text:
    CONTRACTS FOR PUBLIC WORK WHICH ARE ESSENTIALLY NON-COMPETITIVE.
    Circuit Court of Cuyahoga County.
    State of Ohio, ex rel Will S. Scobie, a Tax-payer, v. Edson A. Cass et al.
    Decided, October 28, 1910.

      Public Contracts — •Construction of the Act Providing for the Building of Court Souses — Tax-payer Not Guilty of Laches in Seeking to Enjoin Public Contract, When — Expenditure by Contractor in Furtherance of Work Not a Defense tfb an Illegal Contract — Work that is Non-Competitive in Character Need Not be Submitted to Competitive Bidding — Section 2888.

      1. A tax-payer is not guilty of laches in bringing suit to enjoin the illegal expenditure of public money, where within a day or two after the execution of the contract complained of with bond for its faithful performance he served notice through his counsel upon the prosecuting attorney of the county to bring such an action, and three days later, when the refusal of the prosecuting attorney to bring such an action was communicated to him, his own suit was filed.
    2. Nor is he estopped from bringing such an action because the defendants have been to considerable expense in preparing to execute the contract, where the ground of his action is that the contract is illegal for the reason that the defendants are wholly without authority to execute it, or having executed it to carry it out.
    3. The addition, when it was incorporated into the General Code, of the words “and shall be governed by the provisions of this chapter relating to the erection of public buildings in the county” to the act of March 8, 1906, providing for the appointment of a commission for the building of court houses, is not effectual to limit or restrict the powers of the commission as granted by the original act, where the work of such a commission in building a court house had been carried almost to completion before these words were incorporated into the original act; but in such a case the work should be completed under the provisions of the act as it originally stood.
    4. But should it be assumed that the statute controls in the form in which it'now appears in the General Code, it would still be true that the work of interior decoration is so essentially - non-competitive in character that the commission is not required to submit it. to competitive bidding, where the building has cost more than two million dollars, and is imposing in appearance, beautiful in design and monumental in character, *the walls of which it is proposed to decorate in harmony with the style of the building itself, and thus add to its dignity and beauty, and exhibit the highest esthetic taste of present day culture.

      Smart, Marvin & Ford, for plaintiff.

      John A. Cline, Prosecuting Attorney, W. D. Meals, Assistant Prosecuting Attorney, and Hoyt, Dustin & Kelley, contra.
    Fillius, J. (of the Seventh Circuit, sitting in place of Marvin, J.); Henry, J., and Winch, J., concur.
   This case comes into this court on appeal from a judgment rendered in favor of the plaintiff by the court of common pleas of this county.

The plaintiff, a tax-payer of this county, brings this suit to enjoin the defendants, constituting the building commission of Cuyahoga county, and as well the auditor and treasurer respectively of the county, and William F. Behrens from decorating the court house as proposed by a contract made with Behrens, alleging that the building commission is constructing a court house in Cuyahoga county and that it has entire charge thereof by virtue of authority vested in it by law, including the painting and decorating of the interior thereof and the letting of the contract therefor; that the commission has entered into a contract with the defendant, Behrens, 'for doing the painting and decorating for the agreed sum of ninety thousand dollars; that the contract is illegal and without authority of law, because the commission did not cause full and accurate plans of the painting thus contracted .for to be made, nor did it submit the work for such painting to competitive bidding, but wholly failed to give notice thereof by advertising, as required by law for the lowest and best bid therefor and that no invitation whatever for bids for said work was given by the commission; that the contract was made with Behrens without giving anybody an opportunity to examine plans and specifications therefor to bid on the work; that the auditor of said county will issue, vouchers to the treasurer of the county for the work to be done under said contract; and that the treasurer will pay such vouchers, and that the defendant, Behrens, is about to proceed to carry out said contract, and he prays that the defendants and each of them be restrained and enjoined from carrying out or completing the contract for said painting.

To this petition the defendants, composing the building commission, and the auditor and treasurer of Cuyhoga county jointly answer, admitting that the building commission is engaged in the construction of the court house and that it has entire charge of the construction thereof and the right to determine all questions connected therewith, including the interior painting thereof. They admit the execution of the contract with the defendant, Behrens, to paint and decorate the interior of the court house in accordance with plans and specifications adopted by the commission, which work is to be done to the satisfaction of the commission and its architect, and that by the terms of the contract the commission agrees to pay Behrens ninety thous- and dollars therefor; that the work to be done and the services to be rendered by Behrens under said contract are of a personal character, involving and requiring an extensive knowledge of decorative art, including the mixing, blending and harmonizing of colors, and they admit that if not restrained the commission will go forward in the execution of this contract, and they deny that the contract is illegal.

The defendant, Behrens, files a separate answer, and after admitting the principal averments of the petition, he in effect denies that there is any illegality in the execution of the contract, and denies that the commission was wanting in power to make the same. He further alleges that the nature and character of the work is such as to demand a high order of artistic skill and taste to paint and decorate the walls of the court house, as required by the terms of his contract, and that the services required of him are in ’their nature of that personal, skillful and artistic quality as to make them non-eompetitivs in character.

Thus are the issues presented.

The facts, as established by the testimony offered .upon the trial of the ease, ane substantially^ follows:

The defendants, Fischer, Eirick and Vail, the county commissioners of this county, together with the defendants, Cass, Iiigley, Osborn and Smith, appointed by the court of common pleas to act with said board of county commissioners, constitute a building commission, pursuant to an act of the Legislature passed in 1904, to build the court house. Pursuant to the statute authorizing its creation, the commission employed architects, superintendents and others; procured plans, drawings and specifications ; invited bids thereon for the 'construction of the court house, and ¿ntered actively upon the work of constructing the court house. For reasons apparently satisfactory to the commission, but not appearing in this record, in the original letting of contract for the construction of the court house, bids were not invited nor contracts made for painting and decorating the interior walls and ceilings thereof. The building itself about the time of the execution of the contract complained of was substantially completed. The only work left to be done was the completion of some parts of the interior finish of the building and the painting and decoration of the walls, and the supplying of the mural paintings intended for various rooms in the building.

The building, to cost upwards of two and a half million dollars, is of magnificent proportions, and artistic design and finish. Built of granite, of the style of the Italian Renaissance, located upon the bluff adjacent to the shore of the lake, it is designed not alone to be an appropriate place for the administration of justice, but a monument to the genius and modern artistic development of the city and county which it adorns, and as well to be one of a group of buildings in process of erection and'to be erected in the city of Cleveland and county of Cuyahoga, so placed and constructed about a mall that eacshall be in harmony with the others, and together constitute an expression of the highest development of the art of architecture and civic usefulness in this country.

The commission proceeding to complete this structure, thus conceived and designed, employed Charles F. Schweinfurth, a gentlemen of this city, eminent as an architect and as a man possessing a fine artistic sense, not only in the designing of buildings but in their interior decoration, to prepare plans and specifications for its interior decoration, in keeping in design and artistic finish with the building itself. Without attempting to go into detail, the plans and specifications thus prepared required the interior decoration to be like the building itself of the period of the Italian Renaissance, particularly giving expression to the peculiar quality, style and effect of that period, which found its highest development in one of the greatest artists of that time. The commission adopted the views, plans and specifications of Mr. Schweinfurth, .and in addition determined to place upon the interior walls of the building a number of mural paintings to be executed by one or more of the present day masters of mural art, and it was required that • the decorating to be done by Mr. Behrens, under his contract, should be in harmony with these mural paintings, so that the whole should have one harmonious, artistic effect, suggestive of the majesty and dignity of the law and its administration. To do the interior decorating thus determined upon and in this manner the commission found that it would require a highly developed professional and artistic skill, involving taste, feeling, harmony, idealism and an aesthetic sense that in fact made the work non-competitive in character. The commission, therefore, did not advertise for bids for the doing of this work, but did make inquiry as to prices therefor, through its representive, Mr. Schweinfurth. Accordingly, acting upon the belief that it had the power to enter into a contract of this character without submitting the work to competitive bidding, it entered into the contract in question with Mr. Behrens to do the work and furnish the material therefor, under plans and specifications as definite as the nature of the work would permit, though leaving much ultimately to the judgment of Mr. Schweinfurth.

The question therefore now for determination is, did the commission in thus making this contract exceed the authority conferred upon it by the statute creating it, and any amendment thereof.

Before undertaking to answer this question, it will be well to dispose of two defenses interposed upon the trial: First, that the plaintiff has been guilty of such laches that a court of equity ought not to interfere in his behalf; and, second, that he is estopped to claim the interposition of this court by reason of the fact that he delayed bringing his action so long that the defendant Behrens has, in good faith, and relying upon the legality of his contract, made expenditures and incurred obligations on account thereof, amounting to a very large sum of money, to-wit, more than ten thousand dollars.

