author: STANLEY, Commissioner.

text:
    Stargle R. DUNCAN, Appellant, v. WISEMAN BAKING COMPANY, Inc., et al., Appellees.
    Court of Appeals of Kentucky.
    June 9, 1961.
    As Modified on Denial of Rehearing June 22, 1962.

      '■Damon A. Vaughn, Withers, Lisman & Withers, Dixon, for appellant.
    Earle M. Nichols, Madisonville, William M. Deep, Henderson, for appellees.
   STANLEY, Commissioner.

The plaintiff in an action for personal injuries and property damage sustained in an automobile accident brings an appeal from a judgment for the defendants, Wise-man Baking Company and its drivers, H. E. Raiford and James A. Murray. The major conditions and factors are not in dispute. A reversal of the judgment is sought upon claimed errors, (1) in omitting from the instruction on the duties of the defendants the duty to put out flares or other warning signals upon the highway, and (2) in the contributory negligence instruction by placing too great a duty upon the plaintiff when blinded by lights of another car. A third ground of error need not be considered.

The accident occurred after dark in January, 1958, on a two-lane highway in Webster County. A large tractor-trailer (overall length of 45 feet) of the Wiseman Baking Company of Rome, Georgia, and operated by its employee Raiford was stalled because of motor trouble. It was headed east on the south side of the highway and stopped about half on the paving and half on the shoulder. A passenger automobile driven by the company’s employee, Murray, had gone ahead of the truck. He returned when he had become separated from the truck and stopped when he came upon it. The motor of the truck was tight by reason of recent repairs and its battery lacked enough power to start it; so Murray pulled up beside it in the center of the highway, headed west, for the purpose of connecting his car’s battery by a cable or “jump cord” with the truck’s battery to give it increased power. Thus, the highway was completely blocked by the defendant’s two vehicles, except that cars could squeeze through in the north lane. The accident occurred while the battery cable was being connected.

We summarize the testimony of the plaintiff, Stargle R. Duncan.' He was traveling-•east, the same way the truck was headed. The road was straight but rolling. As he came over a low hill, Duncan was blinded by the headlights of the Murray car, and he dimmed his own but got no response. He thought the car was moving and sounded his horn, assuming that the Murray car would get back in its lane. But as he drew near he discovered it was standing still in the middle of the road and no one was in it. He started to drive off on the right ■shoulder or “take the ditch.” When he got about ten feet from it, the truck loomed before him “in a flash.” His car was then about halfway on the shoulder of the road. There were no lights on the truck. He discovered later that the reflectors were covered with mud. Duncan testified he could not tell what the obstruction was at the moment because he was blinded by the lights of the Murray car. He was going 15 or 20 mph and had skidded about 20 inches before the impact. There were no flares to warn travelers of the blocked highway. Upon citations by a state policeman of Raiford, the driver of the truck, for failing to put out such warning signals, and of Murray, the driver of the passenger car, for improper parking, both entered pleas of nolo contendere and each was fined $10 by the Webster Quarterly Court.

The defendants’ evidence was that Duncan had come up fast and left skid marks 35 or 40 feet long rather than 20 inches, as he testified.

They testified that the parking lights on the rear of the trailer were in good order and burning and that there were a number of lights at the top and around the side and rear of the trailer; also, that Fincher, who was on the truck with the driver, Rai-ford, was standing back of the tractor-trailer, flagging traffic with an electric lantern, and that the plaintiff, Duncan, could have seen the flare which had been placed one hundred yards east of and in front of the truck. A state policeman corroborated the plaintiff that there were no lights on the rear of the tractor-trailer when he arrived at the scene.

The defendants introduced evidence that the plaintiff had the odor of alcohol on his breath and an empty beer can and several unopened cans were in his car. He denied he had had a drink of beer or any other intoxicant before the accident.

I. We consider first the failure of the defendants to have put out flares on the highway.

The primary instruction defined the duties of the defendants Wiseman Baking Company and Raiford as being not to stop the truck on the traveled portion of the highway or leave it standing there unless the truck had become disabled in such manner and to such extent that it was impracticable to move the same while waiting repair or sufficient help to move it, and the “further duty to leave displayed on the rear of said truck a red light visible from the rear five hundred feet away under ordinary atmospheric conditions.” This is in accord with KRS 189.450(1) (a). The court refused plaintiff’s request to add the following provision to that instruction:

“If you shall believe that said truck and its lighting equipment were disabled, it was the duty of the driver of said truck to cause lighted flares, lanterns or other signals capable of continuously producing three warning lights, each visible for a distance of at least 500 feet in advance of the vehicle, one at a distance of approximately 100 feet to the rear of the vehicle and the third upon the roadway side of the vehicle.”

The statute, KRS 189.070(2), provides:

“Whenever any motor truck and its lighting equipment are disabled during the period when lighted lamps must be illuminated on vehicles and the truck cannot immediately be removed from the main traveled portion of a highway outside of a business or residence district, the person in charge of the vehicle shall cause the flares, lanterns or other signals to be lighted and placed upon the highway, one at a distance of approximately one hundred feet in advance of the vehicle, one at a distance of approximately one hundred feet to the rear of the vehicle and the third upon the roadway side of the vehicle, except that if the vehicle is transporting flammahles three red reflectors may be so placed in lieu of the other signals and no open burning flare shall be placed near the vehicle.”

Similar statutes of other states make the duty to put out flares absolute when a motor vehicle has been parked or stopped on the traveled portion of the highway at nighttime. 60 C.J.S. Motor Vehicles § 335d. See Annotation, 67 A.L.R.2d 12. It is to be noted that our statute requires such action “whenever any motor truck and its lighting equipment are disabled.” (Emphasis added.)

The rejection of the offered instruction on the duty of the defendants to “cause flares, lanterns or other signals to be lighted and placed upon the highway” was doubtless because of absence of evidence that the lighting equipment of the vehicle was “disabled.” It was admitted that the motor truck was disabled and could not be immediately removed from the main traveled portion of the highway.

We have heretofore construed the statute, KRS 189.070(2) literally, and said that an instruction on the duty declared therein was not required where the lights of the vehicle were not disabled, even though the truck was stalled because of mechanical difficulty. Basham’s Adm’x v. Witt, 289 Ky. 639, 159 S.W.2d 990; Branch v. Whitaker, Ky., 294 S.W.2d 948. In other cases we have held it to be for the jury to determine whether the exigencies of the particular condition required the operator of the vehicle to use flares as emergency warnings. Harry Holder Motor Co. v. Davidson, Ky., 243 S.W.2d 926; Smith v. Collins, Ky., 277 S.W.2d 38; Branch v. Whitaker, supra, Ky., 294 S.W.2d 948. Some of these cases appear to have regarded slight evidence tending to show disablement of the lighting equipment as justifying the instruction.

Upon further and mature consideration, we are impelled to the view that our literal construction of the statute does not conform to its purpose or the legislative intent to promote highway safety and to protect the traveling public from the hazardous situation of a big motor vehicle stalled on the “main traveled portion of a highway” in the nighttime by providing special and specific warning signals in addition to the lights displayed on the vehicle. These signals also give warning that the vehicle is stationary. Such literal interpretation of the statute permits the operator of a truck stalled because of mechanical disablement to switch off the lights and let it stay on the road in the dark, and yet be under no obligation to warn the traveling public with flares or similar signals just because the lighting equipment was not out of order. Vice versa, the truck could be left standing in a traffic lane even though it was not disabled if its lighting equipment was out of order, and the operator would be excused by the law. Our previous construction of the statute defies reconciliation with the obvious purpose of the statute. There should be a practical construction and application of its terms.

