text:
    CONTROL OF COAL COMPANIES BY OHIO RAILWAY CORPORATIONS.
    Circuit Court of Franklin County.
    State, ex rel Attorney-General, v. The Hocking Valley Railway Co.
    Decided, April 24, 1909.

      Monopoly and Restraint of Trade — ■Illegal Ownership by Railway Company of Stock of Coal Mining Company — Guarantee, of Coal Mining Company Bonds by Single Railway or by Competing Railways is Ultra Vires — Ownership of Majority Stock of Competing Road— Construction by Goal Mining Company of Railroad as an Outlet— Does not Constitute such Co>al Mining Company a Railway or Kindred Company — Control and Combination may be Shown by Circumstances — Quo Warranto — Ouster as to the Illegal Acts — Sections 8S56 and 8800.

    1. A railway company, incorporated under the laws of Ohio, has no authority to acquire • and hold shares of the capital stock of a company incorporated to mine and deal in coal; and especially is this so when the shares of stock so held constitute a majority or controlling interest in such coal mining company.
    2. The control and management of a coal mining company by a railway company upon whose road the coal company is a shipper, through stock ownership, tends to monopoly and restriction of trade and competition, and is therefore unwarranted and illegal.
    3. An incidental purpose in the charter of a coal mining company to construct a railway from its mines to a railway or other outlet, does not constitute such coal mining company a railway or kindred company, so as to make applicable Sections 3300 or 3256, Revised Statutes, authorizing a railway company to subscribe for and hold stock in another railway or kindred company.
    4. The indorsement and guarantee of the bonds of a coal mining company by a railway company is ultra vires; and so also is an agreement between railroad companies operating parallel and naturally competing railroads to indorse and guarantee the bonds of a coal . mining company, in consideration of an equal division between the railway companies of all freight to and from the mines of the coal company.
    5. The ownership of a majority or 'controlling stock by one railway company'of another railway company owning and operating a line of railway a substantial part of which is, in its general nature, parallel to, and naturally and actually forming a part of a parallel and competing system to that of the stockholding company, is illegal and unwarranted.
    6. The control and management by one railway company of another operating parallel and competing lines or system of railways, through combination, may be shown by the circumstances; and a unity of stockholding interests together with unity of management pursuant to an established plan to that effect, is sufficient proof.
    7. In cases where the right is doubtful and has not been adjudicated or finally settled, and the illegal acts have not been persistent, defiant and flagrant, the appropriate relief to be afforded in an action of quo warranto against an offending corporation assuming to exercise unauthorized powers, is to stop the abuse by ousting the corporation from the right to do the illegal acts or continue the unauthorized business.

      Wade H. Ellis, Attorney-General, Smith W. Bennett and E. C. Morton, for plaintiff.

      James H. Hoyt, Doyle, Lewis & Shauffelberger, and C. O. Hunter, contra.
    Allread, J.; Sullivan, J., and Dustin, J., concur.
   This uction was brought to oust the defendant, the Hocking Valley Railway Company, from the exercise of its charter powers.

The charter .among other things authorizes the defendant 1o “acquire the real and personal property, road-beds, right-of-way fixtures and franchises formerly of the Columbus, Hocking Valley & Toledo Railway Company * * * and generally to possess, exercise and enjoy all the rights, liberties, faculties and franchises formerly of the said the Columbus, Hocking Valley & Toledo Railway Company and all the consolidated railroad corporations under the laws of Ohio.”

There are nine offenses charged, relating to the defendant’s ownership of stock in, control over and agreement with, certain coal mining and certain other railway corporations and of discriminations in transportation facilities.

The admissions of the pleadings and the evidence offered shov s that defendant was incorporated February 25, 1899, under the laws of this state as a railway company, and about the date of incorporation acquired by purchase at judicial sale under foreclosure proceedings in the United States Circuit Court' at Cincinnati, Ohio, the railroad and other properties of the Columbus, Hocking Valley & Toledo Railway Company.

The purchase was made and properties- acquired through a reorganization committee, and under a plan issued January 4, 1899, by J. P. Morgan & Company, who were the reorganization managers and afterwards the fiscal and financial agents of the defendant company.

The plan of reorganization was afterwards referred to, ratified and adopted by the stockholders ’ meeting.

The statement of property of the old company in the issued plan of reorganization contains among others the following:

All the stock (15,000 shares, face value $1,500,000) of the Hocking Coal & Railway Co., holding 10,000 acres of coal land in the Hocking valley district.

All the stock (2,000 shares, face value $200,000) of the Ohio Land & Railway Company, controlling about 10,975 acres in the same district.

The Buckeye Coal & Railway Company was incorporated under Ohio laws February 15, 1899, and succeeded by purchase to the properties of the Hocking Coal & Railway Company, and the stock passed.into the hands of the reorganization committee as a substitute for the stock- of the latter company, and thereafter all the stock (except five shares to qualify directors) passed to the defendant company. The Buckeye Company acquired control (either by lease or through stock ownership) of the lands and properties of the Ohio Land & Railway Company.

The charter of the Buckeye Company, in addition to coal mining and kindred purposes, contains authority to construct a railway from any mine, quarry or manufactory to any other railway, water navigation, or place within or upon the borders of Ohio.

The- Sunday Creek Coal Company was incorporated under Ohio laws in 1899 with a similar charter to the Buckeye Coal & Railway Company, and acquired and controlled about 12,000 to 13,000 acres of coal lands in Hocking district.

During the progress of the reorganization, or at least before finally concluded, J. P. Morgan & -Company -at the request of Mr. Monserrat, president of defendant company,-purchased a majority of the capital stock of ithe Sunday Creek Coal Company, viz., 7,643 preferred and 11,796 common, out of a total of 35,000 preferred and 22,500 common, paying therefor $342,860. This transaction was ratified by the board of directors of the defendant company May 4, 1899, and the stock with -other properties acquired by the reorganization -committee passed to the defendant. After the completion of the reorganization the defendant increased its holdings in the Sunday Creek Coal Company up to December 5, 1905, by the purchase of 5,296 preferred and 7,524 common, making a total of 13,939 preferred and 19,370 common.

The Continental Coal Company was incorporated under West Virginia charter January 24, 1902, and admitted to do business in Ohio February 1, 1902. On November 7, 1902, the defendant and the Toledo & Ohio Central Railway Company entered into an agreement with the Continental Company to receive and indorse and guarantee the bonds of the coal company in the amount of $2,750,000. This agreement was based upon the consideration on the one hand of the railway company’s obtaining the large traffic furnished by the coal company, and on the other hand to furnish the coal company with “needed working capital to enable it to improve and develop its mines .and to increase the capacity thereof and to -acquire additional equipment and other property.” The contract also provides for an equal division of the entire traffic of coal -and other freight coming from and to the properties of the coal company, and for a surrender -of all the stock of the company (34,995 shares) except five shares to maintain its existence, to J. P. Morgan & Company, trustees, who retain the legal.title and record ownership with full voting power, giving certificates of beneficial ownership to actual stockholders, the stockholding and voting trust to continue until the $2,750,000 guaranteed bonds .are lifted. On October 7, 1902-, the stockholders of the defendant company affirmed the tripartite contract-between the -two railroad companies and the coal companies, and also the authority-of J. P. Morgan & Company as syndicate managers.

The Continental Coal Company acquired 800 acres by purchase and 27,600 .acres by lease with 22 mines in operation and valued at $653,787.62.

The Sunday Creek Company was incorporated in New Jersey June 29, 1905. The New Jersey charter is very broad, but the authority in Ohio was limited to coal and other mining, manufacturing coke and dealing in coal and coke, and generally to transact all the business oonferredi on or permitted to be done by the laws of Ohio by a coal and railway company and a mining and manufacturing company organized under the laws of Ohio. The Sunday Creek Company took by purchase the properties- of the Sunday Creek Coal Company and by lease those of the Buckeye Coal & Railway Company. The Continental Coal Company and the Kanawha & Hocking Coal and Coke Company, the latter being a West Virginia mining company owning 21,300 acres- of coal lands in West Virginia valued at $1,050,000, and operating under lease on royalty basis also in West Virginia 10,900 acres valued'at $390,119.91, and coke ovens (381). valued at $207,803.87, making a total, Ohio and West .Virginia, of 100,501 acres of coal lands with 44 mines in operation and coke ovens valued at $4,464.885. It also became the owner -of the beneficial certificates of stock of the Continental Coal Company.

The Kanawha & Michigan Railway Company is a railway company owning and operating a railway extending from Corning, Perry county, Ohio, southwardly to Hobson near Middle-port, thence southwest by trackage arrangement over the Hocking Valley branch to a point opposite Point Pleasant, thence leaving the Hocking Valley tracks crossing the Ohio river into West Virginia to Gauley Bridge, a distance of 100 miles in West Virginia and 68 miles in Ohio.

Prior to June 4, 1903, a majority of stock of the K. & M. Ry. Co. was held by the T. & O. C. Ry. Co. and Avas operated by the same officers and in connection with the latter company, and as a connecting and continuous line.

On the date mentioned the defendant company acquired from the T. & O. C. Company the majority stock of the K. & M. Company in exchange for all the stock and bonds of the Zanesville & Western Railway Company.

From and after this, transfer a majority of .the directors of the K. & M. Company have been taken from the directorate of the defendant, and the president and managerial officers of the defendant have been assigned to similar positions in the K. & M. Company.

