text:
    EMBEZZLEMENT — ERROR—EVIDENCE.
    [Cuyahoga (8th) Circuit Court,
    February 7, 1910.]
    Marvin, Winch and Henry, JJ.

      Harry E. Hayes v. State of Ohio
    1. Pledging of Bonds and Conversion of Proceeds of Bonds by Selling Brokers Embezzlement.
    Where an agreement between a railway company and brokers handling the bonds of the company provides that the right of the brokers to retain the bonds should accrue contemporaneously with actual payment therefor, an indictment for embezzlement lies for the pledging of the bonds by the brokers for loans and the conversion of the proceeds of the loans by the brokers prior to a call for funds by the company.
    2. Evidence Competent to Show Pledging and Conversion of Bonds not Due to Misunderstanding of Brokers.
    Evidence is competent in such a case which tends to show that the pledging of the bonds and use of the proceeds therefrom by the brokers was not due to an honest misunderstanding by the brokers of their rights in the matter.

      3. Conviction for Embezzlement upon Evidence Establishing Guilt not Reversed for Misconduct of Prosecutor.
    Misconduct by the court or prosecuting attorney is of little moment to an accused person against whom evidence has been presented which establishes his guilt completely.
    4. Agreement for Mutual Contributions and Share in Profits does not Constitute Partnership.
    An agreement to make mutual contributions to the subject-matter of an enterprise and to share the profits can not be taken as establishing a partnership, where there is nothing else in the agreement which is at all characteristic of a partnership.
    Error to common pleas court.

      Dawley & Sullivan and A. A. Stearns, for plaintiff in error.

      J. A. Cline, Pros. Atty., and W. D. Meals, Asst. Pros. Atty., for defendant in error.

      Affirmed, no op., Hayes v. State, 83 O. S. 490.

   HENRY, J.

The plaintiff in error was indicted jointly with his partner in the firm of W. J. ITayes & Son, for embezzling on August 7, 3907, 198 one thousand dollar bonds of the Cincinnati, Bluffton & Chicago Railway. Upon separate trial he was found “guilty of embezzlement as charged in the first count of the indictment” of property valued by the jury at $18,000, and was sentenced to five years’ imprisonment.

The transaction evidently contemplated by the verdict is the pledging by the defendant below to the Pearl Street Bank, in Cleveland, on January 25, 1907, of twenty of said bonds to secure their note for $15,000. Their rights at that time with respect to these bonds are defined by the following contract:

‘‘ This, agreement, made and entered into this 22nd day of December, A. D. 1906, by and between S. H. Bracey, of Chicago, Illinois, party of the first part, and W. J. Hayes & Sons, of Cleveland, Ohio, parties of the second part, Witnesseth:
“Whereas, the party of the first part is the owner of 10,-080 shares of the capital stock of the Cincinnati, Bluffton & Chicago Railroad. Company and of 1,275 bonds of said company, and is desirous that the said W. J. Hayes & Sons shall act as his brokers in the sale of said bonds:
“Therefore, in consideration of the sum of one dollar, and ■other good and valuable considerations, each to the other in hand paid and received, it is mutually covenanted and agreed by and between the parties hereto as follows, that is to say:
“1st. That, subject to the conditions hereinafter expressed, the said parties of the second part shall have and are hereby given exclusive sale of the said 1,275 bonds owned by the said first party and issued by the Cincinnati, Bluffton & Chicago Railroad Company,
“2nd. The said party of the first part agrees to give to the party of the second part, pro rata as sales are made, as compensation for services, the total aggregate of 35 per cent of the total issue of the capital stock of the said railroad; it being understood, however, that none of said stock can be physically delivered until there is a sale of the 575 bonds provided to be sold in clause 6, so that the moneys derived from such sales can be used to release such stock from present collateral liens; provided that said stock shall be contracted to purchasers of bonds, or if retained by the second party, shall be retained with the understanding that said 10,080 shares of stock are pooled and that no stock shall be transferred unless all is sold and that each share shall participate equally and impartially in the proceeds of any sale thereof.
“3rd. It is mutually covenanted and agreed that the-666 bonds of the said railroad now in the hands of Louis D. Davenport, of Bluffton, Indiana, as well as 34 of the bonds now in the control of the Reorganization Committee of said railroad, making a total of 700 bonds, shall be sold and the proceeds thereof shall be devoted entirely to the cost of engineering, right-of-way for and construction of extensions of said railroad, as hereinafter described, including the securing of necessary and adequate equipment therefor. Said second parties shall have the right to sell the first 350 of said bonds at 75 per cent of their face value, and the next 350 of said bonds at 80 per cent of their face value, and all amounts received by said second party over and above said 75 per cent for said first 350 bonds and 80 per cent for said second 350 bonds shall be retained by said second parties as their compensation and commission for the sale thereof. The amount realized from the said sales of the said 700 bonds shall, from time to time, and as fast as sold, be placed on deposit with some responsible bank to the credit of the said railroad, to be drawn out and expended only for the purposes herein provided, upon cheeks signed by said railroad company and upon vouchers which shall be approved as being for such purposes by some responsible' certified public accountant.
“4th. The party of the first part agrees to supervise the expenditure of the sums of money above provided, and to furnish necessary tools and construction equipment for the construction of said railroad, and shall receive for his compensation 10 per cent, of the actual cost of labor and materials used in the construction and equipment of said extension. It is agreed that the said extension shall be built from a point of connection with the present terminal of the said railroad in Bluffton, Indiana, to Huntington, Indiana, and from the present terminal of said railroad in Portland, Indiana, to Union City, Indiana; the construction to be in accordance with the present general standard of the construction of that portion of the railroad now in operation between Portland and Bluffton, Indiana, in relation to weight of rails, ties, grade, curves, roadbed and ballast; said entire railroad from Union City to Huntington, Indiana, to be built and placed in operation by August 1, 1907, provided said second parties shall meet and pay all of the calls provided for in this contract in clause 7.
“5th. It is further mutually agreed that in case there shall be any profit represented by the difference between the amount of said bond sales of the 700 bonds as herein provided for, plus all subsidies and municipal aid voted or to be voted in aid of said railroad and the actual cost of the construction of said extension and equipment therefor as provided in clause 4 (including the 10 per cent compensation to first party) shall be divided equally between the parties hereto.
“6th. It is further mutually agreed that the remaining 575 bonds owned by the said S. H. Bracey may be sold by the parties of the second part at 85 per cent of their face value, and that the said second parties shall retain in full for their compensation and commission all that they shall receive •on the sale of said bonds in excess of 85 per cent; all moneys received from said sales of said 575 bonds shall be used to release the same from collateral liens and the balance shall be paid to the said party of the first part.
“7th. It is further mutually agreed that the said party of the first part shall, have the right to call upon the parties •of the second part for the payment of twenty-five thousand dollars ($25,000.00) on the 15th day of- February, 1907, upon the delivery to the said parties of the second part of bonds at the rate of 75 per cent of their face value to the amount of •said call, and the second party agrees to make said payment on said date to be used for the purposes herein provided for and upon the delivery of said bonds as aforesaid; subject to the right of refusal exercised as hereinafter provided; like calls for $25,000.00 each upon like conditions can be made by said first party, and the payment of the amount thereof shall he made by said second parties on delivery of bonds at said rate on the 15th days of March and April, 1907; and the following like calls for the following amounts upon like conditions can be made by the party of the first part, and payment thereof shall be made by the parties of the second part upon delivery of bonds at the rates herein provided for the sale thereof, that is to say:
“One hundred sixty-seven thousand five hundred dollars ($167,500.00) on May 15, 1907, or later if not required for construction.
“Two hundred thousand dollars ($200,000.00) on June 15, 1907, or later if not required for construction.
“One hundred thousand dollars ($100,000.00) on July 15, 1907, or later if not required for construction.

