text:
    PLEADINGS
    [Cuyahoga (8th) Circuit Court,
    February 5, 1912.]
    Marvin, Winch and Niman, JJ.
    Rebecca Harrison v. Wallace I. Knight, Admr.
    Striking Pleadings from Files for Failure to Comply with Order of Court.
    The right to strike pleadings from the files because of the failure or refusal of the parties filing them to comply with orders made in respect thereto, is inherent in the courts, and it is no valid objection to the exercise of this right that the pleading ordered stricken off states a cause of action or a good defense.
    Error.

      Kerruish, Kerruish, Hartshorn (& Spooner, for plaintiff in error.

      Morgan & Litzler, for defendant in error.
   NIMAN, J.

The parties to this action, standing in the same order as in the court below, will be referred to as plaintiff and defendant, respectively.

On April 10, 1907, the plaintiff filed her petition against the defendant. The defendant filed a motion seeking to have certain matter stricken from the petition. This motion having been granted, the plaintiff, by leave of court, filed an amended petition. The defendant then filed a motion asking to have certain matter stricken from the amended petition, which was granted. The plaintiff thereupon obtained leave to file a second amended petition. This second amended petition having been filed, the defendant filed an answer thereto, to which answer the plaintiff filed a reply.

The defendant thereafter moved against this reply, and on hearing of the motion, the court ordered certain matter stricken therefrom. Leave was then given to the plaintiff to file an amended reply by a stipulated day. The plaintiff, however, did not file an amended reply but did obtain leave of court to file another amended petition. After the third amended petition was filed, the defendant moved to strike from it certain allegations, and the motion was granted. The plaintiff again obtaining leave of court, filed a fourth amended petition, which, on motion of the defendant, was stricken from the files. Thereafter, the plaintiff filed, by leave of court, a fifth amended petition, which was also, on motion of the defendant, stricken from the files.

In striking the fifth amended petition from the files the court made the following order:

“The motion to strike the fifth amended petition from the files is heard and granted, at the plaintiff’s costs, for which judgment is rendered against her, and said fifth amended petition is hereby stricken from the files. Plaintiff is refused permission to file any further pleadings in this cause. To all of which the plaintiff excepts.”

This order was made on November 27, 1911. Previous to this date, on July 1,1911, the defendant filed an amended cross-petition, on which he caused summons to issue against the plaintiff. The summons was served on her on the 8th day of November, 1911.

The matter ordered stricken from the petition was in substance embodied in the various amended petitions filed by the plaintiff, and was incorporated in the reply.

The plaintiff seeks a reversal of the action of the court of common pleas in striking her fifth amended petition from the files and in making the order which has been quoted.

When the court ordered certain allegations stricken from the petition, it was the duty of the plaintiff, and of her counsel, to omit, such allegations from all subsequent pleadings. Instead of doing this, however, the plaintiff, with slightly different phraseology, embodied substantially the same allegations in all of the various pleadings filed by her. In five amended petitions and one reply the decision of the court was ignored, and practically .no-attention paid to it. The filing of pleadings framed in disregard of the. order of the court extended over a period of more than four years, and seems .to have developed- into a contest of endurance.

■ It was .within the power of the court to take such steps as would secure obedience to its orders, and- to punish for contempt if necessary: Neither a party to the action, nor.an attorney engaged ■ therein, had any right to continue indefinitely to file pleadings containing matter which the court had decided repeatedly to be improper..

The method of securing obedience to its order was within the discretion of the court, and unless that discretion has been abused, or the court has exceeded its powers, the order made should not be disturbed.

The right to strike pleadings from the files because of the failure or refusal of the parties filing them to comply with orders made in respect thereto, is- inherent in the courts, and frequént instance's of its exercise are not found wanting:

In Howard v. Western Union Tel. Co., 25 Ky. L. 828 [76 S. W. 387], the question was before the court and it was there held' that the refusal to comply with an order properly granted, to make a petition more specific is an act of contempt,- rendering a dismissal of the action proper. See also Saalfeld v. Cutting, 49 N. Y. App. Div. 640 [63 N. Y. Supp. 337].

It is no valid objection to the exercise of this right, that the pleading ordered stricken off states' a cause of action or a good defense, as the case may be. This subject was considered in Macdam v. Scudder, 127 Mo. 345 [30 S. W. 168]. In the opinion, page 355, it is held:

‘ ‘ Upon the refusal of the plaintiff to comply with the rule and amend his petition, the court committed no error in dismissing the cause. This was the only álternative left to the court by which its authority could be maintained. The fact that the petition contained a statement of a cause of action, is no reason why it should- not- have been dismissed. The petition was not obnoxious to this motion, because it did not state a cause of action, but because the statement of the cause of action was so indefinite and uncertain that ‘the precise nature of the charges’ upon which- the plaintiff sought to recover was not apparent. The defect could not have been reached by demurrer. The proper way to reach it was by motion. ’ ’

We decide, therefore, that the sustaining of the motion to strike the fifth amended petition from the files was an act within the power of the court, and that the order in so far as. it directed said amended petition to be stricken from the files was properly made, but the court went beyond this, and embodies in its order a provision that the plaintiff was refused permission to file any further pleadings in the cause.

In' view of the fact that the defendant had caused summons to issue on his amended cross-petition, which was served on the plaintiff on November 9, 1911, we consider that the plaintiff had an absolute right to plead to this amended cross-petition. At the time the order was made, November 27, 1911, the time given her by statute for so pleading had not expired, and she tras deprived of a right given her by statute.

The judgment or order of the court of. common pleas striking the fifth amended petition from the files is therefore affirmed, but so much of said judgment or order as' refused the plaintiff permission to file any further pleadings in the cause is reversed, and the cause is remanded to the court of common' pleas for further proceedings.'-

Marvin and Winch, JJ., concur.


source: Caselaw Access Project

author: NIMAN, J.

license: Public Domain

text:
    EXECUTORS AND ADMINISTRATORS
    [Cuyahoga (8th) Circuit Court,
    January 29, 1912.]
    Marvin, Winch and Henry, JJ.
    Christ Meister et al v. John Feuerstein.
    Title ■ of Endorser of Promissory Note, Endorsed by Administratrix without Distribution Order, Complete.
    One to whom a note is endorsed by the administratrix of the estate of a deceased payee, may maintain suit thereon, though no order of distribution in kind .was obtained from the probate court at the time, when it appears that all the debts of the estate had been paid and the distribution of the note was after-wards reported to the probate court and approved by it.

      B. E. McKisson, for plaintiff in error.

      Morgan & Litzler, for defendant in error.
   NIMAN, J.

The plaintiffs in error were defendants and the defendant in error was plaintiff in the court of common pleas. When the terms “plaintiff and defendants” are used herein, reference is made to the relation of the parties in the court below.

The plaintiff brought suit in the court of common pleas against the defendants to recover on a promissory note, a copy of which is as follows:

“$300.00 Cleveland, O., Jan. 14, ’95.
‘ ‘ One year after date I promise to pay to the order of Christ ■Feuerstein, three hundred dollars, at six per cent. (6%) interest. Value received.
“Christ Meister,
“Johanna Meister.”
The note bears the following endorsement.
“Pay to the order of John Feuerstein.
“Estate of Christ Feuerstein,
“by Eva Feuerstein, Administratrix.”

It is established by the evidence set forth in the bill of exceptions that Christ Feuerstein, the payee in said note, was the father of the plaintiff; that some time prior to the bringing of the action, Christ Feuerstein died intestate, leaving the plaintiff his sole heir at law, and leaving a widow, Eva Feuerstein, who was duly appointed administratrix of his estate and who qualified as such; that all of the debts of his estate having been paid, the plaintiff and said administratrix entered into an agreement whereby the former was to take all the remaining property left by said Christ Feuerstein,' and pay to the administratrix for her interest in the estate, as widow, the sum of $4,000; that pursuant to this agreement, the note sued upon was indorsed over to the plaintiff in the manner indicated; that at the time of the making of this agreement and the indorsement of the note by the administratrix and its delivery to the plaintiff, no approval of the probate court had been obtained but that subsequently, after the suit was started, but- before it was tried, the probate court, on the application of said administratrix, and with the consent of the plaintiff, duly approved the distribution in kind of said note to the plaintiff; that the trial in the court below resulted in a verdict and judgment in favor of the plaintiff.

Upon this state of facts on the érrors assigned, we are called upon to determine whether the plaintiff could rightfully bring suit on the note.

It is contended by the defendants that the title to the note in question was in the administratrix of the estate, and until the approval of the probate court was obtained, in compliance with the statute providing for a distribution in kind of certain forms of personal property, in which notes are included, she had no authority or right to transfer the note to the plaintiff, and he took no title by the indorsement. In other words, defendants contend that the plaintiff was not the real party in interest, and therefore could not bring the action.

Section 10839 G. C. provides:

“An executor or administrator who has paid all the debts of an estate, but has in his possession notes, bonds, stocks, claims or other rights in action, belonging thereto, with the approval of the probate court entered on its journal, and the assent and agreement of the persons entitled to the proceeds of such assets as distributees, including executors, trustees and guardians, may distribute and pay them over in kind to those of such distributees as will receive them. ’ ’

The plaintiff and administratrix, in this case, were the only parties concerned or interested in the distribution of the estate. The debts had all been paid at the time the note was taken by the plaintiff. There were no creditors to complain, because the debts of the estate had all been paid. Absolutely unimpeachable was the formal approval of the probate court, which was secured after the suit was started but before the trial took place.

