing opinion by DEW, Special Commissioner, is adopted as the opinion of the court.

All concur.


source: Caselaw Access Project

author: PALMORE, Judge.

license: Public Domain

text:
    A. E. BUCHANAN et al., Appellants, v. CITY OF DAYTON, Appellee.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.
    Malcolm R. Rhoads, Benton, Benton, Lue-deke & Rhoads, Newport, for appellants.
    Davies & Hirschfeld, Newport, Charles-E. Graham, Dayton, for appellee.
   PALMORE, Judge.

In 1954, Dayton, a 4th class city located’ on the Ohio River in Campbell County, filed' a suit under KRS 84.210 to annex a 57-acre-territory contiguous to its southeast corner. Affected parties remonstrated in the manner authorized by KRS 84.220. On February 2, 1957, while that proceeding in the circuit court lay dormant and untried, the city enacted a new ordinance proposing to annex the same area plus an adjacent 270 acres contiguous to the east city limits. The present annexation suit covering the entire area was filed on April 4, 1957. Thereafter, on. May 27, 1957, by leave of court but over objection of the remonstrants therein, the-original annexation suit was dismissed without prejudice.

A very substantial majority of the resident voters in the area proposed to be annexed remonstrated, and among their defenses pleaded the pendency of the 1954 proceeding at the time the 1957 ordinance was enacted and this suit was commenced. Later, in 1958, the city discovered that the area described included some territory already a part of the City of Ft. Thomas, whereupon it enacted a corrective ordinance and was permitted to amend its complaint accordingly. The two boundaries as finally described contain 52 acres and 250 acres, which we shall call the Dayton Pike and Mary Inglis Highway areas, respectively.

After hearing a welter of testimony the trial court found that there was no evidence of manifest or material injury to the owners of real estate within the proposed extension and sustained the annexation. The remonstrants appeal.

The arguments fall in two categories, one relating principally to the technical questions posed-by the institution of new annexation proceedings while the 1954 suit was still in court, and by the amendment of boundary descriptions during the course of the litigation, and the other relating to the sufficiency of the evidence to sustain the judgment. We shall take them in that order.

• Since the dismissal of the 1954 suit without prejudice was not in any sense “a judgment of the circuit court * * * adverse to annexation,” KRS 81.270, forbidding any further annexation attempt within two years, is not applicable.

In Garner v. City of Lexington, Ky. 1957, 306 S.W.2d 305, the city, while a remonstrance suit was pending, enacted an ordinance proposing to annex a one-owner portion of the property involved in the existing litigation. As.the single owner consented, there was no prospect of a remonstrance in this independent proceeding, and had it been permitted to take its normal course the practical result would have been a withdrawal of the tract from the pending suit, ex parte and without leave. This court held that the new proceeding could not take place independently of the court which had jurisdiction of the existing action.

The Garner case involved a 2d class city and different statutes (KRS 81.140 and 81.-110) under which, unless a suit is filed by remonstrants, the annexation may be completed without court action. In this case, however, KRS 81.210 compels the filing of suit by the city, and it is not possible in any way to complete an annexation independently of the circuit court. We do not have here, as in the Garner case, any attempt to circumvent or thwart the dominion of the circuit court; on the contrary, the procedure taken by the city was subjected to and received the approval of the court. If Dayton’s ordinance of February 2, 1957, or its complaint filed on April 4, 1957, had been appropriately attacked before the city moved to dismiss the old suit, or if the city had not then so moved, we think that probably an abatement would have been mandatory. But the dismissal wiped the slate clean of the original proceeding, and when the defense was first raised (some 5 months later) there was no longer any basis for it. We find no error in this respect.

The boundary corrections had been duly enacted and advertised and were not substantial in comparison with the whole area to be annexed; in the absence of a showing of any particular prejudice it was properly within the discretion of the court to permit the necessary amendment.

Coming now to the facts, it is recognized by both sides that the only issue to be determined by the court was whether the amiexation would “cause material injury to the owners of real estate in the limits of the proposed extension.” ICRS 81.220. There is disagreement as to who had the burden of proof, and the remonstrants contend the circuit court considered it to be theirs. The record does not make this clear, but for the purposes at hand we shall assume it to be so.

Under what is now KRS 81.110, setting forth the procedure applicable to all but 4th class cities, it has been held that if 75% or more of the freeholders remonstrate the burden is on the city to show that a failure to annex will materially retard its prosperity and that of the owners and inhabitants of the territory sought to be annexed. Town of Bloomfield v. Muir, 1927, 221 Ky. 815, 299 S.W. 976; Adams v. City of Jeffersontown, 1931, 240 Ky. 482, 42 S.W.2d 704; Likins v. City of Clarkson, Ky. 1955, 280 S.W.2d 491. Under KRS 81.220 the cleavage is set at 50% rather than 75%, and the phraseology is different. Which side has the burden of proof on the question of material injury to the landowners-is not indicated by the statute itself and evidently has not been directly decided by this court. However, in the recent case of City of Greenville v. Gossett, Ky. 1962, 355 S.W.2d 311, the language of the opinion strongly suggests that the burden is on the remonstrants, and when it is considered in relation to the principle that “there must be a ‘clear and obvious’ showing that the burdens substantially exceed the benefits,” this policy is sound and sensible. We hold that in a proceeding governed by KRS 81.220, when the city has proved a prima facie case of substantial benefit (e. g., police and fire protection) to the property in the proposed addition it is sufficient to sustain a judgment of annexation. A showing of substantial benefits is tantamount to a negation of material injury, and the effect is to shift to the remonstrants the burden of proving a “clear and obvious imposition of manifest and substantial burdens.” Cf. City of Greenville v. Gossett, Ky. 1962, 355 S.W.2d 311, and cases therein cited.