The Toledo & Ohio Central Railway Company is a railway company owning and operating a railway from Corning, Perry county, Ohio, north and northwesterly in two divisions to Toledo, Ohio, and the Great Lakes, and has been and is now operated in connection with the K. & M. as the southern extension to the Ohio river and into West Virginia.

At the time of the organization of the defendant company it was stipulated in the regulations adopted by the stockholders that 50,000 shares preferred and. 50,000 shares common stock of the defendant company (face value $10,000,000) should he reserved to be issued upon approval of S-. P. Morgan & Company, reorganization managers, under the plan of reorganisation dated January 4, 1899, for the purpose of acquiring Interests In the T. & O. C. Ry. Co. and the C. S. & H. Ry. Co. OP successors.

In'February, 1902, the defendant company purchased the Stock .and bonds of the Z. & W. Ry. Co., successors' of the C. S. & IT. Ry. Co., giving in exchange out of the reserved stock $1,* 000,000 preferred and $578,400 common.

It does not appear by any direct evidence that the stock of the T. & O. C. Co. has been received in exchange for reserved stock of the defendant, nor that the balance .of reserved stock amounting to $4,000,000 preferred and $4,421,600 common has been issued. But it is- admitted that a syndicate of individuals or corporations hold a substantial majority of the common stock of the defendant company, and that the same parties or their connections or allied interests hold a controlling, interest in the capital stock of the T. & O. C. The common stock of the defendant is $15,000,000, the preferred stock is the same, with equal voting power. Nothing appears as to the ownership of defend- . ant’s preferred.stock.. The president, majority of board of directors and managerial officers of the T. & O. C. are the same as the ■ defendant’s.

The Zanesville & Western Railway Company is an Ohio railway corporation which acquired the railroads and properties of the C. S. & IT. south and east .of Columbus extending from Thurston, a connection on the T. & O. C. south and east to Zanesville and the Hocking coal fields extending into these fields by several branches. All of .its stock and bonds were purchased by the defendant out of its reserved stock and afterwards transferred to the T. & O. C. Ry. Co.

The plan of reorganization of the Hocking Valley Railway Co. issued January 4, 1899, and ratified at the stockholders’ meeting of the Hocking Valley Railway Co. February 25, 1899, recites that the transportation of bituminous coal from mines or adjacent property is the principal business of the Hocking Valley Company, and that that business was strictly and intensely-competitive among the five companies, viz., the Hocking Valley, T. & O. C., C. S. & H., the B. & O. and B. & O. S. W., but particularly among the first named three, and declares that the plan of reorganization should be flexible enough to admit of their acquisition.

A reserve of $10,000,000 of preferred and common stock of the defendant was set apart by the stockholders to acquire these properties, and the Z. & W. was so acquired and exchanged for the majority stock of the K. & M. The controlling stock of the T. & O. C. was aequired-hy the syndicate and allied interests holding the common stock of the Hocking Valley Co., and the Hocking Valley officials took charge of the T. & O. C., the Z. & W. and the K. & M. These railways traversing by main line and by branches and extensions the Hocking coal fields, formerly intensely competitive, were now placed under one, or at least the same management.

The old Hocking Valley Railway Co. at the time of its reorganization held the stock of the Hocking Coal & Railway Co. and the Ohio Land & Railway Co. The former was taken over by the Buckeye Coal & Railway Co., which acquired, by lease or ownership stock, operating control of the Ohio Land & Railway Co., making 20,975 acres of coal lands in the Hocking district.

Before the reorganization was consummated the holdings of the Hocking Valley Co. in coal companies were, increased by purchase of a majority of stock in the Sunday Creek Coal Co., holding 12,000 to 13,000 acres, and then again by the agreement for the indorsement of the bonds and the surrender of the voting power of the stock of the Continental Coal Co. 28,400 acres more passed into Hocking control, so that at the time of the bringing of the suit over 60,000 acres of coal lands, valued at $2,800,-000, were held by coal companies whose controlling stock was held by the Hocking Valley Railway Co.

Since the súit has been pending the Sunday Creek Company of New Jersey has entered the field and taken over all the properties of the former companies under the Hocking Valley Company’s'control and acquired the large and valuable properties of the K. & M. Coal Co. in West Virginia, increasing the acreage to more than 300,000 in Ohio and West Virginia, valued at about $4,500,000.

The Sunday Creek Co., a merger, acquired by purchase the properties of the Sunday Creek Coal Company, 12,000 to 13,000 acres. The balance is held by it by lease or operating contract.

This merger, the Sunday Creek Company, mines and furnishes for transportation 84 per cent, of the output on the line of the T. & O. C. Ry., 58 per cent, on the K. & M., 55 per cent. on. the 71. & W., 39.9 per cent, on the Hocking Valley, and 34.7 per cent, in the Deavertown district, and distributes this large output not only to the nearby cities but through connecting railroads and the Great Lakes reaching the markets of our own state as well as Indiana, Illinois, Michigan and the northwest.-

In respect to ownership of stock in other corporations, it is a familiar principle in this state that the powers of a corporation under its charter and the incorporation acts are to be strictly construed, and upon no subject has this doctrine been more frequently and rigidly applied than with reference to acquisition and holding of stock in its own -and other corporations. Railway Co. v. Iron Co., 46 O. S., 44; Straus v. Eagle Ins. Co., 5 O. S., 59; Railroad v. Hinsdale, 45 O. S., 556; Copin v. Greenleaf, 38 O. S., 275; Railway v. Burke, 19 Bull., 27; Franklin Bank v. Commercial Bank, 36 O. S., 350.

In Franklin Bank of Cincinnati v. Bank, supra, Boyton, J., says (page 354):

“There would seem to be little doubt, either upon principle or authority, and independently of express statutory prohibition of the same, that one corporation can not become the owner of any portion of the capital stock of another corporation, unless authority to become such is clearly conferred by statute. * * * Were this not so, one corporation, by buying up the majority of the shares of the stock of another, could take the entire management of its business, however foreign such business might tie to that which the corporation so purchasing said shares was created to carry on. A banking corporation could become the operator of a railroad, or carry on the business of manufacturing, and any other corporation could engage in banking by obtaining the control of the bank’s stock. * * * This would not only be exercising powers granted to the plaintiff neither expressly nor by implication, but those which are clearly opposed to the manifest spirit and intent, if not to the language of the statute.”

Railway companies are classified .by statute, and Section 3300, Revised Statutes, deals with the subject of stock holding by railway companies in other corporations and permits them to become stockholders in other railway companies to aid in the construction of a connecting and non-oompetiing line. This authority is consistent with and in furtherance of the objects of the charter. Section 3546 authorizes a railroad company to take and own stock in a bridge company, and Section 3448 in .a union depot company. Both are consistent with the charter. The railroad company may and generally does build the bridges and depots; but in special cases it may aid by taking stock in an independent company.

Section 3842 confers power upon a railroad company to subscribe .stock in an elevator company, but limits the amount subscribed to a minority of one-third of the capital stock. This indicates a legislative intent of giving a railroad company, in the single case of holding stock in a company with which it deals, power to .aid but not control.

These -are the only statutes conferring upon railroad companies power to hold stock in other corporations.

Unless, therefore, express authority is found under general statutes fairly. extending to and including railway companies giving the additional power to hold stock -of other .companies, the principle laid down by Boyton, J., that the power of holding stocks unless expressly conferred does not exist, must be applied.

The corporation .act in its general scope confines corporations to a single main purpose and such collateral purposes as- may be incidental to the main purpose. This is intended by the Legislature to prevent the chartering of inonopolies and to classify and regulate corporations according to the stated purpose, State, ex rel, v. Taylor, 55 O. S., 61.

Counsel for defendant contend — citing eases supporting the contention — that the court will not go behind the corporation-entity of the subsidiary company or indentify the responsible Stock ownership. Those, however, are cases of contract or of Civil rights depending upon the corporation in its artificial capacity. It has never been held that the state may not call the corporation to account, not only for acts done openly and directly, but also for acts done indirectly or by a subterfuge.

Williams, J., in Gas & Fuel Co. v. Dairy Co., 60 O. S., 96-106, lays down the rule:

“When the action of a corporation is challenged by the sovereignity which gave it existence, or by whose favor it is permitted to pursue its business, it may be required to show a clear warrant for the acts so called in question; while in suits between individuals and corporations, or between corporate bodies where private rights are involved, the rule is not inflexible, and yields to considerations of right and justice.”

In the case of State, ex rel, v. Standard Oil Co., 49 O. S., 137, it was held that the fiction of incorporation may be ignored by the state-in calling into question powers exercised by or through a corporation; and that the state is not bound by the mere form in which a transaction is clothed.

In the case of The Northern Securities Co. v. Ü. S., 193 U. S., 197, it was contended that the securities company had a lawful right to hold the controlling stock of competing railway com-parties as an, investment and should not be held accountable for a resulting course of conduct by the railway companies as to competition; but the court looked to the substance of the transaction rather than the form, holding the combination of competing companies through the medium of a holding company to be unlawful.

