author: Parker, J. Kinkade, J.

text:
    CONTROL OF EDUCATIONAL INSTITUTIONS MAINTAINED.BY ENDOWMENT AND TAXATION.
    Circuit Court of Lucas County.
    City of Toledo v. Charles A. Seiders et al.

    Decided, March 19, 1910.

      Constitutional Law — Schools—Limitations on the Power of Boards of ■Education Under Section 7921 — Constitutional and Vested Rights— Obligation of Contracts.

    The provision of Section 7921, General Code, that the administration of all estates or funds transferred to any municipality for educational purposes shall be committed to the board of education, is unconstitutional in the- taking of property without due process of law and the impairment of contract obligations in so far as it changes the plans and purpose of the terms of the original trust created by donors and accepted by the municipal council of the city of Toledo.

      Cornell Schreiber, City Solicitor, and B. A. Hayes, for plaintiff.

      Floyd T. Williams and C. A. Seiders, contra.
    Wildman, J.; Parker, J., concurs in a separate opinion; Knsrkade, J., dissents in a separate opinion.

       Affirmed without opinion, Seiders et al v. City of Toledo, 83 Ohio State, 495.

   ■ This is an action instituted in the court of common pleas and appealed to this court to restrain the board of education of the school district which includes the city from interfering with the possession of certain property, known as the Manual Training School, on land owned by the board of education and heretofore leased by it to the Toledo University. There are certain other minpr issues involved which I will not stop to recite.

The case involves a more extended and elaborate discussion than almost any other case recently presented to us, and it would be interesting perhaps to review again to some extent the history of the trust originally given by Jessup W. Scott and others, for the endowment of what in its inception was called a University of Arts and Trades. The attempted acts of the board of education are based mainly now upon Section 7921, General Code, which provides as follows:

“The custody, management and administration of any and all estates or funds given or transferred in trust to any municipality for the promotion of education and accepted by the council thereof, and any institution for the promotion of education heretofore or hereafter so founded, other than a university as defined by this act, shall be committed to and exercised by the board of education of the school district including such municipality, and such board of education shall be held the representative and trustee of such municipality in the management and control of such estates and funds so held in trust and in the administration of such institutions excepting always funds and estates held by any municipality which are used to maintain a university as heretofore defined.”

In Section 7905, General Code, we find:

“A university supported in whole or in part by municipal taxation is defined as an assemblage of colleges united under one organization or management affording instruction in the arts, sciences and the learned professions and conferring degrees. ’ ’

The contention of counsel for the board of education is substantially that the institution now known as the Toledo University, the trustees of which, heretofore appointed by the mayor of the city are asserting a right to the control of the property involved in the trust, is excluded from this definition; that it is not an assemblage of colleges, such as Section 7905 describes, and consequently that the administration of the trust is committed by Section 7921 to the board of education. The principal contention upon the other side is that the Legislature had no power to take away from the municipality or the trustees appointed by the mayor of the municipality the control of this trust; in other words, that if Section 7921 is to be construed as claimed by counsel for the board of education, it is unconstitutional -and invalid.

Questions involving the trust, to which reference has been made, have been in litigation for many years, and have several times been brought to the attention of our court. There is one case, that of The State, ex rel Waldron, v. City of Toledo, 5 C.C.(N.S.), 227; 16 C. D., 628, in which the question of the power of the Legislature to take the control and management of these funds and this property from the trustees of the Toledo University and pass them over to the board of education was considered and passed upon. But it is earnestly urged upon us ;by counsel for the board of education that the conclusions arrived at by the court in that case ought not to stand; that they were based upon some confusion in the minds of the members of ■the court as then constituted as to the relations of the original incorporated Toledo “University of Arts and Trades” to the “Toledo University,” so named — some confusion perhaps as to any line of demarcation between the two. The syllabus of the case perhaps sufficiently expresses the judgment -of the court as then held. The ease which presented the question of the constitutionality of Section 7921, General Code, was decided October 10, 1904. The syllabus is as follows:

■ :“The Legislature is without authority to take the entire control and management of the Toledo University and its property from the trustees appointed by the mayor and pass it over to the city board of education.”

This case is conclusive of the main question in contention now.before us, unless we depart from the view then arrived at. To. my mind there is some confusion in a part of the phraseology used by Judge Haynes in the opinion as we find it reported, but when we read all the cases in which these various matters pertaining to this trust have been litigated in this court, it is hardly-, conceivable that its members have not been at all times fully apprised of the history of this benefaction. They have had knowledge of the terms of the original grant, of the communications made, to the city council by the persons interested in the corporation, known as the Toledo University of Arts and Trades; of.;the resolutions of council; of the appointment of the trustees by a mayor of the city of Toledo to take over the property; of-the.-conveyance to the.city and transfer of the powers and functions-to the trustees of the Toledo University as agents of the. municipality to carry out the purposes of the original donors; and finally they were apprised of this statute, the construction and validity of which are now under consideration.

In the conclusion at which we have arrived, perhaps we are not disposed to place precisely the same reliance as an authoritative adjudication of the whole matter upon the case of State v. Neff, 52 O. S., 375, as was placed upon it in the opinion of Judge Haynes; but the circuit court in the Waldron case was not oblivious of the general current of authority in the United States touching benefactions of this kind, involving trusts for the endowment of institutions of learning of one character or another, the Girard will case, the Dartmouth College case, and numerous other adjudications involving principies analogous to those considered and announced in these two great leading cases by the Supreme Court of the United States.

This case is one of much importance, and for that reason has drawn out from counsel the unusual research and ability of argument which invite a wider range of discussion on my part than perhaps it is wise to give to it. It is hardly worth while to review the history of the transactions. Reference may be made to that history so far as it is recounted in the earlier cases brought into this court and found reported, and I will merely cite them so that they may be read if necessary: State, ex rel Atty.-General v. Toledo, 3 C.C.(N.S.), 468; 13 Cir. Dec., 327 (to which I may make a little further reference later); James Waddick, a Tax-payer, v. Merrill et al, 5 C.C.(N.S.), 103; 16 C. D., 437; and the case already cited, State, ex rel Waldron, v. Toledo, 5 C.C.(N.S.), 277; 16 C. D., 628.

We are not inclined to think that in the consideration of these issues, too much reliance should be placed upon the' character and scope, either of the present Manual Training School as it has been constituted and conducted, or on the other hand upon the scope and character of what is known as the Toledo University as now organized, managed and conducted in the city of Toledo. To some extent these matters are interesting for such light as they may throw upon the intention of the original donors; but the ultimate■ execution of that intent is not to be prevented or interfered with by legislative enactment or judicial decree, simply because it has not yet been fully carried out. It is contended, however, by counsel for the board of education that when the original donation was made by Jessup W. Scott and others, they had in contemplation only an institution such as that now known as the Manual Training School, such a one as has been conducted by the board of education in the city of Toledo. A¥e feel quite clear from an examination of the original instruments expressive of the purposes of the donors, from the term used and from the various circumstances in the case, that Jessup W. Scott and the others uniting with him had in contemplation something of a different character and wider scope than now comprised within the Manual Training School, as we call it. I will not take time to read all the original instrument, the first instrument, drawn in 1872, in which these donors expressed their will — in which they carefully stated what it was that they were trying to found. In its general title it was to be a university of “arts and trades” but there were certain provisions in it indicative of the intent to found an institution for the education of men in various employments and arts. As I have it before me, I will read a part of it emphasing certain phraseology especially pertinent to our inquiry:

“The object of this trust is to establish an institution for the promotion of knowledge in the arts and trades and their related sciences by means of lectures and schools, by extensive collections of models and representative works of art; by geological and mineralogical or other cabinets and museums that relate to the mechanic arts, and whatever else will serve to furnish artists cmd artisans with the best facilities for a high culture in their profession; also to furnish instruction in the use of phonographic characters and to aid their introduction into more general use. Other branches of lemming not included in the above specifications may become a part of the institution when endowed so as to be sustained without the use of the trust funds hereinafter provided. All the advantages offered by this' institution are to be free of cost to all pupils tvho have not the means to pay for the same, and all others are to pay such tuition and other fees as the trustees may require. - The institution shall be open to pupils of both sexes alike.”

