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    (First Circuit—Hamilton Co., O., Circuit Court
    Jan. Term, 1895.)
    Before Swing and Smith, JJ.
    GARDNER E. PHIPPS ET AL. v. FRANK RATTERMAN, TREASURER.
    1. Where under the provisions of sec. 5205, Rev. Stat., the trial court at the request of one of the parties, has, in the judgment, stated the conclusions of fact found, separately from the conclusions of law, and in one of the so-called conclusions of fact it is stated, as was done in this case, that the executor did not omit certain stock from the returns made by him of property for taxation because he believed said stock to be not taxable, but with intent on his part to evade the payment of any tax which the law imposed thereon, and that said returns were “false returns,” and no fact was - found in any of such findings which would justify such conclusion, but on the other hand all of the facts found strongly tended to show that the said stock was not returned for the reason that such executor in good faith believed, and had reasonable ground to believe, that such stock was not taxable, such finding should not * be considered as a finding of fact, but as a conclusion of law.
    2. But if it is to be considered as a proper finding of fact in this case, it is manifestly against the weight of the evidence all of which is set forth in the bill of exceptions taken on the overruling of the motion for a new trial, based on the ground that the finding of facts, and the judgment entered were against the law and the evidence.
    3. Under the provisions of sec. 2781, Rev. Stat., as passed April 14, 1886, if any person whose duty it is to list property, or make a return thereof for taxtation, shall in any year or years make a false return or statement, or shall evade making a return or statement, the county auditor shall for each year ascertain as near as practicable, the true amount of personal property, money, credits and investments, that said person ought to have returned or listed for not exceeding (the) five years next prior to the year, in which the inquiries and corrections therein provided for are made, and to the amount so ascertained for each year, he- shall add fifty per centum, multiply the sum or sums thus increased by said penalty, by the rate of taxation belonging to said year or years, and enter the same for collection on the duplicate of the current year. But where a person, in any year within .five years prior to the year in which such correction is made, in good faith, believing and having reasonable ground to believe that certain property owned by him is not taxable, has omitted to return the same, and at the same time omitted to return for taxation other personal property owned by him, subject to taxation, and which he had no reason to believe was exempt, this will not give to the auditor the right to place upon the duplicate for the current year the taxes and penalty on the amount of the property so in good faith omitted from his returns. As to such property thus omitted in good faith, the returns made were not false.
    Error to the Court of Common Pleas of Hamilton County.
   Smith, J.

This cause is in this court for the second time. The first time it was on a petition in error, brought by Ratterman as treasurer, seeking the reversal of the judgment of the court of common pleas in favor of the defendants below, finding that they were not liable for the taxes which had been placed upon the duplicate for the year 1887, by the auditor of the county against them, as the taxes due and payable on a large amount of the stock of the Pittsburg, Ft. Wayne and Chicago Railway Company held by them as executors and trustees under the will of Gardner Phipps, deceased, during the years 1882, 1883, 1884, 1885 and 1886, and which stock had not been returned for taxation for either of those years, as should have been done, as has been conclusively settled by several adjudications of the Supreme Court of the state, rendered after those years. If the returns made by such executors and trustees, (or by one- of them, Gardner E. Phipps, who by arrangement between them undertook the duty of making proper returns for taxation), for those years, were, in contemplation of sec. 2781 Revised Statutes, “false returns, ” as to this stock, it is clear that the action of the county auditor was right, and in strict accordance with the law' then in force as to this matter. If, however, the returns made were not false in the sense of the statute, it is also settled by the adjudications referred to, that the auditor was not authorized at the time that he did so, to place upon the duplicate of that year, against the defendants, the taxes which would have been chargeable against them, for the several years, if the stock had been properly returned for taxation, and it was the claim of the executors and trustees on the first hearing in this court, on the record as then made,' that their returns for those several years were not false. That in failing to return this stock for taxation they had acted under the honest belief, and without negligence on their part, that it was not taxable, and ought not to be returned, ánd therefore that the action of the auditor under the section referred to, was not authorized by law. It was also -disclosed in that case, that during each of said years, said defendants had, without any justification whatever, failed and neglected to make mention or report, on the returns for taxation made by them as executors and trustees for those several years, of a large amount of other stock held by them, which should have been returned. The taxes for the several years on this-last named stock had at the time been placed by the auditor on the same duplicate, and it was sought to recover all of these taxes in the same action. But for the taxes so charged on this last named stock, by consent of parties, a judgment had been entered before any trial of the case against the defendants, and the amount thereof had been fully paid; while as has been said, the validity of the assessment of the taxes on the Pittsbugr, Ft. Wayne and Chicago Company stock was controverted, and has been the real subject of this litigation.

The principal ground upon which the reversal of the first judgment was sought, was, that the finding of the trial court that the defendant was not liable, was against the weight of the evidence, and that the motion for a new trial therefore should have been granted. On the evidence contained in the bill of exceptions, we were of the opinion that there had been such conduct on the part of the defendants in making their returns for taxation, and in not returning this and other taxable stock for taxation as made the returns “false returns,” and therefore the auditor was justified in his action. And it is certainly true that this conclusion was based, in a very great degree, upon the admitted fact, that in the same returns, the defendants had without any justification therefor, omitted to return securities which they must have known to be taxable. We thought the action in the one case, threw light upon the conduct of the parties in the other. The judgment was therefore reversed and the cause remanded for a new trial. The brief decision rendered in the case is reported in 7th C. C. Rep. 458.

The case, was again tried in the court of common pleas, and resulted in a judgment in favor of the treasurer, subtantially as claimed by him. The case having been tried without a jury, at the request of the defendants, the court made a finding of facts and of law separately. A motion for a new trial was duly filed by the defendants, on the grounds of error of law occurring at the trial — that on the findings the judgment should have been for the defendants — that some of the findings were against the evidence and the law, and that what purported to be the 8th finding of fact, was not a finding of fact, but a conclusion of law. The motion was overruled, and an'exception duly taken, and a bill of exceptions allowed by the court, containing all the evidence submitted to the court, with the various rulings as to evidence and other matters excepted to by defendants, (and this bill of exceptions our judgment was so taken as to avail the defendants of all of those exceptions), and a petition in error has been filed seeking a reversal of this last judgment, on the ground that the court erred in overruling the motion for a new trial, and in rendering judgment for the plaintiff below.

It is manifest therefore that the case now comes to us on a very different record from that which was before us on the former hearing; other and different evidence’ having been presented to the trial court, and a finding of facts having been made by the court which, unless manifestly wrong, as shown by the evidence contained in the bill of exceptions, must be received by us as correct. In addition to this, new questions of law as to evidence, etc-., have been argued to us, and we have endeavored to give to the questions presented our careful consideration

The finding of facts and of law made by the court is very long, but for the proper consideration of several of the questions raised, it seems necessary to give a copy of it, with the exceptions taken to the same by the defendants below.

Findings or Fact.

1. That blank forms as prescribed by law, for listing for taxation all personal property, moneys, credits, and investments in bonds, stocks, joint stock companies or otherwise, held by the executors of Gardner Phipps, deceased, subject to taxation, were left by the ward assessor with Gardner E. Phipps, one of the two executors, to whom his co-executor had committed the management of the estate and its returns for taxation in each of the years, from 1882 to .1887, both inclusive.

2. That said Gardner E. Phipps, under the trusts of the last will and testament of Gardner Phipps, deceased, as executor held, on the day preceding the second Monday of April, in each of said years, moneys subject to taxation, to-wit: in 1882,1547.47; in 1883, $380.71; in 1884, $256.21; in 1885, $372.76; in 1886 $103.54, and in 1887, $90.32. That he further held, subject to taxation and which ought to have been returned, credits, to-wit: in 1882, $3763.55.

And he further held, on said day preceding the second Monday in April, in each of said years, subject to taxation and which ought to have been returned by him, investments in stocks, to-wit: 500 shares, preferred stock, Chicago and Northwestern Railway Company; 300 shares common stock, Chicago and Northwestern Railway Company; 100 shares stock, New York Central and Hudson River Railway Company; 295 shares of stock, St. Louis Transfer Company; 25 shares stock, Western Union Telegraph Company; and 1210 shares stock, Pittsburgh, Fort Wayne and. Chicago Railway Company; each of said shares being of the par-value of $100.00 a share, and of different market values; and all of said companies being corporations not of the state of Ohio, but organized under the laws of other states, and not having any part of their corporate property in Ohio except the Western Union Telegraph Company, which had in Ohio 4950 miles of its total length of lines that were 78,955 miles, in all, and except said Pittsburgh, Fort Wayne and Chicago Railway Company, which had in Ohio 251 65-100 miles of its total miles, which from Pittsburgh, in Pennsylvania, to Chicago, in Illinois, through Ohio and Indiana wore 468 and 82-100 miles in all, and which up to January-14, 1878, when ousted therefrom under the decision, Ohio ex rel. v. Sherman et al., 22 Ohio St. 411, had assumed to be a corporation of Ohio legally incorporated under the laws thereof, but was not such, and since said ouster has not assumed to be or to exercise the franchise.of same.

