author: HURIN, J.

text:
    MONOPOLIES — VALENTINE ANTITRUST LAW»
    [Crawford (3rd) Circuit Court,
    March, 1906.]
    Norris, Hurin and Donnelly, JJ.
    Carl D. Fisher et al. v. Flickinger Wheel Co. et al.
    1. Combination in Restraint or Tbade — Valentine Antitrust Law.
    An organization of the maufacturers of a certain commodity which, hy assessment of its members, raises a fund with which it “leases down” certain rival factories; and which' allots the trade of such factories among its own members, controls the output of its member’s factories and the prices they may charge for the goods they manufacture, binding them not to sell to specified customers except by consent of its officers, is a combination in restraint of trade and is illegal both under Rev. Stat. 4427-2. (Lan. R. L. 7586), and by the cbmmon law.
    2. Antitbust Law — What Contracts Void.
    Revised Statutes 4427-8 (Lan. R. L. 7593), relating to contracts in violation! of the antitrust law being void, includes not merely agreements to form a trust but also contracts made with intent to ear'ry out the illegal ¡purposes defined by this statute.

      3. Contract/ for Purchase of Machinery of Competing Company, etc., Followed by Nonuser of Machinery, Purchased, . is Void as in Restraint of Trade.
    A contract whereby a combination, for a consideration of $66,000, purchases all the machinery of one of its constituent members, a corporation, and stipulates that such corporation shall not compete in business with any of its members, and provides employment for the president of that corporation; it appearing further that such machinery was purchased without any plan for its location and use and has remained unused by the purchaser for eight months after its purchase, is a contract in restraint of trade and is void.
    4. Void Contract of Sale — Possession not Complete if not Apparent to Third Parties.
    Although the full consideration named in a contract for the purchase of the machinery, tools and fixtures of a manufacturing plant has been paid, the contract does not thereby become an executed contract in the absence of possession of such machinery by the purchaser, complete not only as between the parties to the contract, but apparent to third persons likely to deal on the strength of such apparent possession, especially when the contract of purchase is illegal and void. .
    5. Illegal Contract by Illegal Combination in Restraint of Trade not En-forcible.
    Where an illegal combination in restraint of trade has, by"' an illegal contract, purchased the machinery of a corporation but has failed to establish possession as against the receivers of such corporation, the court will not assist the purchaser in obtaining the possession of machinery nor in enforcing the illegal contract as against the proceeds, after the sale of such machinery by the receivers. It will leave the parties where it finds them.
    ¡[Syllabus approved by the court.]
    "Van Deman, Burkhart & Shea, Herron, Gatch, Herron & James 'and. J. F. Wilson, for plaintiffs in error. •
    T. E. Powell and T. J. Keating, for defendants in error.
   HURIN, J.

The original action out of which both of these proceedings in error [Carl D. Fisher et al. v. Flickinger Wheel Co. et al. and Carl D. Fisher et al. v. Adam Semones et al.] grew was brought by Adam Semones to secure an accounting from the Flickinger Wheel Company, defendant; the plaintiff alleging in his petition that defendant company was insolvent and indebted to creditors in various sums aggregating $200,000, of which more than $69,000 were due plaintiff. He asked an .accounting and the appointment of receivers to take charge of defendant’s property for the benefit of creditors.

This petition was filed April 15, 1904, and on the same day Edward Flickinger, the president of the company, and.Daniel Bachelder. were appointed as receivers, and gave bond and qualified. A. M. Snyder was afterwards substituted for Daniel Bachelder as receiver.

These receivers caused the property of defendant company to be appraised and inventoried, and on June 17, 1904, they filed their report <of 'the appraisement.

Afterwards, on June 21, an intervening petition was,, by leave of ■court, filed by Carl D. Fisher,. Charles Minshall, C. F. Ferguson, 0. B. Banister and W. C. Durant, as trustees of a large number of wheel ■companies named in said intervening petition.

In that petition, it is alleged that these trustees were duly appointed by the companies named, about August 17, 1903, for the express purpose of purchasing the personal property therein described and of taking title thereto and holding, controlling and disposing of said title and property for the use and benefit of the companies appointing them, and that they had ever since been acting as such trustees and were the owners of said property and in possession thereof until interfered with by the receivers previously referred to. The property so claimed and described consisted of certain machinery, tools, and appliances located in the buildings previously occupied by defendant, the Flickinger Wheel Company, and formerly used by said company in its business of manufacturing wheels.