Four hundred eighty-eight thousand seven hundred fifty dollars ($488,750.00) on August 15, 1907.

“Provided, however, and this contract is upon the express condition that the parties of the second part shall have “the right to refuse any call above provided for, except the first call of February 15, 1907, in the following manner, viz. the said party of the first part shall give to the said party of the second part, a notice in writing, fifteen days- prior to the March and April calls and if said parties of the second part,, shall neglect or refuse within five days after such notice- to notify the party of the first part of their election to meet such call, then such neglect or refusal to so notify shall amount to a refusal of such call, and said party of the first part shall give to said parties of the second part at least thirty-five days ’ notice of all other calls provided for in this contract, (meaning to except the calls of February, March and April) and if said second parties shall neglect or refuse within five days after such notice to it of such calls to notify the said party of the first part of its election to meet such call, then such, neglect or refusal to so notify shall amount to a refusal of such call. All notices above referred to shall be given by mail, postage prepaid, addressed to the party of the first part at the Tribune Bldg., Chicago, Illinois, and to the parties of the second part at the Chamber of Commerce Bldg., Cleveland,. Ohio; in case of such refusal and notice thereof, then the parties of the second part shall not be liable to meet and pay such call so refused, and this contract shall thereupon, at the option of the party of the first part, become null and void. The said parties of the second part shall have the right, however, to retain the bonds delivered to them for the payment of all previous calls; all other bonds to be returned to said first party.
“8th. It is further mutually agreed that the said party of the first part shall have the right to purchase materials, and labor for construction, to be charged up to the construction account at the same rates and prices provided herein for the sales hereof, and in case the said first party shall sell bonds at par, said sales shall be turned over to the said parties of the second part, and the difference between the prices for which said second parties are given the right to sell such bonds and the par value thereof shall be divided equally between the parties hereto.
“9th. It is understood and agreed that all bonds delivered to said second parties for sale shall have all coupons prior to the year 1907 clipped off and cancelled.
“10th. This contract shall not take effect or become operative unless one P. F. Barling shall fail to perform a certain contract with the party of the first part which expires by its terms December 24, 1906, or unless said P. F. Earling shall, in the meantime, cancel or release the same.
“11th. Said first party agrees to cause the bonds to be delivered to said second parties as fast as sold, and shall deposit with second party in any event not less than 400 bonds on or before January, 5, 1907, and to give a good and sufficient bond satisfactory to second parties, with a penalty of not less than $50,000 for the faithful performance hereof by the said first party, said bond for performance to be furnished second parties on or before January 1, 1907.
“Witness the hands and seals of the parties, the day and year first above written.
“(Signed) S. H. Bracey (Seal)
“(Signed) W. J. Hayes & Son (Seal)”

Of the bonds contemplated by this contract' 664 were, delivered to W. J. Hayes & Son in Cleveland as follows:

400 January 4, 1907;
164 March 19, 1907; and
100 June 3, 1907.

Of these, Hayes & Son subsequently returned 399; sold 42, and hypothecated the residue for money borrowed by them at various banks from January to October, 1907. As before stated twenty bonds were thus hypothecated on January 25, 1907, three weeks before anything was done or due to be done under the contract of December 22, 1906. Twenty-four more were similarly hypothecated to banks in New York and Iowa on February 19 and 20, 1907; but not until $7,500 had been paid. February 16, 1907, to apply on the installment then due. On March 2, 1907, Hayes and Son. paid $5,000 in short time paper; and on March 13, $18,500 more in long time paper. A call for the second installment of $25,000 to be paid March 15, 1907, had been duly made, but by mutual agreement the time of payment was postponed a month. Subsequently, all but $10,000 of the paper issued by Hayes & Son to complete the payment of the first two installments of $25,000 each was paid.

On March 10, 1907, a modification of the terms of the contract of December 22 was entered into by the parties, wherein it was agreed that Hayes & Son would issue their accommodation acceptances to the amount of $200,000 to enable the railroad company to immediately supply the funds for construction purposes, and it was agreed that the 400 bonds already delivered to Hayes & Son and the 164 bonds that were to be delivered on March 19 should be pledged to Hayes & Son as collateral security for these acceptances. Later, and on June 3, 1907, the additional 100 bonds were' delivered by Davenport to Hayes & Son under a receipt which recited that they were to be used in accordance with the contract of December 22, 1906, as modified by the arrangement of March 13, 1907.

Thereafter on March 27, 1907, a further modification of the arrangement between the parties was made, wherein Hayes & Son were authorized to pledge upon mixed loans or otherwise, in their own business, the same as if they were their own, any and all of the bonds in their possession.

It was doubtless intended that the avails of such loans should be applied to the payment of the acceptances; but such application was not properly safeguarded. Thereafter without technical criminality, the funds derived from systematic hypothecation of the bonds were diverted by Hayes & Son until they could no longer conceal the insolvency in which they had involved not only themselves, but the railroad as well.

The plaintiff in error claims that Hayes and Son gained absolute title to the 66 bonds authorized to be retained by them in connection with the calls payable February 15, and March 15, 1907, and that the 48 bonds pledged before the contract of December 22, 1906, was modified were therefore their own bonds, or at least that Hayes & Son may well be deemed to. have so supposed in perfect good faith, But there are several-complete answers to this contention.

First, the letter of June 11, 1908, from the defendants' below, reports “that out of the bonds which were purchased-from you and which were paid for, the following have been sold,” listing 42 bonds with names of purchasers.

There is no pretense that Hayes and Son ever purchased more than 66 bonds, and none of the 42 bonds so sold by them can be identified with the 48 bonds pledged in January and February, 1907. Ninety bonds were thus treated by them as their“own, which is 24 in excess of the most they can claim tc have owned. Moreover, as already pointed out, 20 bonds were hypothecated by them three weeks before they had any right to retain the same, and before they had any conclusive knowledge that they would be called upon to make the February 15 payment. Retail sales of bonds or construction delays, or other contingencies might meanwhile make such call unnecessary; or they themselves might not be, as in fact they were not ready to respond. promptly to their absolute liability to meet such call if made. It is not as if they had pledged the bonds at the time and for the' purpose of applying the avails in payment of the call. For it is plainly provided by the contract that their right to retain the bonds should accrue contemporaneously with actual payment and not before. And their entire subsequent course of conduct and concealment conclusively shows that they themselves never put any other construction upon the contract.

Right here, also, it may be said, that the evidence of transactions after the modification of the contract, was properly admitted for this very purpose of showing that the defendants had erred under no honest misconstruction of their rights in converting the bonds to their own use. The court properly instructed the jury that they could find no embezzlement after February, 1907; and if further instruction were required as to the use which the jury were, to make of the evidence of subsequent transactions, the court’s attention should have been seasonably called to the omission.

The evidence of the unlawful conversion by the plaintiff in error of twenty bonds on January 25, 1907, is perfect and complete. It consists essentially of documents whose authenticity is conclusive in view of the papers produced by the plaintiff in error himself and introduced by him in connection with the cross-examination of the state’s witnesses.