Dayton is an old city, embracing about 300 acres and a population of some 9,000. Figuratively speaking, the unincorporated area sought to be annexed is an island in that it is surrounded by Dayton on the west and south, Ft. Thomas on the south and east, and the Ohio River on the north. Thus it is completely isolated from other unincorporated areas of the county. The 52-acre Dayton Pike area is mostly on the slope and high ridge overlooking the town and river from the south, and the 250-acre Mary Inglis Highway area lies in the long lowland strip between the ridge (most of which is in Ft. Thomas) and the river. Running through the middle of this strip in an east-west direction parallel with the river are the Mary Inglis Highway and a main right-of-way of the C. & O. Railroad. Most of the land between the highway and the river is subject to flooding, and the terrain southward from the highway and railroad rises sharply toward Ft. Thomas and the crest of the ridge. Both the Dayton Pike and Mary Inglis areas are sparsely settled, for the simple reason that most of the land has not been very suitable for development. However, there are spots and fringes of both that áre residentially occupied, and there is a variety of both residential and business improvements along the Mary Inglis Highway, including taverns, trailer parks, summer camps, and places of public entertainment visited at times by large numbers of people. One of these, called Tacoma Park, immediately adjoins the city limit.

Dayton has regular police and fire departments with modern equipment. The availability of fire protection definitely will result in lower insurance rates. It has a garbage collection service which, though financed through assessment of the individual users, apparently exists by arrangement with the city. It has sewage disposal facilities capable of extension to some, at least, of the proposed addition. In the main, these are the benefits offered by annexation.

The principal disadvantage is the imposition of city taxes, including an occupational license tax. The city has a monthly tax on trailers, and this prospect brought owners and occupants of the trailer camps along Mary Inglis Highway to court in a swarm. The inhabitants of the Dayton Pike area fear that the city will not maintain the pike as well as the county has done, but their real objection (if not the tax angle) seemed to be that they regard Dayton as a deteriorating, poorly-run city, outshone and shoddy as compared with Ft. Thomas and other attractive communities in the vicinity. They just do not like Dayton and do not want to be a part of it. They prefer things the way they are.

As we see it, there is no question but that the inhabited parts of the proposed area should have and will be substantially benefited by the police and fire protection the city is able to offer. This in itself distinguishes such cases as City of Cold Springs v. Laycock, Ky. 1958, 312 S.W.2d 882, and Town of Latonia v. Hopkins, 1898, 104 Ky. 419, 47 S.W. 248, 20 KLR 620, in each of which the city had nothing to offer (and in each of which the judgment under review by this court was one in which the chancellor denied rather than granted the annexation). When the property is mixed, some suitable and some unsuitable for urban development, it must be considered as a whole, and we cannot draw a fine line on its annexability. Cf. Mitchell v. City of Central City, Ky. 1962, 354 S.W.2d 281. Unless we deem it to be “clearly erroneous,” the finding of the circuit court must be accepted as conclusive. CR 52.01. Likins v. City of Clarkson, Ky. 1955, 280 S.W.2d 491.

The taxable property in Dayton has an assessed value of about $6,000,000. The city tax rate is 85¾⅞, inclusive of 10⅞⅞ for servicing a voted indebtedness, the unpaid balance of which at the end of 1958 was $32,500. Evidently the city has not handled its sinking fund account in an orderly manner, and thus “owes” the sinking fund out of its general funds; nevertheless, the installments on the bonded debt have been paid as they matured and are not in default. School taxes, of course, are not involved, since annexation will not of itself alter the school district. The most serious financial problem manifested in the accountants’ report of the city’s condition appears to be a year-to-year floating debt (probably an accumulation of annual deficits) evidenced in the form of a $45,000 short-term bank note as of the end of 1958. One year earlier this current liability amounted to $35,000. Remonstrants did not pursue this problem to the point that we can say, from the record, whether the city’s financial condition represents any substantial threat to the property of prospective taxpayers. That the territory annexed will be subject to taxation to pay a pre-existing debt of the municipality is not, as such, a dispositive objection to annexation. McQuillin, Municipal Corporations (3d ed.), § 7.23, pp. 325-326. Hence we are not in a position to hold, on this basis, that the chancellor’s finding of no material injury was clearly erroneous.

On the whole case, we are unable to say that the remonstrants made such a clear and obvious showing of a substantial excess of the burdens over the benefits to the landowners that the chancellor was bound to deny the annexation. See City of Greenville v. Gossett, Ky. 1962, 355 S.W.2d 311, and Mitchell v. City of Central City, Ky. 1962, 354 S.W.2d 281.

Judgment affirmed.


author: CULLEN, Commissioner.

text:
    CITY OF MIDDLESBOROUGH, Appellant, v. Cecil GRUBBS et al., Appellees.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.

      Glenn W. Denham, Middlesborough, for appellant.
    William S. Tribell, Middlesborough, for appellees.
   CULLEN, Commissioner.

In an action by six members of the city police force against the City of Middles-borough the circuit court held invalid an ordinance of the city establishing a merit system for the police department. The city has appealed.

The ordinance abolished all ranks in the police department other than that of chief, and in lieu thereof created a schedule of grades, with designated pay scales. It provided that each existing member of the department should be placed in a grade which would give him a salary $10 per month higher than his salary at the time of adoption of the ordinance. It established a Merit Board whose functions would be to give qualifying examinations, make rating studies of the various members of the police department, and “advise” the city legislative body with reference to the selection and advancement of personnel. The ordinance also contained various other provisions concerning the number of policemen, initial qualifying requirements, provisional status of new members, overtime pay, longevity pay, rating records, sick leave and vacations.

Prior to the adoption of the ordinance in question the city had been operating under previous ordinances, conforming with KRS 95.440 to 95.470, which provided for initial qualifying examinations for appointments to the police and fire departments and which prohibited discharge or disciplinary action except for cause and after a hearing. The previous ordinances contained no provisions concerning promotions nor did they provide any system for determining rank or specify the attributes of various ranks. The city records do not show that previous promotions or ranks of any policemen were based upon examination, recommendation, length of service or any system or method at all. Nor do the statutes make any provision concerning promotions. See Seiter v. City of Covington, 290 Ky. 699, 162 S.W.2d 524.

The plaintiffs below, five of whom had held the rank of sergeant and one the rank of captain, attacked the validity of the new ordinance on various grounds. The circuit court held the ordinance invalid on the sole ground that “the plaintiffs are deprived of vested rights in rank and seniority.”

As concerns the matter of seniority we are unable to find any basis upon which it could be said that any seniority rights are impaired by the new ordinance. Neither the previous ordinances nor the statutes pursuant to which they were adopted, KRS 95.440 to 95.470, say anything about seniority in third-class cities (KRS 95.440(4) relates only to second-class cities). Apparently the plaintiffs here are maintaining they have some rights of seniority in rank, but there is nothing anywhere to indicate that under the previous ordinances and the statutes rank had any relation to seniority, or vice versa. Furthermore, as we shall show, the “rank” to which the plaintiffs claimed rights was nothing more than a bare title.