True, the Legislature used the connective word “and.” But since the popular use of the words “or” and “and” is loose and frequently inaccurate, the courts may and should change “and” to “or,” and vice versa, whenever such conversion is required, inter alia, to effectuate the obvious intention of the Legislature and to accomplish the purpose or object of the statute. James v. United States F. & G. Co., 133 Ky. 299, 117 S.W. 406; Commonwealth v. Bartholomew, 265 Ky. 703, 97 S.W .2d 591; Asher v. Stacy, 299 Ky. 476, 185 S.W.2d 958; Sutherland, Statutory Construction, (3d ed.), Vol. 2, § 4923 ; 50 Am.Jur., Statutes, § 282. We think there is reasonable justification to regard “and” as “or” in the statute under consideration in order to accomplish its purpose. This has the. effect of requiring the display of flares or similar signals if either the vehicle or the lighting equipment is disabled.

An Illinois statute construed in Wise v. Kuehne Mfg. Co., 322 Ill.App. 26, 53 N.E.2d 711, 714, like our Kentucky statute, required the display of flares whenever a motor vehicle and its lighting equipment were disabled. A trailer-truck was stopped on the highway because of mechanical trouble. Its body was illuminated, like the defendants claim the machine in this case was, and there was conflict in the evidence as to whether or not warning flares had been put out. In response to the contention of the appellants (defendants below) that before the statute applied and they would be obliged to put out flares, the truck must have been disabled mechanically and its lighting equipment have been inoperative, the court said:

“If this were true, a truck could be stopped on a highway with no lights whatsoever, and if the truck were not mechanically disabled, there would be no duty under the foregoing statute to warn the travelling public with lighted flares. We are of the opinion that this being a remedial statute, it was the intention of the legislature that in either the event of the truck being without lights or it being stalled on the highway because of mechanical disability, it is the duty of the driver of the truck to use flares as outlined in the statute. Any other construction would be unreasonable. Rosenthal v. Pressing, 108 Ill. 128; People v. Trustees, 322 Ill. 120, 124, 152 N.E. 555.”

We are in accord with that view of our statute. Our previous construction of the statute, KRS 189.070(2), in conflict is overruled.

Our statute, quoted above, merely requires that the flares or similar warning signals be placed upon the highway at the places described. It has usually been recognized in the construction of like statutes — ■ even though they may provide for “immediate” placement — -that the driver is afforded a reasonable time to comply. But in construing “reasonableness” the courts have been somewhat strict, the tendency apparently being to require the flares to be placed within a very few minutes in the absence of circumstances excusing a longer delay. Numerous cases to this effect are summarized in Notes, 67 A.L.R.2d 48. We think that placing the flares should be done with reasonable promptness. With that criterion, we examine the evidence on the point.

There was evidence in behalf of the plaintiff that the truck had been stalled on the highway about an hour, and that the men on the truck had said they had had to go to a certain store to get kerosene for the flares. On the contrary, there was evidence that only fifteen or twenty minutes had elapsed and the errand to get kerosene was made not before but after the accident. But the defendants’ own evidence showed that enough time had elapsed for Murray to have driven some distance ahead before he discovered the truck was not following and turned around and driven back to the stalled truck and become engaged in connecting up the batteries. There were two men with the truck. One of them had had time to walk about 100 yards east and set out a flare and walk back to the truck and set about preparing another flare to be placed west, or back of the truck, when the accident happened. It seems to us that as a matter of common prudence and ordinary reasoning, the first flare should have been placed back of the truck to warn approaching motorists that the south lane, in which they were traveling, was blocked, instead of ahead as a warning to motorists in the north lane. Apparently one of the men on the truck did nothing toward putting out flares. Reasonable promptness was not shown.

It has been frequently held that a violation of similar statutes is negligence per se. Note, 67 A.L.R.2d 21. In Burns v. Fisher, 132 Mont. 26, 313 P.2d 1044, 67 A.L.R.2d 1, the driver of a truck who had not put out flares as required by the statute was killed when his stalled truck (in which he was sitting) was run into by the defendant's truck. He was held to have been guilty of contributory negligence as a matter of law.

We are of opinion that the defendant company and its driver, Raiford, were negligent as a matter of law.

Concerning the passenger car. The driver, Murray, was negligent per se in parking it in the middle of the highway with glaring headlights blinding approaching motorists. Wilson v. Dalton’s Adm’r, 311 Ky. 285, 223 S.W.2d 978. That the lights did blind the plaintiff is not contradicted by either positive or inferential evidence. Likewise, there is no contradiction that because of those lights he could not see the parked truck in his lane of travel sooner than he says he did.

The evidence shows the joint and concurring negligence was responsible for the extremely hazardous situation by violations of both statutory and common law. Of course, this is imputed to the corporate defendant. If the evidence is substantially the same on another trial, the court should instruct the jury to find for the plaintiff unless they should believe he was contributorily negligent.

II. We consider the question of the plaintiff’s contributory negligence.

Of particular application here is the law which gives the right to a motorist who is keeping proper lookout ahead to assume that other drivers on the highway will observe the law of the road and will not unlawfully obstruct the highway, “even though an existing but vanishing condition may prevent a present view ahead.” City of Providence v. Young, 227 Ky. 690, 13 S.W.2d 1022, 1023. Motorists are not obliged “by the doctrine of ordinary care to keep a lookout for an unlighted, invisible truck in the lane of their travel.” Owen Motor Freight Lines v. Russell’s Adm’r, 260 Ky. 795, 86 S.W.2d 708, 711; Crawford Transport Co. v. Wireman, Ky., 280 S.W.2d 163.

The given instruction on contributory negligence defined the plaintiff’s duties, in substance, to have been to exercise ordinary care for his own safety; to operate his automobile in a careful manner, having regard for the use and condition of the highway and the atmospheric conditions; to keep a lookout ahead for persons or vehicles in his path or so near thereto as to be in danger of being struck by his car; to exercise ordinary care to run and operate his automobile so as not to collide with another vehicle on the highway, and to have two lighted headlights capable of revealing objects at least 350 feet in front of him under ordinary atmospheric conditions. This was the instruction requested by the plaintiff and seems to be correct as far as it went. But the court added a paragraph, over plaintiff’s objection, that it was the further duty of the plaintiff if his vision was blinded or affected by the headlights of the Murray car, “to slacken the speed of his automobile, sound its horn and have it under such control that he could, by the exercise of ordinary care, stop it and avoid a collision with any object that might be obstructing the highway which he was not able to see.”

The grounds of objection were (1) that it would have been a futile thing for him to have sounded his horn under the circumstances, and (2) that he was not required to stop his car to avoid colliding with any obj ect he could not see because the law did not require him to stop but merely to exercise ordinary care.

The prefatory Summary to extensive annotations of the subject, “Duty and liability of vehicle driver blinded by glare of lights.”, 22 A.L.R.2d 292, points out that considerations of the congestion of modern highways and normal speed of motor cars have led to a departure by many courts from the earlier rule that required a motorist to stop when blinded by lights of approaching cars. The modern rule, generally accepted, is that a motorist so blinded is not required to stop instantly but his duty is determinable by the standard of ordinary care under the particular circumstances, although the rule is subject to a number of exceptions. A motorist is not entitled to proceed as if he could see ahead, but is required to take additional precautions for the safety of himself and others which are commensurate with the existing danger, such as slackening his speed and bringing his car under such control that he is able to stop it in time to avoid any discernible object in the road ahead or within such distance as he can at all times see what is ahead of him. SA Am.Jur., Automobiles, §§ 332, 707, 1072; 60 C.J.S. Motor Vehicles § 294; Blashfield, Cyclopedia of Automobile Law, § 744; Notes, 22 A.L.R.2d 300, et seq.