Unless, therefore, some other elements of the crime of embezzlement as charged in the indictment, remain unproved, the alleged misconduct of court and prosecuting attorneys in the trial of the case becomes of little moment so far as the accused is concerned. We do not at all approve of the persistence of the state’s attorneys in demanding letters and documents of the accused across the trial table and in the presence of the jury, especially after the court had specifically, repeatedly and correctly ruled against their right to do so.

True, the accused was not thereby compelled to give evidence against himself and hence his constitutional right was not invaded. But his statutory right to exemption from comment upon his failure so to do would have been seriously invaded if his guilt were not incontestable and the court’s cautions to the jury had not therefore sufficed to cure the errors thus .complained of. Sisson v. State, not reported, decided by the circuit court of Lorain county December, 1909. And the same is true of certain inflammatory appeals of the state’s attorneys in their argument to the jury. The public prosecutor may appeal to the consciences of the jurors but not to their prejudices. He may argue upon the facts as disclosed by the evidence in the case on trial, but not upon the demands of public opinion that the jury shall at all hazards convict persons accused of particular classes of crime.

There remains for consideration the contention that the contract of December 22, 1906, was an agreement of partnership between Bracey and Hayes & Son. We do not so construe it. True, it contemplates a certain sharing of profits and a mutual contribution to the subject-matter of the enterprise. But these are often incident to contracts of employment or agency, such as this undoubtedly was. There is nothing else in the agreement that is at all characteristic of a partnership.

It is further claimed that Bracey was not the real party in interest, but that the railroad was at the outset his undisclosed principal and the real owner of the bonds, and that its status as such was fully revealed and acknowledged before the alleged embezzlement took place. The fact is that Bracey was the owner of the stock of the railroad and was expressly given plenary authority by the corporation to handle and dispose of the bonds for construction purposes. He testifies moreover that the bonds were his and the contract so recites. He had at least a qualified ownership, and this as the court properly charged, is sufficient to support the allegation of the indictment that he was the owner. State v. Kusmick, 45 Ohio St. 535 [15 N. E. Rep. 481; 4 Am. St. Rep. 564]; State v. Tillett, 173 Ind. 133 [89 N. E. Rep. 589; 140 Am. St. Rep. 246] ; State v. Spaulding, 24 Kan. 1.

Upon the remaining assignments of error it is sufficient to observe that conviction under this indictment is a bar to conviction of the plaintiff in error under any other indictment for the embezzlement of any of these bonds or the proceeds thereof prior to August 7, 1907. Nor was the state required to elect under this indictment which of the various transactions prior to that date it would rely upon for conviction. Sec. 6842 R. S. (Sec. 12467 G. C.) ; Brown v. State, 18 Ohio St. 497; Gravatt v. State, 25 Ohio St. 162.

It would unnecessarily prolong this opinion to enter upon a discussion and analysis of the eases cited in support of these views. Suffice it to say that we deem these decisions to be controlling, and the judgment is affirmed.

Marvin and Winch, JJ., concur.


source: Caselaw Access Project

author: HENRY, J.

license: Public Domain

text:
    JUDGMENTS AND DECREES.
    [Cuyahoga (8th) Circuit Court,
    February 21, 1905.]
    Marvin, Winch and Henry, XX
    John C. Keefe v. James W. Evenden.
    Proof Required in Action to Set Aside Judgment by Default.
    In an action to set aside a judgment on the ground that defendant had not been served with summons, the evidence must clearly show such want of service.
    Appeal.

      J. P. Dawley and F. A. Beecher, for plaintiff.

      Smith & Taft, for defendant.
   HENRY, J.

The action below was begun June 14, 1904, to enjoin the collection of, and to vacate a judgment by default obtained December 12, 1898, in a previous action begun in the same court October 15, 1898, wherein the plaintiff here was defendant and the defendant here was plaintiff. It is , alleged by Keefe that the return of seryice of summons in that action is erroneous, and that summons was in fact never served on him. The answer of the defendant here denies this allegation. The return of summons in the former case showed upon its face that summons was served on him personally.

Upon the trial he testified that he was not personally served, and that he had no notice of the pendency of the action until he procured an abstract of title to certain of his real estate which he desired to encumber or sell, and, found that the judgment was a lien thereon. His testimony is not, however, clear as to when he first learned of the judgment. In one portion of his evidence he declares that it was six months after judgment was obtained. Later on he testified that it was not until about a month before this suit was brought. He produces other evidence to confirm his own testimony relative to (he want of personal service, and his want of knowledge of the pendency of the action. But this evidence is all either negative in character, or, at all events, insufficient to corroborate his claim.

The defendant produces as a witness George F. Arnold, deputy sheriff, who served the summons in the primary action. Arnold testifies that in making the service he knocked at the side door of Keefe’s residence; that, apparently, in response to his knock a man came from behind the house, and in answer to his question said that he was John Keefe, and thereupon Arnold handed the summons to this man personally. Other witnesses for the defendant testify that various letters were written to Keefe within the next three years, requesting that he pay the judgment, and that in April, 1903, Keefe called twice about the matter at the office of the firm with which Evenden was connected.

Upon the whole case we are not satisfied that the evidence shows with such degree of clearness as equity requires in an action of this sort, that the averments of the petition are true. A decree will, therefore, be entered for the defendant, dismissing the petition at plaintiff’s costs.

Marvin and Winch, JJ.0 concur.


text:
    CORPORATIONS — INSURANCE.
    [Cuyahoga (8th) Circuit Court,
    February 21, 1905.]
    Marvin, Winch and Henry, JJ.
    Merchants Insurance Co. v. Marcus M. Brown and Mayfield Heights Realty Co.
    Recovery of Insurance Denied Realty Company Insuring Property Sold by the President of Such Company as Personal Owner.
    An owner of an allotment of real estate, for the purpose of holding the title and facilitating • the sale thereof, having organized a corporation of which he owned all the stock and acted as president and sole manager of its business, entering into a land contract with a purchaser to whom he ■ personally contracts to convey a certain house and lot in the name of the corporation, the "unconditional and sole ownership” upon which a policy of insurance is issued, vests in the vendee in possession under the land contract and notwithstanding the application statement designating the realty company as having the unconditional and sole ownership thereof, the realty company is not entitled to recover any part of the proceeds of such policy from the insurance company in an action by the latter to foreclose the mortgage assigned to it on payment of the mortgagee’s interest therein.
    Appeal from common pleas court.

      Garfield, Howe & Westenhaver, for plaintiff.

      Horr & Lowenthal, for defendants,
   HENRY, J.

A decree of mortgage foreclosure was granted in the court below. The evidence and the undisputed averments of the pleadings show that the defendant, Marcus M. Brown, being the owner of a real estate allotment, organized a corporation, the Mayfield Heights Réalty Company, defendant herein, to hold the title and facilitate the sale thereof. Of this corporation, Brown himself owned, in effect, the entire capital stock. He was the president of the corporation, and he alone managed its business. In contracting for the sale of lots Brown made contracts in his own name rather than in the name of the corporation, in order that such contracts might not cause embarrassment relative to the mortgage indebtedness upon the property, or otherwise injuriously affect the record title by reason of their pendency, or in case of breach by purchasers.