Considering now the matter of rank, it is true that KRS 95.430 authorizes the city legislative body to “grade” the officers of the police department, KRS 95.440 prescribes that qualified members of the department shall hold their “positions” during good behavior, and KRS 95.450 prohibits a reduction in “grade” except for cause and after a hearing. But, the original ordinances of Middlesborough made no provision concerning grades or ranks.

As we see it, rank (or grade) in the sense here involved embraces only the two elements of compensation and authority. There is no question here concerning compensation. With respect to authority there is nothing in the record before us to indicate that the positions of sergeant and captain held by the plaintiffs carried any particular authority. As far as the record shows a sergeant merely got more pay than a patrolman, and nothing else. There is nothing to show that any member of the Middlesbor-ough police force would be reduced under the new ordinance from a dominant to a subordinate position in the chain of command. So aside from the matter of compensation, which is not here in question, the “ranks” held by the plaintiffs were nothing but titles. We do not find in the statutes any guarantees as concerns titles of positions.

In our opinion the trial court erred in holding that the new ordinance deprives the plaintiffs of rights of seniority and rank.

The plaintiffs asserted in the lower court various other grounds of alleged invalidity of the ordinance. We shall briefly dispose of them.

One contention is that the new ordinance represents an illegal attempt by the city to rescind its previous election to adopt the civil service system provided for in KRS 95.440 to 95.470. The simple answer to this is that the new ordinance is not in conflict with KRS 95.440 tó 95.470 and it does not purport to repeal anything not in conflict with it. The new system will work in conformity with those statutes.

It is contended that the ordinance is invalid because it does not in its own terms set forth the requirement of KRS 95.440(2) that policemen be qualified voters of the city. In our opinion the statutory requirement remains in force regardless of the failure of the ordinance to set it forth,

Another contention is that the provisions of the ordinance for a merit board constitute an unlawful delegation of legislative power of the city council. We find no merit in this, because the board merely acts in an advising and recommending capacity. It was held in City of Covington v. Hicks, 236 Ky. 369, 33 S.W.2d 342, that a city could appoint a supervisor of the police department to give advice and recommendations as to the operations of the department. The statute does not require that examinations be conducted personally by the members of the city legislative body. Furthermore, it has been held that in making appointments to a fire department the city legislative body acts in an executive or administrative capacity rather than a legislative one. Gamm v. City of Covington, 236 Ky. 711, 33 S.W.2d 697.

Finally, it is contended that the ordinance is discriminatory because it relates only to the police department and does not include the fire department. We find no requirement in the statutes or elsewhere that the police and fire departments be organized on an identical basis.

The judgment is reversed with directions to enter judgment dismissing the complaint.


author: WILLIAMS, Judge.

text:
    James V. MARCUM, Commissioner of Revenue, et al., and Kentucky Tax Commission, Appellants, v. KENTUCKY & INDIANA TERMINAL RAILROAD COMPANY, Appellee.
    Court of Appeals of Kentucky.
    May 1, 1962.
    Petition for Rehearing Sustained in Part and Opinion Modified Dec. 14, 1962.

      Frank A. Logan, Louisville, William S. Riley, Hal O. Williams, Frankfort, for appellants.
    Middleton, Seelbach, Wolford, Willis & Cochran, Louis Seelbach, Louisville, for ap-pellee.
   WILLIAMS, Judge.

Kentucky & Indiana Terminal Railroad Company (K & I), a Louisville, Kentucky corporation, is a common carrier engaged in interstate commerce. It owns and operates a bridge across the Ohio River between Louisville and New Albany, Indiana, and a switching terminal which includes about 130 miles of tracks. Many of the major industries in Louisville are located on K & I tracks. The majority of business transacted by K & I is with its stockholders.

K & I was incorporated in 1900. Its entire capital stock consists of $75,000, divided into 750 shares at $100 each. The Southern Railway Company (Southern), the Baltimore S¿ Ohio Railroad Company (B & O), and Chicago, Indianapolis & Louisville Railway Company (Monon), are each owners of one-third of the authorized capital stock. In 1911 the stockholders entered into a contract with K & I whereby it was agreed that the stockholders would pay for the use of K & I property and facilities an amount necessary to meet all expenses and obligations of K & I after taking into account other revenue received by K & I. Each stockholder agreed to pay the cost of switching service performed for it in proportion to the number of cars handled.

In accordance with that contract, monthly payments by the stockholders are determined as follows: Transportation and maintenance of equipment expenses are added together. Of the total the stockholders pay an amount determined by the ratio which the cars handled for the stockholders bears to the total cars handled by K & I. To the amount which remains is added all other expenses suffered by K & I. From that total is deducted the income realized by K & I from nonstockholders. The resulting figure is the deficit for that period. That deficit is prorated among the stockholders according to the services rendered to each. Thus each stockholder pays to K & I its proportionate share of the transportation and maintenance of equipment expenses plus its share of the deficit experienced during the month. There results no appreciable net income to be reported by K & I.

Various other railroads, which are non-stockholders, pay for switching services a rate provided for by a tariff filed with the Interstate Commerce Commission.

The Department of Revenue is empowered by statute (KRS 141.205(1)) to require a parent corporation and a subsidiary corporation doing business in this State to file a consolidated return if it appears that intercorporate transactions tend to reduce the net income of either or both below the amount which would probably result if the two were not related. And KRS 141.205(5) reads as follows:

“In the case of a corporation doing business in this state and not permitted or required to file a consolidated return under subsection (1) of this section that carries on transactions with stockholders, directly or indirectly, the department shall adjust the net income of such corporation to an amount that would result if such transactions were carried on at arm’s length.”

The department, acting under authority of KRS 141.205(5), adjusted K & I income tax liability for the years 1952 through 1955. For the purpose of simplification, we shall consider only the year 1955. The department ruled that there was a tax deficiency for that year in the amount of $158,488.12. A formal hearing before the Kentucky Tax Commission was had and it was ordered that the tax as found by the department was owed by K & I. Appeal was taken to the Franklin Circuit Court. From the judgment of that court, setting aside the order of Kentucky Tax Commission on the ground the switching charge allocated to the stockholders was arbitrary, this appeal is taken.