So far as the question of laches is concerned, it is difficult to see how the plaintiff could reasonably have been more diligent. While it is true the newspapers of the city about August 3d published the fact that the commission h&d substantially contracted with Mr. Behrens to do this work, yet the contract itself and the bond to be executed concurrent with it were not executed until September 14th, and upon that date, or within a day or two thereafter, -the plaintiff made application to counsel and counsel immediately served notice upon the prosecuting attorney of the county to bring this action, and he, after the lapse of two or three days, refused to do so, and the very day that his refusal- was communicated to plaintiff’s counsel, this suit was begun. It would appear, therefore, that the plaintiff was not guilty of laches. . The court would hardly be warranted, in a suit begun on behalf of the tax-payers of the county, to protect their interests against the illegal expenditures of public funds, in finding that the plaintiff was guilty of laches, unless such clearly appeared to be the ease.

Neither is the plaintiff estopped to prosecute this action. He claims that the defendants should be enjoined from carrying out this contract because it is illegal, because the defendants are utterly without authority to execute it, or having executed it, to carry it out. If the contract be in fact illegal and without authority of law, then the plaintiff is not estopped, no matter how much money the defendants or any one of them may have expended in its partial execution, from enjoining the further execution of the contract, or the payment thereon of any of the public funds.

Whether, then, the commission had authority to execute the contract in question depends upon what effect is to be given to the statute and any amendment thereof, under which the commission is acting. This statute is general in its nature and is entitled “an act to provide for a commission for building court houses,” and seems to have been an entirely independent act upon that subject. The commission was empowered by the terms of the act with the broadest discretion to determine all questions connected with the building of a court house, and was granted, in the language of the Supreme Court, ‘‘every phase of power and duty,which is conferred upon the county commissioners and more.” The act expressly provided: “said building commission shall, after adopting plans, specifications and estimates, invite bids and award contracts for said court house, and for furnishing heat, light, ventilation and for sewerage of the same, and determine all questions therewith, until said court house shall be completed and accepted by said building commission.”

In view of this express power thus conferred upon the commission, and of the decision of the Supreme Court in the case of McKenzie v. State, 76 Ohio St., 369, there is little doubt that the commission was well within the limitations of its authority in making this contract. But confusion has arisen from the fact that the codifying commission in codifying the statutes embraced in the general code the statute creating the building commission with other sections of the statutes relating to the authority of county commissioners to erect county buildings under Chapter 1, Title 10, relating to public buildings, covering Sections from 2333 to 2366 inclusive, and from the further fact that the codifying commission divided Section 1 of the original act creating the building commission into several sections, and incorporated that part of the statute above quoted in Section 2338 of the General Code, making an addition thereto, so that the whole of Section 2338 now reads, as follows:

“After adopting plans, specifications and estimates, the commission shall invite bids and award contracts for the building and for furnishing, heating, lighting and ventilating it, and for the sewerage thereof. Until the building is completed and accepted by the building commission, it may determine all questions connected therewith, and shall be governed by the provisions of this chapter relating to the erection of public buildings of the county.”

Plaintiff now claims that because the original act creating the building commission is now incorporated in the General Code under one chapter relating to the construction of county buildings, and especially because the original act appears to have been amended, as shown by Section 2338 of the General Code, by adding the words “and shall be governed by the provisions of this chapter relating to the erection of public buildings of the county,” the power of the building commission has thereby been limited and restricted, and that it no longer has any discretion with respect to letting contracts, but every contract of whatever kind or nature must be advertised upon plans and specifications for public letting and let to the lowest and best bidder; and that if the decoration of the interior of the 'Court house proposed to be done by the commission, pursuant to the contract made with Behrens, be of a character that can not be submitted to competitive bidding, then the commission and the county which it represents must forego that character of work and must adopt a kind and class of work which can be submitted to such bidding.

If this conclusion must necessarily follow from the addition of the words to the statute above referred to, and now appearing in Section 2338 for the first time, then, of course, there is nothing for this court to do but to allow the prayer of the petition. We, however, do not think the conclusion contended for by the plaintiff, from the change in the statute, necessarily follows. The commission came into existence for the purpose of building the court house. Preliminary to the appointment of four members of the commission by the court of common pleas the commissioners of the county had, under the act, determined to build a court house; had submitted to the electors of the county.the question of issuing bonds for that purpose, which had been determined affirmatively by them,, and then it was that the building commission was organized, pursuant to the terms of the statute, and the members appointed thereto by the court were to serve until the court house, as contemplated in the act, was completed. The commission thus created, had but one thing to do, to-wit, to build and complete the court house. The money was provided by the issuing of bonds for that purpose. The members of the commission appointed by the court took an oath and gave bond for the faithful and honest discharge of their duty. In case one of them died before the court house was completed, the judge appointed his successor, and the commission was authorized to employ architects, superintendents and employes, and to adopt plans and specifications and estimates, and invite bids and award contracts for the court house, and for furnishing heat, light and ventilating the same, and for sewerage thereof, and were given authority to determine all questions connected with that work until the court house shall have been completed and accepted by the building commission.

Thus the statute had one purpose — one object. The commission’s service was continuous, beginning with its appointment and ending when the court house was completed. It seems clear, thus viewed, that the work of the commission in carrying out the objects and purposes for which it was appointed, and the building of the court house down to its completion, constituted within the meaning of Section 26 of the General Code “a proceeding” and that any amendment of the statute made after that proceeding was instituted and carried forward almost to completion, can in no manner affect the powers given that commission in the original act. Suppose, indeed, that the codifying act by some error had repealed the entire act creating the commission and 'authorizing the erection of the court house, can it be said that if that had been done the commission would have been absolutely without power or authority to proceed at all with the completion of the building, and that it must remain in its unfinished and unusable state? It would seem as though the very purpose and object of Section 26 was to provide against just exactly such contingency, such repeals, and to permit the authority originally granted to be exercised down to the completion of the work which this statute itself originally authorized, .and which was begun and largely completed before this amendment was made.

The case of City of Cincinnati v. Davis, 58 Ohio St., 225, lends substantial support to this view. In that case the proper board of the city adopted a resolution to improve an alley of a certain width. Thereafter,and pending proceedings to improve the alley, the statute was amended, conferring the authority to do this upon another board. The Supreme Court held that such amendment did not work a discontinuance of the proceeding pending before the original board to improve the alley and that the improvement should be prosecuted to completion by the board that adopted the resolution, under favor of Section 79, now Section 26 of the General. Code.

In passing upon the case, Minshall, J., in the opinion says:

“The question then arises whether the assessments are void, because the ordinance to improve adopted June 20, 1893, was adopted by the board of legislation, instead of by the board of administration; or, whether, by the amendment of March 30, 1893, the proceeding did not abate for want of jurisdiction in the board, before which it was commenced, to make it? We think not. The act of March 30, 1893, contained no express provision making it apply to pending proceedings. Hence, as we think, this proceeding was not discontinued thereby, and the board of legislation was authorized under Section 79, Revised Statutes, to proceed with and complete the improvement as it did. This section relates to no particular subject of legislation. It relates to the operation of statutes in general. The section reads as follows:
“ ‘Whenever a statute is repealed or amended, such repeal or amendment shall in no manner affect pending actions, prosecutions or proceedings, civil or criminal, and where the repeal or amendment relates to the remedy, it shall not affect pending actions, prosecutions, or proceedings, unless so expressed; nor shall any repeal or amendment affect causes of such action, prosecution, or proceeding, existing at the time of such amendment or repeal, unless otherwise expressly provided in the amending or repealing act. ’
“The section as first adopted did not contain the second clause as to repeals or amendments affecting the remedy; but as there was a disposition to hold that it did not apply to such changes in the law this clause was inserted, so that a repeal or amendment affecting the remedy should not apply to pending proceedings ‘unless so expressed’; so that the amendment of March 30, 1893, does- not apply to this case, if it is within the provisions of the above section, whether it relates to the remedy or not, for the amendment contains no express provision to that effect. There seems to be the same reason for applying the provisions of this section to a pending proceeding for the improvement of a road or street that there is for its application to a pending proceeding in the nature of a suit, where the change in the law simply applies to the mode of procedure. In either ease it must be assumed that the proceeding was commenced with reference to the provisions of the existing law; and it is neither wise nor just, as general rule, to disappoint the parties in this regard by a change of the law, and, as must frequently happen, after a considerable amount of costs and expenses have been incurred.
“The section announces the permanent policy of the Legislature as to the operation of its statutes; and, where there are, in its opinion; sufficient reasons for a departure from this policy in a particular instance, it has been declared that the departure shall be expressed in the amendatory statute. In so far as Commissioners v. Green, 40 Ohio St., 318, conflicts with this view, it is not approved. In Raymond v. Cleveland, 42 Ohio St., 522, a more correct view is taken of a clause similar to the provisions of Section 79, Revised Statutes. There under the Municipal Code of 1869, and its amendments, proceedings had been commenced for the improvement of a street to be paid for by assessments on the property benefited. An assessment was made and set aside by the courts for irregularity. Subsequently, under provisions of the code in force when the proceeding was commenced, a reassessment was made; but the provisions of the code in regard to a reassessment had been previously repealed by the revision of 1878; and it was claimed for this reason that the reassessment was void. The revision, however, contained the following saving clause: ‘No suit, prosecution or proceeding shall be in any manner affected by such change, but the same shall stand or proceed as if such change, had not been made.’ It was argued that this provision related only to proceedings in the nature of actions' and the like, and did not extend to the right to make a reassessment authorized only by the law that had been repealed. But Okey, J., in delivering the opinion said: ‘We are unwilling to place any such limitation upon the provision. It is remedial and no violence is done to the language by holding that it preserves the right to make this reassessment under the municipal code of 1869.’ ”

It would seem in view of the foregoing, that if it be conceded that the words added in the General Code to Section 2338 be in fact an amendment of the statute of a character compelling a different construction than would be given it if the words were not added, then, nevertheless, the .amendment would be without effect, because it relates to the work of building this court house, a proceeding, within the meaning of Section 26, long commenced and prosecuted before the amendment was made, and which was in fact made pending the proceeding relative to its completion.