Of this sort was a certain' contract which was entered into on July —, 1899, between Brown and' one Wylie for the purchase by the latter of a house and lot. Wylie entered' into possession of the premises so purchased, and continued therein during all the period under consideration. In. September, 1899, Brown, in the name of his corporation, took out a policy of fire insurance upon the house, stipulating that loss, if any, should be payable to the mortgagee off the premises, one Rollin C. White, as his interest might appear. No mention in the policy was made of the outstanding contract for the sale of the premises to Wylie, but on the contrary' it was stipulated that the interest of the insured in the said premises was that of “unconditional and sole ownership.”

After the insurance was effected, a lean-to, or shed, was built on the rear of the house, and Wylie kept therein a sn.;.il amount of gasoline in a glass can partly covered with a ti i envelope. The contents of this can having somehow escaped, a fire resulted from the lighting of a match by Wylie in the lean-to whereby the house was destroyed. The mortgagee, White, perfected proofs of loss; but Brown deeming that his corporation was not interested, save only to the extent of having the loss paid to the mortgagee in reduction of the mortgage debt, failed to present any proofs of loss on behalf of said corporation until after the time limited therefor in the policy had elapsed.

By the terms of the contract the mortgagee was confessedly not affected by this and other defenses which the insurance company urged against Brown’s corporation. The insurance company therefore paid the amount of the loss to the mortgagee; but instead of permitting the same to be applied in reduction of the mortgage debt, it exacted from White, under the subrogation clause in the policy, an assignment to itself of the mortgage and debt which it secured. Brown’s corporation declined to pay to the insurance company the sum alleged to be due to the latter under the mortgage as thus assigned, save only a small margin in excess of the amount of the insurance, and thereupon this suit for foreclosure was commenced.

Brown’s corporation by answer claims that the mortgage debt was extinguished, having been paid with money belonging to it when the insurance loss was adjusted. Plaintiff by reply insists that Brown’s corporation had no right to the benefit of indemnity under the policy, having violated its provisions in three particulars, namely:

First. In that, by the contract between Brown and Wylie, Brown’s corporation had at the date of the policy ceased to' be the sole owner of the insured premises.
Second. In the manner in which the gasoline was kept on the insured premises, as already described.
Third. In that the insured did not seasonably perfect its proof of loss.

Concerning the first of these particulars, the controversy hinges upon the question whether Brown’s contract with Wylie qualifies the sole and unconditional ownership of the premises by Brown’s corporation. If so, the latter’s representation in that behalf is untrue, and renders the policy void as to it.

Was Brown’s contract with Wylie such that the latter would have been entitled, upon the performance thereof on his part, to a decree against Brown’s corporation in a suit for the specific performance of the contract?

In First Nat. Bank v. Trebein Co. 59 Ohio St. 316 [52 N. E. Rep. 834], it is held that:

“In contemplation of law a corporation is a legal entity, an ideal person, separate from the real persons who compose it. This fiction, however, is limited to the uses and purposes for which it was adopted — convenience in the transaction of business and in suing and being sued in its corporate name, and the continuance of its rights and liabilities, unaffected by changes in its corporate members. But the fiction can not be abused; a corporation can not be formed for the purpose of accomplishing a fraud or other illegal act under the disguise of the fiction; and when this is made to appear, the fiction will be disregarded by the courts and the acts of the real parties dealt with, as though no such corporation had been formed, on the ground that fraud vitiates everything into which it,enters, including the most solemn acts of men.”

In State v. Oil Co. 49 Ohio St. 137 [30 N. E. Rep. 279; 15 L. R. A. 145; 34 Am. St. Rep. 541], it is held:

“That a corporation is a legal entity, apart from the natural persons who compose it, is a mere fiction, introduced for convenience in the transaction of its business, and of those who do business with it; but like every other fiction of the law, when urged to an intent and purpose not within its reason and policy, may be disregarded.”

It was perhaps on the principles affirmed in the decisions just quoted that the Supreme Court in the case of Bundy v. Iron Co. 38 Ohio St. 300, held that a mortgage-upon corporate property made, through error, by the stockholders of the corporation in their own names, instead of by the corporation itself, which had received the consideration therefor, was a good equitable mortgage as against the corporation.

It follows that, in view of the relation between the two defendants here, a refusal by Brown’s corporation to carry out the contract made by him with Wylie ¡would, in case the latter were not in default, amount to a fraud by it, and that it would be effectually estopped from asserting, by way of defense to that contract, that it was not in fact a party thereto. Hence the contract must be viewed as having been to all intents and purposes made by Brown’s corporation.

With a valid contract for the sale of the insured premises outstanding, can it be said that the Mayfield Heights Realty Company was the sole and unconditional owner of the premises in question? A great number of authorities have been cited to us in support of the proposition expressed in 13 Am. & Eng. Enc. Law. (2 Ed.) 234, that:

“One who is in possession of real property under contract to purchase, and is not in default in the payments provided for in the contract, is in equity the owner of the land, and hence is entitled to insure as sole and unconditional owner; This is true whether the purchase price has been paid or not, as, in effect, the unpaid portion of the purchase price is only an incumbrance.”

Lorillard Fire Ins. Co. v. McCulloch, 21 Ohio St. 176 [8 Am. Rep. 52], goes almost to the same length, and in the light of that decision we hold, that the Mayfield Heights Realty Company was not the sole and unconditional owner of the premises in question.

The authorities clearly indicate that when a policy of fire insurance contains a stipulation that the insured is the sole and unconditional owner of the premises, and the fact is otherwise, and the policy in such case is provided by its terms to be void, the courts will recognize and enforce the provision in this behalf, and deny any right of recovery, in case of loss, to the insured.

Our conclusion on this branch of the .ease makes it unnecessary to determine whether or not the other defenses urged by the insurance company as against the realty company are valid. We incline, however, strongly to the opinion, that the lean-to in which the gasoline was kept was an integral part of the insured premises, and that the can in which the gasoline was stored can not be considered, in any just sense of the term, to be a metallic can as required by the policy. The fact that the fire originated in consequence of the eseape of the gasoline contained in this can points forcibly to the propriety of the provisions of the policy in this behalf; since if the gasoline had been stored elsewhere, or had been contained in an unquestionably metallic receptacle, no fire, would, it is probable, have ensued.

We do not, however, pass upon the question whether this was a violation of the policy, nor upon the further question whether, in view of the fact that the mortgagee White perfected proper proof of loss, it was necessary for the Mayfield Heights Realty Company to do the same.

It was conceded in the argument that if any of the defenses urged by the plaintiff insurance company as against Brown’s corporation and its right to indemnity under the policy is valid, the plaintiff is in that case properly subrogated to the rights of the mortgagee White, and can maintain this action. And we so hold.

A decree will be entered accordingly for the plaintiff.

Marvin and Winch, JJ., concur.


author: ALLREAD, J.

text:
    CANALS — STATE.
    [Franklin (2nd) Circuit Court,
    March 26, 1912.]
    Dustin, Allread and Rockel, JJ.
    State of Ohio v. Margaret Fenn, et al.
    1. State Claiming Title to Island in Canal Reservoir Must Establish Appropriation for Canal Purposes.
    A claim of title by the state to an island in a state cana] reservoir, either by selection and appropriation as against the United States under land patent, or by continued use after the patent constituting an appropriation against the patentee; makes it incumbent upon the state to establish an appropriation of the land for canal purposes.
    2. Occupancy by Constructive Possession of Island in Canal Reservoir by Water at Various Stages Surrounding, Gives State no Title when not Necessary for Canal Purposes.
    Occupancy by the state for canal purposes, of an island in a state reservoir as against the owner in the absence of con- , demnation, must be actual, open, notorious and direct; hence, occupancy by constructive possession of the water surrounding it, at flood stage, original and waste weir levels, goes at most to the question of encroachment and does not give the state title to the entire land of the Island, especially if not necessary for canal purposes and if the owners of the mainland, claiming title by United States patent and regular chain of niesne conveyances and claiming title to the island, have enjoyed possession for hunting, pasturing purposes at low stage and made improvements thereon.
    Error to common pleas court.