8. That said Gardner E. Phipps, under the trusts of said last will and testament, as said executor listed, and made returns of, for taxation, in each of said years,upon said blank forms for listing left with him, the moneys aforesaid, that is, in 1882, $574.47; in 1888. $880.7.1; in 1884, $256.21; in 1885, $872.76; in 1886, $103.54; and in .1887, $90.82; but did not list or return said credits, in 1882, $8,768.55 or any part thereof; and did not list or return for taxation in any of said years said shares of stock, or any of them, or any part thereof; and made no returns then or at ■ any other time of said shares of stock, or said credits, or the value thereof of any part, for taxation in said years or in any of said years:', but withheld from the assessor knowledge of his ownership of the same and did not disclose such ownership during such' years, to the taxing officials or any of them of the city of Cincinnati, or of the state, county, or township.

4. That the sum set forth iu the several causes of .action in the petition, as charged upon the tax lists and duplicate of Hamilton county, Ohio, against Gardner E. Phipps and Rebecca A. Phipps, executors of Gardner Phipps, deceased, were the taxes in each of said years, from 1882 to 1887, charged, January 9, 1888, by the county auditor of said county upon the value, as then found and assessed by him-of the shares of stock aforesaid for taxation; of which said several sums, the amormt of taxes upon the value so found and assessed of the shares of the Pittsburgh,Fort Wayne and' Chicago Railway Company stock, adding 'thereto for the years 1886 and .1887 fifty per centum, was as follows: for 1882, $3.775.71; for 1883, $3,299.07; for 1884, $3,865.95; for 1885, $3,965.08; for 1886, $6,464.30; and for 18.87, $7,284.68. That from August, 1852, until April 27, 1886, the auditors of Hamilton comity and the annual hoards of equalization of Cincinnati in said county, where Gardner Phipps testator, and Gardner E. Phipps and Rebecca A. Phipps, executor and executrix and trustees as aforesaid, resided during all of said period, declined and refused to take steps to correct returns for taxation by owners of shares of stock in said Pittsburgh, Fort Wayne and Chicago Railway Company who had omitted the same from such returns, although such officers knew that a large number of such shares were, owned by persons so making returns for taxation in said county; and declined and refused to tax such shares when ownership thereof was disclosed in tax returns, but therein claimed to be non-taxable; which action of said officers was at various times during said period prior to 1882, submittd to the auditor of the state of Ohio, and approved by him, and no directions of a different nature were afterwards given by said county auditor and said boards of equalization, or either of them, prior to February. 1887. An opinion that such stock was not taxable under the laws of Ohio, was given by distinguished lawyers of that state to holders of stock and others prior to the day preceding the second Monday in April, 1882. In the early part of 1881 free discussion of the taxability of such stocks was had in certain daily newspapers of general circulation throughout Hamilton ■County, which newspapers were habitually read by said Gardner Phipps, testator, and Gardner E. Phipps and Rebecca A. Phipps, ' executor and executrix and trustees as aforesaid, and on March 18, 1881,in one of said newspapers, the opinion of Rufus P. Raimey of Cleveland, Ohio, and Samuel J. Tilden, of New York, appeared, holding that the capital stock in said Pittsburg, Port Wayne & Chicago Railway Company, held and owned by residents of Ohio, was not taxable, said opinion having been addressed to G. W. Cass, president of said last named railway company, and bearing date February 15, .1873.

■ Such actions and rulings of such taxing officers and such opinions were generally known, and until April 27, 1886, the belief was practically universal in said Hamilton County that the statutes of Ohio did not subject such shares of stock to taxation in the hands of the owner or holder thereof, or require the owner or bolder thereof to include the same in the list or statement of his taxable property, to be delivered to the assessor or auditor.

(). In the early part of 1881, to-wit, in the spring of that year, Gardner Phipps, testator, as aforesaid, stated to Gardner E. Phipps, who was afterwards executor and trustee as aforesaid, that the stock in the Pittsburgh, Fort Wayne & Chicago Railway Company was not tax. able; that he, said Gardner Phipps, had been so advised by Reuben R. Springer, who based his opinion upon the opinion given to him by eminent lawyers, and also upon statements to him by the County Auditor, that said stock was not taxable. Said Reuben R. Springer was then and thereafter until his death in 1885 a. holder of a very large number of shares in the capital stock of said railway. Said Gardner Phipps, testator, for some years before his death, and said Gardner E. Phipps thereafter, until his death, were each members of the Board of Directors of the Merchants’ and Manufacturers’ Insurance Company, which company is one of those referred to above in the fifth finding as not taxed on Pittsburgh, Fort Wayne & Chicago Railway stock, where the ownership thereof was disclosed in tax returns, but therein claimed to be non-taxable; said company, during the years 1876 to 1886, both inclusive, owning 400 shares of said stock, and returning the same in those years as not taxable, and no correction thereof being made except for 1886 in November of that year.

7. Said Gardner Phipps, testator, died on the 9th of July, 1881, and his last will and testament, dated February 7, 1880, was admitted to probate and record in the Probate Court of Hamilton County, on July 19, 1881. A copy of said will excepting items 7, 8 and 10 thereof, which omitted items are immaterial to the questions at issue, is attached hereto as a part hereof as an exhibit marked “ A. ”

Letters testamentary upon said will were issued by said Probate Court to said Rebecca A. Phipps and Gardner E. Phipps, the executors therein named. Said Rebecca A. Phipps and Gardner E. Phipps entered upon the discharge of their duties as such executors, and accepted and undeitook the trusts imposed upon them by said will. No inventory of the property held by said executors was filed by said executors in the Probate Court of Hamilton County. Said Gardner E. Phipps, being the managing executor and trustee during his life-time, superintended the making of the-tax returns in question herein. Said Gardner E. Phipps' died in the month of January, 1890, and said Rebecca A. Phipps died on the 27th day of April, 1891.

8. That said Gardner E. Phipps, executor, did not omit said stock from his said returns for taxation because he believed said stock not to be taxable, but with intent on his part to evade the payment of any taxes which the law imposed; that said returns so made by said Gardner E. Phipps, executor, by listing, as aforesaid, upon said blank forms left with him for the executors of Gardner Phipps, deceased, were false returns in and for each of said years.

And as a conclusion of law, the Court find.that the plaintiff is entitled to recover against the defendants upon the several causes of action in the petition, the following sums to-wit: upon the first cause of action three thousands seven hundred and seventy-five and 71-100 dollars ($3,775.71); upon the second cause of action three thousand, two hundred and ninety-nine and 07-100 dollars ($3,299.07); upon the third cause of action three thousand eight hundred and sixty-five and 95-100 dollars ($3,865.95); upon the fourth cause of action three thousand nine hundred and sixty-five and 08-100 dollars) ($3,965 08); upon the fifth cause of action six thousand four hundred and sixty-four and 30-100 dollars ($6,4.64.30); and upon the sixth cause of'action seven thousand, two hundred and eighty-four and 68-100 dollars ($7284.68), making the total of twenty-eight thousand, six hundred and fifty-four and 70-100 dollars ($28,654.79).

And thereupon said defendants excepted severally to the 2nd, 3rd, the and 8th, of said findings of fact, and to each and every part of them, and of each of them, and also to said conclusion of law, and to each and every part thereof.

And said defendants further excepted to so much of said 7th finding as finds no inventory was filed by said executors for the reason that said portion of said 7th finding of fact is immaterial, in view of the provisions of the will of said Gardner Phipps, deceased.

And thereupon the defendants moved the court to set aside the conclusions stated in the paragraph marked, uumbered, and called the 8th finding of fact, and also to set aside the conclusion of law; which motions the court overruled; to each of which rulings the defedants then and there excepted.

Thereupon the defendants moved the court to enter judgment in their favor upon each cause of action stated in the petition, making said motion separately as to each of said causes of action; and which motions the court overruled, to each of which rulings the defendants then and there excepted.

(A copy of the will of Gardner Phipps, deceased, was made a part of the finding of facts, but as the substance of so much of it as is necessary to a consideration of the questions raised is hereinafter stated, the will itself is omitted.)

We think it very clearly appears from these findings that for many years prior to April, 188(5, it was the very general belief in Cincinnati and Hamilton County, where these defendants resided, and of the various state and county officers having charge of the assessment, and collection of taxes therein, that the stock of The Pittsburgh, Fort Wayne & Chicago Railway Company was not taxable in this state, and having full knowledge that large blocks of it were owned by persons residing here, who did not return the same for taxation, no steps were ever taken to require such stock to be listed for taxation, and that even when it was specified in the tax return as held by the person making it, with the claim that it was not taxable, no taxes were ever assessed against the same. It further appears that this conclusion was based on the opinion of eminent lawyers, and was practically universal. In addition to this the finding of facts shows that Gardner E. Phipps, the executor and trustee, who made these returns, knew of this general belief, and had been informed by his father Gardner Phipps, in his life-time, that this particular stock was not taxable, and of the grounds of such opinion. If, therefore, there was nothing else in the finding of facts showing that these executors and trustees in making these returns did not act honestly or in good faith, it would seem that it would be going altogether too far to. hold that such returns were false, because this stock had not been returned for taxation, and we could not do so.

