text:
    TELEGRAPHS AND TELEPHONES.
    [Van Wert (3rd) Circuit Court,
    July 1, 1910.]
    Hurin, Allread and Kinder, JJ.
    (Judge Allread, of the-second circuit, sitting in place of Judge Donnelly.)

      United States Telephone Co. v. Middlepoint Home Telephone Co.
    1. Contract for Ninety-Nine Years Between Local Telephone Company and Toll Company, Partly Performed, Held Binding.
    A contract between a telephone company engaged in operating a local exchange and a telephone company engaged in long distance service for the physical connection of lines and interchange of business, for a period of ninety-nine years, where partly performed, of material benefit to the party seeking its avoidance, and where the other party upon faith of, and in. performance of, said contract has made large expenditures, is binding.
    2. Contract for Exclusive Toll Business Originating in Local Exchanges not Obnoxious to Public Policy.
    Such contract for exclusive interchange of business originating on the lines of the one and destined to points reached by the other is within the purview of Gen. Code 9171 (R. S. 3455), and is not obnoxious to public policy.
    3. Statute .Requiring Through Transmission of Messages does not Extend to Verbal Communication over Independent Lines.
    Gen. Code 9182 (R. S. 3462) requiring despatches'to be received, and transmitted from and for other telegraph lines, made applicable to telephone companies by Gen. Code 9191 (R. S. 3471), does nqt, when read in connection with Gen. Code 9171 (R. S. 3455), extend to through verbal communication requiring physical connection of independent lines.
    4. Injunction Lies to Restrain Certain Specific Acts Violating Contract for Uxclusive Toll Service.
    Injunction is an appropriate remedy to restrain certain specific acts threatened to he committed in violation of such contract.
    5. Stranger to Contract Sought to be Annulled not Necessary Party, though Claiming under an Impairing Contract.
    A stranger to the contract sought to he annulled, although claiming under an impairing contract, is not a necessary party.
    [Syllabus by the court.]
    Error to Van Wert common pleas court.

      Cable & Parmenter and G. M. Saltzgaber, for plaintiff in error.

      W. B. Mann, ~W. H. Daily and D. E. Tone, for defendant in error.

      Affirming United States v. Telephone Co. 19 Dec. 202.

   ALLREAD, J.

This action began in the court of common pleas.* It is founded upon a contract for an exclusive interchange of telephone business between the plaintiff and the defendant companies. The relief sought is an injunction against the defendant company from a violation.of the contract by connecting its exchange with, and routing business over, the lines of the Central Union Telephone Company.

A temporary injunction was allowed in that court as prayed for and made permanent upon final hearing.

An appeal has been taken and the cause submitted here upon the pleadings and evidence, and upon elaborate and able argument of the respective counsel.

As a preliminary to a discussion of the legal principles involved it may be recited that The Middiepoint Home Telephone Company, an incorporation of Ohio, is a characteristic local telephone company with'village and rural lines, a central exchange in the'village of Middiepoint, Yan Wert county, and toll service connection with the county seat exchange at Yan Wert.

The Central Union Telephone Company is incorporated under the laws of the state of Illinois, and engaged in the operation of both local and long distance service in the various cities, towns and villages throughout th,e states of Ohio, Indiana and Illinois, has a pay station and at least two local telephones in the village of Middiepoint and operates in connection with and through the American Telegraph and Telephone Company, a long distance company incorporated under the laws of New York, and extending throughout the United States and into portions of Canada.

The Central Union and the American Companies for the purposes of this case, and as applied to the general territory in-volved, comprises the “Bell System.” This system first occupied the telephone field both local and long distance.' Opposition companies appeared competing at first through local exchanges for local service, to which was added in due time toll service to nearby exchanges.

' The opposition companies were usually denominated “Independents,” although there was usually no connection except as they were in general opposition to the Bell System.

In the year 1898 the United States Telephone Company was incorporated under the laws of Ohio as a long distance company, and intended by its promoters to meet the needs and demands of the various so-called “independent” local companies. It obtained various similar ninety-nine year contracts from local telephone companies, upon the faith of which capital was invested in the construction of metallic circuits and other improved equipment and the extension of long distance; service. The zone of influence of the United States companies comprises chiefly the state of Ohio, portions of Indiana, Michigan, Illinois, with limited service to points beyond. The service of the United States company is distributed to the public through local exchanges and pay station booths. The alliance of the United States and the various local companies; through the operating contracts was, within the zone of its influence, in a general sense a rival and competitor of the Bell system.

The Middlepoint Home Telephone Company succeeded to. the properties and rights of the Middlepoint Telephone Company and the Middlepoint Southern Telephone Company. Each, of the former companies were in the independent system and under ninety-nine year contracts with the United States Company. Upon succeeding to the rights and properties of its; predecessor companies the prior contracts were abandoned or. superseded by the contract of September 2, 1904, entered into by the defendant company.

The main provisions of the existing contract are as follows :

Par. 4. “The second party (The Middlepoint Company) * * * agrees to transmit all business to points not now-reached by it or its own line or lines of the first party (except in Van Wert.county).”
Par. —. “The first party (The United States Company)agrees to transmit all messages destined to points on the lines; of the second party, not reached by its own system of wires, to> and over the lines owned or controlled by said second party-lying within Van Wert county, Ohio.”
Par. 2. “Said parties agree not to enter into any contract with any other person, firm, or corporation whereby any of the rights, privileges, or advantages herein acquired by either party may be impaired.”
Par. 5. ‘ ‘ Each party hereto agrees to receive from the other all messages destined to points within its charter or connecting lines which may be delivered to it by the other party hereto.'’"’
Par. 6. “As to all messages received by the Middlepoint company and transmitted over the lines of the United States company the Middlepoint company shall receive twenty-five per cent of the toll charges, and the United States company the balance, provided the Middlepoint company shall in no case receive more than twelve and one-half cents for any message.”
Par. 14. “This contract shall be in force for a period of ninety-nine years from the date hereof.” '

Pursuant to this and the preceding contracts the United States company constructed and has maintained long distance connections with the defendant’s exchange and has furnished long distance service with interchange of business.

The Middlepoint company, in order to secure service to points and exchanges not reached by the United States company and better long distance service to points within the territory of the United States company, contracted on November 29, 1907, with the Central Union company for a connection •of the wires of the Central Union company with the exchange .and subscribers of the Middlepoint company and a designation of the former company as toll agent of the latter at a specific per centum compensation. The stipulated connections were made December 23, 1907; and maintained for long distance service and the routing of business until February 23, 1908, when terminated by the restraining order of the common pleas court.

There is considerable testimony as to imperfect and inferior service at different points over the lines of the United States company and its connections. But we think that the nature of this service is not of such a character as to differ materially from that contemplated by the contract with the United States company, nor has the proper foundation-been laid for a termination of the contract upon that ground. The case rests upon the validity of the ninety-nine year contract. Independent of the obligations of the contract there is no doubt of the right of the Middlepoint company to maintain connections with and obtain the advantages of both companies. The Middlepoint company, therefore, is only restrained,, if at all, by virtue of the obligations of its contract.

The Middlepoint company contends that the dual connections and long distance service afforded thereby greatly extends and improves the service to its patrons and facilitates thereby the public necessity represented by its charter and the duties it has assumed. It therefore justifiés its violation of the exclusive and nonimpairment covenants of its contract with the United States company upon the ground that such stipulations are ultra vires and opposed to public policy.

Gen. Code 9171 (R. S. 3455) among other provisions authorizes a telephone company in respect to other lines to “join with any other company or association in conducting, leasing, owning, using or maintaining such line or lin.es upon such terms as may be agreed upon. ’ ’

This authority is sufficiently comprehensive to uphold an operating contract between telephone companies based upon .mutual exchange of business. The terms “using” and “maintaining” so employed are not without significance and application in the present case. To “use” another telegraph or telephone line includes the necessary physical connection and operating control for a limited time. To “maintain” another line may reasonably and fairly include not only the physical agencies necessary in operation, but may be extended to the guaranteeing or furnishing of business.

It is, however, contended by the Middlepoint company, and , in our opinion correctly, that the letter of the statute conferring charter power is not the absolute test of tiltra vires. The well established rules of public policy as reflected in the trend of decided cases and statutes, in pari materia will often be en-grafted as exceptions upon a general grant of power by the charter act. The special provisions of the enabling act may, however, reflect a legislative intent upon the subject of public policy, and if so, must be applied, although in some measure modifying the pre-existing rules.

But mere general phraseology should not be held to overturn or subvert long continued and well settled rules of public policy.

Assuming then that the contract under consideration is within the letter of the statute, we proceed to the consideration whether it is obnoxious to the established rules of public policy.

It is not without importance to note that the suit here is between the contracting parties, one seeking to sustain and the-other to avoid the contract. No better statement can be given of the underlying principle upon which the jurisdiction rests in cases of this kind than that by Chief Jijistiee Wilmont in Low v. Peers, Wilmont’s Opinions 377, cited in Crawford v. Wick, 18 Ohio St. 190, 203 [98 Am. Dec. 103].