Our later decisions are, generally, to the same effect. City of Providence v. Young, 227 Ky. 690, 13 S.W.2d 1022; Commonweath v. Daniel, 266 Ky. 285, 98 S.W.2d 897; Knight v. Silver Fleet Motor Express, 289 Ky. 661, 159 S.W.2d 1002; Wilson v. Dalton’s Adm’r, 311 Ky. 285, 223 S.W.2d 978; Harris v. Luster, Ky., 259 S.W.2d 489; Slusher v. Brown, Ky., 323 S.W.2d 870. Several of these cases and others are reviewed in Ashton v. Roop, Ky., 244 S.W.2d 727, and notice is taken of some inconsistencies. It was therein held that the rule declared in Lexington-Hazard Express Co. v. Umberger, 243 Ky. 419, 48 S.W.2d 1066, and Freeman v. W. T. Sistrunk & Co., 312 Ky. 438, 227 S.W.2d 979, was erroneous because it placed an absolute duty upon the driver of an approaching vehicle blinded by glare of lights to avoid a collision regardless of the character of the act which placed a stationary vehicle on the road.

With respect to other duties of a driver whose vision is blinded, no definite rule as to specific action can be laid down which would be applicable to every case. As.the present case involved the striking of a stationary object in the plaintiff’s lane of travel, we think the instruction imposed too strict a duty upon the plaintiff. It seems to us the instruction should have been that when the plaintiff was blinded or his vision of the highway was obscured by the headlights of the Murray car, it was his duty to take such protective measures for his own safety as an ordinarily prudent driver would take under the same or similar circumstances. The jury may regard that precaution to have required sounding the horn or slackening speed or even stopping, according to the particular circumstances of a case, but no specific instruction on such actions is necessary or desirable.

The judgment is reversed for consistent proceedings.


source: Caselaw Access Project

author: STEWART, Judge.

license: Public Domain

text:
    FERN LAKE COMPANY, Appellant and Cross-Appellee, v. PUBLIC SERVICE COMMISSION of Kentucky et al., Appellees, (Kentucky Water Service Company, Inc., Appellee and Cross-Appellant). KENTUCKY WATER SERVICE COMPANY, Inc., Appellant, v. PUBLIC SERVICE COMMISSION of Kentucky et al., Appellees.
    Court of Appeals of Kentucky.
    March 23, 1962.
    Rehearing Denied June 22, 1962.

      Squire R. Ogden, Richard F. Newell, Ogden, Brown, Robertson & Marshall, Louisville, Logan Patterson, Pineville, for appellant and cross-appellee, Fern Lake Co.
    Cornelius W. Grafton, Grafton, Ferguson & Fleischer, Louisville, for appellant, appel-lee and cross-appellant, Kentucky Water Service Co., Inc.
    John B. Breckinridge, Atty. Gen., J. Gardner Ashcraft, Asst. Atty. Gen., James L. Williams, Frankfort, for appellee, Public Service Commission of Kentucky.
    Glenn W. Denham, Middlesboro, Clifford E. Smith, E. Gaines Davis, Jr., Smith, Reed & Leary, Frankfort, for appellee, City of Middlesboro.
   STEWART, Judge.

In July, 1956, Kentucky Water Service Company, Inc., (hereinafter called “Water Service”) as owner of a distribution system which provides water service to the City of Middlesboro, applied to the Kentucky Public Service Commission (hereafter called “the ‘Commission”) for an increase in its consumer rates to produce $13,000 per year in additional gross revenue.

As a preface to relating the further proceedings in the case it is necessary to identify certain parties and documents and briefly to describe their involvement in this controversy. In Kentucky Water Service Co. v. City of Middlesboro, Ky., 247 S.W.2d 40, we had occasion to deal with this same water distribution system. We refer to the facts stated in that opinion for its historical background, as we shall recite only the subsequent happenings incident to this controversy.

In 1947, Kentucky Utilities Company (hereinafter called “K. U.”) and Water Service entered into a conditional agreement for the purchase by Water Service of the water and ice plants owned and operated by K. U. in Middlesboro and in 12 other cities. The agreement provided that in exchange for the properties purchased Water Service would deliver to K. U. the agreed consideration of $1,150,000 in cash, and certain contracts, one of which is known as the Middlesboro contract.

This contract obligated Water Service to pay K. U. the additional sun; of $17,700 annually and it further provided that Water Service would obtain water from the body of water called Fern Lake, which was owned by K. U., and would pay K. U. 5^ for each 1000 gallons of water taken in excess of 250,000,000 gallons each year. The primary term of this contract was 20 years with yearly renewals so long as the Middlesboro water system is maintained and operated and Fern Lake constitutes a suitable supply of water for it. The sale of the Middlesboro water system as well as the aforementioned collateral contracts were tentative since their execution was conditioned upon the approval of the Commission.

On December 5, 1947, Water Service and K. U. filed their joint application with the Commission seeking approval of their agreements and requesting the entry of an order to carry into effect the proposed sale of the water and ice properties. Filed as exhibits to the application were copies of the aforementioned agreements and a brochure entitled “Kentucky Utilities Company Data on Water Utility Properties and Interrelated Ice Properties” which contained a detailed description of the properties to be sold.

On December 19, 1947, following a hearing the Commission entered an order approving the execution and performance of these agreements. On December 22, 1947, Water Service and K. U. signed the contract of sale and the other pertinent documents. The Middlesboro contract was later assigned by K. U. for value to Fern Lake Company, which had become the owner of Fern Lake.

Subsequent to the filing of the application for an increase in rates by Water Service, the City of Middlesboro interposed an objection and later brought in Fern Lake Company as a party to the proceeding. The City sought a reduction of the annual payment Water Service was required to make to Fern Lake Company under the terms of the Middlesboro contract. When the application of Water Service was being considered by the Commission, Fern Lake Company urged, among other things, that the money paid by Water Service pursuant to the Middlesboro contract was not a rate but was a part of the agreed consideration to be paid by Water Service in its acquisition of the several utility properties from K. U. It was further argued that since the Commission had approved the sales agreement between Water Service and K. U. in its order of December 19, 1947, it was without authority thereafter to impair any part of that agreement.

These arguments were rejected by the Commission, and in its final order of March 25, 1958, the Commission denied the increase in rates sought by Water Service and ordered that the annual sum, payable by Water Service to Fern Lake Company, be reduced by $4,700 per year, that is, from $17,700 to $13,000.

In separate actions on an appeal to the Franklin Circuit Court, Fern Lake Company asked a reversal of the Commission’s order reducing the amount Water Service was obligated to pay it under their contract; Water Service sought relief from the Commission’s refusal to allow the entire $13,000 per year increase in revenues for which it had applied; and the City of Middlesboro complained of the Commission’s failure to make a sufficient reduction in the annual amount Water Service was to pay Fern Lake Company. These actions were consolidated in the circuit court.