In our opinion, the omission to secure the formal approval of the probate court did not operate to deprive the plaintiff of his right to bring suit on the note. The administratrix, being vested with the legal title to the note, by her indorsement transferred that legal title to the plaintiff. He thereby acquired a voidable, not void, title. As against creditors whose fights might be affected, or other distributees not consenting to the transaction, his title might have been assailed; but there were no such creditors and no such distributees. The only parties financially interested in the estate were the plaintiff and the administratrix, and when the latter entered into the agreement which resulted in the’plaintiff taking the note, he became the only person'financially interested therein, and .at the commencement of the suit had both the legal title and beneficial interest therein.

The plaintiff would, of course, take the title with notice that it was liable to be defeated by the assertion of the claims of possible creditors, or perhaps by the refusal of the probate court to sanction the agreement between himself and the administratrix. His position would be .analogous to one who, with knowledge, acquires trust property from a trustee. -The law in such case is set forth in Perry on Trusts, Vol. 1, Sec. 274, in this language:

“ If a trustee conveys ¿way the trust estate to another, even his co-trustee, and appoints another to execute the trust, the conveyance may pass the valid legal title, but it will have no effect in ■ relieving the original trustee from responsibility, if the transaction is not sanctioned by the decree of the court, or by consent of .all parties interested and it will transfer no authority to-the person thus appointed, except to make him a trustee de son tort, if he attempts to interfere with the trust estate. ’ ’ See also Perry, Torts, Sec. 334.

The subsequent approval of the probate court confirmed the plaintiff’s title to-the note, and would have relation back to the time'of its acquisition by him. We are supported'in this opinion by Palmer v. Whitney, 166 Mass. 306 [44 N. E. 229]. In the opinion, on page 308, Field, C. J., says:

‘ ‘ It has been held that the only way in which an administrator of an intestate estate can effectually protect -himself against the claims of all possible distributees, is by obtaining a decree of distribution and distributing the estate in accordance therewith.' Such a decree, obtained according to law after due notice, is a 'protection against all the world. (Gathaway v. Bowles, 136 Mass., 54.) But it is a common practice, when the distributees are known and their shares undisputed, to pay them what is due without a decree of distribution' and to credit payment in the final account. When such payments are made and are credited in' the account, and the distributees assent to the account, or have notice of it and make no objection to the allowance of it, or are heard upon the allowance of it and their objections are.overruled, we see no.reason why the account should not be allowed. If the distributees have actually received all'they are entitled to, they -ought not to be heard to complain that the .formality of obtaining a decree of distribution has been omitted. An administrator distributing property without a decree of distribution incurs the risk that there may be distributees who are not bound by the allowance of his account, but if he is willing to take this risk, the distributees who have received all they are entitled to can not complain of the procedure.”

In Scott’s Account, In re, 36 Vt. 297, 300, the court says:

‘ ‘ The main purpose of the statute in providing for the order of distribution seems to be to insure the just accountability to the party entitled for the money thus being in the hands of the administrator. When that end has been accomplished by this voluntary action, there would seem to be no occasion for resorting to the court for an order in that behalf.
“Another purpose of that provision seems to be to enable the administrator to protect himself under an order of the court against any claims that might be made on him for funds of the estate in his hands. If he should set fit to take the risk of disposing of the funds without the shield of such order, and no claim should be made upon him by any person otherwise entitled-to those funds, and in point of fact he had paid them over to the person entitled and to whom they would .have been ordered, to be paid, it is difficult to see on what ground the transaction can be called a question.”

The case of Maraten v. Noble, 10 La. 210, is similar to the case under consideration. The syllabus reads as follows:

“The defense to the plaintiffs’ action on a promissory note was that the note belonged to the estate of Kemp; that it was not a negotiable instrument, and that no legal title passed to the transferee. The note, however, being indorsed in blank- by Noble, the payee, and by Lea in his individual capacity, went into the hands of Bullard. He’d: There is no affirmative evidence impeaching the validity of this transfer as one detrimental to the estate of Kemp, and Noble having been notified of the transfer some time before suit brought, and no payment having been made to the estate on account of the note, there is no equitable reason for turning plaintiff out of court for not showing a judicial authorization of transfer to him.”

Our attention has been called to McBride v. Vance, 73 Ohio St. 253 [76 N. E. 938; 112 Am. St. 723; 4 Am. Cas. 191], where it is held that the personal property of a deceased person does not vest in Ms heirs, bnt is in abeyance until administration is granted, and is then vested in the administrator by relation from the time of death, and no right of action on a promissory note belonging to a deceased person is shown by a party in an action on the note by proof of possession and that he is the sole heir of the decedent.

It is claimed by the plaintiff in error that this decision should control in this case, but in our opinion an entirely different question was involved in that ease than the one under consideration. There the plaintiff did not, as in this case, derive title through an administrator, but sought to recover solely on the theory that she was the sole heir at law of the decedent to whom the note belonged, and that having possession of the note she was entitled to maintain the action. It is clear that she had no legal title to the note sued upon, and perhaps had no beneficial estate therein, depending upon the question of whether or not the proceeds of the note might be necessary for the payment of debts of the estate. Here the plaintiff obtained title by the indorsement of the administratrix, which, though voidable when it was acquired by him, was in fact not avoided, but on the contrary, confirmed by the action of the probate court, and in addition to the legal title, had the sole beneficial interest in the note.

We find no error prejudicial to the plaintiffs in error in the rulings of the court of common pleas in which the question of the right of the plaintiff to bring his action was raised, and no error in any of the matters assigned in the petition in error as grounds of error, and the judgment of the court of common pleas is affirmed.

Marvin and Winch, JJ., concur.


text:
    ERROR — REVIVOR
    [Cuyahoga (8th) Circuit Court,
    February 5, 1912.]
    Marvin, Winch and Niman, JJ.

      Rose Connors, Exrx. et al v. George Rackle et al.
    1. Trial of Original Action After Reversal by Higher Court Necessary.
    When a judgment of the common pleas court, refusing to vacate a default judgment, affirmed by the circuit court, is reversed by the Supreme Court and the cause is remanded to the common pleas for further proceedings ’ according to law, it is error for the latter to enter judgment on the mandate of the Supreme Court vacating said default judgment without hearing and determining whether grounds for vacation and a valid defense exist
    2. .Revivor of Original Action on Remand and Death of Party.
    Upon death of one of the parties to a judgment after its reversal and remand to the trial court for further proceedings it is error to proceed with such new trial until the original action is revived.
    Error.

      Henry & McGraw and McGrath & Stern, for plaintiffs in error.

      F. M. Cobb, Skiles, Green & Skiles and R. B. and A. G. Newcomb, for defendants in error.

      Affirmed no opinion, Rackle v. Connors, 87 Ohio St. 518.

   NIMAN, J.

The action in the conrt of common pleas, out of which this proceeding in error arises, was brought by the filing of a petition to vacate a certain judgment, rendered as upon default, in another action in said court.

Proceedings were had in the court below which resulted in a finding that the plaintiffs were not entitled to the relief prayed for, and a dismissal of their petition. This court affirmed the judgment of the court of common pleas, but the Supreme Court reversed this court and the court of common pleas in Rackle v. Connors, 84 Ohio St. 473 [95 N. E. 1154].

The decision of the Supreme Court embodied in the journal entry is in the following language:

“This cause came on to be heard upon the transcript of the record of the circuit court of Cuyahoga county, and was argued by counsel. On consideration whereof, this court being Of opinion that in the original action the cause had not, prior to the trial thereof by the court of common pleas, and entry of judgment therein, been especially assigned for trial out of its regular order within the meaning of Sec. 5134 R. S. (Sec. 11384 G-. C. et seq.), nor assigned for trial to a jury in series, and the trial thereof, by said court was before the action regularly stood for trial ; and the court, being further of the opinion that the plaintiff in error’s contention in the present action is not res ad judicata because of the overruling of his motion to vacate judgment to be found at page 86 of the printed record, and marked ‘defendant’s exhibit 3.’ , ,
“It is further considered and adjudged that the judgment of the circuit court be, and the same hereby is, reversed, for error in affirming and not reversing the judgment of the court' of common pleas of Cuyahoga county'in said case of Backle et al. v. Connors et al.
“And proceeding to render the judgment which the said circuit court should have rendered, it is considered and adjudged that the said judgment of the court of common pleas be, and the same is hereby reversed, and said cause is ordered remanded to said court of common pleas of Cuyahoga county for further proceedings according to law.”

Upon receipt of the mandate of the Supreme Court, the common pleas court made the following order:

‘1 This cause came on to be heard upon the special mandate and order of the Supreme Court of Ohio, entered at the January term, A. D. 1911, of said court, to wit, on May 9, 1911, and proceeding to render the judgment which this court should have rendered in this cause, this court finds that the trial on February 3, 1908, of cause No. 102463, on the docket of this court and entitled ‘James W. Connors v. George Rackle et al.,' was irregular in that it was had before said cause regularly stood for trial, and that a valid defense to said action has been shown ; and' it is therefore ordered, adjudged and decreed that the plaintiffs are entitled to the relief prayed for in their petition and that the judgment rendered by this court on February 3d, 1908, in the, sum of two thousand five hundred dollars ($2,500) and costs in said cause No. 102463, be, and the same is hereby suspended and a new trial granted in said cause; and it is further ordered that in said cause No. 102463 leave be granted to the defendants therein to plead and make their defense in said cause, and that the trial of said cause proceed in the manner provided by law. ”

By this proceeding in error a reversal of the foregoing order of the court of common pleas is sought, and two grounds are urged in support thereof:

1. That the court determined the issues upon the petition to vacate and subsequent pleadings,' without a retrial thereof.

