author: PER CURIAM.

text:
    August WINKENHOFER, Jr., Chairman, Kentucky State Bar Association’s Committee on Unauthorized Practice, Complainant, v. Buford T. CHANEY, Respondent.
    Court of Appeals of Kentucky.
    June 21, 1963.
   PER CURIAM.

On motion of the Chairman of the Bar Association’s Committee on the unauthorized practice of law a rule issued against Buford T. Chaney of Horse Cave, Hart County, to show cause why he should not be found in contempt of court for having engaged in the practice of law without legal right. Rule 3.530. Mr. Chaney, who is engaged in the insurance business, filed a response denying he had practiced law and justified the particular actions about which complaint had been made. Trial Commissioners, appointed by the Chief Justice, conducted a hearing and filed a report summarizing the facts found and stating the evidence did not warrant the conclusion that Mr. Chaney had engaged in the practice of law in advising a cousin about making settlement of a claim for damages for the death of her husband. But the Committee found other charges to have been sustained. They are that the respondent had prepared and filed the final settlement in the county court for his cousin as administratrix, and drafted a certain deed. He had prepared deeds and legal documents for other persons but had made no charge for his services. Mr. Chaney had acted in good faith belief that his activities were not illegal, and he had ceased them and indicated his intention of abandoning such practices in the future.

The committee has recommended that the respondent be adjudged guilty of contempt and be assessed a fine of $100 and the costs of the proceeding, including the expenses incurred by the Bar Association m investigating the charges preferred against him. RCA 3.520; 3.530. However, they further recommend that the payment of the fine be suspended. The costs incurred by the Board of Bar Commissioners in the investigation of the charges and in the conduct of the case (RCA 3.430) are stated to be $323.65.

We affirm the report of the commissioners and order that the respondent, Buford T. Chaney, be and he is hereby adjudged in contempt of court for the unauthorized practice of law, and that he be fined $100, but the payment of the same will be suspended until further order of the court. It is also adjudged that the respondent pay the costs, as recommended by the trial commissioners.


source: Caselaw Access Project

license: Public Domain

text:
    Joseph C. GRAVES, Jr., et al., Appellants, v. SECURITY TRUST COMPANY et al., Appellees.
    Court of Appeals of Kentucky.
    June 21, 1963.

      F. Selby Hurst, Lexington, for appellants.
    Rufus Lisle, Harbison, Kessinger, Lisle & Bush, Lexington, for appellees.
   LAWRENCE S. GRAUMAN, Special Commissioner.

Joseph C. Graves, Jr., and George K. Graves, III, individually and as committee for Kate C. Graves, an incompetent person, instituted this action in the Fayette Circuit Court against Security Trust Company, its President,, its Secretary and its Treasurer. The action is a class suit by the appellants as shareholders of the appellee, Security Trust Company of Lexington, Kentucky, a Kentucky corporation.

A merger was proposed between Security Trust Company and First National Bank & Trust Company of Lexington, Kentucky. 12 U.S.C.A. § 215 requires the affirmative vote of two-thirds of the outstanding capital stock of the Security Trust Company (hereinafter called “Security”) to effect the consolidation. There are 40,000 shares of capital stock of Security outstanding and two-thirds thereof is 26,667. For the merger 31,688 shares of stock were voted; against, 7,300. Of the shares of stock voted for the merger, 9,347 were held by Security in a fiduciary capacity. Without the affirmative vote of these shares the requisite two-thirds vote of all of the outstanding shares could not be obtained.

In this action the appellants, shareholders of Security, question the right of Security to vote the shares held in its fiduciary capacity. Appellants contend that it would be illegal for the 9,347 shares held and owned by Security as executor, administrator and trustee to be considered for the purpose of determining the number of shares of stock voted in favor of the consolidation. Appellants further allege that if the merger is allowed to stand the value of their shares will diminish and the amount of dividends they receive will diminish. There is no allegation of fraud on the part of Security or any of its officers. It appears that the appellants are quarreling with the business judgment of Security.

It is provided by KRS 271.135 with reference to every corporation organized under Chapter 271:

“Shares of its own capital stock belonging to the corporation shall not be voted upon directly or indirectly.”

It is this one sentence upon which appellants primarily rely to support their contention that stock of Security to which Security holds legal title in a fiduciary capacity-may not be voted at a meeting of shareholders.

Though Security is organized under Chapter 287 (relating to banks and trust companies) rather than Chapter 271, KRS 271.015 provides as follows:

“This chapter shall apply to any corporation formed under the laws of this state unless either the statutes relating to a corporation of that kind are inconsistent with this chapter or state that the provisions of this chapter do not apply to it.”

Under the terms of KRS 386.025 a state bank or trust company empowered to act as a fiduciary is expressly authorized to receive and hold, under specified circumstances, shares of its own stock as an investment for an estate or trust under its management. KRS 271.315(4) provides that a person holding shares in a fiduciary capacity “may vote the same in person or by proxy.” KRS 287.220(1) secures to banks and trust companies, when acting in a fiduciary capacity,, the same rights and powers as are allowed to an individual exercising a similar trust. We are of the opinion that these statutory provisions clearly authorize Security to vote stock properly held by it in its fiduciary capacity. Were they inconsistent with KRS 271.135, the latter section would be rendered inapplicable by KRS 271.015. The fact is, however, that they are not inconsistent, because it is our opinion that, within the meaning of KRS 271.135, stock held in a fiduciary capacity does not “belong” to the individual or institution which happens to be the trustee. The entities are separate. Hence KRS 271.135 simply is not applicable.

This case was thoroughly considered by the learned chancellor, who delivered a written opinion overruling the appellee’s motion to dismiss for lack of jurisdiction and sustaining the appellee’s motion to dismiss for failure to state a cause of action. In his opinion the chancellor cited numerous authorities which uphold his ruling.

After carefully considering the various contentions made by the appellants and all of the authorities cited, we are of the opinion that KRS 271.135 does not prevent a corporate fiduciary from voting stock in its own corporation which it holds in a fiduciary capacity,, and that stock held in a trust by a corporate fiduciary belongs to the trust estate and not to the fiduciary. The stock which Security holds in its fiduciary capacity does not constitute any part of its corporate estate.

We are convinced after reading the record and studying the cases submitted by the appellants and the appellees that the judgment entered by the Fayette Circuit Court is correct, and, therefore, should be affirmed.

The opinion is approved by the Court and the judgment is affirmed.


author: WILLIAMS, Judge.

text:
    ILLINOIS CENTRAL RAILROAD COMPANY, Appellant, v. HOPKINS COUNTY, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.

      Mills, Spain & Mitchell, Maubert R. Mills, Madisonville, for appellant.
    Laurence T. Gordon, Nichols & Nichols, Earle M. Nichols, Madisonville, for appel-lees.
   WILLIAMS, Judge.

Hopkins County instituted an action against Illinois Central Railroad Company and Dawson Collieries, Inc., in the Hopkins Circuit Court. The action against Dawson Collieries, Inc., was dismissed, but Illinois Central Railroad Company was directed to construct approaches and a crossing over its right of way at the point where the Union Temple-Dawson Springs Road intersects the railroad. Appeal from that portion of the judgment is taken by Illinois Central Railroad Company.

The primary question involves the right of Hopkins County to maintain this action. The appellant insists that the road in question is not a county road and, consequently, the county should not have been permitted to bring the action. The trial judge found that the road is a county road under the authority of KRS 178.010(b), which provides :

“ ‘County roads’ are all public roads outside of incorporated cities, except primary roads and Federal parkways.”

About 1925, the Illinois Central Railroad Company abandoned an east-west roadbed and constructed a new line some distance away. Up to the time the old railroad right of way was abandoned there was a regularly traveled public road running roughly parallel to the railroad from Union Temple to Dawson Springs. After the roadbed was abandoned and the tracks and ties removed, the public commenced to use it as a highway and discontinued use of the old road which ran parallel to it. A north-south spur line intersects the old public road and the old railroad right of way, and a trestle has been erected at the intersection.

Illinois Central insists the Union Temple-Dawson Springs Road is not a county road because it has not been established as such by order of court. Hopkins County, on the other hand, maintains that the long continued use by the public, and maintenance by the county, created a legal acceptance and, consequently, it is a county road. Admittedly, the road has not been established as a county road by order of court, but it has been in use as a public road at least since 1925. There is a serious question whether the county has ever taken control of and maintained the road. The evidence shows that any maintenance by the county was at most sporadic and insignificant in extent.

In' 1925, when the old road was discontinued and the public started using the abandoned railroad right of way, no action was taken by the county to discontinue or alter the old road. In Chapter 178, KRS, the steps are enumerated which must be taken when a county road is established or discontinued, or the location thereof changed. In Rose v. Nolen, 166 Ky. 336, 179 S.W. 229, this Court specifically ruled that, before a road open to the public shall be recognized as a county road, it must have been established by order of court. That case was decided in 1915, one year after the present law setting up the method of establishing county roads was enacted. It was said there that the statute was intended to make appropriate action by the county necessary to the establishment of a road as a part of the road system of the county.