It would seem that a wide, scope in the advancement'of learning by instruction in this institution was contemplated, and' that its purpose was to afford free instruction to all persons of whatever age who were without the means to pay for their tuition, is expressed in terms. In the manual training schools conducted by boards of education in the state of Ohio under the law, no adults can, under our statutes, obtain free tuition. In a somewhat elaborate and long communication addressed to the city council by some of the original incorporators of the University of Arts and Trades, including among them one or more of the original donors, the idea is expressed that such a university would be of inestimable value to the city of Toledo in the same way in which various universities mentioned in the communication have been of advantage to cities of Europe and the United States where they have been conducted; universities which give instruction to adults, and indeed the word “adults” is used in more than one place in this communication. It is possible that the scope of the manual training school, also may not be bounded by the growth which it has already attained. It may, indeed, while sustained in part by this trust fund, not be bound by the limitations of the statutes as to the pupils who may obtain its benefits, because it is possible that under Section 7921 attempting to transfer the control to the board of education, it is not contemplated by the Legislature that there shall be any limitation upon the power of the board of education to carry out all the purposes of the original trust; in other words, a very liberal construction of Section 7921 would empower the board of education to establish such a University of Arts and Trades as was contemplated by the original donors, even to the extent of giving instruction in the arts of painting and sculpture and all other branches of learning, and affording it without cost to indigent pupils of whatever age. It is possible that the Legislature intended that the board of education should be made the trustees of the original benefaction and be empowered to carry out all the purposes of the original trust without any impairment thereof, even to the establishing of a university outside of the bounds of the school district represented by them. But there is nothing in the statute elea-rly indicating an intention of the Legislature that any board of education may carry on such a university. That it was the intention of the original donors that a university might some day be established upon the tract of 160 acres of land adjacent to the city of Toledo, and which seems to have been platted with some such purpose in view as shown by the record before us, we think is indicated. It may be fairly drawn from the facts disclosed in the record that the donors were not limiting the establishment of their university to the corporate bounds of the city of Toledo. Indeed, there is no statement in the original grant that the university shall be anywhere within Lucas county, ■ and unless that idea is to be inferred from the name of the university and from the arguments held out to the municipality by the persons who signed the communication to which I have referred, we have no authority for assuming that the university was to be limited in its establishment to the city of Toledo.

Now in consideration of Section 7921, and without further touching upon the question of the legislative power to change the control of the trust, it may be suggested that unless the board of education is given power by this section to establish such a university of arts and trades as was in the minds of the original donors, the effect of the legislation if 'carried out, would be to prohibit forever the consummation of the purposes of the original donors except in so' far as they can be carried out within the limits of our statutes as to common schools. In other words, it never could be made' a university as defined by the other section of the statute, 7905. It never could become an assemblage of colleges for the purpose stated in that definition, because that class of universities is expressly excepted from the operation of the section which confers the control upon the board of education. They are not to have any control of a university as defined by the act, and if the University of Arts and Trades is one which when it reached its perfect development as contemplated by the donors, would fairly come within that definition, then the statute either doe.-i not transfer the control of it to the board of education, or defeats the purpose of the trust.

No force is to be attached to the fact that in the summer following the passage of this act as amended to its present form the Toledo University began to enlarge its apparent scope by taking in a school of dentistry and other institutions, because the trustees could not after the enactment had been effected change the character of their university so as to bring it within the terms of the act. But the question may well be considered whether the Legislature, in excepting universities, should not be held to consider those which are inchoate, those which have been partly formed and which are already carrying out some of their purposes with the intention of carrying out all, as well as to except those which had become perfected universities within the definition of the law. Otherwise, as I have said, we must construe this section as preventing the perfecting of an organization and establishment and conduct of a university which has already been started for the purpose of giving instructions in many other and higher branches of learning than those ordinarily considered in the Manual Training School.

The authorities both of text writers and judicial adjudication are not uncommon touching questions of this character. I will not lengthen this opinion by reading from them. We have had many cited, and we have found a number which were not mentioned in the briefs or oral arguments of counsel. I will cite certain authorities without further comment than the mere reference: Cooley, Const. Lim. (6th ed.), pages 289, 290, 291; Yarmouth v. North Yarmouth, 34 Me., 411; Gloucester School Fund v. Bradbury, 11 Me., 118; Dartmouth College v. Woodward, 17 U. S. (4 Wheat.), 518; State v. Neff, 52 Ohio St., 375; South Kenton Union Sunday Sch. v. Espy, 17 C. C., 524; Koblitz v. University, 21 C. C., 144; Society, etc., v. New Haven, 21 U. S. (8 Wheat.), 464; Allen v. McKeen, 1 Sumner, 276; Montpelier Academy v. George, 14 La., 395; University of Maryland v. Williams, 9 Gill & J. (Md.), 365.

I will not take further time in discussion of the conclusion at which we have arrived, that we ought not to depart from the principle which was enunciated by our court in the Waldron case. Some doubt has remained with a part of this court as to the power of the original recipients of the grant, the trustees of the University of Arts and Trades, to delegate that trust to the municipality; but the attorneys upon both sides of the present controversy- have conceded the legal title to be in the city and the control in the trustees of the Toledo University as agents of the city unless it is taken from them by this legislative enactment, General Code, 7921, so that we have not seen fit to consider particularly that phase of the question. There has been such a recognition in these previous adjudications in our court of the title as having passed to the municipality and as to the validity of the appointment of the trustees of the Toledo University by the mayor, that it is perhaps- no longer an open question. Our judgment is that the contentions made by the. plaintiff should be sustained and the relief asked in the peti- . tion will be granted.

Parker, J.

As has been remarked by Judge Wildman, the principal question in this case, as we regard it, and the question upon which the rights of the parties hinge, was- involved and passed upon in the case of State v. Toledo, 5 C.C.(N.S.), 277; 26 O. C. C., 628. I was a member of the court when that ease was decided, and I know it received very careful consideration at the hands of the court, and all members of the court concurred in the decision. In the opinion there are certain expressions that sound like slips of the tongue, upon the part of Judge Haynes, who delivered the opinion, in uttering the names of the institutions named in the deed of donation, the articles of incorporation and the statutes. I presume that the opinion was never submitted to him for correction or those little discrepancies might have been eliminated. I concurred in that decision and I still believe it was correct, and therefore I concur in the judgment that has been announced.

In considering the question (which I do not deem a controlling question here), whether the Manual Training School now authorized by statute, fulfills all the desires- and purposes of the donors, it must be borne in mind that it is made clear by the record that their intent and purpose was to furnish instruction “supplementary” to that afforded by the public schools.

I do not look upon this ease as involving simply a question of whether the Legislature may choose other instruments than the so-called board of directors of the Toledo University to represent the city in the administration of this trust. I do not question the authority of the Legislature in the matter of designating and changing the instruments to work out the will of the city in its capacity of trustee, but I regard this statute as going far beyond that; I regard it as a statute which deprives the city of the administration of this trust, totally and completely, and deprives it of any vested interest it may have by virtue of the conveyance made to it, and also its further interest by reason of the investment in the property involved of funds of the city raised by municipal taxation. I believe that under the authorities, in its right of holding and administering trust property of this- description and those recognizing and favoring its proprietary rights, the city has certain vested rights and interests which it is incompetent for the Legislature to take away from it, without proper compensation and due process of law, as is here attempted. Also that the effect of this statute is to impair the obligation of a contract entered into between the city and the trustees of the Toledo University of Arts and Trades, in consideration of which contract the conveyance of the property was made to the city, and upon which conveyance the city undertook, promised and agreed to administer this trust, a thing that it had the right and the power to do under and by virtue of the statutes then in force.

If by a sweeping statute of this description the city is deprived of this- property and is prevented altogether from taking any part in, or doing anything about, the administration of the trust, that amounts in my opinion not only to depriving it of vested rights without due process of law in contravention of the Constitution, but it amounts to impairing the obligation of the contract entered into between the original directors and the city, to which I have referred, which would also be in contravention of constitutional rights.