2. That James W. Connors, the plaintiff in the original action, and the defendant in the petition to vacate the judgment, died while the proceeding in error was pending in the Supreme Court, and the order complained of was made without having the action revived. Both of these contentions we hold to be well founded.

The essence of the order of the Supreme Court was that the judgment of the court of common pleas be reversed and the cause remanded for further proceedings according to law, and since the judgment reversed consisted of a dismissal of the petition, the order of the Supreme Court merely restored the action to its status before the judgment of the court of common pleas was entered.

A proceeding to vacate a judgment involves a determination of whether or not the grounds on which the vacation is sought exist and the existence or nonexistence of a valid defense to the action. This is true whether the proceeding is by motion or petition. Where the issues are joined upon a petition to vacate a judgment, there must be a trial, both upon the ground for vacating the judgment and the existence of a valid defense to the original action.

These propositions are affirmed by Mcllvaine, C. J., in Watson v. Paine, 25 Ohio St. 340, 344, in the following language:

“When a proceeding by petition or by motion to vacate or modify a judgment is instituted, under Sec. 535 or.536, the first thing to be' done by the court is to try and decide whether or not a ‘ground’ to vacate or modify exists (Sec. 537). ‘The grounds’ referred to in this section are those enumerated in the nine sub-, divisions of Sec. 534. In some cases, the question thus tried and decided, can be determined by inspection of the record; in others, the testimony of witnesses must be heard. But in all cases this question must be tried and decided by the judge or judges. When the evidence of ground to vacate or modify is thus decided, the case is not yet ready for a final judgment of vacation or modification. Before such judgment can be entered, if the petition or motion be filed by the defendant in the original action, it must be adjudged that there is a valid defense to the action (Sec. 538). In order that the validity of the defense may be adjudged, an issue or issues should be made up by proper pleadings. If the proceedings to vacate or modify be by motion, the defendant should be required to file his answer to the original petition with leave to the plaintiff to reply. If the proceeding be by petition, in which the matters of defense are set forth in issuable form, it would be sufficient, no doubt, to take issue thereon by reply or demurrer. When the issue is thus made up, it should be tried as in other cases.”

In support of these principles see also Ralston v. Wells, 49 Ohio St. 298 [30 N. E. 784]: Follett v. Alexander, 58 Ohio St. 202 [50 N. E. 720].

The court below heard no evidence in support of, or against, either of the essential facts necessary to secure a vacation of judgment. The journal entry shows that the cause came on to be heard, not on the evidence, but on the special mandate and order of the Supreme Court. This is a sufficient answer to the suggestion of counsel for defendants in error that this court is not at liberty to go into the question as to what evidence was presented in the i court of common pleas, and that it is always presumed that the court when it makes a finding had before it proof of facts necessary to sustain its finding, and upon which the judgment was rendered.

In our opinion the court of common pleas was in error in making its order without a trial or hearing and on the strength of the mandate of the Supreme Court. ■

The second ground of error complained of is supported by the expression of the court in Williams v. Englebrecht, 38 Ohio St. 96, 97:

“Notwithstanding the death of the plaintiff in error after the assignment of errors and before final judgment, the judgment of reversal is valid and effective. By relation, the judgment of reversal takes effect as of the date of the commencement of the proceedings in error.
“True, the original action must be revived before a new trial can be had in the court below; but such revivor may be had in the court to which the cause has been remanded for a new trial.” See Black v. Hill, 29 Ohio St. 86; and Foresman v. Haag, 37 Ohio St. 143.

It is urged by tbe defendants in error that the order the reversal of which is sought in this proceeding, is not a final order.

We think this contention is refuted by Braden v. Hoffaman, 46 Ohio St. 639 [22 N. E. 930], where it was held:

“An order of the court of common pleas, made on motion of the defendant, and vacating a default judgment entered at a previous term for irregularity in obtaining the same, is an order affecting a substantial right made upon summary application after judgment, and may be reviewed, vacated, or modified for errors appearing on the record.”

The judgment of the court of common pleas is reversed and the cause remanded for further proceedings according to law.

Marvin and Winch, JJ,, concur.


text:
    BANKRUPTCY
    [Cuyahoga (8th) Circuit Court,
    February 13, 1912.]
    Marvin, Winch and Niman, JJ.
    Superior Clothing Co. v. Amdur Bros. Co.
    Bankruptcy — Involuntary Proceedings. Bankrupt May Maintain Suit Before Adjudication.
    A corporation can maintain an action on a claim due it after proceedings in involuntary bankruptcy have been begun, but before adjudication and appointment of a trustee therein.
    Error.

      S. A. Grossner, for plaintiff in error.

      Emil Joseph, for defendant in error.
   NIMAN, J.

The sole question presented to this court on the argument and by brief is whether, after proceedings in involuntary bankruptcy have been begun against a corporation, but before adjudication and appointment of a trustee therein, said corporation can maintain an action on a claim due it.

We do not think this question was saved on the record in this ease. It is not raised by any allegation in the petition or amended answer, nor is there any bill of exceptions showing the evidence taken on the trial, so that we do not know that it was raised in the evidence.

■ Two days after the trial, a motion for a new trial was filed, and the third day after, the trial a motion to set aside the judgment was filed. The latter motion gives three alleged reasons for setting aside the judgment; first, that the plaintiff is not the real party in interest; second, that the note sued.on had been transferred to a third party, and third, that the plaintiff had either filed a petition in bankruptcy or been declared an insolvent under the laws of the state of New York, and so could not maintain the action.

Whether evidence was taken on the motion for a new trial, wé do not know, but it appears that evidence was taken on the motion to set aside the judgment.

Said motion does not give any statutory ground for setting aside a judgment; it states certain facts which, perhaps, might have been raised on the trial, if the pleadings had been amended so as to raise issues involved in these facts.

There is a bill of exceptions, certifying that on the motion to vacate the judgment an agreed statement of facts was used, but it does not certify that said agreed statement of the facts was all the evidence on the hearing of said motion.

In this state of the record, it would seem idle to try to answer the question submitted on the hearing in this case, but we have examined the authorities cited and conclude that the law is correctly stated by Remington Bankruptcy, Secs. 1119, 1120,. 1121, 1123, as follows:

“The subject of the status of property after the filing of the petition is one upon which neither the law itself nor the decisions are clear, nor always consistent.
“But title does not vest until the trustee’s qualification; meanwhile in law the title,, although defeasible, remains in the bankrupt.
“The bankrupt himself is a quasi trustee of the property and its custodian and caretaker until a trustee, receiver, or some other officer of the court is appointed.
‘ ‘ In the meantime, the bankrupt has sufficient title to maintain suits in his own name, at any rate where no receiver has been appointed or where title and not merely possessory right is essential to maintenance of the suit.”

See also Rand v. Iowa Cent. Ry., 186 N. Y. 58 [78 N. E. 574; 116 Am. St. 530; 9 Ann. Cas. 542].

The trial court seems to have followed the law as thus enunciated, and its judgment is affirmed.

Marvin and Winch, JJ., concur.


author: WINCH, J.

text:
    INTOXICATING LIQUORS
    [Cuyahoga (8th) Circuit Court,
    February 13, 1912.]
    Marvin, Winch and Niman, JJ.
    In Re Intoxicating Liquors (Residence District Petition) .
    Proper Test as to Sufficiency of Residence Local Option Petition.
    The sufficiency of a petition in favor of prohibiting the sale of intoxicating liquors, filed under favor of Sec. 6140 G. C., is to be judged by the vote cast at the last regular municipal election held before the petition was filed.
    Error.
    Geo. W. Shaw, for plaintiff in error.
    C. M. Earhart, for defendant in error.
   WINCH, J.

The question presented by the record in this case is whether the sufficiency of a petition in favor of prohibiting the sale of intoxicating liquors, filed under favor of Sec. 6140 G. C., is to be judged by the vote cast at the last regular municipal election held before the petition was filed, or at the last regular municipal election before the hearing on the petition.

It appears from the record herein that the petition in question was filed the day before the November election of 1911, and contains the signatures of qualified electors not less in number than a majority of the vote cast in November, 1909, which was the last regular municipal election held before the petition was filed, but less than a majority of the vote cast in November, 1911, which was the last regular municipal election held before the hearing on the sufficiency of the petition.

Section 6152 G. C. undertakes to lay down the rule on this subject, but it is not specific. It reads as follows:

“Such mayor or judge shall decide whether the petitioners are qualified electors in the residence district and equal in number a majority of the votes cast in such residence district at the last regular municipal election,” etc.

It would have been so easy to have said, “at the last regular municipal election held before the petition was filed,” or “before the hearing on the petition is had,” that one naturally wonders that the legislature did not specify which election should be looked to as the standard.