The department limited its computation of net income to that service defined in Item 270 of ICC Tariff No. 36, as follows:

• “Switching Charges. Between connections with the K & IT and industries and tracks located on the K & IT in connection with shipments handled in road haul movements to or from Louisville, Ky. (except express cars), the switching charge of the K & IT will be $20.30 per car.”

No income which should have been realized by K & I for other switching services performed for the stockholders was included.

The above tariff provides that a charge of $20.30 per car will be made for switching services between connections with K & I and industries and tracks located on K & I. Nonstockholders paid $20.30 per car for the defined services. Stockholders accounted only for services performed in the movement of cars between connections with K & I and industries. The movement of cars for stockholders between connections with K & I and tracks located on K & I was not figured at the rate set out in the above tariff, but was calculated in a different manner according to the cost involved. It is argued that the contract between the stockholders and K & I permits that accounting to be done, which is true. That does not abrogate the fact, however, that a car of a nonstockholder handled in the same manner would require the charge of $20.30.

The only movement at issue here involves loaded interstate cars switched between connections with K & I and industries and tracks located on K & I in connection with shipments handled in road haul movements to or from Louisville, Kentucky, in which the road haul carrier wholly or partially absorbed the switching charge. The department determined the applicable number of cars so handled for stockholders for the year 1955 and applied the rate set out in the tariff in determining the tax deficiency for that year.

The statute (KRS 141.205(5)) directs the department to adjust the net income to an amount that would result if transactions between a corporation and its stockholders were carried on at arm’s length. An arm’s length transaction is one which compares favorably with the usual course of action taken in the conduct of business with the trade generally. Bourjois, Inc. v. McGowan, D.C., 12 F.Supp. 787, involved an excise tax on toilet preparations. The taxpayer did not offer merchandise for sale to the wholesale trade generally at the prices it charged its sales corporation. It was said that sales between a manufacturing company and sales corporations in which the manufacturing company owns all of the stock are not ipso facto “not at arm’s length,” but whether such sales are at arm’s length raises a question of fact, and the presumption is that they are not. And, in Inecto, Inc. v. Higgins, D.C., 21 F.Supp. 418, it was held that sales by a corporation to a controlling company at a price much less than the price to the trade generally were not arm’s length transactions.

Here the payments made by the stockholders assured K & I that it would not operate at a loss. But, under the con-f>-act, and by the accounting method employed, it was equally assured that K & I would not operate at a profit. Such transactions were not carried on with nonstock-holder railroads, and, in view of KRS 141.-205(5), were not carried on at arm’s length between K & I and its stockholders.

It is further argued that the department does not have the power to create income or impose a tax upon nonexistent income. To substantiate this argument several cases are cited which interpret Section 45 of the Internal Revenue Code of 1939, 26 U.S.C.A. § 45. That section gives the Commissioner of Internal Revenue the authority to distribute, apportion or allocate gross income. Those cases are authority for the proposition that an allocation may not be made of a fictitious income, and that income must exist before an allocation can be made. We do not have the same problem here. The statute in question (KRS 141.205(5)) mandatorily directs the department to adjust the net income to an amount that would result if transactions were carried on at arm’s length. According to Webster’s New International Dictionary, “to adjust” is “to settle or arrange,” "to free from differences or discrepancies,” “to make exact,” “to put in order.” The statute does not anticipate creation of income where none in fact should exist. It does direct the determination of the amount of income a corporation would receive if it charged both owners and nonowners the same rate for the same service rendered. Simply stated, the statute means that the department shall determine the net income of a subject corporation to be an amount equal to that which it would have received had all of its business been carried on with strangers.

To imply that K & I could have no net income is tantamount to closing one’s eyes to reality. The proof shows that the payment made for service by the stockholders was less than the actual cost of such service. Had stockholders paid in the same proportion as nonstockholders this would not have been true. There would have been net income.

It is contended that the initial determination of the application of tariff rates is for the Interstate Commerce Commission and not for the court. The fallacy of that argument is that neither the department nor the court is attempting to dictate a rate which must be collected by K & I from its stockholders. The tariff is utilized only in setting a standard by which the net income (for income tax purposes) is calculated. It matters not whether the established rates are actually paid to K & I by the stockholders. They may enter into any contract which pleases them without offending KRS 141.205(5). But when the time comes to pay the state income tax the statute says it shall be determined by calculating the amount that would have resulted had the transactions been carried on at arm’s length. The tariff is merely a guide by which that calculation is made. ■ . ' • ;

It is argued that the' department did not set up a standard; did not show what K & I could get for switching services through an arm’s length transaction. ; The obvious answer is that K & I was' receiving $20.30 for the switching services defined in the above quoted tariff from those railroads which were nonstockholders. The collection of an established rate for a specified service from one railroad does surely serve as precedent for the rate which could be collected from another. To the extent that this charge for a similar switching service was allocated to the stockholders, the Commission’s order cannot be deemed arbitrary.

It is finally contended that the $20.30 tariff applies to only 34,041 switching movements, and that 322,891 switching movements fall within some other classification for which no tariff charge was shown or collected. K & I did not undertake to prove what a reasonable charge for these particular switching services would be.

In our opinion the Department made a prima facie showing that the $20.30 rate may be allocable to the stockholders as a proper charge for all switching operations in connection with road haul movements. However, because of the manner in which the- issues were developed in this case, because of the peculiar nature of this business, and because of the necessity for complete fairness in the assessment of this tax, we are of the opinion that the parties should be given further opportunity to produce evidence of what would have been the reasonable charge for those switching movements which'it'is claimed are in a different category from those to which the $20.30 tariff fate applies.

The judgment is reversed, with directions to confirm, the Commission’s order in part, and to remand the case for further proof and consideration consistent with this opinion. ■ .

STEWART, C. J., and MONTGOMERY, and BIRD, JJ., dissenting.


text:
    Randall Eugene CASH, Appellant, v. E’TOWN FURNITURE CO., Inc., Appellee.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.
    J. Howard ITolbert, Elizabethtown, Louis •Cohen, Louisville, for appellant.
    Harold K. Huddleston, Elizabethtown, for appellee.
   WILLIAMS, Judge.

A transitory action was instituted by ap-pellee against appellant in the Hardin Circuit Court. The appellant, a resident of Jefferson County, was served with summons in Jefferson County and made no defense to the action. After default judgment was taken against him appellant moved the court to quash the return of summons and hold the judgment void. That motion was overruled.