We are met, however, by a direct statement in what is called the 8th finding of facts, “that Gardner E. Phipps, executor, did not omit said stock from his said returns for taxation because he believed said stock not to be taxable, but -with intent on his part to evade the payment of any taxes which the law imposed; that said returns so made by said Gardner E. Phipps, executor, by listing as aforesaid upon said blank forms left with him for the executors of Gardner Phipps, deceased, were false returns in and for each of said years.”

It is strenuously urged by counsel for the plaintiffs in error that this eighth finding is not a finding of fact in reality, but is a conclusion of law based on the oilier facts found, and that, the conclusion thus arrived at is not justified by the other findings, but is in direct, conflict with them. And it is further urged that the trial judge erred in refusing to find as a fact (as he was expressly requested to do,) whether or not such executor when making these returns, believed that this stock was not taxable, and if he so believed, whether he had reasonable grounds therefor.

So far as these questions are concerned we may say, that we greatly doubt whether this eighth finding is one of fact; it seems to us rather a legal conclusion from the other facts found. It is true that it. says that the executor did not omit to return the stock for taxation because he believed it was not taxable, but that, it was done to evade the payment, of taxes thereon. It does not state in any other part, of the finding of fact which justifies any such conclusion. It seems strongly analogous to the case reported in B Ohio St. 87, which was an action of ejectment to recover the possession of real estate, arul in which one of the parties requested the court to find and state his conclusions of fact found, separately from the conclusions of law. The finding made by the court in answer to the request was “that the plaintiffs are not seized of an estate in, or entitled to the possession of the property in the petition described, or any part thereof, but that the defendants are seized in fee simple, and are rightfully entitled to the possession of said lands. The Supreme Court in passing upon this, and construing the statute say: '' The provision is one of much importance, and it is in no sense directory. That there was no proper compliance with the request is admitted; and it is shown tq us that the action of the court in that respect affords ground of reversal, unless it be shown that the plaintiffs were not prejudiced thereby.’

But even if this eighth finding is to be considered as a finding of fact, we are then of the opinion that it was manifestly against the evidence submitted, unless it must be held that the fraudulent intent on the part of the person making the return-is conclusively shown by the conceded fact that when these returns were made, and the stock in question omitted therefrom, the person making them, without any justification failed to return other stocks subject to taxation, and which he had no reason to believe, were exempt. If this be so, and the necessary result of such conduct was to make these returns false ones, in the meaning of the statute, and gave the light to the auditor to bring the taxes upon this particular stock on the duplicate as he did, we suppose that the error of the trial court in refusing specifically to find as to the intent with which the Pittsburgh, Fort Wayne & Chicago Railway 'stock was omitted by the executor from his returns, or that the eighth finding was otherwise against the weight of the evidence, would not be prejudicial to the defendants below, for in that event the judgment actually entered would have been right. ■

The question thus raised is an important one, and as to ■which we have entertained, much doubt. The decision of the Supreme Court in the case of Genin’s Executors v. Auditor, 18 O. S. 534, is greatly relied upon by the counsel for the treasurer. It involveed the construction of Sec. 34 of the tax law of 1859 (S. & S. 1452) and section 1 of the supplementary act of 1861 (S. & S. 759). .Sec, 34 gave tt> the County Auditor the right, when he had reason to believe that any person had made a false return of his property for taxation, or had not returned the full amount thereof, or had omitted or made an erroneous return, to give notice to such person, and after a hearing, before-the final settlement with the County Treasurer, to correct the return and charge the person on the duplicate with the proper amount of the taxes. And by sec. 1 of the supplementary act of 18(51 (S. & S. 759) it was further provided that in making the corrections under sec. 34, the auditor should ascertain the full amount that should have been returned, and add thereto 50 per cent, of the amount so ascertained, and place the two sums on the duplicate. In the case cited, Genin had returned but $10,181. The Auditor,under proper proceedings, found that he should have returned $59,000. _ and he placed that sum on the duplicate, together with the 50 per cent, penalty thereon. This the Supreme Court held was a literal compliance with the terms of the statute, and was valid.

It will be observed that this action was had under a statute not now in' force, and which was very different from that under which the proceeding in the Phipps case was had. It provided only for the correction of the duplicate for the current year, and the language of it absolutely required the Auditor, when there had been a false return, or no return at all, or a return of a less amount than should have been returned, whether in good faith or not, to place upon the duplicate, the true amount with the 50 per cent, penalty.

The law as to the corrections of the duplicate, as it stood when the action by the Auditor was taken in this case, was that of April 14. 188(5 (Sec. 2781 Rev. Stat.). As it then stood, it provided that if any person whose duty it is to list property or make a return thereof for taxation, either to the assessor or the County Auditor, shall in any year or years make a false return or statement, or shall evade making a return or statement, the County Auditor shall, for each year, ascertain as nearly as practicable the true amount of personal property, moneys, credits and investments that such person ought to have returned or listed, for not exceeding the five years next prior to the year in which the inquiries and corrections provided for in this and the next section are made; and to the amount so ascertained for each year, he shall add fifty per centum, multiply the sum or sums thus increased by said penalty by the rate of taxation belonging to said year or years, and accordingly enter the same on the tax lists iii his office, giving a certificate thereof to the County Treasurer, who shall collect the same as other taxes.” But section 2782 provides for the correction of the returns for the current year, not only when the returns are false, but also where from any cause the proper amount has not been returned, the section, in this respect, being similar to that construed in the Genin case; and under this section there would be no double payment of taxes on the same property. For if the taxes on the property returned by the owner had not been paid at the time the auditor makes the correction and adds the penalty thereto, he will only be called upon to pay the proper amount; but if the taxes on the amount returned by him should have been paid by him previous to the correction of the duplicate, he would be entitled to a credit on the amount charged against him for the sum actually paid by him.

The vital question then in this case is this: 'Whether if some property which should have been returned for taxation in any year within five years, has not been so returned, the owner in good faith believing, and having reasonable ground to believe, that it was not taxable, but at the same time such owner has made a false-return, as to other property, or has evaded the making of a true return thereof, the Auditor is authorized, not only to bring upon the duplicate, the property as to which the owner acted in bad faith, but in addition that as to which he acted in entire good faith.

At the hearing of the first case in this court, we inclined to the opinion that he was; that a false return as to a part of the property, or an evasion of his duty to return it, tainted the whole return, and made it false as to all of the property which, according to the provisions of the law, should have been returned, and therefore that the Auditor was justified in placing this stock upon the duplicate.

A more careful examination of the statutes, and the decisions of the courts upon them have led us to the conclusion that such is not the case. It would seem that if the statute is to receive such a construction, it would operate most harshly upon the tax payer in a matter as to which he had acted in entire good faith, and for which he should not be punished by the infliction of a heavy penalty as must be the case if the view claimed by counsel for the treasurer is the correct one. But in such case not only would he be charged with this heavy penalty, but he might have to pay double taxes upon a part of the same property. Thus,if a person owning $100,000 of taxable securities, should during each of the past five years have falsely withheld $10,000 from his return, and regularly paid the taxes upon the $90,000 returned, the auditor on the literal terms of the statute, if this be the meaning of it, would be authorized to place the whole of the $100,000 upon the duplicate with the taxes thereon for each of said years, with a. penalty of 50 per cent, thereon, and collect the whole thereof, though the taxes on the $90,000 had been regularly paid each year. This would be manifestly wrong and unjust, and the intention to do this should not be imputed to the legislature unless the language used is clear and explicit. It would seem that what would be right in such case would be, to bring upon the duplicate the property fraudulently omitted from the return, and deal with that iii the mode pointed out in the statute, and that if property has in good faith been omitted, to take no steps as to this, for the reason that there was no falsity or evasion as to this, and, therefore, it should not under this section be brought upon the duplicate.

It appears, so far as we can gather from the reports of decided cases in this state, that this plan seems to have been the one adopted by the various- taxing officers and boards dealing with these, questions. That is, that only property improperly omitted from the returns, has been brought upon the duplicate. And this seems to have been the construction placed upon the statute by the Supreme Court, for when called upon in the case of The State v. Crites, Auditor, 48, Ohio St. 142, to issue a writ of mandamus to the auditor, directing the steps to be taken by him in a proceeding under this section, he was ordered “to proceed to inquire into the matter of the omission of property from the tax return of C. L. Brice, and to enter for, taxation on the tax duplicate of said county any amount that may be found to have been improperly omitted” during any of the five preceding years. See State v. Crites, 48 Ohio St. 461, where a copy of this part of the writ is given, thus seeming to distinctly recognize the difference between property which in good faith had not been returned for taxatiou. and that as to which there, had 'been evasion or falsity.

In addition to this the legislature on April 24th, 1898, (90 O. L. 233) soon after the decision in the Crites cases, passed a law amending sec. 2781,by ívhich the auditor,in case of such false returns, is authorized tó correct the same and add the omitted amount and place the taxes and penalty on the omitted sums. This we are inclined to regard as a declaratory act, giving the true meaning- of the section as it stood before, and as indicating that such property only as had been omitted by false or evasive conduct in the making of the returns was to be placed on the duplicate under the terms of this section.