“It is the duty of all courts of justice to keep their eyes steadily upon the interests of the public even in the administration of commutative justice; and when they find an action is founded upon a claim injurious to the public, and which has a had tendency, to give it no countenance or assistance ‘in foro civili.’ ”

The contract under consideration is attacked upon the ground, (1) that it is in restraint of trade and tends to stifle and restrict competition, and (2) that it disables the contracting public service corporations in respect to certain public duties made incumbent by the charter and regulating acts.

In the consideration of the principles of public policy as affecting the validity of contracts the courts do not proceed upon abstract theory, nor allow themselves to be controlled by a narrow view of the terms employed. To vitiate a contract in such case the public welfare in a practical sense must be injuriously affected either in fact or in logical and natural tendency.

This doctrine finds support in the opinion of Mr. Justice Harlan in the recent case of the Continental Wall Paper Co. v. Voight & Sons Co. 16 O. F. D. 216, 240 [212 U. S. 227, 266; 29 Sup. Ct. Rep. 280], as follows:

“The adjudged cases all hold that, upon the question whether the particular contract sought to be enforced arises out of an illegal transaction, the court will not be restricted to a partial statement of the facts, but will consider all the circumstances connected with the transaction, so as to ascertain its real nature.”

To the same effect are, Whitwell v. Tobacco Co. 125 Fed. Rep. 454, 460 [60 C. C. A. 290], and Philips v. Cement Co. 125 Fed. Rep. 593 [61 C. C. A. 19].

It is, therefore, clear that the provisions of the contract between the telephone companies must be considered in the light of surrounding facts, its real scope, purpose, and logical tendency as affecting the public interest.

It can hardly be doubted that at the time of its execution, and in view of the existing situation, the contract was not only beneficial to the contracting parties, but conducive to the public interest. It gave to each company a needed service and a mutual exchange of business. The Middlepoint company secured the advantages of the highway of the United States company-for long distance service for a long term of years, and of the interchange of business.

The contract in no wise affected the service of the Bell companies in their usual mode and through their chosen agencies, nor as applied to existing conditions did it tend to stifle or suppress competition. On the contrary, from a practical and business standpoint competition was thereby promoted and made more effective. Any other view sacrifices substance to mere shadow and practical judgment to abstract theory.

It must b,e kept in mind that the combining companies here were substantially and practically noncompetitive, and. herein is found the distinction between the case at bar and many of those cited.

Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666, and State v. Oil Co. 49 Ohio St. 137 [30 N. E. Rep. 279; 15 L. R. A. 145; 34 Am. St. Rep. 541], were combinations of competing companies to control prices and production. The prices had not in fact been raised, but the legitimate tendency of the control was to artificial increase of prices. The court was not, therefore, content to accept as conclusive the.one fact that prices were for the time being lowered, but took the broad view that the suppression of full competition and artificial control of prices by parties whose interests and cupidity might suggest increase had an evil tendency and should not be upheld.

Taking the lead from these eases, we are asked to aecept as conclusive a partial statement to the effect that some individual patrons of the local company may be deprived of the extended service of the Bell company and to ignore the general conveniences arising from effective competition.

Scofield v. Railway, 43 Ohio St. 571 [3 N. E. Rep. 907; 54 Am. Rep. 846], holds that a contract making concessions in rates to a large shipper is an unlawful discrimination tending to create monopoly, and injure, if not destroy, the business of the small shipper, and therefore opposed to public policy.

Lufkin Rule Co. v. Fringelli, 57 Ohio St. 596 [49 N. E. Rep. 1030; 41 L. R. A. 185; 63 Am. St. Rep. 736], adheres to and defends the common-law rule sustaining contracts in partial restraint of trade as incidental to the sale of a business and good will, but holding those in general restraint of trade invalid. Non,e of these cases, in our view, apply to combinations between noneompeting companies, where the legitimate effect and natural tendency is to strengthen their efficiency in a field of competition. The combination of noncompetitive telephone companies for extension of service is brought within the general policy of the law by Gen. Code 9171 (R. S. 3455), and should be upheld unless there appears some injurious feature not contemplated by the statute.

It is. urged that the combination by ninety-nine year contracts between the United States company and a large number of local companies threatens monopoly as offensive as that charged against the Bell system, and ought not as a matter of public policy be sustained. It is not claimed, however, that all this might not be done by consolidation, purchase or lease, and we cannot perceive why it may not also be done by operating contracts. Should the combination ever reach the stage of monopoly by crushing out its powerful rival, or by combining with it, we do not doubt the power of the courts to afford a remedy and protect the public. • But we cannot bring ourselves to the conclusion that it should be condemned while engaged in the struggle of competition upon remote possibilities.

We quote from Mr. Chief Justice Fuller upon somewhat similar contentions in Union Pac. Ry. v. Railway, 163 U. S. 564, 590 [16 Sup. Ct. Rep. 1173; 41 L. Ed. 265]:

“It will not do to hold this contract void and allow defendant to escape from the obligations it assumed on the mere suggestion that at some time in the remote future there is a possibility that the suggested contingency might arise. Should it happen, however, the courts are competent to relieve from the consequences of so radical a change of condition.”

It is, however, contended that the exclusive character of the contract and its long time are features rendering it obnoxious to public policy.

In the case of Cleveland & M. Ry. v. Furnace Co. 37 Ohio St. 321 [41 Am. Rep. 509], the furnace company had an exclusive contract with the railroad company for dockage and transportation of all its ore supplies for a period of ten years. The railroad company after a time sought to be relieved upon the ground that the contract was inconsistent with its duty to the public and necessarily discriminatory. The court declined this view and held the contract for the term of years valid. Johnson, J., in the opinion makes this observation, p. 332:

“Neither the state, nor the public, who are benefited by this public highway, nor the stockholders, are complaining. Why should the corporation be allowed to absolve itself from a contract fairly made, of mutual obligation and advantages, when made, supported by a valuable consideration, received in great part, and free from any discrimination, simply because it may prove less profitable than was anticipated Í ’ ’

These observations are more or less pertinent here. The Middlepoint company and its predeceésors, to whose property and rights it succeeds, sought or at least accepted the contracts and obtained the benefits. It not only gave but received exclusive rights. Without the advantages the contract gave the Middlepoint company would not in all probability have attracted the notice of the Bell, company nor have been able to secure connection with that system.

The language of Mr. Justice Brewer on the circuit quoted in the celebrated case of the Union Pac. Ry. v. Railway, supra, p. 604, is appropriate:

“It is to the higher interests of all corporations and public alike that it be understood that there is a binding force in all contract obligations; that no change of interest or change of management can disturb their sanctity or break their force, but that the law which gives to corporations their rights, their capacities for large accumulations, and all their faculties, is potent to hold them to all their obligations, and so make right and justice the measure of all corporate as well as individual actions. ’ ’

Similar views are announced in an able opinion by Wilson, J., in the case of Dayton & U. Ry. v. Railway, 25 O. C. C. 705 (6 N. S. 537); affirmed, no. op. Railway v. Railway, 67 Ohio St. 523.

The case of the Middlepoint company to annul its contract and be relieved therefrom appeals to the chancellor of a court of equity only by being cloaked in consideration of the public welfare.

It is argued that it was the charter right of the Middle-point company to extend its service to long distance and vice versa as to the United States company, and that the exclusive contract disables each from furnishing such added service. But the right extended by Gen. Code 9171 (R. S. 3455), to extend lines without charter amendment must be read and harmonized with other express provisions of the charter law authorizing consolidation, leasing and operating contracts. The Middlepoint company, therefore, Had its option to extend its lines by contruction, purchase, lease, or by operating contract. Any of the modes answer the charter duty. Michigan Cent. Ry. v. Railway, 128 Mich. 333 [87 N. W. Rep. 271]; Union Pacific Ry. v. Railway, supra.

Again it is urged that the exclusive and nonimpairment covenants of the contract disables the Middlepoint company from obtaining for its patrons the choice of routes and added service afforded by the dual connection. . The question so urged is not free from doubt and is the subject of conflicting decisions. Closely allied to this question is also that of discrimination in service as applied to telephone exchanges. The validity of exclusive contracts depends upon the extent to which proprietary rights are enforced in cases of public service corporations. By assuming public duties the corporation yields a portion of its proprietary dominion over its business and becomes liable to certain mandatory duties, among others to serve the public without discrimination.

The case of State v. Telephone Co. 36 Ohio St. 296 [38 Am. Rep. 583], holds telephone companies to the duty of indiscriminate service to the public. This case arose upon the refusal of the telephone company to install an instrument in the office of a railway company having a telegraph department. The refusal was based upon the ground that the telephone company had an exclusive contract with another telegraph company and refused the railway company its service because it had charge of a telegraph department. But it will be observed that the .railroad company sought this service as one of the public. Its .application and the service demanded was no different from that afforded other members of the public. The objection of the telephone company was purely personal. The applicant was .a competitor of a patron of the telephone company holding an exclusive contract. The refusal of the telephone company was therefore a discrimination among the public whom the telephone company had engaged to serve indiscriminately.

But this rule of indiscriminate service applies only to the public. It does not apply as between public service companies desiring physical connection of plants or joint use of facilities. There is a marked distinction between primary service to the public of a public service company by its own facilities and secondary service by yielding up its facilities and equipment to another public corporation to facilitate the latter’s service.