Said intervening petition alleges that neither the Flickinger Wheel Company nor the receivers have any right, title, or interest in said property, but that, notwithstanding these facts, said receivers have wrongfully taken possession of said property and caused the same to be appraised as part of the assets of said receivership and have ever since wrongfully detained from said trustees the possession thereof and are threatening to, and will, unless restrained by the court, cause said property to be sold and the proceeds applied to the payment of the debts of the Flickinger Wheel Company. Wherefore these trustees pray that “the receivers may be restrained from proceeding with the sale of said property and ordered to surrender the same to the trustees.

An answer to this intervening petition, filed by the receivers, alleges that the wheel companies named by the intervening petitioners as those for whom they were acting as trustees, had, together with defendant, the Flickinger Wheel Company, entered into an illegal -combination and conspiracy and had formed a trust, which trust was commonly known at the “Vehicle Wheel Club;” that said trust was formed in violation of the act of the general assembly known as the Valentine antitrust law and was created to carry out a restriction in trade and commerce in all kinds of vehicle wheels, to increase the price of such wheels and to prevent competition in their manufacture and .sale.

It is further alleged that the contract of sale referred to in the intervening petition was entered into in order to carry out the purpose of said conspiracy, combination and trust, and especially to remove the Flickinger Wheel Company as a competitor of the organizations composing the Vehicle Wheel Club; that no part of said machinery has ever been delivered to said interveners, or to said trust or to their trustees,, but that the same has ever since remained, in the possession of the Flickinger Wheel Company and of its receivers, and the answer avers-that the whole of said contract so made is null and void under the provisions of the Valentine law and is not enforceable in law or equity.

Wherefore, the receivers pray that said contract may be declared by the court to be absolutely null and in violation of said Valentine law and that said machinery be decreed to be the property of' the Flickinger Wheel Company, and ordered sold by the receivers for the benefit of the creditors of said company.

By reply the trustees deny these allegations of fraud and illegality of contract and deny that they have entered into any conspiracy or-trust, and allege facts tending to explain and justify the transactions; relating to the property here in dispute; and they further allege that-the sum of $66,000 paid by these defendants for said machinery was all applied upon the indebtedness of said Flickinger Wheel Company, for the benefit of the creditors of said company.

Notwithstanding the filing of the interveners’ petition and the subsequent pleadings relating thereto, the common pleas court proceeded to order a sale of the property in question and, over the protest of these-interveners, confirmed the sale.

To this action of the court the intervening trustees prosecuted error to this court; but this court, 'at a former term, postponed a decision of the case as thus presented and, while’said action was pending in this court, the case was heard on its merits in the court of common pleas on the issues raised by the interveners’ petition and that court on a full hearing, finding against the claims of the interveners, and that the companies represented by them had combined for an illegal purpose in contravention of the antitrust laws of the state, that said combination was unlawful, and that there was no sale and delivery of the machinery of the Flickinger Wheel Company to the Vehicle CluS, and-that the possession thereof had remained in the Flickinger Wheel Company and its receivers, said interveners again prosecute error to this court, and both bills of. exceptions and the proceedings connected there^ with are now before us for review and will be considered together. |

In their oral argument of this case- counsel for the interveners contend :

First. That, on the evidence presented, the title and possession of" the disputed machinery was in the trustees at the time the said suit was brought.

Second. That though that title and possession were disputed, the common pleas court had no right to order a sale of said property until that title and possession were judicially settled.

Third. That to deny them the right to their property and to relegate them to the proceeds of the sale thereof, should the title of said property be finally determined to be in them, would be a denial of justice.

Fourth. That there was no illegality about the organization of the so-called Vehicle Wheel Club; that it was not a trust, nor a combination in restraint of trade and hence that its acts and particularly the purchase of the machinery in question were wholly legal and should be upheld.

Fifth. That, whether such combination and such purchase were in themselves illegal or not, makes no difference in law, for the reason that such purchase is now an executed, agreement; that at the time of the filing of the petition a full and adequate consideration had actually been paid for said property by its purchasers, the trustees; that they were in actual possession of said property under said purchase and that, therefore, their possession cannot now be legally disturbed.