      Timothy Hogan, Atty. Gen., for plaintiff in error.

      Thompson & Slohaugh, for defendants in error.
   ALLREAD, J.

The state brought an action in ejectment to recover a small tract of land known as Circle Island in Buckeye lake. The defendant recovered in the court of common pleas, and the state brings the ease here upon petition in error.

The defendant, Margaret Fenn, claims title under a patent deed from the United States to William Hodgson dated August 10, 1850, and by regular chain of mesne conveyances. The patent deed included 41.81 acres, a large portion of which is on the mainland and outside the reservoir or lake. The patentee and those claiming under him down to Charles Pence in 1905 claimed ownership and possession of the island as part of the patented tract. From 1865 to 1894 Rachel Shell held title and had constructed and operated a hotel and summer resort upon the mainland at a point near the island, known as Shell Beach. July 19, 1905, Charles A. Pence, bought the island from the successor .in, title of the patentee and built a summer cottage at a cost of .$1,000. Pence, on June 16, 1906, conveyed to Margaret Fenn, who shortly after* the purchase constructed a concrete wall around the island and concrete docks, and also cut a deep water channel between the island and mainland and made fills and. other improvements upon the island at a cost of $12,000.

Before the Fenn improvements the mainland extended out in a point toward the island and to within 200 to 500 feet at the ordinary stage of water. From "this point a ridge extended to the island. The ridge was usually submerged to a depth of from two to five feet. In dry seasons, however, in midsummer the water often receded so as to leave a direct passage way to the island. Prior to 1905 the owners of the mainland had access to this island over the dry lands in the dry seasons and in other seasons by fording the shallow water and by boat. The land was used by the owners of the patented tract at occasional times for pasture, hunting, fishing and camping.

The state’s claim of title is founded upon an alleged appropriation for canal purposes. The Licking reservoir was constructed by the state about 1833 to 1835 and was used for canal and navigation purposes. In 1901 the reservoir was dedicated to the public by legislative act as Buckeye lake subject to canal uses.

The state’s claim of title is based, first, upon selection and appropriation as against the United States government under the act of congress of 1828, and, second, by continued use after the patent, constituting an appropriation against the patentee under Sec. 8 of the Canal act of 1825. Under either claim we think it became incumbent upon the state to establish an appropriation for canal purposes.

The state seeks to establish an appropriation of the island : (1) By constructive possession following from its being surrounded by the waters of the reservoir;' (2) By its occupancy and use by the waters of the reservoir at flood water level as augmented by the roll and splash of the waves; (3) By constructive possession arising from the original standard level; (4) By possession, more or less actual, of a portion of the island by waters up to the waste weir level and also up to the level of the waters at ordinary stage.

It is not contended that either the third or fourth contention show an occupancy of the whole island but go' rather to the question of encroachment. We are unable, however, to accept any of these tests as the exact basis of the state’s title as applied to the case at bar. It is broadly stated in many cases that occupancy of the state for canal purposes constitutes an appropriation and vests the fee simple title in the state. That doctrine in the measure stated is applied only where the appropriation by the state is admitted or clearly established. The justice of this rule of evidence is manifest.

Where the fact of the appropriation is in dispute, the possession and occupancy of the state, in order to confer title, must be actual, open, notorious and direct, and not merely constructive, incidental and indirect. In the case of Smith v. State, 59 Ohio St. 278 [52 N. E. Rep. 638], it was held that in order to acquire title by the state to canal lands by occupancy

‘ ‘ It is necessary that the occupancy by the state be exclusive, and that it be so open and notorious as to put the owner on notice that the property has been taken by the state for its own, with the purpose of incorporating it as part of its canal system.”

The doctrine so announced has been supplemented and extended in the case of Miller v. Wisenberger, 61 Ohio St. 561 [56 N. E. Rep. 454], where it is held that:

"The mere incidental backing of water up a stream caused by the erection of a dam across a river used as part of the canal system, such stream flowing into said river, and remaining in a state of nature, except as slightly raised by such back water, does not constitute such an appropriation and use of the bed of the stream for canal purposes as to vest the fee of such stream in the state. ’ ’

The right of the state depends, therefore, upon the evidence of occupancy and use. The island in controversy does not appear to have ever been used in any way by the state for canal or navigation purposes or in fact for any purpose.

The owners of the mainland always claimed title, and, so far as capable of use, enjoyed the possession and made valuable and lasting improvements. During all this period, and until about the time suit was brought, the state exercised no acts of ownership nor disputed the possession and ownership of the patentee and his successors in title. The state’s claim to possession and occupancy is merely constructive and incidental and not of such character as to confer title as against the owners and occupiers under the patent deed.

We do not think that the doctrine of a constructive berme bank can be applied under the circumstances. The existence of a berme bank and the question of its appropriation and use by the state depends upon the circumstances and the situation. The principle which denies the state’s title to lands occupied by the backwater in collateral streams and ravines where slack water, navigation is provided for disposes of the claim of constructive berme banks. There is no doubt that a berme bank, natural or artificial, may be appropriated for the reservoir wherever necessary and proper to protect the reservoir or its use for navigation purposes, but it does not necessarily follow that a berme bank is appropriated at every point where the baekwater of the reservoir exists.

We think the appropriation must be as definite and as exclusive in the ease of the berme bank as any other part of the canal system. Under these authorities we feel bound to hold that the state did not take such actual, open and notorious possession of the island as to fairly apprise the owners of an intention or purpose to appropriate the island, and did not, therefore, acquire title. The equity and justice of this holding is strengthened by the fact that valuable improvements have been made upon faith of private ownership and without notice of any claim by the state.

It has generally been doubted whether estoppel will be applied against the state in respect to her ownership of lands. The doubt has, however, been dispelled by the late case of State v. Railway, unreported, in which the doctrine is broadly announced in respect to the ownership of land, that when the state “appears as a suitor in her courts to enforce her rights of property, she comes shorn of her attributes of sovereignty and as a body politic capable of contracting, suing and holding property is subject to those rules of justice and right which in her sovereign character she has prescribed for the government of her people. ’ ’

The state exercises possession and control of its canal lands through its board of public works and employes, and we think is fairly chargeable with such notice of the claims of private ownership and of the making of improvements thereon as to ripen estoppel.

The reference in the act of 1894 to the islands in the lake was not intended to establish a new title. The context of the act shows that the jurisdiction was intended to operate only over the lands and waters owned by the state. This declaration, therefore, does not affect the title of the defendant nor destroy the estoppel.

We have considered all the evidence. The only controversy relates to the size of the island above the water level upon the improvment of Fenn. The material facts upon which title rests are not in dispute. Upon the ground that the decision rests upon the law of the case, and not upon- conflict of evidence, we hold that the rulings and order of the trial court in respect to the motion for a new trial and the vacation of the order overruling the same is not prejudicial to the state.