The primary service is guaranteed by law, while the secondary service, in the absence of further legislation, can only be secured by contract. Union Pac. Ry. v. Railway, supra, Wayne-Monroe Tel. Co. v. Ontario Tel. Co. 60 Misc. 435 [112 N. Y. Supp. 424]; Yazoo & M. V. Ry. v. Searles, 85 Misc. 520 [68 L. R. A. 715].

The Pullman Car, Express & Stock Yard cases are in our opinion directly in point. Memphis & L. R. Ry. v. Express Co. 117 U. S. 1 [6 Sup. Ct. Rep. 542; 29 L. Ed. 791]; Atchison, T. & S. F. Ry. v. Railway, 110 U. S. 667 [4 Sup. Ct. Rep. 185; 28 L. Ed. 291]; Louisville & N. Ry. v. Naval Stores Co. 198 U. S. 483 [25 Sup. Ct. Rep. 745; 49 L. Ed. 1135]; Central Stock Yards Co. v. Railway, 192 U. S. 568 [24 Sup. Ct. Rep. 339; 48 L. Ed. 565]; Southern Pac. Co. v. Commission, 200 U. S. 536 [26 Sup. Ct. Rep. 330; 50 L. Ed. 585]; Chicago, St. L. & N. O. Ry. v. Car Co. 139 U. S. 79 [11 Sup. Ct. Rep. 490; 35 L. Ed. 97]; Ft. Worth & D. C. Ry. v. State, 99 Tex. 34 [87 S. W. Rep. 336; 70 L. R. A. 950].

Strong argument might be offered showing the advantage to the traveling public in having interchange of Pullman car service with connecting railroad companies; and so also it might We argued that the connection of train service upon different lines and the joint use of terminal facilities in the populous cities and commercial centers might greatly enhance public convenience. But it is universally held that such interchange of facilities is subject only to contract and cannot be enforced as mandatory or legal, duties.

A careful study of the “Union Depot” cases may reflect some light in the present consideration.

In State v. Depot Co. 71 Ohio St. 379 [73 N. E. Rep. 633; 68 L. R. A. 792], an exclusive grant of cab privileges upon depot grounds was sustained. The only exception allowed was the right of passengers to arrive or depart in owned or hired conveyances. This right of the passengers was one of ingress and egress following as an incident from the transportation.

In the opinion by Crew, J., the rule of discrimination, that the railway company having admitted one cab company, must admit all, announced and maintained in the states of Indiana, Michigan, Missouri, Montana, Kentucky and New Hampshire, is disapproved, while that of the states of New York, Massachusetts, Connecticut, Georgia, Minnesota, Virginia, Rhode Island, and the federal courts sustaining exclusive contracts, is approved. The case of Donovan v. Pennsylvania Co. 120 Fed. Rep. 215, 217 [57 C. C. A. 362], cited with approval, contains this statement of the rule:

‘ ‘ The fact that the person who asserts the right to carry on his business for his own profit upon the trains or within the station buildings is himself a common carrier does not affect the question. The railroad company is a common carrier of merchandise, but is not a common carrier of common carriers of merchandise. It owes no duty to express companies to haul their cars and safes and messengers. * * * If it owed the duty it would have to treat all alike. Owing no duty, it may engage, or not, as it pleases, in the business of serving express companies, and may choose the company, and name the terms acceptable to it.”

In affirming Donovan v. Pennsylvania Co. supra, Mr. Justice Harlan, speaking of the exclusive contract, in Donovan v. Pennsylvania Co. 199 U. S. 279, 296 [26 Sup. Ct. Rep. 91; 50 L. Ed. 192], says:

. “The railroad company was not bound to accord this particular privilege to the defendants simply because it had accorded a like privilege to the Parmelee Transfer Company; for it had no contractual relations with the defendants and owed them, as hackmen, no duty to aid them in their special calling.”

See also State v. Telegraph Co. 166 Ill. 15 [46 N. E. Rep. 731; 36 L. R. A. 637]; Wayne-Monroe Tel. Co. v. Ontario Tel. Co. supra; People v. Fitzgerald, 29 Abb. N. C. 471, 478 [21 N. Y. Supp. 911]; Central N. Y. Tel. & Tel. Co. v. Averill, 129 App. Div. 752 [114 N. Y. Supp. 99].

In State v. Cadwallader, (Ind.) 87 N. E. Rep. 644, there is an interesting and able opinion by Myers, J., holding the telephone company, like railway and other public service corporations, cannot be compelled to furnish through service for another service company by physical connection of plants. But following the Indiana doctrine as established in the “Depot” eases held that having opened its exchange to one long distance company, it was bound to afford equal service to all.

The opinion of Anderson, J., of the federal court in Roland v. -----, — Fed. Rep. —, also follows the local doctrine of the state of Indiana.

It is, however, contended that Gen. Code 9182 (R. S. 3462), requiring interchange of despatches between telegraph companies, made applicable to telephone companies by Gen. Code 9191 (R. S. 3471)' from the nature of the telephone business extends to physical connection and joint use of wires and apparatus.

Gen. Code 9182 prescribes the mandatory duties imposed by law. This section must be read with Gen. Code 9171 prescribing the powers of voluntary contract. The formter includes as a mandatory duty the interchange of despatches, while the latter includes as a right to be obtained by contract the “use” of other lines.

Gen. Code 9182 as applied to telegraph companies does not contemplate physical connection and joint use of wires; and a more extended construction ought not to be applied to telephone companies. Despatches may be transmitted by telephone as by telegraph. But the use of through wires is not contemplated by' the statute as to either telephone or telegraph lines. To discriminate and hold that telegraph despatches are only required to be delivered from one line to another in relay, while telephone despatches comprehend verbal messages to be carried through by the physical connection and joint use of different lines cannot reasonably be sustained.

We have examined with much care the case of United States Tel. Co. v. Telephone Co. 16 O. F. D. 370 [171 Fed. Rep. 130], and regret our inability to agree with the learned judge, for whose opinion we have great respect and from whose conclusion we hesitate to dissent. The following proposition is laid down in the syllabus:

“Concerning that a local company is not bound to permit any long-distance connection with its exchange, yet when it extends that right to one company it is under legal duty as a public service corporation to extend the same rights to others. ’ ’

We are unable to reconcile this proposition of the syllabus and the portion of the opinion supporting it with the rule laid doyn in the Union Depot ease in this state.

It is urged that large public conveniences with slight inconvenience to the telephone company, would flow from joint connection and joint use of wires; but this argument should be more properly addressed to the General Assembly upon the subject of amending the sections of the statute referred to by taking the subject of joint use of lines from the contract section and adding it to the list of mandatory duties. The stipulations as to rates and territory are. urged as affecting the validity of the contract. But in our view the rates cannot, under the contract, be fixed arbitrarily by the United States company. They must be reasonable, as in ease of any other contract not express as to rates. The contracts between the former telephone companies and the United States company are not before the court for adjudication. They have been superseded, and there is no question of good faith between present contracting parties raised.

The exception as to Van Wert county and the provision as to division of business at certain points with other independent companies are fairly incidental to the' contract and do not violate any principle of public policy.

It is contended, however, that the toll service connecting with the Van Wert exchange and the exception of Van Wert county from the contract creates a noncompetitive zone for toll service for long distance business. We are of the opinion, however, that the Van Wert toll extension and the reservation of a wider local area does not of necessity constitute the United States and the Middlepoint companies competitive.

Objection is taken to the remedy by injunction. This objection is argued with much force and has the sanction of the learned judge in the case of the United States Tel. Co. v. Telephone Co. supra. The case of the Union Pac. Ry. v. Railway, supra, is explicit in support of the jurisdiction here invoked, and we feel bound to follow that authority. The authority of Steinau v. Gas Co. 48 Ohio St. 324 [27 N. E. Rep. 545], is to the effect that a general order of specific performance should not be granted where it involves a general and continued oversight of an intricate business. This authority restrains the court from the issuing of such a general order as would amount in effect to specific performance of this contract throughout the length of its existence, but does not prevent the court from granting an injunction from the commission, of certain specific acts now threatened. That evidently was the view of the court in the Dayton & U. Ry. Co. v. Railway, supra, although the point does not appear to have been raised in the case.

Upon the subject of parties the case is not identical with that before Judge Taylor. There the injunction was sought against the intermeddling company; here the relief is sought against the party making the contract and now attempting to avoid it. It is sufficient that the contracting party be before the court, and it is not necessary, in our opinion, to go further and add those who contemplate making impairing contracts.

The existing contract between the two telephone companies in this case does not by express terms or by necessary inference prevent the Middlepoint company from securing an extension of its service through a company other than the United States company to points not within the territory of the latter company, so long as in not doing so it does not impair the existing contract. "We do not, therefore, decide the effect of such ’a contract where the connection is made and the scope of the contract is such as not to amount to an impairment of the contract under consideration. The present contract of the Central Union company applies to all business with the Middlepoint company or any subscriber of the Middlepoint company who desires to send over the lines of the Central Union, and contains an explicit stipulation that the Middlepoint company will make connection between the lines of the subscribers to its exchange or exchanges and the toll lines of the Central Union company, so that the contract is directly an impairment of the existing contract with the United States company. This is confirmed ■amply by the testimony showing that during the two mouths the Central Union toll contract was in existence, substantially? all the'business routed over the Central Union lines was business that would under the contract have been entitled to go over the United States lines.