Wm.. Worthington W. Warrington, for plaintiffs in erorr.

W. L. Avery, for defendant in error.

There is another ground, on which it is claimed by counsel for the defendants below that the return made by the executor and trustee should not be considered a false one in so far as this stock of The Pittsburgh, Fort Wayne & Chicago Railway Company, and the owner of it, is concerned. By the will of Gardner Phipps, the testator, he gave to his executors. and to the survivor of them his stock in this and other companies named to hold the same during.the life of his wife, on the trust, that from the income thereof they were to pay all taxes on this and other property given to her, and then to pay her $12,000.00 per annum. By another item he gave all the rest and remainder of his property to his executors and to the survivor of them during their natural lives, on certain trusts for his children. Here were two separate trusts, concerning distinct property and with different beneficiaries. We incline to the opinion that there should have been separate returns as to each of these trusts. And we understand from the findings and evidence, .that none of the property improperly omitted from the tax return belonged to this trust of which the widow was the- beneficiary. Why then should she be prejudiced by the omission to return other stock in which she was not interested?

But as the conclusion at which we have arrived on the other and principal question will necessarily result in the reversal of the judgment of the Court of Common Pleas, and if our view is correct should prevent a judgment for the treasurer on a new trial, it would seem unnecessary for us to discuss or decide this and several other questions argued to us, as to the rulings of the court on evidence, the burden of proof, etc. We suppose the entry should be that the judgment of the Common Pleas is [reversed, and the cause remanded for a new trial.®


source: Caselaw Access Project

author: Hale, J.

license: Public Domain

text:
    (Eighth Circuit—Cuyahoga Co., O., Circuit Court
    Apr. Term, 1895.)
    Before Caldwell, Hale and Marvin, JJ.
    THE UNION NATIONAL BANK v. THE CITY OF CLEVELAND, ET AL.
    1. A debtor can at the time of making a payment on an open account, designate the item of such amount on which the payment is made, and if received by the creditor, the application will stand. But if the creditor fail to make the application, the creditor may make it,and if no special application of the payment-is made by either, the payment will be applied to the oldest item of the account, subject, however, to such an application as the court would say is equitable and just.
    2. But where the creditor for part of the account would bo entitled to a lien, and for part not, and the creditor afterwards attempts to apply the payments made to those items of the account for which he is not entitled to a lien, and.to secure a lien on that part of the account for which he would be entitled to the lien, he will be ■ sustained by the court in such application of the payments made.
    Appeal from Court of Common Pleas of Cuyahoga County.
   Hale, J.

(orally).

This case is pending in this court by appeal from the court of common pleas. I will announce the conclusions reached sufficiently to enable the parties to file a decree.

The claim of Buettner and Orley, represented by Mr. Green, we sustain.

The controversy between the Union National Bank and the Forest City Chemical Company has given us much trouble. The bank claims, under an assignment of the contracts which the Claflen Paving Company had with the city, the amount due from the city to the Paving Company. The Forest City Chemical Company claims, under a mechanic’s lien, the amount due from the city to the Claflen Paving Company on the contracts for the^ paving of Clark ¿venue and Jennings avenue. We finally come to the conclusion that it is a question, largely, of the application of the payments which have been made.

The Forest City Chemical Company were furnishing to the Clafleu Paving Company cement to use in paving the streets of the city, and liad been doing that for a number of years. An account of the cement furnished to the Clalien Paving Company, and the paymeuts made by the latter company to the Chemical Company, were entercl in one account, no separation being made as to the streets for which the cement was furnished until the commencement of 1891. At that time the Chemical Company, although entering- in its books the account kept with each street, in the same account undertook to designate by a memorandum upon the margin of its ledger the streets for which the cement contained in the item was furnished.

Payments continued to be made, and credited generally, to that account. No application was made by the Clafleu Paving Compauy of the payments at the time, and no application was then made by the Forest City Chemical Conipany, unless the mere crediting it upon the books of the company operated as such application.

It is undoubtedly true that a debtor, at the time he. makes a payment, can make application of such payment and if received by the creditor, that ends the matter. The application is thus made. Put if the debtor at the time of the payment makes no application of the payment, then the creditor may make the application; and if neither makes any application of the payment, then we understand that the ordinary rule is that the payment should be applied to the liquidation of the oldest item in the account, but.subject to such an application as the court would say is equitable and just. It is undoubtedly true that payment upon an open current account, with no specific application made by either party at the time of the payment, should apply to the oldest item of- that account.

Put there was here, as we find to be a fact, an attempt on the part of the Forest City Chemical Company after January 1, '1891, to designate in its accounts the street for which the particular cement charged was to .be used. The payments that were made after that date, were credited in this account. Notes were taken, some of which were paid, and some of which were not paid. On 'December 21, 1891 the Chemical Company sought to perfect a lien and reach the fund that was due to the Claflen Paving Company from the city for the paving of Jennings and Clark avenues. At that time the Chemical Company undertook to make the application of the payments that had been made to the account, so that there should be left the items due it for the cement furnished for Clark and Jennings avenues. . As I understand the facts, there was due to the Chemical Company from the Paving Company the amount claimed in this mechanic’s lien from some source at the time the lien was filed. Hence it seems to us that it comes to the question whether the Chemical Company might make, at the time it made, or attempted to make, air application of the payments that had been made and entered in that account. In a case reported in 54 N. H., 395, a lumberman had hauled lumber for a series of years, and in August of a certain year a settlement was made in which there was found due $80.42 to the hauler of the lumber. After that he hauled lumber to the amount of $30 and performed other labor to the aggregate amount of $50. For hauling the lumber he was entitled to a lien. For the other work he was not entitled to a lien. These items were all charged in one account. The creditor had applied the payments made to the payment of the items for which he was not entitled to a lien, and to the oldest items of the account for which he was entitled to a lien. The contention was whether he could do that. The court sustained the creditor in that claim.

There is a case reported in 11 Nevada, 304, in which a superintendent of a mine not only did the work of a superintendent, but boarded the employes that were working in the mines. For his work he was entitled to a lien, but for the board of the men he was not entitled to a lien. Payments were made upon the account generally, and no application made by the debtor or creditor when the payments were made. But there came a time when the creditor sought a lien for his work, and he applied the payments which had been made to that portion of the account for which he was not entitled to a lien, and made out his lien for the labor, and in that he was sustained. The court say that where payments are made generally, the creditor may apply the payments made in that way to that portion of the account not subject to the lien.

In addition to this view our statute relating to mechanics’ liens provides in substance that a sub-contractor may furnish to the principal contractor the amount of his claim, and if not disputed within the number of days designated in the statute, it is to be held conclusive. This was done in this case. We have concluded to sustain the Forest City Chemical Company in the application that was made of the payment to this account, which results in sustaining the lien. We think there was nothing in the assignment to the bank that would prevent the adjustment of this account between the Forest City Chemical Company and the Claflen Paving Company, precisely as if no assignment had been made. The fact that notes were taken, which were not paid by the Claflen Paving Company to the Forest City Chemical Company is of no moment. They were all at the time the lien was perfected in the hands of the Chemical Company, past due, and that company brings these notes into court, and offers to surrender them to the Claflen Paving Company. I see nothing in the fact that the notes were given for a purpose of this kind and not paid, that would militate against taking the course I have indicated in settling the claim between these two parties. In short,_ we sustain the lien of the Forest City Chemical Company. The result is, that the fund will be divided between the two lien-holders represented by Mr. Grreen and Mr. Kerruish.

Sqnire, Sanders & Dempsey, for Plaintiff.

Kerruish, Chapman & Kerruish, and Arnold Green, Esq., for Defendants.

Judgment ordered. Plaintiff excepts'.


author: Hale, J.,

text:
    (Eighth Circuit Summit Co., O., Circuit Court
    April Term, 1895.)
    Before Caldwell; Hale and Marvin, JJ.
    DAVID MYER v. THE STATE OF OHIO.
    1. Where an agent of a business house in another state makes sales in Ohio of articles for his house, sending the orders to such house in the other state, which then transmits the articles sold directly, to the purchaser, and it appears that such articles are sold in violation of the law of Ohio against the. sale of adulterated food, the acts of said agent coustitute an offense under sec. 1 of that law, and on a-prosecution of such agent for such transaction, the courts of Ohio have jurisdiction to try him for the offense.
    2. It is not competent for the defendant in a prosecution under that act to prove want of Knowledge as a defense. - Altschull v. State, 5 C. C. Rep. 59. affirmed.
    Error to tlie Court of Common Pleas of Summit County..
   Hale, J.,

(orally).

This is a proceeding in error whereby it is sought to reverse the judgment of the court of common pleas, affirming the judgment of a justice of the peace.

The plaintiff in error was tried before P. H. Hoffman, a justice of the peace of Akron township, upon an affidavit ■charging him with unlawfully selling as and for blackberry wine “a certain compound and mixture consisting of wine, sugar, water, alcohol, salicylic, ácid and aniline red.”

The case was tried by a jury, which returned a verdict of guilty. A motion for a new trial was overruled, and the accused sentenced to pay afine of $000.00.