In Louisville & N. R. Co. v. Engle, 278 Ky. 576, 129 S.W.2d 133, we said that a public road may be established only in the manner provided by statute, or by dedication to the public use and acceptance by the proper authorities as a public road. And in Louisville & N. R. Co. v. Whittle’s Adm’rs, 216 Ky. 314, 287 S.W. 894, it was held that neither dedication nor acceptance need be formal, but there must be acts of control on the part of the county court such as the appointment of overseers, etc., before the road could be classified as a county road.

Appellees cite several cases which establish the fact that a road may become a public road without any formal acceptance by governmental authorities. The Union Temple-Dawson Springs Road has been used continuously for many years and is in fact a public road. That fact alone, however, is not sufficient to establish a right in the county to maintain an action such as this one. Before a county can have such right the road must have been accepted by the county as a “county road.”

The statutes setting up the procedure for establishing a county road have been in effect since 1914. We can conceive of no reason why they should not be followed. Of course we realize that, before the time when adequate records were kept, it was reasonable to assume that a road had been accepted by a county when the county had as a matter of fact maintained and controlled the road for a long period of time. At the present time there is no reason why the records of the county should not indicate whether or not a public road has been accepted as a county road.

There has been a failure by the county to show through its orders that the Union Temple-Dawson Springs Road has been established as a county road. Consequently, the county had no right to maintain this action.

The judgment is reversed.


author: STANLEY, Commissioner.

text:
    COMMONWEALTH of Kentucky, DEPARTMENT OF HIGHWAYS, Appellant, v. Arthur PRATHER et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.

      John B. Breckinridge, Atty. Gen., Wm. A. Lamkin, Jr., Asst. Atty. Gen., Frankfort, C. Dante Kearns, Lyndon, for appellant.
    Russell Jones, Fritz Krueger, Somerset, for appellees.
   STANLEY, Commissioner.

In widening U. S. Highway No. 27 at a point five or six miles south of Somerset, the Department of Highways condemned a strip 45 to 50 feet wide and about 250 feet long of a parcel of land owned by Arthur Prather and wife, containing 5.62 acres, on which there was a building used as a gasoline service station and restaurant. The area taken is about a quarter of an acre. It was paved and contained gasoline pumps. The result of the taking puts the highway nine to fourteen feet from the building. The time of the taking was May 23, 1958.

The appeal is from a judgment of $16,500 compensation. The verdict specified it was $11,375 for the land taken and $5,125 resulting damages. These sums are the same as were fixed by the commissioners of the county court in the initiation of the proceedings and were the máximums permitted by the instructions.

The Highway Department contends on the appeal that the opinions of value expressed by the owners’ witnesses are unsupported by facts and knowledge of comparable sales in the vicinity, hence, the court should have stricken the evidence, with the result that the verdict is far in excess of the values competently proved by the Department.

The decisive character of the cross-appeal requires that it be disposed of first.

A previous trial resulted in a verdict of $20,000. It was set aside on the ground that as the owners had not filed an appeal or exceptions in the circuit court from the county court judgment confirming and adjudicating the report of the commissioners (as the Department had done), they were not entitled to recover more than the sum so adjudged, namely, $16,500. After return of the second verdict the landowners moved to substitute the first one and render judgment on it, and the court overruled the motion.

The cross-appellants recognize that where the landowner fails to appeal or cross-appeal to the circuit court or to file exceptions in that court upon stated grounds, he may not complain; or, if he fails to state a specific ground of exception, he is bound by the county court judgment as to it. KRS 177.087; Bullitt v. Commonwealth, Ky., 298 S.W.2d 290; Commonwealth, Department of Highways v. Wilkins, Ky., 320 S.W.2d 125; Commonwealth v. Mayo, Ky., 324 S.W.2d 802. The landowners did not file an appeal or cross-appeal in the circuit court. They had filed in the county court an “Answer and Exceptions to Report of Commissioners” in which they admitted the Department’s right to condemn the property but denied that $16,-500 was the total value of the property taken and resulting damages and alleged the values and damages sustained were $40,000. The cross-appellants contend that as this document was in the record transmitted to the circuit court, they are entitled to have it regarded as the equivalent of filing an appeal and exceptions in the circuit court.

The procedure prescribed in condemnation of land is that commissioners appointed by the county court make an appraisement of the fair compensation and file their report in the county court. If the court finds that the petitioner has the right to condemn the property, it merely confirms the report of valuation and enters judgment accordingly. No issue .of valuations or amount of compensation is there tried. That is done de novo in the circuit court. KRS 177.086; 177.087.

We have construed KRS 177.087 as not requiring as a prerequisite to jurisdiction that an appellant shall file in the circuit court the exceptions which he had filed in the county court where same are contained in the transmitted record. Commonwealth v. Moyers, Ky., 280 S.W.2d 513; White v. Commonwealth, Ky., 287 S.W.2d 625. The filing of exceptions to the report of the commissioners in the county court on the ground of inadequacy of compensation, as above indicated, is not authorized; and we cannot hold that where such has been filed, even though the document is transmitted as part of the record, those exceptions should be given the same effect as if filed de novo in the circuit court. We are of opinion, therefore, that the trial court was correct in setting aside the first verdict; hence, the cross-appeal is not sustained.

We revert to the Commonwealth’s claim' of errors committed on the second trial where the verdict and judgment were $16,500.

The testimony of Mr. Prather, the landowner, was that the difference in the before-and-after-taking value of his property was $35,000: The court overruled the Commonwealth’s motion to strike his testimony because he had not shown a knowledge of the market value of comparable property. The property owners also introduced a witness expert in valuing gasoline service station property, and he testified that there had been a practical destruction of the facilities for that purpose. They introduced two men who were well acquainted with property values in the county and had had great experience in appraising property for the lending of money on it. One of them placed the before value at $48,800 and the after value as $16,200. However, the court withdrew his testimony from the consideration of the jury because he had not shown a knowledge of comparable sales. The other witness was a banker who put the valuations at $60,000 and $20,000 or $24,000, respectively. He had no-knowledge of comparable sales, and the court, in effect, admonished the jury not to consider his testimony.

In Commonwealth v. Tyree, Ky., 365 S.W.2d 472, we went fully into the question of the competency of witnesses to testify as to property values in condemnation cases. We ruled that ownership of the property involved is a sufficient qualification to express an opinion as to value, and that other witnesses having a general knowledge of values in the community and of the particular property are competent to express opinions as to that property and the difference between the before and after taking. See also Commonwealth v. Elizabethtown Amusements, Inc., Ky., 367 S.W.2d 449. The probative weight of the evidence of such witnesses is for the jury. Those cases are sufficient authority, we think, to hold that the trial court should not have stricken or limited the testimony of the two witnesses, as described and, considering it, that the verdict is fully sustained by the evidence.

The instructions to the jury followed the usual form, except to state that the jury’s finding for the land taken should not exceed $11,375 and for resulting damages not to exceed $5,125, “the amounts claimed by the landowner.” The appellant argues that the mention of these sums was not authorized under the evidence — an argument already disposed of — and that the insertion suggested compensation endorsed by the court.

Instructions in condemnation cases are governed by the same fundamental rules applicable to civil actions generally. 29 C.J.S. Eminent Domain § 290. In this jurisdiction it is the rule that instructions on the measure of damages should limit the recovery to a specific maximum sum. If the amount is indefinite as, for example, for pain and suffering, the limit is of necessity that claimed in the petition. Ordinarily the pleadings in a condemnation proceeding do not state or claim a specific sum as compensation, and, generally, the approved forms of instruction do not contain any limitation. See Instructions to Juries, Stanley, §§ 359 to 365. We are not here concerned with the general rule of limitation to the greatest amount for which there is evidence. The limitation in this case was based upon the fact that the property owners were estopped, for reasons above stated, to claim more than the award of the commissioners of the county court. The absence of such limitations in the instructions on the first trial of this case resulted in an improper verdict, which the court was required to set aside. We approve the instruction.

The judgment is affirmed on the direct and cross-appeals.


text:
    Joe HEMLEPP, Director of Finance, City of Ashland, Kentucky, Appellant, v. David ARONBERG, Mayor, City of Ashland, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.

      Paul C. Hobbs, Ashland, for appellant.
    A. W. Mann, W. H. Dysard, Dysard, Johnson & Welch, Robert P. Woods, Gray, Woods & Cooper, Ashland, Jo M. Ferguson, Grafton, Ferguson & Fleischer, Louisville, for appellees.
   CLAY, Commissioner.

This is an agreed case questioning the validity of a refunding bond issue of the City of Ashland. Its legality was upheld by the trial court.