Judgment affirmed.

Dustin, and Rockell, JJ., concur.


text:
    BANKS AND BANKING — DEPOSITORIES—TAXES.
    [Greene (2nd) Court of Appeals,
    October 31, 1913.]
    Allread, Ferneding and Kunkle, JJ.
    In re Osborn Bank.
    1.- Bank Receiving Deposits of Township Funds from Township Treasurer Holds Same as Special and not General Deposits.
    Tbe proviso of Sec. 12873 G. C. exempting the acts of township and other treasurers, depositing certain public funds in the banks prescribed from the operation of‘a drastic criminal statute does not enlarge the authority of such treasurers nor authorize a deposit for other than safe keeping; hence, a hank receiving funds deposited by a township treasurer, no attempt being made to comply with Sec. 3320 G. C. et seq., providing for township depositories, succeeds prima facie to - the treasurer’s possessory title to such funds and as quasi trustee for their safe keeping as a special and not a general deposit.
    . 2. Special Deposits of Village Funds in Bank not Depository do not Become General Deposits.
    Section 4294 G. C. authorizing the deposit of municipal moneys in certain banks as special deposits is intended only to legalize such deposits, retaining the civil liability of the treasurer upon his bond, and there is nothing to warrant any inference that the treasurer’s duty or authority over such trust funds is changed, having no authority to convert such funds to his own or any other’s use. Hence, village funds deposited in a bank by a village treasurer upon his sole authority do not lose their trust status or become general deposits. Whether the subsequent knowledge or acquiescence of his sureties to such deposits is equivalent to prior assent, quaere.
    3. Taxes Collected and Deposited in Depository Bank are General Deposits.
    Taxes collected by a deputy county treasurer under Secs. 2746, 2748 G. C. in villages having no local bank of deposit but deposited by him in a designated bank of deposit on the day of payment, complies with the statute whether sent first to the county treasury or in a depository bank, become “undivided tax funds” .under Sec. 2737 G. C., and, being entered upon the pass book among the interest bearing deposits and allowed to remain, and entered on treasurer’s record as "deposited in depository” and certified by the auditor, constitute such funds general and not special deposits.
    Appeal from- common pleas court.

      B'rank L. Johnson and M. J. Hartley, for intervening petitioners.

      John C. Shea and Frank A. Davis, for State Banking Department.
   ALLREAD, J.

These eases arise upon intervening petitions seeking priority of certain public funds as special deposits.

The public funds involved in the intervening petitions are: (1) County funds of Greene county in the sum of $5,383.71; (2)- Village funds of the village of Fairfield in the sum of $1,503.72; and (3) Funds of the treasurer of section 16, etc., of Bath township in the sum of $721.87.

The Bank of Osborn, an incorporated banking company located in the village of Osborn, Greene county, Ohio, was on June 18, 1913, closed by the state banking department and is in process of liquidation. There were at the time the bank closed sufficient funds on hands to liquidate the claims represented by the intervening petitions.

The question in issue is: Were the funds deposited under such circumstances as to constitute them special deposits and entitled to preference, or were they merely general deposits ?

In consideration of-the status of public funds in the hands of a public treasurer we may start with the proposition that such treasurer, under the clearly established law of this state, is a mere custodian of the funds and has no authority by virtue of'his office to loan or invest them. Eshelby v. Cincinnati Bd. of Ed. 66 Ohio St. 71 [63 N. E. Rep. 586].

The preservation of the public funds has under the policy of our state been the subject of special care, and to uphold a transfer of title and an investment of the public moneys a clear legislative expression and a compliance with the prescribed conditions in all of its material features is required.

Where a bank receives from the treasurer public moneys known by it to be such it succeeds prima, facie merely to the treasurer’s possessory title and as quasi trustee for the safe keeping of such funds, and the burden is upon the bank if it claims greater title to show statutory authority and warrant to support its right to convert the funds to its own use.

In respect to the township funds we find there was no attempt to comply with the depository act. These funds were deposited solely upon the authority of the treasurer. The claim that this fund was deposited generally is founded upon the proviso of Sec. 12875 G. C. as follows:

“The provisions of Sec. 12873 shall not make it unlawful for the treasurer of a township, municipal corporation, board of education or cemetery association to deposit public money with a person, firm, company or corporation organized and doing a banking business under the laws of this state or of the United States, but the deposit of such funds in such bank shall not release such treasurer from liability for loss which may occur thereby. ’ ’

This proviso is a part of a criminal act of a very drastic nature designed to safeguard the public funds. The proviso was intended to except the deposit of certain public funds in certain banks from the operation of the criminal statute. It is not intended to enlarge the authority of the treasurer over the funds nor to authorize more than a deposit for safe keeping.

The village funds were also deposited by the village treasurer upon his sole authority. It is, however, claimed that his sureties knew or afterwards discovered and acquiesced in the ■deposit of the funds so as to bring the case within the scope of See. 4294 G. C., which provides as follows:

“Upon giving bond as required by council, the treasurer may, by and with the consent of his bondsmen, deposit all funds and public moneys of which he has charge in such bank or banks, situated within the county, which may seem best for the protection of such funds, and such deposit shall be subject at all times to the warrants and orders of the treasurer required by law to be drawn. All profits arising from such deposit or deposits shall inure to the benefit of the funds. Such deposit shall in no wise release the treasurer from liability for any loss which may occur thereby. ’ ’

"We do not stop to decide whether subsequent knowledge and acquiescence of the sureties is, within the meaning of the statute, the equivalent of prior assent. We hold that. Sec. 4294 is, consistent with and is intended only to legalize special deposits. Like Sec. 12875 G. C., the civil liability of the treasurer upon his bond is retained and there is nothing to warrant the inference that the treasurer’s duty or authority over the trust funds was to be vitally changed. The treasurer had no authority to convert the funds to his own use and it follows that he had no-authority to authorize another to do so.

It is true that Sec. 4294 contains the provision that all profits upon deposits shall inure to the benefit of the fund. This was intended, in our judgment, not as a license but as a precaution. There were undoubtedly cases when profits on deposits were allowed and paid public treasurers, and the legislature by this provision intended to fix the public policy with reference-thereto. As a part of this act the depository law was provided. In this and all other depository laws there are stringent safeguards thrown about the general deposit and investment of public funds. Care is taken as to the amount of interest, the nature-of the special security to be given and it is inconceivable that-the entire body of the fund was intended to be authorized to be embarked in speculation or investment upon the sole authority of the treasurer and his general bondsmen. The status of the: county funds rests upon a more complicated state of facts and depends upon a construction of various sections of the statute.

The funds in controversy and sought to be declared as special deposits represents taxes collected by a deputy treasurer in Bath township on June 13 at Fairfield and on June 14 at Osborn, The villages are both in Bath township and a short distance apart. The collections were made under authority of the following: statutes:

‘ ‘ 2746. "When, in his opinion, necessary, the county treasurer may open not to exceed one office in each township for the-receiving of taxes. Such office shall he in a city or village in which is located a bank of deposit. The treasurer, his deputy or clerks, may attend at such office and receive taxes on any day or days prior to the twentieth day of June and the twentieth day of December of each year. They may remove from the county treasury to the place of collection records necessary for the receiving of taxes upon the day or days so fixed for that purpose. ’ ’
“2748. For the purpose of transportation, the county treasurer may deposit temporarily in any bank of deposit located at such place of collection any money received in the payment of taxes. A bank or banks receiving any such deposits shall deposit with the county treasurer such securities as the treasurer deems sufficient, subject to the approval of the county commissioners. The liability of the treasurer for any losses of money so deposited shall be the same as provided in this chapter in- case of deposits by the county treasurer in county depositaries.”