The. judgment of the justice’s court was affirmed by the court of common pleas, and the records of both courts are brought to this court for review by petition in error.

We will use the terms plaintiff and defendant as they appear in the petition in error. The errors insisted on, are:

First. _ That the court erred in overruling plaintiff’s motion in arrest of judgment, for the reason that the affidavit did not state facts sufficient to constitute an offense under the laws of the state. The transaction described in the affidavit is made unlawful by the first section of the act passed March 26. 1891, 88 O. L., 281, and the allegations are manifestly sufficient to define an offense under that act. There was,' therefore, no error in overruling this motion.

Second. It is insisted that the offense, if committed at all, was committed in Pittsburgh, in the state 'of Pennsylvania, of which the courts of this state have no jurisdiction.

This claim is made upon the testimony offered in the case, and embodied in a bill of exceptions. We hold that a fair interpretation of that evidence fails to sustain this claim.

All that was done by the plaintiff in connection with this transaction vras done and performed in the city of Akron, and if responsible at all, he is amenable to the laws of this state.

Third. It is stated that the court erred in submitting the case to the jury without instructions. The record shows that after the arguments of counsel had been concluded, the court submitted the case to the jury without instructions, to which omission by the court, counsel for plaintiff' excepted. The court was not asked to instruct the jury, nor were any instructions presented to the court with the request that they be given to the jury. We, therefore, hold that there was no error saved by this exception.

In this view we are supported by the opinion of the court in the case of Hirth v. Grarham, 50th O. S., page 59. .

Fourth. It is insisted that the court erred in excluding from the jury testimony offered by the plaintiff. On'the trial of the case the plaintiff in error was examined as a witness in his own behalf, and in the course of his examination was asked the following questions:

Q. “When you had this conversation with Mr. Herzberger, and also when you wrote out this order and put it in the mail, what knowledge, if any, did you have that the liquor sent to him would be other than pure liquors of this kind?”
Q. “What knowledge, if any, did you have that Mr. Sunstein had at his house or place of business any liquors of the kinds mentioned in this order, that were in any wise adulterated?”

An objection to each of these questions was sustained by the court, and the plaintiff offered to show in answer to the first question that he had no knowledge that the liquors to be sent to Mr. Herzberger, the purchaser, would be other than pure liquors of the kind described in the order which he mailed to the house; and to the second question that he had no knowledge that Mr. Sunstein had any adulterated liquors whatever, of the kind mentioned in the order. To this ruling of the court the plaintiff excepted.

The statute under which this complaint was made, after defining what shall be denominated adulterated wine, and specifying various compounds as such,-enacts “any person, or persons, who shall manufacture, or cause the same to be done with intent to sell, or shall sell, or offer to sell any of such wine or beverage, shall be deemed guilty of a misdemeanor. ’ ’

In the case of Altschul v. The State of Ohio, this court considered the question whether in prosecutions under this statute, it was incumbent upon the state to aver in the affidavit and prove upon the trial that the accused knew the wine sold to be adulterated. 8th O. Circuit Court Reports, page 214.

We are now to consider whether it is competent for the accused to prove, in his defense, a want of knowledge.

The opinion in that case was prepared by Judge Baldwin, and much of the reasoning used by him is applicable here, and need not be repeated. This, and other statutes relating to the adulteration of food, are clearly within the proper exercise of the police power of the state, and to be regarded as police regulations by the state. Within the legitimate limits of that power the legislature has deemed it essential for the public welfare to prohibit the sale of adulterated wine, and in language so clear and positive as to leave no doubt of the legislative intent. It may be fairly inferred that the legislature of the state intended by this positive enactment to prohibit absolutely the sale of adulterated wine, and that knowledge by the accused, of its adulteration, is not an essential element of the crime.

It must be conceded that the object and purpose of this statute, if not wholly subverted, would be weakened to that extent that it would in no wise accomplish the results intended by its enactment, if the accused may go acquit by simply showing he did not know the nature of the article sold.

Food is sold to be consumed. The purchaser is under no obligation to analyze the article purchased for that purpose to ascertain whether it contains substance injurious to health, nor would it be practicable for him to do so, and it should be no answer to his complaint that the seller had no knowledge of its impurity, nor should it be a defense to the seller when called to an account by the state to answer that he was ignorant of the substance he was selling. We see no injustice in holding the seller of food products responsible for what he sells, and in casting upon him the burden of knowing whether the food sold, does, or does not, fall within the prohibition of the statute. With that care and honesty which is encumbent on the seller of such products, he is in no danger of suffering wrongfully or unjustly from the enforcement of the rule adopted by the trial court, while the enforcement of that rule seems to be an absolute necessity to protect the public from fraud and imposition.

The Views already expressed seem to us upon principle to be.well founded. The consideration of the authorities, certainly outside of Ohio, fully sustains this position. The rule very generally adopted and adhered to by the courts of this country and of England, approved by the best text writers, may be stated thus: ‘' If a statute commands that an act be done or omitted, which in the absence ofo the statute would be blameless, ignorance of the fact or state of things contemplated by the statute, will not excuse its violation.

Of the numerous authorities supporting the proposition we are considering, we cite, Barnes v. The State, 19th Conn., 397. Commonwealth v. Nichols, 1t0h Allen, 199. State v. Smith, 10th R. I., 258. State v. Hatfield, 24 Wis., 60. State v. Frank Heck, 23rd Minn., 549. The People v Anthony Girard, 145 N. Y., 105. Commonwealth v. Warren, 160th Mass., 533. People v. Kibler, 106 N. Y., 321. 3rd Greenleaf Evidence, Section 21. Regina v. Woodrow, 15 M. & W., 404. 9th Allen, 489. State v. Tomasi, 31st Atlantic Reporter, 780.

It is contended that whatever may be the holdings of other courts, that under the rule heretofore adopted by the courts of Ohio, the testimony excluded was clearly competent, and our attention is called to the case of Anderson v. The State, 7 Ohio, part 2nd., 230, Birney v. State, 8 Ohio 230, Crabtree v. The State, 30 Ohio St., 382, Farrell v. The State, 32nd Ohio St. 456.

• The first three cases are clearly distinguishable from the case we are here considering. In each case the act constituting the offense was not a crime unless some independent fact co-existed with it. These cases may reasonably be said to fall within the rule stated by Desty in his American Criminal Law, section 35. “When an offense is so defined by statute that the act of the offender is not a crime unless some independent fact co-exists with it, ignorance of the existence of such fact or mistaken belief in good faith and on reasonable grounds that it did not exist, should excuse from crime. ’

Oviatt, Allen & Gobbi, for plaintiff in error.

Clark &Thompson, for defendant in error. •

In the case, of Farrell v. The State, the court considered a question more nearly analagous to the one arising in this case. It is not unlawful to sell intoxicating liquor in Ohio except in a place or for a purpose prohibited, or to a prohibited class of persons named in the statute, while it is unlawful to sell under any circumstances, or to anybody, adulterated wine. The two classes of cases are in this respect certainly distinguishable. The case of Farrell v. The State is reported in the 30th American Reports, page-■, to which is added a very elaborate note by the learned compiler and from all the authorities, the conclusion is reached that that case is clearly against the weight of authority in this country.' We are not disposed to extend the principle announced in that case beyond the class of cases in which the question arose. Nor do we see anything in any of the .Ohio cases which leads us to believe that the Supreme Court will so extend the principle.

Perhaps some weight should be given to the fact that in the statutes relating to the manufacture and sale of adulterated vinegar, and also the statute relating to the sale of oleomargarine, knowledge on the part of the seller by the express terms of the statute is made an element of the crime; while in the statute under which this prosecution is conducted, the word “knowingly” used in the other statutes is omitted.

Wo therefore hold that it was not competent for the accused to show in his defense that he did not know that the substance sold was adulterated wine, and that there was no error in excluding the evidence offered.

We find no error in this regard, and the judgments of both courts are affirmed.


text:
    (Eighth Circuit—Cuyahoga Co., O., Circuit Court
    Jan’y Term, 1895.)
    Before Caldwell, Hale and Marvin, JJ.
    LEOPOLD NEWSHULER v. LEVI MAULE et al.
    1. In a proceeding to revive a judgment, where the judgment debtor pleads his discharge in bankruptcy, such discharge will not be a bar to such judgment where it appears that the original cause of action on which such judgment was rendered was one of fraud of the most active kind.
    2. The proceeding to revive such judgment brings the whole record of the original cause before the court.
    Error to the Court of Common Pleas of Cuyahoga Co.

      Wilson & David, for plaintiff in error.

      W. G. Rogers and Olds & Willett,for defendant in error.
   Hale, J.

This case brings before this court a record in "which a judgment rendered in favor of the defendant in error against the plaintiff in error was revived in the court of common pleas. A motion was made to revive this judgment, and the only objection made to the revival of the judgment was that Newshuler had been released from its payment by a discharge in bankruptcy granted to him by the U. S. District Court N. D. O. The examination of the record discloses that the cause of action upon which that judgment was rendered was one of fraud, in which Newshuler had sold to Maulé, or attempted to sell to him, certain lands to which he had no title, and which contract he accomplished by fraud of the most active kind.