Sixth. That, as there is no claim made that the Flickinger Wheel Company was insolvent at the time of the purchase of the machinery; as the price paid was fair and adequate; and as no offer is now made to restore the price then paid for that machinery, the defendants ought not to be allowed by a court of equity to hold both the $66,000 paid them and the machinery for which it was paid.

We have read with care the bill of exceptions in this case and from its evidence thus presented we find the following facts relevant to the issues, viz.:

That for about rwo years prior to the month of August, 1903, representatives of certain corporations and firms engaged in the manufacture of wood wheels for vehicles, had been in the habit of meeting together and had organized for “social intercourse,” as was claimed, and for the discussion of matters pertaining to the business in which they were all engaged; that their organization was known as the Vehicle Wheel Club and comprised most of the firms or corporations engaged in that line of business, including all in Ohio but two, and a like proportion in Indiana and Michigan, and perhaps other states. That these meetings were held in various cities at stated times, sometimes in Chicago, sometimes in Indianapolis and again at Niagara Falls, and at Galion, Detroit, Dayton and elsewhere, the meetings being held as often as once a month.

The secretary of the organization testifies that he does not Know the objects of the association; that it did not deal in anything nor do any business at all as a club, but that at their meetings they discussed the prices that ought to prevail in their business and endeavored to secure uniformity of prices; that they assessed each member of the club for expenses at rates amounting to ten cents or fifteen cents per set on all wheels manufactured — a sum which we find would amount to many thousands of dollars each year, as in St. Louis alone over 100 thousand sets of wheels are sold each year by the members of this club.

It further appears from the evidence that this club exerted its influence toward uniformity of prices and, through its officers, induced a large majority of its members to agree not to increase their plants or to enlarge their facilities and this with the expressed purpose of limiting the production of wheels; that said club wás in the habit of allotting to its members the portions of the trade of their districts to which each was supposed to be entitled and did attempt to so allot and divide up the business of -the' Flickinger Wheel Company after it agreed to cease doing business; and that in fact the business of all its members was subject to such allotment; that, by agreement, all the members of said club also bound themselves, at least on one occasion, not to deal with a certain corporation engaged in the buggy business nor to execute any orders received from it except under instructions from the president of the Vehicle Wheel Club, Edward F. Flickinger; that the sale of all the product of the several factories of the members of the club, was placed under the control of a committee appointed by the club and that the prices to be secured for siieh product were to be determined and controlled,'not by the individual manufacturer, but by the club and its officers, and that no member could make a contract at less than the association price, without first consulting the president and advisory committee.

As shown by the club’s minutes, arrangements were likewise made whereby all members agreed that in dealing with jobbers all members should quote - prices from a particular schedule of prices, excepting that particular member to whom a particular jobber had been allotted, and he was to quote prices from another schedule; but that this method of doing business was by agreement to be carefully concealed from the trade generally. Arrangements were likewise made for the “leasing down, ’ ’ by the club, of certain competing factories and the allotment of their business among the members of the club — the money’needed for "the purpose to be raised by an additional assessment of fifteen cents per set of wheels upon all the product of the factories represented in "the club.

It further appears from the evidence that about August 17, 1903, the plant of the Flickinger Wheel Company, including its machinery, tools and appliances, but not including its real estate, was purchased by the Vehicle Wheel Club, and the title so acquired placed in the names and under the control of certain trustees, the interveners in this action; that the price paid was $66,000, which was paid in full by the Vehicle Wheel Club to the Flickinger Wheel Company, which in turn ■executed and delivered a formal and complete bill of sale of the property; that by the terms of the contract of purchase, said Flickinger Wheel Company was to be allowed to operate said plant for about sixty days in order to work up the'stock on hand, and the machinery, etc., so sold was to be under the control of Edward Flickinger, who was at the time president both of the Flickinger Wheel Company and of the Vehicle Wheel Club, but that his possession was agreed to be that ■of the Vehicle Wheel Club, the purchasers; that previous to said purchase the machinery had been duly appraised by the American Appraising Company at $64,000, and that by the terms of the agreement $6,000 of the $66,000 paid was to be applied as rental on the buildings in which the property purchased was to be stored for the period of three years at $2,000 per year.