It follows, therefore, that an injunction should be made perpetual against the defendant company from making the connections with the Central Union company under the present, contract, and from routing business over that company to points, within the territory reached by the United States company-lines.

Hurin, P. J., concurs.

Kinder, J., dissents.


source: Caselaw Access Project

author: ALLREAD, J. t

license: Public Domain

text:
    LIMITATION OF ACTIONS — TRUSTS AND TRUSTEES— PARTIES — PLEADING—FRAUD—WILLS—ESTATES.
    [Mercer (3rd) Circuit Court,
    March 25, 1910.]
    Hurin, Donnelly and Allread, JJ.
    (Judge Allread, of the second circuit, sitting in place of Judge Kinder. >
    Joseph Moton et al. v. Bernard Dewell et al. (Two Cases.) Joseph Moton et al. v. Gerhard Kissens. (Two Cases.)
    1. Purchasers of Land Fraudulently Sold by Trustee are Successors of Trustees so Far as Land is Concerned.
    An executor having purchased land in performance of a trust, imposed by will, taking title in his name as executor, and' afterwards in fraud on the trust conveyed the land to others, the absence of a successor to such executor as a party to an: action to set aside deeds brought against such purchasers and their successive grantees is not a fatal. defect, on demurrer, when it is alleged that title was taken by such purchasers and their successors with full knowledge of the trust and of th® fraud; and such purchasers became quasi trustees and successors to the executor so far as the land in question was concerned.

      2. One Beneficiary of Joint Trust may Sue Fob All.
    In 1837 1 y a Virginia will a trust fund was created with direction to the executor to invest same in lands in a free state and to settle the slaves Qf testator thereon, and the executor having purchased lands in Ohio for the trust taking title in his name as executor, and before making such settlement and in fraud on the trust conveyed them to others, one or more of the now ex-slaves or their descendants may prosecute an action for themselves and the others similarly interested to set aside the deeds from the executor to the purchasers from him and successive deeds.
    3. Unless Inconsistent with Whole Petition Special Averment must be Regarded as True on Demurrer.
    As against a demurrer, a special averment in a petition of want of notice and diligence as to discovery of a fraud as saving the action from the statute of limitations must be regarded as true unless the whole situation and admitted facts surrounding the case are inconsistent with such special averment.
    4. In Case of a Fraud -on Cestui Que Trust, Limitation did not Begin until Fraud was Brought Home to Him.
    In 1846 legal limitations were not applied as between trustee and cestui que trust until after there had been an open repudiation of the trust brought home to the cestui que trust.

    5. Law of Another State is Presumed to be Same as Law of Ohio.
    In the absence of a showing otherwise, the law of Ohio is presumed to be the law of Virginia.
    6. Without Words of Succession Lands Purchased with Trust Fund Created bv: Will Descenls to Heirs of Cestui Que Trust.
    Under a will probated in 1837 in which a fund was provided for the purchase, by the executor of lands for the slaves of testator, and Ohio lands were actually purchased for that purpose, the title being taken in the name of the executor as executor, the interest of such slaves in such lands is one in fee simple and descends to their descendants even in the absence of words of succession.
    Error to Mercer common pleas court.

      J. D. Johnson and.W. E. Henderson, for’plaintiffs in error-.

      J. W. Loree, P. E. Kenney and J. G. Bomer, for defendants in error.
   ALLREAD, J. t

The plaintiffs, Joseph Moton and York Ryal, bring these actions on behalf of themselves and the survivors and other descendants of ex-slaves of the late John Randolph, of Roanoke, Virginia, who died testate May 24, 1833, and whose will was on December 7, 1837, admitted to probate in the general court of Virginia at the capital.

By tbe provisions of the will John Randolph gave and bequeathed to all his slaves their freedom, and in addition gave to William Leigh, as executor of his estate, a sum of money not exceeding eight thousand dollars, or so much thereof as was necessary, to transport and settle said slaves in some other state or territory in the United States, giving to all above the age of forty not less than ten acres of land. By a codicil, three thousand pounds 'sterling, or about fifteen thousand dollars, was bequeathed to said executor as a fund for carrying into execution the will respecting said slaves.

The executor'named duly qualified and entered upon the trust, raised the fund provided for this purpose, and on May 19, 1846, from the fund so raised purchased lands in Mercer' county, Ohio, taking the title in fee simple in his own name as executor of said will.

Proceedings, had been commenced in the general court of the state of Virginia at the capital for the purpose of releasing: said slaves from the bondage of slavery, resulting on May 4,, 1846, in an order for their release, and the granting of passports to another state. Shortly thereafter the slaves were transported by the executor from their domicile in Virginia to the southern part of the state of Ohio and from forty to sixty miles from the lands so purchased, and in a different county.

The executor on October 26, 1846, executed a power of attorney to Joseph Plunkett to sell and convey the lands in Mercer county, and the same were sold and conveyed by said attorney in fact, one tract in 1849, and the other in 1852. The deed to the executor, the power of attorney, and the subsequent deeds of the attorney in fact, were each recorded, shortly after execution in the recorder’s office in Mercer county. Resale of the lands by the executor was made without any order or authority of any court, and without the authority of the will.

It is averred in the third amended petition, upon which the ease now stands, that the executor did not settle said slaves or any of them upon the lands so purchased, nor did he give said slaves any land, money or property in lieu thereof. The amended petition contains charges of fraud against the executor in the resale of the lands, extending to the suppression of all knowledge from the liberated slaves and their descendants and the concealment of their rights; that the purchasers from the executor and their successive grantees down to the present owners took the property with full knowledge of the trust and of the fraud, and also aided in the concealment from the slaves and their descendants of all knowledge of their rights. It is also averred that the ex-slaves were illiterate, ignorant, could neither read nor write, and that neither they nor their descendants-had any knowledge of the will, its terms and &onditions, the purchase of lands for their benefit, of the acts, proceedings, etc., of the executor or of the fraud, and no means of knowing, and could not and did 'not discover the facts or their rights until about the time suit was brought.

A demurrer was presented and sustained by the court of common pleas to the third amended petition, containing the facts above stated, and final judgment rendered against the plaintiffs, who, by a petition in error, here seek to have the judgment reversed.

Various grounds are urged and reasons advanced in support of the demurrer. Counsel, both in oral and written argument, have shown extraordinary interest, research and ability pro and con.

It is contended that a successor to William Leigh, as executor, should be appointed in the courts of Virginia and made party here. We think that the absence of a successor to William Leigh is not a fatal defect, for, under the facts stated and admitted by the demurrer, the purchasers became quasi trustees and successors so far as the real estate in Mercer county is concerned to the executor.

So, also, we are of the opinion that one or more of the ex-slaves or their descendants may bring and prosecute the action for themselves and the others similarly interested. Joseph Moton is averred to be a descendant of slave parents over forty, .and York Ryal, a descendant of a slave mother under forty years at the death of Randolph. Each class of slaves referred to in the provisions of the will is therefore represented.

When the executor, after having invested the funds, failed 'further to execute the trust by settling the slaves thereon, and -conveyed the land to a purchaser who took with full knowledge, the ex-slaves had the right, in due time, to appeal to a court of equity in the jurisdiction of the land to declare and enforce the trust created by the will and impressed upon the lands by investment of the funds specially raised and set apart. And inasmuch as the interests could only be assigned in severalty by the act of settling the slaves and making the allotments, the right to bring the suit is joint.

While broad discretion was confided by the terms of the will in the executor as to the manner of carrying out the benevolent object and purpose, yet the direction to purchase lands in another state or territory and to transport and settle the slaves, giving the elder class at least ten acres, and to employ so much of the funds provided as was necessary, was imperative. The right to give or withhold as to the main objects did not rest in the discretion of the executor but was conferred by absolute devise. Such bequest is therefore capable of enforcement by a suit in equity, unless the right thereto is lost by laches or limitation.

The plaintiffs rely upon their want of knowledge and the fraudulent concealment of the executor to relieve the bar of the statute of limitations. On the other hand, the defendants contend that, notwithstanding the averments of the petition that the slaves and their descendants had no knowledge and could not have discovered the facts upon which their right is founded, yet the court will be forced to conclude from the general situation and common knowledge of the race and class of persons involved that they did know or could by reasonable diligence have discovered in due time to bar the action, the facts necessary to their cause. This inference, as counsel contend, is based upon the intimate knowledge and acquaintance which must be assumed of the slaves with John Randolph and his benevolent purpose during life, upon the report and reputation following his death and publication of his will during the thirteen years of domicile on the old -plantation in Charlotte county, Virginia, of the pendency of the proceedings to probate the will, the release of the slaves from bondage with all the attendant agitation and discussion, upon their manumission, the dissolution of bondage, passports and transportation under provision of the executor into a free state and almost within sight of the land provided for, where it may be assumed they settled, and where they and their descendants have lived for sixty years.