The conclusion therefore necessarily follows that the amendment for which so much is claimed by the plaintiff here is not effectual to limit or restrict the powers of the .commission granted by the original act so far as the proceeding relative to this court house is concerned, and that- the commission has, with reference to this contract, the same power that it had before that amendment was made, and in view of the conclusions reached by the Supreme Court in the 76th Ohio State, above referred to, we are of opinion that the commission had the power and authority to make this contract in the manner it did make it.

The conclusion necessarily disposes of the case, but we deem it proper to pass upon the other question here raised, namely, whether the interior decoration of this court house provided for in this contract is so essentially non-competitive in character that the commission is not required to submit the work therefor to competitive bidding, .assuming that otherwise the statute requires it to do so.

The contention of the plaintiff is that where a statute requires work to be submitted to competitive bidding and a contract to be made only with the lowest and best bidder, that then no construction is permissible which undertakes to read into the statute any exception, and that in such a ease the evident design and purpose of the law-making power is to restrict all work to that kind and character which can be in its nature the subject of competitive bidding.

Upon the other hand, the contention is that the purpose of the law is to protect the public against unwise and injudicious contracts resulting from favoritism, dishonesty, and to secure for the public the construction of any public work upon the best terms and to the best advantage and at the lowest possible cost, and that the only sure way of securing this is by open public competition; but it is further contended that while this is true, it was no part of the purpose of the law-making power thereby to prevent the public from having those things which are essentially non-competitive, where they subserve a useful if not necessary purpose which otherwise could not be obtained, and that it is not inimical at all to the purpose of these statutes to limit the public bidding required to those things about which there may be competition. Naturally the things which are noncompetitive'in their nature are few as compared with the number of things that are competitive. So here. A great public building is erected at great cost,'intended not only for the present but many future generations; imposing in appearance, beautiful in design, monumental in character, whose walls it is proposed to decorate in harmony with the style and structure of the building itself, in a manner at once to add to its dignity and its beauty, exhibiting those elements of taste, feeling and harmony corresponding to the highest aesthetic taste of present day culture. This work, we find, is of that character that requires in him who undertakes to do it the idealism and imagination of an artist, the skill of the painter, the sentiment and feeling of the poet. That it may be done to harmonize with the building itself, with the mural paintings proposed to be placed upon its walls and in the manner herein described, requires the commission should select the man fitted to do the work and not to submit the work to any man who might bid for it, whether he is fitted to do it or not. It seems to us that it is not doing violence to the intention of the law-makers nor the evils against which the statute is directed to construe it to be limited to work that is in its nature competitive and not otherwise.

This court in the ease of State, ex rel, v. Mackenzie, 9th Cir. Ct. Rep. (N.S.),105, decided in 1907 this question, arriving at the same conclusion. In an able opinion by Henry, J., concurred in by Marvin and Burrows, JJ., it is said that:

‘ ‘ When .the contemplated construction is essentially and absolutely non-competitive, because of its artistic nature; or is strictly monopolistic, because of the' function to be performed thereby is necessarily dependent upon a single means which is the subject of an exclusive patent, or franchise, or sole source of supply, then the principle of competition is, so far forth, inapplicable.”

Numerous authorities from other states support this conclusion.

While the Supreme Court of our state has nowhere expressly passed upon the question, yet in the case of Mackenzie v. State, supra, Davis, J., in the opinion, speaking with reference to whether requiring public bidding had always worked out the best results or not, says:

“Every man has realized in his own experience that the lowest price does not always secure satisfactory results and that some things which are most desired are not open to competition.”

To us it is obvious that it is most desirable that the interior decoration of this magnificent structure should be in harmony with its original design, and that the plans and specifications and ideas with reference thereto of the architect employed by the .commission, Mr. Schweinfurth, should be carried out, and if carried out, will add permanently to the dignity, beauty and character of the structure itself. This, we are convinced, can not be done by submitting the work to competitive bidding, but can only be done by the commission’s selecting an artist whose skill, taste and aesthetic sense are of that high order that will enable him to carry out upon the walls of that building the scheme of decoration proposed.

It is claimed, however, that the Supreme Court of this state has, in effect, determined this question otherwise in the case of State v. Yeatman, 22 Ohio St., 546. In that case the Supreme court held that a contract made by the county commissioners for re-copying plats of the county for use in the auditor’s office, the estimated expense of which exceeds five hundred dollars, is void as. against the county, unless it be made with the lowest responsible bidder, in accordance with the provisions qf the statute. The statute- provided that in cases where the estimated expense exceeded $500 contracts should be awarded to the lowest responsible bidder, and Day, J., in passing upon the question, said: ' .

‘ ‘ There is nothing in the character of the work to be contracted for that excludes it from the operation of this section of the statute. If the ‘lowest responsible bidder’ should not be possessed of the skill requisite to perform the work in a suitable and acceptable manner, he would be under the necessity, as in other eases, of employing those who have the capacity to do the work in a manner that will secure a faithful performance of the contract. ’ ’

We do not think this is in conflict with the view we have taken of the ease at bar. Obviously the copying of plats required merely skill in copying, and it might be added, but ordinary skill at that, and it was with reference to work of that kind that the court was speaking; but in the case at bar the work involves not only skill, but it involves taste, feeling, harmony, sentiment, ideals — indeed, the whole category involved in what is denominated aesthetics. We thus conclude that for this reason also, the contention of the plaintiff in this case is not well taken, and that the commission had power and authority to make the contract which it is sought here to enjoin.

It is therefore ordered that the plaintiff’s petition be and it is hereby dismissed at the costs of the plaintiff.


source: Caselaw Access Project

license: Public Domain

text:
    CONTRACT FOR. PUBLIC IMPROVEMENT.
    Circuit Court of Hamilton County.
    Fred Tuke, a Tax-payer, on Behalf of the City of Cincinnati, v. J. H. Sundmaker, Director of Public Service, et al.

    Decided, November 1, 1910.

      Bids and Bidding — Construction Which Will he Placed on Specifica- ■ tións Must he Known to Bidders — Injunction Against Award of Contract for Wood Bloch Paving — Where the Proposals Could Not' he Reconciled.

    The execution of a contract for a public improvement will be enjoined, where the specifications were impossible of enforcement and the bidders were not made aware of the construction which would be placed upon the specifications in determining which was the lowest and best bid.

      Maxwell & Ramsey, for the plaintiff in error.

      E. M. Ballard, City Solicitor, and F. F. Dinsmore, contra.
    Giffen, P. J.; Smith, J., and Swing, J. concur.

       Affirming 10 N.P.(N.S.), 417.

   The plaintiff seeks to enjoin the execution of a contract for paving Eastern avenue with wood-block treated with a heavy or dead oil of coal-tar.

The specifications provided that the oil shall be free from carbon, and it is admitted that a strict compliance with this provision is impossible. It is admitted also that the prior interpretation of this provision allowed two and one-half per cent, of free carbon. The construction applied in awarding this contract was not more than three-fourths of one per cent. It is plain therefore that the impossibility of complying with the specifications was evidenced by each and every sample of oil submitted with the bids, and left to speculation by the bidders the maximum amount of free carbon permitted. While the director of public service had the per cent, fixed in his own mind, it was not known to all the bidders nor to all who might desire to bid. Their information must come from the specifications, unless the construction adopted by the director of public service was known to all. The court will not do a vain thing by undertaking the enforcement of that which is'impossible or to reconcile proposals that were confessedly not in compliance with the specifications. We are of the opinion that the director of public service could not legally award a contract to any bidder, because all the proposals as evidenced by the samples of oil submitted failed to comply with the specification as to that material.

The. execution of the contract will be enjoined.


text:
    INSUFFICIENT CERTIFICATE TO PETITION FOR. ANNEXATION.
    Circuit Court of Hamilton County.
    Norwood v. Board of Elections, and St. Bernard v. Board of Elections.
    Decided, October 28, 1910.

      Annexation — Certificate of Clerk as to Signatures on Petition — Jurisdiction of Council — Sections S56S, et seq., Amended.

    The statutory requirement that the signatures to a petition praying for annexation to an adjoining municipality represent twenty-five per cent, or more of the resident electors of the territory to be annexed, based upon the number of votes cast at the last municipal election held in that territory, is not satisfied by a certificate by the clerk of the board of deputy state supervisors and inspectors of election that the signatures on the petition represents twenty-five per cent, or more of the total votes cast at the last municipal election. Quaere — Whether it is within the power of the clerk to fully carry out the requirement of the statute is a matter of doubt.