Much has been said here about the inability of the Toledo University through its board of trustees to administer this trust in such a way as to accomplish fairly and reasonably the purposes intended by the donors. It is enough to say that that question is not involved in this case. This case as it is presented to us presents a question of proprietary Rights; it is a question of whetheR or not these lessees of this property have become now in effect, by force of this legislation, not only lessees but lessors, and practically owners and controllers of the property, so that they are not bound longer to regard the terms of the lease under which they entered into possession of the property and under which the school building was built and equipped and hitherto has been operated. Whether the directors of the Toledo University are exercising powers and functions that they have no right to exercise under this statute in the matter of gathering in várious schools and colleges about the city and treating this bringing of the colleges together as the establishment of a university coming within the purview of.General Code 7905, or whether they are unable to carry out the project of the donors by reason of lack: of funds, or whether indeed they contemplate any act that would amount to misadministration or maladministration of the funds, is, in our opinion, not at all involved in the controversy presented to us. Should the university directors or the city undertake to do any of. those things, there is a way by legal process to reach them and control them. In my judgment this statute, while it contains some language giving color to the idea that the board of education is simply a representative of the city in administering this trust — simply an agency of the city — is, -tb the extent that it gives that color, a deception and a snare. It does more. You can not take away from a person or a corporation all of the control, all of the usufruct of property, without in effect taking from him or it the property. If this statute is to be given effect, the matter is so completely turned over to the board of. education as that the city can- not have a word to say in the future as to the management of this trust or these trust funds; not a word. It has started in to establish the Toledo University, so-called, and has undertaken to, and has in fact, put in operation what it calls one branch thereof, which branch has developed into what we are in the habit of calling the Manual Training School. But it has never declared its purpose, to not, when able, establish and operate other branches; it has never, in other words, declared that the institution shall never grow beyond this single branch; that that shall be the end of its growth' and development. But if this statute is given effect, then I take it that so far as the administration of this trust is concerned, no matter how valuable the property may become, no matter how much it may be added to by other donations, no matter how able the city may become in the- administering of this trust to enlarge the so-called university, and extend it, the city is by this statute rendered utterly helpless. If it should attempt to establish another branch of the university, the board of education might ignore such action, and indeed would have no authority to give any effect or to pay any attention to its action in the premises. Therefore it is that I regard this statute, when you get at the clear meaning of it, as being a' statute which does not provide for another agency to administer this trust on behalf of the city of Toledo, but as a statute which transfers the whole trust and the whole property to the board of education, another public corporation, representing another and a different constituency, leaving the city of Toledo utterly helpless in the matter, and with nothing but the bare, naked, legal title in it. And considering it in that way, as a statute which practically takes the property away from the city and gives it to another corporation, it seems to me that it may just as well have given it to the board of education of the city of Perrysburg or to Lucas county or to any other public corporate body. Regarding it in that way, it seems to me, as I have said, to impair the obligation of . this contract with the representations of the donors and to deprive the city, without justification or due process- of law, of vested rights. In my remarks, following the opinion by Judge ITaynes, in the Waldron case, I attempted to point out how and why the school district almost (but not quite), coterminous with the city limits, is an essentially different entity from the city, so much so that it can not ever be said that the same electors are concerned or given ultimate control.

Kinkade, J.

(dissenting).

I find myself entirely unable to agree with my associates in the conclusions reached in this case. It would be idle, in the time at hand, to attempt to make a statement of this case. I think the statement of the case by counsel, together with the reading of the agreed statement of facts, occupied between an hour and a half and two hours, and occupied no more time than it should have occupied; and the opinion expressed by the majority of the court has occupied over an hour. So that it will be apparent that if I made any attempt to state this case in detail there would be considerable said on the subject. If this court had many cases that had the facts and the history this case has, it would not need any other litigation brought in to keep it continually busy, and very busy.

This case has had a very great deal of attention from this court. I will content myself with simply stating briefly a few things. First, in my judgment, the donor, Mr. Scott, had no such notion in mind in using the term “University of Arts and Trades,” as the university that it is now contended exists in the city of Toledo. Second, I think the university as it is now contended, exists in the city of Toledo and in no wise meets the requirements of the definition of a university, as laid down in the statute. I have no trouble at all in reaching the conclusion that the Legislature had full and ample power to do all that it attempted to do in General Code 7915 and 7905, and it does not seem to me that they have disturbed any vested rights or have gone beyond the point that they might rightfully go. I have no difficulty in concluding in this case that this property is and should be, all of it, clearly within the control of the board of education of the city of Toledo, and I do not see that the city is denied the right to have anything to say about what should be done with this property in the future, when the board of education consists of members elected by the citizens of the city of Toledo, who may be changed at any time.

I wish I had time to review this case. It would not enlighten counsel any. I will sum the whole matter up by saying this: I think the position taken in this case and the authorities cited to support the position by the counsel for the board of education and the counsel representing the Scott heirs, has not at all been met by the other side, and I agree entirely with the position taken by counsel representing the board of education and the Scott heirs in this case, and so thinking, of course, I can not agree with the conclusion reached by the majority of the court.


source: Caselaw Access Project

license: Public Domain

text:
    APPORTIONMENT OF STOCK DIVIDENDS BETWEEN LIFE TENANTS AND REMAINDERMEN.
    Circuit Court of Cuyahoga County.
    Henry C. Miller et al v. Mortimer H. Miller et al.

    Decided, December 2, 1912.

      Wills — Parties Financially Interested, in Construction of a Will Are Incompetent as Witnesses — "Lawful Heirs" Determined as of the Time of the Testator’s Death, Not at Time of Happening of a Contingency — Testator’s Domicile — Stock Dividends Treated as Capital and Distributed to Remaindermen Rather than to Life Tenant — Corporations — Trusts—Distribution.
    1. Parties who are financially interested in the construction of a will, and whose rights will be affected by the decision of the court, are not competent to appear as witnesses.
    2. In the will under consideration the term "lawful heirs” refers to those who answered that discription at the time of the testator’s death, rather than those falling within that class at the time of the contingency provided for in the will, and the distribution should be made per stirpes, representatives taking the share which would have gone to the ancestor if living, except where the will provides otherwise.
    3. A declaration by a testator in his will as to his domicile establishes that fact unless overcome by positive proof to the contrary, and his place of residence is declared by the testator to be Ohio, distribution will be made in accordance with the laws of this state, notwithstanding he may have lived for a time in another state and owned and accumulated property there.
    4. Stock dividends declared by a corporation out of earnings retained by the corporation and treated as a part of its capital go to remaindermen rather than to life tenants, and this is true of earnings carried as cash or invested in securities capable of ready conversion into cash, where such funds were devoted to the extension and promotion of the company’s business.

      Stearns, Chamberlain & Royon, for plaintiffs.

      Higley & Maurer, 'Westenhaver, Boyd, Rudolph & Brooks, Hoyt, Dustin, Kelley, McKeehan & Andrews, contra.
    Niman, J.; Marvin, J., and Winch, J., concur.
    Appeal from Common Pleas Court.

       Affirming Miller et al v. Miller et al, 13 N.P.(N.S.), 1.

   This action was brought by the trustees of the estate of Nathan E. Chapman, deceased, to obtain, a construction of the will under which they are acting as trustees.

Nathan E. Chapman died January 13, 1893, leaving the will in question, which. was admitted to probate by the Probate Court of Cuyahoga County, Ohio, on February 15, 1893. Letters of trusteeship were subsequently duly issued to the plaintiffs who qualified as trustees and have ever since continued to act as such.

The third paragraph of the will in question reads as follows : N

"It is my will, that said trustees shall hold all the real estate, securities and moneys, of which I may die seized, with power to sell and convey said real estate, and to sell, dispose of or collect all of said securities, and to invest and reinvest the proceeds thereof, and after paying expenses, to pay the entire net income from my said estate, to my wife, during her lifetime. And it is my will that if it becomes necessary, in the judgment of said trustees, to use any part or all of the principal, of my estate for the support and care of my wife, that the same shall be so used.
‘ ‘ At the decease of my said wife, it is my will, that the entire net income from my said estate, shall be paid by said trustees, to my said son, Harry, during his natural lifetime, should he survive his mother. And should said trustees, or their successors deem it necessary, at any time, after the decease of my said wife, to use any portion of the principal of my said estate, for the support and maintenance of my said son, Harry,.they are authorized to so use the same. And shpuld my son die, leaving issue, then, at his death, should he survive his mother, or at his mother’s death, should she survive him, said.net income to be paid tó the proper guardian of said issue, until it or they arrive at the age of twenty-one years, and to then become the absolute property of said issue. But, if my said son shall die, without leaving issue, then, after his death, if he survive his mother, or after his mother’s death, if she survive him, or after the death of his issue, should it or they die before arriving at the age of twenty-one years, it is. my will, that all my estate, shall go, one-half to my lawful heirs, and one-half to the lawful heirs of my wife, subject however to the following conditions:
"Should my son’s wife survive both my son and my wife, then it is my will that one-fourth of my said estate shall still remain in trust, she to be paid by' said trustees, the net income of said one-fourth, during the time that she remains the widow of my said son; and that the remaining three-fourths of my said estate be then and there divided between my heirs and the heirs of my wife, as aforesaid; provided, however, that if my sister, Mary E. Buckland, should survive me, then it is my will, that the share that she would receive at law, should remain in trust in the hands of my said trustees, she to receive the income therefrom during her lifetime, and at her death, said share to be paid to and vest in her daughter and the heirs of her daughter, Maria. It is my will, that no part of my estate shall ever go to my said sister’s son, George. And provided, further, that the share that Avould go to Mary A. Solloivay, sister of my wife, shall remain in trust during the lifetime of said Mary A. Solloway, she, during said time to receive the net income from said share, and at her death, it is my will that said share should go to the other heirs of my said wife, excluding therefrom the children of the said Mary A. Solloway, it being my will that the said children of the said Mary A. Solloway shall inherit or receive no part of my estate. And provided further, that the part of my estate which would go to Mitchell H. Miller, brother of my wife, shall be held in trust during the remainder of his lifetime, by said trustees, he to receive the net income therefrom, and at his decease, the same to go to his children. And it is my will, that in the event one-fourth of my estate shall remain in trust for the benefit of the wife of my said son, as above provided, then at her marriage or decease, as aforesaid, said one-fourth to be disposed of in the same manner provided above for said three-fourths. ’ ’