It further appears from the evidence that none of this property was ever moved away by the purchasers nor any manual possession taken of it by them except that it was inspected and handled by the trustees, and perhaps other members of the Vehicle Wheel Club, and plans discussed for its final disposition; and that after the appointment of receivers in this case the property was, by the consent of Edward Flickinger, at that time one of the receivers, tagged as the property of the Vehicle Wheel Club or its trustees; but was afterwards, by order of court, sold by the receivers and the proceeds are now subject to distribution by the court. It appears also that before said Flickinger would permit said property to be so tagged, he demanded and received from the trustees a sum of money exceeding $700, which he claimed to be due him personally but for which no demand had ever before been made.

It finally appears by the evidence that under the contract of sale of said plant, the good will of the Flickinger Wheel Company was included; and that, as a part of the agreement, said company was to retire from business and not engage in the manufacture of wood vehicle wheels for the period of five years at any point west of New York City and east of Denver, Colorado, in competition with the members of the-Vehicle Wheel Club.

Under the facts thus found we have no hesitation in finding that the organization known as the Vehicle Wheel Club was an illegal combination or trust.

Revised Statutes 4427-1 (Lan. 7586), declares that;

“A trust is a combination of capital, skill or acts by two or more persons, firms, partnerships, corporations or associations-of persons, or of any two or more of them for either, any or all of the following purposes :
“1. To create or carry out restrictions in trade or commerce.
“2. To limit or reduce the production, or increase, or reduce the price of merchandise or any commodity.
“3. To prevent competition in manufacturing, making, transportation, sale or purchase of merchandise, produce or any commodity.
“4. To fix at any standard or figure, whereby its price to the public or consumer shall be in any manner controlled or established, any article or commodity of merchandise, produce or commerce intended for sale, barter, use or consumption in this state.
“5. To make or enter into or execute or carry out any contracts, obligations or agreements of any kind or description, by which they shall bind or have bound themselves not to sell, dispose of or transport any article or any commodity or any article of trade, use, merchandise, commerce or consumption below a common standard figure or fixed value, or by which they shall agree in any manner to keep the price of such article, commodity or transportation at a fixed or graduated figure, or by which they shall in any manner establish or settle the price of any article, commodity or transportation between them or themselves and others, so as directly or indirectly to preclude a free and unrestricted competition among themselves, or any purchasers or consumers in the sale or transportation of any such article or commodity, or by which they shall agree to pool, combine or directly or indirectly unite any interests that they may have connected with the sale or transportation of any such article or commodity, that its price might in any manner be affected. Every such trust as is defined herein is declared to be unlawful, against public policy and void.”

The mere reading of this statute in connection with the facts as previously found suffices to establish the illegality of this association, known as the Vehicle Wheel Club. Each one of the five clauses of the act is distinctly violated

Although its innocent secretary does not know to this day what "the objects of the club were, beyond mere social intercourse, it must be -apparent to every one else that its main object was to control the trade in wheels — to create or carry out restrictions in the trade or commerce in' wheels — the thing forbidden by the first clause of this act. Why -else was it engaged in “leasing down” rival factories and allotting the business of those factories among its members? Why was it fixing the ■prices at which its members could sell the product of their own factories? Why did they bind themselves not to sell to particular customers without the consent of their president and advisory committee?

In the same way each separate one of the five clauses of the act will ■be found to apply to some one or more of the acts or practices shown, by the minutes of this club, to have been done with the club’s approval.

That the Vehicle Wheel Club as thus organized and conducted was in violation of the statute is clear. But independent of any statute, the illegality of such an organization would be equally evident. Its whole purpose, its every object, was in violation of the common law. An organization of > such a nature is illegal, because it is contrary to public policy, a menace to public safety, a constant threat against the rights of independent producers and of the public generally.

If any authority were needed in support of this proposition, the case of United States v. Pipe & Steel Co. 85 Fed. Rep. 271 [29 C. C. A. 141; 54 U. S. App. 723; 46 L. R. A. 122], clearly establishes the illegality of such organization under the common law, whether in violation of statutory law or not.

But whatever may have been the legal status of the Vehicle Wheel Club, the important question in this case is the character of the contract made between the Vehicle, Wheel Club and the Flickinger- Wheel Company. Was that contract illegal and void? Or is it enforcible?