There is a contention that the deputy treasurer was not authorized to open books or receive taxes in the village of Fairfield because of its having- no local bank of deposit. But we find no substance in that objection. All the taxes collected there as well as at Osborn were actually deposited in the Osborn bank on the day of their payment, and it remains now to ascertain their status.

The Bank of Osborn was a bank of deposit within the meaning of Sec. 2748, and, therefore, capable of receiving this fund for transportation.

It is also claimed to be a county depositary with right to receive funds in that capacity. If the funds were received for transportation, whether a special bond was given or not, the deposit would be special and entitled to preference.

On the contrary, if the funds were lawfully deposited in the bank as county depository and as an interest bearing deposit, the bank had a right to commingle and use the funds for profit, thus creating a general deposit.

It is, therefore, quite important to ascertain in what capacity these funds were held at the time the bank failed. The determination of this question- rests upon both law and fact. The legal contention is:

First, that the deputy treasurer was authorized only to deposit the tax collections for transportation, and second, that the funds so collected were not subject to deposit in the official depository.

The deputy treasurer was authorized to represent his principal. The treasurer, therefore, who made the collections of taxes, was authorized to deposit it. There is no statutory requirement, express or implied, that collections under Sec. 2746 G. C. were first to be transported to the county treasury and then to a depository, nor can we conceive of any necessity or consideration of public policy requiring such formality. The authority for transportation.is general and may authorize a transportation to a depository as well as to the county treasury.

We are, therefore, inclined to adopt a practical construction of-these two statutes and holdthat the funds might be delivered directly to the county depository and the process completed by a proper system of bookkeeping.

Upon the question whether these funds were subject to deposit in an official depository we hold they are included in the clause “undivided tax funds” used in Sec. 2737 G. C., and, therefore, subject to deposit in a county depository.

Upon the question of fact we think the inference is clear that a deposit under the depository law was intended. The deposits were entered upon the bank pass book among the interest bearing deposits and allowed to remain. No certificate of deposit was taken as is usual in cases of mere transportation and the fund was entered in the treasurer’s record as “deposited in depository” and was so certified to the auditor.

This inference arising from the circumstances is confirmed by the testimony of the deputy treasurer who made the deposits, as follows:

“How did you come to do that of your'own volition? (Referring to the deposit in the Osborn bank.) A. It had been the custom. It is one of our legal depositories and if it hadn’t been I would have taken a certificate of deposit and deposited it when 1 came home for the purpose of transportation. We do that at. other places — Cedarville, Bowersville and Jamestown.

This brings us to a consideration of the regularity of the designation and qualification of the Osborn bank as a county depository.

The resolution authorizing bids under the depository law fixed the period at two years instead of three. This, was not a. vital error. The designation of depositories thereunder would be good for two years and until a new depository — temporary <or permanent — was designated to take the funds.

The act of April 11, 1913, Sec. 2715, G. C., took effect a few days before the depositories were designated. This amendment provided for the designation of two kinds of depository — inactive and active. The inactive depository was intended to receive funds not required for current or immediate use. The .active depository was required to be located at the county seat and was designed to meet current and immediate demands.

It does not appear that the commissioners expressly designated any of the depository banks as active or inactive. The call for bids was general and it does not appear that any stipulation in this respect was contained in the bids or in the resolution of acceptance by the commissioners.

The bank of Osborn not being located at the county seat was <only eligible as an inactive depository, and the presumption of regularity of official proceedings justifies the inference from the rmaking and acceptance of its bid that the Osborn bank was intended as an inactive depository, and the record may be construed as the equivalent of such designation.

So far as is shown in the evidence the deposits, and especially those in controversy, were of a character to be properly deposited- in an inactive depository.

The bond given by the Osborn bank qualifying it as depository was in proper form and duly accepted. The designation and qualification of the Osborn bank as such depository and the deposit of said county funds therein as a public depository, as an interest bearing fund, constitutes the same a general and not a special deposit.

It, therefore, follows that the intervening petitions of the treasurer of section 16 Bath township, and of the village of Fairfield should be sustained, and that of Greene county should be dismissed.

These cases are very interesting and involve very doubtful questions and a construction of the new set of statutes in relation to depositories, and we are not favored with any direct decisions of any of the courts of the state but we have endeavored to work out what we believe to be a correct solution under the facts in the ease.

Ferneding and Kunkle, JJ., concur.


author: POLLOCK, J.

text:
    EXECUTORS AND ADMINISTRATORS.
    [Trumbull (7th) Court of Appeals,
    February 19, 1914.]
    Metcalfe, Norris .& Pollock, JJ.
    William H. Loveless v. Erie Ry. et al.
    Executor Liable for Rents Collected on Lands of Devisee.
    Rent accruing after the death of the testator under a lease made by him, passes to the devisee of the premises leased, unless otherwise disposed of by the will, and if paid to the executor of the will, he becomes liable to the devisee for money had and received.
    [Syllabus by the court.]
    Appeal from common pleas court.
    D. J. Hartwell, for plaintiff.

      Washington Hyde, for defendants.
   POLLOCK, J.

Plaintiff claims that he is the owner of about forty-three acres of land in this county; that under a grant made by Edward Moore, the then owner of this land, the Erie Railroad Company entered upon this land, erected a dam thereon, and are .using water therefrom, the railroad company agreeing to pay therefor $100 per annum. Plaintiff claims this money by reason of the devise of this land to him by will of Edward Moore.

The plaintiff brought this action to recover from the railroad company the amount due under this contract after the property vested in him. He made Samuel Q. Marsh, executor of the will of Edward Moore, a party defendant with the railroad company.

• The defendant railroad company by its answer alleges that it had paid the money claimed by plaintiff to its co-defendant, prior to the beginning of this action.

Samuel Q. Marsh, as executor of Edward Moore, answered admitting that he had received this money from the railroad company, but alleged that both the plaintiff and Frances Gleason claimed the money, -and asked that Frances Gleason be made a party defendant.

Frances Gleason answered that she was the residuary legatee in the will of Edward Moore, and claimed the money by reason thereof.

Such proceedings were had that the money in the hands of Samuel Q. Marsh, executor, was paid into court, and the railroad company and Marsh were dismissed from the further proceedings in this ease, leaving the plaintiff and Frances Gleason to contest the right to the money.

In 1903 Edward Moore was the owner of this forty-three acres of land; and prior to that time there had been a coal mine on adjoining lands, the water from this mine discharging through the entry was collected at the mouth of the entry by the railroad company and piped to its water tank.

After the railroad company had used this water for some time, a new opening near the lands of Moore was made into this mine, which changed the course of the water and caused it to flow through this new opening on to the forty-three acre tract owned by Edward Moore.

• The railroad company about 1903 then entered into a verbal contract with Edward Moore by which he granted to the railroad company the right to build a dam on his land, and, force the water back through this new opening and cause it to flow through the old opening, and for this right the railroad company agreed to pay Edward Moore. $100 per year.