      H. E. Engelhardt and Samuel B. Hammel, for the plaintiffs.

      E. M. Ballard and Frank F. Dinsmore, contra.
    Swing, J.; Giffen, P. J., and Smith, J., concur.
   Section 3568, General Code, as amended May 10, 1910, is as follows:

“The submission shall be by ordinance adopted by council of each corporation at least thirty days prior to an annual election at which the vote shall be taken.
“If there shall be presented to the council of a municipality proposed to be annexed to an adjoining or contiguous municipality a petition asking for the submission of the question of annexation to a vote, signed by twenty-five per cent, or more of the resident voters of the territory to be annexed, and there shall accompany said petition a certificate duly verified by both * * * or- from the clerk -of the board of deputy state supervisors of elections of the county in which said municipality is located, to the effect that the petition contained twenty-five per cent, or more of the resident electors of the territory to be annexed, based upon the number of votes cast at the last municipal election in said territory, the councils of both said municipalities shall order the question of annexation to be submitted to a vote at the next general election.” * * *

Under the law before the question of annexation can be submitted to a vote of the people of the municipalities each council of the municipalities must find and determine that a petition has been presented to it signed by twenty-five per cent, of the resident electors of the territory to be annexed, and that it is accompanied by a certificate under oath, by the clerk of the board of deputy state supervisors of elections of the county in which said municipality is located to the effect that the petition contained'twenty-five per cent, or more of the resident electors based upon the number of votes cast at the last municipal election in said territory.

In these cases the clerk of the board of state supervisors of elections for Hamilton county, Mr. George A. Gohen, made a certificate under oath to the effect that the signatures on the petitions praying for annexation represents twenty-five per cent, of the total vote cast at the last municipal election.

It must be noted that this, certificate does not contain any statement to the effect that the signers of the petition were in fact resident electors of the municipality. It amounts simply to this, that the number of names on the petition is twenty-five per cent, of the total votes cast at the last municipal election. It must be evident that this does not meet the requirement of the statute. Whether it was in the power of the clerk to fully carry out the requirements of the statutes is a matter of doubt.

But aside from this we are of opinion that each council not . only-, had the right to determine, but it was its .duty to determine, whether, the petition presented to it was signed by twenty-five per cent, of the resident electors of the territory to be annexed, ; and that', its finding upon this question must stand and is final until set aside by some'competent tribunal. And we are further ¡of -the opinion, following the case of Dutten v. Village of Hanover, 42 O. S., 215, that up to the time that council took action on the petition, any signer had the right to withdraw his name from the petition, and if after such'withdrawal there was not twenty-five per cent, remaining on.the petition, it was the duty of council to reject the same and take no further action.

If we are correct in this view of the law, there was not a petition in either case signed by the necessary twenty-five per cent, of the resident electors, and no question should be submitted to the vote of the people for or against annexation.

The injunction should issue as prayed for.

       Affirming City of Norwood v. Deputy State Supervisors of Elections, 8 O. L, R., 880.


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    EXTENT OF CARRIERS’ LIABILITY FOR GOODS LOST IN TRANSIT.
    Circuit Court of Cuyahoga County.
    The Cohn-Goodman Company v. Wells Fargo Express Company.
    Decided, November 28, 1910.

      Carriers — Freight Charges May Properly be Regulated by Value Placed on the Property Shipped — Limitation on Carriers’ Liability Where no Value is Given.

    The liability of an initial carrier for goods lost in transit is limited to the value of the goods as fixed by the contract of shipment, and where the valúe of the goods was asked at the time of shipment and was not given, and the contract provides that in such cases the company shall not be held for more than fifty dollars, no greater sum than that can be recovered in the event the goods are lost.

      Fred Desberg, for plaintiff in error.

      R. G. Curren and Howard A. Cause, contra.
    Marvin, J.; Henry, J., and Winch, J., concur.
    Error to the Court of Common Pleas.
   Each party is a corporation, the defendant being a common carrier and the plaintiff a manufacturer of cloaks. The parties here are as they were id the court below,

On the 21st day of August, 1907, the plaintiff delivered to the defendant, at Cleveland, four packages of goods (to be shipped from Cleveland) consigned to M. J. Baum & Co., Oklahoma City, Indiana Territory. These goods were of the value of several hundred dollars. Somewhere between Cleveland and Oklahoma City the goods were lost, and the plaintiff sues to recover the value of the goods. The goods were delivered by the plaintiff to the defendant’s wagon driver in Cleveland at the manufactory of the plaintiff. The custom of the defendant in its dealings with the plaintiff was, that the defendant left with the plaintiff a form of receipt which had printed thereon at the top the following words:

“Not Negotiable (Form 418). Read the Conditions
of This Receipt.
“Wells Fargo & Co., Express.
“Received from........ the following articles, which Wells Fargo & Company, a corporation, hereby undertakes to forward to its agency nearest destination, but only upon the following conditions: The liability of Well's Fargo. & Co. shall be at all times only that of a forwarder, and in no event shall it be liable for loss of or damage to said property caused by or resulting from the same being improperly packed, secured or addressed, nor by or from any act of the law, or of a person acting as an officer of the law, whether acting with or without lawful process, warrant or authority; nor for loss of or damage to fragile articles, unless plainly'marked as such, nor for loss of or damage to articles consisting of or contained in glass; nor shall said company be liable for any loss of or damage to said property in any event or for any cause whatever unless said loss or damage shall be proved to have been caused by or to have resulted from the fraud or gross negligence of said company or its servants; nor in any event shall said company be held liable beyond the sum of Fifty Dollars, at not exceeding which sum the said property is hereby valued, unless a different value is hereinabove stated;, nor in any. event shall said company be held liable for any loss of or damage to said property; unless written claim be made therefor to said company within ninety days from this date. In respect to C. O. D. goods, if fhe "amount to-be collected' from the consignee on delivery is not paid within thirty days from this,date,-Wells Fargo & Go. may at its option return the same to the consignor, who shall pay the charges for transportation both ways-. Wells Fargo & Co. is not required to make free delivery of said property beyond its office at any station where no free delivery service is maintained by said company, nor at any station where such free delivery service is maintained beyond and delivery limits established by said company at the date hereof, unless otherwise herein agreed and an .additional compensation paid therefor. All of the stipulations and conditions in this receipt shall extend to, and inure to the benefit of each and every person or company to whom this company may entrust or deliver the above described property for transportation, storage or delivery.
“The Party Accepting This Receipt Thereby Agrees to its Conditions. ’ ’

Under these words were columns; at the top of the left hand of which columns was the word “Date”; in the next column the letters “No.,” and in the next column the word “Articles”; in the next column the word “Value”; in the next the letters “C. O. D.”; in the next the word “Consignee”; in the next the word “Destination”; and in the last of these columns the words “Receipted by.” This form of receipt was kept in the office of the plaintiff, being left there by the defendant. The plaintiff was in the habit of shipping goods very frequently through and with the defendant, and when shipments were so made, would write in, under the column marked date, the date on "which shipment was made; then under the column next following, and under the letters “No.” the number of articles shipped, and under the word “Articles,” the kind of article to be shipped; and in the column, under the word “Value,” whenever a value was given, this value given by the shipper would be placed; 'and then under the headings of the several columns, as above indicated, would be written the information required by such headings in said columns.

In the- month of August, 1907, a large number of shipments were made by the plaintiff over the line of the defendant, the plaintiff taking a receipt in the form above indicated in each instance. In the column under the words “Receipted by” would be the name written by the particular agent of the express company who took the goods from the shipper; usually this would be'the driver of the express wagon. The receipt book which was on the desk of the plaintiff, as already indicated, shows that fourteen shipments had been made by the plaintiff at the hands of the defendant during the month of August, prior to the one in' question; the receipts in each case being entered on the form of receipt which, as already said, was in the keeping of the plaintiff. The shipment for loss of which this suit was brought, was receipted for in this wise: In the column marked “Date” the figures “8-21” appear; under the letters “No.” the figure “4”; under the column “Articles” “Pkge”; under.the column “Value” and running over into the column “C. O. D.” are the words “Value asked and not given”; under the column indicating the name of the consignee and the destination appears “M. J. Baum” and the words “Oklahoma City O. T.” and under the column “Receipted by” what seems to be the word “Post.”

The words “value asked and not given” hereinbefore quoted were plainly stamped upon this form of receipt with a rubber stamp. The signature in the column “Receipted by” was written by a driver of one of the express wagons, whose name is Postbinder, and was written by him as his signature on behalf of the express company. The packages were lost without the fault of the express company, and the sole question for consideration here is whether the express company is liable for the value of the goods lost, or only for the sum of $50, which, by the terms of the receipt hereinbefore quoted, is the maximum amount for which the express company agrees to become liable, in case of the value of the articles shipped is not given.

