author: NIMAN, J.

text:
    CORPORATIONS — PARTIES—WILLS.
    [Cuyahoga (8th) Circuit Court,
    December 2, 1912.]
    Marvin, Winch and Niman, JJ.

    Henry C. Miller and Samuel C. D. Johns, Tr. v. Mortimer H. Miller et al.
    1. Parties Defendant Financially Interested in Determination of Proceeding to Construe Will Excluded as Witnesses.
    Parties defendant in an action brought by trustees to construe a will, in the determination of which their financial interests are involved and whose rights will be affected by the decision of the court, are properly excluded as witnesses under Gen. Code 11495.
    2. “Lawful Heirs" Determined as of Time of Testator’s Death, not at Time of Contingency Happening.
    “Lawful heirs,” in a devise of testator’s estate, one-half to the lawful heirs of testator and one-half to the lawful heirs of ¡his wife, being the respective brothers and sisters of each, also certain of their children named, to whom, after the death of his son without living issue, the estate is directed to be distributed, refers to those who answered the description at testator’s death, excluding the widow and son of testator, and not at the happening of the contingency of the son's death; hence, distribution should be made respectively, per stirpes, the representatives of the deceased brothers and sisters taking the share that would have gone to their deceased ancestor if living, except where the will provides such shares shall not go to certain specified persons.
    3. Testator's Recital of Domicile in Will Strong Evidence of Fact.
    A declaration of testator’s domicile in his will establishes that fact unless overcome by positive proof to the contrary; accordingly testator in his will having recited his residence in Ohio, notwithstanding he had resided in another state and owned and accumulated personal property therein, in the absence of evidence of intention to make that state his domicile, distribution will be determined by the laws of this state.
    4. Stock Dividends Declared out of Earnings Treated as Capita! Stock and Distributed to Remaindermen not Life Tenants.
    Stock dividends declared by a corporation out of earnings retained by such corporation and treated as part of its capital go to the remaindermen and not to the life tenants, and this notwithstanding certain earnings were accumulated and carried as cash or invested in securities capable of ready conversion into cash, if such funds were devoted to the extension and promotion of the company’s business. .
    [Syllabus approved by the court.]

      Appeal from common pleas court.

      Stearns, Chamberlain <& Boy on, for- plaintiffs.

      Higley & Maurer, Westenhaver, Boyd, Budolph <& Brooks, Hoyt, Dustin Kelley, McKeehan & Andrews, for defendants.
   NIMAN, J.

This action was brought by the trustees of the estate of Nathan E. Chapman, deceased, to obtain a construction of the will under which they are acting as trustees.

Nathan E. Chapman died January 13, 1893, leaving the will in question, which was -admitted to probate by the probate court of Cuyahoga county, Ohio, on February 15, 1893. Letters of trusteeship were subsequently duly issued to the plaintiffs who qualified as trustees and have ever since continued to act as such.

The third paragraph of the will in question reads as follows :

“It is my will, that said trustees shall hold all the real estate, securities and moneys, of which I may die seized, with power to sell and convey said real estate, and to sell, dispose of or collect all of said securities, and to invest and reinvest the proceeds thereof, and after paying expenses', to pay the entire net income from my said estate, to my wife, during her lifetime. And it is my will, that if it becomes necessary, in the judgment of said trustees, to use any part or all of the principal, of my estate for the support and care of my wife, that the same shall be so used.
“At the decease of my said wife, it is my will, that the entire net income from my said estate, shall be paid by said trustees, to my said son,' Harry, during his natural lifetime, should he survive his mother. And should said trustees, or their successors deem it necessary, at any time, after the decease of my said wife, to use any portion of the principal of my said estate, for the support and maintenance of my said son, Harry, they are authorized to so use the same. And should my son die, leaving issue, then at his death, should‘he survive his mother, or at his mother’s death, should she survive him, said net income to be paid to the proper guardian of said issue, until it or they arrive at the age of twenty-one years, and to them become the absolute property of said issue. But, if my said son shall die, without living issue, then, after his death, if he survive his mother, or after his mother’s death, if she survive him, or after the death of his issue, should it or they die before arriving at the age of twenty-' one years, it is my will, that all my estate, shall go, one-half to my lawful heirs, and one-half to the lawful heirs of my wife, subject however to the following conditions:
“Should my son’s wife survive both my son and my wife,then it is my will that one-fourth of my said estate shall still remain in trust, she to be paid by said trustees, the net income of said one-fourth, during the time that she remains the widow of my said son; and that the remaining three-fourths of my said estate be then and there divided between my heirs and the heirs of .my wife, as aforesaid; provided, however, that if my sister, Mary E. Buctland, should survive me, then it is my will, that the share that she would receive at law, should remain in trust in the hands of my said trustees, she to receive the income therefrom during her lifetime,.and at her death, said share to be paid to and vest in her daughter and the heirs of her daughter, Maria. It is my will, that no part of my estate shall ever go to my said ■sister’s son, George. And provided, further, that the share that would go to Mary A. Solloway, sister of my wife, shall remain in trust during the lifetime of said Mary A. Solloway, she; during said time to receive the net income from said share, and at her death, it is my will that said share should go to the other heirs of my said wife, excluding therefrom the children of the said Mary A. Solloway, it being my will that the said children of the said Mary A. Solloway shall inherit or receive no part of my estate. And provided further, that the part of my estate which would go to Mitchell H. Miller, brother of my wife, shall be held in trust during the remainder of his lifetime, by said trustees, he to receive the net income therefrom, and at his decease, the same to go to his children. And it is my will, that in the event one-fourth of my estate shall remain in trust for the benefit of the wife of my said son, as above provided, then at her marriage or decease, as aforesaid, said one-fourth to be disposed of in the same manner provided above for said three-fourths.”

The testator was survived by his wife, Fannie E. Chapman, who died March 10, 1908, and by his son, Harry E. Chapman, who died November 17, 1910, without issue living. The testator had four brothers and one sister. The brothers were: — William H. Chapman, who died August 18, 1895; Nelson C. Chapman,, who died December 1, 1896; Dana B. Chapman, who died November 22,1865; Charles W. Chapman, who died March 10,1884;. the sister was Mary E. Buckland, who died January 18, 1905.

The two brothers, who died before the testator, left children who were living at the time of the testator’s death. The brothers, and sister who survived the testator, each left children living,, or their representatives.

Fannie E. Chapman, wife of the testator, had two brothers, and three sisters, as follows:

Mitchell H. Miller, Henry C. Miller, Mary IT. Solloway, Josephine A. Johns and Nettie Heckman, all of whom were living at the time of the death of the testator.

Mitchell H. Miller died March 17, 1905, leaving two sons, and a daughter.

The plaintiffs seek the judgment and direction of the court in regard to the construction of the will upon four matters. There being, as we understand, no disagreement among the parties to this action with respect to the last three of the questions propounded in the petition, we are required to consider only the first, which is stated in the petition in the following language:

“Whether the interest and estate of the said heirs vested in them at the time of the death of the testator, or whether the interest and estate of said heirs was contingent until the death of the said son of the testator, in November, 1910, and it being determined whether said interest or estate in said heirs was vested or contingent at the time of the death of testator, whether the said heirs now take their inheritance per capita or per stirpes.”

In addition to this question, another, which has been injected into the case by the cross petitions of the defendants, and which has become the principal question for decision, is:

“Whether any part of a large amount of money received by the trustees upon the distribution of the assets of the Latrobe Steel Company in which the trustees held stock, should be treated as income belonging to tbe life tenants under tbe will, or as a part of the corpus of tbe estate to be distributed among tbe remaindermen.” Tbe facts that give rise to this question will be stated hereafter.

Before passing to tbe consideration of tbe questions suggested, it is necessary to rule upon tbe objection made to the competency of tbe witnesses: — Mary Solloway, Josephine Johns and Nettie Heckman.

These witnesses are all defendants in tbe action and interested in tbe construction of tbe will and tbe determination of tbe questions involved in this action. Their financial interest will be affected by any order made by the court in respect to tbe fund in tbe bands of the trustees. If it is decided that a portion of this fund is income, which should go to tbe representatives of Fannie C. Chapman, and Harry E. Chapman, these parties would receive less, under tbe provisions of tbe will, than they would receive if tbe contrary decision is reached. Their testimony is directed largely to tbe subject of tbe domicile of tbe testator. Objection is made on behalf of tbe defendant, J. B. Wilbering, administrator de bonis non, of tbe estate of Harry E. Chapman, deceased, to their competency as witnesses; tbe objection being based upon tbe provisions of Gen. Code 11495.

In our opinion, tbe objection is well taken and their testimony will be excluded. Objection was originally made to tbe competency of tbe witness, Henry C. Miller, one of tbe trustees, and one of tbe plaintiffs in tbe action. This objection, however, has been withdrawn by all parties interested and it is therefore unnecessary for us to rule on tbe competency of this witness.