This looseness of expression, however, is further exemplified by the expression “equal in number, a majority” instead of “are not less in number than a majority” and “regular municipal election, ’ ’ which latter phrase has been held to be indefinite and include either a general or special election. The same uncertainty of expressions runs to such an extent through all the sections of the code regulating residence district local option, that no clear light is thrown upon the meaning of Sec. 6152 here under consideration, by any other section of the law.

We are remitted, therefore, to a general consideration of the purpose and intent of the law as a whole.

There can be no doubt that a history of the legislation of this state on the liquor question shows an intention of the Legislature, in recent years, at least, to permit the people themselves to determine whether they will permit or prohibit the sale of liquor in this midst. The will of the people is ordinarily expressed at an election, and so we had at first, and still have, laws providing for the submission of these questions to the people at an election. Then this method of registering their will by petitions was adopted. Can it be considered anything else than an open instead of a secret ballot? We think not. Only qualified electors of the district are authorized to sign such petition, and it takes a majority of them to make a petition sufficient.

At an election the qualifications of voters are determined when they offer their ballots, and the votes are canvassed after the polls are closed, by the election officers.

In the ease of these petitions, the qualifications of the signers are determined by the judge or mayor, and he also canvasses the vote, tallying all proper signatures to the petition in its favor and all other qualified electors in the district against it.

The analogy to an election is so complete that, without further reference to other sections throwing a side light upon this analogy, we hold that the filing of the petition is in effect, the casting of votes, and the number voting in favor of the question submitted by the petition, as shown by the proper signatures thereto, and the number voting against said question, as shown by subtracting the number of such signatures from the whole number of qualified voters in the district, measured by the standard of the vote at the last municipal election held before the day of filing the petition, determines the question thus submitted to the people.

If this theory is sound, the sufficiency of the petition depends upon the circumstances existing at the time it is filed, and can not be affected by events thereafter occurring.

It follows that the election held in November, 1911, in nowise affected the sufficiency of the petition filed the day before said election. ■

So holding, the judgment is affirmed.

Marvin and Niman, JJ., concur.


text:
    MORTGAGES
    [Cuyahoga (8th) Circuit Court,
    February 13, 1912.]
    Marvin, Winch and Niman, JJ.
    Anna V. Kuzel et al v. Citizens Savings & Trust Co. et al.
    1.- Sale In Foreclosure Under Judgment for Excessive Amount not Set Aside.
    Though a decree in foreclosure may he for more than was lawfully due the plaintiff, if the sale thereunder produces only enough'to satisfy the amount confessedly due on the mortgage, the sale will not be set aside, for in such case, under Sec. 11702 G. C., the judgment creditor is required to make restitution only of the amount for which the mortgaged lands were sold, with interest, and that amount, at least, is confessedly due the mortgagor.

      2. Mortgage Security for Joint Indebtedness of Husband and Wife but Personal Liability Individual.
    Husband and wife being jointly indebted to a bank in the sum of $2,100 and the husband individually indebted to it in the sum of $10,314.52, the bank demanded of the husband that he give security for the liabilities of himself and wife suggesting “that if he could not pay, he and his wife give a mortgage” on certain premises owned by them, whereupon they jointly executed a new note for, $10,000 and a mortgage securing the same and delivered them to the bank, the amount of the new note being fixed at the estimated value of their equity in the property, there being a prior mortgage on it; Held: The mortgage secures the joint indebtedness of husband and wife and individual indebtedness of the husband, but the wife did not, by the transaction, increase her personal liability to the bank.
    Error.
    Jl. A. & A. II. Bemis, for plaintiffs in error.

      W. J. O’Neil, for defendants in error.
   NIMAN, J.

The action below was one for the foreclosure of a mortgage. The defendant, Harriet M. Elsworth was a lienholder, whose rights are not attacked and against whom no relief is sought in this proceeding.

The findings of fact and conclusions of law made by the court of common pleas are before us, and by reference to these it appears that on September 14, 1907, the defendants, Anna V. Kuzel and Joseph H. Kuzel, were legally indebted to the Dime Savings & Banking Co. for two joint and several overdue promissory notes, one for $1,600, with certain interest thereon, and the other for $500, with certain interest thereon, both payable to the order of the I)ime Savings &.Banking Co.; that the consideration for said notes was money loaned to said defendants in the same amounts as the face of said notes; that at the same time, the defendant, Joseph H. Kuzel, was also indebted to said the Dime Savings & Banking Co. either primarily or secondarily, upon numerous items of indebtedness aggregating $10,-314.52; that on and prior to said September 14, 1907, said Dime Savings & Banking Co. was engaged in the banking business in the city of Cleveland, and was at that time in danger of being thrown into liquidation by reason of outstanding obligations which it was unable to pay, and that several officers of said company, including the defendant, Joseph H. Kuzel, were heavily indebted to said companythat at that time said defendant, Joseph H. Kuzel, was the assistant treasurer of said 'company; that on and shortly prior to said ■ September 14, 1907, the duly authorized officers of said company demanded of said defendant, Joseph H. Kuzel, that the obligations of himself and said defendant, Anna V. Kuzel, be paid, or security furnished therefor; that the suggestion was made to him that if he could not pay, he and the said defendant Anna V. Kuzel, give a mortgage on certain premises at that time owned by said defendant, Anna V. Kuzel; that he was informed that unless he should at once pay or furnish security for said obligations and certain other obligations asserted to exist, but disputed by him, he would be discharged from his employment as- assistant treasurer, of said company for his alleged misconduct and breaches of .duty as said officer, but that if he paid such obligations, or furnished satisfactory security therefor, he would be retained in his position, which would give him time to make collections of certain debts outstanding for which he was security, with others, to the bank; that on said September 14, 1907, he, with his wife, acting through his procurement, executed the note and mortgage described in the plaintiff’s petition, and delivered the same to said the Dime Savings & Banking Co. to secure the payment of all obligations then or thereafter legally owing from said defendants, Anna Y. Kuzel and'Joseph H.-Kuzel, or either of them, to said company; that the amount of the note given was $10,000, payable one year after date, with interest at six per cent, per annum, payable semi-annually on the 15th day of June and December of each year until paid, all overdue interest to draw interest at the rate of eight per cent, per annum, payable semi-annually until paid; that the amount of said note was fixed at the estimated value of the equity of said defendants, Anna Y. Kuzel and Joseph H. Kuzel, in the property covered by the mortgage given; that after the execution of said note and mortgage, they were duly assigned to the plaintiff, the Citizens Savings & Trust Co.; that subsequent to the. execution and delivery of the $10,000 note and mortgage, said the Dime Savings & Banking Co. demanded of said defendant, Joseph H. Kuzel, that lie give a demand note for the sum of $11,800 to cover the same indebtedness represented by the $10,000 note and mortgage except the $500 note and the $1,600 note, on which both he and the defendant, Anna V. Kuzel, were liable, and certain additional items of indebtedness; that in compliance with this demand, he, on December 15, 1907, executed such a note; that about the same time he also executed a demand note to the bank for $2,000 with interest, which was accepted by it to evidence the same indebtedness represented by the $1,600 note of the said Anna Y. Kuzel and Joseph H. Kuzel, before referred to, including the unpaid interest thereon, and that thereupon said the Dime Savings & Banking Co., caused a credit of $1,600 and interest to be placed on the ledger card of the $1,600 note; that the $1,600 note has at all times been retained and held by the company and its assigns; that there was attached as collateral to said $1,600 notes a life insurance policy payable to the estate of Joseph H. Kuzel, for $2,000 and a certificate for 100 shares of the common capital stock of the Lake Shore Electric Ry. Co.; that after the credit was made on the ledger card of the $1,600 note, the certificate of stock was transferred as collateral to said $2,000 note, and the life insurance policy was thereafter carried with said $11,800 notethat the $2,000 note has not been paid, and that all money paid on said debt and previous credits thereon, have been credits on said $1,600 note; that neither the Dime Savings & Banking Co. nor any of its directors, officers or agents, ever made any false representations, threats or intimations to the defendant, Anna Y. Kuzel, nor did the Dime Savings & Banking Co., nor any of its directors, officers or agents, other than the defendant, Joseph H. Kuzel, make any representations to the said Anna Y. Kuzel about said note and mortgage, and that she had full and free opportunity at the time she executed the same, to read and examine said note and mortgage; that the said defendant, Arina Y. Kuzel, was not informed as to the various matters set forth in the finding of facts concerning the condition of the bank by anyone representing the bank, and that she had no knowledge thereof other than as may have been communicated to her by her said husband, Joseph H. Kuzel.

As conclusions of law, from the facts found, the court of common pleas found that there was due the plaintiff, the Citizens Savings & Trust Co., from the defendants, Anna V. Kuzel and Joseph H. Kuzel, jointly and severally on their two notes for $500 and $1,600, the sum of $2,850.62, with interest from September 1, 1911; that there was due the plaintiff from the defendant, Joseph H. Kuzel, including said sum of $2,850.62 and interest, the sum of $10,314.52, with interest from the first day of the September term of court, 1911; that said note and mortgage for $10,000 given by the said Anna V. Kuzel and Joseph H. Kuzel secured all the indebtedness found to be owing the plaintiff by said parties, and that “there is now due plaintiff on said $10,000 note and mortgage from defendants, Anna V. Kuzel and Joseph H. Kuzel, the sum of $10,314.52 and interest thereon from the first day of this term of court”; and that to secure the payment of said sum said plaintiff had and holds the best lien on the property in the decree described, subject only to the lien of the defendant Harriet M. Elsworth.

