author: MOREMEN, Judge.

text:
    Paul J. PRYOR, Appellant, v. Luther THOMAS, Warden, Kentucky State Penitentiary, Appellee.
    Court of Appeals of Kentucky.
    Oct. 12, 1962.
    Paul J. Pryor, appellant, pro se.
    John B. Breckinridge, Atty. Gen., Ronald M. Sullivan, Asst. Atty. Gen., for appel-lee.
   MOREMEN, Judge.

Appellant, Paul J. Pryor, was convicted of murder and sentenced to life imprisonment. He filed a petition for a writ of habeas corpus in the Lyon Circuit Court on the grounds that KRS 435.010, which reads “Any person who commits willful murder shall be punished by confinement in the penitentiary for life, or by death,” does not prohibit the act by merely fixing the punishment for murder. He contended that such a statute must also define the nature of the crime, and that the indictment and conviction under it contravene Section 1 of the Fourteenth Amendment to the Constitution of the United States. He further complained that the indictment contained elements taken from the common law definition of willful murder and such a procedure is not authorized by KRS 435.010.

Kentucky is a common law State. Our common law originated as an English institution evolved from local rules and customs which were in time recognized by the King's Court. That great mass of law has been accepted as part of the general law of almost every State of the Union.

By an Act of the Virgina General Assembly of 1776 it was declared “that the common law of England, all statutes or acts of parliament made in aid of the common law prior to the fourth year of the reign of King James I, and which are general, and not local to that kingdom * * * shall be the rule of decision, and shall be considered in full force, until the same shall be altered by the legislative power of this colony.” Ray v. Sweeney, 14 Bush 1, 77 Ky. 1.

The fourth year of the reign of King James I was in the year 1607. On May 14, 1607, the first permanent English settlement in America was founded on Jamestown Island, in the James River, near the present city of Norfolk, Virginia. Apparently the General Assembly of Virginia considered this event to be an appropriate cutoff date.

Section 233 of our Constitution provides:

“All laws which, on the first day of June, one thousand seven hundred and ninety-two, were in force in the state of Virginia, and which are of a general nature and not local to that state, and not repugnant to this constitution, nor to the laws which have been enacted by the general assembly of this Commonwealth, shall be in force within this state until they shall be altered or repealed by the general assembly.”

It will be noted that the Act of the General Assembly of Virginia of 1776 accepted generally the common law as developed by the courts, but excluded statutes or acts made before 1607. However, KRS 447.040 has further limited the scope of our acceptance. It reads: “The decisions of the courts of Great Britain rendered since July 4, 1776, shall not be of binding authority in the courts of Kentucky.”

It has long been accepted by the bench and bar that the common law prevails unless changed by our constitution or statutes. A good statement of this principle may be found in Nider v. Commonwealth, 140 Ky. 684, 131 S.W. 1024, where it is said:

“If this was an offense at common law, then it would also be an offense in this state, even if we had no statute on that subject, as the common law of England and all acts of Parliament made in aid thereof have since the organization of this state been a part of the body not only of the criminal but the civil law, except where it has been abrogated or superseded by statute, or is repugnant to the spirit of our laws or the public policy of the state. And so it is that when there is a wrong to be punished, whether it be great or small, or an injury to be redressed, whether it be big or little, and no statute law of this state can be found that will afford the punishment or offer the remedy, we turn to the common law for relief. And if we can find there a principle that is applicable to the situation or condition, its aid may be invoked and under it the wrong punished or the injury redressed.”

We have discussed at some length appellant’s theory of the case; however the question should have been raised upon direct appeal from the original judgment by which he was convicted of murder. We have often held that the writ of habeas corpus may not be invoked to obtain relief which properly should have been sought by appeal. See Owen v. Commonwealth, Ky., 280 S.W.2d 524; Etherton v. Jones, Ky., 350 S.W.2d 151; Brown v. Hoblitzell, Ky., 307 S.W.2d 739.

Judgment affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Joseph FRENEL, Owner Advance Specialties Company, Appellant, v. COMMONWEALTH of Kentucky DEPARTMENT OF HIGHWAYS, Appellee.
    Court of Appeals of Kentucky.
    June 22, 1962.
    As Modified on Denial of Rehearing Nov. 9, 1962.

      W. R. Jones, Fritz Krueger, Somerset, for appellant.
    John B. Breckinridge, Atty. Gen., F. D. Curry, Asst. Atty. Gen., for appellee.
   MOREMEN, Judge.

This is the second appeal by a land owner from judgments entered in a condemnation suit initiated by the Department of Highways. The opinion in the first appeal may be found in Ky., 331 S.W.2d 710.

Appellant owns about 23 acres of land situated on U. S. Highway 27 between Somerset and Burnside. The Department of Highways is enlarging the present two-lane road into a four-lane divided highway. The land being taken amounts to about 2.63 acres, 2.43 of which is being condemned for highway purposes and the remaining .2 of an acre for easements through which to extend drainage pipe. The strip is about 113 feet in depth and 938 feet long. When the new divided highway is completed the remainder of appellant’s land, not taken, will front on the new highway for about the same distance as the entire tract now fronts on the old road. Although the proof in this case is not exhaustive concerning the physical nature of the whole 23 acre tract of land, it seems reasonably plain from the testimony had and from exhibits filed in the record that the tract is fairly uniform. Appellant had purchased it as as factory site in 1955.

Appellant contends that on the re-trial of this case the value of the strip taken should not have been measured with reference to the entire tract, but that the testimony as to value should have been limited to the value o'f the strip as frontage property at the time of the taking. It is contended that testimony of the witnesses should have been limited strictly to the value of 'the strip' individually and separately as frontage property which adjoined the old two-lane highway and the- strip should have been valued and appraised independently and without relation to its being a part of the entire tract.

We have many times said that when land is taken for highway purposes, the difference between the fair market value of the whole premises before the taking and the fair market value of the remainder immediately afterwards is a true measure of compensation to be awarded the landowner. Commonwealth v. Moore, Ky., 267 S.W.2d 531; Gulf Interstate Gas Co. v. Garvin, Ky., 303 S.W.2d 260; Com., Dept, of Highways v. Stamper, Ky., 345 S.W.2d 640. So one is not permitted to slice off a part of the tract and value it without regard to the entire tract. Just compensation is determined by fixing the diminished value of the tract after the taking.

We have said on at least two occasions that the value of a tract of land taken by condemnation is to be measured with reference to the entire tract. Com., Dept. of Highways v. Blanton, Ky., 352 S.W.2d 545, and Com., Dept. of Highways v. Hall, Ky., 353 S.W.2d 548. The rule cuts both ways. In the latter case, it was said:

“The instructions given were offered by the appellant and were approved in Commonwealth v. Combs, 244 Ky. 204, 50 S.W.2d 497. The jury was advised to consider the tract taken ‘in relation to the entire tract of which it is a part.’ It is argued that the value of the part taken should be in direct proportion to the value of the entire tract as the area of the part taken is to the area of the entire tract. That theory is not well taken because the part taken may be the only valuable portion of the entire tract and still comprise but a fraction of the whole. Here in fact the part taken was the most valuable' - portion of the tract because it was level ■ and the part remaining was hilly.”

In the instant case it was not shown that the most valuable portion of the tract was taken. The argument seems to be based solely upon thé supposition that the “frontage” was lost for the entire tract. This is not so because the tract after completion of the highway will still have about the same amount of front footage.

“Frontage” value may be considered nothing more than the value that derives from convenient, direct access to the highway. The right of such access ordinarily is appurtenant to the entire tract, and so long as the tract continues under single ownership it cannot be said that the value attaches to the front portion of the tract any more than to 'the back. The value from the right of access can attach specifically to the front portion only by a conveyance of the right along with a conveyance of the front portion which results in destroying or lessening the access to the highway from the back portion. But in the ordinary highway widening situation the right of access is not taken by the condemnation and the front portion is not devoted to a use that impairs the access of the back portion — on the contrary, it is converted to a use which leaves all of the right of access attaching to the back portion. No part of the right of access is taken along with the front portion, by the condemnation, and no new right of access is created for the back portion; the formerly existing right of access simply adheres to the back portion. So no “frontage” value has been taken by the condemnation nor has the value of the remainder of the tract been enhanced by any newly created frontage rights. To the extent that the opinion on the former appeal of this case, Ky., 331 S.W.2d 710, may be considered to have expressed a contrary view, we believe it is in error, and sufficiently so that we are not required, under the “law of the case” rule, to abide by it. See Union Light, Heat & Power Co. v. Blackwell’s Adm’r, Ky., 291 S.W.2d 539.