The following cases also support the view that a holding company can not escape the responsibility following from ownership of a majority of stock: Burrows v. Metropolitan Co., 156 Fed., 389; Distilling Co. v. People, 156 Ill., 491; State, ex rel, v. Standard Oil Co., 194 Mo., 124; People v. Chicago Gas Co., 130 Ill., 268; Dunbar v. American Telephone Co., 224 Ill., 9; Bigelow v. Calumet & Heckla Mining Co., 155 Fed., 869; Farmers Loan & Trust Co. v. Ry. Co., 150 N. Y., 410; Pearsall v. Great Northern Ry. Co., 161 U. S., 646.

It is urged that express power to hold the coal eompaiiy atoefca i§ lotind iti iéitíoii 6266, Revised Statutes, which aihotig other things provides :

“And a private Corporation may purchase or otherwise acquire and hold shares of stock in other kindred but not competing corporations, whether domestic or foreign; but this shall not authorize the formation of any trust or combination for the purpose of restricting trade or competition.”

Assuming that this statute applies to railway companies it must appear, to justify the acquisition and holding of the stock, that the corporations are kindred and non-competing, and that no combination restrictive of trade or competition is formed.

A dissension of kindred purposes as applied to corporations by Spear, J., is found in State, ex rel, v. Taylor, supra, where it was held that a corporation formed to manufacture gas and electricity .and furnish light, heat and power to a municipality and its citizens can not amend its charter .to authorize the construction and operation of an electric railway.

Under the definition given and applied here a railway company and a coal mining company can not be deemed kindred. They are not in the same statutory classification, and are governed by different laws. The purposes are essentially different. The railway company could not be authorized to transact directly a coal mining business. In this fact is found a plausible reason for the organization of subsidiary companies. By this means a formal appearance of regularity is given to enable a railroad company to control and carry on the distinct and separate business of coal mining.

Again it is urged that the Buckeye and Sunday Creek coal companies have charter power to construct railroads, and that therefore both Section 3300 and the kindred corporation clause (Section 3256) are applicable:

But it will be observed that the railroad purpose in the coal company’s charter is incidental to the main purpose and is limited to such ‘ ‘ as may he deemed necessary to carry cut the object of its incorporation,” and the railroad to extend frorh “any mine, quarry, or manufactory owned or operated by said company to any other railroad, or to any canal.or water navigation or navigable water or place within or upon the borders of the state of Ohio.” The railroad contemplated by this authority is to begin at a mine, etc., and end at a railroad or other outlet. It is a private road for the benefit of. the coal company, and it is in no sense a public road. Miami Coal Co. v. Wigton, 19 O. S., 560; Railway v. Burk, 19 Bull., 27; Snow Fork & Cleveland Coal Co. v. Hocking Coal & Ry. Co., 4 N. P., 115.

Besides there is no evidence to show that the coal companies ever exercised this charter power by attempting to build or acquire a railroad. No stock can be issued under Section 3300, except to aid in the construction of a connecting and non-competing railway. This section does not authorize the railway company to extend aid to the coal mining purposes of the charter. Nor can this railroad clause in the charter furnish the connecting link of kinship under Section 3256, because, in the first place, of the non-exercise of the railroad clause, and in the second place, because the main purpose of a corporation fixes its class. Taggart v. Republic Iron & Steel Co., 141 Fed., 910.

A railroad company can not be classed as a hotel company because it operates one or more eating houses as incidental to its passenger traffic, nor as a land company because it has acquired more land than is necessary for railroad uses.

The fact that the railroad chapter applies to the railroad if constructed by the coal company does not change -the classification. The act only gives to coal companies the power as 'incidental to its business of constructing a private railroad, and places the railroad when constructed under the regulations provided' for in the railroad charter. Taggart v. Republic Iron & Steel Co., supra.

It is contended that the power to acquire the coal mining stocks is found in the clause in the charter authorizing the company to acquire all the “real and personal property” of the old company. But power to be sustained must not only be within the charter but within the terms of the corporation act. While the case of Gas & Fuel Company v. Dairy Company, supra, extends somewhat the strictness of the rule of acquisition of property not indispensable to the purpose for which the corporation was chartered, yet neither this case nor the later case of State v. Ry. Co., 68 O. S., 40, justify the acquisition of unauthorized stock, or .the carrying out of a purpose not within the spirit and intent of .the corporation act. Nor is the decision of Lurton, J., in the case of Central Trust Co. v. Railway Company, 87 Fed., 815, conclusive either as a precedent or as an adjudication upon the state seeking an account of acts done under the charter. The learned judge in that case, between private suitors where considerations of right and justice between the parties are controlling, places special emphasis upon the giving of the mortgage sought to be annulled not alone by the corporation, but reinforced by action of all the stockholders, and that the bonds secured by the mortgage had passed into- innocent hands, while the mortgagees seeking the-relief took expressly subject to the mortgage sought' to be annulled. The case did not, however, involve the power of the railway company to hold the coal mining stock, but only involved the .power of the coal company .by express consent of all its stockholders to mortgage its property to a railway company. It will be noted, however, in the case at bar that the stock now held by the defendant in the coal companies did not come directly from the foreclosure sale. The Buckeye Company w-as incorporated and became the owner of the Hocking Coal & Railway Company property by purchase, and its stock passed by voluntary acquisition to the reorganization committee, and thence to the present company; while the acquisition of the Sunday Creek Coal Company stock was wholly distinct from the foreclosure sale, although the properties were grouped together by the reorganization committee.

The claim is made that because coal companies are authorized by statute to acquire stock in transportation companies, a public policy is thereby evidenced which could be extended to railway companies owing stock in coal companies. This claim is not supported by the doctrine of strict construction, and a material difference may be found between coal companies acquiring an interest in railroads, and railroad companies acquiring interests in coal companies. The railway company has 'advantages of discrimination and trade restrictions which coal companies do not have.

Counsel for the railway company cite from Wood on Railways, Section 194, to the effect that a railway company may own a coal mine as incidental to its railroad purposes, and may sell the surplus coal. A clear distinction, however, may be drawn between the case of a railroad company owning a coal mine for its own use and engaging in the coal mining business for the general market. This principle is illustrated in the case of M. & C. Railway v. Telegraph Company, 38 O. S., 24, in which it was laid down by McIlvaine, J., that while a railway company may build and operate a telegraph line for its own use, it can not engage in the general telegraph business.

But, after all, the controlling question to be decided here is whether through this stock ownership in subsidiary coal companies a combination' has been formed restricting trade and competition. For even if' the abstract right of holding stock be conceded, yet such right can not be extended to cases resulting in or having the legitimate tendency of restrictions' of trade' or competition. Northern Securities Co. v. U. S., supra; Bigelow v. Calumet & Hekla Mining Co., supra; Distilling Co. v. People, supra; Burrows v. Interborough Metropolitan Co., supra; L. & N. Ry. Co. v. Kentucky, 161 U. S., 677; Dunbar v. American Telegraph Co., supra.

In considering combinations by stock ownership between railway and shipping corporations, we should not overlook the important influence of the carrier both as to rates and facilities upon the business of the shipper.

Rebates and discriminations in shipping facilities are well known and recognized as most effective aids in building up monopolies and breaking down competition. The former has been made the subject of penal laws by Congress and in many of the states. The latter is none the less effective .in restricting trade and embarrassing competition.

At common law public or common carriers were required to servo all without discrimination, and railway companies by their incorporation are vested with .a portion of the sovereignty of the state to carry out the public duties of a common carrier. They become quasi public agents to administer a public duty without discrimination to all citizens. Scofield v. Railway Co., 43 O. S., 571.

This obligation as stated by Baxter, J., in Dinsmore v. Railway Co., 2 Fed., 465, is:

“To do exact -and even handed justice to everybody offering to do business with them.”

For a railroad company, to acquire an interest in the subject-matter is inconsistent with the trust.

It is a sound principle everywhere acknowledged, that no man — even if his motive be as correct as those attributed to Sir Matthew Hale — can be a judge in his own case, or a ease in which he has a private interest; and this principle applies to all cases of public trust.

How then can a railway company be sustained in exercising a public function conferred by its charter of equal service to all shippers when it has acquired a private interest in the business of one? ' •

To illustrate: The Buckeye Company desires a rate, a distribution of cars, or an extension of track facilities, and applies to the railway company, which practically owns 'its stock. The subject is taken up by the president and board of directors of the railway company, who are also president and directors of the coal company. At the same time a similar request is made by an independent company in competition with the Buckeye Company. The railway company is interested in the Buckeye Company, and yet under the law it is required to deal with absolute impartiality between the company in which it has an interest and its rival. The railway company may be able to do this, yet the law looks upon the tendency, and has regard to the frailties of human nature and the temptation of being controlled by self interest.

“If self the wavering balance shake,
It’s rarely right adjusted.”

In Piatt v. Longworth, 27 O. S., 159, where an administrator had acquired an interest in the sale made by him as trustee, Johnson, J., said:

" In such cases the court will not suffer itself to be drawn aside from the application of this equitable rule by any attempt on the part of the purchasers to establish the fairness of the purchase because of' the danger of imposition, and the presumption of fraud inaccessible to the eye of the court. The policy of the rule is to shut the door against temptation in cases where the relationship exists. "

In line with this rule it has been held that it is not necessary to produce proof showing actual' restriction of trade or stifling of competition, but it is sufficient to show a legitimate tendency to that effect. Salt Company v. Guthrie, 35 O. S., 666, 672; State, ex rel, v. Standard Oil Co., supra.