It is clear that the plaintiff had full knowledge of all that was contained in this receipt, which is accepted, because, as already said, the blank receipt was on its desk and it was in a book of receipts which was left by the defendant in the custody of the plaintiff that it might be ready to be signed by such driver or other agent of the defendant company as should come to the plaintiff from time to time as it should be called to taire goods for shipment. The defendant company charged and received for freight on goods shipped over its lines different prices for different values; that is to say, where the goods were of greater value, the freight express charges were more than when they were of less value. This difference in the rate of prices to be charged was well known to the plaintiff, and was- advertised by the defendant by notices posted in two public and conspicuous places near its offices and depots in the city of Cleveland, Ohio, and defendant filed with the Interstate Commerce Commission schedules showing all its rates, fares and charges for' the transportation of freight between different points on its route. The defendant had no knowledge of the value of the goods contained in this shipment of four packages. The charge actually made.by the defendant for this shipment was the lawful, and proper charge for a shipment from Cleveland to Oklahoma City, of a package worth not more than $50. Therefore, as before stated, the sole question in the case here is, whether this contract, as expressed in the form of receipt already quoted, lawfully limits the amount for which the defendant is liable, where the goods are lost without its fault.

The question is raised in this way: At the close of all the evidence, which consisted chiefly and largely of an agreed statement of facts, each party made a motion to the court to direct a verdict. The motion of the plaintiff was that a verdict be directed for $801, which was the value of the goods lost, with interest; whereas, the motion of the defendant was that the court direct a verdict for the plaintiff in the sum of $50, with interest. Both parties have thus submitted to the court the question of law raised, for there was no question as to the facts. The court granted the motion of the defendant and directed a -verdict for $50 with interest.

It is provided by the act of Congress known as the Interstate-Commerce Act:

“That any common carrier, railroad or transportation company receiving property for transportation from a point in one state to a point in another state shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage or injury to such property caused by it or by any common carrier, railroad or transportation company to which such property may be delivered or over whose line or lines such property may pass, and no contract, receipt, rule or regulation shall exempt such common carrier, railroad, Or transportation company from the liability hereby imposed.”

Under this statute, it is insisted, that the defendant could not be relieved from payment .of the full value of the goods. This question was before the Appellate Term of the Supreme Court of New York in the case of Richard Schulte et al v. Levi C. Weir, as president of the Adams Express Company, in June, 1908, and it was there held that the contract, as to the limitation of liability to $50 was invalid, as being in violation of the statute, and therefore a recovery could not be limited by reason of the contract.

However, in the case of Greenwald v. Barrett, 92 Northeastern, 218, the Court of Appeals of New York held that the statute under consideration does not abrogate the right of the carriers to regulate their charges for carriage by the value of the goods, or to agree with the shipper on the valuation of the property, and a contract limiting the carrier’s liability to a specific sum, in consideration of the rate charged, regulated by the value of the goods, is not invalid.

In this latter case the court, in its opinion, uses this language:.

“The language of the enactment does not disclose any intent to abrogate the right of common carriers to regulate their charges for carriage by the value of the goods, or to agree with the shipper upon a valuation of the property carried. ’ ’

And, in support of the position taken, the court called attention to the case of Travis v. Wells Fargo & Co., 74 Atl., 444, where this language was used, in reference to this same statute:

“The statute means that instead of a common carrier being liable as at common law for any loss caused by itself, it shall not only be liable for such loss, but for any loss caused by a connecting carrier to which it has delivered its goods. There was no intention to impose upon the receiving carrier any additional liability for goods lost by it, and that the loss under the statute, as before, is the loss of goods of such value as the carrier has bargained to carry, and is, under his contract, to be paid for carrying. It was intended to abrogate the right to limit liabilities for loss in accordance with the amount paid for carriage. ’ ’

In the case of Bernard v. Adams Express Co., 91 Northeastern, 325, it is said by the Supreme Judicial Court of Massachusetts, the Chief Justice speaking of the $50 valuation clause in the express company’s receipt, says:

“It is a contract as to what the property is in reference to its value. The purpose of it is not to change the nature of the undertaking of the common carrier or limite his obligation in the care and management of that which is intrusted to him. It is to describe and define the subject-matter of the contract so far as the parties care to define it for the purpose of showing of what value that is which comes into the carrier’s possession and for which he must .account in the performance of his duty as a carrier. ’ ’

The theory of these cases is that the statute was designed to prevent the carrier from being relieved from responsibility after the goods had passed into the hands of a connecting carrier, but that it was- not intended to impose upon the initial carrier a liability greater than the value of the goods as fixed in the contract of shipment, where the charge for carrying was rated according to the value of the goods.

Entertaining these views, we reach the conclusion that the court was right in directing a verdict for $50 with interest, and no more, and the judgment is affirmed.


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    COMPETENCY OF TESTIMONY OF A FORMER ATTORNEY.
    Circuit Court of Hamilton County.
    Bernard Feltrup, Executor, v. Helene Schloemer.
    Decided, December 3, 1910.

      Witnesses — Attorney Who Drew Will of Decedent May Testify as to Other Matters — Past Services Sufficient Consideration for a Promise.

    1. An attorney who drew the will of a decedent, but who performed no other services for her, is not debarred from testifying as to conversations occurring between them other than in connection with the drawing of the will.
    2. A contract is not rendered unenforcible by reason of the fact that the consideration for the promise upon which it was based was service rendered in the past.

      H. C. Busch and Powell & Smiley, for the plaintiff in error.

      Thorne Baker, contra.
    Smith, J.; Giffen, P. J., and Swing, J., concur.
   Section 5241, Revised Statutes, provides:

“The following persons shall not testify in certain respects: First, an attorney concerning a communciation made to him by his client in that relation, or his advice to his client. ’ ’

This is applicable only where the communication is of such a character that it would not have been made except for that relation. Smart v. Nova Caesarea Lodge No. 2, 6 C.C. (N.S.), page 15.

The witness, Frank J. Dorger, whose testimony was objected to at the trial of the case, was not therefore an incompetent witness. ITe distinctly states he was only the attorney of Mrs. Niehoff in the drawing of her will; this, therefore, would not foreclose him from being called to testify upon any other subject of conversation between them, but only as to those things and conversations which came to him as attorney by reason of and in connection with the matter for which he was acting as her attorney.

We think the evidence sustains the claim of the defendant in error, and the court sitting as a jury having so found and instructed a verdict in favor of defendant in error, the same should not be set aside. First National Bank v. Hayes, 64 O. S., 100.

Upon the question argued by counsel that the contract could not be enforced for the reason that the services rendered were past and therefore there was no good consideration for the promise, the court is of the opinion that under the rule set forth in the case of Erwin, Admr., v. Lombard University, 56 O. S., page 20, this contention can not be maintained.

We find no errors in the record and the judgment will be affirmed.


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    SEWER. DISTRICT TAXES UNLAWFUL.
    Circuit Court of Cuyahoga County.
    J. C. Alexander et al v. Albert K. Spencer, Treasurer; and The Avery Stamping Company v. Albert K. Spencer, Treasurer; and Theodore M. Bates et al v. John I. Nunn, Treasurer.

    Decided, May 31, 1910.

      Taxation — Levying of Taxes Not & Part of Any Other “Proceeding” — Redemption of Sewer District Bonds — Repealed Section 27IS, Revised Statutes.

    The repeal of former Section 2713, Revised Statutes, by the municipal code which went into effect May 4, 1903, took away the power of municipal councils to levy taxes upon sewer districts for the redemption of sewer district bonds, including bonds issued to pay for sewers, the construction of which had been begun before said repeal took effect. The levying of taxes, unlike the levying of special assessments, is no part of any other “proceeding.”

      Ford, Synder & Tilden and T. M. Bales, for plaintiff.

      Newlon D. Baker, City Solicitor, and Wilbur D. Wilkin, Assistant City Solicitor, contra.
    Winch, J.; Henry, J., and Marvin, J., concur.
    Heard on appeal.

       Affirmed by the Supreme Court without opinion, January 17, 1911 (83 Ohio State, p. —).

   These three cases were all tried together on an agreed statement of facts.

The question involved is whether the city can now levy taxes by sewer districts to provide a sinking fund for sewer district bonds issued since the new municipal code went into effect, May 4, 1903, for the purpose of paying that portion of the cost of sewers constructed in certain districts not assessed upon the property specially benefitted, the councilmanie proceedings for the improvements paid for by the bonds having been begun before said date.

The whole matter grows out of the repeal of Section 2713, Revised Statutes, by the new municipal code. That section read as follows:

“The levy to provide a sinking fund for the redemption of bonds issued for sewerage purposes shall, where the corporation is divided into sewer districts, be upon the property of the district for which the bonds were issued.”

The levy here mentioned is strictly a tax, as distinguished from a special assessment. It is a tax to pay a debt of the city. That debt, it is true, was contracted for the benefit of a certain district of the city. Who shall now pay it, the sewer district or the city at large ?

The city urges that the levying of a tax to pay these bonds is part of the original “proceeding” under which the improvements were begun to pay for which the bonds were issued, and claims that rights under repealed Section 2713 are saved -to the city, by virtue not only of Section 26, General Code, but also of Section 211 of the municipal code (Section 1536-910, Revised statutes; not found in the General Code), which reads in part as follows: ■

“No rights or liabilities, either in favor of or against such corporation, existing at the time of the taking effect of this act, and no suit, prosecution, or proceeding shall be in any manner affected by such change, but the same shall stand or proceed as if no such change had been made.”