The first question propounded by tbe petition, wherein tbe judgment and direction of tbe court are sought, requires a determination of tbe question; whether the persons embraced within tbe words “heirs at law” used in this will, are to be determined as of tbe date of tbe testator’s death; or as of tbe date of tbe death of tbe last of tbe life tenants, Harry E. Chapman.

It will be noticed that tbe language of the will is: “but if my said son shall die without living issue, then after his death it is my will that all my estate shall go one-half to my lawful heirs, and one-half to the lawful heirs of my wife, subject however to the following conditions.”

It is contended on the one hand that the term, “heirs at law,” as used in this will, refers to those who answered that description at the time of the testator’s death, excluding the widow and son of the testator, and, on the other hand, it is contended that the “heirs at law” must be ascertained as of the happening of the contingency upon which the distribution provided for in the will is to take place, which, under the facts before us, was the death of Harry E. Chapman.

The problem, in this case, as in all other cases involving the construction of a will, is to ascertain the intention of the testator.

In Stevenson v. Evans, 10 Ohio St. 307, 311, of the opinion, it is said:—

“If the intention of the testator, collected upon the face of the will, can be carried into effect according to the principles of law, it is undoubtedly the duty of the court to do so. The proper course, therefore, will be to ascertain, if we can, upon the face of the will, the intention of the testator, and if the intention, so ascertained, interferes with no rule of law, our duty will have been discharged.
“It is not claimed that we are prohibited, by any technical meaning given to any particular words used by the testator, from regarding all the languages and all the provisions of the will in deciding upon his intention. We are at liberty to look at the whole will and each provision to ascertain the intent, and the only point made has been, that the true intent requires the creation of estates or interests which the law does not permit. ’ ’

Seeking from all the language of the will, the expressed intention of the testator, we find, first, that it was his clear intention to exclude his widow and son from those embraced within the expression “heirs at law.”

In Jones v. Lloyd, 33 Ohio St. 572, it was held in paragraphs three and four of the syllabus, as follows:

‘ ‘ The term heirs, when used in a will, is flexible, and should be so construed as to give effect to the manifest intention of the testator as ascertained by a due consideration of all the provisions of the will.
“Where a testator makes a provision for his wife, in lieu of ■dower, and directs that, in the event of her claiming dower, the balance of certain personal property bequeathed for her support ‘shall be shared equally among my heirs,’ the words ‘my heirs’ will be construed as meaning my next of kin, or any heirs according to the statute of distribution, exclusive of my wife, though his wife, in case of intestacy, would under the statute, have taken all such personal property. ’ ’

A further indication of the intention of the testator is furnished by the provision of the will, “that if my sister, Mary E. Buekland, should survive me, then it is my will that the share that she would receive at law, should remain in trust in the hands of my said trustees, she to receive the income therefrom during her lifetime, and at her death, said share to be paid to and vest in her daughter, and the heirs of her daughter, Maria. ’ ’ Further provisions of the will to the effect that no part of the testator’s estate should ever go to his sister’s son, George, and that the share that would go to Mary A. Solloway, sister of his wife, should remain in trust during the lifetime of the said Mary A. Solloway, and the provisions excluding from the benefits of the will, the children of the said Mary A. Solloway, and providing for the holding in. trust of that part of the estate that would go to Mitchell H. Miller, brother of the testator’s wife, and after his death, the same to go to his children, express an intention on the part of the testator to indicate his brothers and sisters as “his heirs at law,” and the brothers and sisters of his wife, as the “heirs at law-of his wife.”

If it were not for these expressions of intention, the direction of the will that after the happening of certain contingencies, “all my estate shall go, one-half to my lawful heirs and one-half to the lawful heirs of my wife,” would probably be controlled by the rule of interpretation laid down in Barr v. Denney, 79 Ohio St. 358; but the testator having by his own language indicated the class intended by him to be embraced within the designation “heirs at law,” as we think he has, it is the duty of the court to adopt that construction of the will! which expresses the testator’s intention.

We, therefore, hold that the testator, by the use of the words “lawful heirs” intended to designate his brothers and sisters and the brothers and sisters of his wife, and it is the judgment and direction of the court that the division shall be made among those who were living at his or her death, respectively, per stirpes, the representatives of the deceased brothers, and sisters taking the share that would have gone to their deceased ancestor, if living, except where the will provides that, such shares shall not go to certain specified persons.

Coming to the consideration of what is considered the principal question in this action, namely — whether certain funds,, received by the trustees upon the liquidation of the Latrobe Steel Works, shall be treated as a part of the corpus of the estate to' go to the remaindermen, it becomes necessary to recite certain of the facts appearing from the evidence.

At the time of .the testator’s death, January 18, 1893, he was the owner of 250 shares of the capital stock of the Latrobe Steel Works, of the par value of $100 per share. The Latrobe Steel Works was a Pennsylvania corporation with a capital stock, paid in of $600,000.

Until a short time before his death, the testator was a director of the company, and employed by it as a salesman. Prior to the testator’s death, no dividends had been paid on the stock the first dividend paid thereon being in February, 1894; on September 30,1892, the corporation had a surplus of $187,386.16. The 250 shares left by the testator were taken over by the trustees and carried by them as a part of the trust estate. On November 1, 1895, another company was organized, known as the Latrobe Steel Company, and by action of the directors of the Latrobe Steel Works, and with the written consent of all the stockholders, the Latrobe Steel Works transferred all of its property and business to the new company which had a capital of' $1,500,000 and there was issued to each stockholder of the old corporation, two shares of the new company for each one held' in the original corporation. The trustees thus received 250 additional shares of stock which were paid for entirely out of the surplus accumulations of the Latrobe Steel Works.

In 1898, a corporation with a capital stock of $300,000, known as the Latrobe Steel and Coupler Company, was organized under the laws of the state of Illinois, and property in Chicago turned in to this corporation. All of the stock of this new company was owned and, held by the Latrobe Steel Company and the board of directors and officers of both companies were the same. The Latrobe Steel Company enjoyed a prosperous business and paid regular dividends for a period of about ten years. In some years, the dividends were as high as 10 per cent, semiannually.

In addition to the payment of large dividends, the company accumulated a large surplus of which $2,200,000 was in cash, or in securities easily convertible into cash, which were carried on the books of the company under the name of “contingent capital.”

This fund was created and carried according to the testimony of Marriott C. Smythe, president of the company, as a sort of “war fund” to be used by the company in protecting itself in case of severe trade competition, to which it had been subjected in the early period of its existence. No part of this fund of $2,200,000 seems to have been actually employed in the conduct of the business, except that it was placed pn deposit and drew interest and was invested in securities easily convertible into cash.

On November 1, 1905, the Latrobe Steel Company sold its physical assets to the Railway Steel Spring Company for $4,300,-000 in cash. The assets sold at this figure had previously been carried on the books of the company at $1,039,819.80. Upon the books of the corporation the sale was treated as a conversion into cash of the various items comprising the assets sold and the profit upon the transaction of $3,260,080.20, was entered upon the books to the credit of “profit and loss.”

In 1908, the company sold the stock of the Illinois corporation for $1,243,000 cash. The sale of the various property of the Latrobe Steel Company, together with other assets owned by it, which were all converted into cash, left the total cash assets of the sum of $8,549,250. This money was distributed among the stockholders. In January, 1906, four distributions were made, each distribution being equal to the face valúe of the stock held by' each of the stockholders. Other payments were made to the stockholders until the money was all disbursed. All of this money was treated as a single fund and distributed among the stockholders as a part of the assets of the corporation. The checks were marked “An account of liquidation,” and the stock was all turned in and indorsements of the various sums distributed made on the certificates. The trustees of the estate of Nathan E. Chapman received as their share of the fund distributed, the sum of $287,000..

It is contended on behalf of the representatives of the life tenants that a large porportion of the 250 shares of stock of the Latrobe Steel Company, received by the trustees in addition to the stock representing the original 250 shares, should be treated .as income belonging to the life tenants and that a large part ■of the amount received by the trustees as a result of the traná■action of 1905, over and above the original investment, represents profit or income which likewise should go' to the life tenants. These contentions are combated by the remaindermen who contend that the entire fund of $287,000, received by the trustees, belong to the corpus of the estate.

It is' claimed on behalf of the representatives of the life tenants that their contention is supported by the laws of Pennsylvania and that the domicile of the testator at the time of his ■death was in Pennsylvania, which makes necessary the application of the laws of that state in determining the distribution of the fund in question.

Under the evidence in this case, we hold that the domicile ■of the testator at the time of his death, was in Ohio. While he -.resided in Philadelphia his residence there is not shown to have ■established his domicile in the state of Pennsylvania.

In Price v. Price, 156 Pa. St. 617 [27 Atl. Rep. 291], it was held:

“Domicile is acquired by actual residence, coupled with the intention to reside in a given place or country, and cannot be Acquired in any other way. If the intention of permanently residing in a particular place exists, a residence in pursuance of that intention, however short, will establish a domicile.
“Domicile of original must be presumed to continue until another sole domicile has been acquired by actual residence,, coupled with the intention of abandoning the domicile of origin.. This change must be animo et facto, and the burden of proof is; on the party who asserts the change.”