Before this case was heard in this court, the property involved in the foreclosure proceeding was sold at sheriff’s sale under the decree of foreclosure, to the plaintiff, and after payment of the costs and prior liens out of the proceeds of the sale, there was paid to the plaintiff the balance remaining, which amounted to only $692.29.

It is contended by the plaintiff in error, Anna V. Kuzel, that there was a failure of consideration for the giving of the mortgage on her property, except as to the indebtedness to the bank for which she was jointly liable with her husband, the defendant, 'Joseph H. Kuzel; that since such indebtedness was represented by only the $500 note and the $1,600 note referred to, the mortgage when given secured only the amounts due on those two notes, and did not, by reason of want of consideration, secure any of her husband’s individual indebtedness; that after the giving of said mortgage, the transaction that took place concerning the $1,600 note, as above detailed, constituted a payment and discharge thereof, leaving the $500 note with interest thereon, the only indebtedness secured by said mortgage, at the time of the trial in the court of common pleas.

A reversal is sought of all findings in the court below, not in accord with these contentions.

The amount due on the $500 note, conceded to have been secured by the mortgage, was in excess of the amount received by the plaintiff in error, on the distribution of the proceeds of the sheriff’s sale, and the plaintiff in error insists that there is, therefore, no prejudicial error in the decree of the court below, so far as the mortgaged property and the application of the proceeds thereupon, are concerned. This proposition, limited to the effect of any error committed by the trial court, upon the title to the property sold, and the distribution of the proceeds, is well founded.

Section 11702 G. C., provides:

“If a judgment, in satisfaction of which lands or tenements are sold, be thereafter reversed, such reversal shall not defeat the title of the purchaser. In such case restitution must be made by the judgment creditor, of the money for which such lands or tenements were sold, with lawful interest from the day of sale.”

It is clear, therefore, that reversal of the judgment of the court of common pleas could not defeat the title of the purchaser of the mortgaged premises, and it is equally clear that the plaintiff could not be required to make restitution of so much of the proceeds of the sale as it has received, since it did not receive as much as was admittedly secured by the mortgage.

In another way, however, the' plaintiff in error may be prejudiced if the findings of law and the judgment of the court below were not correct. The finding of the court of the amounts due from the defendant, Anna V. Kuzel, on the various notes, ás set forth in the decree, although no personal judgment therefor was rendered against her, is a judicial determination of the validity of the indebtedness, and execution may issue for the deficiency left after crediting the amount, received from the sale of the premises. Giddings v. Barney, 31 Ohio St. 80.

Of the errors complained of, therefore, only those need be considered that relate to the several amounts found due the plaintiff from the defendant, Anna V. Kuzel, since it is only in respect to these that she can be prejudiced by any error found in- the findings and decree of the court beloV.

The validity of the $500 note'being admitted, no further attention need be given it.

As to the $1,600" note on which the defendant, Anna V. Kuzel', was jointly liable with her husband, it is claimed that by taking the note of December 15, 1907, for $2,000 signed by Joseph II. Kuzel alone, to evidence the same debt, represented by the one for $1,600 and interest thereon, crediting the ledger card of the latter note with the amount of the former, and shifting, the collateral from the earlier to the later notes, the bank released the defendant, Anna V. Kuzel. ■

■ In our opinion the facts do not justify this conclusion. The taking of a note for a debt does not constitute payment of the debt unless such is the agreement, and the facts disclose no such agreement. The amount realized from the collateral and the interest paid on the $2,000 note have been credited'on the one for $1,600 which was never surrendered. The entering of credits on the ledger card of the $1,600 note was according to the usage of the bank and was a mere matter of ‘bookkeeping, and did not indicate that the note had been paid. Nothing in the facts’found would justify the conclusion of law that this note had been paid, or. that Mrs. Kuzel had been.released .therefrom. The finding, therefore, that there was due the plaintiff from Anna V. Kuzel and Joseph H. Kuzel jointly and severally, on the notes for $500 and $1,600 the. sum of $2,850.62, with interest from September 1' 1911, is sustained.

The only remaining question relates to the correctness of the finding that there was due from the defendants, Anna V. .Kuzel and Joseph II. Kuzel, on the $10,000 note and mortgage the sum-of $10,814.52 and interest.

The liability of Joseph H. Kuzel in this amount can not be disputed on the facts found. As to Anna Y. Kuzel $2,850.62 of this amount, with interest, has been heretofore considered, and the finding of an indebtedness on her part to this extent approved.

. If the Dime Savings & Banking Co. stood in the position of a holder for value of said $10,000 note, or if.the facts found. show a consideration for said note to the full extent, the finding, that the full amount thereof, with interest, was due the plaintiff from these defendants should stand, but if not, as against Anna V. Kuzel, the finding was erroneous, and the amount ex: cessive by the difference between $10,314.52 and $2,850.62.

We are of opinion that the mere continuance of Mr. Kuzel in his employment, and the fact that the bank did not bring suit on the paper in its possession, and the other facts relied upon, did not furnish a new consideration for the note and mortgage. If there were nothing in the facts showing any limitation upon the liability assumed by Mrs. Kuzel when she joined in the execution of the note and mortgage, it might well be contended that she was liable to the full amount under the principle of Pitts v. Foglesong, 37 Ohio St. 676 [41 Am. Rep. 540], where it was held:

“One, not induced by fraud, who indorses a negotiable promissory note owned by another, for his accommodation without restriction as to its use, is liable to an indorsee who receives it in good faith from the owner, before due, as collateral security for an antecedent debt of such owner, although there be no other consideration for giving such collateral.”

We find, however, by reference to the finding of - facts, that when the bank made its demands upon Mr. Kuzel for security for the liabilities of himself and Mrs. Kuzel, the suggestion was made to him, quoting from the finding, “that if he could not pay, he and Anna V. Kuzel give a mortgage on the premises in this decree described for such purpose. ’ ’ Again the facts inform us that the amount of the note given was fixed at the estimated value of the equity of said Joseph H. Kuzel and Anna Y. Kuzel in the property in the mortgage described.

The logical and reasonable inference from these facts is that it was the intention of the parties on both sides of the transaction, that- Mrs. Kuzel should convey her property by way of mortgage, to secure both her own indebtedness and that of her husband, but that she should not incur any personal obligation beyond that already owing by her. The giving of the note for $10,000 was a mere incident in the furnishing of the mortgage security which the bank had demanded, to secure the debts of the Kuzels, already existing, and such as might thereafter be created.

The mortgage security has been exhausted, and for the reasons suggested, neither of the plaintiffs in error has been prejudiced in any way by what took place in the court below with respect thereto, but the plaintiff in error Anna V. Kuzel is entitled to a reversal of so much of the judgment or decree as finds to be due from her to the defendant in error, the Citizens Savings & Trust Co., any amount in excess of $2,850.62, with interest from the first day of September, 1911.

The judgment of the court of common pleas is therefore reversed, but the facts being before us, and the error found consisting of a finding of law, not warranted by the facts, the judgment will be rendered by this court which should have been rendered by the court below.

Marvin and Winch, JJ., concur.


author: NEMAN, J.

text:
    CORPORATIONS
    [Cuyahoga (8th) Circuit Court,
    February 13, 1912.]
    Marvin, Winch and Niman, JJ.
    P. C. O’Brien Co. v. Western Seamen’s Friend Society.
    1. Presumption as to Knowledge of Directors of a Corporation.
    For the purpose of protecting the rights of innocent third persons, the knowledge of the directors of a corporation of those things which, in the exercise of their official duties, they ought to know, will be presumed.
    2. Ratification of Beneficial, Unauthorized Acts of Agents.
    A corporation may ratify the unauthorized acts of its agents, and no formal resolution of the board of directors is necessary for that purpose, and if the unauthorized act of an agent of a corporation is clearly beneficial to the corporation, a presumption of ratification will arise from slight circumstances.
    3. Corporation Operating Hotel for Accommodation of Sailors, Liable for Groceries Supplied, though not Formally Ordered by Directors.
    The Western Seamen’s Friend Society, incorporated under special act in 1850, whose purpose is the disseminating of moral and religious instruction and other charities amongst sailors and boatmen doing business on our western waters, and having power in furtherance of this purpose “to acquire, possess and enjoy, sell, convey and dispose of property, real and personal or mixed, whether acquired by purchase, gift,' devise or legacy, also of all property of which the society is now the legal and rightful owner; provided the annual income thereof shall not exceed the sum of $40,000, having purchased hotel ■ property particularly adapted to the accommodation of sailors, and operated it as such, purchasing groceries .therefor, from which operation it received a profit, is liable for the groceries so purchased.
    Error.

      M:P. Mooney, for plaintiff in error.

      J. M. Shalleriberger, for defendant in error.
   NEMAN, J.

The parties to this proceeding in error stand in the same relation as in the court of common pleas. Upon the trial of the case,-after all the evidence was in on both sides, the court, upon motion of the defendant, directed the jury to return a verdict ■for the defendant. - For alleged error of the trial court in thus directing a verdict, the plaintiff in error seeks'a reversal of the judgment against it.

The plaintiff’s action in the court of common pleas was brought to recover the sum of $359.87 for groceries claimed to have been furnished the defendant, in its operation of the Kim-ball Hotel, formerly the Hotel Bethel, in the city of Cleveland.