In 1960 the City, acting for the benefit of the Board of Education of the Ashland Independent School District under the authority of KRS Chapter 162, authorized the issue and sold $2,500,000 of school revenue bonds. These bonds carried an interest rate of 4¼. to 4¾ percent interest and were noncallable until March 1, 1965. Subsequently in 1962 an additional $200,000 in parity bonds was issued for the same purpose. (These bonds carried a lower interest rate and are not directly involved in the refunding plan.) The bonds are not obligations of the City, the principal and interest being payable from rentals charged the Board of Education under a lease agreement with the City.

The proposal under consideration is to refund the 1960 issue by calling all outstanding bonds of that issue on March 1, 1965. The City anticipates that by doing so it may effect an overall saving of not less than $75,000 on this total obligation by reason of more favorable interest rates now prevailing. The interest rate on the original bonds was 4⅛ to 4¾ percent, and the refunding bonds will have an interest rate of 3⅛ percent.

The principal amount owing on the 1960 issue is $2,289,000. The proposed refunding issue will be in the principal amount of $2,508,000. The excess of $219,000 will be expended as follows: $61,800, redemption premium; $12,540, incidental costs of redemption ; the balance to pay principal and interest on the original issue during the period between the time of the issuance of the refunding bonds and the redemption of the original issue. The duplication of principal and interest obligations during the estimated 18 month period between the issuance of the refunding bonds and the redemption of the original issue constitutes the principal objection raised to this plan by appellant.

The refunding of bonds is authorized by KRS 162.260. This statute simply provides that such bonds be issued in accordance with the procedure prescribed for the issuance of the original bonds.

The contentions made on this appeal are that the issuance of refunding bonds in advance creates a new obligation, increases the indebtedness of the City, requires the payment of interest not yet due, and duplicates interest payments for the same debt. In addition, it is contended that it is illegal to issue refunding bonds in an amount exceeding the debt to be refunded, and the proposed issue will impair the security of the 1962 bonds.

The first three contentions of appellant are clearly without merit. Refunding bonds always create a new obligation but this issue, if otherwise proper, is authorized by KRS 162.260. The issue will not increase the indebtedness of the City because the City assumes no obligation. The plan does not authorize the payment of interest not yet due.

The basic contention of appellant is that the law with respect to refunding of general obligation voted bonds is well settled in Kentucky and that if the same principles are applied to revenue bonds, the proposed refunding issue is invalid. This Court has been rather strict in holding that the amount of the refunding bond issue should not exceed the outstanding obligations of the original issue. The opinions consistently make reference to “increasing the debt” and “duplicating the interest”. See Russell v. Fiscal Court of Boyd County, 274 Ky. 377, 118 S.W.2d 757; Hale v. Fiscal Court of Fulton County, 282 Ky. 475, 138 S.W.2d 937, and same case at 283 Ky. 599, 142 S.W. 2d 115; Holt v. City of Covington, 286 Ky. 727, 151 S.W.2d 780; and Shaw v. Fiscal Court of Graves County, 288 Ky. 215, 155 S.W.2d 856. Obviously when a specific indebtedness and interest rate has been approved by a vote, the enlargement of that debt or the increase in the interest rate under the guise of a refunding procedure would violate the specific plan approved and create an additional obligation of the governmental agency whose credit was involved. These objectionable features do not apply to revenue bonds.

The plan to issue refunding bonds substantially in advance of the redemption date of the original issue is new in Kentucky. It has been approved in Florida. See State v. City of Orlando, Fla., 82 So.2d 874; State v. City of Melbourne, Fla., 93 So.2d 371; State v. Jacksonville Expressway Authority, Fla., 93 So.2d 870. Our attention is not called to any constitutional or statutory provision that would be violated by such a scheme.

Appellant’s real objection seems to be that the immediate and substantial increase in the total amount of the bonded debt plus the obligation to pay additional interest for a certain period constitutes an improper expenditure of public funds. However, the plan has a legitimate purpose. The eventual liquidation of the indebtedness, because of the lower interest rate, will realize a saving in overall expenditure. It is estimated the net interest cost for the period between the issue of the refunding bonds and the redemption of the original issue will be ¼ of one percent (since the proceeds of the refunding bonds will be invested in interest-bearing United States securities). Although the refunding operation also requires a reserve for redemption premiums on the bonds to be called and interest on those bonds until called, the amortization of the debt will not only absorb these costs but will result in a net substantial saving by the time the total indebtedness is paid.

We have recently held that reasonable expenses incident to the issuance and sale of refunding bonds are within the purposes for which the original issue was authorized. Bell v. Board of Education of Barren County Sch. Dist., Ky., 343 S.W.2d 804. The reserve for redemption premium payments, the setting aside of a fund for the payment of principal and interest on the original issue during the interim period, and the payment of additional interest (even if properly designated “duplicate interest”), are simply incidental costs of the refunding operation. See State ex rel. Maestri v. Cave, 193 La. 419, 190 So. 631. No claim is made that these expenses are unreasonable. Consequently no ground of illegality in this respect appears.

The final contention is that the refunding bond issue will impair the security of the 1962 bonds, which are not directly involved in this plan. Appellees answer the argument by saying the new issue simply takes the place of the old issue, which had been on a parity with the 1962 issue. Since the holders of the 1962 bonds were on notice that by law the original issue could be refunded, the reasonable cost of the refunding plan may not be said to impair their rights. Another reason would appear to be the provision in the refunding bonds to the effect that they are “not issued in derogation or impairment of any liens or other security rights previously created and existing for the security thereof” (specific reference having been made to the 1962 issue).

On the record before us, we find no reversible error.

The judgment is affirmed.


author: CLAY, Commissioner.

text:
    WHITESBURG MUNICIPAL HOUSING COMMISSION, etc., Appellant, v. C. B. CAUDILL et al., Appellees.
    Court of Appeals of Kentucky.

    June 28, 1963.
    LeRoy W. Fields, Whitesburg, for appellant.
    Stephen Combs, Jr., Whitesburg, for ap-pellees.
   CLAY, Commissioner.

This is an urban renewal condemnation proceeding brought under KRS 99.420. Appellant plaintiff filed a complaint on November 1, 1962, commissioners were appointed, and their report was filed December 18, 1962. Upon the filing of the report, pursuant to KRS 99.420(4), a summons was issued against the defendant appellees. This summons was incomplete.

Upon being notified orally of the defect in the summons by a relative of the defendants, plaintiff’s attorney had a new summons issued January 10, 1963. At no time did the defendants file an answer or other pleading, or exceptions to the report of the commissioners. On January IS plaintiff filed exceptions to that report on the ground the award was excessive. Subsequently defendants moved to strike the plaintiff’s exceptions and the plaintiff moved to validate the exceptions. The trial court struck the exceptions, confirmed the award, and entered a judgment in conformity therewith.

Under KRS 99.420(6) the plaintiff was required to file exceptions to the report of the commissioners within 20 days after such report was filed on December 18. This it failed to do. The time is automatically extended under that subsection if the defendants file an answer or other pleading. Plaintiff first contends that the oral notification to it concerning the defective summons was tantamount to a pleading. This contention is absurd. It may be noted that the issuance or service of summons has nothing to do with the requirement that the plaintiff file its exceptions within 20 days from the filing of the report and award of the commissioners.

Plaintiff next contends the court should have extended the time for filing exceptions under CR 6.02 because of excusable neglect. Assuming, without deciding, that the court could have properly-extended this statutory time limit, plaintiff made no motion for such extension. Even assuming that such motion had been made, the court’s ruling may be treated as a finding that plaintiff’s neglect was not excusable. We cannot say it was.

The judgment is affirmed.


author: WADDILL, Commissioner.

text:
    Riley DURBIN et al., Appellants, v. Ben S. WOOD, d/b/a Ben S. Wood No. 2, et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.
    George M. Catlett, Frankfort, Robert B. Reed, Paducah, for appellants.
    Frank Dailey, Frankfort, David R. Reed, Paducah, for appellees.
   WADDILL, Commissioner.

The appeal is from a judgment of the Franklin Circuit Court upholding an order of the Alcoholic Beverage Control Board granting the appellee, Ben S. Wood, a retail package liquor license, a retail drink license and a beer license for premises located in McCracken County. The appellants, who protested the issuance of these licenses, urge that the published notice of Wood’s application failed to satisfy the mandatory requirements of KRS 243.360(1) in that it did not sufficiently describe the location of the premises for which the licenses were sought.

The notice in question described the premises as “Ben Wood No. 2, Route 2, Boaz, Kentucky.” The applicable provision of KRS 243.360(1) requires that the notice state “the location of the premises for which the license is sought.” The purpose of this subsection of the statute is to notify the public of the proposed use of specific property so that any member of the public is afforded an opportunity to file a protest against the issuance of a license for that location. Barnett v. Portwood, Ky., 328 S.W.2d 164. It is our opinion that the quoted description is so indefinite that it gives no notice of the proposed use of any particular property. Hence, there was no compliance with the requirement of KRS 243.360(1) and, under this view, the Alcoholic Beverage Control Board is compelled by KRS 243.450 to refuse to issue the licenses sought by Wood.