The testator was survived by his wife, Fannie E. Chapman, who died March 10, 1908, and by his son, Harry E. Chapman, who died November 17, 1910, without issue living. The testator had four brothers and one sister. The brothers were: William H. Chapman, AAho died August 18, 1895, Nelson C. Chapman, who died December 1, 1896; Dana B. Chapman, who died November 22,1865; Charles W. Chapman, Avho died March 10,1884; the sister was- Mary E. Buckland, aaJio died January 18, 1905.

The tAAo brothers, who died before the testator, left children who were living at the time of the testator’s 'death. The brothers and sister who surviAed the testator, each left children living, or their representatives.

Fannie E. Chapman, wife of the testator, had two brothers and three sisters, as folloAvs;

Mitchell H. Miller, Henry C. Miller, Mary H. Solloway, Josephine A. Johns and Nettie Heckman, all of whom Avere living at the time of the death of the testator.

Mitchell IT. Miller died March 17, 1905, leaving two sons- and a daughter.

The plaintiffs seek the judgment and direction of the court in regard to the construction of the will upon four matters. There being, as we understand, no disagreement among the parties to this action with respect to the last three of the questions propounded in the petition, we are required to consider only the first, which is stated in the petition in the following language:

“Whether the interest and estate of the said heirs vested in them at the time of the death of the testator, or whether the interest and estate of said heirs was contingent until the death of the said son of the testator, in November, 1910, and it being determined whether said interest or estate in said heirs was vested or contingent at the time of the death of testator, whether the said heirs now take their inheritance per capita or per stirpes.”

In addition to this question, another, which has been injected into the case by cross-petitions of the defendants, and which has become the principal question for decision, is:

“Whether any part of a large amount of money received by the trustees upon the distribution of the assets of the Latrobe Steel Company in which the trustees held stock, should be treated as income belonging to the life tenants under the will, or as a part of the corpus of the estate to be distributed among the remaindermen.” The facts that give rise to this question, will be stated hereafter.

Before passing to the consideration of the questions suggested, it is necessary to rule upon the objection made to the competency of the witnesses: Mary Solloway, Josephine Johns and Nettie ITeekmann.

These witnesses are all defendants in the action and interested in the construction of the will and the determination of the questions involved in this action. Their financial interest will be affected by any order ihade by the court in respect to the funds in the hands of the trustees. If it is decided that a portion of this fund is income, which should go to the representatives of Fannie C. Chapman and ITarry E. Chapman, these parties would receive less, under the provisions of the will, than they would receive if the contrary decision is reached. Their testimony is directed largely to the subject of the domicile, of the testator. Objection is made on behalf of the defendant,'J. B. Wilbering, administrator de bonis non of the estate of Harry E. Chapman, deceased, to their competency as witnesses; the objection being based upon the provisions of Section 11495, General Code.

In our opinion, the objection is well taken and their testimony will be excluded., Objection was originally made to the competency of the witness, Henry C. Miller, one of the trustees, and one of the plaintiff’s in the action. This objection, however, has been withdrawn by all parties interested and It is therefore unnecessary for us to rule on the competency of this witness.

The first question propounded by the petition, wherein the judgment and direction of the court are sought, requires a determination of the question, whether the persons- embraced within the words “heirs at law” used in this will, are to be determined as of the date of the testator’s death,.or as of the date of the death of the last of the life tenants, Harry E. Chapman.

It will be noticed that the language of the will is: “but if my said son shall die without living issue, then after his death it is my will that all my estate shall go one-half to my lawful heirs, and one-half to the lawful heirs of my wife, subject however to the following conditions.”

It is contended on the one hand that the term “heirs at law, ’ ’ as used in this will, refers to those who answered that description at the time of the testator’s death, excluding the widow and son of the testator, and, on the other hand, it is contended that the “heirs at law” must be ascertained as of the happening of the contingency upon which the distribution provided for in the will is to take place, which, under the facts before us, was the death of Harry E. Chapman.

The problem, in this case, as in all other cases- involving the construction of a will, is to ascertain the intention of the testator.

In Stevenson v. Evans, 10 Ohio St., 307, 311, of the opinion, it is said:

“If the intention of the testator, collected upon the face of the will, can be carried into effect according to the principles of law, it is undoubtedly the duty of the court to do so. The proper course, therefore, will be to ascertain, if we can, upon the face of the will, the intention of the testator, and if the intention, so ascertained, interferes with no rule of law, our duty will have been discharged.
“It is not claimed that we are prohibited, by any technical meaning given to any particular words used by the testator, from regarding all the languages and all the provisions of the will in deciding upon his intention. We are at liberty to look at the whole will and each provision to ascertain the intent, and the only point made has been, that the true intent requires the creation of estates or interests which the law does not permit.”

Seeking from all the language of the will, the expressed intention of the testator, we find, first, that it was his clear Intention to exclude his widow and son from those embraced within the expression “heirs at law.”

In Jones v. Lloyd, 33 Ohio St., 572, it was held in paragraphs three and four of the syllabus, as follows:

“The term heirs, when used in a will, is flexible, and should be so construed as to give effect to the manifest intention of the testator as ascertained by a due consideration of all the provisions of the will.
“Where a testator-makes a provision for his wife, in lieu of dower, and directs that, in the event of her claiming dower; the balance of certain personal property bequeathed for her support ‘shall be shared equally among my heirs,’ the words ‘my heirs,’ will be construed as meaning my next of kin, or any heirs according to the statute of distribution, exclusive of my wife, though his wife, in case of intestacy, would under the statute, have taken all such personal property. ’ ’

A further indication of the intention of the testator is furnished by the provision of the will, “that if my sister, Mary E. Buekland, should survive me, then it is my will that the share that she would receive at law, should remain in trust in the hands of my said trustees, she to receive the income therefrom during her lifetime, and at her death, said share to be paid to and vest in her daughter, and the heirs of her daughter, Maria. ’ ’ Further provisions of the will to the effect that no part of the testator’s estate should ever go to his sister’s son, George, and that the share that would go to Mary A. Solloway, sister of his wife, should remain in trust during the lifetime of the said Mary A. Solloway, and the provisions excluding from the benefits of the will, the children of the said Mary A. Solloway, and providing for the holding in trust of that part of the estate that would go to Mitchell H. Miller, brother of the testator’s wife, and after his death, the same to go to his children, express an intention on the part of the testator to indicate his brothers and sisters as “his heirs at law,” and the brothers and sisters of his wife, as “the heirs at law of his wife.”

If it were not for these expressions of intention, the direction of the will that after the happening of certain • contingencies, ‘ ‘ all my estate shall go, one-half to my lawful' heirs and one-half to the lawful heirs of my wife,” would probably be controlled by the rule .of interpretation laid down in Barr v. Denney, 79 Ohio St., 358; but the testator having by his own language indicated the class intended by him to be embraced within the designation “heirs at law,” as we think he has, it is the duty of the court to adopt that construction of the will which expresses the testator’s intention.

We, therefore, hold that the testator, by the use of the words “lawful heirs” intended to designate his brothers and sisters and the brothers and sisters of his wife, and it is the judgment and direction of the court that the- division shall be made among those who were living at his or her death, respectively, per stripes, the representatives of the deceased brothers and sisters taking the share that would have gone to their deceased ancestor, if living, except where the will provides that such shares shall not go to certain specified persons.