While the delivery to the hotel of the groceries is not denied, it is claimed that the. board of directors never authorized the operation of a hotel and the purchasing of the groceries.

The defendant in error purchased the land and building at the corner of Spring street and Superior avenue in the city of Cleveland on March 15, 1905, from the Cleveland Bethel Union. ■At that time the property was used by the Cleveland Bethel Union as a hotel, known as the Hotel Bethel, which was managed by one Fitzpatrick, on behalf of the owner. On March 15, 1905, at the time of the purchase of the property, Fitzpatrick was- instructed by a Mr. McMahon, the general superintendent of the defendant in error, and a member of the board of directors, to continue in the management of the hotel as he had been doing. The hotel was managed by Fitzpatrick from that date to some time in September, 1908. During that period of time he received a salary, and the surplus earnings of the hotel were turned over by him monthly to the secretary and treasurer of the Western Seamen’s Friend Society, and were by that official deposited to the bank account of the society, and used by it for its purposes. The groceries,- for the price of which the plaintiff sued, were furnished to the hotel thus under Fitzpatrick’s management, between the first of August and the first of September, 1908. .. Previous to this and during, the entire period from March 15, 1905, to August 1, 1908, the plaintiff in error had furnished groceries to the hotel, which had been paid for by Fitzpatrick out of funds realized from the operation of the hotel. These payments had been accounted for by Fitzpatrick to the secretary and treasurer of the Western Seamen’s Friend Society, in statements rendered from time to time.

On this state of facts, and by reason of other facts not herein' enumerated, there was evidence of authority,' or of ratification, to be submitted to the jury, if the defendant in error could under any circumstances be held liable for a claim of the kind sued for, and incurred for the purpose, and in the manner, indicated.

It is a principle of law that for the purpose of protecting the rights of innocent third persons, the knowledge of the directors of a corporation of those things which, in the exercise of their official duties, they ought to know, will be presumed, Arlington v. Price, 122 Mass. 270; Murray v. Nelson Lumber Co., 143 Mass. 250 [9 N. E. 634], The law is clearly settled that a corporation may ratify the unauthorized acts of its agents, and no formal resolution of the board of directors is necessary for that purpose, and if the unauthorized act of an agent of a corporation is clearly beneficial to the corporation, a presumption of ratification will arise from slight circumstances. Washington Savings Bank v. Butchers’ & Drovers’ Bank, 107 Mo. 133 [17 S. W. 644; 28 Am. St. 405].

But it is contended by the defendant in error,. that it is a charitable corporation, and so limited by its charter rights that it had no authority to engage in the business of operating a hotel, and that, even though it received and used the groceries it can not be required to pay for them.

The question presented by this contention requires a consideration of the precise corporate powers conferred upon the defendant in error by the act of its creation.

The Western Seamen’s Friend Society was incorporated by a special act of the Legislature of Ohio, passed on February 23, 1850. By this act the corporation was created ‘ ‘ for the purpose of disseminating moral and religious instruction, and other charities amongst sailors and boatmen doing business on our western waters.”

The powers conferred upon it are expressed in the following language:

‘ ‘ And as such shall continue and have perpetual succession, with power to contract and be contracted with, prosecuting and defending suits, in all courts of law and equity, and to acquire, possess and enjoy, sell, convey and dispose of property, real and personal, or mixed, whether acquired by purchase, gift, devise or legacy, also of all property of which the society is now the legal and rightful owner; provided the annual income thereof shall not exceed the sum of forty thousand dollars.
“Sec. 2. The society shall have power to establish minor or lesser institutions, newspapers, magazines and such other auxiliaries in furtherance of its said object as may be deemed necessary, to have and use a common seal, and to change, alter or renew the same at pleasure, and to make, alter and amend such constitution and by-laws, rules and regulations for its government, the number and election of officers and admission of membership, as it may deem necessary and expedient.”

If the Western Seamen’s Friend Society has any authority to engage in the operation of a hotel, such authority must be founded on an implied power of the corporation, since the language above does not expressly empower it to engage in such an enterprise.

The doctrine of the implied powers of corporations has been liberally applied in Ohio, and has been invoked to- sanction not only those acts of a corporation necessary and indispensable to the enjoyment of powers expressly given, but those that are appropriate, convenient and suitable for the accomplishment of the purpose of its creation, and a reasonable choice is allowed in selecting the instrumentalities with which to accomplish such purpose.

The principles to be applied in determining whether a corporation is acting within its implied powers, are laid down in Central Ohio Natural Gas & Fuel Co. v. Capital City Dairy Co., 60 Ohio St. 96 [53 N. E. 711; 64 L. R. A. 395], a part of the syllabus of which reads as follows:

£ ‘ The implied powers which a corporation has in order to carry into effect those expressly granted, and accomplish the purposes of its creation, are not limited to such as are indispensable for these purposes, but comprise all that áre necessary in the sense of appropriate, convenient and suitable, including the right of reasonable choice of means to be employed.”

The same principles should be resorted to as are applied in ascertaining those of a corporation for profit in determining the implied powers of a charitable corporation. Reverting to the act whereby the Western Seamen’s Friend Society was created, it will be seen that the express powers granted it are very broad. While its purpose is the “disseminating of moral and religious instruction, and other charities amongst sailors and boatmen doing business on our western waters,” it is given power, in furtherance of this purpose, “to acquire, possess and enjoy, sell, convey and dispose of property, real and personal or mixed, whether acquired by purchase, gift, devise or legacy, also of all property of which the society is now the legal and rightful owner ; provided the annual income thereof shall not exceed the sum of forty thousand dollars.”

The purchase of the hotel property was clearly within the power of the defendant in error. Having by the exercise of authority expressly given it, acquired property, long used as a hotel, and therefore suitable for that purpose, and perhaps suitable for no other purpose, when it undertook to devote that property to a use, from which it might reasonably expect to receive a profit for use in its charities, while at the same time it was maintaining an establishment, to which men of the class whose condition it was the purpose of the corporation to improve, might resort for board and lodging, was it acting outside of its implied power ?

In the light of all the circumstances, considering the purpose of the corporation, and the character of the property, and the use to which it had previously been put, we are of opinion that the question propounded must be answered in the negative. The proviso in the act of incorporation, that the annual income of' the property of the corporation should not exceed ■ forty thousand dollars, implies the right to devote its property to some income producing purpose. The Legislature, by the act of incorporation, also gave the corporation power to establish “newspapers, magazines and such other auxiliaries, in furtherance of its said object as may be deemed necessary. ’ ’ It would seem that by virtue of this power to establish “other auxiliaries,” the operation of a hotel on its own property previously devoted to such purpose and fitted for its continuance, where sailors and boatmen doing business on our western waters might seek accommodations, would not do violence to the principle that a corporation has the right of. reasonable choice of appropriate, convenient and suitable means of exercising and enjoying the powers expressly granted it.

Biit few eases involving the implied powers of charitable, corporations, oí corporations of a kindred nature, seem to have arisen, doubtless because the number of such is small compared to corporations for profit, but in Dunn v. Agricultural Society, 46 Ohio St. 93 [18 N. E. 496; 1 L. R. A. 754; 15 Am. St. 556], it was held that the power granted to those composing an agricultural society to “perform all such acts as they deem best calculated to promote the agricultural and household manufacturing interests,” conferred .ample authority to hold fairs and charge for admission to them, and in Moss v. Hufeth Academy, 54 Tenn. 283, an educational, corporation was held to have the power to borrow money for use in effecting the corporate purpose, the court saying, “the .power might be fairly implied as a usual and appropriate means .to accomplish the objects of the charter. ’ ’

We. do not intend to decide that under other circumstances a charitable corporation, such as the defendant in error, would have the right to embark in the hotel business. ' We recognize the limitations placed upon the activities of corporations of this kind, and the views here expressed are based entirely upon the special facts before us in the evidence. We consider a further quotation from the syllabus of the case of Central Ohio Natural Gas & Fuel Co. v. Capital City Dairy Co. supra, applicable to the situation before us:

“Acts of a corporation, which if standing alone or engaged in as a business, would be beyond its implied powers, are not necessarily ultra vires when they are incidental to, or form part of, an entire transaction, that in its general scope is within-the corporate purpose. The validity of such a transaction is to be determined from its general character considered as a whole, rather than by segregation into individual facts, and each regarded as distinct from the others.”

If the transactions by which the groceries were furnished by the plaintiff in error to the defendant in error were to be held to be outside the implied powers of the defendant in error, there is another ground on which thes defense urged should not be sustained. The contract sued on is an executed one. ' The groceries have been furnished to the defendant in error and used by it. In all the transactions arising out of the operation Of the hotel considered as a whole up to the time the groceries in question were furnished, the defendant in error has received a profit, $2,800 having been turned'over to the society under the management of Fitzpatrick. It is claimed on behalf of the defendant in error that certain fixed charges such as interest, taxes and water rent would wipe out this supposed profit, but these charges would have to be paid no matter how the propérty was used, and at any rate, there was evidence tending to show a profit arising out of the conduct of the hotel during the period from March 15, 1905, to September 1, 1908.

The defendant in error is, therefore, in the position of having profited by the enterprise, which it is now claimed was in excess of its corporate powers. It has received the fruits of the contract between it and the plaintiff in error, but refuses to pay therefor.