In the consideration of this contention it may be conceded that if the only rational deduction from the situation and admitted facts surrounding the parties is inconsistent with the special averment of want of notice and diligence as to discovery, the latter may be disregarded; but if not wholly inconsistent, the averments must be reconciled upon the demurrer. It can hardly be doubted that the Randolph slaves, although ignorant and unlettered, spread the news of their emancipation and repeated and handed down to posterity as tradition the oft told story of their journey to the land of freedom, but resort to common knowledge might reasonably lead to the conclusion that to the liberated slaves their freedom was the chief thought — the priceless boon — about which clustered their fondest hope and highest aspiration, and afforded undoubtedly the chief topic of discussion. But it does not clearly and necessarily follow that, emerging from the condition of slavery and with little, if any, knowledge of property or property rights, ignorant and unable to read, the slaves knew, discussed or imparted to their descendants any knowledge of their property rights, although such rights, are conferred by the same instrument which granted their freedom. It is specially urged that the proceedings of the. general court of Virginia for their emancipation and the judgment and passports resulting charged the slaves with knowledge of the provisions of the will and of their rights. It does not, however, either expressly nor as a necessary inference, appear that the slaves instituted the suit or were parties. A slave might in some of the slave states have maintained a suit against the person claiming his bondage. James v. Walker, 57 Ky. (18 B. Mon.) 605.

A more appropriate suit would have been on behalf of the executor , to confirm the manumission provided in the will, and as the proceedings here were in the court probating the will and administering the estate, and not at the domicile of both the slaves and the executor, the inference in support of the theory of the executor having brought the suit is strengthened.

The inference of knowledge of property rights by the ignorant slaves from the judgment of the court resolving the bondage, their passports and journey into the free state, is by no means conclusive so as to overcome other positive averments admitted by the demurrer.

It is still further contended that the amended petition does not allege that the descendants of the slaves are ignorant or illiterate, and that, therefore, their knowledge of property rights from lapse of time and proximity of residence must be conclusively presumed. But it will be noted that about fifty of the John Randolph slaves were still living when the suit began, and as to descendants of those deceased, it does not appear that they were in such contact with the stirring events of their ancestors’ emancipation and exodus as to lead to a necessary inference of knowledge of their property rights. The only means of knowledge necessarily inferred from the state of facts contained in the petition lay with their ancestors who cannot be held to have transmitted greater information than they possessed. The petition does not inform us of the date of the death of any of the ancestors, and we cannot, therefore, from the petition determine as to the beginning of the tolling of the statute of limitations as to, any of the descendants.

The foundation of the present cause of action arises from the investment of the trust funds in the Mercer county lands, and specific knowledge of that fact cannot be deduced from any situation or set of circumstances shown in the petition, nor from any notice charged by law of the probation and contents of the Randolph will in the courts of Virginia in face of a distinct averment of the petition of want of knowledge or of opportunity for knowledge on the part of the ex-slaves and their descendants.

It is contended by counsel for the plaintiffs that the trust created by the will of John Randolph and transferred to the successive grantees of the real estate is a continuing and subsisting trust, and thereby excepted from the present statute of limitations, but that is immaterial for the reason that the statute of limitations in force at the time the cause of action arose controls, and that under the prevailing practice at that time legal limitations were not applied as between trustee and cestui que trust until after there had been an open denial or repudiation of the trust brought home to the cestui que trust. Paschall v. Hinderer, 28 Ohio St. 568; Ham v. Kunzi, 56 Ohio St. 531 [47 N. E. Rep. 536].

It is also contended in support of the demurrer that the executor having bought the land and taken the title in his own name had an absolute right to convey and restore thereby the funds to its original form and that the rule requiring specific authority of the court or will does not apply. The effect of such conveyance as to an innocent purchaser need not be determined for here the amended petition charges the successive purchasers with knowledge of the trust, and they are, therefore, bound by the trust.

It is argued that there is no sufficient showing or statement of facts as to fraud, but the averments showing breach of trust, intent to defraud, and fraudulent concealment are sufficiently broad and specific to pass the test of a general demurrer.

It is asserted that the provisions of the Randolph will were personal to the slaves and that the right did not descend. The act of March 3, 1834, (1 Curwen 145), first brought into the statutes the rule of construction of wills averring the vesting of the estate in fee simple in the absence of words of succession. But independent of the statute, a devise was so construed even in the absence of words of succession. Niles v. Gray, 12 Ohio St. 320; Platt v. Sinton, 37 Ohio St. 353, 355; Flickinger v. Saum, 40 Ohio St. 591, 600.

This is the law of Ohio and is presumed to be the law of Virginia in the absence of a showing otherwise, and, therefore, ■controls,- whether the construction of the will for the purposes of this ease be under the laws of either Ohio or Virginia.

Whether the term “settle” employed in the will is to be-construed in harmony with plantation customs in slavery days and applied as a sort of tenancy by sufferance or in the more enlarged acceptation of the free states in which the investment was directed, it is not necessary to decide at this-stage. The laws and customs of the state of Virginia, if competent at all to be engrafted upon the construction of - the will, must be specifically pleaded and proven.

The investment of the funds in the real estate described ■ and the taking of the title in the name of the executor impressed thereon a trust for the settlement of the slaves, and under the facts stated in the petition,, the interest so conferred upon the slaves is one in fee simple.

The third amended petition, therefore, stating a good cause of action as against a demurrer, the judgment of the common pleas court should be reversed and the cause remanded with instructions to overrule the demurrer, and for further proceedings.

Hurin, J., concurs.

Donnelly, J.,

concurring:

I agree with the majority of the court that the third amended petition is good as against a demurrer, but do not fully agree with the reasons given by the majority of the court.


author: WINCH, J.

text:
    EVIDENCE — BROKERS.
    [Cuyahoga (8th) Circuit Court,
    January Term, 1910.]
    Henry, Winch and Taggart, JJ.
    (Judge Taggart, of the fifth circuit,, sitting in place of Judge Marvin.)'
    Mary H. Lippert et al. v. W. B. Page.
    1. Incompetent Hearsay Evidence Admitted without Objection has; some Probative Force.
    Incompetent hearsay evidence, when admitted without objection,, has some probative force.
    2. Real Estate Broker Required to Show that Purchaser was. Induced to Apply to Owner Through Means Employed by Broker.
    To entitle a real estate broker to recover commissions he must show that the purchaser was induced to apply to the owner through means employed by the broker. It is not indispensable, however, that" the purchaser be introduced to the owner by the. broker, or that the broker be personally acquainted with the purchaser, or that the broker at the time have knowledge of. the negotiations between the owner and the purchaser.
    [Syllabus by the court.]
    Error to Cuyahoga common pleas court.

      A. B. Odell, for plaintiffs in error:
    Cited and commented upon the following authorities: Schwarts v. Hoyne, 54 111. App. 499; Gleason v. Nelson, 162. Mass. 245 [38 N. E. Rep. 497]; Vanstone v. Hopkins, 49 Mo. App. 386 • Jones v. Frost, 24 Misc. 208 [53 N. Y. Supp. 573]; Johnson v. Seidel, 150 Pa. St. 396 [24 Atl. Rep. 687]; Harp v..' Cummins, 54 Pa. St. 397; Colwell v. Tompkins, 6 App. Div. 93 [39 N. Y. Supp. 478]; Whitcomb v. Bacon, 170 Mass. 479' [49 'N. E. Rep. 742; 64 Am. St. Rep. 317].; Commercial Nat. Bank v. Hawkins, 35 111. App. 463; Evans, Agency 341; Lincoln v. McClatchie, 36 Conn. 136; Gleason v. Nelson, 162 Mass-245 [38 N. E. Rep. 497].

      George A. Grott, for defendant in error:
    Cited and commented upon the following authorities r Schwarts v. Yearly, 31 Md. 270; Lincoln v. McClatchie, 36> Conn. 136; Carter v. Webster, 79 111. 435; Newhall v. Pierce, 115 Mass. 457; Mooney v. Elder, 56 N. Y. 238; Lloyd v. Matthews, 51 N. Y. 124.
   WINCH, J.

This is a proceeding to reverse a judgment recovered by Page on a claim for commissions on the sale of a small farm of six acres in Warrensville township, Cuyahoga county, Ohio. The sole error complained of is, that there was not sufficient evidence produced before the jury to sustain its verdict. It is said that the plaintiff below failed to show that by his efforts a sale of the property was made.

The evidence was very conflicting; the defendants below not only denied having authorized Page to sell their property for them, but denied that he had in any way directly contributed as the efficient cause to the sale which was finally made.

After carefully considering the evidence, and allowing for an absolute disbelief in some statements of the defendants which the jury doubtless had because of manifest untruths in other parts of their testimony, we think it may be said fairly that the following is all the plaintiff proved regarding the transaction:

About September 1, 1907, W. B. Page, a real estate man, called upon the Lipperts at their home in Warrensville and made a verbal agreement with them whereby he was to try to find a purchaser for said real estate at a price above $1,000, and was to have all over said sum that any purchaser furnished by him might pay for it, the Lipperts retaining the right to find a purchaser themselves. It was also arranged that in order that the Lipperts might know Page’s customers Page was to give his business cards to everybody sent by him, and the Lipperts were to ask everybody who went there to buy, or to consider buying the place, whether they came at Page’s suggestion, or were sent by him, and if the customer said that he came by or through Page, then the Lipperts were to regard him as Page’s customer.