The issue of law presented is whether a judgment by default may be rendered against a defendant in a transitory action where the defendant is not a resident of the county in which the action was brought, nor was he served with summons in that county, nor did he make defense to the action before judgment was entered.

It is conceded that, prior to the adoption of the Civil Rules of Procedure, a default judgment entered under circumstances recited above would be void. See Caywood v. Williams, 218 Ky. 282, 291 S.W. 377, and Gover v. Wheeler. 296 Ky. 734, 178 S.W.2d 404. But CR 12.08 provides that a party waives all defenses and objections, with certain exceptions, which he does not present either by motion or by answer. That Rule is identical to the Federal Rule 12(h) which was construed in Zwerling v. New York & Cuba Mail S. S. Co., D.C. 33 F.Supp. 721, and Clover Leaf Freight Lines v. Pacific Coast Wholesalers Association, 7 Cir., 166 F.2d 626, in which there was a quotation from the opinion in Commercial Casualty Ins. Co. v. Consolidated Stone Co., 278 U.S. 177, 49 S.Ct. 98, 73 L.Ed 252. The substance of those Federal Court decisions is that the defense is waived by failure to make timely objection. Because the question had not been considered by this Court since adoption of the Civil Rules, the Hardin Circuit Court followed the reasoning of the Federal cases.

However, the sections of the Civil Code upon which the earlier decisions were founded were transferred to the Statutes at the time the Civil Rules were adopted. What were Sections 78 and 79 of the Civil Code are now KRS 452.480 and 452.485, which provide:

“KRS 452.480 [C.C. 78], An action which is not required by the foregoing provisions of KRS 452.400 to 452.475 be brought in some other county may be brought in any county in which the defendant, or in which one of several defendants, who may be properly joined as such in the action, resides or is summoned.”
• “KRS 452.485 [C.C. 79], In action brought pursuant to KRS 452.480, against a single defendant, there shall be no judgment against him, unless he be summoned in the county wherein the action is brought; or, unless he reside in such county when the action is brought and be summoned elsewhere in this state; or, unless he make defense to the action before objecting to the jurisdiction of the court.”

Unless CR 12 overrides those sections of the Statutes there is no question but that the judgment taken herein is void. See Gover v. Wheeler, supra. Had it been intended that the Civil Code Sections have no effect, they would not have been transferred to the Statutes. The Civil Rules were not intended to fix or affect jurisdiction or venue. CR 82 provides that: “These rules shall not be construed to extend or limit the jurisdiction of any court of this Commonwealth or the venue of actions therein.” Consequently, we are of the opinion that a judgment which is taken in violation of the provisions of KRS 452.485 is void.

The judgment is reversed.


author: WADDILL, Commissioner.

text:
    HIGH SPLINT COAL COMPANY, Appellant, v. Joe CHANDLER, Appellee.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.

      T. E. Mahan, Williamsburg, Patterson & Berger, Pineville, for appellant.
    Doyle & Doyle, Harlan, for appellee.
   WADDILL, Commissioner.

Appellee filed an application with the Workmen’s Compensation Board seeking adjustment of his claim based upon the allegation that he became disabled on February 21, 1957, due to the disease of pneu-moconiosis caused by exposure to dust and other irritants while employed in appellant’s mine. The Board dismissed the application on the ground that, although appellee had established he had pneumoconiosis, he had not proved he had contracted the disease while employed by appellant. On appeal, the circuit court adjudged that the dismissal was erroneous and that appellee was entitled to compensation because he had established that he became disabled from pneumoconi-osis while working for appellant under conditions which could cause the disease.

Appellant’s sole contention on this appeal is that pneumoconiosis is only a generic ter-m and the actual disease which appellee has contracted is silicosis. Therefore, it is argued that KRS 342.316(4) (as it read in 1957) is applicable and appellee is not entitled to compensation because he has not shown the two-year exposure within this state as required by that subsection. The fallacy of this contention is that the medical testimony does not justify appellant’s assumption that appellee’s disease is silicosis. Dr. W. H. Anderson, who specializes in respiratory diseases, diagnosed appellee’s condition as occupational pneu-moconiosis which he described generally as a fibrotic disease of the lungs due to the inhalation of minute mineral or metallic particles. This testimony adequately supports the finding of the Board that appellee has the disease of pneumoconiosis. Such disease was recognized as an occupational disease without further identification in Gregory v. Peabody Coal Co., Ky., 355 S.W.2d 156.

The record shows without contradiction that appellee became disabled and was last injuriously exposed to the hazard of the disease while in appellant’s employment thereby satisfying' the requirements of KRS 342.316(12). We conclude that the circuit court correctly- remanded the case to the Board for the entry of an appropriate award.

Judgment affirmed.


text:
    COMMONWEALTH of Kentucky, DEPARTMENT OF HIGHWAYS, Appellant, v. Edward J. CARLISLE et al., Appellees.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.

      John B. Breckinridge', Atty. Gen., H. D. Reed, Jr., Asst. Atty. Gen.,- Leslie Aberson, Dept, of Highwáys, Frañkfort, F-fánk D’. 'Berry, Madisonville, for 'appellant.
    Neville Moore, Moore & Morrow, Madi-sonville, for appellees.
   CULLEN, Commissioner.

The Commonwealth of Kentucky, Department of Highways, appeals from a judgment in a highway condemnation suit awarding Edward Carlisle and wife $16,000 damages in accordance with a jury verdict fixing $13,400 as direct damages for the taking of a portion of a tract of land and $2,560 as resulting -damages to the remainder of the tract. The Commonwealth maintains that the verdict was not sustained by sufficient evidence and is excessive.

The Carlisle tract is a vacant lot located on the east side of U.S. Highway 41, a north-and-south highway Before the condemnation the tract had a 300-foot straight frontage along the highway, and extended back a depth of 683 feet. It contained 3.87 acres.

The Department of Highways acquired rights of way across land directly to the north of the Carlisle tract for the purpose of constructing a new east-west highway intersecting U.S. 41. In order to construct a deceleration lane and a turning lane for traffic coming from the south on U. S. 41 and desiring to turn east onto the new intersecting highway the department brought the instant action to condemn an irregular-shaped parcel on the northwest comer of the Carlisle tract. This parcel consists of about one-third of an acre. Beginning at the north west corner its boundary runs 192 feet south with the west line of the Carlisle tract, then east SO feet, then north 100 feet, then northeastwardly 127 feet to a point on the north line of the Carlisle tract which is 165 feet east of the northwest corner, thence with the north line to the beginning point.