In this connection, we think that great weight should be-given to the recital in the will itself in which the language is: “I, Nathan E. Chapman, of the City of Cleveland, County of' Cuyahoga and State of Ohio.” It has been held that declaration made in a deed or will on the subject of domicile at a time-when there is no dispute about the. matter is evidence of the.highest character and establishes a domicile unless overcome by-positive proof to the contrary. Ennis v. Smith, 55 U. S. (14 How.) 400 [14 L. Ed. 472]; Merrill v. Morrissett, 76 Ala. 433, 440; Ward v. Oxford, 25 Mass. (8 Pick.) 476.

This view of the evidence .renders it unnecessary for us to-decide whether the question of domicile was necessarily involved in the judgment of the probate court in admitting the will to probate although in our opinion there is great force in the contention that the question of domicile was involved in the judgment of the probate court, and that such judgment can not be attacked collaterally.

The distribution of the fund in the hands of the trustees, must therefore be determined by the laws of Ohio and that distribution will depend upon the rule which we adopt in deciding whether any part of said fund shall be treated as income or whether the whole should be regarded as belonging to the corpus, of the estate. The question is a new one in this state but hasi been before the courts in numerous cases in other states.

There is much conflict in the results reached in various jurisdictions as well as in the principles resorted to in reaching those results.

In Pennsylvania, the rule of apportionment between life-tenant and remaindermen has been established. Under, this rule,, where the dividends, whether in cash or in stock, have been, earned before the death of the testator, they are held to be a. part of the corpus of the estate and belong to the remaindermen; but if earned after the life estate began, they are held to be income and go to the life tenant, and if earned partly before and partly after the death of the testator, the earnings are apportioned between life tenant and remainderman. Earp’s Appeal, 28 Pa. St. 368.

In Smith’s Estate, 140 Pa. St. 344 [21 Atl. Rep. 438; 23 Am. St. Rep. 237], the rule enunciated in Earp’s Appeal is restated in the following language:

“When the stock of a corporation is by the will of a testator given in trust, the income thereof for the use of a beneficiary for life with the remainder over, surplus profits which have accumulated in the lifetime of the testator, but which are not divided until his death, belong to the corpus of the estate, whilst the dividends of earnings made after his death, are income and payable to the life tenant no matter whether the dividend be in cash, or scrip or stock.”

This rule, with various modifications and qualifications, has been adopted in a considerable number of other states.

In Massachusetts, a different rule has been established. There it is held that cash dividends are regarded as income and stock dividends as capital, without reference to the time they were earned or declared.

This rule was first laid down in the case of Minot v. Paine, 99 Mass. 101 [96 Am. Dec. 705], On page 107, it is stated in the .opinion:

“It is obvious that, if the directors had made no stock dividends, but had invested the income in permanent improvements, making no increase of the number of shares, the improvements would have been capital, belonging to the legatees in remainder. So, if they had thus invested it, and instead of increasing the number of shares, had increased their par value, the shares would have been mere capital, and not income, as to the stockholders, though increased in value by the application of the net income of the road, to that purpose. So when they increase the number of shares, each share of all the stock in the corporation is in its nature, capital. The new shares take their place among the old ones; and each of the old shares thereby becomes a less proportion of the whole- stock than it was before, •and is entitled to a less proportion of dividends declared than it was before. It may be that dividends are less per cent than they would otherwise have been, and in such case the old stock is diminished in value, and the interest of the remaindermen is •injuriously affected. But, on the other hand, the effect may 'be, by increasing the business of the road, to increase the divi•dends and the market value of the old stock.
“But neither courts nor trustees can investigate such matters with accuracy; and in many cases no investigation can be made. A trustee needs some plain principle to guide him, and the cestui que trust ought not to be subjected to the expense of •going behind the action of the directors, and investigating the -concerns of the corporation, especially if it is out of our jurisdiction. A simple rule is to regard cash dividends, however large, as income, and stock dividends, however made, as capital. ’ ’
“The court are of the opinion that this rule is more in conformity with the legal and equitable rights of shareholders than -any that has been suggested. ’ ’

The rule as stated in Minot v. Paine, supra, that cash dividends, however large, should be regarded as “income” and stock •dividends, however made, as “capital,” has been somewhat restricted even in Massachusetts, for under later decisions the court inquires as to the circumstances under which the distribution was made in order to ascertain whether there has, in fact, been a ■capitalization of earnings. Capitalized earnings which have been distributed in the form of shares of stock have been held to be capital and cash dividends to be income. The Massachusetts rule has been followed in many states.

The latest decision called to our attention, bearing on the •question under consideration is that of Bryan v. Aikin, 82 Atl. Rep. 817 (Del. Ch.), decided April 1, 1912.

In that case a will, executed by a testator, gave certain ■corporate stock to trustees to pay the net income, interest and dividends to grandsons for life, with remainder over upon the ■death of the survivor. The corporation declared a stock •dividend out of the earnings and it was there held:

“The increase in the value of corporate stock resulting from accumulations of earnings becomes a part of tbe corpus of tbe fund invested, and tbe increased value should be added to. the corpus if the stock be sold, and the income on any other-investments of the proceeds made, be paid to the life tenant,, leaving the principal as reinvested to go to the remaindermen..
“Where corporate stock is bequeathed to trustees in trust,, to pay the income and dividends to one for life, with remainder-of the stock over, dividends in form of stoek, representing earnings used during the life tenancy to increase the business plant-of the corporation and distributed pro rata to the stockholders,, belong to the remaindermen as a part of the corpus.”

The rule that stock dividends declared by a corporation out of earnings retained by the corporation and treated as a part of' its capital, should go to the remaindermen and not to the life, tenant meets with our approval.

If the stock distributed in 1895, upon the promotion of the-Latrobe Steel Company and the taking over of the assets of the-old company, be considered as a stock dividend, it should in accordance with the conclusion we have reached, go to the remaindermen and the same result is reached even if this should, not be considered in its strict sense a “stock dividend.” There was at any rate a capitalization of all the earnings and assets of the Latrobe Steel Works and the issuance of an increased number of shares in the new company to stockholders of the old,, did not in any way affect the interest of the stockholders in the. property of the' corporation. They had the same proportionate interest therein after the receipt of the increased number of' share's as before.

In determining whether or not any of the fund of $287,000-received b.y the trustees upon the liquidation of the Latrobe-Steel Company, should be regarded as income belonging to the life tenants or whether it should' all be treated ás a part of the corpus of the estate, it is important to notice that none of' this money was distributed' in the form of dividends or earnings.

Until the time of the liquidation, the earnings of the corporation belonged to the corporation itself and not to the stockholders, except as they had an interest therein' represented by their shares of stock. The power of a corporation, either to distribute its corporate earnings to stockholders, or withhold them for the purpose of extending, the corporate business, is not subject to judicial control in the absence of bad faith.

The corporation here saw fit to retain its earnings and use them in the extension of its business. It might, if it had seen fit, have declared dividends out of its earnings in addition to the liberal dividends paid from time to time, but it did not see fit to do so. It appears to have capitalized its earnings and to have used them in furthering the interests of the company’s business.

It has been contended that the socalled “war fund” of $2,200,000 was clearly income and although carried on the books as contingent capital, was nevertheless earnings in which the trustees had an interest in proportion to the stock held by them and which interest should go to the life tenant.

It is true as. shown by the testimony of Mr. Smythe, that this fund was accumulated and carried as cash or invested in securities capable of being converted into cash on short notice; but it was nevertheless devoted, in our opinion, to the extension of the business and the promotion of the company’s welfare as effectually as if it had been invested in the company’s plant, or in other forms of property used in the business in which it was engaged. We think that it was a part of the capitalization of the company and that upon final distribution of the assets of the corporation, it was impressed with the same character as the other assets.

It seems to us that great difficulty would follow the adoption of any principle of law that would require the courts to investigate the affairs of a corporation and determine what part of its assets should be considered as income or surplus or accumulations, under whatsoever name, and what as a part of the capital of the corporation.

In view of the undoubted power of a corporation to distribute or withhold earnings from stockholders, to employ them in the extension, improvement and increase of the material business facilities of the corporation, and thereby permanently capitalize them, it seems wise to adopt the rule that 'treats the assets of a corporation upon liquidation as the corporation itself has treated them, in the absence of bad faith.