We believe the testimony introduced by the Commonwealth was competent 'and was based upon the proper theory of valuation which aided the jury in fixing a fair value for this property.

The judgment is therefore affirmed.


author: BIRD, Judge.

text:
    Wallace L. MILLER, Individually, et al., Appellants, v. COUNTY OF BRECKINRIDGE, Ky., et al., Appellees.
    Court of Appeals of Kentucky.
    Oct. 16, 1962.
    J. Henry Gibson, Paul D. Miller, Hard-insburg, for appellants.
    Joseph R. Rubin, Louisville, Charles W. Hall, County Atty., Hardinsburg, for ap-pellees.
   BIRD, Judge.

The voters of Breckinridge County, by a vote of more than three to one, approved the issuance and sale of bonds in the sum of $250,000 for hospital purposes.

The bonds are about to be issued and sold by the county in order to comply with the provisions of the Hill-Burton Act and thus qualify for federal aid in the construction of a new hospital.

This action attacks the validity of the bond issue. The trial court found inter alia that hospital facilities in Breckinridge County were grossly inadequate. Thereupon the trial court concluded among other things that the health and well-being of the people sufficiently warranted the voted indebtedness about to be assumed by the county. The action was dismissed and the plaintiffs have appealed to this Court.

Only one question is presented to us. Does the gross inadequacy of hospital facilities in the county constitute an emergency within the meaning of Section 158 of the Kentucky Constitution so as to permit the county to exceed its normal debt limitations ?

We have not heretofore answered the question. Persuasive authorities have been cited and it is now the opinion of this Court that the proven inadequacy does constitute an emergency within the meaning of Section 158.

We have been requested to say whether an unappealed judgment in the circuit court is sufficient approval of the bond issue.

Obviously such judgment is as binding as a judgment of this Court.

We find no error. The judgment is therefore affirmed.


author: WADDILL, Commissioner.

text:
    Frank A. BARNETT, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    Oct. 12, 1962.
    Robert M. Short, Owensboro, for appellant.
    John B. Breckinridge, Atty. Gen., John B. Browning, Asst. Atty. Gen., Frankfort, for appellee.
   WADDILL, Commissioner.

This is an appeal from a judgment of the Daviess Circuit Court refusing to release appellant from custody after a hearing upon a writ of habeas corpus.

The petition for habeas corpus alleged that appellant was being unlawfully detained in the county jail to answer charges contained in an indictment upon which he had been previously placed in jeopardy. The response, in effect, stated that appellant was being held in jail pursuant to a valid court order. The trial judge in reaching his conclusions specifically found that there was no merit to appellant’s claim of former jeopardy.

The plea of former jeopardy is an affirmative defense in a criminal prosecution and it can only be raised in accordance with section 164 of our Criminal Code. Little v. Commonwealth, 197 Ky. 320, 247 S.W. 2; Roberson’s New Kentucky Criminal Law and Procedure, section 152, pages 239-241. In Etherton v. Jones, Ky., 350 S.W.2d 151, we said that even if former jeopardy were established it would not void the judgment and therefore could not be considered as a ground for relief in a habeas corpus proceeding. (For a full discussion, see Annotation, 8 A.L.R.2d 285).

While the circuit court correctly refused to release appellant from custody, the court should not have decided in this proceeding whether appellant had been previously placed in jeopardy. If properly raised upon trial on the indictment, the merits of the defense of former jeopardy-should then be decided.

Hence, the circuit court will modify the judgment to conform with this opinion.

As modified, the judgment is affirmed.


author: PER CURIAM.

text:
    J. W. OSBORNE, Appellant, v. D. P. OSBORNE et al., Administrator of the Estate of Wm. J. Osborne, Deceased, Appellees.
    Court of Appeals of Kentucky.
    May 4, 1962.
    Rehearing Denied Nov. 16, 1962.
    Joe Hobson, J. B. Clarke, Prestonsburg, for appellant.
    Joe P. Tackett, Prestonsburg, for appel-lees.
   PER CURIAM.

Motion for an appeal filed December 28, 1959, from a judgment of the Floyd Circuit Court, Honorable E. D. Stephenson, special judge, in favor of D. P. Osborne, individually, and as administrator of the estate of William J. Osborne, deceased, against J. W. Osborne, for $804.52 with interest.

We find the judgment and the basis upon which it rests correct. Therefore, the motion for an appeal is overruled ard the judgment stands

Affirmed.


text:
    Hershell STACY, Appellant, v. South NOBLE, Jr., et al., Appellees.
    Court of Appeals of Kentucky.
    Oct. 19, 1962.

      Calvin N. Manis, Hazard, for appellant.
    Willis W. Reeves, Richard D. Cooper, Reeves, Barret & Cooper, Hazard, for ap-pellees.
   MOREMEN, Judge.

Appellant, Hershell Stacy, was employed by Carter’s Garage as a mechanic and on September 12, 1959, was repairing a disabled vehicle on the highway when he was struck by an automobile driven by South Noble, Jr. and owned by Hollis Gashaw. He was seriously injured. A few days after the accident appellant employed an attorney to represent him in connection with his Workmen’s Compensation Claim and also entered into a written agreement whereby the same attorney was employed to bring action against Noble and. Gashaw to recover damages for injuries received because of the negligent operation of the automobile.

The Aetna Casualty & Surety Company was compensation insurance carrier for Stacy’s employer, Carter’s Garage, and soon after the accident began payments of compensation benefits to him. The Aet-na Company entered into an open agreement with Stacy by which it became liable to him for compensation in the sum of $14,931.00 and in addition paid the sum of $2500 for medical treatment. Stacy agreed to pay to his attorney an amount equal to 33½ per cent of the amount recovered in the third party tort action. Suit was filed against Noble and Gashaw for damages. Aetna intervened in this action and asked subrogation. It was also shown by the record that Aetna offered to prosecute the suit to a conclusion without cost, but the offer was refused.

The Fund Insurance Company was public liability carrier for Gashaw and it too intervened in the tort action, stated that it had no valid defense to make and paid into court the sum of $5,000, the limit of its liability under the policy. The tort action came on to be heard. Noble and Ga-shaw failed to appear and judgment by default was had.

The jury returned this verdict:

“We the jury do agree and find for the plaintiff in .the sum of $30,000.”

Aetna filed an amended intervening complaint, alleged that it was entitled to the entire $5,000 which had been paid into court in partial satisfaction of the judgment, and moved that the court disburse the entire $5,000 to it.

Appellant responded to the motion to disburse the fund and contended that: (1) Stacy should be allowed the sum of $1,-949.50 — the difference between the hospital and medical expenses allowed by the jury ($4,474) and the amount paid by Aetna as insurance carrier ($2,424.50); (2) Appellant should be allowed the sum of $1,-666.66 as a contractual attorney’s fee in the tort action; (3) The balance of the $5,000 should be paid to him as damages for pain and suffering, since nothing is allowed for them under the Workmen’s Compensation Act.

The circuit court adjudged that Aetna was entitled to the $5,000 fund and held that it was subrogated to the rights of Stacy to the extent of $14,931, compensation awarded to him, less the attorney’s fee of $2,396 paid to his attorney out of his compensation. The trial court was correct in refusing to allow items (1) and (3) claimed by appellant.

KRS 342.055 reads:

“Whenever an injury for which compensation is payable under this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages, the injured employe may either claim compensation or proceed at law by civil action against such other person to recover damages, or proceed both against the employer for compensation and such other person to recover damages, but he shall not collect from both. * * * If compensation is awarded under this chapter, either the employer or his insurance carrier, having paid the compensation or having become liable therefor, may recover in his or its own name or that of the injured employe from the other person in whom legal liability for damages exists, not to exceed the indemnity paid and payable to the injured employe.”

Under the foregoing statute the employee’s cause of action against a third party is assigned to the extent of indemnity paid and payable to him. This Court, however, has written into the statute an exception as to the extent of the assignment insofar as attorneys’ fees are involved and has held also in some circumstances that medical expenses may be segregated from other compensation benefits paid by the insurer company with the result that although the insurance carrier may have paid an amount in excess of the entire recovery from a third party, if the verdict in the tort action returns a special item of damages for medical expenses the insurance carrier may be reimbursed out of this item only for the amount of money paid on that account.