In its petition for condemnation the Department of Highways stated that it sought to condemn the parcel above described -“and that the defendants shall have no -right to ingress or egress to or from their -remaining property to or from the proposed 'highway.” But neither the judgment in the ■county court nor the judgment in the circuit court purported to condemn any access rights. However, all of the witnesses based their estimates of damage on the assumption that the only highway access the landowners would have after the condemnation woul4 be a 16-foot entranceway to U.S. 41 near the south line of the lot.

Since the^-Department of Highways undertook: to condemn access rights rather than depend upon such authority as it might have had under the police power to limit access, and since the case was tried on the theory- that access rights were being condemned, we think the case must be decided on the basis that the access rights were in fact condemned. But the troublesome question is: What were the rights of access that were condemned? See Cromwell, Loss of Access to Highways, 48 Virginia Law Review, No. 3, p. 538.

The case seems to have been tried on -the assumption that the landowners had unqualified rights’ of access to U.S. 41 ¡along the entire frontage of their lot. We ■cannot say that the damages awarded were .excessive or were not sustained by sufficient evidence if such were their rights of access. And although in our opinion there was a misconception of the nature and extent of the actual rights of access we feel compelled to affirm the judgment because of the way the Department of Highways elected to present and try the case. However, we shall avail ourselves of the opportunity to express our views as to the proper rules governing access rights.

At the outset we think it is necessary to point out that the benefit an abutting landowner may derive from the location of a highway and the direction of the traffic courses thereon is not a matter of right and it does not come within the category of access rights. The landowner has no right against relocation or change in the traffic courses of the highway. DeRossette v. Jefferson County, 288 Ky. 407, 156 S.W.2d 165; 5 Nichols, Eminent Domain, sec. 16.101(5). He has no right against the placing of a turning or deceleration lane between his property and the main highway. He has no right against the placing of traffic dividers between the lanes of the highway that will impede his access to the far lane. State v. Peterson, 134 Mont. 52, 328 P.2d 617.

It appears that a substantial amount of the damage to the Carlisle lot in the instant case will result from the construction of the deceleration and turning lane between the lot and U.S. 41, and the pfacing of traffic dividers between the north and south lanes of that highway. This is damage for which the landowners were not properly entitled to be paid, because it did not involve a taking of any rights they had. However, several witnesses were permitted, without objection, to include the above factors as elements of damage in their evaluations. No objections having been voiced by the Department of Highways nor any suggestion made to the trial court that these were not proper elements of damage, the department is in no position to claim error in this regard.

Coming now to the matter of true access rights, it is our opinion that the only access right the landowner has is a right of reasonable access to the highway system. Department of Highways v. Jackson, Ky., 302 S.W.2d 373. Access is subject to control under the police power, so the test of reasonableness involves measuring the benefit to the owner against the hazard and danger to the traveling public. Bowling v. City of Somerset, Ky., 333 S.W.2d 769.

Where the state undertakes to limit access under the police power it seems to us that the measuring of benefits against hazards must be done on the basis of present use of the property rather than prospective future use. If the owner devotes his property to a use which requires substantial access before the highway conditions become so hazardous as to create a need for limiting the access, the owner’s rights weigh heavy in the measuring balance. But if the highway becomes hazardous at a time when the land is unoccupied, the owner’s right to develop the land for a use requiring substantial access must yield. This is comparable to the rule in zoning cases, where if the owner is devoting his property to a commercial use before the district is zoned residential he is entitled to continue it, but if the zoning is done first he cannot realize on the formerly existing potential commercial value of his property.

In the final analysis the question is one of public policy. The welfare of the public requires highways reasonably safe from access hazards. On the other hand the abutting owner is entitled to reasonably unlimited enjoyment of the full potential of his property. . ,n important consideration, we think, is that where the owner desires to use his property for commercial purposes it is the existence of the highway that gives the property its commercial value. In our opinion an abutting owner who has not yet devoted his property to a commercial use, but who claims a commercial value by reason of the highway, must yield to the public interest if the highway form or use in the meantime becomes such as to require limitation of access in the intef'est of public safety.

Applying the foregoing principles to the instant case, it would appear that had the Department of Highways not elected to condemn the access rights .the land-. owners would have had no claim for depreciation in value from loss of access, because their access rights would not have been affected. And if the department later undertook by administrative order to bar access to the deceleration lane and to U. S. 41 at the point where the deceleration lane began, and the Carlisle lot at' that time continued to be vacant, the order would stand good chance of being upheld under the police power. In such a situation the potential value of the lot for commercial use would not enter into consideration.

The fact is, however, that here the Department of Highways elected to condemn the access rights. We cqnceive that it would be practically impossible, procedurally, in a condemnation case, to attempt to value an access right in relation to the extent it possibly could be restricted under, the police power, if exercised. So even, though the owner’s access right is not an unqualified right of full access along his entire frontage, nevertheless where the right is sought to be condemned (and has not previously been limited by an order under the police power) there is no way to value it on any basis other than that it is an unqualified right. So there is no escape in the instant case from the result which pays the landowner for rights that he did not fully have.

It is true that prior to the condemnation in the instant case there was in force an order of the Department of Highways requiring a permit for construction of an entranceway to any main highway, but this appears simply to have been for the purpose of controlling the manner of construction of entranceways.:and not to limit access. ¡ .

. Since the case' was pleaded and tried on the theory that access rights were being condemned, the judgment should be modified to recite specifically that all access rights are condemned except for the designated 16-foot accessway.

The judgment is affirmed with directions that it be modified as above prescribed.


author: STEWART, Chief Justice.

text:
    Rector CARPENTER, Appellant, v. Elbert EVANS et al., Appellees.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.
    Cleon K. Calvert, Pineville, Carlos B. Pope, J. B. Campbell, Barbourville, for appellant.
    Lester L. Parrott, Pineville, Francis M. Burke, F. Dale Burke, Pikeville, for appel-lees.
   STEWART, Chief Justice.