The chancellor in the case of Bryan v. Aikin, supra, in adopting the rule which we follow, said on page 823:

“The rule here adopted has merit, not only as being eon■cededly simple and direct, but represents a logical conclusion from established premises. It gives weight to the action of the company, because the corporation has the power to settle the premises upon which the question is to be decided. It avoids an investigation into the transactions of the company to determine the period within which the earnings were made and on numerous occasions, it has been pointed out by courts which have rejected the apportionment rule of Pennsylvania that this is always troublesome, usually expensive, seldom satisfactory and sometimes practically impossible, as in the case of a foreign corporation. Of course, these references to some of the difficulties of adopting a rule as to apportionment, according as the earnings were made in whole or part during the life of the testator, or wholly or partly thereafter, do not apply in the ■ease at bar, because it affirmatively appears that all the earnings represented by the stock dividend in question was made since the life tenancy began. Still a plain simple rule is sought, and one that is workable in all cases to prevent controversies and to-guide in the administration of other estates respecting other distributions of capitalized earnings. The • rule has been ■criticized because it gives too much weight to the action of the corporation, but this is a necessary result of the character of the investment and of the necessary power of the corporation respecting the management of the assets of the company. The rule here adopted is clear, easily applied and logical and as fair to present interests as the nature of the case will permit, in view ■of the corporate control of corporate- property. ’ ’

The language, above quoted, meets with our approval. We think that the adoption of this rule is in accord with the intention of the testator. He was a director in this company until a short time before his death and may be assumed to have been familiar with the power of corporations to accumulate their earnings and use the same in the conduct of their business, rather than to distribute them among stockholders as dividends.

In his will, he conferred power upon his trustees “to sell, dispose of and collect, all of said securities and to invest and reinvest the proceeds thereof, and after paying expenses, to pay the entire net income, etc.”

He, therefore, contemplated a situation where some increase in value of his investment in this corporation might arise and a sale become profitable.

It was evidently his intention in such ease that the increase in value should be added to the corpus of his estate and be reinvested.

The conclusion reached renders it unnecessary for us to determine the effect of the transactions between the trustees and the life tenants, Hattie E. Chapman and Harry E. Chapman, which was claimed to constitute an accord and satisfaction or an agreement to consider all the funds in the hands of the trustees, at the time of the transaction, as belonging to the corpus of the estate.

No matter what view we take of the instrument signed by the life tenants, it can have no effect upon this decision in view of the rule which we adopt.

As to the attack made on the appointment of J. B. Wilberding, administrator de bonis non of the estate of Harry E. Chapman, we are of the opinión that the probate court had power to make such an appointment and that the same cannot be collaterally attacked in this proceeding.

All questions of account on the part of the trustees should be passed upon by the probate court and. no ruling is made by this court upon any item of said account.

In accordance with the conclusion announced, the trustees are directed to distribute the entire amount received by them on the stock of the Latrobe Steel Company, upon its liquidation, in accordance with the terms of the will, as a part of the trust estate belonging to the remaindermen.

Marvin and Winch, J.J., concur.


source: Caselaw Access Project

author: SHIELDS, J.

license: Public Domain

text:
    CRIMINAL LAW — HOMICIDE—MOBS.
    [Licking (5th) Circuit Court,
    April, 1911.]
    Powell, Voorhees and Shields, JJ.

      Montella Watha v. State of Ohio.
    1. Accused Jointly Indicted With Others and Separately Tried Upon> Election of Prosecutor Cannot Challenge Array Summoned as Against all Accused.
    An accused person, who has been jointly indicted with others for murder in the first degree, cannot complain of the overruling by the court of his challenge to the jury array, where he has been brought to trial upon election of the prosecuting attorney, and a copy of the venire, summoned in the case as against all the accused persons, was served upon him three days before the day set for his trial.
    2. Dry Partisans on Jury not Prejudicial In Trial of Crime Arising out of Liquor Prosecution.
    Error will not lie to the overruling of a challenge to the array, ion the ground that names had been placed in the jury wheel of persons who were known to have actively favored the “drys”' In a recent local option election and the crime of which the accused was charged grew out of a contest over the illegal salo of liquor, if it appear that there was an entire, absence of evidence of any kind tending to show that the jury commission, under authority of Gen. Code 11421, placed in the jury wheel names of persons who did not fulfill the qualification of being judicious and discreet.
    3. Good Character of Accused for Peace and Quietness not Sufficient to Offset Guilt Proven Beyond Reasonable Doubt.
    An instruction given relative to the reputation of the accused for peace and quietness that good character with a reasonable doubt of accused’s guilt should acquit him but if guilt is proven beyond such doubt good character would not save him, was not prejudicial to his interests.
    4. Prosecution of Members of Mob for Homicide.
    In a prosecution of one alleged to have participated in a lynching,, it is not error to charge the jury' that “any words, acts, signs- or motions, done or made for the purpose of encouraging the-commission of the crime” may be considered by the jury in connection with the criminal character of the alleged acts of the defendant, and a verdict of guilty may be based on evidence, which the jury believed was entitled to credit, that the-defendant mingled with the ' crowd some hours before the lynching occurred, and engaged in conversation regarding the events which led up to the lynching, and was heard to urge the ■crowd to avenge the blood which had been shed and soon afterward the doors of the jail were battered open, and the cell in which the decedent was confined was , forced, and the deceased taken out and hanged to a telephone pole until he was dead.
    [Syllabus approved by the court.]
    Error to common pleas court.

      Flory & Flory and Thomas L. King, for plaintiff in error:
    Cited and commented upon by the following authorities: Passenger By. v. Young, 21 Ohio St. 518 [8 Am. Rep. 78] ; Fendrick v. State, 28 O. C. C. 724 ('9 N. S. 49), reversed by Supreme Court, State v. Fendrick, 77 Ohio St. 298; Walters v. State, 39 Ohio St. 215; Burns v. State, 75 Ohio St. 407 [79 N. E. Rep. 929]; Jones v. State, 51 Ohio St. 331 [38 N. E. Rep. 79] ; Bond v. State, 23 Ohio St. 349; Cincinnati, H. & D. By. v. Frye, ■80 Ohio St. 289 [88 N. E. Rep. 642; 131 Am. St. Rep. 709] ; Weaver v. State, 24 Ohio St. 584; Bupp v. Shaffer, 12 Cire. Dec. 154 (21 R. 643) ; Salomon v. Beis, 3 Circ. Dee. 184 (5 R. 375) ; ■State v. Lingafelter, 77 Ohio St. 533 [83 N. E. Rep. 897] ; Wool-weaver v. State, 50 Ohio St. 289 [34 N. E. Rep. 352; 40 Am. St. Rep. 667] ; State v. Snell, 5 Dec. 670 (2 N. P. 55) ; Marts v. State, 26 Ohio St. 162

      P. B. Smythe, Pros. Atty., Wm. H. Miller, Asst. Atty. Gen., ■and Seth McMillen, for defendant in error.

      Motion for leave to file petition in error in the Supreme Court denied June 27, 1911.

   SHIELDS, J.

At the April term 1910, of the court of common pleas of Licking county, Ohio, the grand jury of said county returned an indictment against the defendant, Montelle Watha, charging him, jointly, with some fourteen others, with the crime of murder in the first degree. To this indictment the defendant entered a plea of not guilty. A motion was made challenging the array of the jury, which motion was overruled. Thereupon the defendant was put upon trial to a jury, which returned a verdict of guilty against the defendant of manslaughter. A motion was filed by the defendant for a new trial, alleging various reasons why the verdict of the jury should be set aside and a new trial granted him, which motion was overruled; to which action of the court tbe defendant excepted. A motion in arrest of judgment was also filed by the defendant, which motion was overruled; to which action of the court the defendant excepted. Thereupon the court sentenced the defendant to the term of twenty years imprisonment in the Ohio Penitentiary.'

A bill of exceptions was tendered and allowed, and a petition in error is filed in this court to reverse the judgment of said court of common pleas, which said petition in error recites the following grounds of error:

‘ ‘ 1. That said court erred in ruling out relevant and proper evidence offered in behalf of plaintiff in error on the challenge to the jury array. 2. Said court erred in overruling the challenge to the jury array. 3. Said court erred in admitting improper and illegal evidence offered on behalf of the defendant in error. 4. Said court erred in excluding proper and illegal evidence offered on behalf of the plaintiff in error. 5. Said court erred in overruling the motion of plaintiff in error at the conclusion of the testimony of the defendant in error, to take the case from the jury and direct a verdict for the plaintiff in error. 6. Said court erred in refusing to give to the jury, before argument, certain requests to charge offered by the plaintiff in error. 7. Said court erred in giving to the jury certain requests to charge offered by the defendant in error. 8. Said court erred in its charge to the jury to the prejudice of the plaintiff in error. 9. Said court erred in refusing to give to the jury, after argument, certain requests to charge offered by the plaintiff in error. 10. Said judgment is against the weight of the evidence. 11. Said judgment is contrary to law. 12. Said court erred in rendering judgment for the defendant in error when it should have been given for the plaintiff in error. 13. Said court erred in overruling the motion for a new trial made by plaintiff in error. 14. The sentence and judgment of the court is excessive and unwarranted by the evidence. 15. Other errors apparent upon an inspection of the record.”