Coming to the consideration of what is considered the principal question in this action, namely, whether certain funds received by the trustees upon the liquidation of the Latrobe Steel Works, shall be treated as a part of the corpus of the estate to go to the remaindermen, it becomes necessary to recite certain of the facts appearing from the evidence.

At the time of the testator’s death, January 18, 1893, he . was the owner of 250 shares of the capital stock of the Latrobe Steel Works, of the par value of $100 per share. The Latrobe Steel Works was a Pennsylvania corporation with a capital stock paid in of $600,000.

Until a short time before his death, the testator was a director of the company, and employed by it as a salesman. Prior to the testator’s death, no dividends had been paid on the stock; the first dividend paid thereon being in February, 1894; on September 30,1892, the corporation had a surplus of $187,386.16. The 250 shares left by the testator were taken over by the trustees and carried by them as a part of the trust estate. On November 1, 1895, another company was organized, known as the Latrobe Steel Company, and by action of the directors of the Latrobe Steel Works, and with the written consent of all the stockholders, the Latrobe Steel Works transferred all of its property and business- to the new company which had a capital of $1,500,000 and there was issued to each stockholder of the old corporation, two shares of the new company for each one held in the original corporation. The trustees thus received 250 additional shares of stock which were paid for entirely out of the surplus accumulations of the Latrobe Steel Works.

In 1898, a corporation with a capital stock of $300,000, known as the Latrobe Steel & Coupler Company, was- organized under the laws of the state of Illinois, and property in Chicago turned in to this corporation. All of the stock of this new company was owned and held by the Latrobe Steel Company and the board of directors and officers of both companies were the same. The Latrobe Steel Company enjoyed a prosperous business and paid regular dividends for a -period of about ten years. In some years, the dividends were as high as 10 per cent, semi-annually.

In addition to the payment of large dividends, the company accumulated a large surplus of which $2,200,000 was in cash, or in securities easily convertible into cash, which were carried on the books of the company under the name of “contingent capital.”

This fund was created and carried according to the testimony of Harriot C. Smythe, president of the company, as a sort of “war fund” to be used by the company in protecting itself in case of severe trade competition, to which it had been subjected in the early period of its existence. No part of this fund of $2,200,000 seems to have been actually employed in the conduct of the business, except that it was placed on deposit and drew interest, and was invested in securities easily convertible into cash.

On November 1, 1905, the Latrobe Steel Company sold its physical assets to the Railway Steel Spring Company for $4,300,-000 in cash. The assets sold at this figure had previously been carried on the books of the company at $1,039,819.80. Upon the books of the corporation the sale was treated as a conversion into cash of the various items comprising the assets sold and the profit upon the transaction of $3,260,080.20, was entered upon the books to the credit of ‘ ‘ profit and loss. ’ ’

In 1908, the company sold the stock of the Illinois corporation for $1,243.000 cash. The sale of the various property of the Latrobe Steel Company, together with other assets owned by it, which were all converted into cash, left the total cash assets of the sum of $8,549,250. This money was distributed among the stockholders. In January, 1906, four distributions were made, each distribution being equal to the face value of the stock held by each of the stockholders. Other payments were made to the stockholders until the money was all disbursed. All of this money was treated as a single fund and distributed among the stockholders as a part of the assets of the corporation. The checks were marked “An account of liquidation,” and the stock was all turned in and indorsements of the various sums distributed made on the certificates. The trustees of the estate of Nathan E. Chapman received as their share of the fund distributed, the sum of $287,000.

It is contended on behalf of the representatives of the life tenants that a- large proportion of the 250 shares of stock of the Latrobe Steel Company, received by the trustees in addition to the stock representing the original 250 shares, should be treated as income belonging to the life tenants and that a large part of the amount received by the trustees as a result of the transaction of 1905, over and above the original investment, represents profit or income which likewise should go to the life tenants. These contentions are combated by tbe remaindermen who contend that the entire fund of $287,000, received by the trustees, belongs to the corpus of the estate.

It is claimed on behalf of the representatives of the life tenants that their contention is supported by the laws of Pennsylvania and that the domicile of the testator at the time of his death was in Pennsylvania, which makes necessary the application of the laws of that state in determining the distribution of the fund in question.

Under the evidence in this case, we hold that the domicile of the testator at the time of his death, ‘was in Ohio. While he resided in Philadelphia his residence there is not shown to have established his domicile in the state of Pennsylvania.

In Price v. Price, 156 Pa. St., 617, it was held:

“Domicile is acquired by actual residence, coupled with the intention to reside in a given place or country, and can not be acquired in any other way. If the intention of permanently residing in a particular place exists, a residence in pursuance of that intention, however short, will establish a domicile.
“Domicile of origin must be presumed to continue until another sole domicile has been acquired by actual residence, coupled with the intention of abandoning the domicile of origin. This change must be animo et facto, and the burden of proof is on the party who asserts the change.”

In this connection, we think that great weight should' be given to the recital in the will itself in which the language is: “I, Nathan E. Chapman, of the city of Cleveland, county of Cuyahoga and' state of Ohio.” It has been held that declaration made in a deed or will on the subject of domicile at a time when there is no dispute about the matter is evidence of the highest character and establishes a domicile unless overcome by positive proof to the contrary. Ennis v. Smith, 55 U. S., (14 How.), 400; Merrill v. Morrissett, 76 Ala., 433, 440; Ward v. Oxford, 25 Mass. (8 Pick.), 476.

This view of the evidence renders it unnecessary for us to decide whether the question of domicile was necessarily involved in the judgment of the probate court in admitting the ^ will to probate, although in our opinion there is great force in the contention that the question of domicile was involved in the judgment of the probate court, and that such judgment can not be attacked collaterally.

The distribution o£ the fund in the hands of the trustees must therefore be determined by the laws of Ohio and that distribution will depend upon the rule which we adopt in deciding whether any part of said fund shall be treated as income or whether the whole should be regarded as belonging to the corpus of the estate. The question is a new one in this state but has been before the courts in numerous eases in other states.

There is much conflict in the results reached in various jurisdictions as well as in the principles resorted to in reaching those results.

In Pennsylvania, the rule of apportionment, between life tenant and remainderman has been established. Under this rule, where the dividends, whether in cash or in stock, have been earned before the death of the testator, they are held to be a part of the corpus of the estate and belong to the remaindermen; but if earned after the life estate began, they are held to be income and go to the life tenant, and if earned partly before and partly after the death of the testator, the earnings are apportioned between life tenant and remainderman. Earp’s Appeal, 28 Pa. St., 368.

In Smith’s Estate, 140 Pa. St., 344, the rule enunciated in Ewp’s Appeal is restated in the following language:

“When the stock of a corporation is by the will of a testator given in trust, the income thereof for the use of a beneficiary for life with the remainder over, surplus profits which have accumulated in the lifetime of the testator, but which are not divided until his death, belong to the corpus of the estate, whilst the dividends of earnings made after his death, are income and payable to the life tenant no matter whether the dividend be in cash, or scrip or stock. ’ ’

This rule, with various modifications and qualifications,' has been adopted in a considerable number of other states.

In Massachusetts, a different rule has been established. There it is held that cash dividends are regarded as income and stock dividends as capital, without reference to the time they were earned or declared.

This rule was first laid down in the ease of Minot v. Paine, 99 Mass., 101. On page 107, it is stated in the opinion:

“It is obvious that, if the directors had made no stock dividends, but had invested the income in permanent improvements, making no increase of the number of shares, the improvements would have been capital, belonging to the legatees in remainder. So, if they had thus invested it, and instead of increasing the number of shares, had increased their par value, the shares would have been mere capital, and not income, as to the stockholders, though increased in value by the application of the net income of the road, to that purpose. So when they increase the number of shares, each share of all the stock in the corporation is in its nature, capital. The new shares take their place among the old ones; and each of the old shares thereby becomes a less proportion of the whole stock than it was before, and is entitléd to a less proportion of dividends declared than it was before. It may be that dividends are less per cent, than they would otherwise have been, and in such ease the old stock is diminished in value, and the interest of the remaindermen is injuriously affected. But, on the other hand, the effect may be, by increasing the business of the road, to increase the dividends and the market value of the old stock.
“But neither courts nor trustees can investigate such matters with accuracy; and in many cases no investigation can’be made. A trustee needs some plain principle to guide him, and the cesiui que trusl ought not to be subjected to the expense of going behind the action of the directors, and investigating the concerns of the corporation, especially if it is out of our jurisdiction. A simple rule is to regard cash dividends, however large, as income, and stock dividends, however made, as capital.
“The court are of the opinion that this rule is more in eon'formity with the legal and equitable rights of shareholders than any that has been suggested. ’ ’

The rule as stated in Minot v. Paine, supra, that cash dividends, however large, should be regarded as “income” and stock dividends, however made, as “capital,” has been somewhat restricted even in Massachusetts, for under later decisions the court inquires as to the circumstances under which the distribution was made in order to ascertain whether there has, in fact, been a capitalization of earnings. Capitalized earnings which have been distributed in the form of shares of stock have been held to be capital and cash dividends to be income. The Massachusetts rule has been followed in many states.