Thereafter, Page advertised in the “Plain Dealer” that he had six acres of land in Euclid, of North Woodland avenue for sale, and this advertisement was seen by one Mary Ben-bow, and she, about September 20, wrote to Page asking for information, regarding the property and when she could see it. Page replied by postal card telling where she could find him, and afterwards she called him up by ’phone, or wrote him a letter, so as to make arrangements to see the property. He wrcite back giving her directions, and subsequently met her with a horse apd buggy at Stop No. 10 on the Gates Mill line, driving with her about a mile and a half to the property, which, upon inspection, Mrs. Benbow decided not to buy, but told Page, or Mrs. Page, who was with them, that she had some friends in mind whom she thought would be glad to buy the property, and that she would let them know about it. Thereafter, she told one Elizabeth McCullock about the property, and the latter told Andrew Hogg, who was a friend of Mrs. Benbow, and he and his wife called upon Mrs. Benbow to find out about the property, and also sent their sons to her for information concerning it. Mrs. Benbow gave them Page’s postal card and also his business card, and told them about the property, where it was, and that Page was asking $1,350 for it. She told them to call up Page 'for further information. They attempted to do so twice, but did not get him on the line, and receiving from Mrs. Benbow more specific directions as to how to find the property, they sent' their two sons to see it about Thanksgiving time. They reported, and a few days later went out again to the place and talked with the Lipperts, who live upon the adjoining farm. On -Thanksgiving day Mr. Hogg and his wife went to see the property and Mrs. Hogg told Mr. Lippert that it was through Mr. Page she was buying the property; whereupon Lippert told her that he had taken the property out of Page’s hands, and that his price for it was $1,200. Shortly after Thanksgiving day the sons went again to the-property with instructions to buy it, and, paying down $20, received a receipt for said sum as part payment on the purchase price, and reported to their parents. The .sale was shortly thereafter concluded between the Lipperts and Hoggs and a deed was delivered on December 5, 1907. Page never saw or personally communicated with the purchasers, and never knew of any of the negotiations the purchasers had with the Lipperts until after the deed was made — perhaps not until January, 1908.

It is proper to say that our finding that Mrs. Hogg told Mr. Lippert that she was buying the property through Page is based wholly upon hearsay evidence, found in the bill of exceptions on .page 23, where Mrs. Benbow, without objection, was permitted to testify that Mrs. Hogg had told her that she so stated to Mr. Lippert, and that he thereupon informed her that he had taken the property out of Page’s hands.

Hearsay evidence has some probative force. It is not inherently without weight, for we act upon it daily in our business affairs. It is only the rules of law which have made hearsay evidence incompetent, and there are many exceptions to the general rule. Nor is the rule universal in all countries. In Scotland, France and other countries, hearsay evidence is received in the courts of law and given such credit as it should properly have.

It has been held in this state that incompetent hearsay evidence, when admitted without objection, has its natural probative effect. Thompson v. Ackerman, 12 Circ. Dec. 456 (21 R. 740). The opinion there expressed is supported by the authorities cited.

The question remains whether all the evidence as heretofore stated, shows any direct connection between Page and the sale.

It may be conceded as claimed by plaintiff in error, that “to entitle á real estate broker to his commission for furnishing a purchaser of real estate, he must be the procuring cause of furnishing such purchaser. In order to be the procuring cause, he must be the proximate cause, not a remote cause or cause of causes.”

We cannot subscribe, however, to the balance of plaintiff in error’s claim that:

“To entitle Page to a commission from the Lipperts on account of said sale, it must appear that he by himself personally or by others acting under authority from him as his agents, was the procuring cause. To entitle him to the benefits of what Mrs. Benbow and Miss McCulloch did in the matter, \ it must appear from the evidence that they were authorized or directed by Page to do what they did. It is not enough that the information was transmitted the whole length of the chain from one. to another by Page directly or through others who were expressly authorized by him as his agent.”

A very instructive note on this subject, citing many authorities, most of which we have examined, is found appended to the case of Hoadley v. Bank, 71 Conn. 599 [42 Atl. Rep. 667; 44 L. R. A. 321]. The cases relied upon by plaintiff in error lack the one distinguishing feature of this case, to-wit: the advertisement of the property in a newspaper.

"We take it that when a broker advertises property for sale in a newspaper of general circulation in the community, he naturally expects, not only tl?.at his notice, if attractively worded, will be read by many persons who may see it in the paper, but that it will be repeated by the readers to others and discussed by many who did not see the paper. He thus intends the natural results of inserting an advertisement in a newspaper, and why should he not have the benefit of the natural results of his deliberate act?

It may be conceded that ordinarily it would be very difficult for the broker to trace the connection between his ad and a purchaser who did not read it, but got his information from another who had read it; however, in this ease the chain is complete; we know that the Hoggs learned of this property only because Page advertised it.

Furthermore; it was agreed between the parties that if any intending purchaser should inform the Lipperts “that he came by or through Page, then the Lipperts were to regard him as Page’s customer,” and this Mrs. Hogg did.

There are cases which sustain the view here expressed.

The syllabus of the case of Anderson v. Cox, 16 Neb. 10 [20 N. E. Rep. 10], is as follows:

“A landowner employed an agent to sell his real estate upon commission. The agent advertised the land at his own expense, and a neighbor seeing the advertisement directed a buyer to the farm, and thereby a sale of the land was effected. There being a dispute as to the contract between the landowner and agent, Held, That the sale being effected through the agent’s advertisement constituted a strong equity in his favor. ’ ’

The first paragraph of the syllabus of the case of Lincoln v. McClatchie, 36 Conn. 136, reads as follows:

“The defendant in the month of March put into the hands of the plaintiff, a real estate broker, for sale, a house in a certain city street, at the price of $6,500; the plaintiff to receive a commission of one per cent if he sold the house, the defendant to have the right to sell it himself without being liable to a commission, and the plaintiff not to advertise. The plaintiff entered the house on his books and in December and January following advertised houses for sale on that street. G, who lived on the street and was desirous of finding a house near by for a friend, saw the advertisement and went to the plaintiff’s office and learned that the defendant’s house was for sale. He informed his friend, and the latter went to the defendant, and negotiated with him for it and finally purchased it. The purchaser did not see the plaintiff nor go to his office, and G’s action in the matter was wholly voluntary. Held that tlm plaintiff was entitled to his commission.

This case was approved and followed in the case of Hoadley v. Bank, supra, being the same case annotated in the L. R. A., heretofore referred to. On page 608 of the opinion in that case we find the following language:

“Where an owner places land with a real estate broker for sale, he agrees, in the absence of any special contract, to pay the customary commission or brokerage in case a sale is consummated with a purchaser who was led to begin the negotiations through the intervention of the broker. It is immaterial that the purchaser at some prior time had been engaged in a bootless negotiation with the owner in respect to the same property, or that the owner, after the broker has interested the purchaser, secretly pursues the negotiation and himself completes the sale, or that the owner of his own accord effects a sale at a less price than that he gave the broker. If any act of the broker in pursuance of his authority to find a purchaser is the initiatory step that leads to the sale consummated, the owner must pay the commission.”

This statement of the law is perhaps broader than we are willing to subscribe to. It is not indispensable that the purchaser should be introduced to the owner by the broker, nor that the broker should be personally acquainted with the purchaser; but in such cases it must affirmatively appear that the purchaser was induced to apply to the owner through the means . employed by the broker. Sussdorff v. Schmidt, 55 N. Y. 319; Derrickson v. Quimby, 43 N. J. Law 373.

Upon the whole case as shown.- by the bill of exceptions, remembering that the credibility of the witnesses is a matter peculiarly for the jury, and that plaintiffs in error by their testimony, which was manifestly false in some particulars, must have shaken the jury’s faith in them in all particulars, we are unable to say that the evidence introduced was insufficient under the law as we understand it, to sustain the verdict.

Judgment affirmed.

Henry and Taggart, JJ., concur.


author: ALLREAD, J.

text:
    CONTRACTS — DAMAGES.
    [Franklin (2nd) Circuit,
    March 25, 1910.]
    Sullivan, Dustin and Allread, JJ.
    Ed. H. Jacobs v. Shannon Furniture Co.
    1. Whether a- Penalty or Liquidated Damages were Intended will be Determined from Whole Contract and Circumstances at Time of Contract.
    in determining whether a stipulation in a contract is a penalty or liquidated damages, the court will consider it along with the other provisions and general scope 'and subject-matter of the contract and the circumstances from the standpoint of the parties at the time of the contract, and not ex post facto, and from these determine whether the parties intended to fix a fair and just amount for the actual damages likely to arise or an arbitrary amount as mere penalty to secure performance.
    2. One Thousand Seven Hundred and Fifty Dollars Liquidated Damage in Five Year Contract of Employment, Valid.
    In a contract of employment entered into by a mercantile establishment with a person for general manager for term of five years at $1,800 per year, a.provision for liquidated damage in sum of $1,750 should that person be discharged within twenty-five months- is a reasonable adjustment of what would be considered by parties at time of contract as the actual damages that might be contemplated, and will be upheld as' liquidated damage.
    [Syllabus approved by the court.]
    Error to Franklin common pleas court.