The contention that any insufficiency of the published notice, previously discussed, was cured by a subsequent notice published after Wood had filed his application with the Distilled Spirit and Malt Beverage Administrators is unavailing because KRS 243.360(1) provides that an applicant (such as Wood) must publish his notice before applying for a license. The further contention that the insufficiency of notice was waived by the failure to raise this objection before the Alcoholic Beverage Control Board is without merit because the fulfillment of the notice requirement of KRS 243.360(1) cannot be waived since it is a condition of eligibility which is made mandatory by the provisions of KRS 243.-450.

The judgment is reversed with directions to enter a judgment remanding the case to the Alcoholic Beverage Control Board for the entry of an order dismissing the applications for the licenses sought by Wood.


author: PALMORE, Judge.

text:
    COMMONWEALTH of Kentucky, DEPARTMENT OF HIGHWAYS, Appellant, v. Howard McGEORGE, Sr., et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.

      John B. Breckinridge, Atty. Gen., William A. Lamkin, Jr., Asst. Atty. Gen., Phillip K. Wicker, Somerset, for appellant.
    J. C. Helton, Pineville, for appellees.
   PALMORE, Judge.

The Highway Department appeals from a judgment entered pursuant to a jury ver-diet in a condemnation proceeding awarding Howard McGeorge and wife $2,000 for .78 acres taken from their 9.8-acre tract of land and $1,000 for damages to the remainder by reason of the taking.

The tract in question fronts about 600 feet on the south side of U. S. Highway 119 in Bell County and runs back a depth of some 880 feet to the Cumberland River. It is bottom land and lies several feet below the level of the highway, falling away from the road so that a southward relocation of the right-of-way will result in a greater difference in level between the land and the new road than existed with respect to the former frontage. This increase in height of fill was the only basis for the landowners’ evidence of damage to the value of the remainder tract.

The landowners were permitted over objection by the condemnor to show for comparative valuation purposes a fairly recent transaction in which the Bell County Board of Education had negotiated for and bought a nearby 10-acre tract of similar land for $11,000. The admissibility and possible prejudicial effect of this evidence are a main issue on appeal.

There was competent evidence that bottom land of the type here concerned had a market value of $1,000 per acre and that the portion of the McGeorge property fronting on the highway was suitable for residential building purposes and had a market value of $1,000 per 100 front feet. According to the testimony, 413 feet of the 600-foot frontage is being taken. On this basis it was estimated in behalf of the owners that the land taken had a fair market value of $4,000. Witnesses for the condemnor valued the whole tract before the taking at $500 per acre and, apparently giving no higher value to the highway frontage (because it lay several feet below the road surface and, in their opinion, was not suitable for residential purposes), estimated the .78-acre strip as worth $390 plus $125 for fencing removed.

The board of education has the power of eminent domain, and it is the general rule that a transaction involving a potential condemnor is inadmissible as a comparable sale, because it lacks the element of volun-tariness and freedom from compulsion. “The landowner, on the one side, may force a sale; and the condemnor, on the other, must have the land, even though it costs more than its value.” 5 Nichols, Eminent Domain, § 21.33, p. 468; 1 Orgel, Valuation under Eminent Domain, § 147, p. 618. See also Stewart v. Commonwealth, Ky., 337 S.W.2d 880, 882, and authorities therein cited. Rules of law, however, are based on reason, and are not necessarily applicable to cases in which their fundamental purposes will not be served. All of the decisions of this court cited by appellant in support of the exclusionary rule were cases in which one party or the other sought to show prices paid in connection with right-of-way acquisitions. In such cases not only the seller, but the buyer as well, is under a certain amount of compulsion. Having committed itself to a certain right-of-way or a particular block of tracts, and especially after having begun the acquisition, the purchaser has compromised its freedom of choice. The exclusionary rule amounts to a conclusive presumption that prices paid do not reflect free and voluntary transactions, and in that type of case it is founded on plausible reason.

“There has been some dissatisfaction with the rule of exclusion. * * * and in some jurisdictions it has been held that such evidence is admissible if the land was in fact similar and it was shown that the transaction was not influenced by any fear of litigation. * * *. The view has been expressed that the objection to such evidence goes to its weight rather than its admissibility. * * * In support of the view which disregards the rule of exclusion it has been argued that all sales, even those not involving a person possessing the power of condemnation, involve a compromise between vendor and vendee. Just as the court must determine similarity it should also first determine whether there was in fact freedom of contract.” 5 Nichols, Eminent Domain, § 21.33, pp. 472-478. “The courts that admit evidence of sales to the condemner * * * have accordingly stated that the fact that a sale was made with a condemner as one of the parties goes to the ‘effect’ of the evidence and not to its admissibility.” 1 Orgel, Valuation under Eminent Domain, § 148, pp. 619-620.

As it was the landowners who offered the evidence of the school board sale, the question is not whether the school board’s power of condemnation influenced the price, but whether the board’s freedom of choice as to location was so restricted that it was caused to pay more than the land was worth. A member of the school board familiar with the transaction and qualified to express an opinion of land values in the community testified that the sale was free and voluntary and that the market value of the property was what the board paid for it. He was neither examined nor cross-examined with respect to whether the board had a choice of other possible sites. A valuation witness for the condemnor, however, pointed out to the jury that in the selection of a location for a school a number of considerations other than price are involved. We are of the opinion that juries must be presumed intelligent enough to understand this sort of thing, and that in this case the question of whether the school board transaction was free and voluntary from the standpoint of the purchaser was a matter for the consideration of the jury.

Our previous cases following the rule of exclusion are not overruled. The rule simply does not apply hard and fast to every instance in which the purchasing party had the power of condemnation. We hold the trial court did not err in admitting the testimony in this case.

The award of $1,000, or any other amount, for damages to the remainder tract was unauthorized. The highest value put on the McGcorge property as a whole by any witness was $1,000 per acre. The .78-acre part taken by the condemnor was worth more than that only because it fronted on the highway. Obviously, therefore, when the jury assessed $2,000 for this .78 acres the state was paying for the frontage. Having paid for the frontage, it cannot be required to replace it with a new frontage. The state already has been charged for 100% of the access value of that portion of the frontage included in the .78 acres condemned. Thus the further award of $1,000 based upon the state’s having left the owners with less or more difficult access than they had before amounted to a duplication of damages. This has been a frequent incident of assessing separate elements of damage instead of confining the inquiry simply to the difference in market value of the landowner’s property as a whole before and after the taking, and is one of the pitfalls sought to be eliminated in the future by the rule set forth in Commonwealth Dept. of Highways v. Sherrod, Ky., 367 S.W.2d 844 (1963).

The condemnor moved to strike the valuation evidence given by certain of landowners’ witnesses on the ground that they showed no reasonable basis for their estimates. For the same reason it is contended that the evidence does not support the verdict. This case, however, is not to be compared with Commonwealth Dept. of Highways v. Rankin, Ky., 346 S.W.2d 714 (1960), an extreme example of excessive award based on weak evidence. The witnesses in this case were competent on the subject of land values, and although testimony should be stricken when the witness on cross-examination makes it unmistakably clear that his estimates are based entirely on incompetent and improper factors, it cannot be stricken or ignored merely because he flounders a little. This is for the jury to judge.

To the extent that it awards $2,000 for the taking of .78 acres of land the judgment is affirmed. Otherwise, it is reversed with directions that no amount be allowed for damages to the land remaining in appellees’ ownership.

      . Prom the oficial map filed as an exhibit it would appear, however, that approximately 450 feet on the old road is being taken and that 413 feet represents the figure to which this particular portion of the frontage will be reduced when the highway is straightened and moved southward.

      . KRS 162.030.

      . Commonwealth by State Highway Comm. v. Combs, 229 Ky. 627, 17 S.W.2d 748 (1929); Chicago, St. L. & N. O. Ry. Co. v. Ware, 220 Ky. 778. 295 S.W. 1000 (1927); Kentucky Hydroelectric Co. v. Woodward, 216 Ky. 618, 287 S.W. 985 (1926) ; Kentucky-West Virginia Gas Co. v. Hays, 238 Ky. 189, 37 S.W.2d 17 (1931); Louisville & N. R. Co. v. Johnson, 233 Ky. 628, 26 S.W.2d 535 (1930); Adams v. Commonwealth, 285 Ky. 38, 146 S.W.2d 7 (1940); Commonwealth by State Highway Comm. v. Crutchfield, 261 Ky., 272, 87 S.W.2d 598 (1935) ; Brock v. Harlan County, 297 Ky. 113, 179 S.W.2d 202 (1944) ; United Fuel Gas Co. v. Mauk, Ky., 272 S.W. 2d 810 (1954) ; and Stewart v. Commonwealth, Ky., 337 S.W.2d 880 (1960).


author: STEWART, Chief Justice.

text:
    DULWORTH & BURRESS TOBACCO WAREHOUSE COMPANY, Inc., et al., Appellants, v. George Olin BURRESS, Appellee.
    Court of Appeals of Kentucky.
    June 28, 1963.