The latest decision called to our attention, bearing on the question under consideration is that of Bryan v. Aiken, 82 Atl. Rep., 817, decided April 1, 1912.

In that ease a will, executed by a testator, gave certain corporate stock to trustees to pay the net income, interest and dividends to grandsons for life, with remainder over upon the death of the survivor. The corporation declared a stock dividend out of the earnings and it was there held:

“The increase in the value of corporate stock resulting from accumulations of earnings becomes a part of the corpus of the fund invested, and the increased value should be added to the corpus if the stock be sold, and the income on any other investments of the proceeds made, be paid to the life tenant, leaving the principal as reinvested to go to the remaindermen.
“Where corporate stock is bequeathed to trustees in trust, to pay the income and dividends to one for life, with remainder of the stock over, dividends in form of stock, representing earnings used during, the life tenancy to increase the business plant of the corporation and distributed pro rata to the stockholders, belong to the remaindermen as a part of the corpus.”

The rule that stock dividends declared by a corporation out of earnings retained by the corporation and treated as a part of its capital, should go to the remainderman and not to the life tenant meets with our approval.

If the stock distributed in 1895, upon the promotion of the Latrobe Steel Company and the taking over of the assets of the old company, be considered as a stock dividend, it should in accordance with the conclusion we have reached, go to the remaindermen and the same result is reached even if this should not be considered in its strict sense a “stock dividend.” There was at any rate a capitalization of all earnings and assets of the Latrobe Steel Works and the issuance of an increased number of shares in the new company to stockholders of the old, did not in any way affect the interest of the stockholders in the property of the corporation. They had the same proportionate interest therein after the receipt of the increased number of shares as before.

In determining whether or not any of the fund of $287,000 received by the trustees upon the. liquidation of the Latrobe Steel Company, should be regarded as income belonging to the life tenants or whether it should all be treated as a part of the corpus of the estate, it is important to notice that none of this money was distributed in the form of dividends or earnings.

„ Until the time of the liquidation, the earnings of the corporation belonged to the corporation itself and not to the stockholders, except as they had an interest therein represented by their shares of stock. The power of a corporation, either to distribute its corporate earnings to stockholders, or withhold them for the purpose of extending the corporate business, is not subject to judicial control in the absence of bad faith.

The corporation here saw fit to retain its earnings and use them in the extension of its business. It might, if it had seen fit, have declared dividends out of its earnings, in addition to the liberal dividends paid from time to time, but it did not see fit to do so. It appears to have capitalized its «earnings and to have used them in furthering the interests of the company’s business.

It has been contended- that the so-called “war fund” of $2,200,000 was clearly income and although carried on the books as contingent capuital, was nevertheless earnings in which the trustees had an interest in proportion to the stock held by them and which interest should go to the life tenant.

It is true as shown by the testimony of Mr. Smythe,* that this fund was accumulated and carried as cash or invested in securities capable of being converted into cash on short notice; but it was nevertheless devoted, in our opinion, to the extension of the business and the promotion of the company’s welfare as effectually as if it had been invested in the company’s plant, or in other forms of property used in the business in which it was engaged. We think that it was a part of the capitalization of the company and that upon final distribution of the assets of the corporation, it was impressed with the same character as the other assets.

It seems to us that great difficulty would follow the adoption of any principle of law that would require the courts to investigate the affairs of a corporation and determine what part of its assets should be considered as income or surplus or accumulations, under whatsoever name, and what as a part of the capital of the corporation.

In view of the undoubted power of a corporation to distribute or withhold earnings from stockholders, to employ them in the extension, improvement and increase of the material business facilities of the corporation, and thereby permanently capitalize them, it seems wise to adopt the rule that treats the assets of a corporation upon liquidation as the corporation itself has treated them, in the absence of bad faith.

The chancellor in the case of Bryan v. Aikin, supra, in adopting the rule which we follow, said on page 823:

“The rule here adopted has merit, not only as being concededly simple and direct, but represents a logical conclusion from established premises. It gives weight to the action of the company, because the corporation has the power to settle the premises upon which the question is to be decided. It avoids, an investigation into the transactions of the company to determine the period within which the earnings were made and on numerous occasions, it has been pointed out by courts which have rejected the apportionment rule of Pennsylvania that this is always troublesome, usually expensive, seldom satisfactory and sometimes practically impossible, as in the case of a foreign corporation. Of course, these references to some of the difficulties of adopting a rule as to apportionment, according as the earnings were made in whole or part during the life of the testator, or wholly or partly thereafter, do not apply in the case at bar, because it affirmatively appears that all the earnings represented by the stock dividend in question was made since the life tenancy began. Still a plain simple rule is sought, and one that is workable in all cases to prevent controversies and to guide in the administration of other estates respecting other distributions of capitalized earnings. The rule has been criticized because it gives too much weight to the action of the corporation, but this is a necessary result of the character of the investment and of the necessary power of the corporation respecting the management of the assets of the company. The rule here adopted is clear, easily applied and logical and as fair to present interests as the nature of the case will permit, in view of the corporate control of corporate property.”

The language, above quoted, meets with our approval. We think that the adoption of this rule is in accord with the intention of the testator. He was a director in this company until a short time before his death and may be assumed to have been familiar with the power of corporations to accumulate their earnings and use the same in the conduct of their business, rather than to distribute them among stockholders as dividends.

In his will, he conferred power upon his trustees “to sell, dispose of and collect, all of said securities and to invest and reinvest the proceeds thereof, and after paying expenses, to pay the entire net income, etc.”

He, therefore, contemplated a situation where some increase in value of his investment in this corporation might arise and a sale become profitable.

It was evidently his intention in such case that the increase in value should be added to the corpus of his estate and be reinvested.

■ The ■ conclusion reached renders it unnecessary for us to determine the effect of the transactions between the trustees and the life tenants, Hattie E. Chapman and Harry E. Chapman, which was claimed to constitute an accord and satisfaction or an agreement to consider all the funds in the hands of the trustees, at the time of the transaction, as belonging to the corpus of the estate.

No matter what view we take of the instrument signed by the life tenants, it can háve no effect upon this decision in view of the rule which we adopt.

As to the attack made on the appointment of J. B. Wilberding, administrator de bonis non of the estate of Harry E. Chapman, we are of the opinion that the probate court had power to make such an appointment and that the same can not be collaterally attacked in this proceeding.

All questions of account on the part of the trustees should be passed upon by the probate court and no ruling is made by this court upon any item of said account.

In accordance with the conclusion announced, tne trustees are directed to distribute the entire amount received by them on the stock of the Latrobe Steel Company, upon its liquidation, in accordance with the terms of the will, as a part of the trust estate belonging to the remaindermen.


author: By the Court

text:
    IRREGULAR. DISMISSAL OF A PUBLIC SCHOOL TEACHER.
    Circuit Court of Licking County.
    The Bowling Green Township School District of Licking County v. Preston E. Breese.
    Decided, February Term, 1912.

      Schools — Contracts of Employment with Teachers* — Unauthorized Termination of — Judgment Sustained in Favor of a Teacher Dis-, charged Without a Hearing.

    1. The authority conferred upon a board of education to dismiss any teacher for inefficiency, neglect of duty, immoral or improper .conduct can be lawfully exercised only after the charges have been reduced to writing and the accused teacher has been given reasonable opportunity to appear before the board and make defense thereto.
    2. A teacher, employed for a school year or for any specified term, if wrongfully discharged before expiration of the term of employment; may recover salary in full for the remainder o.f such term, upon, a showing of failure to obtain other employment after reasonable effort so to do. .. .