While the foregoing contain the assignments of error in the record on which the plaintiff in error asks for a reversal of the judgment and sentence, counsel for plaintiff in error, in their argument to the court, rely chiefly on the following assignments of error:

First. That the jury was illegally selected, drawn and summoned.

Second. That the number of names put in the jury box exceeded the number provided by statute.

Third. That only such names of persons who signed “dry” petitions were put in the jury box.

Fourth. That the court erred in overruling the challenge to the array by the plaintiff! in error, for the foregoing reasons.

Fifth. That the court erred in its charge to the jury on the subject of the evidence introduced by the plaintiff in error, touching his reputation for peace and quietness.

Sixth. That the court erred in its charge concerning an accessory after the fact.

Seventh. That the court erred in its charge to the jury upon the subject of words spoken, or acts done, or signs or motions made by the plaintiff in error, for the purpose of encouraging the commission of the crime.

Eighth. That the court erred in refusing certain requests to the jury, requested by the plaintiff in error.

The preliminary steps necessary to be taken in the selection, drawing and summoning of a jury in a capital case are regulated wholly by statutory provisions. The accused is entitled to have these provisions observed before he is placed upon trial.

Gen. Code 13642 provides for the issuing of a venire by the clerk.

Gen. Code 13645 provides for the service and return of such venire.

Gen. Code 13646 provides that where two or more persons are jointly indicted for a capital offense, each person indicted shall be separately tried, and the clerk shall make out a venire, as provided in said Gen. Code 13642, for the trial of each person indicted.

Gen. Code 13648 provides that a copy of the panel of the jury returned by the sheriff shall be delivered to every person so indicted at least three days before the day of trial.

Gen. Code 13643 provides that if it appear to the clerk, by the return of the sheriff, that any person named in the venire is dead, insane, absent, removed from the county, or not an elector of the county, or has been convicted of a felony, and not pardoned, the clerk shall draw from the box the number of ballots equal to double the number of such persons, etc. But the return of the venire in this case by the sheriff does not show the necessity for any such action by the clerk.

It is contended by the plaintiff in error that the court erred in overruling the challenge to the array of the jury made on behalf of the plaintiff in error before trial, because the venire was not issued, or the selection, drawing and summoning of the jury made, for the trial of the case as contemplated by the statute. It is contended that inasmuch as Gen. Code 13646 provides that the clerk shall make out a venire, as provided in Gen. Code 13642, for the trial of each person indicted, that therefore the accused was entitled to have a venire drawn and served upon him in his individual case before trial. The record shows that the accused was jointly indicted for said crime with some fourteen others, under docket No. 2866; that a venire was issued by the clerk and served by the sheriff upon a precipe filed by the prosecuting attorney of said county in said case, as directed by Gen. Code 13642 and 13646; and, upon the election of the prosecuting attorney to try the case, a copy of the panel of the jury, returned by the sheriff, was delivered to and served upon the accused at least three days before the day of his trial. The prosecuting attorney had the right to make the selection, and, having exercised it, and the jury having been drawn and summoned in the case named, we think that the objection urged in this respect affords no ground of error.

It is further contended that the court erred in overruling the challenge to the array of the jury, made on behalf of the plaintiff in error before trial, because of the action of the court in excluding evidence upon the objection of the state, offered by the plaintiff in error, by which it was sought to show by one of the jury commissioners for said county that said jury commission placed in the jury box the names, in part, of persons of known and pronounced opinions upon temperance, as evidenced by their signatures to certain “dry” petitions.

Gen. Code 11421, et seq., provides that the jury commission shall, before entering upon their duties, take an oath that •’they “will consent to the selection of no person as a juror whom they believe to be unfit for that position, or likely to render a partial verdict in any cause in which he may be called as a juror,” etc. Said statute further provides that said commissioners shall, at a stated time, “select such number of judicious and discreet persons having the qualifications of electors. ’ ’

It thus appears that this commission is clothed with sole authority to select the names of persons for the performance of jury duty. They are to select the names of “judicious and discreet persons”; that is, persons who have, or as they have reason to believe have, the qualifications of sound judgment and discernment. The statute is silent as to the qualifications of jurors in other respects. It does not provide that they shall be of one sect or another; of one belief or another; of one party or another; but simply provides that they shall be “judicious and discreet persons.”. In' the absence of a showing' to the contrary, it is presumed that the jury commission performed its duty in this respect, as required by law.

An examination of the record shows that, in the impaneling of the jury, the plaintiff in error publicly announced, through his counsel, that he was .satisfied with the jury, and that no question was raised by him of the want of the requisite qualifications possessed by each and every juror in the panel. We are, therefore, of the opinion that there was no error upon the part of the court in this respect, in overruling the challenge to the array by the plaintiff in error.

It is further contended by the plaintiff in error that the court erred in its charge to the jury upon the subject of the reputation of the plaintiff in error for peace and quietness. The testimony shows that testimony of this character was submitted to the jury. On page 1104 of the record, the court, in instructing the jury on this subject, said:

“The defendant introduced evidence tending to show his good character for peace and quietness. If, in the present case, the good character of the defendant for peace and quietness is proven to your satisfaction, then such fact should be kept in view by you in all your deliberations, and it is to be considered by you in connection with all the other facts in the case; and if, after the consideration of all the evidence in the case, including that, bearing upon the good character of the defendant, the jury entertain a reasonable doubt as to the defendant’s guilt, it is your duty to acquit him. But if the evidence convinces you, beyond a reasonable doubt, of defendant’s guilt, you must so find, notwithstanding his good character. ’ ’

Evidence of reputation and character is always admissible in a case wherein a party is charged with a crime, and such evidence is proper to be considered by the jury in connection with all the proven facts and circumstances in- such case, as bearing upon the guilt or innocence of the accused; but such evidence raises no issue, the burden of which is assumed or imposed upon the defendant. It is, in no sense, an affirmative defense. And while we think that this instruction to the jury, if standing alone and not qualified by any other instruction given to the jury upon this subject, either before or after it was so given, would perhaps be erroneous, an examination of the record shows that the following special charge was given by the court to the jury at the request of the plaintiff in error, before argument:

Request No. 20. “If the evidence of good reputation, taken in connection with the other evidence, raises in your minds a reasonable doubt of Watha’s guilt of the murder charge made in the indictment, you can not find him guilty of such murder charge. ’ ’

Comparing this special charge with the court’s general charge upon the subject of reputation for peace and quietness, can it be said that the jury was thereby probably misled, or that the general charge was erroneous? Salomon v. Reis, 3 Circ. Dec. 184 (5 R. 375); Eckels v. State, 20 Ohio St. 508, 514.

The charge of the court is to be construed as a whole. Bean v. Green, 33 Ohio St. 444; Ohio & Ind. F. Co. v. Fishburn, 61 Ohio St. 608 [56 N. E. Rep. 457; 76 Am. St. Rep. 437].

Considering that part of the charge of the court referred to, in respect to the defendant’s reputation for peace and quietness, we think it excludes the possibility of prejudicial error, arising from the objection made to the charge of the court in this respect by the plaintiff in error.

Exceptions were also taken by the plaintiff in error to the court’s charge in respect to an accessory after the fact. An examination of the record shows that the court made mere mention of this, and nothing more; and we do not think that the jury could have been misled by the court’s reference thereto. We, therefore, think that there was no error committed by the court in its charge in this respect.

Exceptions were also taken to the action of the court in admitting certain evidence offered by the state, against the objection of the plaintiff in error on the trial, in respect to certain disturbances occurring and assaults made during the day preceding the evening of the alleged lynching of Carl Etherington, when and where it is claimed that the evidence shows that the plaintiff in error was not present.

The plaintiff in error claimed upon the trial that he was not away from his home and about the square in the city of Newark during the day, at any time when any riotous disturbances were going on, except that he went up street on ah errand in connection with his work at home. But the evidence for the state tends to show that he was up street, and in that part of the city where the riotous disorder was prevailing as the result of the arrival in said city of some twenty detectives, armed with warrants to search certain places in said city where it was alleged that liquor was being illegally sold, contrary to the provisions of the Rose local option law.

Referring to the record on page 699, Kenneth Black, a witness for the state, testified, among other things, as follows:

“Q. Were you in the city of Newark on July 8, the day of this riot and lynching? A. Yes, sir.
“Q. Did you on that day see this defendant, Watha? A. I saw him in the afternoon, I believe between 1 and 2 o ’clock.
“Q. Where were you when you saw him? A. We were standing over here by the National Bank on the west side of the square.
“Q. State where you were. A. Not the First National Bank, but by the Franklin National Bank.
“Q. Were you standing on Third street? A, Yes, sir; on Third street.
“Q. Who was with you, if any one, and this man Watha? A. There were several of us in the crowd; Lansing Sutton, Sanford Henry and Uly Craig, and a fellow named Johnson, from Granville. There were five or six of us.
‘ ‘ Q. State to the jury whether or not William Howard, at that time, had been shot at the park. A. Yes, sir; I think he had.
“Q. What, if anything, were you talking about? A. We were talking about the excitement.
“Q. About what excitement? A. The rioting.
“Q. What do you mean by ‘the rioting’? A. The shooting of Howard, and one thing or another.”