That is the record. Now we hold that the whole record of that judgment is brought before the court by this judgment, and looking into the record, we find it as I have stated. That being so, the discharge in bankruptcy would not release Mr. Newshuler, and we think the court of common pleas properly made its order reviving this judgment. There may be some objection to the manner in which it was got at, but the result was certainly right, and no erroi to the prejudice of the plaintiff in error ensued.

The judgment of the court of common pleas is affirmed.


author: Caldwell, J.

text:
    (Eighth Circuit—Lorain Co., O., Circuit Court.
    April Term, 1895.)

    Before Caldwell, Hale and Marvin, JJ.
    THE FIRST NATIONAL BANK OF WELLINGTON v. THE MANSFIELD SAVINGS BANK.
    1. Power of cashier to make contracts. — The cashier of a bank cannot make for his bank a contract, in regard to a subject-matter outside of the usual and customary business of the bank, and outside of the business usually performed by cashiers.
    2. Competency of instructions by principal to agent. —Where an agent has had definite instructions not to act for his principal in a matter outside of his duties as an agent, the principal may show such instructions where he is sought to be held for the acts of his agent contrary to such instructions.
    3. Character of agency of different banks receiving a draft for collection. ■ — Where a banK in this state receives for collection a draft, payable in this state, and for the same purpose forwards the draft to its correspondent in Pennsylvania, and the bank in Pennsylvania forwards it for like purposes to another bank in Ohio where it is payable, such last-named bank is the agent of the bank in Pennsylvania, and is not the sub-agent of the bank',' in Ohio that first received the draft. The bank in Ohio where the collection is to be made, is responsible for its negligence to the Pennsylvania, bank only. ■
    I. Obligation of one who is liable on one of two separate claims to defend against both claims. — If M. is sued’on two separate claims, and W. is liable to M. on one of the claims, if M. has it to pay, but is not thus liable on the other claim, and M. when sued notifies W. of the pendency of the suit, W. is under no^obligation to defend the suit involving both claims, and if judgment is obtained against M. for the sum of both claims, M. cannot recover from W. a part of the costs and attorney fees in"the suit against him.
   Caldwell, J.

Tbe Mansfield Savings Bank in its petition against tbe First National Bank of Wellington says: Tbat on tbe 5tb day of December, 1881, tbe firm of Crawford & Taylor drew a darft for $61.16 at one day’s sight on Smith & Jordan of Wellington, O., payable to tbe order of R. Brinkerhoff, cashier, and deposited said draft with plaintiff for collection. Plaintiff says tbat it sent said draft through tbe usual course of business for collection, rand tbat the defendant received the draft on the 9th day of December, 1881. four days after it was drawn, and presented it for acceptance; it was accepted; they then held the draft until the 20th day of January, 1882, when they returned it.

Then another draft of $30.54 was drawn by the same parties, Crawford & Taylor, on the same persons, Smith & Jordan, of Wellington.' That was sent by the Mansfield bank directly to the First National Bank of Wellington.

This draft was made on the 3rd day of January, and was sent to the First National bank, of Wellington and presented and accepted on the 5th day of January, and that was returned on the 19th day of January.

Crawford & Taylor brought suit against the Mansfield Savings Bank,Smith & Jordan having failed about the 19th or 20th of January, 1892. Crawford & Taylor brought the suit against the Mansfield Savings Bank to recover the amount of these two- drafts, claiming that the bank either itself or through some one after sending it had been guilty of negligence in holding these drafts at the very time when if they had been retunred they themselves could have collected them, or at least got them, secured. And that being the case, that the Mansfield bank was responsible to them for the amount of these two drafts. They say that after they were sued before the justice of the peacein Mansfield, they notified the First National Bank of Wellington of that fact, and asked them to take charge of the suit, as the responsibility, being on it, must finally rest on that bank.

It is claimed that at one time, while the case was pending before the justice of the peace, Horr, the cashier of the First National Bank of Wellington, went down to Mansfield, and that he had written several letters before that to them. But these letters are now lost; they were not produced on the trial of this cause; and they say that while there he made an arrangement and employed the attorneys of the bank at Mansfield to look after the suit; that in addition to that they say those letters that were lost stated that they would do this, and asked BrinkerhofE, the president of the Savings Bank at Mansfield, to secure attorneys to look after this suit at the expense of the Wellington bank.

There are three parties who testified that when Mr. Horr was in Mansfield he made this arrangement, and took upon the bank that he represented at Wellington the responsibility of looking after the litigation in Mansfield. Mr. Horr claims and testified that he made no such arrangement; that he went to Mansfield for the sole purpose of testifying in that case, intending to show by his testimony,if possible, that he simply held these drafts for collection; that that was the custom and the rule where papers were marked “no protest;” and that they not being paid, the parties having failed to show by his testimony that there was no time while they held these two drafts that they could have possibly been collected from Smith & Jordan. This was one point at issue between the parties upon the evidence. The defense to this action set up that the first draft that was sent, which was a sight daft, or due one day after sight, was sent to the Pittsburgh bank by the Mansfield Savings bank, and the Pittsburgh bank sent it to the First National Bank of Wellington for collection. This is not denied at all, but is admitted.

It is plain that the bank at Wellington is not responsible to the Mansfield bank but only to the Pittsburgh bank, and the Mansfield bank must look to the Pittsburgh bank for the payment óf that draft, if they can make a case against that bank. Then that leaves the facts of this case standing this way: Was or was not Mr. Horr, the cashier of the bank,an agent capable of making the arrangement that it is claimed he made at Mansfield? And secondly, has any evidence been shown, if he was not by reason of his being cashier of the bank capable within that agency of making that contract— was he in any manner qualified or authorized by the bank to make that arrangement, and did the bank thereafter ratify that arrangement?

These are the facts in this case. And the second question is this: Is the bank at Wellington liable directly to the Mansfield bank upon the draft that was sent to them through the Pittsburgh bank? The next question that arises is: Was the bank at Wellington compelled, after having been served with notice, to defend the suit in Mansfield against the Savings Bank there as to the second draft which was sent by the Savings Bank directly to the First National.

As we have said; the facts appear clearly as I have stated them, and these issues are raised in this bill of exceptions.

Mr. Horr was unquestionably ..the cashier of the First National at Wellington; he undoubtedly went to Mansfield. He testified that he went there for no other purpose than to give his testimony upon the trial of that case.

The Savings Bank has introduced no testimony except the fact that- Mr. Horr while there entered into an arrangement, and by letters written before lie went there that he- would enter into such an arrangement, and that he did while there enter into an arrangement or agreement to prosecute that suit. Now, we think the'law is clearly that the cashier of a bank has not by reason of his agency as cashier the power to make such a contract, that it is not within the scope of that agency that he should have made the contract that the Mansfield Savings Bank claims he did make.

It was necessary to show that he had authority to make the contract; that proof devolved upon the Savings Bank of Mansfield. It was not necessary to prove the agency of Mr. Horr — that was admitted; he was the cashier of this bank; but the extent of that agency, whether that agency was extended by the bank to include this arrangement it is claimed he made at Mansfield, was a matter that must be proved. There is no proof whatever on that subject. Nor is there any ratification of anything he did there in this evidence. It is claimed that the bank at Wellington undertook to take depositions to carry out this arrangement, but what was done there — everything that was done — was done by Mr.' Horr; so if he had no authority to make the arrangement at Mansfield, he certainly had no authority to carry it out.

During the trial of this case the bank proposed to show that Mr. Horr had no authority to make such an agreement. There was evidence that the Savings ank was endeavoring to get the First National to take upon it the burden of that suit in Mansfield, and I have no doubt but that that fact came to the ears of the officers of the bank, and the officers of the bank met and took action upon the matter, and this testimony was offered in regard to that when Mr. Horr was on the stand:

Q. You may state whether you received any instructions form the directors?

A. I did.

Q. What was it?

To this question the plaintiff objected, and the court sustained the objection, and the defendant then and there excepted. And then the attorney for the First National made a statement of what he would prove by the answer to that question. ‘ ‘ I offer to prove that the board of directors instructed him to take no steps whatever toward assuming the defense of that suit or employing any attorneys; but simply to give the testimony, and give what facts he had as cashier, and that the board considered this in meeting, and gave him directions of that sort.”

But this question was as to what directions were given him, It may be said that this was excluded because it must have been in writing; but his is not true. All corporations are supposed to keep a record, but it is well known they do not record all their doings in that record, and if it is not recorded, it may be shown by oral testimony, and it does not appear here whether there was or was not any record of the action of that board wherein they gave instructions to Mr. Horr, and it was error in the court to exclude that testimony until it was positively known that the instructions that were given to Mr. Horr by'the directors of the bank were in writing.

We think the court erred, and the error was prejudicial, because this evidence would have shown, as it was claimed by the attorney here and he offered to show by the answer of this witness, that the bank instructed him to have nothing whatever to do with the prosecution of that suit in Mansfield of that defense — and the case should be reversed on account of this error. In the next place it is claimed by the bank of Mansfield that judgment having been obtained against it, that the First National is bound by the amount that was recovered against the Savings Bank at Mansfield.