Revised Statutes 4427-8 (Lan. 7593), being a part of the same act relating to trusts, provides that,

“Any contract or agreement m violation of the provisions of this act, shall be absolutely void and not enforcible 'either in law or equity. ’ ’

Unless this statute can be restricted in its application to the mere agreement to form a trust, which does not seem to us to be its intended limitation, it must be held to apply to contracts made with intent to carry out the illegal purposes defined by the statute.

Was this such a contract? There is no claim of fraud as to the value paid for the property. It is not denied that the full value and perhaps much more than the full value was actually paid in money. Indeed the same property was afterwards sold by the receivers for about one-eigbtb of tbe price previously paid by tbe Vehicle Wheel Club and this, too, at a competitive sale at, which about forty bidders were present.

That the purchaser at that sale shortly afterwards sold the same property to a corporation, of which Edward Flickinger and his son are active members and officers, for about the same consideration, does not help the matter.

We find that a full and fair consideration was paid by the Vehicle Wheel Club for the machinery, etc., in question.

But we are given to understand by the secretary that this was the only property ever actually owned by the club and that after its purchase nothing was done with it, except to discuss plans for dividing it up or moving it to St. Louis, none of which plans were ever definitely acted upon.

This is not the usual course which business men pursue in making so large a purchase. In such eases a definite purpose or intention to use the thing purchased is always present and in view of the record of this club .as revealed by its minutes, and especially in view of the express and minute stipulations of the contract of sale, whereby the Flickinger Wheel Co. agrees to remain out of business, as far as concerns the manufacturing of wheels in competition with the members of the Vehicle Club, and in view also of the stipulations of that contract as to the employment of Edward Flickinger by the Vehicle Wheel Club, we are irresistibly drawn to the conclusion that the main object of the purchase was the restriction of competition — the putting of this plant and its president out of business as a competitor of the other plants represented in the club.

Clearly then the contract comes within the inhibition of the statute and, consequently, is illegal and void and not enforcible. See Miller v. Ammon, 145 U. S. 421 [12 Sup. Ct. Rep. 884; 36 L. Ed. 759] and McMullen v. Hoffman, 174 U. S. 639 [19 Sup. Ct. Rep. 839; 43 L. Ed. 1117]. See again United States v. Pipe & Steel Co. 85 Fed. Rep. 271 [29 C. C. A. 141; 54 U. S. App. 723; 46 L. R. A. 122].

But it is claimed and ably argued that, inasmuch as this contract has been fully executed, its illegality cannot be questioned by the receivers in this case; that the receivers stand in the same position exactly as the Flickinger Wheel Company; that that company has received its. pay in full for this plant — perhaps far more than the real value of the plant today; that presumably the $66,000 paid has been applied toward the payment of the creditors of the concern and that this being so, the receivers who represent those creditors cannot again demand, or be allowed to receive, a second payment for the same property; that Edward Fliekinger having, as president of the Fliekinger Wheel Company, received $66,000 for its plant, and delivered possession of it to the purchaser, cannot now, as receiver for that company, ask, in good faith, this court to require the purchaser to give up its property, without at the same time tendering to it a return of the money so paid; that for this court to lend its authority to such a course would be to support a fraud and encourage flagrant ^violations of good faith.

There is much to be said in favor of this view. We are not deeply impressed with the righteousness of this transaction in any of its stages or with the virtue displayed by any of the participants in it. Nor is there any lack of authority for the position thus taken. We are cited to the case of Thomas v. Cronise, 16 Ohio 54, an early Ohio case where the Supreme Court laid down the rule thus:

“It is a universal principle, both in law and equity, that where an agreement is founded upon a consideration illegal, immoral, or against public policy, a court will leave the parties where it finds them; if executed, the court will not rescind it; if executory, the court will not aid its execution.”

To the same effect are Hooker v. De Palos, 28 Ohio St. 251; Kahn v. Walton, 46 Ohio St. 207 [20 N. E. Rep. 203]; Emery v. Candle Co. 47 Ohio St. 320 [24 N. E. Rep. 660; 21 Am. St. Rep. 819]; Buchanan Bridge Co. v. Campbell, 60 Ohio St. 406 [54 N. E. Rep. 372].