So here it is not essential to show that discriminations or increase of rates actually resulted. But it is clear that the direct tendency of a combination by stock ownership in coal shipping companies by the railway company is toward discrimination and trade restrictions, and this proposition is recognized in the discussion of Mr. Justice White in the case of New Haven R. R. v. Interstate Commerce Commission, 200 U. S., 361, in which it is stated that the effect of the Chesapeake & Ohio Railway Company becoming a dealer in coal along its line was to exclude every other dealer, and that -this result -was not accidental but followed legitimately. Mr. Justice White in this opinion cited with approval the case of The Attorney-General v. The Great Northern Ry. Co., 29 L. J. Ch., N. S., 794, wherein it was decided that a railway company had no power to become a dealer in coal for the public market. In the English ease cited it appeared that a railway company from the Coal fields in the north of England had established a coal agent in London and had engaged indirectly in the buying and selling of coal for the general market, and in the course of eight years it had monopolized practically the entire coal business in that section. It was urged in argument that other railroads entered the London market from the Lancashire district and from the Bristol and other districts in the southwest, but the vice chancellor replied that nothing would prevent the other roads, if the business was legal, from acquiring a monopoly in those districts and giving the monopoly of the entire business of dealing in coal to the three railroads; and adding:

“If they can do that with respect to coal, what is to prevent their doing it with every species of agricultural produce all along the line ? Why should they not become purchasers of corn, of all kinds of beasts, and of sheep, and of 'every species of agricultural produce, and become great dealers in -the supply of eatables in the markets of London, and why not every other species of commodity -that is purchased in every part of the country from which or to which the railroad runs? I do not know where it is to stop, if the argument on the part of the company is to prevail. There is therefore great detriment to the interests of the public, for this reason, taking merely the article of coal. "

The results feared by the English vice chancellor are modest compared with the possibilities in this country. If a railway company can buy and sell, and thereby become the exclusive dealer in coal along its line, the grain carrying railways may monopolize the grain business; other railways the carrying of live stock, others the carrying of manufactured goods, while others the products of the iron and other mines; and if .then it is possible, that all railway interests of the United States may be combined under one management, the enormity and extent and importance of the proposition of controlling by subsidiary companies or otherwise the output of the mines and the farm and the factory becomes .apparent, or at least capable of being imagined. The ownership by the defendant of the stock in the subsidiary coal companies and the control resulting therefrom is illegal and unwarranted.

The contract of the defendant with the Continental Coal Company for an equal division of coal shipments between the Hocking Valley and T. & O. C. railways tends to stifle competition and is also unwarranted. The guaranty of the bonds of the coal companies, while a valid obligation as affecting the property of the railway and coal companies in favor of the mortgagees, yet as against the state is illegal and unwarranted.

In respect to the ownership of stock in the Kanawha & Michigan Railway Company, it is admitted that the defendant owns the majority of such stock, but claims that the line is not parallel nor competing. For more than one-third of its line the K. & M. is parallel to the defendant’s line and is more or less competing, but its competing features are pronounced and made clearly apparent when it is viewed as a natural as well as actual connecting road of the T. & O. C. system. The cases cited by the defendant’s counsel where there is an inconsequential part of the lines parallel and competing, but where in the general features of the two roads'they are non-competing and not parallel, do not apply here, for a substantial part of the K. & M. line is parallel and competing in the coal mining business, which forms a substantial part of the carrying business of the railroad companies involved.

In respect to the Toledo & Ohio Central Railway Company, it is conceded to be a parallel line with the defendant, but the defendant denies that it .owns or holds the stock of the T. & O. C. Company. It is agreed, however, that the stock of the T. & O. C. Company is held by the same stockholders or their allied interests, to-wit, the J. P. Morgan & Co. syndicate,, and is officered by the same persons as the defendant. Unity of stock-holding interests and unity of management is strong, if not conclusive, evidence of combination. This combination of -parallel lines is restrictive of competition, and .is contrary to the letter as well as the spirit of the corporation laws. It is difficult to conceive. of competition where one person and one agency controls both corporations. Can a shipper appeal with any hope of suecess for competition tp two companies controlled by the same management? A shipper appeals to Mr. Monserrat, as president of the defendant, for rates or facilities, and is not able to obtain a satisfactory concession. He then desires to make application to the parallel line of the T. & O. C. and is compelled to go before the same president and the same board of directors. A mere statement of the question is its own answer.

The state is not bound to show in eases of combination a record of the agreement resulting in the destruction of competition. It is not to be anticipated that in every case where a combination actually exists it is reduced to formal written agreement, or that all stockholding combinations appear of record upon the stock books. A verbal or even secret combination is just as obnoxious to public interests. We may therefore look to the evidence as in other cases of conspiracy. Unity of stockholding interests and of management, supplemented by the general plan of reorganization of the defendant company, is sufficient, to show a combination. State, ex rel, v. Standard Oil Company, supra.

The combination of the defendant, therefore, with the T. & O. C. Railway Co., as shown by the evidence referred to, as well as its ownership of a majority of stock of the K. & M. Company, is illegal and unwarranted.

In respect to the Zanesville & Western Railway Company, by a stock ownership it has become a part of the Toledo & Ohio Central System, and-so far as this action is concerned, may be considered as a part of that system. The -defendant does not hold or control this company except through its agreement or combination with the Toledo & Ohio Central, that of itself will carry a dissolution of all combination with the Zanesville & Western.

In respect to the relief to be awarded, it may be said that the rule is found in the case of The State, ex rel Attorney-General, v. The Capitol City Dairy Co., 62 Ohio State, 350. By this authority it is held that where the manner of conducting a business by a corporation is in excess of its charter and in violation of law, the court has power to stop the abuse; and if the illegal acts have been persistent, defiant and flagrant, the court may oust the defendant from its charter and terminate its corporate existence. The drastic remedy of terminating the corporation’s existence is only to be applied where the acts are persistent, defiant .and flagrant. In other cases the power of the court is limited to stopping the abuse, or, in other words, ousting the company from the right to do the illegal business.

In the case of The State v. Standard Oil Co., supra., the court merely ousted the company from authority to do the illegal business. The acts done by the Standard Oil Co. in the ease referred to were quite as continuous and quite as obnoxious to the public interests as.those involved here. The right of the defendant to own and control the stock of the subsidiary companies has been an open question, as is also the right of the defendant to own a majority of the stock of the K. & M. Company. The course of the defendant, therefore, in asserting its claim to the ownership of these stocks can hardly be said to be flagrant and persistent until the question has been authoritatively adjudicated.

A more serious question is presented by the indirect control and management of the Toledo & Ohio Central Railway Co. and the formation of the Sunday Creek Co. since suit began. But upon a consideration of the whole case the court has arrived at the conclusion that the facts do not warrant a judgment of ouster from the charter or corporate existence of the defendant ; but do require that the defendant be ousted from its ownership of stock in the Buckeye Goal & Railway Company, the Sunday Creek Coal Company, the Sunday Creek Company, and the Continental Coal Company; that it be ousted from its right to continue the guaranty of the bonds of these companies; that it be ousted from its right to hold stocks in the Kanawha & Michigan Railway Company, and from its control and management of the Toledo & Ohio Central Railway Company, the Zanesville & AYestern Railway Company, and the Kanawha & Michigan Railway Company.


source: Caselaw Access Project

license: Public Domain

text:
    SERVICE OF SUMMONS ON THE WRONG PARTY.
    Circuit Court of Hamilton County.
    The Pittsburgh, Cincinnati, Chicago & St. Louis Railway Co. v. Samuel P. Copenhaver, Administrator, et al.
    Decided, March 28, 1908.

      Summons — Action Filed Against Controlling Instead of Subsidiary Company — Service had on Officer of Subsidiary Company — Service Defective and Amendment thereof Ineffectual — Injunction against Multiplicity of Suits — Section 50Jfl,