Further referring to the record, on page 702, Lansing Sutton, a witness for the state, testified as follows:

“Q. Were you in the city of Newark on the 8th day of last July? A. Yes, sir.
“Q. State whether you saw this man, Montelle Watha, upon that day. A. Yes, sir; I did.
“Q. Where did you see him? A. Well, I met him over there by the express office; right across the street over here.
“Q. On what street? A. On Third street.
“Q. Who, if any one else, was with you? A. There was Sanford Henry, Uly Craig and Kenneth Black, and a man named Walter Johnson, as far as I can remember. I know there were a good many in the crowd.
‘ ‘ Q. Tell the jury about what time- of day that was ? A. Well, it was about half-past one or two o’clock.
“Q. State to the jury whether or not you had any conversation with Montelle Watha, or the other man that you have mentioned. A. Not personally with him, but I had a conversation with all of them.
“Q. What was that conversation? What were you talking about? A. Well, we were talking about dry detectives be-. ing in town, and generally talking about the whole thing. About them doing the searching.
“Q. State to the jury whether or not, at that time, you. knew that William Howard had been shot. A. Yes, sir; he had.
“Q. State to the jury whether or not there was anything-said in that conversation — well, I will ask you this: state to-the jury whether or not there was any conveisation in that crowd about the death of William Howard at that time. A. Well, I don’t remember whether there was or not.”

Further referring to the record, on page 711 Sanford Henry, a witness for the state, testified as follows:

‘‘Q. About how long have you known him?” (referring to Montelle Watha.) “A. I think between nine and ten. years; possibly longer than that.
“Q. Were you in the city of Newark on July 8, last? A. Yes, sir.
“Q. That was the day of the lynching and riot ? A. Yes, sir.
“Q. Did you, upon that day, see this defendant, Montelle Watha? A. Yes, sir.
“Q. Where did you see him? A. I believe I saw him once on Third street.
“Q. Where upon Third street? A. About the corner of the Franklin National Bank.
“Q. Who, if any one, other than yourself, was present?' A. Well, there was U. G. Craig, Kenneth Black and Lansing Sutton, and a couple of young men from Granville.
“Q. Did you, at that time, have any conversation with Montelle Watha and the other men that you mentioned? A. Yes, sir; we were talking together.
‘ ‘ Q. Tell the jury what you were talking about. A. Well, we were talking in regard to the events of the day.
“Q. Tell the jury what it was. A. In regard to the rioting.
“Q. What else? A. And the shooting of Howard.
“Q. State whether or not this defendant, Montelle Watha, was engaged in that conversation, and what he said, if you. know. A. Well, he was with the crowd talking; but; in regard to what he said, I can not just remember. I can not just remember at that time what he said while we were talking there.
“Q. How long did you stay together there? A. I sup-, pose we were together there possibly twenty minutes.
“Q. Were you waiting there for anything? If so, what was it? A. We just simply met there and talked.
“Q. What, if anything, did you hear this Montelle Watha say? If he did say anything to anybody, during that conversation. A. I believe I heard him speak to Cráig — to U. G. Craig.
“Q. What, if anything, did he say to Craig? Tell the jury what it was. A. I think he asked Craig how many revolvers he had; and Craig answered: I haven’t got any. ’ ’

In the light of the foregoing evidence, we find no error in the action of the court in the admission of this evidence.

Error is also assigned because the court instructed the jury that “any words, acts, signs or motions, done or made for the purpose of encouraging the commission of the crime, are sufficient” as bearing upon the criminal character of the alleged acts of the defendant.

Persons participating in the commission of a crime do so either as principals or as those who aid, abet, or procure the commission of a crime.

Gen. Code 12380 provides that whoever aids, abets, or procures, another to commit any offense, may be prosecuted and punished as if he were the principal offender.

After testimony was given to the jury tending to show the state of mind of the plaintiff in error in the afternoon of the day in question, as hereinbefore stated, the record shows that in the evening of that day, the plaintiff in error met with a large number of persons — perhaps thousands — who had assembled in and about the county jail where Etherington was confined, and, in the language of Joshua Hull, a witness for the state, at page 595 of the record, states that the plaintiff in error said, in addressing said assemblage:

“I heard him say that he abhorred lynch law, but, in this case, he wanted the blood of Howard — Howard’s blood avenged; and he said: Come on, boys; come on.
“Q. What else did yon hear? A. I walked away.
1 ‘Q. What was the last thing you heard him say? A. ‘I want the blood of Howard avenged.’
“Q. What else? A. ‘In this case.’ And he says: ‘Come on, boys; come on. ’ ” .

Soon afterwards, it appears that an assault was made on the county jail; that its doors were forced open; that Etherington’s cell was broken into; that he was removed therefrom, and was led to the corner of the public square of said city, where he was hanged to a telephone pole until he was dead.

If the jury believed the testimony of this witness and other testimony introduced in support of this issue of fact, surely here was an active participation in a felonious plan, under concerted action, rendering the accused liable as an aider and abettor and procurer in the commission of a crime. Baker v. State, 12 Ohio St. 214; Hanoff v. State, 37 Ohio St. 179, 184 [41 Am. Rep. 496].

Exceptions were also taken to the action of the court in refusing to give to the jury the following requests submitted by counsel'for plaintiff in error. The first request to charge, and refused, was request No. 22, on page 1062 of the record. An examination of the court’s charge shows that the substance of this request was repeatedly and variously given by the court to the jury, and other requests submitted by counsel for the plaintiff in error; we, therefore, find no error on the part of the court in refusing to give such request.

Request No. 3, on page 1060 of the record: The record shows that the court charged the jury on page 1082 on the proposition embraced in said request.

Request No. 1, on page 105 of the record: Gen. Code 13692 provides that when the indictment charges an offense including different degrees, the jury may find the defendant not guilty of the degree charged, and guilty of any inferior degree. The crime of “riot” not being embraced in the crime charged in the indictment, we think the request made was properly re- ' fused.

Requests Nos. 17 and 18, on page 1063, and request No. 4, on page-1064 of the record, we think were properly refused.

Several other assignments of error are made upon the record, but we do not deem it necessary to notice them further than to say that, in our judgment, they are not maintainable; and, upon the whole record, we are of the opinion that there is no error in the record, prejudicial to the legal rights of this defendant.

The judgment is, therefore, affirmed, with costs. Exceptions noted, and said cause is remanded to the court of common pleas of Licking county for execution.

Powell and Voorhees, JJ„ concur.


author: JONES, J.

text:
    CARRIERS — ERROR.
    [Hamilton (1st) Circuit Court,
    August 5, 1911.]
    Smith, Swing and Jones, JJ.

      Louisville & Cincinnati Packet Co. v. J. W. Long.
    1. Act of God Injected.as Defense When not Pleaded, is Erroneous, but Reversal Refused Because not Prejudicial to Complainant.
    Subjection of an instruction as to act of God as a matter of defense, in an action against a carrier for the value of apples frozen in transit, no such issues being pleaded, constitutes error; but since the error was prejudicial to the consignee rather than the carrier, it is not ground for reversal upon petition in error of the carrier.
    2. Freezing Apples in Transit in December in Southern Ohio not Due to Act of God.
    Freezing of a shipment of apples in transit in the latitude of Southern Ohio in December cannot be attributed to the act of God, or to any inherent nature of the fruit which could not be guarded against, but is due to the negligence of the carrier.
    [Syllabus approved by the court.]
    Error to common pleas court.

      Stephens, Lincoln & Stephens, for plaintiff in error. '

      Charles Broadwell, for defendant in error.

       Affirmed,. no op., Louisville & C. Packet Co. v. Long, 88 O. S. 569.

   JONES, J.

The petition filed in the common pleas court by defendant in error, alleges that, “on December 12, 1904, at Louisville, Kentucky, plaintiff delivered to the defendant, in good order, certain goods, the property of the plaintiff, to wit: 102 barrels of apples of the value of $230, and in consideration of $31.15 paid by plaintiff to the defendant, the defendant agreed to carry said goods from Louisville to Cincinnati and there deliver said goods to plaintiff in good condition. The plaintiff did not safely carry and deliver said goods in accordance with said agreement, but so negligently and carelessly conducted itself in that behalf that said goods were wholly lost to plaintiff to his damage in the sum of $230. ’ ’

The damage as disclosed by the evidence consisted in the freezing of the apples while in transit.