In Southern Quarries & Contracting Co. v. Hensley, 313 Ky. 640, 232 S.W.2d 999, the employer became liable for $9,000 disability benefits and $400 for medical expenses. The employee in the third party action recovered $6000 for personal injuries and $1458 for medical expenses. The employer claimed the entire sum of $7,458 as credit on the award. The Court held that only the $400 medical expenses should come out of the $1458 special damages for medical expenses and adjudged that the employee was entitled to retain the excess of $1058.

It will be noted in the case at bar that no amount for special damages for medical care was awarded by the jury and one may only speculate as to whether any was allowed on this account. In the same case (Southern Quarries & Contracting Co. v. Hensley) the contention was made, similar to the one made here, that since there is no allowance for pain and suffering under the Workmen’s Compensation Act, other sums should be segregated and placed beyond the insurer’s reach because of that fact. It was said:

“It is sufficient answer to this contention that the jury in its verdict made no allocation for pain and suffering. The jury simply divided its verdict into a certain sum for medical expenses and hospital bills and a certain sum for bodily injuries. We cannot speculate or guess what proportion of the $6000, if any, was for pain and suffering.”

We do not believe the court intended to lay down a rule to the effect that if the jury had made a separate allowance for pain and suffering in its verdict the employee was entitled to that amount before the insurer was paid. The holding apparently was that since no separation was had speculation was unnecessary. The question of the right of the employee to such items before the insurer was reimbursed for its expenditures was not reached. Any indication otherwise from the language used would result from obiter dictum.

In the case at bar, although the jury was instructed that it could return a verdict for medical services of a sum not to exceed $4374, it, in fact, made no specific return in this regard. So, under the authority of the Southern Quarries Company case we refuse to speculate as to what proportion was for medical expenses and, at the same time, find it unnecessary to decide whether the employee had a prior claim to money recovered from the third party if the jury had made a specific finding on that account.

The question of when and to what extent an employee in a third party action is entitled to an attorney’s fee out of any recovery has caused this Court considerable difficulty. In some cases the decision was based on whether the compensation award exceeded the amount recovered against the tort feasor. In the Southern Quarries case the sum recovered in the court action less the attorney’s fee was credited on the compensation award. There the compensation award exceeded the amount recovered. In Aetna Casualty & Surety Co. v. Snyder, Ky., 291 S.W.2d 14, the amount of recovery exceeded the amount of the award and this distinction was the basis for the holding that the carrier’s recoupment could not be reduced by employee’s expenses, including attorneys, in prosecuting claim against tort feasor.

In Spinner v. Fidelity & Casualty Co. of N. Y., 245 Ky. 519, 53 S.W.2d 946, the attorney’s fee was denied on the ground that there was no implied contract by the insurance carrier to pay any part of such fee.

In the case of Charles Seligman Co. v. Russell Brown, Ky., 360 S.W.2d 509, this Court overruled the two cases just mentioned and, in doing so, said:

“The employee in this case sued a third party for damages growing out of the same injury. He recovered damages. The sum recovered in the court action, less the attorneys’ fees, was credited on the compensation award. Appellant claims it was error not to credit the compensation award with the entire court recovery. We have held to the contrary in Southern Quarries & Contracting Co. v. Hensley, 313 Ky. 640, 232 S.W.2d 999, where the compensation award exceeds the amount recovered against the tort feasor, as it did in this case. Moreover, regardless of the respective amounts recovered, where the employer or its insurer has a reasonable opportunity to intervene in the employee’s action against the third party tort feasor, but chooses not to do so, it would he inequitable to require the employee to bear the attorney fee on that portion of the recovery which KRS 342.055 obliges him to pay over to the employer or its insurer. To the extent that Aetna Casualty & Surety Co. v. Snyder, Ky., 291 S.W.2d 14, and Spinner v. Fidelity & Casualty Co. of N. Y., 245 Ky. 519, 53 S.W.2d 946, indicate otherwise they are overruled.”

It will be noted in the foregoing quotation that some emphasis is placed on the fact that in that case the insurer had the opportunity to intervene, but did not avail itself of the opportunity. In this case the insurance company did intervene and in addition offered to prosecute the third party action free of cost to the employee. It will be noted, however, that in Southern Quarries case the basis for granting the attorney’s fee to the employee was the fact that the insurance carrier had intervened in the suit. We said:

“While there was no contractual relationship between the Company or its Insurance Carrier and the attorney bringing the common law action against the tort feasor, the Insurance Carrier did intervene in that suit to obtain the benefits therefrom and it therefore seems equitable that they should allow deduction for the attorney’s fee necessary to obtain those benefits before the judgment is credited against the award, and we so hold.”

The opinion in Charles Seligman v. Brown had not been handed down at the time this case was decided by the trial court. The briefs on this appeal were also prepared before the decision was had. A review of the cases shows that we have had great difficulty in maintaining a simple line of logic that would sustain justice in each case. Equitable principles have been invoked to prevent one from obtaining without cost the fruits of an attorney’s labor.

We have concluded that regardless of the facts of the initial employment of counsel, if the employee’s counsel actually bears the burden of obtaining recovery from the third party, then whoever takes the money is chargeable with a share of the fee. The fee must, however, be a reasonable one.

We have borne in mind that the initial right of action is vested in its entirety in the injured person and even though KRS 342.055 works an assignment of a portion of that cause of action — and perhaps sometimes the entire action — we have not been unmindful of the prime right of the employee to be represented by an attorney of his own choosing.

The judgment is reversed and the case remanded for proceedings consistent with this opinion.

MONTGOMERY, J., dissents.


author: MILLIKEN, Judge.

text:
    KENTUCKY STATE FAIR BOARD et al., Appellants, v. Marguerite E. NICKLIES et al., Appellees.
    Court of Appeals of Kentucky.
    Oct. 12, 1962.
    Samuel M. Rosenstein, Louisville, Jo M. Ferguson, Atty. Gen., John B. Browning, Asst. Atty. Gen., for appellants,
    Louis Lusky, Marvin Morse, Joe G. Leibson, Louisville, for appellees.
   MILLIKEN, Judge.

The Board of Claims denied the claim of Mrs. Elizabeth Nicklies, seventyffive years of age, for injuries received in a fall at the Kentucky. State Fair on the afternoon..of September 12, 1957, and, upon •appeal to the Circuit Court, the decision ■of ther Board was set aside, new findings of -fact made,: $5,000 allowed her for pain and suffering, and $2,317.50 and $2,682.70 awarded her husband for medical expenses and loss of consortium, respectively. Whether the 'Circuit' Court has the statutory power to make an award and whether the findings of the Board were supported by the evidence are the principal questions presented on appeal.

Created by statute (KRS, Chapter 44) waiving the sovereign immunity of the State, the Board of Claims is empowered to make limited awards to claimants whose injuries, it finds, are caused by negligence .of agents of the State. In order to grant an award, the Board must conclude that the evidence presented would sustain “an action at law if the state were amenable to such action.” ,(KRS 44.120.)

Appeals to the Circuit Court are governed by statute, the pertinent part of which (KRS 44.140(2)) declares: '

“On appeal no new evidence may he introduced, except as to fraud or misconduct of some person engaged in the hearing before the board. The court sitting without a jury shall hear the cause upon the record before it, and dispose of the appeal in a summary manner, being limited to determining: Whether or not the board acted without or in excess of its powers; the award was procured by fraud; the award is not in conformity to the provisions of KRS 44.070 to 44.160; and whether the findings of fact support the award.”

. We think it clear that the Circuit Court may. not itself make an award, hut is limited to remanding the case to the Board if the court finds that (1) the Board acted in excess of its powers; (2) the award was procured by fraud; (3) the award was not in conformity to the statute; and (4) when the findings of fact do not support the award. Commonwealth v. Mudd, Ky., 255 S.W.2d 989. Therefore the award granted by the court must be set aside.

The provision in the statute to the effect that the court may act if it finds that “the award is not in conformity to the provisions of KRS 44.070 to 44.160” does not empower the court to make an award when the Board has refused to make one. In fact, KRS 44.120 declares that “no award shall be made unless the board is of the opinion that the damage claimed was caused by such negligence on the part of the Commonwealth or its agents as would entitle claimant to a judgment in an action at law if the state were amenable to such action.” It-is the Board and not the court which may make an award in cases within the scope of the statute.