    1, Service upon the chief clerk of the superintendent of a railway is not service upon a chief officer, and where such service is had upon a petition in which the wrong company is named as defendant, the substitution of the name of the proper company, and the amend* ment of the return of summons to conform thereto, is ineffectual to bring the proper company into court.
    2. Where it appears that as many as six actions are being prosecuted by the same plaintiff as administrator of as many different estates against the same defendant, which can result only in .void judg* ments, a court of equity will intervene by injunction to prevent a multiplicity of suits and vexatious litigation.
    The plaintiff railway company brought an action in the court, below to enjoin the defendant, Copenhaver, administrator, from prosecuting six different actions against the said company on -account of the deaths of six different members of the same family, who were killed by being struck by a train at one of the company’s crossings. These actions were brought against the Pennsylvania Company for the reason, as was stated in the court below, that the cars which composed the -train which struck the decedents were marked “the Pennsylvania'Lines” and employes of the road had declared to the administrator or his counsel that they were employes of the Pennsylvania Company. The actions were filed in August, 1903, six weeks after the accident. Summons was issued upon -the Pennsylvania Company, but -was served on W. B. Folger, assistant or chief clerk of the P., C., C. & St. L. Ry. Company, which was the company operating the line upon which the accident occurred, under the control of the Pennsylvania Company. The month following the P., C., O. & St. L. Ry. Co. filed an answer, but did not set up that the Pennsylvania Company was not the proper party defendant. Nearly three years intervened before it was discovered by the plaintiff that the wrong, company had been made defendant. A motion to correct the name of the defendant was thereupoh filed, which was granted over the objection of the P,, 0., O. & St. L. Ry. Co., and entries were made correcting the name and also amending the summons and also the return’ thereon.
    Five months thereafter the petition in the present ease was filed, the prayer of which’ was that the administrator be restrained from proceeding to trial or from taking judgment in any of said cases until the company, had been properly brought into court, the allegation being that if judgment and levy were taken in these cases as they then stood, it would be without due process of law and contrary to the Fourteenth Amendment of the Constitution of the United States.
    In contesting this action it was claimed on behalf of the administrator that notwithstandiñg the mistake in the na,me the right party was served with summons; that one of the first maxims of equity had been violated by the railway company, to-wit, that he who seeks equity, must do equity, the violation being in the fact that nothing was said in the answer of the said company, filed three years before, which would give the plaintiff information that he had not sued the right party; and further, that the company had a complete and adequate remedy at law, and that irreparable injury would result to the administrator by granting an injunction, for the reason that it would prevent the prosecution of cases for six wrongful deaths.
    As against the right of the railway company to an injunction, Albert H. Morrill cited: 4 N. P., 331; 8 0., 39; 14 0., 358; 12 Ó., 389; 4 C. C. — N. S., 11; 12 C. 0., 177; 18 C. C., 847; 68 Miss., 409; 49 Fed. Rep., 517; 71 Fed. Rep., 58; 76 Fed. Rep., 25; 16 Am. & Eng. Eney. of Law, 359; 9 N. J. Equity, 192; 7 Howard, 652; 4 Blatchford, 70; 34 Mo., 92; 56 N. Y., 175; High on ■ Injunctions, par. 51.
    - As to the service of summons on the wrong, party, it was contended that the weight of authority is to the effect that if a party is actually served, though served under a wrong name, the error will not be fatal, a proposition sustained by the following au-' thorities:- Yol. 20, Eney. Pleading & Practice, p. 1131; 33 Mo., 347; 73 Mass., 378; 87 Ind., 181; 23 S. C., 125; 31 Md„ 38; 77 Mo., 369; 50 N. C., 25.

      Maxwell & Ramsey, for plaintiff in error.

      Albert H. Morrill, L. W. Goss, Cogan & Williams and Renner & Renner, contra.
    Giffen, J.; Swing, P. J., and Smith, J., concur.
   The chief clerk of the superintendent of a railroad CSfpófá/ tion is not a chief officer upon whom service of summons is am thorized by Section 5041, Revised Statutes, and service upon such person as an officer of the Pennsylvania Company is not even an attempt to serve the Pittsburgh, Cincinnati, Chicago & St. Louis Railway Co.; hence the substitution of the latter company for the former as defendant upon motion of the plaintiff. and the amendment of the return of the sheriff are unauthorized to effect the appearance of such defendant.

Where it appears that the court has no jurisdiction -of the person of the defendant in six separate actions growing out of the same alleged negligent act of the defendant, which are prosecuted by the same plaintiff, as administrator of six estates, a court of equity will intervene by injunction to prevent a multiplicity of suits and vexatious litigátion which can result only in void judgments. Scofield v. Railway Co., 43 O. S., 571; Greene v. Railway Co., 62 O. S., 67; High on Injunctions, Section 12.

The injunction prayed for will therefore be granted.


text:
    CONSTRUCTION OF THE WORDS “ NEXT OF KIN.”
    Circuit Court of Hamilton County.
    George H. Bishop, Executor, v. Charles Rider et al.
    Decided, March 6, 1909.

      Wills — Words “Next of Kin” will be Construed in Their Teehnieal Sense, When — Presumption Where it is not Known Whether Certain Relatives are hiving or Dead.

    Where it appears that a testator was uncertain as to whether certain relatives were living or dead, it will be presumed, in the absence of any reference to the statute of descent, and distribution, that he intended by the use of the words “next of kin” to designate a particular class of persons related to him in an equal degree of consanguinity.

      Yeatman & Yeatman and E. C. Pyle, for the executor.

      Frank Dinsmore, for Charles Rider.

      Robert Ramsey, for cousins of the testatrix.
    Giffen, P. J.; Smith, J., and Swing, J., concur.
   The only question involved in this case is the construction of item eighteen of the last will and testament of Julia C. Giles, deceased, which is as follows:

“And lastly all the rest, residue and remainder of my estate, both real and personal of whatsoever kind or nature, I give, devise and bequeath to my next of kin, their heirs and assigns forever. ’ ’

It appears from the pleadings and the evidence that the defendant, Charles Rider, an uncle of the testatrix, is one of the next of kin, and that it was unknown to her and is even now'- unknown to the defendant, Charles Rider,, and the executor whether the two aunts, Harriet Ryder and Isabella Ryder, are living or dead, the presumption, therefore, in the absence of any reference in the will to the statute of descent and distribution, is that the words “next of kin” were used in their technical sense to designate a particular class of persons related to the testatrix in an equal degree of consanguinity, and do not imply the principle of representation. Clayton v. Drake, 17 O. S., 368; Mooney v. Purpus, 70 O. S., 57, at 65.

Decree accordingly.


text:
    SPEED OF ELECTRIC CARS CONSTITUTING NEGLIGENCE.
    Circuit Court of Lake County.
    Cleveland, Painesville & Eastern Railway Company v. Jessie Sites.
    Decided, February Term, 1909.

      Negligence — In the Operation of Interurban Oars — Cow Standing upon the Track Struck by Oar and Passenger Injured — Application of the Maaip Res Ipsa Loguitor.

    Where an electric railway company operates its road on the public highway, and runs its cars in the night time upon a straight level track, although in the open country, at such a rate of speed that a cow can not be discovered standing upon the track by the light of the headlight in time to stop the car, and a passenger is injured by reason of the car striking the animal, such facts will justify a jury in rendering a verdict in favor of the passenger fpr the injuries sustained.

      Harry E. Hammer, for plaintiff in error.

      Homer E. Harper and H. T. Nolan, contra.
    Cook, J.; Laubie, J., and Metcalf, J., concur.
   Jessie Sites, while a passenger on one of the cars of the Cleveland, Painesville & Eastern Railway Company, was seriously injured, as she claims, through the negligence of the employes of the railway company. She obtained a verdict for five hundred dollars, upon which judgment was rendered by the court; and the company now prosecutes error in this court.

A number of errors are assigned but the principal one relied upon, and the only one which we deem important, -is that the verdict was not supported by sufficient evidence.’ There is little conflict in the evidence. The injury occurred by reason' of the car running into a cow standing on the track. The track of the company is upon the south side of the public highway and the driveway for the public is on the north side. The highway and track were practically uninclosed, there being no fence on the north side of the highway and very little on the south side of the track.

The track where the injury occurred was in the open country and for a long distance east .and west thereof, was straight and nearly level. The time was in the evening, but after dark. The-car went over the cow throwing off the.rear truck and ran, as -the evidence tends strongly .to show, some two or three hundred feet after striking the cow. The car was equipped with all the necessary appliances for-stopping it, and the headlight was burning.

The motorman -testified he did not see the cow until he was within two hundred feet of -it, and that he immediately put on the emergency brake, reversed his motor and did all in his power to stop the car. By the testimony of the employes on the car and others the ear was running from thirty-five to forty miles an hour. The car was a heavy express car. The company proved that an object such as a cow standing upon the track .could, not be seen by the light of .the headlight more than three hundred feet, and that it was impossible to stop such a car running at a speed of from thirty-five to forty miles an hour, by proper use of all the appliances for that purpose, in a less distance .than four hundred feet.

Counsel for plaintiff in error seem to admit that the fact of. the injury under circumstances of this character raises a presumption of negligence upon the part of .the company, which presumption must be met by evidence of equal amount and weight; that the maxim of res ipsa loquitur applies. Leaving that maxim out of consideration, as there may be some doubt about its applicability, the question arises: Do the facts show such negligence upon 'the part of the employes of the company as justified the. jury in returning a verdict for the plaintiff ? The question must be largely, if not entirely, 'determined upon the fact as to whether .or not the ear was being run at such a high rate of speed as to constitute negligence.

This ear was running in the open country, and the claim of plaintiff in error is, that in analogy to steam railways, the company had the right to run its car at any speed that it might deem necessary in the operation of its road. We d:o not think so, There is little analogy between the running' of a train of cars on a steam railway in the open country and the circumstances of this case. In the former the company owns its roadbed absolutely and has exclusive control over it. It is fenced on either side, and persons or animals being upon the track, except at crossings, are -trespassers. Here the road-bed was on the public highway, and the rights of the public and the company were equal. The highway and track being unfeneed, the company might reasonably have anticipated that animals might go upon -the,track; yet it ran its car at such a rate of speed that if such obstruction should be upon the track, it could not see it by the light of the headlight in time -to stop its car although the track was straight and level.

Indeed this is -the defense made by the company. " We do not think such defense tenable. There may be some doubt as to how far the headlight would light up the track, and the distance at which the car could have been stopped; but adopting the. claim of -the company'we are óf opinion that it was negligence to run the car at such a rate of speed upon a straight level track that an obstruction could not be seen in time to stop the car. Of what use would be a headlight, if the car could not be stopped on a level straight track within the distance lighted by it?

In the case of Cincinnati Street Railway Company v. Lewis, 3 O. C.—N. S., page 115, it is held:

“In the absence of a regulative ordinance, the rule as to speed of electric oars is that of reasonable safety in view of all the-facts and surrounding conditions.”