The rule contended for has been held to apply to the case of special assessments (Raymond v. Cleveland, 42 O. S., 523, and other cases cited by counsel), but we have been unable to find a case where the same rule was applied to the levying of taxes. There is a decided distinction between the two kinds of impositions. The levying of an assessment to pay for a street improvement is clearly a part of the proceedings, and is so treated in the municipal code. Notice is given to the owners of benefitted property, and they, in a manner, take part in the proceedings. The whole assessment at once becomes a continuing lien, though it may be collected through a series of years. Not so-with regard to the levying of taxes. That power is in the state to be exercised as the Legislature directs within the rules laid down in the Constitution. So long as the constitutional limits are observed the tax-payer must submit and has no part in the matter, and one Legislature can not bind another or make a bargain about the right to levy taxes, with a municipal corporation or any other agency.

Each.year’s tax levy is a new and distinct matter having no reference to any previous levy. We fail to see that a tax levy -is a part of any other proceeding; taxes are levied to pay old debts, as bonds,' notes, judgments, etc., and to furnish funds for current expenses, but in no sense does the tax levy become a part of the proceeding whereby the old debt was created or the current expense is incurred.

Distinguishing these cases from assessment cases on the point that the levying of taxes is no part of the original street improvement ‘ ‘ proceeding, ’ ’ we hold that the plaintiffs are entitled to the injunctions prayed for.

Judgments for plaintiffs.


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    PERSONAL JUDGMENT IN FORECLOSURE TO A CROSS-PETITIONER.
    Circuit Court of Cuyahoga County.
    Yetta Krause v. The Guarantee Title & Trust Company et al.
    Decided, May 13, 1910.

      Pleading — Joinder of Clauses of Action — Qounter-claim—Foreclosure— Personal Judgment — Sections 11306 and 11317.
    Personal judgment can not be recovered by a cross-petitioner in a foreclosure suit, notwithstanding the cross-petitioner holds an express lien on'the same land upon, .which the .plaintiff is Seeking to foreclose.

      Toland & Pearson, F. Higley send V. C. Leslie, for plaintiff in error.

      Thompson & Hine, Ulmer & Bernstein, Fred Desberg, Vernon H. Burke and Griswold & White, contra.

      Henry, J.; Marvin and Winch, JJ., concur.
    Error to the Court of Common Pleas.
   The judgment and decree of the court below in this mortgage foreclosure case must be so modified as to eliminate the personal judgments for money that were rendered upon cross-petitions filed therein.

Revised Statutes; Section 5080 (General Code, Section 11306) provides that: •

The plaintiff may unite several causes of action in the same petition, whether they are such as have heretofore been denominated legal or equitable or both, when they are included in either of the following classes:

“1. The same transaction.
“2. Contracts connected with the same subject of action. * * *'
“8. Claims to foreclose a mortgage given to secure the payment of money, or to enforce a specific lien for money and to recover a personal judgment for the debt secured, by such mortgage or lien.”

It is to be presumed that paragraph 8, above quoted, is not a mere needless repetition of what is already included under paragraphs 1 and 2.

When therefore in Revised Statutes, Section 5069 (General Code, Section 11317), the Legislature in defining a counterclaim uses substantially the same language as that contained in said paragraphs 1 and 2, and omits such language as is con-in paragraph 8, the conclusion would seem to follow that it designedly excluded the joinder in a cross-petition of a counterclaim for foreclosure with one for a money judgment, unless there is some other reason for such joinder. But be that as it may, it .can not ordinarily be said that merely because a defendant’s claim for money is secured by an express lien on the same land as that to which the -plaintiff’s lien, attaches, a cross-petition praying for a money judgment on such claim asserts a cause of .action in favor of such defendant “arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff’s claim, or connected with the subject of the action” so brought by the plaintiff. The.defendant’s lien on the same land undoubtedly may give rise to a cause of action so connected; but a cause of action arising on tbe claim for money secured by such lien is wholly unconnected with any cause of action asserted by the plaintiff in foreclosure.-

The judgment below will therefore be modified as stated, and as so modified, affirmed.


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    CARELESSNESS IN DRIVING UPON A STREET RAILWAY TRACK.
    Circuit Court of Hamilton County.
    The Cincinnati Traction Company v. John L. Renner.
    Decided, November 19, 1910.

      Negligence — Weight of Evidence as to, Where.® Team Was Driven Upon a Street Railway Track in Front of an Approaching Oar — Charge of Court.

    The evidence in this caes indicates that the plaintiff below either saw before driving upon the track the car by which he was struck approaching and very near, or he heedlessly drove upon the track without looking, and support is not found for a verdict in his favor in either aspect of the case.

      Paxton, Warrington & Seasongood, for the plaintiff in error.

      A. C. Fricke and Thos. L. Michie, contra.
    The plaintiff, Renner, recovered a verdict of $2,250 in the court belowc
    Giéeen, P. J.; Smith, J., and Swing, J.', concur.
   The plaintiff, John L. Renner, was driving a team of mules hitched to' a platform wagon out of Jane street into Sixth street, in the city of Cincinnati', and while attemping to cross over to 'the south-side of Sixth street his wagon-was struck near the front' wheel by a west bound- ear of the defendant company, whereby he was injured.

He himself'testifies that when the mules were within two feet of the west bound track-he'looked in the direction whence the car came, and, although he had a clear view of two or three hundred • feet,-he saw no'cat; that he attempted to -cross and-when his mules reached .the east bound track he heárd the ear, which was then about five feet from him.

If he looked for the first time when he says he did he must have have seen the car, for it is incredible that the car traveled two hundred feet while his team was walking twelve or fifteen feet, unless the ear was running at the rate of fifty or sixty miles an hour, which is not shown by any evidence. His inattention, recklessness, or incredibility appears from his statement that he did not discover the ear until within five feet .of him. If he looked to the front all the time, as one of his own witnesses testified, he could, without turning his head, have seen the approaching car, not only five feet away, but twenty-five feet and possibly fifty feet. While there is no absolute rule of law which required him to look in both directions for an approaching car, yet he could not close his eyes to his surroundings and be held blameless for an accident resulting therefrom. He either saw the car approaching before entering upon the track and assumed a risk that an ordinarily prudent person would not assume, or heedlessly attempted to cross without any effort to ascertain whether a oar was coming. The other testimony fixes the distance between the car and the wagon when plaintiff attempted to cross at twenty-five to one hundred feet. The jury must have adopted the testimony of the plaintiff that there was no car in sight when he started over the track; but this statement is not supported by any other evidence, and is wholly incredible.

The special charge requested by the defendant, and refused by the court, assumes that the failure to look when about to cross a street railway is negligence per se; but the rule of law applicable to steam railroad crossings does not govern at street railroad crossings. Cin. St. Ry. Co. v. Snell, 54 O. S., 197.

There was no error in refusing such instruction. That part of the definition of preponderance of evidence quoted in the brief of counsel for the plaintiff in error, is faulty, but cured by. the next paragraph.

The other alleged errors are not likely to occur in a subsequent trial, and it is unnecessary to here consider them further than, to shy- that we deem them harmless. . . .

;,..._-.The. judgment .will, be .reversed, because not sustained by, sufficient evidence, and the cause remanded for a new trial.


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    PURCHASE BY A CORPORATION OF ITS OWN STOCK.
    Circuit Court of Montgomery County.
    J. B. Siders v. The Gem City Concrete Company et al.
    Decided, December 23, 1910.

      Corporations — Purchase by, of Their Own Stock, Not Illegal, When— Nature of the Transaction — Action on Note Given by Corporation in Payment for Its Own Stock — Defenses—Estoppel—Contracts— Ultra Vires Acts.

    1. A corporation where not prohibited by its charter, or a statute or constitutional prohibition, may purchase its own stock, and there is no statute or constitutional provision in Ohio preventing such purchase.
    2. Before such a purchase will be held for naught it must be shown that it was not made in good faith and will result to the injury of creditors.

      3. Such a transaction is not malum in se, and a note given by the corporation, the consideration of which is the purchase price of such stock, is not per se void.
    4. If such note includes other considerations than the purchase price of the stock and these can be separated, the note would at most only be void to the extent of the consideration which w,as included therein for the purchase of the stock.
    5. Where a corporation purchases its own stock and gives a note therefor, such transaction so far. as the sale and purchase of the stock is concerned becomes an executed contract, and the mere want of power to purchase such stock will not be a good defense in an action against the corporation to collect such note.
    6. A corporation, which has purchased its own stock and given a note in payment, and thereafter sells the stock, is estopped from setting up the defense of want of power to make such purchase.

      Hunger & Kennedy, for plaintiff.

      Thompson & Thompson, contra.
    Rockel, J.; Dustin, J., and Allread, J., concur.
   Tbis cause comes into this court on error from the common pleas. In the court below, plaintiff in error brought suit on an ordinary promissory note, against the defendants the Gem City Concrete Co., W. L. Blocher, A. F. Meeker and Philip J. Rotterman and C. E. Clark, endorsers on said note. The petition did not so state, but it afterwards appeared that said endorsers were at the time endorsement was made, directors of the said Gem City Concrete Co., and that they occupied the relation of accomodiation endorsers.