The trial judge entered a judgment disallowing certain claims of Fern Lake Company as improper expenses and ordered that the annual payment under the Middles-boro contract be reduced by an additional $9,000, which reduction was directed to be passed along to the ultimate consumer by computing a new and lower schedule of consumer rates to be charged by Water Service. In all other respects the finding and order of the Commission were approved. Fern Lake Company and Water Service have appealed and Water Service has additionally cross-appealed against Fern Lake Company.

The question dispositive of the appeal by Fern Lake Company is whether the Commission or the circuit court may deprive K. U.’s assignee, Fern Lake Company, of an essential part of the consideration of a contract between K. U. and Water Service, the validity of which is not questioned by either party to it.

Appellees have strenuously defended the Commission’s order on the ground that it constitutes a proper regulation of the rates and services of a utility. See KRS 278.040. They insist it is a well established rule that the Commission has the authority to change rates upon a proper showing and that its power may not be limited by contract because the law in force when and where a contract is made becomes a part of it. Appellees further maintain that the Commission’s prior approval of the contract does not estop it from subsequently changing rates therein when necessary in the public interest. We cannot challenge the soundness of these contentions.

As appellees have pointed out, the Commission’s jurisdiction extends to rates and services. However, the arguments of ap-pellees are based on the assumption that the Commission has ordered a change in a “rate.” We cannot accept this assumption when we scrutinize the terms of the Mid-dlesboro contract. Water Service has an absolute obligation to pay Fern Lake Company $17,700 annually whether or not it takes a drop of water from Fern Lake. Furthermore, it is apparent in the sales agreement that this contract to pay $17,700 annually was executed as an integral part of the consideration for the sale of the water and ice properties of K. U.

Since this contract provides for installment payments of $17,700 annually for a period of 20 years, i. e., a total of $340,000, and in view of the fact that the original sales agreement between K. U. and Water Service makes this payment an essential item of the consideration for the sale of the ice and water plants, we have concluded that the annual payment ($17,700) for the term of 20 years is not a rate and therefore is not subject to change by the Commission during that term. It follows that the order of the Commission and the judgment of the circuit court are erroneous to the extent that they reduced this payment during the primary term of this contract. It is unnecessary for us to decide what the situation may be after the expiration of this term.

The appeal of Water Service in these consolidated cases raises additional issues. The Commission is required by KRS 278.290 to give due regard to a number of enumerated factors in determining a just and reasonable rate. The opinion and order of the Commission reflects that it considered each of these factors in arriving at a rate schedule for Water Service. One of these factors is original cost, and Water Service argues that the Commission erred as a matter of law in arriving at an amount representing original cost.

To present this argument it is necessary to relate certain background facts. Through a joint effort of K. U. and the Commission the original cost of each of K. U.’s utility properties was estimated in 1941. However, the original cost of the water distribution system in Middles-boro was carried on K. U.’s books at a substantially lower figure than had been estimated for it. When Water Service acquired the Middlesboro water system in 1947, it adopted K. U.’s original cost figure, but in 1951 it increased this sum. The Commission refused to permit this increase as an item of original cost. Water Service attempted to justify an increase in this respect by showing that K. U. had voluntarily decreased the figure for its convenience and as a conservative accounting practice, and that it had merely restored to the original cost an amount to which it was entitled. However, there was also evidence that since this water system was designed to serve an expected population far greater than the number of customers it has ever had, its facilities are far in excess of those needed; and hence the excess facilities were not used or useful so as to be a proper factor in establishing a rate base.

In its March 25, 1958, opinion and order the Commission found that the original cost figure as of 1941 was reduced because of over-adequate facilities. There is substantial evidence to support this finding. Furthermore, as a matter of law, we believe the Commission properly refused to include the cost of over-adequate facilities in the rate base. Public Service Commission v. Montana-Dakota Utilities Co., N.D., 100 N.W.2d 140; 43 Am.Jur., Public Utilities, sec. 106, p. 647.

We have considered the other questions raised by Water Service concerning the action of the Commission and find no reason to answer them for they are without substantial merit.

Wherefore, the judgment is reversed insofar as it affects Fern Lake and affirmed in all other respects, with directions to remand the case to the Commission for the entry of a new order not inconsistent with this opinion.

BIRD, J., dissenting.


author: PER CURIAM.

text:
    Shirl DECKER, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    April 20, 1962.
    Rehearing Denied June 22, 1962.
    R. H. Cannon, Leitchfield, for appellant.
    John B. Breckinridge, Atty. Gen., William F. Simpson, Asst. Atty. Gen., for ap-pellee.
   PER CURIAM.

Appellant, Shirl Decker, was convicted in the Hardin Circuit Court of transporting alcoholic beverages for the purpose of sale in dry local option territory. He was fined $100 and sentenced to 45 days in jail.

A consideration of the record and of the points raised in appellant’s brief has failed to disclose any error prejudicial to appellant’s substantial rights and the judgment is therefore affirmed.


text:
    Henry RIDDLE et al., Appellants, v. Herbert C. HOWARD et al., Appellees. Henry RIDDLE, Appellant, v. John W. HOWELL et al., Appellees.
    Court of Appeals of Kentucky.
    May 1, 1962.
    Rehearing Denied June 22, 1962.

      Thomas C. Fisher, Middletown, for appellants.
    Herbert C. Howard, R. Davis McAfee, Harry Hargadon, Louisville, for appellees.
   STANLEY, Commissioner.

The basic question in the two appeals is the justness or correctness of the judgment declaring that Middletown does not exist as an incorporated municipality.

The cases were initiated by the filing by Henry Riddle and many others as “citizens and residents of the City of Middletown” on June 16, 1960, of a petition in the Jefferson County Court to have trustees appointed for the town of Middletown in accordance .with KRS 88.230. An objection was filed by Herbert C. Howard and others on the grounds that (1) the city had been inactive for the last 75 years; (2) it was not certain that the Legislature had not dissolved the town; and (3) the appointment of trustees “at this time would not be in accordance with law as to process and orderliness and would result in hardship and unnecessary expense to the owners.” Eight days later, on June 24, John W. Howell and another filed an ex parte petition in the circuit court for a judgment declaring the original charter of Middletown to have been forfeited under the provisions of KRS 82.010, 82.020. The petitioners in the county court intervened in that proceeding, made issue of certain alleged facts and pleaded in abatement and as a jurisdictional bar their prior and then pending proceeding in the county court for the appointment of town trustees.

The circuit court on July 26, 1960, entered a judgment that the charter of the town “is forfeited for failure for more than one year to maintain a city government by electing or appointing officers and by levying and collecting taxes.”

The next day, July 27, the county court dismissed the petition to appoint trustees on the basis of the circuit court’s judgment of forfeiture of the town’s charter. An appeal from that judgment was taken to the circuit court and there affirmed. We have appeals from both judgments.

It appears without contradiction that the Jefferson County Court in May, 1797, established an area of 500 acres as the town of Middletown. The authority was an act of the Legislature enacted in December, 1796. 1 Littell, Laws, 512. The existence of the town was thereafter recognized by the Legislature in an amendatory act of 1800 (2 Littell, Laws, 406), and in 1871 (Acts 1871, Ch. 1109, p. 28), and by certain orders of the Jefferson County Court entered in 1899 and 1913. However, it appears also that beyond the memory of the oldest resident the town had been dormant and had had no trustees.

The appellants concede those conditions but argue that, nevertheless, Middle-town continued as a municipal corporation and a city of the sixth class (KRS 81.010 (6)) because such a corporation may not commit suicide or become automatically dissolved by mere failure to function. That is recognized as the law. Hill v. Anderson, 122 Ky. 87, 90 S.W. 1071, 28 Ky.Law Rep. 1032. 37 Am.Jur., Mun.Corp., § 22.