In the case at bar, the area where the claimant was injured was paved with concrete and the surface tapered toward the street, eliminating the curb, so that vehicles might have access to the building. The tapering lowered the surface most abruptly where the curb was eliminated, and it was at this point that the claimant fell, for a view of the dip in the surface was obscured by the passing throng of visitors at the Fair. There was evidence that other pedestrians had trouble at this site, and the claimant offered expert evidence that the design of the slope did not meet standard requirements, an assertion which was denied by an engineer testifying for the State Fair Board. Each party questioned the competency of the other’s expert testimony, but pictures of the area were introduced and the Chairman of the Board of Claims • inspected the site pursuant to the claimant’s request. Thus, there is photographic evidence in the record from which alone the Board could conclude that the construction was or was not negligently designed, and it found that it was not negligently designed. As the trier of the facts of the case, the conclusion of the Board has evidence of substance to support it, and for that reason we must sustain its conclusion.

The judgment of the court is reversed with directions to enter judgment sustaining order of the Board.

      . (Generally speaking, the scope of re-viewability of administrative decisions is not always a simple matter, for statutes governing the subject are not explicit for the most part and courts are not always logical in their decisions in this field. See Yol. 4, Davis, Administrative Law Treatise, Chapter 28, for an exhaustive discussion.)


author: MONTGOMERY, Judge.

text:
    Frances M. HOUGLAND, Appellant, v. Ernest J. PERDUE et al., Appellee.
    Court of Appeals of Kentucky.
    Oct. 19, 1962.
    Terrell, Schultzman & Hardy, Paducah, for appellant.
    Michael Avedisian, Reed & Hines, Padu-cah, for appellee.
   MONTGOMERY, Judge.

Frances M. Hougland appeals from a judgment enabling Ernest J. Perdue and his wife to improve Lindbergh Court in Hillcrest Subdivision near the City of Padu-cah so as to provide a means of ingress and egress to their properties in said subdivision. Appellant contends that the county is the sole owner of the street and has the responsibility for its maintenance, and until such responsibility is assumed, each abutting property owner holds possession to the center of the street as trustee for the county. it also is contended that '-he appellees, as adjoining property owners, have a right to use only so much of the street as will provide them with reasonable access to their property and that a 30-foot drive is sufficient for such purpose.

In September 1927, Hillcrest Subdivision was created and established. A plat showing the lots and streets was appropriately recorded in the county court clerk’s office. A street or roadway was designated on the plat as Lindbergh Court. It extended from Pecan Avenue to Grand Boulevard. The designated width of Lindbergh Court as shown by the plat is 80 feet. This is divided into a center strip or open areaway 20 feet in width, with a travel strip 30 feet in width on each side of it.

When the subdivision was opened, the streets, including Lindbergh Court, were graveled and were used by the general public. Following 1940, the use of Lindbergh Court was slight. Eventually the area became overgrown with weeds, vehicular traffic became nonexistent, and only pedestrian and bicycle travel over it was observed.

Appellant owns lots on the south side of Lindbergh Court and lots adjoining on 'Pecan Avenue. In 1959, appellant constructed a residence on her lots at an approximate cost of $150,000. The house fronts on Pecan Avenue.

Perdue and wife own all of the lots abutting on the north side of Lindbergh Court, as well as other lots in the subdivision. George Lawrence Saffer and his wife, also appellees, own the other lots adjoining Lindbergh Court. They are in accord with the Perdues in the desire to improve the street. The Chancellor found there was a need to improve the street for the benefit of appellees and other property owners in the subdivision as well. He also found that the proposed improvements planned by engineers would be proper, reasonable, and in accord with the plat.

The Chancellor concluded that the platting and recording of Hillcrest Subdivision and the sale of lots therein by reference to the plat constituted a dedication of the streets in the subdivision, _ including Lindbergh Court, to the public use and that the dedication inured to the benefit of the public, including abutting property owners who had a right to use Lindbergh Court. He further concluded that in the absence of any acceptance by the county and any effort by it to improve the street, the abutting property owners might make reasonable improvements thereon as a valid exercise of the easement resulting from the dedication. In addition he concluded that a fence erected by appellant in the half of Lindbergh Court lying next to her property was in violation of the rights of the abutting owners and other property owners in the subdivision and that she should remove it.

In his conclusions the Chancellor relied on Salyers v. Tackett, Ky., 322 S.W.2d 707 and Elam v. Elam, Ky., 322 S.W.2d 703. His conclusions represent a correct application of the principles set forth in those cases. The judgment entered in accord therewith is correct. See also 26 C.J.S. Dedication § 52, pages 530-531; Annotation, 112 A.L.R. 1303, including Morgan v. Morgan, 205 Ky. 545, 266 S.W. 35; Guillet v. Livernois, 297 Mass. 337, 8 N.E.2d 921, 112 A.L.R. 1300; Cassell v. Reeves, Ky., 265 S.W.2d 801.

There is no merit in appellant’s argument that the improvement of the street will impair the attractiveness and value of her property or that such improvement constitutes a “spite road.” The answer is that the proposed improvement is a reasonable exercise of a right to be enjoyed by appel-lees.

Appellant’s argument that she is a trustee for the county with the right to possess and occupy one-half of the street until the county assumes the responsibility for maintenance is erroneous for the reasons set forth in the cited cases. This view is not sustained by City of Paducah v. Mallory, 225 Ky. 692, 9 S.W.2d 1015, or Brewer v. City of Mayfield, 231 Ky. 356, 21 S.W.2d 436. Those cases hold that one who dedicates a street to public use hut retains possession until the city or county accepts it holds the land as a trustee for the public and not by adverse possession. Appellant can claim no comfort under those cases since she neither dedicated the street nor actually had possession of it.

Judgment affirmed.


author: PALMORE, Judge.

text:
    Margaret CHAPLIN and T. G. Chaplin, Jr., d/b/a Richmond Ice Cream Company, Appellants, v. BESSIRE & COMPANY, Inc., Appellee.
    Court of Appeals of Kentucky.
    Oct. 19, 1962.

      Eugene S. Wiggins, Richmond, for appellant.
    Thomas D. Shumate, Richmond, for ap-pellee.
   PALMORE, Judge.

This suit was brought by the buyers against the seller to rescind a conditional sales contract and recover what had been paid on the contract price, together with special damages. The seller counterclaimed for the unpaid balance of tire purchase price and the enforcement of its security rights. The controversy was submitted to a jury, which returned a verdict upholding the rescission but awarding the buyers less than the amount they had paid on the contract, which therefore was less than the very minimum recovery to which they were entitled upon a valid rescission. The trial court subsequently sustained the seller’s motion for a judgment n. o. v., overruled a CR 50.03(2) motion of the buyers for a new trial, and entered judgment dismissing the complaint and awarding the seller full recovery on its counterclaim. The buyers appeal.

The ground on which rescission was sought to be justified was breach of warranty, and on the particular issue of whether the property bought and sold was in fact defective, thus breaching the warranty, we can say without further ado that the evidence was amply sufficient for submission to the jury. The critical question on this appeal, however, is whether, if there was a breach, as a matter of law the buyers failed to rescind within a reasonable time after discovering it. This apparently is the point on which the trial court ultimately determined to override the verdict of the jury.

The broad principles governing the buyer’s right to rescind a sale of personal property for breach of warranty were codified by § 69 of the Uniform Sales Act, which section seems to have been substantially declaratory of the prevailing case law and, at the time this controversy arose, was in force here as KRS 361.690. (The same basic policies, except as to “election,” continue to apply under § 2-608 of the Uniform Commercial Code, KRS 355.2-608. See Anderson’s Uniform Commercial Code, Vol. 1, pp; 365-370.)

It is fundamental that the purchaser who desires to rescind must act “within a reasonable' time, taking all of the circumstances into consideration.” Annotation, “Time for rescission by purchaser of chattel . for fraud or breach of warranty,” 72 A.L.R. 726, 729, and cases there cited, including Church v. Wright Mach. Co., 1921, 190 Ky. 561, 227 S.W. 1003, in which it was said that “all this depends upon the nature of the property and circumstances of the case. There is no hard and fast rule by which to determine what is and what is not an unreasonable delay * *

“The reasonable time in which a purchaser of chattels must rescind the contract runs only from the time the purchaser had knowledge of or is reasonably chargeable with knowledge of the breach of warranty.” Reno Sales Co. v. Pritchard Industries, C.A. 7, 1950, 178 F.2d 279, 281, citing 72 A.L.R. 726, 740. South Bend Pulley Co. v. W. E. Caldwell Co., 1899, 54 S.W. 12, 21 Ky.Law Rep. 1084. According to the nature of the case, disillusionment and discovery may, of course, come by degrees. Cf. Lambach v. Lundberg, 1934, 177 Wash. 568, 33 P.2d 105, 108. In that event the question of what is reasonable becomes doubly difficult.