      Robert M. Spragens, Lebanon, Clifford E. Smith, E. Gaines Davis, Jr., Smith, Reed, Yessin & Davis, Frankfort, for appellant.
    No appearance for appellee on appeal.
   STEWART, Chief Justice.

This is an appeal from an order appointing a receiver pendente lite to take over the assets of Dulworth & Burress Tobacco Warehouse Company, a corporation.

In 1947, Early V. Dulworth, J. C. Dul-worth, Robert L. Dulworth, appellants herein, and George Olin Burress, appellee herein, organized the Dulworth & Burress Tobacco Warehouse Company for the purpose of constructing and operating a tobacco sales warehouse in Greensburg. Each person contributed one-fourth of the original investment and each received one-fourth of the stock issued. These same persons presently own all the corporate stock in the same ratio as they did originally.

Eventually, appellee became dissatisfied with the manner in which the corporate affairs were being managed. In June, 1961, he filed this suit as a creditor and shareholder of the corporation, alleging various irregularities in the conduct of the business of the corporation on the part of the three Dulworths as “shareholders, directors and officers exercising full control” of the corporation. He asked for the appointment of a receiver; for $1345.-18 indebtedness due him; for the recovery of $12,600 unpaid salary; for an accounting; for the restitution of corporate funds that had been diverted or misapplied; and for dissolution of the corporation and distribution of its assets or, in the alternative, for judgment against appellants in the amount of $100,000 in consideration for which he would surrender his stock.

The hearing on this litigation began May 18, 1962, and continued until circuit court adjourned on the following May 25th, the parties having agreed that appellee might take and introduce as evidence the deposition of one Henry Cox. That deposition was filed on August 4, 1962. Appellee has not yet rested his case but on September 15, 1962, he moved the court to appoint a receiver pendente lite. No grounds for this action were stated in the motion for such an appointment. The trial judge thereupon made findings of fact and conclusions of law on the evidence presented solely by appellee and indicated his intention to comply with appellee’s request.

On September 19, 1962, appellants obtained from the Court of Appeals a temporary writ restraining the trial judge from effectuating the contemplated appointment. On January 25, 1963, this Court in an opinion held that appellants’ remedy by appeal was adequate, and in consequence the temporary writ was dissolved and the application to prohibit the appointment was denied. On January 26, 1963, without notice to appellants and before the mandate dissolving the writ had issued, the trial court signed and entered the order appointing the receiver. This is an appeal from that order.

Appellants filed their brief within the time allowed; appellee has filed no brief in this appeal. RCA 1.260(c) reads: “If the appellee fails to file his brief within the time allowed, the Court may: (1) accept the appellant’s statement of the facts and issues as correct; or (2) reverse the judgment if the appellant’s brief reasonably appears to sustain such action; or (3) regard the appellee’s failure as a confession of error and reverse the judgment without considering the merits of the case.” We are electing to dispose of this case in accordance with provisions (1) and (2).

After the order of appointment had been signed, but before the person named therein had qualified to act, appellants appeared before the trial judge in opposition to the proceeding and moved that the appointment be set aside. This motion was accompanied by an affidavit wherein appellants offered to execute a bond in their individual capacity, or to post a bond with corporate surety thereon, for an amount sufficient to satisfy any judgment which appellee might ultimately recover against the corporation; and they also agreed to submit to the entry of an injunction which would forbid any cash withdrawals from the corporation treasury, other than for current bills and tax payments, and which would in addition enjoin any transfer or encumbrance of the corporate real estate pendente lite.

In this same affidavit (the statements of which are not in dispute), appellants disclosed that the assets of the corporation consisted of a warehouse free of all liens, located in Green County, with a value in excess of $200,000; that it had cash on hand and owned accounts receivable of more than $100,000; and that its liabilities, exclusive of taxes, were less than $2500. This sworn document stated that their personal combined net worth was over $1,250,000.

The trial judge, after considering the motion and the affidavit, declined to nullify his order appointing a receiver.

Under the facts recited did the chancellor abuse his discretion in appointing a receiver pendente lit el

KRS 27.061, which provides the conditions for naming a receiver, states that the appointment of such an officer is not authorized unless and until there is proof that the property or fund in which a party has an interest or right, which is involved in an action, “is in danger of being lost, removed or materially injured.” Clark on Receivers (2nd ed.), in sec. 747, pp. 1105-7, in speaking of the circumstances which warrant the designation of a receiver, has this to say:

“ * ⅜ * Ordinarily something in the nature of fraud, wilfulness or recklessness in the management of the property and affairs must be shown, some flagrant disregard of official duty as to show the unfitness of the management to control the business. Mere differences of opinion among stockholders or directors as to the business methods or policy of the corporation, cannot of themselves constitute a legitimate ground on which to take the property out of the duly constituted management and place it in the hands of a receiver.”

The appointment of a receiver, which is a harsh and extraordinary course of action for a court to pursue, is generally regarded as a remedy of last resort. Accordingly, a receiver should not be appointed where there is available another safe, expedient and adequate remedy. Thus in 75 C.J.S. Receivers § 10, p. 669, under the subject of Receivers, it is pointed out that the appointment of a receiver should not be made where the following facts obtain: “Generally a receiver will not be appointed where every purpose of a receivership can be effectually accomplished and the rights of the parties as effectually protected by a bond with good and sufficient sureties, which the adverse party is ready to furnish, or where there is an adequate remedy on a bond or other security previously given.” To the same effect see also Fletcher, Cyclopedia of the Law of Private Corporations, Vol. 16, sec. 7733, p. 213. In Stillwell v. Savannah Grocery Co., 88 Ga. 100, 13 S.E. 963, the Supreme Court of Georgia made this pertinent statement in respect to a proposal identical to that submitted by appellants herein:

“The offer to give a bond for all the funds involved and to insure the preservation and protection of the real estate, and the defendants’ consent to any decree or order of the court except the appointment of a receiver, was as much as could legally be required to prevent the appointment of a receiver.”

It is clear beyond any question that it was incumbent upon appellee at least to make a showing that some of the corporation’s property was in imminent danger of being lost, removed or materially injured, and that only the immediate appointment of a receiver could avert and prevent a harmful result to his rights. These essential facts were not proven in this case. The trial court believed, and gave as his main reason for making the appointment, that a receiver was needed because the “business and purposes of the corporation are now impaired and seriously threatened by dissension among the stockholders.” The evidence introduced does not support such a finding. Even if this condition had existed, it has been heretofore shown this fact, standing alone, would not justify the appointment. Over and above all this, as there was available a less drastic remedy which would fully protect appellee’s rights in the corporate property, it was the duty of the court to utilize that remedy. Because of the failure to do so, the receivership appointment must be voided.

Is the corporation entitled to have the costs of the receivership pendente lite taxed against appellee?

CR 54.04 provides, in part, that, except when express provision therefor is made either by statute or by the Rules of Civil Procedure, costs shall be allowed as a matter of course to the prevailing party unless the court otherwise directs. Clay’s second note to this Rule states: “KRS Chapter 453, and particularly KRS 453.040, generally controls the allowance of costs. Ordinarily, as a matter of course, costs should be allowed the prevailing party. The Rule, however, recognizes a residual authority in the court to impose costs in its discretion when a statute or these Rules contains no express provision to the contrary.” See Clay’s Kentucky Practice, CR 54.04, Vol. 7, p. 143.

In Stella v. Mosele, 305 Ill.App. 577, 27 N.E.2d 559, the contention was made that only those items specifically enumerated in the statute could be taxed by the clerk as costs, and that the expense of a receivership which the court had set aside on appeal could not therefore be so taxed. Holding otherwise, that court said:

“In the absence of any direct authority on the question, it seems to us that, under the broad powers which courts of equity are generally held to possess, where a receiver was improvidently appointed on plaintiff’s petition, thereby having caused defendant to incur expenses in obtaining a reversal of the order, the power to assess and tax the damages incurred, as costs, is incidental to the powers of the equity court, especially where the pending suit is clearly cognizable in equity and the assessment of costs, even though legal in character and not specifically authorized by statute, becomes incidental to the settlement of the parties’ rights.”

In Greenbaum v. Lafayette and Broad Realty Corporation, 97 N.J.Eq. 536, 128 A. 168, a receiver was appointed after a hearing by the trial court but, on appeal, it was found the statutory requisites had not been met and the receiver was ordered removed. In remanding the case to the trial court the cost of receivership was ordered “taxed as a part of the costs of the corporation, as against the complainant, Greenbaum, and be collectible as a part thereof.”

As a general rule, however, in the absence of a statute or contract expressly providing therefor, attorneys’ fees are not allowable as costs, 14 Am.Jur., Costs, sec. 63, pp. 38, 39, nor recoverable as an item of damages, 15 Am.Jur., Damages, sec. 142, pp. 550, 551. See also Kentucky Portland Cement & Coal Co. v. Steckel, 164 Ky. 420, 175 S.W. 663; Kentucky Land & Immigration Co. v. Crabtree, 118 Ky. 395, 80 S.W. 1161, 4 Ann.Cas. 1133. (Attorney’s fees may be allowed in some instances under the Rules of Civil Procedure. See, for example, CR 37.01.)