The creation and dissolution of municipal corporations are political in character and are exclusive legislative functions. Such a corporation must be dissolved by or on authority of the Legislature. Hill v. Anderson, 122 Ky. 87, 90 S.W. 1071, 28 Ky. Law Rep. 1032. Before the adoption of the present Constitution, with its limitations and restrictions on the enactment of special laws, §§ 59, 60, dissolution of a city was usually by special act. It appears that no general statute on the subject was enacted until 1906, when the Legislature authorized the courts to declare dissolution of a charter of a sixth class city upon petition of a majority of the resident voters: KRS 88.020. No proceeding was ever instituted under that statute or its predecessor, § 3662a-l et seq., to terminate the life of Middletown. In 1918 an act (Ch. 152) authorized circuit courts to declare the charter 'of any city forfeited upon a finding that it had failed for one year to maintain a city government by electing or appointing officers and levying and collecting taxes for the maintenance of its streets and alleys. KRS 82.010, 82. 020. See Boone County v. Town of Vernona, 190 Ky. 430, 227 S.W. 804; Green v. Davis, 253 Ky. 105, 68 S.W.2d 750; Sizemore v. Commonwealth, 285 Ky. 142, 147 S.W.2d 56; Jewell v. City of Lake Louisvilla, Ky., 339 S.W.2d 169. The present proceeding in the circuit court was under that statute.

The crucial or only legal question may be said to be whether a proceeding begun in a county court (which in this matter has exclusive original jurisdiction) tolled the right and power of the circuit court to declare a forfeiture of a city charter, as was within its exclusive original jurisdiction; or whether the pendency of the proceeding in the. circuit court deprived the county court of power to act in its proceeding. The county court did not act and render judgment before the circuit court rendered its judgment.

The appellants contend that they having instituted the proceeding in the county court for the appointment of trustees for the legally existing city, as provided in KRS 88.230, before the beginning of the forfeiture proceeding in the circuit court, the county court, in the exercise of its exclusive jurisdiction in the matter, should have promptly granted the prayer of the petition and should not have held the case in abeyance, and the circuit court should have recognized the prior jurisdiction of the county court and abated or dismissed its proceeding. If meanwhile the county court had appointed the trustees, there would have been no ground for forfeiture of the charter.

It is a rule of general application that when a court of competent jurisdiction acquires jurisdiction of the subject matter of a case, its authority and control continue until final disposition, and as a matter of principle and comity another court of concurrent jurisdiction will recognize the prior jurisdiction and will not interfere by taking over the same case. A plea in abatement will be sustained. Farmers National Bank of Danville v. First Colored Baptist Church, 277 Ky. 521, 126 S.W.2d 1130; Booth v. Copley, 283 Ky. 23, 140 S.W.2d 662; Delaney v. Alcorn, 301 Ky. 802, 193 S.W.2d 404; 1 Am.Jur.2d, Abatement, Survival and Revival, §§ 5, 16. However, it is an essential condition for the application of the rule that the first action shall afford the parties in the second action an adequate and complete opportunity for the adjudication of their rights. So, where the pendency of a suit or proceeding in one court is relied on to defeat or abate a second suit or action in another court of concurrent jurisdiction, it must relate to the same or substantially the same cause of action, and the parties and the relief or remedy sought in the first action must be the same or the equivalent. The rule of abatement does not apply where the second suit has merely a close connection with the other action. 1 Am.Jur.2d, Abatement, Survival and Revival, §§ 26, 31; 14 Am.Jur., Court, § 246; 21 C.J.S. Courts § 492; Ross v. Fox’s Adm’r, 212 Ky. 838, 280 S.W. 143; Farmers National Bank of Danville v. First Colored Baptist Church, 277 Ky. 521, 126 S.W.2d 1130; Finger v. Tate, 282 Ky. 542, 138 S.W.2d 978; Booth v. Copley, 283 Ky. 23, 140 S.W.2d 662.

In the present cases the second proceeding in the circuit court related to the same general subject matter and the parties were practically the same, but the relief sought was not the same and the jurisdiction of the two courts was not concurrent, but exclusive, one of the other.

The statute, KRS 88.230, places a mandatory duty upon the county court to-fill vacancies in the board of trustees of a city of the sixth class, but it is within the court’s discretion to determine the existence of the conditions requiring its action and whom the court will appoint. The record discloses the county court was fully advised of the later institution and pendency of the proceeding in the circuit court. It was not required to act immediately upon the petition to appoint trustees, for issues had been raised. We think it was within the discretion of the county court to withhold disposition of the proceeding a reasonable time until the circuit court should determine whether the charter of Middletown had been lost because of the failure of the city to function. City of St. Matthews v. Smith, Ky., 266 S.W.2d 347; 53 Am.Jur., Trial, § 16; 89 C.J.S. Trial § 604.

The judgments in both cases are

Affirmed.


author: CULLEN, Commissioner.

text:
    COMMONWEALTH of Kentucky, Appellant, v. ARLAN’S DEPARTMENT STORE OF LOUISVILLE, Kentucky, et al., Appellees.
    Court of Appeals of Kentucky.
    Feb. 23, 1962.
    Rehearing Denied June 22, 1962.

      John B. Breckinridge, Atty. Gen., Troy D. Savage, Asst. Atty. Gen., for appellant.
    Henry B. Sadlo, James E. Thornberry, Edward M. Post, Frank A. Garlove, Louisville, for appellees.
    Charles E. Keller, Louisville, for amicus curiae.
   CULLEN, Commissioner.

On warrants charging violations of the Kentucky “Sunday Closing Law,” KRS 436.160, the owners of three retail stores in Louisville were tried in the quarterly court, found guilty, and fined $20 each. They appealed to the circuit court, which dismissed the prosecutions on the ground that the statute is unconstitutional. The Commonwealth has appealed from the judgments of dismissal.

The circuit court held the statute unconstitutional on the grounds that it violated state and federal constitutional guaranties of freedom of religion and prohibitions against establishment of religion or giving preference by law to any religious sect (Ky.Const., Secs. 1, 5; U.S.Const., Amendments 1, 14) ; that it was not a proper exercise of the police power; and that the exemptions were such as to make the statute discriminatory and arbitrary.

In substance, the Kentucky statute prohibits working on Sunday or employing another person to work on Sunday at any occupation or in any labor or business except:

1. Ordinary household duties.
2. Work of necessity or charity.
3. Maintenance or operation of a public service or public utility plant or system.
4. Amateur sports.
5. Athletic games.
6. Moving picture shows.
7. Chautauquas.
8. Filling stations.
9. Opera.

A further exception is of persons who are members of a religious society which observes as a Sabbath a day in the week other than Sunday and who actually do observe as a Sabbath one day in each seven. The statute prescribes special penalties for holding a boxing, or wrestling match, or permitting billiards or pool to be played, or hunting game with guns or dogs, on Sunday.

' Subsequent to the rendering of the decision in the circuit court and while these cases were pending on appeal, the Supreme Court of the United States held valid similar statutes of Maryland, Massachusetts, and Pennsylvania, in McGowan v. State of Maryland, 366 U.S. 420, 81 S.Ct. 1101, 6 L.Ed.2d 393; Gallagher v. Crown Kosher Super Market of Massachusetts, 366 U.S. 617, 81 S.Ct. 1122, 6 L.Ed.2d 536; Two Guys From Harrison-Allentown, Inc. v. McGinley, 366 U.S. 582, 81 S.Ct. 1135, 6 L.Ed.2d 551; and Braunfeld v. Brown, 366 U.S. 599, 81 S.Ct. 1144, 6 L.Ed.2d 563.