“Since the question as to what is a reasonable time * * * depends on the facts of the particular case, and is frequently a matter as to which different conclusions may reasonably be drawn, it is well settled that ordinarily the question is one of fact for the jury.” Annotation, 72 A.L.R. 726, 753, citing cases including A. C. Morris & Co. v. Heaton, 1930, 235 Ky. 66, 29 S.W.2d 617, 619.

The material facts to which the foregoing principles must be applied in determining whether in this case the delay of the buyers in attempting to rescind was so obviously unreasonable as to preclude submission of the issue to the jury are as follows:

Bessire and Company, Inc. (hereinafter called Bessire), the seller, which has an office at Louisville, Kentucky, deals in and sells an extensive' line of equipment and supplies for bakeries and dairies. It has conducted this business for many years. Among its regular customers in 1957 were Margaret Chaplin and son, T. G. Chaplin, Jr., partners doing business as Richmond Ice Cream Company, who were engaged in manufacturing and selling ice cream and related products and had their plant at Richmond, Kentucky. The son, whom we shall simply call Chaplin, was the manager. During 1957 he negotiated with Bessire, with which he had periodic personal contact through the visits of its salesman, Tisdale, to the ice cream plant in Richmond, for the purchase of a walk-in “hardening box,” meaning an insulated chamber capable of holding a low temperature for the proper storage of ice cream and similar products and for hardening freshly manufactured mixes. In September of 1957 Chaplin ordered the box and certain auxiliary equipment at a .total price of $6533, which included $600 for installation by the seller. The major portion of this amount was payable in installments falling due monthly during the 6-month season of May through October in each of the years 1958, 1959, and 1960.

Bessire caused the box to be manufactured and delivered to Richmond by the Central Fixture Company, of Indianapolis, Indiana. Its dimensions were 30' x 2O' horizontally and 8 feet in height, and it was delivered in 20' x 5' sections which were put together and set on a concrete slab Chaplin had been directed to have ready in advance. The assembly work was done in the latter part of October, 1957, by or under the direction of the men who came with the truck from Central. The truck bed was unprotected, and it was raining when they arrived. It rained again the day after the assembly work was completed, and Chaplin at once observed that water was dripping inside through the seams where the sections were put together to form the top of the box. He telephoned Bessire, and promptly its chief officer at Louisville, Mr. Bresler, together with Tisdale and a Mr. Horine from Central (all of whom had previously looked over the plant during the negotiation stage in order to formulate the necessary specifications) came to Richmond. During this inspection visit Chaplin for the first time was advised that it would be necessary for him to build a protective roof over the box. On the next day, November 1, 1957, Bresler wrote him a letter expressing regret that the box had become water soaked and a willingness to do whatever was necessary to correct the situation. This letter confirmed what had been agreed on by the parties at Richmond the day before, which was, in substance, that holes would be drilled to drain the water out of the porous insulating material in the ceiling sections, all the seams and openings would then be recaulked, and an additional 4 inches of insulation would be applied to the under side overhead, following which both Bessire and Central would “guarantee this box to perform and give satisfactory service. By this, we guarantee that there will not be any air leaks and that proper temperatures will be maintained within the box.”

The corrective measures mentioned in Bresler’s letter were accomplished during November and Chaplin accepted the box. He signed the formal conditional sales contract early in December, 1957. During the winter months of 1957-58 the box gave 'satisfactory service, but in May of 1958 when the weather became warm Chaplin began to notice cracks in the ceiling through ■which water apparently had seeped and formed icicles. He says he had trouble keeping a proper temperature in the room and that the higher the temperature was, the more icicles formed. When Tisdale called'on his regular rounds about once a month Chaplin says he notified him of this trouble and showed him the condition. Tis'dale said he would report the situation, but there was no subsequent response from Bessire or Central. On 'each of the several occasions Tisdale visited the plant during the next few months Chaplin renewed his complaint, and in each instance Tisdale again assured him that he would report it. Meanwhile, throughout the summer season of 1958 the box was in full use and appears to have served its purpose despite the imperfections. Finally Chaplin telephoned Bessire in November of 1958 and said that if they did not come and check the box he would stop paying his installments (at this time, however, he had paid but two of the six installments due in 1958). The result of this action was that Bessire contacted Central, and in February of 1959 Horine and another Central representative from Indianapolis came to Richmond and inspected the box. They advised Chaplin the cause of his trouble was that the roof he had put over the box in November of 1957 was sealed too tight, and if he would cut air vents in it, that would correct the difficulty. So Chaplin then had vents cut along the sides of the elevated roof (which roof, it will be recalled, had been constructed at Bessire’s suggestion in November of 1957 as one of the requisites of its guaranty that the box would thereafter perform satisfactorily).

During the cold months of the 1958-59 winter the hardening room gave no trouble, but with the advent of spring icicles began to form again, and water dripped from the top. The ceiling developed more cracks. (The added insulation applied to the ceiling in November, 1957, consisted of two 2-inch layers of styrofoam slabs in 7x3' sections, bonded by a mastic composition, with the slabs or sections staggered so as to offset the seams. Both the styrofoam and mastic are or were supposed to be impervious to water, whereas the fiber insulating material inside the ceiling and walls of the box itself was not.) The straw that broke the camel’s back, to Chaplin’s way of thinking, came on May 6,1959, when an electrical fuse blew out, stopping the refrigeration machinery, and in the relatively brief period of three hours or less before the difficulty was discovered and the fuse replaced the temperature in the hardening box rose some 32 degrees, resulting in spoilage and loss of $777 worth of ice cream. Immediately Chaplin telephoned Bessire’s Louisville office and requested that someone be sent to Richmond to fix the box (that is, so as to prevent rapid loss of temperature). Having received no response by May IS, 1959, on that date he had his attorney write Bessire a letter rescinding the sale and tendering a return of the box.

(During the interim between May 9 and May 15, 1959, Chaplin paid the equivalent of two monthly installments on his contract with Bessire. It is possible, of course, for a party to waive his right of rescission by treating the contract as still in force after he knows of the breach of warranty. But at this time Chaplin was in arrears, and he says he made those payments under the impression that he would have to be paid up in order to be in a position to rescind. Moreover, he had not yet made the decision to rescind, being still in hope that Bessire would rectify the situation. Thus the payment of these installments was but one episode in the chain of circumstances to be considered in determining whether, when the choice to rescind finally was made on May 15, 1959, Chaplin’s acts and omissions up to that time were such that it was unreasonable to say he had not waived his right to do so.)

Following the letter of rescission Chaplin permitted representatives of Bessire and Central to inspect and test the hardening room at Richmond. They concluded that the trouble was in the refrigeration machinery rather than the box, and Bessire refused to accept the tendered return.

At this point it bears repeating that whether the box was in fact defective and unfit for its intended use was a question for the jury, but in discussing whether Chaplin acted to cancel within a reasonable time we must assume that it was. Granted, then, that it was unfit, at what point does reason dictate that Chaplin was obliged to abandon ship?

As we have already suggested, realization that a defect exists and is irremediable may from the nature of the situation come gradually. As the signs of trouble appeared in this box Chaplin can hardly be expected to have anticipated at once that Bessire, a reputable house with which he had theretofore done business and in whose guaranty he had good reason to place confidence, would not be able to detect the cause and remedy it. In the first place* according to the testimony of Chaplin’s expert witness the difficulty was caused by a gradual accumulation of ice within the walls and roof of the box, resulting in a reduction of its insulating capacity, and this process could have taken as long as two years in progressing to its maximum destructive effect. Thus in the beginning the manifestations of faulty performance may not have appeared serious enough to justify such an extreme measure as cancellation. Secondly, with a large and costly installation such as the one involved in this case, the buyer has a least a moral right, if not a legal duty, to give the seller a fair opportunity to correct the defective condition, and certainly he does not lose his right of rescission by first exhausting that avenue.

It has been said that while the seller is engaged in an effort to remedy the defects the “reasonable time” within which the buyer must rescind does not run. Heibel v. United States Air Conditioning Corp., 1939, 206 Minn. 288, 288 N.W. 393, 394. And if the buyer promptly calls upon the seller to make his warranty good the time should not begin to run against the buyer until it is no longer reasonable for him to> expect that the seller can and will do so.

The cases in which a buyer has been permitted to rescind after using the property for more than a season or year are not plentiful. However, most cases of this sort have involved items of shorter durability than a walk-in refrigeration chamber. A year in the life of an automobile is not to be equated with a year in the ■ anticipated life of a long-term fixture. One of the important considerations in de- • termining whether a rescission was’ reasonably prompt is the possibility of prejudice to the seller. In this case there is no evidence to indicate that the seller was any ' more prejudiced by the cancellation in May of Í959'than it would have been a year earlier. On the whole case -we conclude that reasonable men may well’ differ on whfether Chaplin acted in due season, and that the question therefore was in the province of the jury. ' Hence the trial court’s judgment n. o. v. was in error.