To this petition an answer was filed, admitting the execution of the note, but alleging that the consideration therefore was a transfer and delivery back to the company of nineteen shares of stock, and further alleging that the company had no power to purchase said stock and that there was no consideration for said note.

To this answer a general demurrer was filed and overruled. Afterwards, however, the Gem City Concrete Co., by leave of court filed an amended answer alleging substantially the same matter and setting up the fact that the. plaintiff was the owner of twenty shares of stock in said company and that there was an accounting held between the Gem City Concrete Co. and the plaintiff for money advanced by the plaintiff for various purposes and that the plaintiff had paid for said stock the sum of $950 and that the board of directors of the said company had purchased said stock, and had issued its note to that amount, and that there was no other consideration of said note and that the same was void.

It also filed a claim in the nature of a cross-petition, in which it averred that said plaintiff had subscribed for twenty shares of stock, but had only paid for nineteen, and that there was still due said company the sum of $50, for one share of stock. To this amended answer and cross-petition, demurrers were filed, which were overruled and exception taken thereto.

Then the plaintiff filed a reply, to which .a motion was filed on a number of grounds, which motion was sustained. Thereupon an amended reply was filed which contained a general denial, and by way of a first defense admitted the incorporation and capital stock, etc., and averred that the consideration of said note set up in the petition was for money advanced to defendant and services rendered, and for the second defense, among other things, denied that the plaintiff ever subscribed for' the one share of stock for which judgment was sought and averred that all of his stock was transferred back to the company, and by the said company re-spld to other persons to this defendant unknown; and that they were estopped, etc. To this a motion was filed, which was sustained, that practically struck the same from the files to which the plaintiff excepted.

The plaintiff then filed a second amended reply, the first defense of which admitted the execution of the note, and denied each and every other allegation of said emended answer. The second defense admitted that the plaintiff was the owner of eighteen shares of the capital stock, and that at a meeting of directors, July 27th, 1906, said directors being the endorsers on .the note sued on, that it was agreed with the plaintiff to purchase said stock so held by him, and that in pursuance thereof plaintiff has signed, transferred and surrendered said stock and delivered same to said company, and fully carying out the contract on his part to be performed; said company executed and delivered to this plaintiff said note, endorsed by said directors, as set forth in said petition and canceled said stock; that said company thereafter (December 28th, 1906) bargained and sold all of its authorized capital stock to other parties, including said stock formerly held by this plaintiff, and that the company increased its capital stock without notice to the plaintiff, who was no longer a stock holder:

That said company further did not offer to return said stock to plaintiff, and that it is now not in the possession or control of said company and can not be returned, and that said company is now insolvent.

This second defense on motion of the plaintiff was stricken out, to which, exception were taken by the defendant. There was also a general denial in this second amended reply to the matters set up in the cross-petition of defendant’s amended' answer.

The case was then ordered for trial upon the pleadings as they then stood, the reply of the plaintiff being considered only a general denial to the answer and cross-petition, the court, not permitting the plaintiff to file a defense other than a general denial to the new matter set up in the defendant’s amended answer and cross-petition. The ease was submitted to the court without the intervention of a jury, and the court made a finding of facts as follows:

First. That the note set forth in plaintiff’s petition is found to have been executed as claimed.

Second. That the allegations of the amended answer of the Gem City Concrete Co., and the facts therein set forth are true as claimed, and that the sole consideration of said note set forth in the petition herein was the pretended sale of stock to the' issuing company.

Third. That the endorsers were accomodation endorsers and no consideration of whatever kind or character inured to them.

Fourth. That the said note set forth in the petition should be declared void and of no legal force and effect, and further found that there was due to the Gem City Concrete Co., the sum of $50 for .unpaid subscription on one share of stock.

The plaintiff filed a motion for a new trial, which was overruled. In the trial of the case the plaintiff attempted to introduce testimony which would have substantiated the defenses set up in his amended reply, which was refused by the court and exception taken, particularly, testimony showing that -the company had increased its capital stock and that all of this stock including that which it received from the plaintiff had been sold.

The plaintiff also desired to offer testimony showing that the company employed one L. E. Spear as its agent to sell the stock of the company, and that the said Spear did sell the stock, which was not permitted and exceptions taken by the plaintiff. From the finding of the court and the alleged errors oecuring in the trial of said ease, error is prosecuted to this court.

The principal questions involved are:

First. Is a note given by a corporation for the purchase of its own stock, absolutely void and without consideration?

Second. Is the transaction of the corporation in purchasing its own stock of such a character that if a note be given for the same, and said note includes as a consideration therefore other considerations for the purchase of the stock, is such note void?

Third. Can the corporation after it has given the note and received the stock, plead its want of power and successfully defend against the same without returning the stock, or placing the seller of the same in statu quo..

These questions involve the doctrine of ultra vires and estoppel as applied to the corporation.

The court below seems to have taken the view that the corporation had absolutely no power to purchase its own stock and that the note was therefore without consideration and void; that the transaction was malum in se and that the note was void, although considerations went into the consideration for the note other than the purchase of the stock.

There is some authority in Ohio in support of the view that a corporation can not buy its own stock, but our Supreme Court has held that if this be a general rule, that it is not without exceptions, and in Morgan v. Lewis, 46 O. S., page 8, we find this language:

“It at least helps us to distinguish it from the ease of Coppin v. Greenlees, 38 O. S., 275, relied upon by defendants in error. In that case it was held that, ‘an executory agreement between a manufacturing corporation of this state, and one of the stockholders, for the purchase of the stock of such corporation, by the former from the letter, can not be enforced, either by action for specific performance or for damages.’ ”

That this presents a very different case from one of an executed contract is emphasized by the following language of McIlvaine, J., by whom the opinion was prepared.

“If it were averred that the plaintiff had purchased the stock from the defendant, or from others, under an agreement with the company that it buy the same from him when he quit its employment, or if the contract of purchase by the defendant had been executed, very different questions would arise.”

In State v. Building Association, 35 O. S., 263, the general principle that a corporation may not traffic in its own stock is recognized. Yet in the same connection it is said:

“We do not deny that a corporation has power to receive shares of its stock as security for a debt or other similar purpose. 26 Ga., 28; 84 Ill., 145; 17 N. Y., 507; 114 Mass., 37; 18 Vt., 131.
“It is apparent from the foregoing that no inflexible rule has been recognized by this court, that a .corporation may not in any case, nor for any purpose, receive its own stock. On the contrary, the way is left open for the application of exceptions to the general rule in proper cases.”

In the case of Coppin v. Greenlees, etc., 38 O. S., 275, Judge McIlvaine admits that there are a line of authorities which support the doctrine that corporations may, when not prohibited by their charters, buy and sell their own stock, but that “they think the decided weight of authority both in England and United States, is against the existence of the power, unless conferred by express grant, or clear implication.” However, he recognizes that there may be exceptions and therefore it is logically not true that a corporation can not buy its own stock for want of power; for if there was no power, then the transaction would be absolutely void, and the courts would have no right to inject life into something that was absolutely dead. But this last case was decided principally upon the ground that a corporation could not buy its own stock by reason of the constitutional double liability of a stockholder, which is well known existed at that time, and that the withholding of such stock would be taking from the corporation a valuable -asset. This constitutional liability of the stockholder, double the amount of his subscription, does not now exist, and therefore the decision of that case is not of much force at the present time. This constitutional liability of the stockholder is now only whatever may remain due and unpaid on his subscription; and if the decision of Judge Sater of the United States Federal Court, of Columbus, Ohio, in Mannington v. The Hocking Valley R. R. Co. (vol. 8 Ohio Law Rep., 451) be correct, it being recent and under the present condition of our statutory and constitutional law, it is certainly entitled to considerable weight; there is no constitutional provision now, as to the stockholder’s liability on his stock, that will prevent a corporation from buying its own stock.

In this last case Judge Sater says: “I have been cited to no Ohio case, and I have found none, which announces, as an inflexible rule,' that a corporation may not purchase its own stock. ’ ’ The case of Bank v. Carriage, 17 C. C., 255, was also decided while the stockholder’s constitutional double liability existed.

In the case of the 38th O. S. before referred to, it is said, “that the great weight of authority in England and United States is against the right of the corporation to purchase its own stock.” This might have been true at the time it was uttered, but can hardly be said to be true now, at least so far as the United States is concerned. Cook on Corporations, 4th Ed., Section 311, takes the contrary view and gives a number of eases in support of the doctrine, that “when not prohibited by statute or Constitution a corporation may in good faith purchase its own stock. ’ ’

Thus in Burns v. Burns, 137 Fed. Report, 781, it is stated, ‘‘ that in the absence of a constitutional or statutory prohibition, corporations have the inherent right to buy, retire and sell their own stock. ” In Re Castle, 145 Fed. Rep., 224, it is said, ‘ ‘ when all the stockholders consent, a purchase will be sustained where there is no proof that the corporation was insolvent, even though it should afterwards go into bankruptcy. ’ ’

In Re Copper v. Costello, 95 Pac. Rep., 94 (1908, Aiz.), it was held “that a mining company might purchase its own stock from a person who is superintendent, for the purposes of getting rid of him on account of his bad management, even though the officers believe that the company was insolvent.”