The ease, as shown by the opinion, was determined upon a case that went to the Supreme Court from -the same circuit, where the same doctrine was held and affirmed.

Railway Company v. Osborn, 66 O. S., 45, is relied upon by counsel for plaintiff in error. In that case it was held:

“Where a passenger on a street railway car was thrown from the ear and injured by the sudden stopping of the ear in the effort to avoid the collision, and by the shock of the collision which was not brought .about by "the negligence of the defendant, it is damnum abseque injuria.”

In that ease there could be no claim of negligence upon the part of the gripman. The collision occurred in a street within the city; the bakery wagon was proceeding in the same direction as the car, which was going at a speed not to exceed ten or twelve miles .an hour, and suddenly the wagon turned across the track. In this emergency, which unexpectedly occurred, it was the duty of the gripman to usé every .effort to avoid the collision. Iiis duty, not only to the driver of the wagon but also to his passengers, was to avoid a collision if possible. We do not .think that case governs • the case we have under consideration.

The judgment of the court of common pleas will be affirmed.


text:
    LIABILITY FOR. INJURY TO SURROUNDING PROPERTY FROM BLASTING.
    Circuit Court of Hamilton County.
    Sarah Armstrong v. The City of Cincinnati and The W. J. Gawne Company.
    Decided, April 3, 1909.

      Blasting — Injury to Surrounding Property from — Creates no Liability in the Absence of Negligence — Charge of Court as to the Degree of Care Necessary in the Use of Explosives in Such Work.

    It is not negligence per se to use explosives for blasting, and a charge to the jury in an action for damages to , property from blasting in the neighborhood is not erroneous, where the jury are told that “the users of such materials, knowing their explosive power and their destructive tendency, are bound to exercise the highest degree of care in their use.”

      A. B. Huston and E. H. Williams, for plaintiff in error.

      Jonas B. Frenkel, for the City of Cincinnati.

      J. W. Heintzman, for the W. J. Gawne Company.
    Smith, J.; Giffen, P. J., and Swing, J., concur.
   The negligence complained of by plaintiff is that the defendant in error, W. J. Gawne Company, having contracted with the City of Cincinnati to construct for it a tunnel for the purpose of supplying water to said city, in the course of the excavation for the same wrongfully and .negligently caused the loosening and removal of earth and rocks by means of blasts and explosions of dangerous and powerful explosive substances, producing great concussion and disruption of the earth, thereby causing her house, cistern, etc., to tremble and become disintegrated, cracked and broken, which resulted to her damage.

It is apparent that a proper complaint of this kind supported by relevant and competent evidence would entitle the plaintiff to recover for damages- to her property because of concussions, and the two questions raised upon this issue are:

First. Whether or not the verdict and judgment are sustained by sufficient evidence.

Second. Whether or not plaintiff’s right to recover depended upon the work being done negligently and the injury was the result of negligence, or upon simply showing that her property was injured.

Upon the first contention we are not prepared to say that the verdict is against the weight of the evidence.

From an examination of the record in this respect, we think the jury might well find that the injury, if any, to plaintiff’s property was not caused by the work of the defendants, and having so found this court would be slow to set aside this verdict unless the second ground of error complained of is well taken.

The court charged .the jury as follows:

“It is difficult to lay down a hard and fast'rule regarding the use of explosives of high power under any and all circumstances.
“However, the users of such materials, knowing their high explosive power and their destructive tendency, are bound to exercise the highest degree of care in their use.”

Counsel for plaintiff in error contend that this charge is erroneous for (the reason that the use of explosives by any person does not depend upon the question of care, and in support of this question of care, and in support of this contention.rely upon the two cases of Tiffin v. McCormick, 34 O. S., 638, and Bradford Glycerine Co. v. St. Mary’s Manufacturing Co., 60 O. S., 560.

The first case is one where, in blasting in a stone quarry with powder, fire was thrown upon the-property of the injured party which resulted in its destruction.

The second case is where nitroglycerine, a substance usually recognized as highly explosive and dangerous, was stored at a I>lace which was a constant menace to the property in the vicinity and damage resulted from its explosion.

The first case was decided upon the authority of Hay v. Cahoes Co., 2d N. Y., 159, and Tremain v. Cohoes Co., 2d N. Y., 163.

In such cases the injury sued for was connected with a trespass as when stone or inflammable materials were hurled on adjacent property, and the defendants were usually held liable without regard to care or carelessness in doing the work.

In Benner v. Atlantic Dredging Co., 134 N. Y., 156, it was held that injuries to a house from blasting caused merely by the shaking of the earth or pulsation of the air, or both, gave no right of action, in the absence of negligence in doing the blasting; and in Holland House v. Baird, 169 N. Y., 136, it was held that injury to another’s house by a mere concussion without throwing rock or othejr material on the premises occasioned by blasting on one’s own premises in order to adapt them to h lawful use, when that mode is the only proper one and the work is transacted with due care and diligence, creates no liability. The language of the court in this last case is applicable to the present, in that this action is not one of a technical trespass upon the property of another, -where proof of negligence in the defendant is unnecessary, but one of consequential injury, where proof of negligence in performance is essential to a cause of action for damages.

This same rule was adopted in the case of Simon v. Henry, 62 N. J. L., 486, where it was held that a charge to the jury “that blasting close by a building necessarily would, require a high degree of care — perhaps the highest degree of care — to protect the building from injury” was not erroneous, and if the defendants exercised reasonable care and skill in the use of the explosive, they were not responsible for the damage alleged. See, also, Booth v. Rome, W. & O. R. R., 140 N. Y., 267.

In the recent case of Thurmond v. White Lime Association, 125 Mo. App., 73, this same rule in regard to negligence is upheld.

We do not think the rule in Ohio in. such cases as the one at bar is different, as the cases relied upon in this state by counsel for plaintiff in error are such as where the blasting amounted to a trespass upon the property of the party injured or where a highly explosive or dangerous substance was stored upon one’s property which was a constant menace to the property in the vicinity. We think, therefore, that the' charge of the court in this regard was eminently proper.

We do not think the other objections urged by counsel for plaintiff in error appear to have been prejudicial as, under the evidence and the charge of the court, we believe the jury was justified in the determination of the case as reached by it.

Judgment affirmed.


text:
    PRO CEEDURE WHERE CAUSES ARE MISJOINED.
    Circuit Court of Hamilton County.
    Jane Morris v. Anchor Fire Insurance Co. et al.
    Decided, July 27, 1908.

      Improper Joinder of Gauses of Action — Proper Procedure by the Plaintiff — iError to Dismiss the Petition — Section 5064.

    A liberal construction of the civil code in furtherance of justice requires that, where separate causes of action against several defendants are improperly joined, the plaintiff be permitted to file a petition against each defendant as provided by Section 5064, Revised Statutes.

      Moulinier, Bettman & Hunt, for plaintiff in error.

      Wade Cushing, contra.

      Swing, P. J.; Gtefen, J., and Smith, J., concur.
   The demurrer to the petition on the ground that separate causes of action against several defendants are improperly joined was properly sustained, but we think the court erred in dismissing the petition. What the court should have done was to permit the plaintiff to have filed several petitions against each- defendant by analogy with Section 5064, Revised Statutes. This section does not in express terms apply to this ease. It was adopted long before the eighth cause of demurrer was made a ground for demurrer; but there would seem to be no reason why Section 5064 should apply to the seventh cause for demurrer and not apply to the eighth cause for demurrer. The code should be liberally construed in furtherance of justice as is- shown by Section 5114, Revised Statutes, whereby amendments are provided for, and the general principles applicable to code pleading, and we think this principle broad enough to cover this case. To some extent it avoids costs and litigation and does no substantial harm to the defendants.


text:
    PROHIBITION OF BUSINESS NEAR AN AGRICULTURAL FAIR INVALID.
    Circuit Court of Brown County.
    A. G. Markley and Frank Shriver v. State of Ohio.
    Decided, April, 1909.

      Constitutional Law — Delegation of Power to Agricultural Societies— In Derogation of Property Rights, When — Police Power and its Limitations — Agricultural Societies Bound by the Limitations of Private Corporations — •Tyranny in the Control of Corporations— Creation of Monopolies — Business which Disturbs Religious Exercises Distinguished — •Section 7006.

    1. Section 7006 of Revised Statutes of Ohio which provides that “whoever establishes a temporary place of business for the sale of any article whatsoever or offers for sale any such article * * * within one-fourth of a mile of the fair ground of any agricultural society, while the fair of such society is being held therein, unless he had obtained the written permission of the board of such society” and imposing a penalty for the violation thereof, is an unconstitutional exercise of power by the Legislature.
    2. Such provision violates Section 1, Article XIY, of the Federal Constitution, because it abridges the privileges and immunities of citizens, deprives them of their property without due process of law, and denies to each the equal protection of the law.
    3. The delegation of power to the board of such fair, to determine who shall do the forbidden act, is an unlawful restriction upon a lawful business, giving the board the power to destroy competition and create a monopoly and to deprive a citizen of the right guaranteed to him by Section 1, Article I; of the Bill of .Rights of enjoying and possessing his property.