The principle which we conceive should be applied in .such a case as this is stated in Larwell v. Hanover Savings Fund Society, 40 Ohio St. 274. We quote from the opinion, page 285:

‘ ‘ The tendency of the courts, based upon the strongest principles of justice, is to enforce contracts against corporations, although in entering into them they may have transcended their chartered power, when they have received the consideration and the benefit of the contract, and it seems to be now the well established rule, that when .a contract, not illegal, has been executed and fully performed on the part, either of the corporation or of the other contracting party, neither will be heard to object that the contract and such performance were not within the legitimate powers of the corporation.”

See also Herrick v. Wardwell, 58 Ohio St., 294, 308 [50 N. E. 903]; Norwalk Savings Bank v. Norwalk Metal Spinning & Stamping Co., 7 Circ. Dec. 275 (14 R. 1) affirmed 60 Ohio St. 603 [54 N. E. 1106]; Bates v. Peoples Savings and Loan Assn. 42 Ohio St. 655; Hays v. Galion Gas, L. & C. Co., 29 Ohio St. 340; Armstrong v. Karshner, 47 Ohio St. 276 [24 N. E. 897]; Whitney Arms Co. v. Barlow, 63 N. Y. 62 [20 Am. Rep. 504]; Chester Glass Co. v. Dewey, 16 Mass. 94 [8 Am. Dec. 128].

We think that the defendant in error, even though a charitable corporation, having received and consumed the goods of the plaintiff in error, under the circumstances and with the result detailed, should be estopped from asserting that its contract under which they were furnished was ultra vires.

We are of opinion, for the reasons announced, that the motion to direct a verdict should not have been granted, and the judgment of the court of common pleas is reversed and the cause remanded for further proceedings according to law.


text:
    APPEAL — COURTS—JUSTICE OF THE PEACE
    [Cuyahoga (8th) Circuit Court,
    February 12, 1912.]
    Marvin., Winch and Niman, JJ.
    M. Swee et al v. Louise Bregenzer.
    Appeal from Justice Court on Action for Money Had and Received on Rescinded Land Contract.
    A justice of the peace has jurisdiction of an action for money had and received, though that money was had and received as part payment on a contract for the conveyance of real estate, defendant refusing to convey and plaintiff electing to treat the contract as rescinded; hence such action is appealable to the common pleas court.
    Error.

      James Metzenbaum, for plaintiff in error.

      Halle & Geisner, for defendant in error.
   NIMAN, J.

The plaintiffs in error sued the defendant in error in the court of a justice of the peace. The bill of particulars stated a cause of action for money had and received. A judgment having been rendered in the justice court against the defendant in error, she appealed the case to the court of common pleas. The petition filed in that court, after averring that the case came into the court on appeal, from the court of the justice of the peace, stated a cause of action in the following language:

“Plaintiffs for their further cause of action, say, that on or about April 19, 1909, plaintiffs paid to this defendant the sum of one hundred ($100) dollars for and in consideration of the defendant promising and agreeing in writing, to convey to these plaintiffs a certain parcel of property.
“Plaintiffs further say that said defendant received said sum of money, but has never conveyed said premises to these plaintiffs, and has instead, conveyed said premises to other persons, and has failed, neglected and refused to convey said premises to plaintiffs, or either of them, though demanded by plaintiffs.
‘ ‘ The plaintiffs further say that they have made demand of said defendant for said sum so had and received by this defendant of said plaintiffs, but that said defendant has wholly failed, refused and neglected to return said sum to said plaintiffs. ’ ’

The defendant in error filed a motion in the court of common pleas to dismiss the action, on thé ground that the cause of action stated in the petition was on a contract for the purchase of real estate, and that the justice of the peace had no jurisdiction of such an action, and that the court of common pleas had no jurisdiction thereof on appeal.

This motion was granted, and by this proceeding in error we are asked to reverse the judgment of the court below in dismissing the action.

Section 10232 G. C. provides that justices shall not have cognizance of any action on contracts for real estate.

If the cause of action set forth in the petition is one on a contract for real estate, the court of common pleas would have no jurisdiction over it on appeal against the objections of the defendant, unless she expressly or impliedly waived her right to object. ■ ■ • . .

The identity of the cause of action stated in the petition with that set forth in the bill of-particulars is clear.- The latter in brief terms states a claim for money had and received, while the former alleges with greater detail the facts from which the law implies an obligation of the same character as that which was the foundation of the action in the justice court.

The cause of action is not based upon any stipulation in the contract referred to in the petition. That contract, according to the allegations of the petition, is no longer subsisting. It has been rescinded by the defendant, and the plaintiffs, accepting that rescission, and recognizing that the contract has no longer any existence, sue to recover the money paid by them while it was a subsisting contract. In such a case the law raises an obligation which may be enforced in an action as for money had and received. While it may be necessary for the plaintiffs to resort to the contract as evidence to establish their right to recover, the action itself is not on the contract. In these views we are supported by Halloway v. Davis, Wright, 460, the syllabus of which reads:

“Where money has been paid on a contract which has been rescinded, or put an end to, or which the defendant has refused to perform, it may be recovered back in an action for money had and received.”

It was also held in Middleport Woolen Mills Co. v. Titus, 35 Ohio St. 253, as follows:

“Where money has been paid on a contract which has been subsequently rescinded, and the payment of the money is the only thing remaining to be done, a petition for money had and received is sufficient; but while the contract is subsisting'the action can only be brought on the agreement.”

See also English v. Brooks, 4 Dec. Re. 120 [1 Clev. Rep. 43]; Newman v. McGregor, 5 Ohio 349 [24 Am. Dec. 293]; Brown v. Timmany, 20 Ohio 87.

It follows from the conclusion stated as to the nature of the cause of action set forth in the plaintiffs’ petition, that it was one which the justice of the peace had jurisdiction, and' being in the court of common pleas' on appeal, that court had jurisdiction, and the motion to dismiss should not have'been granted.

The judgment of the court of common pleas is reversed and the cause remanded for further proceedings according to law.

Marvin and Winch, . JJ., concur.


author: MARVIN, J.

text:
    MECHANICS’ LIENS
    [Cuyahoga (8th) Circuit Court,
    June 7, 1910.]
    Hénry, Marvin and Winch, JJ.'
    Joseph Gross v. Frank Lukas.
    Lien for Work made Necessary by: Mistake of Architect.'
    When extra work on a house, made necessary by a mistake of the architect, is ordered by him under an arrangement with, the owner that the architect would pay for, it, the contractor who does tie extra work may have á lien therefor upon the interest •of the owner in the premises, notwithstanding he has knowledge of the arrangement between the architect and the owner that the former would pay the bill'.-
    Error.

      Hidy, Klein & Harris, for plaintiff in error.

      Benjamin Parmely, Jr., for defendant in error.
   MARVIN, J.

Suit was brought by Lukas against Gross upon an attested account and to foreclose a mechanic’s lien. , The facts are that Gross engaged a contractor to build a house for him; the work of building said house was to be under the supervision of an architect named. By error on the part of the architect a mistake was made in building a bay window on the side of the house which brought it so near to the adjoining lot line as to be obnoxious to the building code of the city of Cleveland, in which city this building was being erected. The attention of the architect, the builder and the owner being called to this by the city authorities, the architect agreed at his own expense to remove this bay window, and build one at another place on the house, which would not be in violation of the building code. This change was made, but unhappily the architect did not pay for it. The contractor was put to the expense of this change, and for the labor and material upon it he made out an account and perfected a lien upon the premises, if he was entitled to any lien.

The claim made here is that Gross the owner was under no obligation to pay the contractor; that.he (the contractor) was bound to look to the architect. It is urged first on behalf of the plaintiff in error that the allegation of the petition that the work was done and the material furnished at the request of the agent and architect of the owner does not make such an averment such as entitled the plaintiff to take out a lien, the language of the statute being that such lien can be taken out when the work or material is furnished “by virtue of a contract, express or implied, with the owner, or the authorized agent of the owner.” The petition here alleges that Harry Cohen was.the agent and architect for the owner and seems to us clearly to bring the case within the statute and makes the petition good. The allegation being that the work was done and material furnished “at the request of the agent” is a sufficient allegation that through this agent the owner made an implied promise to pay for this work and material, The arrangement between the owner and the architect that the architect would pay for the work was not binding upon the contractor, even though he knew of that arrangement. He had a right, as we think, to do this work, and furnish this material for the alteration in this house, by the direction of the architect, with the implied promise on the part of the owner that he would pay for it, even though he (the contractor) knew that this extra expense had been caused by the negligence of the architect and that he had agreed to pay for it.

We think that the result reached in the court of common pleas is right, and the judgment of the court is affirmed.

Henry and Winch, JJ., concur.


text:
    CORPORATIONS
    [Cuyahoga (8th) Circuit Court,
    June 7, 1910.]
    Henry, Marvin and Winch, JJ.

      Grabler Manufacturing Co. v. T. J. Leahy.
    Corporation Bound by Contract Made by Secretary with Knowledge and Approval of President.
    When a by-law of a corporation provides that its contracts can be made only by its president, a contract made by its secretary, of which the president had knowledge and approved, is binding upon the corporation.
    Error.

      Weed, Miller & Rothenberg, for plaintiff in error.

      Tanney & Barber, for defendant in error. ■

      Affirmed no opinion, Grabler Mfg. Co. v. Leahy, 85 Ohio St. 442.

   MARVIN, J.