In Re Republic v. Swigert, 135 Ill., 150, it was held “that a corporation may, if it act in good faith, buy and sell its own stock. ’ ’

In another case, Chicago v. Marseilles, 84 Ill., 643, the court said that “if the power of the directors of a company are not prohibited by their charter, their right to purchase shares of their own stock is well recognized.” (Cornis v. Thayer, 94 U. S., 631.)

In the recent case of the Smith Lumber Co., reported in 132 Fed. Rep., 618, the court uses this, language:

“In the United States, I take it, the weight of authority upholds the right of the corporation in absence of a statutory prohibition to become the purchaser of shares of its own capital stock. * * * But the courts which have held this doctrine have most definitely held to and rigidly enforced the collateral principle, that a corporation can not become such purchaser where it results in a fraud upon the rights of, or injury or loss to the creditors of the corporation. * * * The danger of fraud being perpetrated upon or of injury and loss resulting to creditors, was one of potent reasons moving the courts of England to establish and adhere to the rule that a corporation can not become the purchaser of its own shares of stock.” (Upon the last proposition citing Trevor v. Whitworth, L. R., 12 App. Cas., 409; Cook on Corporations, 4 Ed., Section 309.)

From this decision, we would be led to believe that the reason for the holding even in England, that a corporation could not purchase its own stock, was not founded upon a want of power, but upon the fact that the exercise of such a power might result in fraud.

In 10th Cyc., 1109, it is stated as a general proposition “-that in the absence of a statute denying the right, a corporation may purchase and dispose of its own stock, provided the transaction is made in good faith and without causing injury to its creditors. ’ ’ In support of this doctrine, the ease of- Shoemaker v. Washburn Lumber Co., 97 Wis.,. 505, is cited. In 7 Am. & Eng. Enc. of Law, 2d Ed., 818, this is said to be the prevailing doctrine.

We therefore come to the conclusion that the consideration of the purchase of a corporation of its own stock, is not of such an illegal character, that if joined with other considerations in a promissory note, that it would affect the entire consideration of the note and 'make the same void; but that in case the note could be apportioned, and the holder could recover to the extent of the valid consideration, and no further; and where the parts of the note are not respectively liquidated and definite, the question what amount was founded on one consideration, and what on the other, is to be settled by the jury upon the evidence. Doty v. Knox, 16 O. S., 134.

It might be well here to add, that it is not claimed so far as we know that there is any statutory provision in Ohio denying the right of a corporation to purchase its stock; neither in the case at bar, is it claimed in the pleadings of the defendants, that the purchase of such stock would injure creditors; nor is there anything in the testimony to show that the corporation was absolutely insolvent at the time it made its purchase. True one witness says that it was probably insolvent, but the directors, those who endorsed the note, all say that they did not expect to pay the note, as they believed that the corporation would pay it. ' The conclusion therefore is that, in the opinion of those who ought to have known, the corporation was solvent; and if that be true, creditors could not have been injured.

The further fact exists that the’ corporation, if it was insolvent at that time, continued in business for a year or two thereafter. It seems to us further that the testimony conclusively shows that the sole consideration of said note was not alone the purchase price of the stock.

In the minutes of the corporation, which ought to be conclusive upon the defendants in this ease, we find the statement that Mr. Siders, the plaintiff, who was secretary of the company, offered to resign his position, if the company would pay him what they owed him and take back his stock; and thereupon he presented a bill of what he claimed that the company owed him, and finally he agreed that, “for his stock, salary and money advanced to pay small bills, he would take $950.” The bill that he rendered to the corporation, showed claims aggregating $1,249, and the most that he could have owed the company for the twenty shares of stock which they claimed he had subscribed for would be $1,000.

Therefore, in addition to his stock at its full subscription price, he was surrendering his position of secretary and $249, which he claimed.

We have been somewhat at a loss to understand how the defendants, or the court below, came to the conclusion that he had only paid his subscription for nineteen shares of his stock and still owed for one share. There is no evidence anywhere showing that he specifically paid for nineteen shares. The most that could be claimed was that from a statement furnished by him he charged himself with $900 paid on stock. In the agreement for which he was to accept $950, it was specifically stated that it was to be for all of his stock, and there was no claim made at that time that there were any unpaid subscriptions: and the conclusion would irresistibly follow that whether his stock was paid or unpaid, that it all should go back to the corporation, and ¿ór such stock, paid or unpaid, and the other considerations, he was to receive the sum of $950; certainly' the corporation would not give its note for $50 more than it owed. And that further he did resign his secretaryship, and turned over to the corporation all of his said stock. The mere fact that nineteen shares of stock at the subscription price of $50 per share, equals the face value of the note, does not show that the consideration of the note was intended as a payment of that much stock.

But if it be admitted that as a general rule a corporation can not purchase its own stock, the case at bar comes within an exception recognized by our Supreme Court, and that is that when the contract has been executed, then the corporation can not plead its inability to purchase.

In the case at bar the transaction so far as the purchase of the stock was concerned became a completed one when the note was signed and delivered, and the plaintiff released all his claims against the corporation, resigned his secretaryship, and turned over to the corporation all of his stock.

The fact that the note remained unpaid did not affect the execution of the contract (Wright v. Pipeline Co., 101 Pa. St., 204); and under these circumstances the defense that the giving of the note, for the amount of the stock, was ultra vires will not be permitted. Dewey v. Toledo R. R. Co., 91 Mich., 351.

In addition, however, to it having been executed, we have in this ease the further fact that the corporation has received all it contracted for, and it has made no offer or proposition to turn back to the plaintiff the alleged consideration, and it will be further observed that, it not only accepted the stock, but it sold it to other parties and received a consideration therefor.

Therefore we might well say as was said by the court in Wright v. Pipeline Co., above referred to, “the defense of ultra vires comes with better grace, if made before it has discovered that it has made a bad bargain.”

In 10th Cyc., 1156, it is said:

‘ ‘ The great mass of judicial authority seems to be to the effect that where a private corporation has entered into a contract in excess of its granted powers, and has received the fruits or benefits of the contract and an action is brought against it to enforce the obligation on its part, it is estopped from setting up the defense, that it had no power to make it. * * * (Citing authorities from California, Connecticut, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Mississippi, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Washington, Texas, Wisconsin and United States Supreme Court.) The principle is that the rule requiring the observance of good faith and fair dealing, is just as applicable to corporations as to individuals, and that neither can involve others in onerous engagements and, with the consideration of the contract in their possession, disavow their acts to the damage and discomfiture of Others, unless it clearly appears that there was an absolute want of capacity to make the contract. ’ ’

And as in one illustration it is said:

“Thus if a corporation has executed a promissory note for a consideration which it has received and retained it is bound to pay the note, although it may have been executed in furtherance of a contract which was ultra vires;” also, “It can not where it has purchased property contrary to a prohibition or without an authorization in its charter retain both the property and its price; it can not retain the property and refuse to pay the price or set up the defense of ultra vires when sued for the same. ’ ’

And again: .

‘‘The most frequent application of this doctrine, is that where a corporation has entered into a contract which has been fully executed by the other contracting party, so that nothing remains for the corporation to do but to pay the consideration money, it will not be allowed to set up that the contract was ultra vires.”

Our own Supreme Court has said: “and it seems to be now the well established rule that where a contract, not illegal, has been executed and fully performed on the part, either of the corporation or of the other contracting party, neither will be heard to object that the contract and such performance were not within the legitimate powers of the corporation.” Larwell v. Hanover, 40 O. S., 274.

In a case in the United States Supreme Court, Comis v. Thayer, 94 U. S., 631, under a statute, which provided that no national bank shall be the purchaser or owner of any if its own stock, the court held that the purchase by the bank of its own shares was not void, even if it was ultra vires.

So in the case at bar, at least where it is not shown that creditors of this corporation were injured by its purchase of this stock, we are forced to the conclusion that such purchase eouLd in no sense be determined to be an illegal contract. It is at most a voidable one, and the defense of ultra vires can not be successfully made on that ground.

The endorsers upon this note having been directors of the corporation, at most can not stand in any better position than the corporation itself; if anything, having full knowledge of the corporation affairs and, as continuing stockholders and directors, they might easily be held to have received a benefit from this transaction. Undoubtedly they thought they would, or they would not have lent their credit to this note.

We think that the court below erred in sustaining the defendants’ motion to strike out the plaintiff’s second defense in his second amended reply, and in not permitting the plaintiff to introduce testimony tending to substantiate the averments of said second defense; that there was error in not permitting the plaintiff to introduce evidence tending to show that the Gem City Concrete Co. had employed an agent to sell the stock purchased from this plaintiff, which was in full at least of the consideration of the note, the cause of plaintiff’s action herein, and that said agent did sell said stock and that the court erred in its finding of facts that the sole consideration of said -note was the sale of said stock to said defendant, the Gem City Concrete Company, and that said note was void and of no effect; that the court erred in finding that there was due from the plaintiff to defendant, the Gem City Concrete Company, the sum of $50 for unpaid subscription on one share of stock; and that the court erred in overruling the motion for a new trial herein.

The judgment of the common pleas will therefore be reversed and the cause remanded for further proceedings.