      E. H. Kirkpatrick, for plaintiffs in error.

      George C. Barnes, Prosecuting Attorney, contra.
    Walters, J.; Cherrington, J., and Jones, J., concur.
    This is .a proceeding in error to reverse the judgment of the lower court.
   Plaintiffs in error were indicted under Section 7006 of the Revised Statutes for keeping a place, of business, and also for exposing for sale, and selling certain articles, viz., lemonade, orangeade, ice cream, candy and pop-corn, within one-fourth of a mile of the agricultural fair then being held in Brown county, at Georgetown, by what is known as the Brown County Agricultural Society, on the 7th, 8th and 9th of October, 1908.

Section 7006 is as follows:

“Whoever exhibits or shows any natural or artificial curiosity for any price or gain, or sets up to let or use for profit any swing, revolving swing, flying horses, whirligigs or other device, or whoever establishes a temporary place of business for the sale of any article whatsoever, or offers for sale any such article except as a regularly established dealer in such article at his usual place of business within one-fourth of a mile of the fair ground of any agricultural society, while the fair of such society is being held therein, unless he had obtained the written permission of the board of such society, shall be fined not more than one hundred dollars nor less than one dollar.”

It is admitted in the bill of evidence that Markley, one of the plaintiffs in error, owned the real estate upon which the stand or booth was erected.

It is admitted also that the plaintiffs in error did, on the days when the fair was being held, from the stand or booth so erected, sell lemonade, ice cream, candy, orangeade and popcorn, without having first obtained the written permission so to do from the board.

The only question presented for our consideration is whether or not the provision of Section 7006, which refers to this subject-matter, is constitutional, or whether or not the Legislature was prohibited by the fundamental law of the state from passing so much of this act as is embraced within this indictment. Its constitutionality is based upon the right of the Legislature in passing the act, to do so, because it was a valid exercise by it of what is known as the police power of the state. The police power has its origin and is confined to and deals with that class of legislation which has to do with the public health, public welfare, public morals and public safety. No general definition-of this power, comprehensive enough to include within it all cases, has ever yet been written. But when called upon to apply to it the right of the Legislature to enact a particular law, which for its validity must rest upon the existence of one or more of the objects embraced within its scope, its definition does not seem so apparent or important. Especially is this observation true when applied to this case. In determining whether this portion of this Section 7006 is justified as being within the police power, or is in violation of the Constitution, we must ascertain whether the health, morals, safety and welfare of the public justify its enactment. The solution of this depends somewhat upon the question as to whether the Brown County Agricultural Society is a public or private corporation or agency.

In Dunn v. Agricultural Society, 46 O. S., 97, the Supreme Court of Ohio held that this, the Brown County Agricultural Society, was a private 'corporation aggregate, being a number of “natural persons associated together by their free consent for the better accomplishment of their purposes, and were bound to the same care in the use of their property and conduct of their affairs to avoid injury to others as natural persons, and a "disregard or neglect of that duty involves a like liability."

If this association was a public agency established exclusively for public purpose by the state, and connected with the administration of local governments, then it might well be said the Legislature had .authority to regulate even to prohibition of acts which would interfere with its successful operation. The court, however, having found that it was a private corporation it must be .treated the same as a natural person, though it may serve a public purpose.

Mr. Tiedman, in his work on the Limitations of Police Powers, at page 290, says:

“If the business is not harmful the prosecution of it can not lawfully be prohibited to one who will conduct the business in a proper and circumspect manner. Such an one would be deprived of his liberty without due process of law."

At page 301, the same author says:

“It has also been maintained, and we think satisfactorily established, that no trade can be prohibited altogether, unless the evil is inherent in the character of the trade; so that the trade however conducted and whatever may be the character of the person engaged in it, must necessarily produce injury upon public or upon individual third persons.”

Mr. Justice Brown, in Lawton v. Steele, 152 U. S., 133, 136 and 137 (14 Sup. Ct. Rep., 499), says:

“To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. The Legislature may not, under the guise of protecting the public interests, arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful occupations.”
“It will probably not be disputed that every one has a right to pursue in a lawful manner, any lawful calling which he may select. The state can neither compel him to pursue any particular calling, nor prohibit him from engaging in any lawful business, providing he does so in a lawful manner.” Tiedeman, Section 85.
“If the police regulation of trades and occupations can not 'be instituted and enforced, except so far as a trade or occupation is harmful or threatens to be harmful in any way to the public, however slight the restraining may be, so much the more necessary must it be to confine the exercise of the police power to the prevention of the injuries with which .the public is threatened by the prosecution of a calling, when the law undertakes to deny altogether the right to pursue the calling or profession. In proportion to the severity or extent of the police control must the-strict observance of the constitutional limitations upon police power -be required. There is no easier or more tempting opportunity for the practice of tyranny than in the police control -of occupations. Good and bad motives often combine to accomplish this kind -of tyranny. The zeal of the reformer, as well as cupidity and self interest, must alike be guarded against. Both are apt to prompt the employment of means to attain the end desired, which the Constitution prohibits.
“It has been so often explained and stated, that the police power must, when exerted in any direction, be confined to,the imposition -of those restrictions and burdens which are necessary to promote the general welfare, in other words to prevent the infliction of a public injury, that it seems to be an unpardonable reiteration to make any further reference to it. But the principle thus enunciated is the key to every problem arising out of the exercise of police power. Applied to the question of prohibition of trades and occupations, it declares unwarranted by the'Constitution any law which prohibits altogether an occupation, the prosecution of which does not necessarily, and because of its unenviable character, work an injury to the public. " Tiedeman, Section 102.
“As long as a trade does not injure the public health, and is the source of no annoyance whatever to the inhabitants of the locality in which it is conducted, it can not lawfuly be prohibited. Every man has a constitutional right to follow on his premises any calling, provided it does not in any way interfere with another’s reasonable enjoyment of his premises,” Tiedeman, Section 104.

We can see no element derived from the police power upon which this part of this act can be' upheld. To sustain it would be to take another’s property without due process of law.

This act in its provisions admits the lawfulness of the things complained of in the indictment, by providing that the written permission of the board of such society is the only requirement. Bower is, therefore, here delegated to one person in his discretion to say whether another, his neighbor, shall be permitted to do a lawful act on his own premises, viz., sell his own personal property, which act is not in itself injurious to the public or any private individual, except he may come in competition in the sale of it with the person to whom is granted the power to say whether he shall compet or sell at all.

"The right to pursue any lawful business is more than a mere right. It is property that can not be taken from him without due process of law.” State v. Scougl, 51 N. E., 865.
“It is not the question of how much or how little loss the citizen may sustain, it is a question of the power of the Legislature to deprive a citizen of his property. If the power exists to take any, it would be difficult to fix the limit.” Millet v. People, 117 Ill., 294.

Section 1, Article NTY of the Constitution of the United States provides:

“No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States. Nor shall any state deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction.the equal protection of the law.”

Justice Field, in Slaughter-House Cases, 16 Wallace, 97, says:

“The privilege and immunities designated are those which of right apply to the citizens of all free governments. Clearly among these must be placed the right to pursue a lawful employment in a lawful manner without other restraints than such as equally affect all persons.”

Section 1, Article I, of our Bill of Rights declares:

“All men * * * have certain inalienable rights among which are those of enjoying and defending life and liberty, and acquiring, possessing and protecting property. "

The effect of the act in question is to restrict or abridge the right of the plaintiffs in error to use and enjoy their property in a particular manner, so that the fair company may use its property in the same manner to greater profit than it could if each was left to the free use of its or their own as it or they should see fit. It is inimical to Section 1, Article XIV of the Federal Constitutibn above quoted, because it .therefore abridges the privileges and immunities of citizen; deprives them of their property without due process of law and denies to each the equal protection of the law.

The act in question gives to the board of trustees of the fair company the right to say who shall do the forbidden act; and restrains'a lawful trade and occupation, and gives it the power to destroy competition, and, therefore, create a monopoly. It takes away from the plaintiffs in error the right guaranteed them by Section. 1, Article 1, of our Bill of Rights, the privilege of enjoying and possessing their property. It gives to the fair association an absolute and arbitrary power over the property of others.

The only case which has been cited to us directly in point is reported in 26 Am. Rep., page 189. It is a Kentucky case and the syllabus of the same is as follows:

“A statute forbidding any person to carry on the stabling business within a given distance of the grounds of a specified agricultural society, during the continuance of its fairs, and imposing a penalty for any breach of the law, is an unconstitutional interference with the right of enjoyment of private property.”

The statute under which this decision is made is in all respects like the one at bar.

We were cited in argument a Massachusetts ease, where a somewhat similar statute was held to be constitutional, and as being a proper exercise of the police power. In that' case, however, the contention arose between a camp meeting, association while engaged in the services usual and incident to' those gatherings, and a carrying on of other business within the prohibited distance, which the court found might interfere and distract the attention of those who might desire to engage in those religious exercises from their proper performance of the sanje.

Entertaining these views we are cqnstrained to hold that the act in question so far as it relates to the subject-matter in the indictment is unconstitutional, and the judgment of the lower court will be reversed; and, proceeding to enter such decree as the lower court should have entered, the plaintiffs will be discharged.


text:
    APPEAL BY AN EXECUTOR. FROM THE COMMON PLEAS TO THE CIRCUIT COUR.T.
    Circuit Court of Franklin County.
    John M. Fergus, Administrator, v. W. T. McClure, Executor, et al.
    Decided, April, 1909.