The decisions of this court on which . Bessire relies are distinguishable:

(1) A. C. Morris & Co. v. Heaton, 1930, 235 Ky. 66, 29 S.W.2d 617, involved a milking machine which was delivered November 10, 1926. Shortly thereafter the buyer, became ill and took a sojourn in Florida for his health. No complaint was . made for 6 months, and a purchase-money note was renewed for an additional 6 months on May 10, 1927, before the buyer elected to rescind.. A judgment upholding the recission was reversed on the ground that the buyer delayed unreasonably, in that he admittedly “had time after his recovery of health and return from Florida to ' try out* the machine before he renewed the note. No. effort in that direction was ma.de * * * until’ a month or more after the note was renewed.”

In that case thé inoperable condition of the machine was readily discoverable, since it was in fact discovered when the buyer undertook to use it, whereas in this ca'se discovery and disillustionment came over an -extended period of time during which the buyer had reason to believe that the defect could and would be remedied by the seller. Chaplin did not delay either in putting the property to the test of use or in notifying the seller of its shortcomings as they developed and were observed.

(2) In Gargotto v. Sherman, 1944, 297 Ky. 597, 180 S.W.2d 565, where the subject 'of the-sale was a restaurant, the ground for rescission was fraud, and the buyers discovered the alleged misrepresentation with- - in 9 days after taking the business over. Nevertheless, they continued to operate it and treat the contract as still in force for two months before attempting to rescind. In affirming a judgment for the seller this court said that on discovery of fraud the buyer must act promptly, and “will not be permitted to speculate as to the result of-tfie trade and then rescind after it proves to be unprofitable.”-

The speculative, character of the property is an important factor in determining what is a reasonable time to rescind. Brown v. Hassenstab, 1957, 212 Or. 246, 319 P.2d 929, 934. It was the vital consideration in the Gargotto case. We do not have that situation here, or, if it lurks beneath the surface, at least it is not obvious on the record.

(3)Frick Co. v. Wiley, 1942, 290 Ky. 665, 162 S.W.2d 190, involving a threshing ..¡machine, was decided in favor of the seller on the basis of the buyer’s failure to com- . ply with a provision of the written sales contract requiring him, in, the event of a . breach of warranty, to return the-machine . immediately to the place where received. The court found that the buyer neither returned -nor tendered a return of the machine until after he had been sued for the unpaid balance of the purchase price. In the instant case there is no issue on the question of tender.

Bessire makes the further argument that during the pendency pf this litigation Chaplin made attempts to sell the hardening box, and by asserting- ownership and dominion waived the right of - rescission. ' We' see no merit in this con- " tentiori. Chaplin had tendered a return of the box and Bessire had refused it. Its continued presence in Chaplin’s possession obliged him to care for it, thus tending to generate damages that at the same time he was under duty to mitigate. Moreover, under the express provisions of the Uniform Sales Act he had the right to sell it. KRS 361.690(5) gave to the buyer a lien to secure repayment, with the same enforcement remedies as given the seller by KRS 361.530. These remedies included the right of resale under the conditions set forth in KRS 361.600.

We come now to the question of whether the Chaplins are entitled to a new trial, and, the verdict having been patently inconsistent with the instructions, undoubtedly they are.

The instruction covering damages directed the jury, if it found for plaintiffs, to award them $2977.66, the amount theretofore paid toward the purchase price of the property, and authorized further special damages of two categories, (1) installation expenses necessarily incurred and (2) the value of the ice cream lost on May 6, 1959, if the loss resulted from failure of the box to maintain proper temperatures and without negligence on the part of the claimants. Although there was no evidence to justify it, the instruction authorized the jury to deduct from category (1) of the special damages the reasonable residual value to the Chaplins of the concrete slab and certain electrical installations enumerated in the category, such deduction not to exceed $1540.76, that being their cost.

The jurors came in and attempted to return a verdict of $1200 for the plaintiffs, but the trial court directed their attention to the portion of the instruction directing an award of $2977.66 and the portion limiting deductions to $1540.76 (which, of course, had no application to the $2977.66) and sent them back to the jury room to check their calculations. The jury then returned with the following verdict:

“We, the jury, find for the plaintiff $1436.90 damages. The contract is to be rescinded.”

The amount of this verdict is the exact difference between $2977.66 and $1540.76, clearly violating the instruction authorizing the deduction only'as an offset against whatever the jury might see fit to award on account of the cost of the items to which they were applicable. $2977.66 was, of course, the minimum amount the jury could properly have awarded under a verdict for the plaintiffs.

The Chaplins put on evidence to show that Bessire’s failure to remove the hardening box following the rescission and tender cost them $9935.94, and they insist this item should be included in the instructions on another trial. Their claim is that a large refrigeration chamber enabled them to buy special items (called novelties) in quantity at cheaper prices, and to manufacture their weekly requirement of ice cream in 3 days instead of 6. The expenses incident to operating with a smaller space are classified by counsel as expenses of “caring for and storing the hardening room after the contract was rescinded.” We do not so regard them.

This hardening box was an addition to the capacity of the plant, and not a replacement for facilities theretofore in existence. When it was shut down on May 15, 1959, the Chaplins were left in the same position they occupied before its acquisition in November of 1957. If there is any fundamental justification for allowance of special damages in a rescission case, it is to restore the aggrieved party to status quo. True, the continued occupancy of space that would otherwise have been available may have prevented the acquisition or construction of a replacement box, but how long it would have taken to accomplish such a process, whether the Chaplins would have done it, and what success might have ensued are all matters of speculation. Moreover,-such items as $100 per day for the time Chaplin had to stay in the plant making ice cream instead of doing promotional and selling work on the outside surely must be recognized as too remote for allowance under any standard. In leaving this phase of the case we cannot resist the temptation of suggesting that if discontinuing the use of this box cost the Chaplins so much in so short a time thereafter, then surely they must have made enough from its use during the 1958 season to pay for it.

The Chaplins make the further contention that certain of the instructions were unnecessary and erroneous. Without reaching the question of whether Nos. 2, 3 and 4 were erroneous and, if so, prejudicial, we agree that they were not necessary and should not be given in the event of a new trial. In substance, No. 1 required the jury, in order to give the plaintiffs a verdict, to find that the hardening box was not as warranted and that the plaintiffs “within a reasonable time after discovering or after they should have discovered the defect or defects therein (if there were defects)” tendered it back to the defendant. No. 2 was a converse statement on the reasonable time in which to rescind, corresponding with the pleaded defense of waiver. Since plaintiffs could not recover under No. 1 unless they had acted within a reasonable time, nothing was added by No. 2. Nos. 3 and 4 instructed that if the failure of the box to maintain proper temperatures resulted from the compressor, or from the failure of the plaintiffs to operate the box in-a careful and prudent manner, the law was' for the defendant. Again, however, the warranty'was that the box “would maintain proper temperatures,” and the jury had' to find that it “would not.” If it “would not” maintain proper temperatures, the efficiency of the compressor and careful management of the user would have been of no avail. In this connection, we note that at one place Instruction No. 1 used the word “did” rather than “would,” and this may have invited further qualifying instructions such as Nos. 3 and 4. On another trial the second sentence of No. 1 should be modified to say “in that it was not capable of maintaining” in lieu of “in that it did not maintain.”

Judgment reversed with directions that appellants be granted a new trial.


text:
    KENTUCKY UTILITIES COMPANY et al., Appellants, v. FARMERS RURAL ELECTRIC COOPERATIVE CORPORATION, Appellee.
    (S82-60).
    Court of Appeals of Kentucky,
    Oct. 19, 1962.

      Charles A. Robertson, James S. Welch, Ogden, Brown, Robertson & Marshall, Louisville, Uhel O. Barrickman, Richardson, Barrickman & Dickinson, Glasgow, J. Gardner Ashcraft, Morris Burton, John B. Breckinridge, Atty. Gen., Frankfort, for appellants.
    Philip P. Ardery, Brown, Ardery, Todd & Dudley, Louisville, Cecil C. Wilson, Wilson & Nunn, Glasgow, for appellee.
   WADDILL, Commissioner.