      E. C. Turner and H. R. Jones, for plaintiff in error.

      Huggins, Huggins & Johnson, for defendant in error.
   ALLREAD, J.

The first cause of action seeks to recover liquidated damages stipulated for in a contract of employment. The contract provided for the employment by the Shannon Company of Jacobs as manager of a business to be conducted in his name for a period of five years, at a salary of $9,000, or $1,800 per annum and 5 per cent commission on the excess above $25,000 of the combined net profits for each year during said term. The contract stipulated for liquidated damages upon its termination, otherwise than by voluntary withdrawal or fault of Jacobs within twenty-five months after the beginning of the term in the amount of $1,750:

The petition alleges the discharge of Jacobs within twenty-five months, a full compliance by Jacobs up to that time, and ability and readiness to comply for the balance of the term, and asks judgment for the sum stipulated for.

A demurrer was sustained in the court of common pleas to the first cause of action, and final judgment entered for the defendants.

The only question presented here upon error is as to the validity of the stipulation for liquidated damages.

It may be deduced from the authorities in this state that a stipulation in a contract for liquidated damages in case of breach where no purpose appears or can be fairly deduced to charge the same as a penalty will be upheld. Blasting Co. v. Stone Co. 64 Ohio St. 361-367 [60 N. E. Rep. 563]; Grasselli v. Lowden, 11 Ohio St. 349, 361; Lange v. Werk, 2 Ohio St. 520, 533.

Whether a stipulation in any given case is to be regarded as penalty or liquidated damages becomes a question of intention to be reflected from the whole instrument in connection with the subject-matter. The form in which the stipulation is clothed may be considered, but is not conclusive. In final analysis, the stipulation for damages must be read and considered along with all other provisions, the general scope and subject-matter of the contract, from which must be determined whether the parties intended thereby to fix a fair and just amount for the. actual damages likely to arise, or an arbitrary amount as mere penalty to secure performance.

Cases cited by counsel for defendant in error in support of their contention may, we think, fairly be grouped as follows :

(a) Cases where a lump sum is fixed for default in each of several things of varying importance, and, therefore, inconsistent as actual valuation or liquidation, but consistent only as penalty. Berry v. Wisdom, 3 Ohio St. 241.

(b) Cases where the amount stipulated for is manifestly in excess of the actual damages to be reasonably contemplated from a breach of contract.

The case'at bar is distinguishable from those of class (a), for the reason that the lump sum here is fixed only for a complete breach.

It is distinguishable also from those of class '(b), for the reason that the damages here are uncertain, and therefore a proper subject of liquidation. It is true that the obligation of the Shannon company was to pay money. But the payment of money was for wages and, upon breach, the measure of damages is not necessarily the amount of wages agreed to be paid, but depends upon the uncertain damage arising from the discharge. And such damages are generally, if not universally, held to be a proper subject for liquidated damages. Tennessee Mfg. Co. v. James, 91 Tenn. 154 [18 S. W. Rep. 269; 15 L. R. A. 211; 30 Am. St. Rep. 865]; Walsh v. Fisher, 102 Wis. 172, 180 [78 N. W. Rep. 437; 43 L. R. A. 810; 72 Am. St. Rep. 865]; Watson v. Russell, 149 N. Y. 388 [44 N. E. Rep. 161]; Glynn v. Moran, 174 Mass. 233 [54 N. E. Rep. 535].

It therefore remains to be considered whether the amount stipulated for is a fair and reasonable measure of the contemplated damages, or manifestly excessive. This question must be viewed by the court from the standpoint of the parties at the time of the contract, and not ex post facto when the litigation is up for trial. Contracts are always so construed and a stipulation for liquidated damages is no exception. Sun Ptg. & Pub. Assn. v. Moore, 183 U. S. 642, 672 [46 L. Ed. 366] Knox Rock Blasting Co. v. Stone Co. supra, p. 366.

It is urged that Jacobs’ damages may be very slight, and in argument it was stated that he had gone back almost immediately to his old employment. But this is ex post facto and cannot be employed to aid in the original construction of the contract except as it may have been reasonably foreseen an(f contemplated.

It is a matter of common knowledge that responsible and lucrative positions in merchants’ establishments are not always 'open, but more frequently attained only after years of subordinate employment and by regular promotion. When Jacobs left the employ of the Lazarus company and entered the employ of the Shannon company, it was reasonable to contemplate a difficulty upon discharge in securing satisfactory employment of -a like character and of the same compensation, and to make some provision in case of discharge. We are of the opinion from the written contract, in connection with the subject-matter, and in view of tbe common knowledge of the difficulties of securing other employment, that the sum of $1,750, provided for a discharge within the first twenty-five months and while thirty-five months of his time was still before him, was a fair adjustment of what would be considered by the parties at the time of the contract as the actual damages that might under reasonable circumstances be contemplated.

The cases of Rock Blasting Co. v. Stone Co. and Glynn v. Moran, supra, are both in point in principle and general features. The stipulated amount in the present case may be sustained under the authority of the two cases referred to, not only as a reasonable liquidation of damages, but as an agreement based upon sufficient consideration to pay the additional, amount as further compensation upon discharge.

The judgment of the court of common pleas is, therefore, reversed, and cause remanded, with instructions to overrule the demurrer to the first cause of action.

Sullivan and Dustin, JJ., concur.


author: WILDMAN, J.

text:
    ERROR — INTOXICATING LIQUORS — NEW TRIAL.
    [Wood (6th) Circuit Court,
    April 13, 1910.]
    Parker, Wildman and Kinkade, JJ.

      Geo. Carmack v. State of Ohio (Two Cases). Geo. Rogers v. State of Ohio (Two Cases).
    1. In Liquor Prosecutions Complaint Need not Allege that Case is not One of the Exceptions.
    In prosecution for violation of the county local option law making sale of intoxicating liquors unlawful, it is not necessary that the complaint allege that the alleged sale was not one of the exceptions mentioned in that statute, nor is it necessary to prove it; such matter is defense and must be established as such.
    2. Continuance of Trial over Thirty Days under Sec. 17 of 98 O. L. 12 within Discretion of Trial Court.
    In a prosecution which comes within the principles of Sec. 17 of 98 O. L. 12, Gen. Code 13243 (R. S. 4364-30zd), under the last part -of said section a discretion is given the trial judge to continue the case beyond the thirtieth day, and so doing will not deprive such court of jurisdiction.
    3. To Bring Sale of Liqtíor within Exceptions, Sale Must be Made in Good Faith.
    In the sale of liquor in “dry” territory to bring the transaction within the exception in the criminal statute making sale for pharmaceutical purposes lawful the sale must have been made in good faith by the seller and merely keeping a book with a statement that it is used for pharmaceutical purposes, which purchaser signs does not relieve the requirement of good faith.
    [Syllabus approved by the court.]
    Error to Wood common pleas court.

      B. F. James, for plaintiffs in error.

      N. B. Harrington and William Dunipace, prosecuting attorney, for defendant in error.

      Dismissed, Carmack v. State; Rogers v. State, 55 Bull. 214.

   WILDMAN, J.

(Orally.)

In both of these cases, similar questions are presented. The two plaintiffs in error were prosecuted for an alleged violation of the liquor law or local option law under which this county has voted to make the selling of intoxicating liquors as a beverage unlawful.

Numerous objections to the judgments of conviction in the probate court have been presented both in the common pleas-court to which the cases were brought upon error, and subsequently in this court.

The position is taken by these plaintiffs in error, among' other contentions, that the complaint against them is insufficient in that it charges a violation of the prohibitory liquor law as applied to Wood county without stating that the defendants did not come within one of the exceptions mentioned in the statute, especially the exception that applies to the sale of liquor for pharmaceutical purposes.

The affidavits of complaint upon which the cases were tried before the probate judge were attacked both by plea in abatement and by demurrer, and this question would properly be presented by demurrer, but it has been disposed of in another case decided by this court in Lucas county in 1907, or rather in three cases presented at the same time, viz.: the case of Otte v. State, Krupp v. State, and Noller v. State, 29 O. C. C. 203 (9 N. S. 293).

Part of the syllabus that touches this particular matter is on page 204; the seventh paragraph of the syllabus reads:

“Negative averments and proof are not necessary in prosecutions for violations of a statute under prpvisos or exceptions not included in the definition of the offense. Hence, no proof is required of such negative averments in an affidavit, for unlawfully selling intoxicating liquors in a residence district where the selling of intoxicating liquor is unlawful under the Jones district local option law;” and the principle is the same.

On page 215 of the opinion the matter is more fully discussed, but I will not stop to read it. Leave to file petitions in error in these cases was refused by the Supreme Court.

■It will be noted that the holding is, that it is not incumbent upon the state, either to allege', or to prove that the sales, were not made for pharmaceutical purposes. Indeed, the principle is well settled by authority pot only in this state but elsewhere that where negative matters of this kind are not included in the definition of the offense and where certain persons or certain classes of cases are excepted from the operation of the act, it becomes a matter of defense for the defendant to allege and show that the' transaction comes within such classes of cases, or that he is one of the persons exempted by the act.