Except as to one point which will hereinafter be discussed, the opinions of the Supreme Court in the above cited cases, to which we shall adhere, completely refute the contentions that our Kentucky statute violates constitutional guaranties and prohibitions with respect to religion, that the statute is not a proper exercise of the police power, and that the exemptions are such as to make the statute discriminatory or arbitrary or violative of the right to equal protection of the law.

In none of the four cases did the Supreme Court expressly uphold the validity of a blanket exemption, such as is contained in our statute, of persons who observe a Sabbath other than Sunday in accordance with the precepts of a religious society of which they are members. It is contended here that the existence of this exemption creates a discrimination against persons who do observe Sunday as the Sabbath and imparts such a religious flavor to the entire statute as to bring it within the constitutional prohibition against any law for the establishment of religion.

While the Supreme Court did not specifically rule on this question, it is to be noted that the Massachusetts statute, which was •Jphéld in the Gallagher case, contained several limited exemptions in favor of persons who observe a Sabbath other than Sunday, and the Court found no fault in those exemptions. Furthermore, in the Braunfeld case, where the contention was that the Pennsylvania statute was invalid because it did not provide an exemption for persons who because of religious conviction observe a Sabbath other than Sunday, the Court referred to the fact that a number of states do provide such an exemption and said, “this may well be the wiser solution to the problem.” So it must be considered that the Supreme Court by implication did uphold the validity of such an exemption.

Our own view is that the exemption does not affirmatively prefer any religion nor amount to the establishment of a religion. Rather, it simply avoids penalizing economically the person who conscientiously observes a Sabbath other than Sunday.

Apart from the questions of constitutionality, the appellees argue that the Kentucky Sunday Closing Statute-has been repealed by implication by certain subsequent statutes (KRS 244.290, 244.480) authorizing local governmental units to permit the sale of alcoholic beverages on Sunday, and by another subsequent statute (KRS 337.050) requiring time-and-a-half pay for work done on the seventh day of the week.

With respect to the statutes permitting Sunday sales of alcoholic beverages, the contention is that in enacting such statutes the legislature evinced an intent to abandon the idea of making Sunday a day of divorcement from worldly pursuits; that in permitting alcoholic beverages to be sold on Sunday the legislature was adopting the policy that “anything goes” on Sunday. However, in the McGowan case, in reference to the fact that the Maryland Sunday Closing Law provided various exemptions for sales of alcoholic beverages, the Supreme Court said that the legislature could reasonably find that in conformity with carrying out the general purpose of the statute to enhance the recreational atmosphere of the day, “some people will prefer alcoholic beverages * * * to add to their relaxation.” We think that at the most the subsequent statutes of Kentucky permitting sales of alcoholic beverages on Sunday constitute simply additional exemptions from the Sunday Closing Law, which are valid on the same basis as the other exemptions.

As concerns the statute requiring time- and-a-half pay for work on the seventh day of the week, it is argued that this constitutes a legislative recognition that work on Sunday is lawful. We do not find this argument meritorious, because the legislature very well may have imposed the extra wage requirement in recognition of the fact that a considerable variety of Sunday work is lawful by reason of exemptions from the Sunday Closing Law. There is no such irreconcilable conflict between the two statutes as to create a repeal by implication.

In our opinion the circuit court erred in holding KRS 436.160 unconstitutional and in dismissing the prosecutions.

The judgments are reversed with directions to reinstate the prosecutions.


text:
    Marian WARD et al., Appellants, v. Mrs. Albert K. MOORE, Appellee.
    Court of Appeals of Kentucky.
    March 16, 1962.
    Rehearing Denied June 22, 1962.
    Joe Hobson, Prestonsburg, Ky., for appellants.
    Earl R. Cooper, Salyersville, Ky., John G. Prather, Somerset, Ky., for appellee.
   PER CURIAM.

This is a motion for an appeal in consolidated cases, made prior to the 1960 change in Rules, from a judgment of the Magoffin Circuit Court.

We have examined the record carefully and find no prejudicial error.

The motion for an appeal is denied and the judgment is affirmed.


text:
    Kenneth Ray HAZELWOOD et al., Appellants, v. Bobbie Jean HODGE, Appellee.
    Court of Appeals of Kentucky.
    May 19, 1961.
    Rehearing Denied June 22, 1962.

      Thomas A. Ballantine, Jr., McElwain, Dinning, Clarke & Winstead, Louisville, for appellants.
    Joe G. Leibson, Leibson, Leibson & Leib-son, Louisville, for appellee.
   CULLEN, Commissioner.

Bobbie Jean Hodge, a 19 year old married woman with two children, was injured when the automobile in which she was riding was struck by a taxicab. In her action for damages against the taxicab company and its driver the jury’s verdict awarded $21,683.70. The defendants have appealed from the judgment entered upon the verdict. The asserted grounds of error are that incompetent evidence was received, one of the instructions was erroneous, and the damages are excessive.

The accident occurred in October 1957. Mrs. Hodge sustained no broken bones and the apparent injuries were to muscles and tissues in her neck, shoulder and back. She was confined for six days in a hospital and a short time after her release from that hospital was confined in another for 12 days, after which she spent three weeks in strict bed rest at home. During the next seven months she made 20 visits to the family doctor, whose treatment included placing adhesive casts on her back, prescribing and administering sedatives and muscle relaxants, and prescribing a bed board. Early in June 1958 she made complaint to her doctor of chest discomfort and coughing spells and upon fluoroscopic and X-ray examinations he discovered that she had active tuberculosis in both lungs. She was immediately admitted to a tuberculosis sanitarium and at the time of the trial in June 1959 she was still confined in the sanitarium.

For the purpose of proving that Mrs. Hodge did not have tuberculosis prior to the accident there were introduced in evidence two photographic reproductions of fluoroscopic images of a human chest, which photographs were from the files of the Louisville Tuberculosis Association and were identified by file cards attached to them as being photographs of the chest of Mrs. Hodge, one taken in 1955 and the other in 1956, at which times she was a high school student. Three medical witnesses were asked on the stand to examine these photographs and each said that they showed no evidence of tuberculosis. The defendants objected to the admission of the photographs and to the testimony concerning them, and they contend on this appeal that error was committed in the overruling of their objections.

The grounds of objection were that the scientific accuracy of the photographs and the identity of the subject (a matter of integrity of the records) were not established. We do not-find it necessary to pass on the merits of these grounds because it is our opinion that the admission of the exhibits and testimony, even if erroneous, was not prejudicial. However, we deem it appropriate to make these comments: As concerns the question of scientific accuracy there appears to be little basis for the objection, because not only was there testimony by one of the doctors that the process used in making photographs of this kind has proved by experience to be very satisfactory, but all of the medical witnesses found these particular photographs to be entirely satisfactory for the purpose of expressing a diagnostic opinion. As concerns the question of identity or integrity we think the objection probably was well taken, because there was no testimony from persons who kept the records. See Whittaker v. Thornberry, 306 Ky. 830, 209 S.W.2d 498.