Appellants seek reversal of a judgment of the Franklin Circuit Court vacating an order of the Public Service Commission of Kentucky. Under our view of the case the circuit court should have dismissed the action because it was not properly brought within the time prescribed in KRS 278.410 which in pertinent part provides:

“Any party to a proceeding before the commission or any utility affected by an order of the commission may, within twenty days after being served with the order, * * *, bring an action against the commission in the Franklin circuit court to vacate or set aside the order or determination on the ground that it is unlawful or unreasonable.”

This statute provides the exclusive method by which an order of the commission can be reviewed by the circuit court. Therefore, to obtain a review it is necessary that the action be filed against the commission, an indispensable party, within the twenty day period.

Appellee brought this action against the Kentucky Utilities Company (which was a party to the proceeding before the commission) within the twenty day period, but appellee did not make the commission a party until forty-two days after receipt of the commission’s order. Appel-lee seeks to excuse its failure to conform to the requirements of the statute by contending that no prejudice resulted to either the commission or the Kentucky Utilities Company. The contention is unavailing since the requirements of the statute are jurisdictional. See Roberts v. Watts, Ky., 258 S.W.2d 513; Ferguson v. Garland, Ky., 352 S.W.2d 70, 71.

Judgment reversed with directions to enter a judgment dismissing this action.


author: WILLIAM M. KIMBERLIN, Special Judge.

text:
    Leo MARKOVITZ, Louis Markovitz, Joe Markovitz, Edward Markovitz and Charles Klamen, (Plaintiffs) Respondents, v. BRITH ABRAHAM FRATERNAL ORDER CHARLES WERNER BANNER LODGE No. 114, I. B. A., (Defendant) Appellant.
    No. 30998.
    St. Louis Court of Appeals. Missouri.
    Sept. 18, 1962.
    Motion for Rehearing or to Modify Opinion or to Transfer to Supreme Court Denied Nov. 20, 1962.
    Herman Schachter and Douglas Mac-Leod, St. Louis, for appellant.
    Marvin Klamen, Clayton, for respondents.
   WILLIAM M. KIMBERLIN, Special Judge.

This suit was instituted in the Magistrate Court, Second District, St. Louis County, Missouri', by plaintiffs, to recover on a death benefit certificate issued to Rosa Markovitz by the defendant, a Jewish Fraternal Society. The plaintiffs are the children and beneficiaries of Rosa Marko-vitz, a member of the defendant fraternal order, who died on April 6th, 1959. It was alleged the total amount of the death benefit was $500.00; that the defendant had vexatiously refused to pay for which plaintiffs were entitled to ten per cent thereof as damages and for reasonable attorney fees in the amount of $250.00. Plaintiffs recovered a blanket judgment of $650.00. Defendant appealed to the Circuit Court of St. Louis County.

Thereafter and on December 14th, 1960, plaintiffs filed in the Circuit Court a motion for summary judgment and attached thereto a supporting affidavit. The defendant on February 7th, 1961, filed an opposing affidavit. The defendant did not file a pleading either in the Magistrate Court or in the Circuit Court.

The facts of the case are contained in the two affidavits and are not in dispute as reflected by the stipulation of the parties hereinafter set out. The facts as set forth in the two affidavits will be taken by the Court to be true.

The plaintiff’s affidavit in support of the motion for summary judgment was made by Leo Markovitz and stated in substance that he was the natural son of Rosa Marko-vitz; that he had resided with his mother since his birth on November 30th, 1909, to the time of her entry into the hospital shortly prior to April 6th, 1959, which was the date of her death; that Rosa Markovitz could neither read nor write English and that he received and read all mail addressed to his mother and answered all of her correspondence; that she became a member of the defendant fraternal order and society in October, 1905; that the certificate of membership was delivered to her in the State of Missouri, and that all premiums and assessments due have been paid and were paid by the decedent in the State of Missouri; that at the time of becoming a member said society provided for death benefits of $500.00, payable to certain designated beneficiaries as long as said beneficiaries were within a class acceptable to said association and that all of these plaintiffs are her children and are qualified beneficiaries; that the amount of said dues and assessments were based upon mortality losses for a prior period and were billed directly to each member and that they averaged about $32.00 annually; that during her period of membership deceased paid the approximate sum of $1700.00 and had not been in default or in lapse of payment at any time; that the decedent was not present at the 56th annual convention held by the organization wherein Class A resolution was adopted and was never advised of the results of such meeting and has never ratified, affirmed or approved of such action ; that under the terms of the resolution defendant has attempted to reduce the benefits of said policy of insurance 'from $500.00 to $250.00.

The defendant’s opposing affidavit was made by Herman Schachter, an attorney of St. Louis, Missouri, who for many years has been a delegate to the Grand Lodge of the Order of Brith Abraham, a fraternal insurance society'organized under the laws of the State of New York representing the St. Louis subordinate lodge of said Order Brith Abraham, which subordinate lodge is known as the Charles Werner Banner Lodge No. 114. The deceased was a member of this lodge. In substance it states he was present at the 56th annual convention of the organization held at Saratoga Springs, New York, in June of 1943 at which was adopted the resolution known as “Class A Resolution”; that this Jewish fraternal association was organized in 1887 under the laws of the State of New York; that said order is governed by the constitution and. by-laws which, provide that the governing body of the order shall be the United States Grand Lodge; that said constitution provided for classification of members and designates Class A membership as being those holding death benefit certificates and paying assessments for death benefits by a proportionate assessment, after the accrual there of post mortem assessment plan; that Rosa Markovitz was a member of the Order of Brith Abraham at the time of her death, being a Class A membership certificate holder; that said certificate provides also in certain events therein stated for the payment of a lesser amount than the sum of $500.00; that upon the death of Rosa Markovitz the society made payment to the beneficiaries provided for by the by-laws and constitution of the order in accordance with the Class A Resolution adopted on June 28th, 1943; the affiant attached to the affidavit three documents, the constitution and by-laws of the society, a copy of the certificate of membership and a statement showing the method of post mortem assessment.

Section 9 of Article 13 of the constitution and by-laws of the defendant society adopted in 1928 reads as follows:

“Every beneficial member of this Order and each beneficiary shall be bound by the laws, rules and regulations of this Order in force at the time of the admission of such member, and to all changes, alterations and amendments thereto which may be thereafter made or adopted, and all beneficial certificates or other certificate issues by this Order shall at all times be subj ect to such changes, alterations, amendments and modifications as to terms, payments, assessments, taxes, conditions of payments and contingencies in which the same be payable, as the laws, rules and regulations of the Order may from time to time provide.”

The pertinent portion of the Class A Resolution adopted at the 56th annual convention in Saratoga Springs, New York, on June 28th, 1943, is as follows:

“NOW, THEREFORE, BE IT RESOLVED :
1. That each member in Class A hereby is assessed, and shall pay to the Order on or before September 1, 1943 the sum of $250.00 per $500.00 death benefit certificate, and pro rata with respect to death benefit certificates in lesser amounts, and, until paid, such assessments shall be and hereby are declared to be a lien and charge against such member’s death benefit certificate, without interest, and shall be deducted by the Order out of moneys, or first moneys, payable by or through the Order under said death benefit certificate.”

The certificate of membership issued to Rosa Markovitz will not be set out verbatim but it contained, among others, the following pertinent clause:

“And is entitled to all the benefits provided for by the constitution and laws of said order, as a member, subject however, to compliance by the said member, at all times, with the constitution and laws of said order, and said lodge, as they now exist or as they may hereafter be amended, altered, or modified, all of which are to be taken as part hereof.”

On February 15th, 1961, the parties filed the following memorandum:

“Motion argued. Facts stated in affidavit of Herman Schachter stipulated as true. No factual issue present or presented. Motion heard as submitted and taken under advisement.
“RGJH
“2/15/61
“/s/ Herman Schachter,
“Atty. for Defendant
“/s,/ Marvin Klamen,
“Attorney for Plaintiffs.”

The trial court sustained the motion for summary judgment and entered a judgment for plaintiffs in the amount of $500.00 on the certificate, $50.00 for damages for vexatious delay, and $200.00 for attorney fees, making a total judgment for the plaintiffs in the amount of $750.00. The defendant’s motion to set aside the judgment and to enter judgment in favor of the defendant was overruled. The defendant thereafter perfected appeal to this court.

The crux of this controversy is whether the Class A Resolution, assessing a reduction of the $500.00 death benefit and declaring a lien on the certificate if the assessment is not paid, is valid and enforceable as against these plaintiffs. It is the considered view of this court that it is valid and enforceable.