One draft sued on was not sent directly to the First National, but to the Pittsburgh bank,and then by the Pittsburgh bank here; that raises the question of whether there was any contract between the Mansfield bank and the First National, and the authority in this state is that there was no contract, relation. That the Wellingon bank was not the agent of the Mansfield bank, and that there was no contract relation between them. And the authority in this state in the case of Reeves, Stephens & Company v. The State Bank of Ohio, 8 Ohio St. 465, was a case where Reeves, Stephens & Co., presented a paper to the Commercial Bank of Toledo for collection; the Commercial Bank of Toledo sent it to the American Exchange Bank of New York; the Commercial Exchange Bank of New York made the collection, and about the time this collection was made the Commercial Bank of Toledo failed; that was a branch bank of the State Bank at Columbus, and the Ohio State Bank became responsible for its liability, and was entitled to all the assets there were when this was collected. The Ohio State Bank was entitled to the money collected on it, and was liable to Reéves, Stephens & Co., of Cincinnati, either as creditor or as money held in trust for them,or held especially for them, and this was one-of the questions that was tried in the case; but has nothing to do with this matter. Brinkerhoff, Judge, in his opinion in this case says, that the case might be considered in this light: that Reeves, Stephens & Co. had sued directly the American Exchange Bank of New York, and then he considered it in that light. In that case it was held that Reeves, Stephens & Co. could have no claim whatever against the New York bank. That determines this case. The Mansfield bank'sends this paper to Pittsburgh, and the Pittsburgh bank sends it directly to the Wellington bank. The Mansfield bank having sent through the Pittsburgh bank, and the Pittsburgh bank to the Wellington bank, makes the precise case that was in the 8th Ohio St. that I have referred- to. And if we follow that ruling, we must hold in this case that the Mansfield bank had no cause of action on that first draft against the Wellington bank. It was contended by the Mansfield Savings Bank that even if no contract was made by Mr. Horr with the Mansfield Savings Bank, that notice to them of the pendency of that suit, and knowing as they did if there was any liability by reason of the neglect, that that neglect was on the part of the Wellington bank, and that mere notice to them of the pendency of that suit in Mansfield was sufficient to compel them to’ defend that suit, and if they did not defend in that suit, they were bound by the judgment so far as the amount of the judgment was concerned.

Admitting now that it is the rule, that#mere notice is sufficient where the party is liable, yet this case in not the usual case. We find here two claims sued upon in Mansfield. The bank in Mansfield sues upon two claims. It had a claim, if it was liable, directly against the Wellington bank, on one of those claims; but had no claim on the other on the Wellington bank. That then brings us to this question of law: If a party is sued, and if he is compelled to pay he has a right to look to a third person to make good the judgment that may be obtained against him, if he is sued and there is notice to this third party, then the third party is bound by that judgment, we will say. But here is a case where the party has sued upon two claims; on one of them the third party was liable to the party sued; and on the other the third party was not liable to the party sued. Is the party who is ultimately liable on one of those claims bound to step in and defend that suit where he is not liable to the party sued upon the other claim? And we clearly think the law is that he is not liable unless he contracts to defend that suit

The court charged that if Mr. Horr mad3 a contract, and a legal contract, a lawful contract, to defend that suit against both of those claims, that then the bank could recover in this action, and we find no fault with that. We think that although the Wellington bank Was not directly responsible to the Mansfield bank on the first draft, yet it was evident that they were ultimately liable to the Pittsburgh, and the Pittsburgh to the Mansfield bank, and that if the Wellington bank contracted to defend that suit, as to both of these claims, we think there was consideration enough in this matter of their ultimate liability to make that binding; but we do not find any testimony showing that Mr. Horr had any right to make any such arrangement, so the cpestion is left to this: Was mere notice upon the Wellington bank sufficient to bind it to the judgment against the Mansfield bank as to the second draft? The court in its charge to the jury said that would bind them. That is, if they had notice of the pendency of that suit. If the Mansfield bank had a right to sue the Wellington bank upon part of that judgment, and the Wellington bank had notice of the pendency of that suit, then the jury would be warranted in adding to the amount of the judgment obtained upon that part claimed, a reasonable part of the expenses, such as a proportion of the costs of the Mansfield suit and attorney’s' fe'es. That was error on the part of the court below; because we think the Wellington bank could not be bound to the Mansfield bank on a part of that judgment, unless they contracted to defend that suit, because of the reasons, as I have before stated, that they were not bound to defend so far as their obligation to the Mansfield bank was concerned. Upon mere notice the Mansfield bank cannot hold the Wellington bank to a part of a judgment where it was not liable to the Mansfield bank upon another claim entering into the same judgment. There was considerable testimony offered as to the mode of dealing between the Mansfield bank and the Wellington bank. The Wellington bank claimed it had become a custom, between these two banks, for the Wellington bank when it received a paper marked ‘ ‘ no protest, ’ ’ to hold that paper and try to collect it, in at least a reasonable time, and then return the. paper, if not collected; and if collected, then return the money.

It was claimed on the part of the Mansfield bank that there was no such custom between these two banks, and this matter was submitted to the jury. It is clearly shown by the testimony that considerable paper passed — a great number of pieces of paper passed between these two banks — presented to the Wellington bank by the Mansfield to collect. And quite a number of other papers that were sent to the Wellington bank, by sending through other banks, sending to other banks first, and then to the Wellington bank, and the same course was pursued with all those papers that was pursued with these papers here, except that this paper was held a little longer; but so far as there is any evidence upon that subject at all, it seems to be all one way — that it was the customary way of doing business, when such paper was received, for the Wellington bank to hold it and try to collect, as long as it had a reasonable show of collection, and return the money after collection. One of the drafts here in question was sent on the 5th day of December, 1881; it was presented for acceptance, and accepted on the 9th day of December, 1881. Now, from December 9 until January 3, 1882 it would be twenty-five days. The paper had not been returned to the Mansfield bank. Then the Mansfield bank sent the second draft here in question; but so far as is shown in the record not one word was said as to why the other draft was not returned, and if it had been collected, why, the proceeds were not returned. The bank at Mansfield seemed, so far as this record is concerned, to rest satisfied that the Wellington bank was pursuing the usual course of business between the two banks, so that the testimony in this respect was substantially all one way — that this was the custom between these two banks. That question was submitted to the jury, submitted by special finding to the jury, and the jury found against that custom, and so clearly against the whole testimony, we may say, that the judgment will have to be revered also on that ground, that it was against the testimony. The plaintiff claims that it was the custom with the banks in Ohio, especially northern Ohio, to hold a paper that was marked “no protest” — to hold that paper for collection after it had been accepted; to hold it as long as there was any reasonable show of payment. That is, a reasonable length of time. Now, Mr. Warner, who has been a banker for a great many years, Mr. Horr, Mr. Hill of this city, and one or two others testify that was the custom, and there is nothing to contradict it, and the only thing that is said against this is this, that the parties who were on the witness-stand kept saying “so far as I know, ” ’“so far as our experience goes, ” “so far as we have handled papers for other banks, and 1 ‘ so far as they have sent it to us, that has been our way of doing. Yet, all of these witnesses did say it was the general custom among banks in northern Ohio to do that way. And there is not any testimony in this bill of exceptions looking any other way. No witness is called to say there was no such custom, or that it was not universal, or was no such general dealing in northern Ohio as to be called such custom, and we think the jury erred in finding there was no such custom. Of course, the holding of this paper • — the bank here may justify its holding this paper, and yet be so negligent in trying to collect the paper that they would be liable; but the evidence shows they ought not to be liable by reason of holding the paper simply, and for that reason we think the jury erred, and upon these various errors we reverse the case.

Boynton & Horn, for plaintiff in error.