Our opinion that the evidence complained of was not prejudicial is based upon the fact that other evidence in the case was convincing that Mrs. Hodge did not have tuberculosis in an active state prior to the accident. In fact there was no real effort to prove otherwise. Her testimony and that of her husband was that she was strong and healthy before the accident and was able without difficulty to do her housework and the many tasks involved in -caring for her two small children. There was proof that the members of her family were free of tuberculosis. And, most convincing of all, her family doctor testified that during the seven months immediately following the accident he had made several fluoroscopic examinations of Mrs. Hodge’s chest and they all were negative as to tuberculosis. There was no evidence to contradict this testimony, other than the testimony of one doctor that Mrs. Hodge might have had minimal lesions before the accident, which of course is no evidence that she had tuberculosis in an active state.

The instruction of which the appellants complain was that the jury in determining damages could consider Mrs. Hodges’s condition of active tuberculosis if they believed from the evidence that there was “a causal relationship” between the physical injuries which she received in the accident and the development of the tubercular condition. (There was medical testimony that the injuries either activated or lighted up a dormant germ infection or so reduced Mrs. Hodge’s resistance as to cause her to contract the disease. The doctors, in referring to the causal connection, spoke of it as “probable” and as “a reasonable medical certainty.”)

The contention of the appellants is that the “cause” of tuberculosis is always the germ; that negligent conduct cannot impose liability for injury unless the conduct is the “proximate cause” of the injury; and therefore there can be no liability for a tubercular condition that is activated by an injury negligently inflicted. This argument is so fallacious as hardly to deserve comment. It will be sufficient to cite merely a few of the multitude of authorities for the proposition that a negligent actor is liable for a disease which is contracted because of lowered vitality from injuries, or for a disease activated or lighted up by injuries. See Louisville Taxicab & Transfer Co. v. Hill, 304 Ky. 565, 201 S.W.2d 731; Sentilles v. Inter-Caribbean Shipping Corp., 361 U.S. 107, 80 S.Ct. 173, 4 L.Ed.2d 142; Restatement of the Law of Torts, sec. 458; Prosser on Torts, sec. 48; 25 C.J.S. Damages § 20, p. 478; 15 Am.Jur., Damages, sec. 81, p. 490.

The damages do not strike us as being excessive to the extent of appearing to have been awarded under the influence of passion or prejudice. There was evidence that Mrs. Hodge was continuing at the time of the trial to suffer severe pain from her back injury and there was medical testimony that the back injury appeared to be chronic. By reason of the tuberculosis she had spent a year in a sanitarium and there was no prospect of her immediate release. While there was no medical testimony as to the probable duration of the nec-essáry period of her hospitalization it was clear that her recovery was not imminent and there was testimony that in the event of her ultimate 'release from the sanitarium she would continue to be restricted in her activities. Under these circumstances the award does not appear excessive.

The judgment is affirmed.


author: CLAY, Commissioner.

text:
    Edgar V. ALBERT et al., Appellants, v. BLACK MOTOR COMPANY, a Corporation, et al., Appellees.
    Court of Appeals of Kentucky.
    March 23, 1962.
    Rehearing Denied June 22, 1962.

      James Sampson, William A. Rice, Harlan, Logan E. Patterson, Pineville, for appellants.
    James S. Greene, Jr., Harlan, Herschel M. Sutton, Corbin, for appellees.
   CLAY, Commissioner.

This suit was instituted by a stockholder of Black Motor Company for and on behalf of such company and its other stockholders. Damages were sought against five of its directors for profits allegedly realized on the sale of stock owned by it in another corporation. The claim was dismissed as to four of the directors, and appellant Albert appeals from a judgment against him in the sum of $192,368.

The claim is founded on the breach of fiduciary duty, fraud and concealment. The basic facts are not in dispute.

Black Motor Company (hereafter referred to as “Black”) was incorporated in 1921 to engage in the general automobile and motor business. Albert was a stockholder and director of this corporation. He subsequently became its president and at all times hereafter related effectively controlled it.

In 1937 Albert promoted the creation of a new corporation, Southeastern Gas and Oil Company (hereafter referred to as “Southeastern”). This company was chartered to engage in the wholesale distribution of gas, oil and automobile accessories, with an authorized capital stock of 250 shares ($100 par value). When Southeastern was incorporated sixty shares were issued to Black, and in 1953 a total of 176 shares had been issued to it. Nothing of value was paid or contributed by Black for any of this stock. However, for many years Southeastern was recognized by both companies as a legitimate subsidiary of Black.

Shortly after the incorporation of Southeastern, at the first meeting of stockholders in 1938 (at which time Black was the principal stockholder and was represented by Albert) by some manipulation the stock of Black was changed from voting to nonvoting stock. (The Chancellor found this to be illegal.)

In 1953 the capital structure of Southeastern was changed and its stock was increased from 250 to 500 shares. No additional stock was subscribed by or on behalf of Black, but by the purchase of additional shares Albert became the principal stockholder in Southeastern. (The judgment awards damages based on the value of 352 shares, being the original 176 plus an additional 176 which Albert should have acquired for Black. This phase of the judgment is not attacked.)

In December 1954 the Texas Company cancelled the distributorship agreement it had with Southeastern and immediately entered into a similar agreement with Albert. He thereupon sought out, individually, the majority of Black’s directors, and having advised them about the cancellation of -the Southeastern franchise and representing the stock would be sold to the employees of Southeastern, induced them to execute a writing which approved the sale of the 176 shares owned by Black for $150 a. share. (This backhanded method of committing the directors was not a valid act of the corporation.) In January 1955 these 176 shares were transferred to Albert and he paid Black $26,400. Subsequently in August 1955, at a special meeting of Black’s directors, the majority ratified their previous action in authorizing the sale of this stock.

Prior to this last step appellant, having acquired the franchise formerly held by Southeastern and having acquired all of Black’s stock in that corporation, in March 1955 formed a new company in his own name to take over the business of Southeastern. (This project was not completed, and it is not of significance except to complete the picture of Albert’s overall plan.)

While all the foregoing transactions were taking place, appellant was president, director and the principal active officer of both Black and Southeastern. When he was negotiating the sale of Black’s 176 shares of Southeastern stock, he did not disclose to Black’s directors or stockholders that he had acquired the Texas franchise or that he was the buyer of the stock. There is no doubt on this record that Albert manipulated both Black and Southeastern for his own benefit, in total disregard of his fiduciary obligations to these corporations and the rights of their other stockholders. See Reinhardt v. Owensboro Planing Mill Co., 185 Ky. 600, 215 S.W. 523.

Albert does not deny his fiduciary obligations to Black nor does he assail the basic findings of fact of the trial court with respect to the transactions above related. We will take up his specific contentions seriatim.

Appellant first contends that Black had no substantive or enforceable rights in its 176 shares of Southeastern stock because they were issued without consideration and in violation of section 193 of the Constitution of Kentucky. That section provides that any fictitious increase of stock “shall be void”.

It may be conceded that this stock was at least voidable as to Southeastern, its stockholders and its creditors. The difficulty with Albert’s position is that he endowed it with the incidents of valuable property. In the first place, it was according to his plan that Southeastern issued the stock to Black. Secondly, pursuant to his plan and with his knowledge and consent, Southeastern was treated on the books of Black as its subsidiary. Thirdly, as a director of Southeastern he participated in the payment to Black of dividends accruing on this stock. Finally, he recognized the stock constituted a valuable asset of Black when he took great pains to negotiate the purchase of it for $26,400.

Whether this stock was illegally issued, or could have been cancelled, or actually gave Black an ownership interest in Southeastern, is immaterial. No claim is asserted against Southeastern. It was Albert himself who engineered the issuance of this stock, who maintained it on the books as a valuable asset of Black, and who eventually paid a substantial price for it. In addition, it was clearly his duty, as the highest ranking executive officer of both corporations, to see to it that this stock was validly issued and paid for by Black.