This litigation concerns the ownership of three grants of land made by the Commonwealth to Aaron Edwards, late of Knox County. The action was filed by some of his heirs at law as a class action for themselves and for the benefit of all other heirs of the decedent, his progeny being too numerous to ascertain (about 140) and too scattered to be brought into court as parties.

On December 31, 1957, the Knox Circuit Court (Ray C. Lewis, Circuit Judge) entered findings of fact, conclusions, of law and judgment, decreeing the plaintiffs, who are appellants herein, to be the owners of the lands in controversy.

On January 8, 1958, the defendants, now appellees herein, pursuant to CR 52.02, CR 59.01, and CR 59.07, filed their motion requesting the trial court to amend the findings of fact and conclusions of law, set aside the judgment, and enter new findings and conclusions and judgment, and, in addition, to grant them a new trial.

Briefs were filed, oral arguments were heard, and on August 27, 1958, the Knox Circuit Court (S. B. Knuckles, Circuit Judge) sustained the motion of appellees. The court made new findings and conclusions in direct conflict with the first findings and conclusions and, in consequence thereof, entered judgment for appellees.

The new judgment did not in specific terms set aside the earlier findings, conclusions and judgment. Appellees have filed a motion under CR 60.02 for leave to apply to the circuit court to correct such failure on the part of the trial court. This Court heretofore passed the motion to the merits.

The question presented on this appeal is whether the trial court, where a timely motion was filed under CR 52.02, CR 59.01, and CR 59.07, has the authority to reverse earlier findings and conclusions and enter new findings and conclusions and judgment. Appellant says no; appellees say yes. The correctness of the trial court’s last findings and conclusions is not raised.

CR 52.02 reads:
“Not later than 10 days after entry of judgment the court of its own initiative, or on the motion of a party made not later than 10 days after entry of judgment, may amend its findings or make additional findings and may amend the judgment accordingly.
The motion may be made with a motion for a new trial pursuant to Rule 59. When findings of fact are made in actions tried by the court without a jury, the question of the sufficiency of the evidence to support the findings may thereafter be raised whether or not the party raising the question has made in the trial court an objection to such findings or has made a motion to amend them or a motion for judgment or a motion for a new trial.”

This Rule is substantially the same as F.R.Civ.P. 52(b). In Bender’s Federal Practice Manual under Federal Rule 52(b), on page 415, this language appears:

“A motion for amendment of findings should be limited to modification of the judgment entered or to amplification or expansion of the facts found. ■It is not proper for the moving party to seek a reversal of the judgment entered or a finding of contrary facts!’ (Emphasis added) (3 cases are cited thereunder.)

Appellant relies on this interpretation.

Appellee cites Russell’s Practice and Procedure where this Committee note follows Rule 52.02.:

“This Rule has the effect of allowing a court to reverse itself upon timely motion without the necessity for the granting of a new trial where there has been no consideration by a jury.”

According to Clay’s Comments on CR 52.02, a motion made thereunder may be joined with a motion for a new trial under Rule 59.01. This was done in the present case, setting out as grounds for a new trial that the original findings, conclusions, and judgment were not supported by the evidence or the law applicable thereto.

CR 59.07 reads:
“On motion for a new trial in an action tried without a jury, the court may grant a new trial or it may open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new findings and conclusions, and enter a new judgment.”

Clay’s Comments on this Rule are stated thus on page 527:

“It [CR 59.07] authorizes the court to take alternative action other than ordering a new trial when such a motion is made. The Rule relates to actions tried by the court without a jury, and a motion for a new trial may be converted into a request to take appropriate action under the circumstances. The court may either (1) grant a new trial or (2) enter a new judgment without a complete new trial. * * * This Rule is complementary to Rule 52.02.”

CR 59.07 is a broad and sweeping grant of power to the trial court to grant a new trial or, alternately, to enter new findings, conclusions and judgment where the dictates of justice require, if, as occurred here, the action was tried without a jury. This Rule supports the action taken.

Appellant suggests that the first findings, conclusions and judgment are res judicata of the issues between the parties. Obviously this argument is without merit for the reason that, under the motion filed, the trial court, still retaining complete control over the case, was empowered to pursue the very course it followed.

The omission of the trial judge to set aside the first judgment appears to have arisen from oversight. Under CR 60.01 such an error may be corrected on motion.

Wherefore, the judgment is affirmed.


author: STANLEY, Commissioner.

text:
    Brooks Edward MAYS, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.
    Claude Asbury, Catlettsburg, for appellant.
    John B. Breckinridge, Atty. Gen., Fred R. Whalin, Asst. Atty. Gen., Frankfort, for appellee.
   STANLEY, Commissioner.

We have a motion for an appeal by Brooks Edward Mays from a judgment convicting him of the offense of knowingly causing or contributing to conditions which cause a child to “become delinquent, neglected, dependent needy or charged with a crime.” KRS 208.020(3)(a). His penalty was fixed at a fine of $100 and a jail sentence of thirty days. The motion is sustained and the appeal granted. Cr.Code, §§ 347, 348.

The prelude of the case is that in a bastardy proceeding in the Boyd County Court a jury found Mays to be the father of an illegitimate child of Rita Robbins, and that he should pay $10 a week for the support of the child. KRS 406.090. In default of making bond, conditioned upon the payment of the sums, Mays was committed to jail, and after serving ten days was discharged as an insolvent debtor. KRS 406.-100, 426.400.

Soon afterward the mother of the baby had a warrant of arrest issued charging Mays with the offense of “contributing to the delinquency of the child,” as described in KRS 208.020(3) (a); and upon a trial in either the county court or the quarterly court (the papers being variously styled. See Smith v. Smith, Ky., 358 S.W.2d 521.), Mays was sentenced to serve six months in jail and pay a $250 fine. He appealed to the circuit court where he was found guilty and his penalty fixed as first above stated.

Under common law a putative father is under no legal obligation to support his illegitimate child. Mercer v. Mercer’s Adm’r, 87 Ky. 30, 7 S.W. 401. However, this cannot relieve the father of the responsibility of nature and morality. A bastardy proceeding, defined by KRS 406.-100, is a statutory proceeding and is the exclusive basis of judicial liability for support of a child born out of wedlock. Commonwealth ex rel. Powell v. Ross, 277 Ky. 212, 126 S.W.2d 150. The proceeding is civil in character, and the judgment is regarded as a civil judgment and not criminal. Commonwealth ex rel. Baker v. Bondie, 277 Ky. 207, 126 S.W.2d 148; Green v. Commonwealth, 297 Ky. 675, 180 S.W.2d 865.