Kerr & McBride, for defendant in error.


author: Smith, J.

text:
    (First Circuit Butler Co., O., Circuit Court
    April Term, 1895.)
    Before Swing, Cox and Smith, JJ.
    JAS. DAVIS v. H. D. PORTER.
    Davis entered into a written contract with Porter, his son in law, whereby he leased to him, during the life of Davis, a tract of land, and Porter was to pay therefor an annu al rental of $250, and the taxes thereon. The lease further says. “The said James Davis having by his last will and testament bequeathed the premises leased, to Emily Porter, the wife of said Harry D. Porter, and daughter of the said James Davis, she is to take possession of the same from and after the death of said James Davis. It is expressly agreed on the part of the said James Davis that the said Harry D. Porter is to take free and entire possession of said premises hereby leased, from and after the 1st day of March, 1883, and to make such repairs and improvements thereon as he may deem best for his interest and the interest of his said wife. In a word, “he is to use said premises as if they were his own.” Porter took possession of the premises and erected buildings and made other improvements thereon. Afterwards Davis, with the knowledge of Porter, executed and delivered to Emily Porter a deed for said premises for her life, with remainder to her children, and subsequently Porter and wife mortgaged the property to another to secure a debt. Davis sued Porter to recover the rents alleged to be due, and Porter, by way of counter-claim, sought to recover the damages which he claimed had resulted to him by his having made improvements on the real estate, and that Davis having conveyed only a life estate in the land to Mrs. Porter instead of a devise to her in fee, as he had stipulated to do, that he should recover the damages Sustained by him thereby. On the trial the court found in favor of Porter on his counter-claim, and assessed his damages thereon, substantially at the cost of the improvements. Davis, Porter and his wife are still living. On this state of facts, Held:
    1st. That the contract did not provide that in any event, Davis should compel, sate Porter for, or pay to him the cost or value of any improvement made by him on said premises.
    2nd. That the sipulations or recital in the contract as to the existence of the will of Davis, whereby he had devised to his said daughter those promises in fee simple, and as to the right of Porter to make improvements thereon during his lease as ho might deam best for the interest of himself and of his w-ife, were in the nature of an existing and material fact, and were a part-consideration for the making of such contract, and it was incumbent upon Davis to see that such arrangement as to the devise of the land was carried out. And in case of a breach of this stipulation by Davis, he would be liable to Porter for the damages resulting to him therefrom.
    3rd. Such performance might be waived by Porter, and it was done in this case.
    4th. Whether there has been a breach of the contract entitling Porter to sue thereon during the life time of Davis, Quiere, But if this be conceded, yet owing to the fact that it is absolutely uncertain how long the term of Porter may continue, and whether his wife will survive her father or Porter survive his wife,and as the only damage that Porter might sustain by breach of this stipulation by Davis would be in the event that Mrs. Porter should survive her father and Porter survive her, and would be for the loss of his contingent right of dower in the improvements made, it is manifest that the cost of such improvements, with the interest thereon, is not the measure of his damages, and should not be allowed.
    Error to the Court of Common Pleas of Butler County.
   Smith, J.

We are of the opinion that the finding of the court of common pleas on the counter claim interposed by the defendant below, was manifestly against the weight of the evidence, and therefore that there was error in the action of the court in overruling plaintiff’s motion for a new trial, based on this ground. Without going at length into the discussion of the question,we may say:

1. That it seems entirely clear to us, that by the contract between the parties, by which Davis leased to Porter the 80 acre tract of land during the life of Davis, at an annual rental of $250, to be paid by Porter to Davis, and by the express terms of which, Porter was authorized to enter upon the possession of the tract and use the same as his own, and was privileged to make such improvements thereon, as in his opinion would be for the benefit of himself and his wife, there was no stipulation or agreement, either express or implied, that if any such improvements were put upon the premises by Porter during the term, or at any time, that Davis was to be liable for the amount expended for such improvements, or any part thereof. There is not the slightest reason, judging from the language used in the contract, that- any such idea entered into the minds of the parties. As appears therefrom it would seem it was the intention of Davis that his daughter, the wife of Porter, should under the terms of his will, then in existence, take this tract in fee simple as part of her share of the father’s estate, and Porter expected the same thing, and therefore it was that it was stipulated that he might make such improvements, using any of the timber on the place in doing so. But as has been said, there was nothing in the agreement from which it could be inferred, that either party contemplated any payment by Davis on account of such improvement, and it would have been so unreasonable to so provide, that any such idea must be left out of the question.

2. Has any such state of fact been averred in the counter claim, and supported by the evidence, as shows that,for any reason, Davis has become liable to Porter, as for a breach of this contract or arrangement entered into between them, as makes the former liable to the latter, and if so, what would be the measure of the damages ?

This contract of lease contains these provisions: Davis in consideration of the covenants of Porter therein mentioned, among others the payment of an annual rental of $250,rents the land to Porter during Davis’ life. Porter was also to pay all taxes thereon during the term. It then says: “The said James Davis,having by his last will and testament bequeathed the premises leased to Emily Porter, the wife of said Harry D. Porter, and daughter of the said James Davis, she is to take possession of the same from and after the death of said James Davis. It is expressly agreed on the part of the said James Davis that the said Harry D. Porter is to take free and entire possession of said premises hereby leased, from and after the 1st day of March, 1883, and to make such repairs and improvements thereon as he may deem best for his interest and the interest of his said wife. In a word, he is to use said premises as if they were his own, ’ ’ and was only bound and obliged to pay the yearly rental and taxes as aforesaid.

What effect, if any, 1ms this provision upon the rights of the parties? Is it merely a recital of an existing fact, viz., that at the making of the contract of lease, Davis had executed a will, by which, (if he allowed it to rerftain as his valid last will until his death), Mrs. Porter was to have this tract of land, and that Davis after the execution of this lease to Porter, could without incurring any liability to him, revoke his will, and by the conveyance of the land to some one else, apparently put. it out of his power to devise it to Mrs. Porter, and give her a good‘title to the same.

The question is one as to which we entertain some doubt. But speaking for myself I may say, that I incline strongly to the opinion, that the stipulation in question is in the nature of a representation of a material fact, and of one which naturally and probably was a part at least of the consideration of the contract, and an inducement for the defendant to enter into it, and expend his money in improvements upon the property to the possesion of which, under the contract, he was entitled during the life of Davis, and on the death of Davis, if his will stood, the wife would take the fee simple, for we all agree that this is the meaning of the provision, and that if this is a stipulation of the contract which Davis was bound to perform, it would not be satisfied by the devise to her of an estate for life merely. I think the effect of the language was, that it was a part of the contract between Davis and Porter that he was to see that on his death Mrs. Porter took the title to this land, if she were still living; and that, if this stipulation was broken by Davis, and as a result of this Porter was damnified, Davis would be answerable to Porter for the damages actually sustained by him by reason of the breach of this agreement, and Judge-Cox agrees with me as to this.

But if this be so, (and I think we do not all agree that it is), and it is an agreement or covenant on the part of Davis that the wife of Porter on the death of her father should have this land), other important and difficult questions arise, and 1st. Has there been such a breach of this covenant on the part of Davis, as entitles Porter now to sue and recover damages therefor ? The contract, if it be one, is that Davis at his death will leave a will under which Mrs. Porter would take the land. Davis is still alive. It is possible that although he made a conveyance of this land to Mrs. Porter for life, and to her children in remainder, several years ago, that he may re-possess himself of the land, and devise it to his daughter, Mrs. Porter. But there is the doctrine of the law (and it is the one as to which there is great diversity in the authorities,) that a promisor by absolutely putting it out of his power to fulfill a contract entered into by him, may make himself liable, without demand, from the time he thus incapacitates himself, even though the time for performance has not yet arrived. He may for instance (according to some of the authorities,) expressly repudiate the contract,in which case he may at once be sued, though the other party, if electing to sue immediately for the repudiation, cannot afterwards insist on the performance. ’ ’ Wheaton on Contracts, sec. 885a. In sec. 676,2nd. Parsons on Contracts, is this statement: “If one bound to perform a future act, before the time for doing it declares his intention not to do it, this is no breach of his contract; but if his declaration be not withdrawn when the time comes for the act to be done, it constitutes a sufficient excuse for the default of the other. “ See authorities stated in decision of Judge Conner, Ham. Common Pleas, 9 Law Bul. 180.

But if it is a breach on the part of Davis to have conveyed this property to Porter’s wife and children as he did, it was a breach which might be waived by Porter He knew of this conveyance to his wife for her life, with remainder to her children, but made no objection to it, but acted upon it, and thereby practically consented to it, when with his wife he executed a mortgage upon it doubtless to secure his own debt, and ought not now to be allowed to claim that what was done was in violation of his rights.

But if it be conceded that there is now a cause of action, by reason of a breach of the contract, and if it has not been waived by Porter in the maimer stated, it seems to us clear that he is not entitled to recover anything like the amount awarded to him by the court. Of course it would.be very difficult to arrive at a correct conclusion as to the amount of his probable loss. Davis is still alive, and it is therefore wholly uncertain how long the term of Porter will still continue. It may be ten, fifteen or twenty years. He has already been in the use and enjoyment of these improvements for several years, and may be for many years more while his lease continues. This should be taken into the account. It is possible, and perhaps probable that by the time the lease terminates, the improvements made may be gone. He would then have suffered no loss by the breach of the contract by Davis. Then the question would arise as to- Mrs. Davis living longer than her father, for if she should die before him, even if the land had been devised to her in fee, her children would take it as her heirs, and the husband not be entitled to any interest therein, even if he survived her.. And of course, if he died before her, he would never have any interest in the land. The only loss he could suffer by reason of the breach of this contract by Davis, would be in the event that he survived both his father-in-law and his wife, and she had survived her father; and then for the reason that if his wife had taken the fee, he would have been entitled to a dower interest of one-third in the land if he survives her, and being deprived of this, he would thereby be deprived of the use of one-third of the improvements. But there was no evidence on any of these points, and the finding of the court, in effect, that the damage of the plaintiff was the cost of the improvements, has no legal foundation on which to stand.

Thos. Millihin, for plaintiff in error.

A. F. Hume, and Morey, Andrews & Morey, contra.'

On the consideration of the whole case, we have come to the conclusion that the whole judgment as rendered, should be reversed, as it seems to be an entirety, and a new trial awarded on all the issues raised by the pleadings.