The underlying principle, relative to death certificates issued by fraternal benefit societies, which is determinative of this case is enunciated by the United States Supreme Court in the case of Sovereign Camp W.O.W. v. Bolin et al., 305 U.S. 66, 59 S.Ct. 35, 83 L.Ed. 45. The Bolin case originated in Missouri and went to the highest court in the land on writ of certiorari to the Kansas City Court of Appeals. In the course of the opinion at loc. cit. page 38 of 59 S.Ct. it was stated:

“The beneficiary certificate was not a mere contract to be construed and enforced according to the laws of the state where it was delivered. Entry into membership of an incorporated beneficiary society is more than a contract; it is entering into a complex and abiding relation and the rights of membership are governed by the law of the state of incorporation. Another state, wherein the certificate of membership was issued, cannot attach to membership rights against the society which are refused by the law of the domicile." (Emphasis supplied.)

It was further stated by Mr. Justice Roberts in this opinion at loe. cit. page 39 of 59 S.Ct., as follows:

“The court below was not at liberty to disregard the fundamental law of the petitioner and turn a membership beneficiary certificate into an old line policy to be construed and enforced according to the law of the forum. The de-cisión that the principle of ultra vires contracts was to be applied as if the petitioner were a Missouri old line life insurance company was erroneous in the light of the decisions of this court which have uniformly held that the rights of members of such associations are governed by the definition of the society’s powers by the courts of its domicile.”

See also Modern Woodmen of America v. Mixer, 267 U.S. 544, 45 S.Ct. 389, 69 L.Ed. 783.

The Missouri Supreme Court has spoken upon the subject of the relationship between the members of a fraternal insurance society and the corporate entity itself. In the case of Clark v. Security Benefit Association, 343 Mo. 263, 121 S.W.2d 148, at loc. cit. page 151, the Court En Banc stated:

“Speaking of the legal relationship existing between a mutual assurance society and its members, Korn v. Mutual Assurance Society, 6 Cranch 192, 201, 3 L.Ed. 195, 199, states: ‘Every member, in fact, stands in the peculiar situation of being party of both sides, insurer and insured’; and the instant issues extend beyond those ordinarily involved in an action ex contractu; for instance, actions on insurance policies wherein the policy within itself contains in express words all the legal contractual relationships involved; because the legal relationship between plaintiff and defendant embraces not only the benefit certificate but the correlative rights and obligations between defendant, as a corporate entity, and plaintiff as a member of said entity under the constitution, laws and charter of the corporation(Emphasis supplied.)

Another Supreme Court case, Robertson v. Security Benefit Association, 342 Mo. 284, 114 S.W.2d 1009, announces the same principle. See Achtenberg v. Sovereign Camp of W. O. W., 346 Mo. 927, 144 S.W.2d 73; Reece v. Security Benefit Association, 344 Mo. 29, 124 S.W.2d 1146.

Therefore, it is abundantly clear the correlative rights and obligations as between the members of a fraternal benefit society and the society itself, as a corporate entity, are established by the constitution, by-laws and charter of the society and these are construed and governed by the laws of the State of Incorporation. The definitive fights of the members are created by the ¿onstitution and by-laws of the society'and the certificate itself. All three instruments are governed and controlled by the laws of the State of Incorporation. In the instant case it is New York.

This cause was not determined in the Magistrate Court nor lodged in the Circuit Court until after April 1, 1960, the effective date of the “Rules of Civil Procedure” adopted by the Missouri Supreme Court. Under the allegations and evidence before the trial court there was raised a genuine issue for trial which required the trial court under “Civil Rule 55.23(b), V.A. M.R.,” to take judicial notice of the public statutes and judicial decisions of the State of New York.’

The certificate of insurance issued to Rosa Markovitz specifically provided that it .was subject to the constitution and by-laws’ of said order and lodge as they now exist' or as they may hereafter be amended, altered or" modified, all of which were to be taken as a part of the membership ■ certificate.'

The Resolution is lengthy and will not be set forth .in detail in the interest of brevity. The resolution states in effect that the society was in a precarious financial condition and that the conditions affecting Class, A membership were extraordinary and therefore the levying of an extraordinary assessment on the members was necessary and imperative in order to protect the 'interest of .all of the members in Class A.■ It: is’hot questioned by the plaintiffs but that the!defendant had authority; and power'under-its constitution and by-laws 'to.’passYíheC Oá¥s A Resolution. They do contend.it was not binding on the plaintiffs under the Missouri law.

It must be conceded before this Class A Resolution is valid and binding on fhe plaintiffs, as beneficiaries under the membership certificate, that it must not be in violation, of the New York law. As a'matter of fact, the evidence shows that the Insurance Department of the State of New York had inquired into the conditions and affairs of the defendant society, and had made certain recommendations relative to Class A membership. At'the 1943 convention the reasons for the changes in benefits recommended by the Insurance Department and the necessity therefor were fully explained to the delegates and the convention .then passed the resolution carrying out the recommendations of the Department.

The New York Statutory Law, Sec. 465, subd. 5 of the Insurance Law of New York, McKinney’s Consol.Laws, c. 28, in force at the time sanctioned and authorized the reduction.of benefits.

Plaintiffs.. contend that Rosa Markovitz did not consent to the reduction of. benefits nor did she ratify, affirm or approve such reduction. She paid the assessments in a reduced amount from the effective date of the resolution to the date,of death in-April,. 1959, which was for a period in excess of 15 years. Under New York case law she was as a matter of law chargeable with notice as a member of the .society of its constitution and by-laws (in this instance Resolution) and it was not necessary to establish actual receipt of such notice. Everett v. Supreme Council, Catholic Benevolent Legion, 236 N.Y. 62, 139 N.E. 780. Certainly, after payment of the new and reduced assessffieiits-.' for so many years after being chargeable with notice her consent and ratification can be implied.

•The Resolution- dealt with the financial structure ánd management of the -monetary affairs- of the association and of thé duties of the members of the society which were for the mutual benefit of all of the members including' Rosa Markovitz. This is true because of the nature of the organization and the legal relationship existing between the members of a fraternal society and the entity itself as explained in the Bolin and Clark cases, supra.

It is the considered judgment and view of this court that this Class A Resolution was applicable to the certificate of membership held by Rosa Markovitz and is valid and binding on the plaintiffs in this case.

It is the contention of these plaintiffs that the New York law is not controlling and that the certificate is a Missouri contract to which the laws of this state apply and govern.

Assuming the certificate is to be regarded as a Missouri contract for the purpose of the interpretation of the terms of the contract, and that the laws of Missouri are applicable, still this does not mean that plaintiffs should prevail in the instant case. The crucial issue in this case does not hinge upon an interpretation of the terms of a contract as such, but rather upon the right and authority of the society to reduce the benefits by assessment under the applicable law. The ruling of this court is that under the New York law this procedure was valid. The Resolution was not in violation of the Missouri laws relative to fraternal benefit associations. Chapter 378 V.A.M.S., contains certain provisions requiring these type of societies to keep in sound financial condition. Furthermore, the holding of this court does no violence to the rule against the impairment of the obligations of a contract. This line of cases is not analogous to the one at bar where, because of the precarious financial condition of the society, an assessment is made by the society on the individual members for their mutual protection. The Class A Resolution was adopted for the purpose of restoring the society to solvency. The certificate in the instant case specifically provides for the payment by the members of all dues, assessments and taxes in the manner provided for by the laws and constitution of the society and to pay the death benefit to the beneficiaries upon the death of the member, if at the time the member was in good standing and shall have complied with the said constitution and bylaws. The reduction of the amount due upon death was done by assessment which under the constitution and by-laws of the society and the applicable law of New York the defendant had the legal right to do.

By virtue of the stipulation of the parties the summary judgment procedure employed by plaintiffs pursuant to “Civil Rule 74.04, V.A.M.R.,” was proper. “Civil Rule 74.04(c), V.A.M.R.,” provides, “Summary judgment, when appropriate, may be rendered against the moving party.” For the reasons set forth herein this court is of the opinion that it would have been appropriate for the trial court to have entered judgment for the defendant and against the plaintiffs, who were the moving parties.

Accordingly, the judgment should be reversed. However, the defendant is liable to plaintiffs for the reduced amount of death benefit which is $250.00. From a reading of the transcript and briefs the status of the checks, which were issued by the defendant in favor of the individual plaintiffs in the total sum of $250.00 is unclear. Therefore, this cause is remanded to the trial court with instructions to said court to enter judgment in favor of plaintiffs and against the defendant in the amount of $250.00.

Judgment of the trial court should be reversed and cause remanded. It is so ordered.

ANDERSON, P. J., and MARSHALL CRAIG, Special Judge, concur.