The statute making it a felony for a parent to desert or abandon his child, leaving him in destitute or indigent circumstances and without making proper provision for his care, applies only to the parent of a legitimate child, natural or adopted, and does not cover such action in respect to an illegitimate child. Commonwealth v. Ray, 196 Ky. 203, 244 S.W. 415; Mathis v. Commonwealth, Ky., 324 S.W.2d 826. We do not believe it was the intention of the Legislature that KRS 208.020(3) (a), which is a part of the Juvenile Court Act, should be used as a criminal proceeding to punish a father for failure to maintain his illegitimate child. It seems to us that the present case is outside the scope of that statute.

It may be observed that the judgment in the bastardy proceeding is still effective. A discharge from custody upon taking the insolvent debtor’s oath related to the amount due or accruals up to the time of the commitment. The defendant’s liability for subsequent payments on the judgment was not discharged. It may be a matter of contempt. Smith v. Smith, 287 Ky. 287, 152 S.W.2d 944 ; 29 Am.Jur., Insolvency, § 91; 10 C.J.S. Bastards § 117.

The judgment is reversed.


text:
    Margaret Gladys ROBINSON, Appellant, v. Edward ROBINSON, Jr., Appellee.
    Court of Appeals of Kentucky.
    Dec. 14, 1962.

      Clay Shackelford, Shackelford & Bur-nam, Richmond, for appellant.
    George W. Robbins, Robbins, Robbins & Robbins, Richmond, for appellee.
   PALMORE, Judge.

This is a divorce case in which the wife (appellant) was awarded an absolute divorce, custody of her two small children, and $20 per week “as alimony for herself and as maintenance and support for her two children.” Though it involves the technical points hereinafter mentioned, the main thrust of her appeal is directed to the inadequacy of the monetary award.

In his complaint -the husband (appellee) conceded custody of the children to the wife and stated that- he would make reasonable payment for their support. The wife counterclaimed and caused a general order of attachment to be levied on an automobile, truck, and certain intangibles. During the course of the proceeding the trial court, without written motion and grounds and for what reason we can only guess, discharged the attachment. The wife’s motion to try the case on depositions, rather than in accordance with a rule of practice of the Madison Circuit Court requiring that all divorce actions be tried orally unless otherwise directed by the court, was eventually overruled by an order reciting that the rule “precludes either party to a divorce action from taking depositions for any purpose whatsoever unless the court in its discretion otherwise directs,” etc.

The husband did not testify, but departed the state and took up residence in Florida. The award of $20 per week was based on testimony to the effect that immediately prior to this departure he had been employed by his stepfather for $60 per week.

Since we do not know whose depositions appellant intended to take in order to discover or prove the amount of her husband’s property and earnings, there is of course no need to consider the applicability of Wiglesworth v. Wright, 1954, Ky., 269 S.W.2d 263, to this case. However, the circuit court cannot make or so construe a local rule as to be in conflict with the Civil Rules. CR 43.04(1) applies to trial by deposition. It does not authorize the court to prohibit pre-trial depositions permitted by Rule 26. An order preventing- discovery depositions deprives the party of an opportunity to explore for the proof that may be necessary to sustain his case, and without knowing what evidence might have been thus developed we must presume a prejudicial effect. Otherwise, the complaining party could have no redress for the loss of a patently valuable right.

It may be that information developed in the course of pre-trial conference gave the court reason to conclude that no prejudice would result from'denial of the right to discovery. However, counsel for appellant could not have known in advance whether exploratory depositions would lead .to the production of material and helpful evidence. One of the most difficult aspects of a divorce proceeding is the determination of the financial status of one or both of the parties. We do not suggest that there was a calculated concealment here, but if so it would hardly be unusual to this type of case. Certainly it is obvious that the appellee wanted to get his freedom and leave the children in the appellant’s care with as little responsibility as possible on his part. Had he been inclined to show good faith he could have done so by making a frank and honest disclosure of his financial situation. Instead, he left the state and chose not to testify. Under these circumstances we think the right of discovery was vital. On remand of the case appellant should be given reasonable time and opportunity to avail herself of it.

In discharging the attachment the court was acting within its jurisdiction, however erroneous that action may have been. Thus the order was not void, and could not be set aside nunc pro tunc, or ab initio, as appellant suggests. Moreover, it would be impossible to restore the status quo even if we ordered it to be done. From a practical standpoint, the attachment question appears to be moot. But for the guidance of counsel and the court in the future course of the proceeding, CR 7.02, in referring to oral motions during the course of a trial or hearing, means motions that are incidental to the trial or hearing itself, and which arise in such a manner that the preparation of a written application is impracticable. A hearing does not provide the occasion for an intermission or holiday during which the requirement of written motions is suspended. A motion to discharge an attachment must be in writing.

In Brandenburg v. Brandenburg, 1932, 246 Ky. 546, 55 S.W.2d 351, evidence was heard on the motion to discharge, but was not transcribed and made a part of the record on appeal. The clerk’s certificate in the case now before us indicates that the transcript covers the proceedings. If other things said and done along the way were not important enough to put in the record, they do not count.

$20 per week for the support of two children is clearly insufficient, even if the appellee earns but $60 per week. Though a father’s earnings are always an important factor to be considered in fixing ■the amount of support payments, it must be remembered that the law holds him responsible for the maintenance of his children regardless of how little he earns. This obligation does not come from the court, and for that reason the court cannot exempt him-from it, wholly or in part. To the extent that a court purports to reduce a parent’s obligation below the minimum amount required for the support of his child it acts within an area of questionable jurisdiction. In the case of an able-bodied father we think the trial court must first determine the minimum amount that is necessary for the decent support of his children, which amount at least must be paid regardless of his earnings. Should he prove unable to comply, mitigating circumstances addressed to the court in defense of contempt proceedings will provide sufficient relief against oppression.

We cannot fix the minimum amount necessary to the support of appellant’s two children, except to say that $20 per week is not enough. Further proceedings may reveal what the appellee has earned during the interim since the judgment. If not, we think it is fair to say that if he does not see fit to make a full disclosure the court will be justified in concluding that he is able to provide whatever his children reasonably require.

Reversed for further proceedings consistent with this opinion.