To this petition defendant below (plaintiff in error here) filed its answer, admitting that it received certain goods on December 12, 1904, at Louisville, Kentucky, to wit, 102 barrels of apples, and agreed to carry the said goods to Cincinnati, Ohio,, and denied each and every other allegation of the petition. For further answer, defendant says:

“That said shipment of apples was made at New Amsterdam, Indiana, December 1, 1904, under a bill of lading, which provided that the said 102 barrels of apples would be delivered at Cincinnati, Ohio, without unnecessary delay, the danger of navigation, fire, explosions, mobs, riots, insurrection, bridges and all other known and unknown restrictions or accidents excepted, unto the consignee, with privilege of lightering, storing, towing, reshipping and changing carrier. * * * That said apples were carried in an open barge from New Amsterdam to Louisville for a period of about twelve days, and were not delivered to or reshipped upon the defendant’s boat under said bill of lading until December 12, 1904, and defendant believes and alleges that if said apples were frozen they were frozen upon said open barge and before delivery to this defendant. ’ ’

For further defense, this defendant says, “that if said appies were frozen while in its possession, which it denies, said freezing was caused by the inherent nature of the goods carried and the unusual condition of the weather and without any negli.gence on the part of this defendant whatsoever.” The defendant also says for further defense “that immediately upon the arrival of said goods at Cincinnati December 13, 1904, it notified the plaintiff, but that the plaintiff failed to remove said goods within a reasonable time under the circumstances, and that if said goods were frozen while on the wharfboat of the defendant, which this defendant denies, said accident was caused by the negligence of the plaintiff -in failing to remove said goods promptly. ’ ’

The case went to trial before a jury upon these issues. It will be seen that the plaintiff charged the loss of the goods wholly on account of the negligence of the defendant. The defendant on the other hand denied that the goods were damaged, and further answering, said that if frozen, they were not frozen through any negligence on its part; that said freezing occurred either on the open barge between New Amsterdam and Louisville and before delivery to it, or they were frozen after being unloaded and placed upon the wharf-boat in Cincinnati, owing to the negligence of the plaintiff in not removing them within a reasonable time.

The other defense is as to the nature of the goods and the unusual condition of the weather at that time and needs no further restatement. The case went to the trial upon these issues which were clearly set out in the pleadings and upon the issues as made in the pleadings and the law applicable thereto.

We find no error except in the charge of the court. Plaintiff in error complains of the following language in the general charge of the court, which is also contained in substance in a special charge given. “Nothing would excuse the carrier for failure to safely deliver the goods committed to its charge for transportation, except the acts of God and the public enemy. ’ ’

We are of the opinion that it was error in the trial court to inject into the charge a defense not made in the pleadings. It will be seen that nowhere in the answer does the defendant below seek to defend on the ground that the freezing of this cargo of apples was tbe act of God. This being tbe case it must be conceded that it was error for the court to refer to such a defense, but after careful consideration, we fail to see how this could have been prejudicial to the defendant. If it had any influence upon the minds of the jury, it certainly must have been such as would lead them to believe that the court took the view that the freezing of the apples may have been occasioned by the act of God for which the defendant would not be liable, and thus a greater burden was placed upon plaintiff.

In all other respects we find that this case was tried upon the issues and that the charge of the court upon the doctrine of ■negligence was correct. It may be that the reference to the act of God in the charge was caused by something said during the arguments of the counsel to the jury; but however that may be, the doctrine had no place in this ease. The freezing of fruit-in this latitude in the month of December must be attributable to the negligence of man, rather than to the «act of the Almighty.

The plaintiff in error also contends that this .judgment should be reversed because the evidence shows conclusively that the freezing of the apples was due to their inherent nature and could not be guarded against. The question as to whether the carrier exercised the proper degree of care to protect the fruit after arriving in Cincinnati was fully presented to the jury; also, as to whether the consignee had exercised due care in removing the apples from the wharfboat within a reasonable time. These questions were fully presented by the evidence and the charge of the court and the jury found in favor of the plaintiff. We can not disturb this verdict. It is an inherent quality of apples, and indeed all kinds of fruit after it has been gathered, to decay, but we doubt that it can be truthfully said that it is an inherent quality of apples to freeze any more than it is an inherent quality of man to freeze. The freezing of either is usually, if not always, caused by man’s negligence, rather than by any inherent nature or any act of God.

Finding no error therefore prejudicial tó the plaintiff in error the judgment of the court of common pleas will be affirmed.

Smith and Swing, JJ., concur.


author: WINCH, J.

text:
    INSURANCE.
    [Cuyahoga (8th) Court of Appeals,
    March 3, 1913.]
    Winch, Meals and Grant, JJ.
    New Amsterdam Casualty Co. v. Cora Belle Johnson, Admrx. of Charles W. Johnson, Deceased.
    Dilation of the Heart Caused by Taking Cold Plunge Bath Characterized as Effect of Accidental Means in Accident Policy.
    The word “means,” qualified by the adjective “accidental” in an accident insurance policy is to be considered in a liberal and popular rather than a strict and philosophical sense; if the effect of the act from which injury results has the characteristics of the act from which injury results has the characteristics of an accident it is proper to so characterize the means producing it; hence, dilation of the heart, caused by taking a cold plunge bath is properly characterized as effected by accidental means, especially, since insured was an apparently healthy and vigorous man of military activities, accustomed to such baths and had never previously experienced any bad effects therefrom.
    [Syllabus approved by the court.]
    Error to common pleas court.

      Seaton & Paine, for plaintiff in error.

      Ford, Snyder & Tilden, for defendant in' error.
   WINCH, J.

The original plaintiff in this ease was Charles W. Johnson, who brought his action against the Casualty Company to recover on an accident insurance policy for disability claimed to have been sustained as the result of an accident. Upon his death, the action was revived in the name of his administratrix..

The disability in question was due to dilation of the heart caused by taking a cold plunge bath.

The sole question submitted by the briefs for review here, though saved by motion for judgment on the pleadings, motion for a new trial, request to charge and exception to the charge given, is whether the injury complained of was effected solely and exclusively by accidental means.

The facts in the case are as follows:

On Sunday, June 9, 1909, Major Johnson was apparently in perfect health, being a man of military activities and accustomed to keep himself in good physical condition. He was wont to take horse back rides and upon his return. therefrom to take cold plunge baths, from which, until the day in question, he had never experienced any bad effects.

This day in June was warm. The major started out about 9 A. M., returning about 1 P. M., heated and perspiring freely. He took his usual cold plunge, but this time it drove the blood back to his heart with force sufficient to cause the trouble which the doctors call acute dilation of the heart. Medical experts testified that such is not the usual result of taking a cold plunge bath, nor is such result reasonably to be anticipated therefrom.

There was evidence in the record, however, that there is danger in taking a cold plunge bath when one is heated,' and that it is imprudent to take such bath when perspiring; also that the injury that occurred from taking this bath was a natural result from a natural cause.

The court charged the jury as follows:

“Now, the question will be this, gentlemen, what was Major Johnson to expect when he took this cold plunge? A man is supposed to expect that which would result from the natural consequence of his act, as that act appears to him at the time, not as it might appear to a physician, but as it would appear to him under all the circumstances-surrounding that particular transaction. Reading from a reputable work:
‘ ‘ ‘ The natural consequence of means used is the consequence which ordinarily follows from its use; the result which may reasonably be anticipated from its use and which ought to be-expected. The probable consequence of the use of a given means is the consequence which is more likely to follow from its use than it is to fail to follow. An effect which is the natural and probable consequence of an act or course of action is not an accident, not is it produced by accidental means. ’
“So, then, taking all the circumstances of this particular case in consideration, the situation- of Major Johnson, his condition at that particular time, what had he'a right to expect would be the result of a plunge into a tub of' cold water ? If the thing that he should naturally expect would be a dilation of the heart, which would contract the muscles and cause the injury complained of, if that was to be expected in the ordinary acceptation of the term, by that bind of an act, — then it would not be-accidental because he would be held responsible for the natural consequences of his act, and consequently he would not be entitled to recover in this ease. But if from a course of conduct hitherto followed by him, he would have no reason or expectation, to believe that an injury, such as dilation of the heart, would be occasioned by a plunge in cold water in that manner, then under the rules that I have given you, the injury would be. caused by an accident and he would be entitled to recover in this ease.
“Now, gentlemen, you can take into consideration your own human experience with respect to these things. Men cannot close-their eyes to things which they know themselves. Was the result which happened to Major Johnson, a thing that could reasonably be expected to follow from a cold bath ? If it was, then he-cannot recover in this case nor can his executrix. If it was not, if the result was something he could not anticipate, something-that was not to be expected, — then within the meaning of the-law, of the definitions I have given you, it would be accidental and it would be covered by the terms of this policy.”