Thus we conclude appellants’ counsel may not collect their attorneys’ fees in this proceeding from appellee, as none of the conditions exist that permit them to-do so. The corporation may collect as-costs all other expenses incurred.

Wherefore, the judgment is reversed' with directions that the receivership be set aside and that the corporation recover its costs in conformity with this opinion.


author: CULLEN, Commissioner.

text:
    Eli S. GREGORY, suing for himself and on behalf of all other citizens and taxpayers of the City of Lewisport, Kentucky, similarly situated, Appellant, v. CITY OF LEWISPORT, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    June 28, 1963.
    As Modified July 16, 1963.

      Woodward, Bartlett & McCarroll, Owensboro, for appellant.
    Bratcher, Rummage & Beard, Sandidge, Holbrook, Craig & Hager, Owensboro, Maxwell H. Elliott, Torrance, Cal., for ap-pellees.
   CULLEN, Commissioner.

A citizen and taxpayer of the City of Lewisport, Kentucky, appearing on behalf of himself and others similarly situated, joined with the city and with Harvey Aluminum, Incorporated, in submitting to the circuit court, under the procedure provided for in KRS 418.020, seventeen questions concerning the validity of various aspects of a project designed to conform with KRS 103.200 to 103.280, for acquisition by the city of an industrial plant to be leased to Harvey Aluminum and to be financed through revenue bonds. The circuit court entered judgment answering each of the questions favorably to validity. The citizen and taxpayer has appealed.

Three of the questions raised (A, B and H), namely, whether the transaction would create claims against the city without express authority of law in violation of Section 162 of the Constitution, whether the financing plan in general represents an unlawful lending of credit of the city in violation of Section 179 of the Constitution, and whether the project is for a private purpose rather than a public one, properly were answered in the negative by the circuit court, on authority of Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80, Bennett v. City of Mayfield, Ky., 323 S.W.2d 573, and Norvell v. City of Danville, Ky., 355 S.W.2d 689. As far as these three questions are concerned the issues are the same as in the three cited cases, so no further discussion of them is required.

The ■ project here involved contemplates that Harvey Aluminum will construct the plant and that the city will pay the construction costs, in stages as the work progresses, from the proceeds of the bonds. A question (F) is raised whether this plan for progress payments constitutes an unlawful lending of the credit of the city. In our opinion the plan for payment of the purchase price in stages as the construction work progresses does not involve a lending of the city’s credit any more than would a plan (such as approved in the cases hereinbefore cited) for payment of the entire purchase price upon completion of the construction. In either case the pay-' ments are to be made solely from the bond proceeds and no resources of the city are pledged.

Another question (E) is whether the plan for making progress or stage payments during construction is within the statutory authority, KRS 103.210, to acquire an industrial building “either by purchase or construction.” It is argued by the appellant that the statute authorizes only an outright purchase of a complete building or the construction of the building by the city itself. We think a purchase through a. progress-payment plan is a purchase within the literal meaning of the statute, and we believe it does not violate the spirit of the statute. The appellant argues that the plan will give the city no control or supervision over the construction work and no means of checking the costs, so there is no assurance that the building will be worth the price paid. However, we think there is as much assurance of getting full value under the proposed plan as in a case where the city buys a completed building.

The progress-payment plan gives' rise to another question (C) : Is the plan an invalid device to evade statutory requirements for advertisement for bids for construction work by cities and for the - payment of prevailing wages on public works projects? Perhaps it would not be acceptable for a city to contract, before commencement of construction, to buy a building upon its completion, if the only purpose of the plan were to escape statutory regulations governing construction of buildings by cities. But here the plan has • a legitimate purpose — to insure that the - building will conform to the requirements' of the lessee for whose use the building is designed. We think the statutes in question • are aimed primarily at construction of buildings for public use, so when, as in the case here, a building is being acquired for; use of private industry the courts should not search for possible motives of evasion. in the plan for acquisition of the building if the plan does not literally violate the statutes and if it has an apparent legitimate purpose.

The financing plan provides for the designation of an out-of-state bank as escrow agent. The proceeds of the sale of the bonds will be deposited with the agent and disbursed by it. The plan further provides for appointment of an out-of-state bank as trustee of the revenue bond sinking fund. The rentals from Harvey Aluminum will be paid to the trustee and applied by it to retirement of the bonds. The bank named as agent or trustee must have a combined capital and surplus of over $50 million (the amount of the proposed bond issue). The trustee is to be given irrevocable power to accept on behalf of the city all notices, deeds, bills of sale and policies of title insurance. The lease with Harvey Aluminum may be terminated only with the written consent of the trustee, and any new lease or re-lease must be approved by the trustee. Furthermore, the city will agree to be bound by the determinations made by the trustee with regard to any reports, certificates or opinions furnished to the trustee pursuant to the provisions of the lease contract.

Several questions are raised with reference to the foregoing provisions. The first (D) is whether a foreign bank not authorized to do business in Kentucky may act as a depository for a Kentucky city. Admittedly there is no express statutory prohibition against a foreign bank’s acting as such a depository. The fact that designation of a foreign depository, at least in revenue bond transactions, is not against a legislative policy is shown by the provision of KRS 162.540(10) expressly authorizing the naming of an out-of-state bank as depository in connection with certain revenue bond issues for school projects. The funds here involved consist of money borrowed by the city, on security of the industrial building and the rents to be derived from it, for the purpose of paying for the

building. The purpose of using a depository or escrow agent is to protect the bondholders rather than the city. Any considerations of policy that might dictate the selection of a domestic depository for city funds are not present here because the funds in question are not really city funds. The function of the depository will be to see that the borrowed money is used for the purpose for which it was borrowed and we think it is proper to designate a foreign bank for that purpose. Practical reasons for such designation are that no bank in Kentucky has a combined capital and surplus as great as the amount of the proposed bond issue, and the larger banks in the major financial centers of the country have a reputation and experience in the bond market that facilitates the handling of transactions of this nature.

A second question (G) is whether an out-of-state bank may validly be designated as trustee. The applicable considerations on this question are substantially the same as on the question of the depository. The function of the trustee is to protect the bondholders, who will have a first claim on the rentals. Their interests do not require that the trustee be a Kentucky institution. The appellant argues that under KRS 395.005 only a bank or trust company incorporated under the laws of this state may be a “fiduciary,” but this statute applies only to “fiduciaries” as defined in KRS 395.001, which are confined to those appointed by or under the control of or accountable to the county court.

A third question (I) is whether the provisions hereinbefore mentioned as to the powers of the trustee constitute an unlawful delegation of discretionary power of the city. Under the decision in Commonwealth v. Associated Industries of Kentucky, Ky., - S.W.2d -, delegations of power are allowed considerable latitude. But even without regard to that decision we think there actually is no delegation of power here. The city is in the position of a bar- rower, and the provisions in question are standard for borrowing transactions. A borrower usually has to surrender some of his rights in order to protect the lender. The city here is not surrendering any governmental powers. What are involved are simply details of a proprietary transaction.

With respect to the other questions submitted to and decided by the circuit court (J, K, L, M, N, O, P and Q) the appellant makes no argument.

Since no issue has been raised on this appeal with respect to the latter questions it is unnecessary for us to discuss them. We affirm the judgment answering these questions favorably to validity.

The judgment is affirmed.


author: BOHLING, Commissioner.

text:
    Walter L. WALLACE, Administrator of the Estate of Doyle L. Wallace, deceased, Appellant-Respondent, v. Ruth BOUNDS, Respondent-Appellant.
    No. 49605.
    Supreme Court of Missouri. Division No. 2.
    June 4, 1963.
    Motion for Rehearing or to Transfer to Court En Banc Denied July 8, 1963.

      Sherman Landau, St. Louis, for appellant.
    Evans & Dixon, John C. Shepherd and Paul V. Gilbert, St. Louis, for respondent.
   BOHLING, Commissioner.

Doyle L. Wallace sued Ruth Bounds for $17,500 for personal injuries sustained on July 27, 1960, when she drove an automobile into the rear of an automobile in which he was working. He died December 6, 1960, the result of a self-inflicted gunshot wound. Walter L. Wallace, the father of and Administrator of the Estate of Doyle L. Wallace, Deceased, was substituted as party plaintiff on February 6, 1961, and as administrator filed an amended petition in two-counts. Count I was an action for $50,000* damages for personal injuries sustained by said Doyle as alleged in the original petition. § 537.020. (Statutory references are: to RSMo 1959, V.A.M.S.) Count II, “in the alternative,” was a wrongful death action for $25,000 based upon the negligent acts alleged in Count I of the petition. § 537.-080. Plaintiff’s theory under Count II appears to be that the injuries Doyle Wallace received in the accident of July 27, 1960, aggravated an existing epileptic condition and he took his life on December 6, 1960, under an irresistible impulse caused thereby. Defendant’s answer to each count was a general denial. The trial resulted in a verdict and judgment for the defendant. Plaintiff contends upon his appeal that the court erred in requiring him to elect under which count he would go to the jury; in overruling his motion for a directed verdict at the close of all the evidence; in permitting defendant to inject a false issue of plaintiff’s claimed incapacity to prosecute the count for wrongful death, and in giving defendant’s instruction No. 2. Defendant has also appealed and questions an after-trial entry appearing in connection with the overruling of plaintiff’s motion for new trial.