Reduced to its essence, Albert’s claim is that the breach of his fiduciary duties to both corporations with respect to this stock somehow shields him from liability for breach of other fiduciary duties to Black by which he obtained for his own benefit the property of the latter. We do not see how his own wrongs could create in him any rights, nor can we discern what standing he has in court to invalidate a business transaction which he actively initiated and perpetuated for and on behalf of the corporation he represents.

The situation is similar to that in Franklin v. Mortgage Guaranty & Security Co., 9 Cir., 57 F.2d 834. There the president of a corporation was sued for secret profits he realized on the sale of stock. One of his defenses was that the sale by the corporation was illegal. The court rejected this defense and pointed out that the defendant was guilty of a double wrong in both permitting the corporate delinquency and attempting to make a secret profit therefrom. That is exactly what we have here.

Another comparable case is Pittsburg Mining Co. v. Spooner, Wis., 74 Wis. 307, 42 N.W. 259. In that case the defendants formed a corporation and thereafter in effect sold to it for $90,000 property they had acquired for the corporation at a price of $20,000. When sued for this secret profit, they defended on the ground that the corporation itself was illegally organized. The court said, 42 N.W. page 264:

“These defendants, who were the active agents in the formation of the corporation, who were instrumental in the issue of the alleged illegal stock, and who contracted with the corporation having full knowledge of all of its transactions, are in no position to contest the regularity of the formation of the corporation.”

We cannot imagine a clearer case of es-toppel to deny that the Southeastern Stock constituted one of Black’s valuable assets. See 11 Fletcher Cyc.Corp. (Perm.Ed.) Section 5169 (page 464); Shannon’s Co-Executors v. Shannon Spring Bed Mfg. Co., 313 Ky. 463, 230 S.W.2d 457.

The same principles apply to Albert’s related contention that Black had no legal power under its charter to acquire stock in another corporation. Assuming this to have been an ultra vires act, clearly it cannot be attacked by the president, director and stockholder of the corporation who not only assented to the transaction but himself devised and consummated it. See Lincoln Court Realty Co. v. Kentucky Title Sav. Bank & Trust Co., 169 Ky. 840, 185 S.W. 156; 7 Fletcher Cyc.Corp. (Perm.Ed.) Section 3453 (page 600).

Another related contention is that the Black corporation on whose behalf this suit is brought never owned any Southeastern stock regardless of whether it was legally or illegally issued. This contention is based on the fact that the corporate life of the original Black Motor Company, to whom the stock was issued, expired in 1946. A new corporation with the same name, on whose behalf this suit is prosecuted, was organized in 1953 and took over the assets of the old corporation. Whether or not there had been a proper transfer of the shares to the new corporation on the books of Southeastern, both corporations and Albert treated the stock as if such transfer had been made. It appears this question was not raised in the lower court, but in any event, Albert’s argument is not persuasive.

The next contention is that the principal asset of Southeastern was the Texas franchise, that Black was not in a position to acquire this franchise, and therefore Black was not entitled to any profits realized by Albert upon his personal acquisition of it. Albert cites respectable authority for the proposition that an officer of a corporation has the right to engage in business ventures on his own account with' out breach of fiduciary duty if the corporation lacks the power or the ability to engage in such an independent enterprise. We have difficulty comprehending Albert’s argument or the applicability of the legal principles upon which he relies.

This suit is not brought to charge him with profits realized by the acquisition of the Texas franchise originally held by Southeastern. The claim against him is that he purchased from Black its shares of stock in Southeastern at a price substantially less than their fair value.

It may be true the Texas franchise constituted a valuable asset of Southeastern and its loss may have affected the value of the stock. However, that is not Albert’s contention. Apparently he does not make such claim because (1) the loss of the franchise resulted from his breach of fiduciary duty to both Black and Southeastern, and (2) the parties agreed the book value of the stock on November 30, 1954 (before the loss of the Texas franchise) would be fairly representative of its book value at the time it was purchased by Albert in January 1955 (after he had acquired the franchise). The answer to Albert’s contention on this point is that whatever profits he made by virtue of the acquisition of the Texas franchise, which were not even shown on this record, were not sought by appellee.

The next major contention of Albert is that the sale of the Southeastern stock was effectively ratified by Black. This was purportedly done at a special meeting of the Board of Directors held August 29, 1955. A prime requisite of an effective ratification of such a transaction is that the corporation have full knowledge of all material facts relating thereto. 13 Am.Jur., Corporations, Section 978 (page 930); Kenyon Realty Co. v. National Deposit Bank, 140 Ky. 133, 130 S.W. 965, 31 L.R.A.,N.S., 169.

The trial court found that at this meeting Albert did not disclose that (1) he was the purchaser of the stock or (2) he was the holder of the Texas franchise. Clearly these were material facts and the record amply supports the Chancellor’s finding that they were not known to the directors and were not disclosed. Not only was there direct evidence on this issue but there was ample circumstantial evidence that Albert made every effort to conceal the true nature of the transaction. He had attempted to obtain the approval of the directors in an unorthodox way, and at regular meetings of both the stockholders and the Board of Directors after the purchase of stock, no mention of it was made. The court’s finding on this question is fully supported by the evidence.

Albert’s next contention is that there was no proper evidence to support the trial court’s finding that $675 was the fair market value of a share of stock in Southeastern at the time of the purchase by Albert. This finding was principally based upon the “book value” of the stock as determined by a certified public accountant. It is Albert’s argument that book value is not a fair measure of market value.

It is generally recognized that the best evidence of market value is the price at which stock is bought at bona fide, voluntary sales. In this case, however, the Chancellor was confronted with a closely held corporation whose stock had not been bought or sold on the open market. There were a few isolated sales of the stock at $100 (the par value), but this appears to> have been the price paid to Southeastern upon the issuance of stock and the sales were obviously consummated for the purposes of management of the corporation. There were no sales which would establish a fair market value.

Under those circumstances, as a matter of practical necessity, resort must be had to other evidence such as the value of the corporate assets, good will, earning capacity, and other items. See 11 Fletcher Cyc. Corp. (Perm. Ed.) Section 5119 (page 226); State v. Carpenter, 51 Ohio St. 83, 37 N.E. 261; Moffit v. Hereford, 132 Mo. 513, 34 S.W. 252; Hetrick v. Smith, 67 Wash. 664, 122 P. 363.

This Court has recognized that book value is a proper and substantial criterion of market value when the latter cannot be established by sales of stock. Dumesnil v. Reeves, 382 Ky. 563, 142 S.W.2d 132; Board of Supervisors, etc. v. State National Bank of Frankfort, 300 Ky. 620, 189 S.W.2d 942.

It is true that the book value may be either more or less than market value. In this case appellees’ certified public accountant found the book value to be $752.56 per share. Taking other factors into consideration, the Chancellor determined the fair market value to be $675. There was ample substantial evidence to support this finding.

Finally, Albert contends the judgment is inequitable in awarding damages instead of requiring him to transfer to Black the 176 shares formerly owned by it. The court made a finding that due to the subsequent transfer of these shares by Albert, the lapse of time, and certain developments in the conduct of the business of Southeastern, it would be difficult and would involve endless litigation if an attempt were made to recreate the status quo at the time of the purchase of stock by Albert. We concur in this finding and certainly can find no error in the form of relief granted.

The judgment is affirmed.