      Fitzgibbon & Montgomery, for plaintiff in error:

      8mythe'(& Smythe and J. M. Sivartz, contra.
   By the Court

(Voorhees, Shields and Powell, 'JJ.).

A petition in error is filed in this case for the purpose of reversing the judgment of the court of common pleas, in an' action brought by the plaintiff below, defendant in error, against the defendant below, plaintiff in error, to recover damages for said defendant’s alleged wrongful discharge as a school teacher.

In his amended petition in the court below, the plaintiff says that on June 3, 1907, the defendant, the board of education of said school -district, contracted with the plaintiff, by electing him as a teacher, to teach one of its schools in the 'district of Bowling Green -township, in the town of Brownsville, Licking county, Ohio, known as the grammar school,. for the ■ coming year; which school year covered the term of eight months, and which school term was to commence at a time to be fixed by said board of education. It is further alleged that the plaintiff: had and held, at the time of his employment by said board as such teacher, a good and valid certificate issued by the board of school examiners of Licking county, Ohio, authorizing him to teach the school, which he, the said plaintiff, was so employed to teach by the defendant; that the plaintiff accepted said employment as teacher in pursuance of said contract with the defendant board, and on the 16th day of September, 1907, he entered-into his employment as teacher of said grammar school of said district, and continued to teach and instruct the students of said school in accordance with his said contract of employment, made and entered into by him with the defendant, up to the 15th day of January, 1908. He further says that at a called meeting of said board of education, held on the 15th day of January, 1908, said board attempted to discharge and dismiss the plaintiff as said teacher, and, from that time, until the end of the time for which he was so employed as aforesaid, did refuse and prevent him from discharging his- duties as such teacher under said contract, and refused to pay him any part of the compensation to which he was entitled under and by virtue of said contract; that by the terms of said contract, he says he was-to receive the sum of $40 per month, to be paid -at the end of each month, and he says that from the time of said pretended discharge to the end of said eight months was seventy-seven days, amounting in all to the sum of $154. He say's that said action taken by said board was taken without giving to the plaintiff a hearing and opportunity to defend himself against-the charges made against him. He says that there was no cause, for the action of said board, and that the same was unlawful;- and, by reason thereof, defendant was guilty of a breach of said contract, to his damages in the said sum of $154, with interest thereon from the 2d day of June, 1908. He further says that-his business and profession is that of a school teacher; that after the said alleged discharge he went from place to place in' an effort to secure employment as a school teacher, and used' every effort that he could to get employment during the remainder of said time- for which he was employed as. aforesaid • He further says that he used due diligence to get other employment during said time, and that during said time he was unable,’ notwithstanding his efforts, to earn any’ money whatever, and he did not earn any money. He therefore prays judgment for said-sum of $154, with interest from the 2d day of June, 1908.

To this amended petition the defendant filed an answer, admitting the employment of said Preston E. Breese as a teacher' for a school year for one of the schools of said district; that the plaintiff had a certificate authorizing him to teach school at said time; that said plaintiff entered upon his employment as a teacher on the 16th day of September, 1907, and continued to teach under said employment until January 15, 1908; that the plaintiff was paid therefor; that on January 15, 1908, the board of education of said school district discharged said plaintiff; and defendant denies all the other allegations contained in said petition, not therein specifically admitted to be true.

The cause was submitted to a jury, resulting in a verdict for the plaintiff below. A motion for a new trial was filed and overruled, and judgment was rendered upon said verdict. A petition in error- is filed, together with a bill of exceptions, embracing all the evidence, for the reversal of said judgment upon various alleged grounds.of error, but principally because the verdict of the jury is contrary to the weight of the» evidence and is contrary to law.

An examination of the record shows that the defendant in error was employed to teach said school for the period of eight months, at an agreed price of $40 per month; that on or about January 15th, 1908, he was dismissed from said school as such teacher by the board of education of said district; that- a contract of hiring existed between said board of education and the defendant in error, by the terms of vffiich defendant in error was employed to teach for the time stated, on the terms stated, and that he was dismissed as such teacher’ by the board, at the time stated, is admitted, the matter in dispute being as to whether or not the board was justified in its said action.

Section 4017, Revised Statutes ,provides that “each board may dismiss any appointee or teacher for inefficiency, neglect of duty, immoral or improper conduct; but no teacher shall be dis-' missed by any board unless the charges are first reduced to writing and an opportunity be given for defense before the board, or a committee thereof, and a majority of the full membership of the board voting upon'roll call in favor of such dismissal. ’ ’

It appears from the record that some disagreement arose between the superintendent of said school and the defendant in error in reference to certain exercises proposed to be given in said school on Thanksgiving of said year. This. led to some feeling between the two, which manifested itself in certain complaints being made by the superintendent of said school to said board, that the defendant in error was not complying with the rules of said board in being present at the school building fifteen minutes- before the opening of the school, and also that he 'had threatened violence upon the person of the superintendent of said school. This latter charge was made by a witness other than the superintendent, which said charge was denied by the defendant in error, who claimed that, while he was at all times present at the opening of said school and ready for duty, he was unavoidably detained from being present at the school building on one or two occasions.

ít is evident from the record that a condition of things obtained which tha board thought was not best for the interests of the school, for on the 13th day of January, 1908, the superintendent of said school resigned his position; on or about said date an assistant teacher also resigned, and that on the 14th day of January, 1908, said board through its secretary, notified the defendant in error, by letter, to appear before it on January 15th, 1908, to answer certain charges. This letter, it seems, was received by the defendant in error the following morning, the morning of the day named in said letter for him to appear before said board. He did so appear, and, after learning of the intention of the board-to take action against him, he protested and insisted upon being granted time to make his defense, all of which was refused him, and the board, by its action, thereupon discharged him.

■ While we recognize that boards of education may prescribe rules for the government of schools, and are given power under the law to dismiss teachers for causes therein enumerated, such power can not be exercised “unless the charges are first reduced to writing, and an opportunity be given for defense before the board.” Were these conditions complied with in this instance? Was the defendant in error properly notified of any charges, and a reasonable time allowed him thereafter to prepare and make his defense to such charges? We think not. This alone, however, would not give the defendant in error a right to recover for the unexpired time of his contractual service, unless it further appears that he made an effort'to procure employment during such term and failed to obtain employment. Did he do sol He testifies that he did, and his testimony in this respect is unopposed and uncontradicted. Under the charge of the court, the jury seems to have taken this view, having found for the plaintiff below, and we think, from an examination of the record, that the verdict of the jury is sustained by the weight of the evidence, and that the judgment of the court below is right. Said judgment is, therefore, affirmed, but without penalty, and the cause is remanded to said court for execution.


text:
    OPENING OF SALOON BEFORE SIX A. M. FOR. THE PURPOSE OF CLEANING UP.
    Court of Appeals of Athens County.
    William Betts v. The State of Ohio.
    Decided, January, 1913.

      Liquor Laws — Ordinance Prohibiting Keeping Open of Saloons Between 10 p. m. and 6 a. to. — Barkeeper Convicted for Opening Before .the. Prescribed Hour for the Purpose of Cleaning Up.

    Where an ordinance of a city provided, “that it shall be unlawful for any person to permit or allow any place where intoxicating liquors are sold as a beverage to be open or remain open between the hours of 10 o’clock p. m. of any day and 6 o’clock of the next succeeding day,” and the barkeeper of a proprietor of a saloon in said city entered his saloon before 6 o’clock, locked the door, allowed no one to enter until 6 o’clock nor did he before that time sell, offer for sale, furnish or give away any liquor or other'goods, but was engaged in cleaning up the saloon, icing the liquors therein preparatory to opening. Held: That he was rightfully convicted of a violation of the ordinance.

      J. M. Foster, for plaintiff in error.

      Emmet Keenan, contra.
    Walters, J.; Jones, J., and Sayre, J., concur.
   This is an error proceeding seeking to reverse the judgment of the common pleas court. The case in the court of appeals was submitted on an agreed statement of facts, which shows that on August 10th, 1912, the plaintiff in error was a bar tender in the employ of the proprietor of a certain saloon located in the city of Nelsonville, Ohio, where intoxicating liquors were sold as a beverage and that between 5 -.30 a. m. and 6 o’clock a. m. of said day, said Betts entered the room in which said saloon was situated for the sole purpose of cleaning out said room, to have it in readiness at 6 a. m. to receive any customers that might apply for admission, and locked the door after him. The plaintiff in error besides cleaning out, chipped ice for the purpose of placing it upon his liquors for sale, which was also done prior to 6 o ’clock a. m. on said morning. That said plaintiff in error did not prior to 6 o’clock a. m. on said day sell, offer for sale, furnish, or give away any liquor, or other goods, nor did said Betts permit any person to enter said place of business prior to 6 o’clock a. m. except a police officer who entered upon official business.