Leahy brought suit against the Grabler Manufacturing Co. to recover for money which he claimed to be due upon a contract entered into between himself and the company. The whole question involved here is whether there was a contract between the parties. A writing was made out which, if it is a contract binding upon the company, entitled the plaintiff below to the recovery which he had. This writing, which is in the form of a contract, is signed with the name of “The Grabler Manufacturing Company, William S. Bayer, Sec.”

It is conceded that Bayer was the secretary of the company at the date of this writing, and that his name appearing upon the writing, as above stated, was written by him. It is conceded that the secretary was not authorized by the board of directors of the corporation to make this contract, and that a by-law of the board provides that contracts can be made only by the president of the board. But the defendant in error says that though the secretary was not authorized on behalf of the company to bind it by this contract, its conduct in relation to the writing after it was executed was a ratification on the part of the corporation of the contract.

In its charge to the jury the court told them that the secretary had no authority to make this contract, but, he said:

“ It is admitted, gentlemen of the jury, in the case, that the president of the defendant corporation, Mr. Rosenfeld, had the power and the authority to make the contract or make such a contract as .was made in this case, and the only issue here is whether or not he did make it. If he approved of a contract made by the secretary of that corporation, then that act of approval on his part would find it. No claim is made here that Mr. Rosenfeld, as president, signed the corporate name of the company to this contract, but the claim is made here that, having the power to approve of the contract, the evidence shows that his contract and acts were such as to warrant the belief that he did approve, that he did know of a contract which had been signed by the secretary and that, as a matter of fact, he did approve it.”

Certain propositions were asked by the defendant below to be given to the jury. These were not given except in so far as they are given in the general charge. Without stopping to •read them, we think the propositions were sufficiently well covered by the charge as given. The only serious doubt that we have in the matter is whether the court was sufficiently specific in instructing the jury that to make the conduct of the president a ratification of the contract it must be shown that the president at the time of such ratification, had knowledge of the contract.. But on the whole we are of opinion that the language used, which has already been quoted, would be understood by the jury to.require a knowledge on the part of the president, before his conduct in relation to the contract could constitute a ratification, and so finding we reach the conclusion that there is no error apparent on the record and the judgment of the court of common pleas is affirmed.

Henry and Winch, JJ., concur.


text:
    DAMAGES — DEATH—EVIDENCE
    [Cuyahoga (8th) Circuit Court,
    June 28, 1910.]
    Henry, Marvin and Winch, JJ.
    William Becker v. Jennie Howanyecz, Admx.
    1. Liability of Owner of Team for Death of Child Establlshed-by Proof of Agency of Driver.
    In an action against the owner of a wagon for death from wrongful-act occurring through the negligence of a driver of the wagon In running over an infant playing in the street, the fact that the driver was in charge of and driving the team attached to the wagon sufficiently established his agency- so as to charge the owner thereof with liability.
    2. Verdict of $800 for Death of Two Year Child not Excessive.
    A verdict of $800 for the death of an infant two years old will not be set aside as excessive, even though there was no evidence introduced as to the probable length of life of the infant or as to what it would probably have contributed to the support of the beneficiaries of the judgment, if it had lived.
    Error.

      Eigley, Maurer & Dautel and P. L. A. Lieghley, for plaintiff in error.

      Joseph L. Stern, for defendant in error.
   MARVIN, J.

The parties here stand in the reverse order to that in which they stood in the action in the court of common pleas. The terms plaintiff and defendant as used in this opinion will refer to the parties as they stood in the original action.

The plaintiff is the administrator of the estate of a deceased infant of about two years of age. The defendant is the owner of several large wagons, with teams, used for moving furniture and the like.

On the 17th day of October, 1907, the child whose estate is being administered upon by the plaintiff, ■ was killed on West 19th street in the city of Cleveland. The claim on the part of the plaintiff is that the child ran out into the street, got in front of a team of the defendant, driven along said street in connection with one of the large moving wagons, and was knocked down by one of the defendant’s horses in said team, and stepped upon by one of the defendant’s horses and killed; that the driver of the team was the agent of the defendant, and that he was negligent in that he did not keep a lookout in front of his team to see what might get in front of it, and this on a street where a good many children were accustomed to play. That the child was killed either by one of the horses in the team or by the wagon running over it, is not denied.

The evidence discloses that the team was being driven at a slow trot or jog. The driver himself testifies that some dogs on the ground were barking at a dog in the wagon of the defendant. The testimony of Mary Moran is that she being at a house adjoining the one in which the child lived, saw the child go out into the street; saw the feet of one of the horses strike the child; and saw the child fall and the horse step upon the child’s head. The driver of the team did not notice the child and drove on, but immediately following him was another team belonging to the defendant, the driver of which saw this accident. He stopped his team, picked up the dead child and delivered it to its mother, who had rushed out hearing the screams of Miss Moran, who testifies to having seen the accident. This driver of the second team says that the child ran under the wagon of the first team and not in front of the horses. Miss Moran testifies that the driver of the first team was striking his whip at the dogs which were barking on the ground, and also was not looking in such wise as to see what was in front of his team. This the driver of the first team denies. The driver of the second team does not know whether the driver of the first team was looking in such wise as to see what was in front of his horses or not, but does know he was giving some attention at least to the dog in the wagon. The testimony of Miss Moran directly conflicts with the testimony of the driver of the front or first team, but we find nothing improbable in her testimony, and are not surprised that the jury should have believed her testimony to be true. ' The jury was properly instructed as to what would constitute actionable negligence, and if they believed Miss Moran, as they might well do, they properly found that there was negligence on the part of this driver, who should have been looking out when his team was being driven along a street in a populous city, where children play in the street, to see what was in front of his team. He says he was. She says he was not. The jury believed her.

The brief of the defendant urges that the driver of the team which killed the child, either by being trodden upon by one of the horses, or by being crushed by the wagon, is not shown to be the agent of the defendant. It is shown by his testimony and by that of the other driver, that he was in charge of and driving the team of the defendant and this sufficiently establishes his agency, and so far for his negligence in the performance of his duty as driver of that team is concerned, the defendant, would be liable. The result in the court below was a verdict for $800 in favor of the plaintiff. No evidence was introduced as to the health of this child, or circumstances of the family of the child, except that the child had a mother and a young brother and sister. It is said on the part of the defendant that the damages, if any were to be recovered, were excessive, and that, indeed, without evidence as to the probable length of life of the child, and the probable aid that it would be to the family, nothing more than nominal damages should have been recovered in any event, and that surely the verdict for $800 is excessive.

In the case of Russel v. Sunbury, 37 Ohio St. 372 [41 Am. Rep. 523], the court on page 376 in the opinion uses this language:

‘ ‘ The law assumes that there is such a pecuniary loss to the widow and next of kin, and awards to them damages therefor.”

In the case of Ashtabula Rapid Transit Co. v. Dagenbach, 11 Circ. Dec., 307, 308, a recovery for $1,000 was sustained for the death of a boy five years of age, although no evidence was permitted to go to the jury as to what the boy might probably have been able to earn in aiding his father in his cigar factory. At page 310 of the opinion, Judge Laubie, speaking for the court, says that the father was a cigar maker and offered to show that he expected to use the boy to aid him in his work as such. This evidence was excluded, and though it might properly have been admitted, still in the absence of any evidence, as already stated, the court permitted the judgment to stand. The concluding paragraph of the opinion reads:

“While we might have been better satisfied with a less verdict, we are not prepared to say that it was a verdict that was rendered under prejudice or passion, or that it was clearly excessive within the meaning of the law, which allows the party to take advantage of such a question. We can not say that this verdict was manifestly wrong, and on the whole the case will have to be affirmed.”'

This judgment was affirmed, without report, by the Supreme Court. See Rapid Transit Co. v. Dagenbach, 67 Ohio St. 512.

In the case of Ellis v. Twiggs, 42 O. C. C. 96 (17 N. S. 172), which was a suit for the wrongful death of a wife, Judge Henry said, speaking for the court:

“ As to the measure of damages it is claimed that nothing is shown in the evidence regarding any actual pecuniary damages sustained by any of the next of kin, the husband and children of the deceased. We think it is unnecessary to show anything more than the fact of wifehood and motherhood to authorize substantial as distinguished from nominal damages.”

See, also, Lake Shore & M. S. Ry. Co. v. Murphy, 50 Ohio St. 135 [33 N. E. 403].

This was an action for wrongful death and in that ease it was urged that nothing was shown affirmatively as to the pecuniary loss to the beneficiaries. The court, however, sustained a verdict for the plaintiff.

We reach the conclusion that the court did not err in overruling the motion for a new trial on the ground that the verdict was not sustained by sufficient evidence, nor on the ground that the verdict was excessive. It is said, and properly too, that juries are not permitted to “guess” what the damages in this or in any other case will be, and this is correct, if the word “guess” is construed to mean “to reach a conclusion without any basis for it.” But the word may be used in such sense as to be misleading, because in all cases where a recovery is had for wrongful death, the damages are altogether uncertain. It can never be known how long the deceased would have lived but for the accident, nor what he or she would have contributed to the support of his or her family or next of kin. It can only be determined on probabilities. •

The language quoted from the opinion of Judge Laubie in Ashtabula Rapid Transit Co. v. Dagenbach, supra, expresses our views in reference to this ease, and the judgment is affirmed.

Henry and Winch, JJ., concur.