Moore agreed to embody this verbal agreement in a letter directed to the company, which he afterwards did, and the letter was received by the railroad company. No other agreement was ever made between Moore and the railroad company, and the letter written by Moore was lost prior to the trial of this case in the court below. From the time this contract was made until the bringing of this action, the railroad company continued to use these premises under this contract, and until the death of Edward Moore paid him the contract price, and after his death it continued to pay to his executor.

The amount of money that accrued after the death of Edward Moore is claimed by both the plaintiff and Frances Gleason in this action, under the provisions of the will of Edward Moore. Edward Moore died in March, 1909, leaving a will which was probated. By the third clause of this will he devised this forty-three acres of land to the plaintiff. Frances Gleason is the residuary legatee under the will of Edward Moore, and all the debts and special legacies of his estate have been paid.

The plaintiff claims that the money paid by the railroad company for the right to occupy the premises devised to him by the will of Edward Moore, and which accrued after the death of Moore, should go to him by reason of this devise; while Frances Gleason claims that the money paid by reason of this grant, whether it accrued after or before the death of Edward Moore, is part of his personal estate and should be collected by his legal representative and distributed to her as residuary, legatee.

This brings us to the question whether rent paid as consideration for a grant or lease of real estate made in the life time of the testator, but which accrues after the death of the testator, goes to the devisee of the leased premises, or is an asset of the testator’s estate.

Bent may be defined to be the consideration agreed to be paid by one party for the use and occupancy of the real estate of another. Clark v. Cobb, 121 Cal. 595, 600 [54 Pac. Rep. 74]; Fisk v. Brayman, 21 R. I. 195 [42 Atl. Rep. 878].

The right to receive rent, by one from another arises by privity of estate rather than by contract. A contract fixes the amount of land, and the terms of payment, and the manner of the use of the estate, but the right to recover the rent depends upon the ownership of the reversion. West Shore Mills Co. v. Edwards, 24 Ore. 475 [33 Pac. Rep. 987].

A transfer of the reversion, during the term of the lease, carries with it the right to the unearned rent and the transferee can prosecute an action for its recovery, unless it is specifically reserved. Watson v. Penn, 108 Ind. 21 [8 N. E. Rep. 636; 58 Am. Rep. 26]; Evans v. Enloe, 70 Wis. 345 [36. N. W. Rep. 22]; 1 Washburn, Real Prop. Sec. 699.

Rent accruing after the death of the testator under a lease made by him belongs to the devisee, unless specially excepted by the terms of the will. 1 Woerner, Administration (2 ed.) Sec. 300; Lightner v. Speck, 28 S. E. Rep. 326 (Va.); Anderson v. Richards, 18 Ky. L. Rep. 455 [37 S. W. Rep. 62].

Rent paid to the grantor under a lease made by him which accrued after his conveyance of the real estate if collected by the grantor, can be recovered from him by the grantee as money had and received.

In the case of Van Wagner v. Van Nostrand, 19 Iowa 422, the court said:

“Unaccrued rent, under a lease existing at the date of a conveyance of the real estate, passes to the grantee, and he can collect it by virtue of the grant; and the grantor has no right to receive rent becoming due after such conveyance; but his liability to the grantee for such rents collected would be for money had and received, and not for a breach of the covenant.”

Rent collected by an administrator or an executor which accrued after the death of the testator is held by him in trust for the heirs of the estate or the devisee, and they can recover from him. 1 Washburn, Real Prop. Sec. 699; 2 Woerner, Administration (2 ed.) Sec. 513.

This grant by Ed-ward Moore was not executed with the formalities required by the statute and did not provide the time for which it was to run. For these reasons Mrs. Gleason claims that the grant made by Edward Moore to the railroad company was a mere license to the railroad to go upon his land for the purpose of securing this water, and so long as he permitted it to use the land for this purpose he should be paid $100 per year.

The railroad company took possession of the land under this grant and all its terms were fully carried out and complied with by both the grantor and grantee during the life of Edward Moore. This created a tenancy at will which existed until the death of Edward Moore. It is true that on the death of the lessor the tenancy at will terminated, and it became a tenancy by sufferance. The only change this made in the rights of the parties was that the devisee would have a right to terminate the lease without giving the notice required by a tenancy at will, but his continuance of the lease by acquiescence in the lessor’s possession and demanding the consideration converted it again into a tenancy at will.

But we need not further consider the rights of the devisee and the railroad company, after the vesting of the reversion in these premises in the devisee, for the reason that no change in their relations could inure to the benefit of the estate of Edward Moore.

The devisee would have a right to all the rent which accrued after the death of Edward Moore, whether they arose from the grant made by Moore to the railroad or from the new relations created after his death between the devisee and railroad company.

An order may be made directing the clerk to turn over the money now in the hands of the plaintiff, and a judgment entered against the defendant, Frances Gleason, for the costs.

Metcalfe and Norris, JJ,, concur.


author: MARVIN, J.

text:
    CONTEMPT OF COURT.
    [Cuyahoga (1st) Circuit Court,
    March 28, 1908.]
    Marvin, Winch and Henry, JJ.

      John Meek v. Joseph V. McGorray.
    Contempt Before a Police Justice Punishable.
    A police justice may punish for a contempt committed in his presence while he is in the exercise of his official duties.
    [Syllabus by the court.]
    Error to common pleas court.

      Miller & Linder, for plaintiff in error.

      S. V. McMahon, for defendant in error.

      Affirmed, no op., Meek v. McGorray, 81 O. S. 542.

   MARVIN, J.

The only question in this ease is whether one appointed a police justice under Sec. 1536-884a R. S. (Sec. 4544 G. C.), may, while in the exercise of his official duties as such, punish for contempt committed in his presence. Section 605, R. S.T provides that a justice may punish, as for contempt, persons guilty of “ disorderly, ” “ contemptuous ” or “ insolent behavior, ’ ’ toward the justice, tending to interrupt the due course of trial, or other judicial proceeding before him.

Section 1536-783 R. S. (See. 4534 G. C.) provides that:

“In felonies, and other criminal proceedings * * * the mayor shall have jurisdiction and power, throughout the county, concurrent with justices of the peace.”

Section 1536-884® R. S., under which police justices may be appointed, provides that any person so appointed, police justice shall “have concurrent jurisdiction of all prosecutions for violations of ordinances of the corporation with full powers to hear and determine the same, and shall have the same powers, perform the same duties and be subject to the same responsibilities in all such cases as are prescribed in the Revised Statutes of Ohio, to be performed by and are conferred upon the mayors of such corporations.”

Since the statute provides that a justice of the peace may punish for contempt, and that he who presides at a trial, as provided for in the statutes authorizing mayors to preside at trials, shall have the same authority to punish for a contempt as the justice has, and the statute further provides that in all such criminal trials the police justice shall have the same authority and perform the same duties as the mayor, it seems to follow, without question, that the police justice may punish for contempt. But even without the statute the case of Hale v. State, 55 Ohio St. 210 [45 N. E. Rep. 199; 36 L. R. A. 254; 60 Am. St. Rep. 691], goes a long way to support the proposition that every court has inherent power, without authority of statute, to punish for contempts committed in its presence. It is true that the syllabus in that case speaks of courts created by the constitution, but the reasoning of the case is to the effect that in the very nature of things, he who presides as a judge in a superior or inferior court, must have authority to punish for contempts committed in the presence of the court.

We reach the conclusion, then, that the judgment of the court of common pleas should be, and it is affirmed.

Winch and Henry, JJ., concur.