Section 2 of the ordinance of said city reads as follows:

‘ ‘ That it shall be unlawful for any person or persons to cause, permit or allow any place where any intoxicating liquors are sold as a beverage, furnished or given away as a beverage to be open or remain open between the hours of 10 p. m. of any day and 6 o ’clock of the next succeding day. ’ ’

• This ordinance adopts the language of the statute in relation to Sunday closing and therefore any decisions upon the subject •of-Sunday closing would equally apply to this ordinance.

■ The court is only required therefore to detérmine whether 'this section of the ordinance was violated, and we are called upon to give a construction to the same in the light of the agreed facts.

The learned counsel for plaintiff in error cites the case of Munzebrock v. State, 10 Ohio Dec. Reprint, 277, and seems to rely -greatly upon it. It was decided in 1886 by Judge Robertson of the Hamilton County Common Pleas Court and the second syllabus is as follows:

“In the law against selling liquors on Sunday (85 O. L., 260) a prohibition against keeping open means open in such a manner as to induce the public to enter as on other days and does not make penal the opening of the doors under any and all circumstances. ’ ’

In the opinion, the following language is found:

“The word (open) is to be construed reasonably in view of all the circumstances and so construing the word in this statute it would seem that keeping open such places on Sunday in such manner as to induce or permit the public to enter on Sunday as on other days of the week, or opening the place so as by implication to hold out that the place was open for the con-' •ducting of business or the sale of liquor is within the prohibition of the act.”

■This statement of the law was held to be incorrect by Noble, J., in Moliter v. State, 10 Ohio Dec. Reprint, 324, Common Pleas Court, Cuyahoga County, and holding that the offense is complete irrespective of any inducement offered to the public to enter or'any intention whatever on the part of the person so entering. This ease was affirmed by both the circuit court and the Supreme Court, the latter without report.

Effinger v. Ohio, 9 C. C., 377:

In this case, Effinger, some members of his family and others, not members of his family went into his saloon on Sunday to abate a nuisance which had been committed by his dog. No liquors were either drank or .given away; it was held that the fact that he and others were in the saloon was prima facie a violation of the statute and -it was not necessary to show sales or an intention to make sales and that the existence of a nuisance and the necessity for its removal must be shown by the defendant by a preponderance of the evidence. This case would seem to be indirect authority for the proposition that opening and entering is a violation of the statute.

People v. Waldvogel, 13 N. W. Reports, 620:

This was decided by the Supreme. Court of Michigan and the syllabus is as follows: . .

. ‘ ‘ Act 259 of 1881 requiring saloons to be kept closed on. Sunday is violated if a saloon is allowed to be open whether for the sale of liquor, for cleaning up or for any other business purpose and the question of the proprietor’s intent is immaterial.”

The defendant below in this case was in his saloon on Sunday and he and others assisting him were engaged in washing and cleaning the saloon. No liquor was sold nor was there any intention of selling any. The court was requested to instruct the jury, that unless they found the defendant was in his place of business for the purpose of carrying on his business of liquor selling, they must acquit; also that if they found he was there for the purpose of cleaning out his saloon and not for dealing in 'liquor selling, the criminal intent is wanting and the defendant must be acquitted. These requests were refused and the court instructed the jury, that if the defendant kept his saloon open, or had it open so that the public could enter if they chose, he would be guilty. In the opinion the Supreme Court says:

“The question of intent is wholly immaterial under the statute. The Legislature in order to guard against the danger of sales being made has directed that places where liquors are kept should be closed, so that no opportunity to violate by making sales should be afforded. The person who engages in the business of carrying on a saloon must at his peril see that ■no necessity exists for keeping the same open by carrying on any other business therein which would require the doors to be open, or ffor persons to enter therein^ The places- named must be closed and can not by the proprietor thereof be kept open for any business purpose of any kind.”

This case was affirmed in People v. Higgins, 22 N. W., 309. In this case, the court uses the following language in the opinion:

. “We hold in People v. Waldvogel, 13 N. W. Reports, 620, that keeping a saloon open on Sunday although for the purpose of cleaning or scrubbing it out, was a violation of the statute. There were no qualifying words in the statute and no exceptions in favor of any business whether foreign to the business of saloon keeping or not; the object of the statute being to cut off all subterfuges or excuses for violation of this statutory inhibition.”

People v. Lundell, 99 N. W. Rep., 12;

This was also a Michigan case and the syllabus of the same was 'as follows:

‘ ‘ A person engaged in business in a building in which a saloon was located entered the saloon, during prohibitory hours to remove a defect in a water pipe and prevent water from escaping into the basement. After being in he, without request, swept out the saloon, and then remained talking with the bar tender a few minutes; held that the bar keeper in permitting him to remain in the saloon after the time required to repair the water pipe, was keeping the, saloon open contrary to law. ’ ’

People v. Mathis, 50 N. E. Rep., 398, Supreme Court of Indiana.

The syllabus of this case is as follows:

' “Under Acts 1895, page 248, paragraph 3-10, providing for the regulation of sales of liquor, the permitting a person, not a member of the saloon keeper’s family to be in his place of business on Sunday is of itself an offense.”

People v. Cummingford, 25 N. W., Rep.:

. In this case, which was also decided by the Supreme Court of Michigan, the following doctrine is laid down in the syllabus:

‘ ‘ When the statute requires the doors of a saloon to be closed, it means that no one shall be inside or get inside. ’ ’

In the opinion in this case, the court uses this language:

"“It isn’t alone the intent or purpose for which the saloon is kept open that is offensive to th§ law; but also the' opportunity furnished persons to obtain liquors at hours and on days prohibited by the statute.”

The Supreme Court of Ohio, in the case of State of Ohio v. Heible, 54 O. S., page 321, evidently follows the law as laid down by the Supreme Court of Michigan in the cases we have just quoted from. In this ease, the evidence on behalf, of the state tended to show that the proprietor of a saloon admitted two persons on Sunday, that they remained there for some hours at work varnishing wood work and that they drank beer for which they did not pay. Evidence was also introduced tending to show, that several other persons were admitted to defendant’s saloon on the day named for the purpose of buying oysters and oysters were sold to them. The defendant offered no evidence. On the trial of the case, instructions were asked to be given to the jury and which were given; which indicated the opinion of the trial judge to be, that the regular business should be closed.

The Supreme Court in the opinion says of these instructions:

“The instructions given and the refusal to instruct as requested introduced a question as to defendant’s purpose which the terms of the statute do not permit;”

People v. Cummerford, 58 Michigan, 328:

While the case here decided by our Supreme Court in its facts is not exactly like the ease at bar, yet the court does cite the Michigan case as authority for its decision and then follows by the Supreme Court in the opinion the following important declaration:

“That emergencies might arise which would make it lawful for the proprietor and others to enter a saloon upon Sunday may be a necessary inference from the general purpose of the statute. But there was no suggestion of such emergency in this case. ’ ’

This language carries with it by implication that unless some emergency arises which would make it lawful for the proprietor or others to enter the saloon within the prohibited hours, that there would be a violation of the ordinance.

In the case at bar, there was no suggestion of any emergency. On the contrary, however, in addition to the mere entering, there was the admitted fact, that after entrance, the bar-keeper was engaged in cleaning and scrubbing the saloon and icing the liquors so that he was at that time within -the prohibited hours engaged in doing things which were necessarily incidental to the carrying on of the business. Where the ordinance makes it unlawful to be open, it means it shall be closed and if it is closed and one enters, it has not been clos.ed or remained so. The purpose of the Legislature in passing the statute in regard to Sunday closing and the purpose of the municipal council in this case in passing the ordinance was undoubtedly to so far as possible lessen the evils resulting from the .traffic in intoxicating liquors, and if the proprietors of saloons under the language Employed in this ordinance can by themselves or by their agents enter their places of business within the prohibited hours for the purpose of cleaning out or scrubbing or repairing, or icing their goods, or doing the other various things in their place of business, which might seem to be required, then it would necessitate a very wide operation, close observation and surveillance on the part of the police officers to discover infractions of law which might be committed within such places while persons were so permitted to be engaged in those things during the closing hours.

The ordinance makes no exception in its language; we can read none into it and we think it means just what it says.

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