In criticism of this, counsel for plaintiff in error says:

“If this is the law, all injuries are accidental unless voluntarily incurred.
“We maintain on the contrary, that the result of an act has nothing to do with determining whether or not the act was. an accident.
“The fact that injury as the result of an act is certain, or probable, or possible — makes it no less an accident, if the act. was accidental in its nature. Nor does the fact that injury as. the result of an act is uncertain and the chance of injury remote —and not to be reasonably apprehended, — make such injury, when it does occur, one occasioned by accidental means. The-cause must be accidental, the result does not determine the cause. ’ ’
“The contention of plaintiff in error is that the event preceding the injury, and which was the proximate cause of the injury, must be in the nature of an accident. That an unexpected or unusual result of an act, not in the nature of an accident, does not render' it an accident, — or the resulting injury one occurring by accidental means. In short, that the cause determines the result, while defendant in error claims that the result determines the cause. ’ ’

What has been quoted from the charge and from the brief of counsel for plaintiff in error sufficiently exhibits the two theories as to the law applicable in such eases as this. Both theories are sustained by the authority of adjudicated cases. The general rule contended for by plaintiff in error is thus stated by Joyce:

“A person may do certain acts, the results of which may produce unforeseen consequences, and may produce what is commonly called accidental death; but the means are exactly what the person intended to use and did use, and was prepared to use; the means were not accidental, but the result might be accidental.” 3 Joyce, Insurance 3808.

This rule was applied in the case of Carnes v. Traveling Men’s Assn. 106 Iowa 281 [76 N. W. Rep. 683; 68 Am. St. Rep. 306], where the death of the assured was caused by his taking-morphine, knowing at the time how much he was taking, but not knowing that such amount would cause death.

In the case of Schmid v. Accident Assn. 42 Ind. App. 483 [85 N. E. Rep. 1032], the assured died as a result of his exertions in climbing the steps of a hotel, carrying heavy satchels. The hotel was in a high altitude where the atmosphere was rarefied'. The court applied the rule as given by Joyce and denied a recovery.

In the ease of Appel v. Insurance Co. 86 App. Div. 83 [83 N. Y. Supp. 238], the assured suffered a rupture of the appendix from the ordinary jar incident to riding a bicycle, and was denied recovery.

The same was the result in the case of Hastings v. Insurance Co. 190 Fed. Rep. 258, where the assured ruptured his heart in an effort to raise and lower himself by the use of his hands and arms when seated in a Morris chair.

For other eases'see briefs of counsel.

The contrary view, and the one followed by the trial judge, is formulated by Cooley, Law of Insurance p. 3156, as follows:

“Policies of accident insurance usually insure against ‘bodily injuries caused by external, violent and accidental means. ’ The important factor in this description of the risk assumed, is the word ‘accidental.’ In determining whether the cause of injury or death is one of the risks covered, it is therefore necessary to first determine what is meant by the term ‘accidental,’ and whether the particular cause was ‘accidental,’ within the definition. Strictly speaking a means is accidental perhaps only when disassociated from any human agency, but this narrow interpretation is not recognized in the law of accident insurance. Whether or not the means is accidental, is determined by the character of its effects. Accidental means are those which produce effects which are not their natural and proper consequences. The natural consequence of means used, is the consequence which ordinarily follows from its use — the result which may be reasonably anticipated from its use and which ought to be expected. The probable consequence of the use of a given means, is the consequence which is more likely to follow from its use, than it is to' fail to follow. An effect which is the natural and probable consequence of an act or course of action, is not an accident, nor is it produced by accidental means. It is either the result of an actual design or it falls under the maxim that every man must be held to intend the natural and probable consequences of his' deeds. On the other hand, an effect which is not the natural and probable consequences of the means which produced it, an effect which does not ordinarily follow and cannot be reasonably anticipated from the use of such means, an effect which the actor did not intend to produce and which he cannot be charged with the design of producing, is produced by accidental means. It is produced by means which was neither désigned nor calculated to cause it. Such an effect is not the result of design, cannot be reasonably anticipated, is unexpected and is produced by an unusual combination of fortuitous circumstances; in other words, it is produced by accidental means.”

The leading case adopting this reasoning is Horsfall v. Insurance Co. 32 Wash. 132 [72 Pac. Rep. 1028; 98 Am. St. Rep. 846], where the assured, a strong, healthy man, attempted to lift a bar of iron weighing 350 to 400 pounds, by taking hold of one end of it while another man lifted the other, end. Nothing unusual happened while he was lifting the iron, but the exertion caused dilation of the heart.

Commenting on the facts of the case the court says:

“The result certainly was unexpected. It did not take place according to the usual course of things. If instead of a sprain of the muscles of the heart, the deceased had sprained the muscles of the back, or arm, or ankle, it certainly could not have been reasonably claimed that the result was not due to accident. The fact that the heart was dilated or ruptured, was none the less an accident according to the usual acceptation of the term and according to the definition above given. We think the evidence shows an accident within the meaning of the policy. ’ ’

In a case where three men jumped from a platform a few feet from the ground and one of them, the assured, in alighting, caused a stricture of the duodenum, from which he died in a few days, the Supreme Court of the United States held:

“The court properly instructed them that the jumping off the platform was the means by which the injury, if any was sustained, was caused; that the question was whether there was anything accidental, unforeseen, involuntary, unexpected, in the act of jumping, from the time the deceased left the platform until he alighted on the ground; that the term ‘accidental’ was used in the policy in its ordinary, popular sense, as meaning ‘happening by chance; unexpectedly taking place; not according to the usual course of things; or not as expected;’ that, if a result is such as follows from ordinary means, voluntarily employed, in a not unusual or unexpected way, it cannot be called a result effected by accidental means; but that if, in the act which precedes the injury, something unforeseen, unexpected, unusual occurs which produces the injury, then the injury has resulted through accidental means. ’ ’

United States Mut. Acc. Assn. v. Barry, 131 U. S. 100 [9 Sup. Ct. Rep. 755; 33 L. Ed. 60], May, Insurance p. 515, speaks of the Barry ease as one “far more sensible” than those holding the view urged by plaintiff in error.

In the case of North Am. Life & Acc. Ins. Co. v. Burroughs, 69 Pa. St. 43 [8 Am. Rep. 212], it was held that a death resulting from abdominal strain occasioned while assisting to unload a load of hay, was caused by accidental means.

See also Hey v. Liability Co. 181 Pa. St. 220 [37 Atl. Rep. 402; 59 Am. St. Rep. 644].

On authority of the Barry case, it was held in the case of Western Com. Trav. Assn. v. Smith, 85 Fed. Rep. 401 [29 C. C. A. 223; 56 U. S. App. 393], that death ensuing from blood poisoning which set in as a result of the assured wearing a pair of new shoes which rubbed the skin off his toe, was caused by accidental means.

The same was held in the case of Nax v. Insurance Co. 130 Fed. Rep. 985, where death resulted from a self-inflicted knife cut, made by the assured while trimming a corn, blood poisoning following.

Many other cases might be cited to the same effect, and they seem to be the later eases.

Chancellor Kent said: ‘ The modern reports, and the latest of the modern, are the most useful, because they contain the last, and, it is to be presumed, the most correct exposition of the law. ’ ’ In quoting this Lieber says: “It might be added, because they relate to cases applying to the same circumstances and conditions with our own, they speak the same language with ourselves. ” Lieber, Hermeneutics, 226.

Accident insurance has now come to be a common thing; it is intended as a protéction to those upon whom chance visits some injury while they are engaged in the daily and usual things of life. Every accident happens as the result of the working of fixed rules, but it is equally an accident if I voluntarily place myself under the operation of these rules without being able to foresee the consequences of so doing, as it is if I know the rules, but some power beyond my control puts me under tbeir operation.

This thought is apparent in the case of United States M. A. Assn. v. Hubbell, 56 Ohio St. 516 [47 N. E. Rep. 544; 40 L. R. A. 453], though the case turns oh the application of another clause in the policy that the injury must not result from, “voluntary exposure to unnecessary danger.”

On page 525, Judge Spear says:

“It will not be doubted that the definition of “death by accidental means,” given by the trial judge to the jury, viz.r ‘Any event which takes place without the foresight or expectation of the person acted upon or affected by the event/ was a proper definition. ’ ’

Again, on page 526, he says:

“Accidents are the result very largely of the failure to observe due care, and yet the contract is intended as a remuneration in case of accident, and it is to procure the obligation of the company to pay this remuneration, that the assured pays the premium. As stated by Allen, J., in Keene v. Accident Assn. 161 Mass. 149 [36 N. E. Rep. 891] : ‘By taking a policy of insurance against accidents, one naturally understands that he is to be indemnified against accidents in whole or in part from his own inadvertence.’ ”

Having in .mind this consideration of the nature of the accident insurance contract, a liberal and popular rather than a strict and philosophical meaning must be given to the word “means,” qualified by the adjective “accidental,” as used in the policy.

"We know that if the means is accidental, the effect is accidental; — that is conceded. But just as well we know that if the effect has the characteristics of an accident, we so characterize the means that produced it. In other words, it is common reasoning to say, as Cooley says: “Whether or not the means; is accidental, is determined by the character of its effects. ’ ’

Giving this rule to the jury to guide it in its deliberations; upon the facts in this case, was instructing it to employ that method of reasoning which men ordinarily nse, and was therefore proper.

There was no error in the charge, and this being so, because the whole case turns upon this one legal proposition, the judgment is affirmed. “

Grant and Meals, JJ., concur.