      Appeal — By an Executor in the Interest of his Trust — As to Filing Notice with the Clerk — Effect of Giving Bond — What it is that Effectuates the Appeal — Sections 640S, 5227, 5228 and 5229,
    Where an appeal from a decision or order of the common pleas to the circuit court is desired to be taken by an executor, etc., in the interest of the trust in pursuance of the provisions of Section 5228, Revised Statutes, a written notice of an intention to appeal must be filed with the clerk of the common pleas within thirty days after the entering of the judgment appealed from as provided by Section 6408, Revised Statutes.

      A. C. Harvey, for plaintiff.

      W. T. McClure, for defendants.
    Sullivan, J.; Dustin, J., and Allread, J., concur.
   The defendant, William T. McClure, as executor, desiring to appeal in the interest of his trust to this court from the decision of the common pleas court, caused to be incorporated in the entry of the judgment a notice of his intention to appeal. On a day subsequent, the court caused the following to be entered on its records, to-wit:

“It appearing to the court that written notice has been given according to law by William T. McClure, trustee, etc., defendant in the above entitled cause, of his intention to appeal from the decision of this court to the Circuit Court of Franklin County, Ohio; that the defendant has giVen bond in the Probate Court of Franklin County, Ohio, as trustee of the estate of Moses Hanna, deceased, it is therefore ordered that no appeal bond be required of said defendant.”

No written notice as an original paper in the case was filed, and the subsequent finding of the court is based entirely upon the n.otice appearing in the entry of judgment.

The plaintiff has filed his motion to dismiss the appeal stating two grounds. First, the failure to file a written notieé by the defendant of his intention to appeal in the interest of his trust as required by Section 6408, Revised Statutes; and second, the failure of the clerk of the common pleas to file a transcript in this court at the expiration of thirty days after the entering of the judgment.

Taking up the last of these grounds first, Section 5228, Revised Statutes, provides that, “the clerk of the common pleas court at the expiration of thirty days from the entering of such judgment or order upon the journal of th,e court, shall, if not otherwise directed, make a transcript, which, together with the papers and pleadings filed in the case he shall transmit to the clerk of the circuit court as in other cases of appeal.”

The provisions of this section are the same as they were prior to the amendment of Section 5227, Revised Statutes, omitting written notice of an intention to appeal. Prior to said .amendment, the clerk was notified of an intention to appeal by an executor or an administrator, and hence it was his duty to prepare the transcript, etc., and file in .the circuit court unless the executor or administrator after giving such notice directed the clerk not to do so. After the written notice of an appeal had been filed with the clerk by the executor or administrator, the appellant was not required to see that the clerk discharged this duty, and hence the failure of the clerk in that respect could not prejudice the rights of the appellant. We think this ground not well taken. Hubble v. Renick, 1 Ohio St., 171; Hirsh v. Kilsheimer, 12 C. C., 291.

The appellant here has given bond in .this state with sureties according to law, and hence by favor of Section 5228, Revised Statutes, he is not required to give the undertaking required of parties appealing in their own interests by Section 5227.

Prior to the amendment of the latter section in 1904, the written notice required advised the clerk of an intention of a party to the action who was an executor or administrator to appeal in the interests of their respective trusts.

As the necessary -bond has been given, it is apparent that it was the written notice that effectuated the appeal in such cases. As such written notice is no longer required by Section 5227, and if not required at all, the clerk in all cases where an executor or administrator was a party, would be required unless other-wise directed to prepare a transcript, etc., and file it and the original papers and pleadings in the clerk’s office of the circuit court.

Before Section 5227, Revised Statutes, was- so amended as to omit the filing of the written notice, executors and administrators were required like all other parties desiring to appeal from the common pleas to the circuit court, to file such notice, and a failure to do so defeated the right of appeal. After filing such notice if he or they desired to abandon the purpose to appeal, notice of that fact was required to be given the clerk; otherwise he was required to proceed with the transcript, etc., as provided in Section 5228, Revised Statutes; and now unless such written notice is required by some other section of the statute, in all cases where an executor or administrator is a party, an appeal is effectuated within thirty days from, the entering of the judgment on the journal of the court, unless within that period the executor or administrator by some act waives the right of appeal. Such was not certainly intended by the Legislature, and as the written notice of an intention to appeal was necessary to perfect such right, prior to the amendment of Section 5227, by an executor or administrator, and the apparent imperative necessity for such notice that the clerk' might be advised as to his duties, it is reasonable, we think, to conclude that the Legislature contemplated that the’giving of -such notice would be required by some other section in the event Section 5227 should be so amended as to omit the giving of such notice where parties took an appeal in their own interests. If written notice was provided for in some general act, it would come into force if Section 5227 should be amended by omitting such requisite.

If a party to an action in the common pleas should die after judgment and within the period provided by Section 5227, Revised Statutes, for giving the undertaking in appeal, whether his executor or administrator in such case could take an appeal may be questionable under Section 5229, Revised Statutes. However, if such right passed to the personal representative, notice of an intention to exercise the right would have to be entered upon the journal of the court. The giving of a bond in the state conditioned for the faithful performance of the duties of the trust would not effectuate an appeal. When such notice was entered on the journal, the executor or administrator as the case might be, thereby became a party to the judgment and the appeal at once perfected. Where notice of an intention to appeal is required, the courts, we believe, have uniformly held that, an omission to give it, and also to give it in the manner required by statute, was fatal.

The clerk of the common pleas is not required to perform the duties devolved upon him by Section 5335, Revised Statutes, until the appeal is perfected in which are included those named in Section 5228, Revised Statutes.

Where parties desiring to appeal in their own interest, an appeal is effectuated by the giving of the undertaking provided for by Section 5227, where an appeal is desired to be taken by an executor or administrator in the interests of his trust, and has given bond in the state with sureties according to law, unless there is some statute providing 'that the fact of having given such bond effectuates an appeal, an appeal would not be consummated. The right of appeal is a statutory right. The method by which it may be accomplished must be prescribed by statute. The provisions of Section 5228, Revised Statutes, were enacted with reference to those of Section 5227, prior to the amendment of the latter omitting written notice. Two things were necessary to perfect an appeal, the notice and bond. If the several trustees named in Section 5228, Revised Statutes, had given the bond therein mentioned, the one provided for in Section 5227 should not be required. Section 5228 was not changed but is the same as it was before Section 5227 was- amended. This alone would seem to be sufficient to indicate that the Legislature contemplated that the same steps were still required on the part of an executor, etc., taking an appeal, that were required before Section 5227 was amended.

It is contended by the appellee that Section 6408, Revised Statutes, now regulates the manner of taking appeals by executors and administrators from the common pleas to the circuit court.

That section is found in the chapter of general provisions and that part of the section relating to the taking of appeals by such trustees reads as follows:

“But when the person appealing from any judgment or order in any court, or before any tribunal, is a party in a fiduciary capacity, in which he has given bond within the state, for the faithful discharge of his duties, and appeals in the interest of the trust, he shall not be required to give bond, but shall be allowed the appeal, by giving written notice to the court of his intention to appeal within the time limited for giving bond. ’ ’

Is this provision now applicable to appeals from the common pleas to the circuit court? True, much of it is a duplicate of the provisions of Section 5228, for which reason it can be said that it was not intended to apply to such appeals, and that the latter section was alone applicable.

It is quite apparent before Section 5227 was amended, that it could not apply, for then a complete method of appeal was provided by Sections 5227 and 5228.

Furthermore, if Section 6408, Revised Statutes, is applicable, the first paragraph of Section 5228 is superfluous, and it seems inapplicable if the Legislature intended Section 6408 to apply when amending Section 5227, supra, they did not amend Section 5228 by omitting the first paragraph.

It seems to us .that as appeals can be taken by executors and administrators from the common pleas to this court without giving the undertaking required by Section 5227, that some notice by such parties of such intention is indispensable.

The language found in Section 6408, Revised Statutes, as follows, “appealing, from any judgment or order in any court, or before .any tribunal, ’ ’ is broad and comprehensive enough to include the case at bar. It says the notice must be given to the court, from which it may be inferred that the section related to appeals alone from the probate court, but in our opinion the filing of the notice with the clerk of the court from which an appeal is taken would be a substantial compliance with that part of the section quoted above.

The notice must be given within the time limited for giving bond. This may well relate, and without doubt does, to the time limited by Section 5227 for giving the undertaking.

We do .not believe this view conflicts with the authority of Layer, Gdn., v. Schaber, Admr., 57 Ohio St., 234, relied upon by counsel for appellant.

There the appeal was taken when notice of an intention to appeal was required to be entered on the record within three days after the judgment or order appealed from was entered on the journal. It was then very clear that Section 6408, Revised Statutes, did not apply to such appeals because the latter required the notice to be given in writing as an original paper and to be filed with the court within .twenty days after the time limited for the giving of the bond, whilst under Section 5227, Revised Statutes, the notice was required to be given within three days after entering the judgment or order on the journal, and said notice was required to be entered on the record.

The provisions were so different in these several respects, that it was easily demonstrated that Section 5227 alone applied to such appeals.

The judgment in that case as indicated by the opinion on page 238 was based upon the difference in time required by the two sections for filing the notice.

We are, therefore, of the opinion that the second ground of the motion to dismiss the appeal is well taken and the same is therefore sustained and -appeal dismissed at appellant’s costs.