Plaintiffs in error further contend that jurisdiction to try the cases was lost in- the trial court by noneompliance with Sec. 4364-30zd, reading as follows:

“When a prosecution is commenced before a court or magistrate for the violation of a law prohibiting the sale of intoxicating liquors as a beverage, and the liquors seize/l by virtue thereof are to be used as evidence in such trial, such trial must take place in not more than thirty days. ’ ’

This statute, it will be noted, is not applicable except where liquors are seized and are to be used as evidence in such trial. In the case before us the liquor had been obtained in some way and possibly the principle of the statute would apply, but the statute provides further:

“If at the time appointed for such trial, the returns have not been properly made, or for other sufficient cause, the trial is postponed to a further date, it shall not be continued more than fifteen days beyond such thirty days.”

This prosecution was begun, if my memory serves me aright, upon the ninth of November, 1909, and upon the application of the defendants in the two eases, continuances were had until December fourteenth. On the fourteenth of December additional continuances were had until the twentieth of December upon the application of the state, but the first continuances were had upon the application of the defendants, as stated in the record. The cases in fact began upon the twentieth, forty-one days after complaint was filed — were tried, and motions for new trials were made in the absence of trial court, and the eases went to judgment upon the twenty-sixth. The statute does not provide that the length of time before judgment after the beginning of the trial shall not be more than forty-five days.

"We do not -understand that the statute contemplates a loss of jurisdiction by the court after the trial is begun, if it is begun in proper time. No exception was taken to the adjournment upon the application of the state — at least no exception appears in the record and we are not disposed to think the court lost jurisdiction upon the facts, so far as they are disclosed by this record.

In considering whether the convictions were justified by the evidence, that which I have said about the negativing of the guilt of the defendants by showing that the sales were made for pharmaceutical purposes, applies as well to the trials as to the charges in the complaints; the burden was upon the defendants to show that the sales were made for pharmaceutical purposes so as to bring the cases within the provisions of the act which would exonerate them from criminal liability.

It is true that the names of the buyers appear upon a register or book which is required to be kept by the statute, and opposite it is the word “pharmaceutical” placed there apparently by a rubber stamp in a column where the word is placed as to other persons to whom sales were made, but there is evidence in the ease bearing upon the question as to how sales were made and for what purpose, and upon this evidence it sufficiently appears, we think, to justify the magistrate in finding that there was no real intention to use the liquor so procured for pharmaceutical purposes. In fact, it is testified to by one of the witnesses at least, that he got the liquors to drink, and he does not at any place in his testimony indicate that he was buying them in fact for pharmaceutical purposes. He signs the book; the seller seems to have thought that the mere keeping of the book and putting down an ostensible purpose for which the sale was made was all that was required,- that is, if they were selling for the ostensible purpose of being used for pharmaceutical purposes, then there would be no violation of the law. We think this is not contemplated by the statute; the sales must have been made in good faith for pharmaceutical 'purposes,' whether or not the purchaser was acting 'in good faith.

I

"We do not feel called upon to discuss the question whethei the tona fide belief of the seller-if it had existed, that he was selling for pharmaceutical purposes, would exonerate him from liability or not. We think at least that he would have no legal right to sell unless he so believed, and the evidence, we tnink, is such that the probate judge could very well conclude that the whole transaction was a mere idle form so far as the claim was made that the liquors were to be used for pharmaceutical purposes, and that it was simply done by the seller to evade. th,e law. The burden being upon the defendants to show this defense — and not for the state to disprove it — we cannot say that the finding of the trial court was against the weight of the evidence.

It is claimed that a new trial should have been granted because of newly discovered evidence, upon a motion which was filed upon that ground. We think that the newly discovered evidence, as disclosed, might affect to some extent the credibility of witnesses, but it did not go directly to the issue involved in the cage, and even if it had, our Supreme Court has many times laid down the rule that new trials will not be granted upon newly discovered evidence, unless the effect will be to require a different verdict from that which was rendered, and we feel that the court below would not have been justified in granting a new trial in this case upon that ground. The evidence, to be sure, if it had been in possession of the defendants and had been offered upon the trial, might have induced the probiate judge to form a different conclusion, but we cannot say that it would necessarily have done so or that its legitimate effect would have been to require him to form a different conclusion, because he might still from all the circumstances have been satisfied that the defendants had violated the law and that these men should be convicted. There are some other points in the cases to which I might refer if I had time but they are not of any special importance, and it is sufficient to say that we find no error in the records such as would justify any reversal of the findings and judgments of conviction, and the judgments will be affirmed.

Parker and Kinkade, JJ., concur.


text:
    CORPORATIONS — MANDAMUS—COURTS.
    [Cuyahoga (8th) Circuit Court,
    May 9, 1910.]
    Henry and Winch, JJ.
    (Judge Marvin not sitting.)
    State ex rel. John Ferencz v. Unida Gold Mining Co. et al.
    1. Mandamus not Proceeding to Require Corporation Secretary to call Stockholders’ Meeting.
    Mandamus is not the proper proceeding by which to require the secretary of a corporation to call a meeting of its stockholders.
    2. Courts have no Visitobial Jurisdiction over Internal Corporate Ajteairs.
    The courts of this state have no visitorial or supervisory jurisdiction with regard to the management of the internal affairs of a corporation of another state.
    [Syllabus by the court.]
    Error to Cuyahoga common pleas court.

      Mart, Canfield & Crolce, for plaintiff in error.

      Falda & Svarc, for defendants in error:
    Cited and commented upon the following authorities: Fraternal Mystic Circle v. State, 61 Ohio St. 628 [48 N. E. Rep. 940; 76 Am. St. Rep. 446]; Cincinnati Vollcsblatt Co. v. Hoff-' meister, 62 Ohio St. 189 [56 N. E. Rep. 1033; 48 L. R. A. 732; 78 Am. St. Rep. 707]; Freon v. Carriage Co. 42 Ohio St. 30 [51 Am. Rep. 794]; State v. Carpenter, 51 Ohio St. 83 [37 N. E. Rep. 261; 46 Am. St. Rep. 556],
   WINCH, J.

The relator filed a petition in the common pleas court setting forth that the defendant company was incorporated under the lawsi of the state of Arizona, but having its principal office in the city of Cleveland, Cuyahoga county, Ohio, where the defendant, George H. Palda, its secretary, and the otheij defendants, some six in number, directors of said “company, reside. He sets forth that he is a stockholder of the company and requested said secretary to call and give notice of an annual meeting of the stockholders of the company to be held on February 21, 1910, pursuant to a by-law of the said company, which he sets forth, but that the defendants wholly refused to held said meeting. The relator prays that a writ of mandamus may issue, commanding the defendants to perform their dpties, as set' forth in the constitution and by-laws of the corporation, and give notice of the time and place of the annual meeting of the stockholders. To this petition a demurrer was fded, which was sustained by the common _ pleas court, and the plaintiffs not desiring to plead further,, judgment was entered dismissing the petition; to review said judgment this proceeding in error has been instituted.

¥e apprehend that there are two reasons justifying the ruling of the common pleas court in sustaining the demurrer.

First, the relator mistook his remedy. The object of the remedy by miandamus is to compel public officers and private individuals in matters relating to the public, to perform their public duties. Tillson v. Putnam, Co. (Comrs.) 19 Ohio 415.

As stated By Judge Shauck in the case of Fraternal Mystic Circle v. State, 61 Ohio St. 628 [48 N. E. Rep. 940; 76 Am. St. Rep. 446], “This is only saying, that private actions are appropriate for the redress of private wrongs.”

So it was there held that a member of a private corpora-' tion though unlawfully expelled and excluded from participation in its benefits, is not entitled to a writ of mandamus to compel it to restore him to membership. The proper procedure to enforce the private rights of a stockholder in a corporation is pointed out in the case of Cincinnati Volksblatt Co. v. Hoffmeister, 62 Ohio St. 189 [56 N. E. Rep. 1033; 48 L. R. A. 732; 78 Am. St. Rep. 707], where it is held:

“Injunction is the proper form of remedy to enforce the right of a stockholder in a private corporation, given by Sec. 3254 Rev. Stat. (Gen. Code 8672, 8673), to inspect the books and records of the corporation.”

Another cogent reason why the demurrer was properly sustained is, that the courts of one state have no visitorial or supervisory jurisdiction with regard to the internal affairs of a corporation of another state which in no wise affect the rights of the citizen as such, in common with all other citizens, and distinct from his private rights as a stockholder. This view is elucidated in the case of Madden v. Light Co. 181 Pa. St. 617 [37 Atl. Rep. 817; 38 L. R. A. 638].

In the case of North State Copper & Gold Co. v. Field, 64 Md. 151 [20 Atl. Rep. 1039], it is said:

‘/Where the act complained of affects the complainant solely in his capacity as a member of the corporation, whether it be as stockholder, director, president, or other officer, and is the act of the corporation whether acting in stockholders’ meeting or through its agents, the board of directors, then such action is the management of the internal affairs of the corpora^ tion, and in case of a foreign corporation, our courts will not take jurisdiction.”

We subscribe to this statement of the law, and for the two reasons stated, the judgment of the common pleas court is affirmed.

Henry, J., concurs.