Plaintiff’s case rests largely on the deposition of defendant, Mrs. Ruth Bounds, which he read in evidence. Mr. and Mrs. Doyle Wallace (plaintiff attacks the validity of their marriage) were living with defendant and her husband, Lonnie Bounds, in Piedmont, Missouri. Mrs. Wallace was Mrs. Bounds’ niece. On July 27, 1960, a clear day, Doyle Wallace was in his Buick automobile, parked on the shoulder of the roadway (quoting plaintiff’s statement) “replacing the electrical fuse which powered the blower fan for the defroster.” He was on his back, with his head under the dashboard, and his feet up over the back of the front seat. The brakes on the Bounds Buick were bad. Only the emergency brake worked. Doyle and Bounds were going to work on the brakes that afternoon. About 1:00 p. m. .defendant drove their car, in response to her husband’s request to move it to a shady spot, around to the front of their house and behind the Wallace car. She •could not stop the car. The brakes were bad, and the front bumper of the Bounds car struck the rear bumper of the Wallace car and moved it two or three feet forward. The collision caused Doyle’s legs and feet to go up over his head and out of the door of his car. After the collision the upper part of his body was in his car and the lower part, from the waist down, was out of the car and extended to a ditch alongside the shoulder. The testimony was that no damage from the collision could be seen on the Wallace car and there was only a slight dent on the bumper of the Bounds car, “no real damage.” Doyle was taken to the Veterans Administration Hospital at Poplar Bluff and later that afternoon he returned to the Bounds home. This was the only record that hospital had of Doyle Wallace, and his application of said date for treatment reads, so far as material here: “Brief history. Allegedly lying on seat of a car which was struck from behind. Was thrown partially out of car. Physical, laboratory, and X-ray findings. Allegedly experiencing severe pain. No muscle spasm elicited. Small area of contusion over the back. Diagnosis, contusion of back.”

Doyle Wallace served in the Marine Corps from April 20, 1956, to March 11, 1958, when he received an honorable discharge with a service-connected disability rating of thirty per cent. His medical history shows that he was well until September, 1957, when he had an epileptic attack. He had two or three additional seizures before being hospitalized. His service health record disclosed he was hospitalized July 26, 1957, when the first attack occurred. Repeated hospitalizations show a diagnosis of epilepsy, cause undetermined.

Doyle’s parents lived in St. Louis, where his father was a boilermaker for the Missouri Boiler Company. Doyle returned to his parents’ home after his discharge and was a helper at the said company’s plant for about two years, starting in April, 1958. His employer did not know of his condition.

Doyle returned to his parents’ home from Piedmont the latter part of August, 1960. Later, he went to Chicago, and on December 6, 1960, he died from a self-inflicted gunshot wound.

A medical report, dated May 26, 1960, of the St. Louis Veterans Administration office, where Doyle Wallace was under the supervision of the Neurology Division of the Mental Hygiene Clinic from December 9, 1958, through February 17, 1960, discloses he did not report for his scheduled visit of April 20, 1960. His treatment folder was later forwarded to Chicago at his request, and the report closes with: “Note — 12/8/60 Death notice in Post Dispatch, St. Louis, indicated pt. died 6 Dec. 60.”

The court at the close of all the evidence sustained defendant’s motion to require plaintiff to elect upon which count he would submit the case. Plaintiff elected to go to the jury under Count II, the wrongful death count. He claims error, stating said counts were not inconsistent and permitted a recovery for personal injuries (Count I) or a recovery for wrongful death (Count II), but not for both. He cites Civil Rule 55.12, V.A.M.R.; State ex rel. Francesconi v. Aetna Casualty & Surety Co., Mo.App., 350 S.W.2d 418, 422; Gomillia v. Missouri Pac. R. Co., Mo., 345 S.W.2d 202, 209[4]; 71 C.J.S. Pleading § 484b n. 43.

Civil Rule 55.12 authorizes parties to plead claims or defenses in the alternative. The Rule is cited in plaintiff’s State ex rel. case, supra, an action founded on contract, in connection with a quotation from Lee-Schermen Realty Co. v. Rueffel, Mo.App., 176 S.W.2d 655, 657[9], stating it is “‘settled law that a count based on an express

contract may be joined with a count based on quantum meruit. * * * And furthermore it has been held, that plaintiff cannot be compelled to elect on which count he will go to the jury.’ ” See also the early case of Moore v. Gaus & Sons Mfg. Co., 113 Mo. 98, 107(11), 20 S.W. 975, 976(2), and cases cited. Plaintiff in his argument also mentions American Displays v. E. T. Swiney Motors, Mo.App., 240 S.W.2d 732, 735 [2], and Kaiser Alum. & Chem. Sales, Inc. v. Lingle Refrig. Co., Mo.App., 350 S.W.2d 128, 132 [7], As expressly stated in the Kaiser Alum. & Chem. Sales, Inc., case, the count on the express contract and the count in quantum meruit pleaded the same cause of action and the two theories of recovery were not inconsistent or mutually destructive. Plaintiff quotes that portion of the Gomillia case, supra, stating that a defendant is not required to elect between two defenses that are not inconsistent. (As to the differences in the situations of a plaintiff and a defendant, see Tomlin v. Alford, Mo., 351 S.W.2d 705, 710[1,2].) His quotation from C.J.S. supra, reads: “However, in most jurisdictions it is generally held that an election will not be compelled when a plaintiff has two or more counts on which he has a single cause of action, and there is some uncertainty as to which he will be able to establish at the trial.” But said authority also states in § 485: “Between Theories of Action * * * However, an election may be required where the theories presented are inconsistent”; and in § 483: “Inconsistency. An election may be compelled when two counts are so inconsistent that the proof of one necessarily disproves the other.”

Civil Rule 55.12 (§ 509.110) is a rule of pleading. Our holdings are that it is error to submit inconsistent and contradictory theories of recovery. State ex rel. Tunget v. Shain, 340 Mo. 434, 101 S.W.2d 1, 3[5-8] ; Dilallo v. Lynch, 340 Mo. 82, 101 S.W.2d 7, 10[3-5]; Thompson v. Gipson, Mo, 277 S.W.2d 527, 531 [4, 5]; Sanders v. Carl Berry Oil Co, Mo, 359 S.W.2d 769[2],

At common law a party’s action for personal injuries did not survive his death. Plaza Express Co. v. Galloway, 365 Mo. 166, 280 S.W.2d 17, 21 [3], and cases cited. Also, at common law no civil action existed for wrongful death. Plaza Express Co, supra [4], case cited and Gilkeson v. Missouri Pac. Ry. Co, 222 Mo. 173, 185, 121 S.W. 138, 141, 24 L.R.A.,N.S, 844, 17 Ann.Cas. 763.

The common law has been changed by statute.

Section 537.020 provides, so far as material here: “Causes of action for personal injuries, other than those resulting in death, * * * shall survive to the personal representative of such injured party * * (Italics ours.) See Laws 1955, p. 780, amending § 537.020.

Section 537.080 provides, so far as material here: “Whenever the death of a person •shall he caused by a wrongful act, neglect or default of another, * * * the person who * * * would have been liable if death had not ensued shall be liable to an action for damages ⅜ * (Italics ours.) See Laws 1955, p. 778, repealing and reenacting §§ 537.070, 537.080, 537.090 and 537.100. Now § 537.080 authorizes the parties therein specified in the circumstances set forth to institute an action for wrongful death. Consult also §§ 537.085-537.100.

In this action the Administrator of the Estate of Doyle L. Wallace, Deceased, is suing under both § 537.020 and § 537.080. He filed a “first amended petition,” and in Count I sought a recovery under § 537.020. It has been considered that the petition of a personal representative of a decedent plaintiff should bring his claim within § 537.020 and expressly state that the injuries complained of did not result in the injured plaintiff’s death. Showen v. Metropolitan St. Ry. Co, 164 Mo.App. 41, 148 S.W. 135, 137[3]; Greer v. St. Louis, I. M. & S. Ry. Co, 173 Mo.App. 276, 158 S.W. 740, 744 [6-8] ; and see Adelsberger v. Sheehy, 336 Mo. 497, 79 S.W.2d 109, 111[1-3] ; Long v. F. W. Woolworth Co., Mo, 159 S.W.2d 619, 622[2],

As stated in the Plaza Express Co. case, supra 1. c. 22: “Thus only by virtue of Section 537.020 may an action for personal injuries survive to the personal representative of deceased. And this action survives only if the injury to the deceased did not result in his death. Likewise, it is solely by virtue of the wrongful death statutes above that any claim or cause of action accrues to a widow or other person named in Section 537.070 [now § 537.080, supra]. [Citations omitted.]”

The right of a plaintiff to recover under § 537.020 or § 537.080 depends entirely upon the provisions of the statutes creating the right. Under the terms of § 537.020, which applies only to causes of action for personal injuries, other than those resulting in death, and paraphrasing the Plaza Express Company case, supra [5], at the instant of Doyle Wallace’s death his claim for damages for personal injuries survived to his administrator if, but only if, said injuries did not result in Doyle Wallace’s death; and under the terms of now § 537.-080 the claim for the wrongful death of Doyle Wallace herein sued for accrued to his administrator if, but only if, the injuries aforesaid did result in Doyle Wallace’s death. At his death only one claim or cause of action was in existence. It was either the same claim Doyle Wallace had and sued for in his lifetime or a new claim which came into existence upon his death. Both claims could not and did not exist. The theory of one of the claims denies the theory of the other. The proof of one negates, repudiates and disproves the other. In these circumstances the claims are inconsistent and, under the authorities, a party is not entitled to go to a jury on the two claims but is put to an election. Cases supra; consult also Davis v. Hauschild, Mo., 243 S.W.2d 956, 960[6]; Carden v. Thompson, 333 Mo. 218, 62 S.W.2d 882, 889[5]; Payne v. White, Mo.App., 288 S.W.2d 6, 917].

The court in Allen v. Dunham, 188 Mo, App. 193, 175 S.W. 135, 137[6], considered the causes of action under now §§ 537.020 and 537.080 inconsistent, and where, by agreement, claims under said two statutes were consolidated for trial, it was further considered that the trial court properly required the plaintiff to elect which action she would submit to the jury. Consult also Plaza Express Company case, supra 25[14]. In Grand River Twp. v. Cooke Sales & Serv., Inc., Mo., 267 S.W.2d 322, 323[2], we considered a motion to require a plaintiff-purchaser to elect between inconsistent claims in one count for breach of warranty and for rescission should have been sustained. See also Otto v. Young, 227 Mo. 193, 127 S.W. 9, 18(7); Tracy v. Aldrich, Mo., 236 S.W. 347, 353[9-11], Although not on the instant issue, Jackson v. St. Louis-S. F. Ry. Co., 357 Mo. 998, 211 S.W.2d 931, 937[4, 5], held that a plaintiff could not recover damages under both the penal and compensatory sections of the wrongful death act, but was required to elect which of the two she would submit to the jury.

Plaintiff’s presentation does not establish error in his being required to elect on which count he would go to the jury.

Defendant says plaintiff failed to make a case under the wrongful death statute. We think we may as readily dispose of this review by ruling the remaining alleged trial errors, and proceed on the assumption, without so holding, that plaintiff made a sub-missible case.

Plaintiff claims the court erred in overruling his motion for a directed verdict at the close of all the evidence, refusing his instruction B and in overruling his after-trial motion to like effect. This is based on defendant’s deposition establishing negligence on her part in running into the rear of the automobile in which Doyle Wallace was working and injuring him on July 27, 1960. Plaintiff elected to go to the jury on the wrongful death count of his petition. Notwithstanding the fact that defendant’s deposition established negligence on her part on July 27, the jury did not have to believe plaintiff’s evidence, even if substantial, tending to establish that the injuries then received were a direct and proximate cause of Doyle Wallace’s death on December 6, 1960, in Chicago, Illinois, as a result of a self-inflicted gunshot wound. We find no merit in plaintiff’s said contention.

Plaintiff states the court permitted defendant to inject a false issue into the case; that is, plaintiff’s claimed incapacity to sue based upon a purported marriage between Doyle Wallace and Wanda Bailey.

In connection with the medical files put in evidence by plaintiff’s first witness, defendant, on cross-examination, established that said file contained a certified copy of a certificate showing that Doyle Wallace and Wanda Bailey were married in St. Clair County, Illinois, on March 24, 1959. This was without objection. Later, upon offer, the court considered the marriage certificate might tend to establish who was entitled to receive the proceeds of the litigation from the administrator. Over objection, defendant read the marriage certificate of Doyle Wallace and Wanda Bailey to the jury. Defendant’s counsel, in argument, stated that the two lived together as husband and wife and were so living together at the time of the automobile accident of July 27, 1960. Plaintiff objected, stating there was “no evidence of that.” There was evidence before the jury that authorized the inference of fact in counsel’s statement. The widow of a decedent and certain other specified relations have prior rights over an administrator or executor under § 537.080. In this case the administrator pleaded and his verdict-directing instruction was predicated upon a finding, among others: “ * * * and that .at the time of his death, Doyle Wallace was .unmarried, and that he was not survived by any wife or child, but that he was survived by next of kin including father, mother, brother and two sisters * * Defendant asked no instruction that defeated plaintiff’s recovery upon a finding that Doyle Wallace and Wanda Bailey were lawfully married or that she was his lawful widow. Plaintiff had the burden of proving his case. The preponderance of the evidence may have established that the marriage aforesaid was void. But, under plaintiff’s pleading and submission this issue was for the jury. We conclude plaintiff may not successfully complain of prejudicial error on these trial occurrences. See Civil Rule 83.13(b); § 512.160(2).

Plaintiff contends the following in-> struction was prejudicially erroneous: “The court instructs the jury that unless you find and believe from the evidence that the death of Doyle Wallace was the direct and proximate result of the accident of July 27, 1960, then your verdict shall be for the defendant.” (Emphasis supplied.) Plaintiff’s contention is that “a” should have been substituted for the italicized “the,” citing Caldwell v. St. Louis Pub. Serv. Co., Mo., 275 S.W.2d 288, 292[4, 5], In the Caldwell case there were two defendants, the jury returning a verdict against defendant St. Louis Public Service Company and a verdict in favor of defendant Beck. The trial court granted plaintiff a new trial against defendant Beck on the ground that an instruction authorizing a verdict in favor of said defendant unless the jury found that his negligence was “the direct and proximate” cause of plaintiff’s injuries was erroneous in that defendant Beck’s negligence could be “a” direct and proximate concurrent cause with the negligence of the other defendant in producing plaintiff’s injuries. This does not rule the issue here presented.

In the case before us, the trial court did not find defendant’s instruction to be erroneous and in this we think the court ruled correctly, principally because:

“Suicide, due to a mind disordered by an accident or injury or even by an assault accompanied by mental torture, has been held not so related to the wrongful acts as to furnish a ground for the action, where the act of suicide of the insane person is voluntary and done with knowledge of its purpose and physical effect; but where, as the proximate result of the injury the person injured becomes insane and bereft of reason, and while in this condition and as a result thereof he takes his own life, his act being involuntary, the act causing the injury has been held to be the proximate cause of death.” 25 C.J.S. Death § 25, p. 1094. See also Scott v. Greenville Pharmacy, Inc., 212 S.C. 485, 48 S.E.2d 324, 11 A.L.R.2d 745; Annotation, 11 A.L.R.2d 751, 757; Tate v. Canonica, 180 Cal.App.2d 898, 913, 914, and 915[5], 5 Cal.Rptr. 28; Orcutt v. Spokane County, 58 Wash.2d 846, 364 P.2d 1102[1]; Arsnow v. Red Top Cab Co., 159 Wash. 137, 292 P. 436 [3] ; 2 Restatement, Torts, § 455 (comment a, b, d); Prosser, The Law of Torts, 2d ed., § 49, pp. 273, 274; 16 Am. Jur., Death, § 81

Under the above authorities, plaintiff’s presentation does not establish error in the instruction and his contention is overruled.

Of defendant’s appeal. The order overruling plaintiff’s after-trial motion for new trial reads: “Plaintiff’s motion for judgment or new trial overruled as to Count 2. No ruling as to Count One since that count has not been tried.” Under the record before us the last sentence of this order was an inadvertent oversight on the part of the trial court. Plaintiff went to trial on both counts of his first amended petition. At no time did he dismiss as to Count I. His insistence in the trial court and in this court that he should have been allowed to instruct on Count I and Count II in the alternative shows that he tried both counts. The court must have considered both counts had been tried when he required plaintiff to elect on which count he would go to the jury. Plaintiff’s contention on appeal that the court erred in requiring him to elect which count he would submit is consistent with his having tried Count I. We have ruled an election between the inconsistent theories of recovery was proper. In making his election plaintiff went forward with Count II and abandoned Count I. The last sentence of the order overruling plaintiff’s after-trial motion should be deleted therefrom. It is so ordered.

The judgment is affirmed and the cause is remanded with directions to delete the above-mentioned sentence in the order overruling plaintiff’s motion for new trial.

BARRETT and STOCKARD, CC., concur.

PER CURIAM.

The foregoing opinion by BOHLING, C.,. is adopted as the opinion of the court.

All of the Judges concur.