The question thus becomes all important whether this contract was an executed or an executory contract.

That the full consideration agreed upon was paid is not denied; that the machinery was formally sold and a bill of sale delivered, are equally true; that the machinery was treated as delivered by the parties to the contract as between themselves is a fact unquestioned.

The Vehicle Wheel Club met at Galion, inspected the machinery, talked of it among themselves, as delivered, handled it, discussed its future disposition and finally, but after the receiver had been appointed, tagged it.

For two months it was used by the seller to work up the stock on hand — this by agreement of the parties. For nearly six months more it apparently was allowed to remain idle and the only watchman is said by the younger Fliekinger, to have been one employed by his father. There was no attempt made by the purchaser to use it or control it, or dispose of it or remove it. Under the agreement no such attempt was necessary — the purchaser had paid three years’ rent in advance for the storage of this machinery in the buildings in which it was located.

Some evidence was offered and we think properly rejected by the court to the effect that this property was advertised for sale by the trustees, and notice sent to Edward Flickinger. But this evidence, even if admitted, would not show actual, open possession. As between the parties ¿nd especially if the transaction itself had been a legal one such constructive possession would unquestionably have been upheld as a delivery. Edward Flickinger in all his intercourse with the trustees treated the property as theirs.

But in this ea!se third parties’ interests are involved, creditor have commenced suit and caused receivers to be appointed; possibly some of these creditors gave credit to the Flickinger Wheel Company on the strength of the apparent ownership of this machinery by the Flickinger Wheel Company after it was in reality sold; as to this we are not advised. But at any rate, the machinery was allowed to remain in its place, much of it imbedded in concrete, or bolted to the floors, for eight months after its sale, with no apparent change of ownership so far as third parties could see; part of that time openly used as before, by its former owners, apparently still its owners, and no attempt was made by the purchasers, until after the receivers were appointed, to show to the world their title or possession.

All this, together with the illegal character of the transaction itself, goes far toward overcoming any presumption raised by a constructive taking possession such as is claimed to have occurred, and in our opinion the proofs of possession taken are not sufficient under the circumstances to justify us in holding this to have been an executed contract. Those purchasers were in a position, as far as third parties were concerned, where they could either affirm or deny their ownership, as might seem best to them; and, having taken that position, a court of equity in view of the illegal character of the transaction will leave them where it nnds them.

If we are right in the view we have taken as to the possession of this property not being complete in the intervening trustees, then the authority cited by them, and relied upon, viz., the case of Kahn v. Walton, 46 Ohio St. 195 [20 N. E. Rep. 203], is in reality strongly in favor of the action taken by the common pleas court. Indeed all the cases cited by counsel for the interveners are strongly against them unless we are prepared to concede a full and complete possession by them of the machinery in question and this, too, legally and in good faith. This we can not ’ do.

What constitutes a complete delivery of personal property is not easily determined; no uniform rule can apply to all cases. Much depends on the nature of the property, the usages of the trade in relation thereto, its location, its movability, whether or not it is attached to realty and, if so, how it is attached. The question as to the good faith of its acquisition often becomes material and, as in the case at bar, the legality of its transfer. A transfer of possession, sufficient as between. the parties, is often wholly insufficient as ,against the claims of third parties. And so the authorities cited by counsel for interveners, while applicable to transfers of personal property of a movable character transferred in good faith and with sufficient publicity to satisfy the conditions of the cases in which they were questioned, are none of them satisfactory as authority in view of the conditions prevailing in this ease. The rule, for instance, expressed in the case of Newhall v. Langdon, 39 Ohio St. 87 [48 Am. Rep. 426], as applicable to the sale of flour stored in a railroad depot, depended on a usage of the business and can have no applicability to the case at bar..

Much stress is laid by counsel for the interveners upon the fact that, before the receivers took possession of this property, it was tagged by the order of the trustees as their property. It may well be questioned whether such tagging by permission of a receiver after he had assumed the duties of the receivership and apparently without the knowledge of his associate receiver, and especially in view of the relations which had existed between the receiver who so permitted the tagging and the parties whose interests were to be preserved by the tagging, ■could add much weight to the claim of possession. Nor does the fact, that before he would permit such tagging he demanded and received .a personal payment to himself of over $700 for claims which apparently had never before been heard of, add weight to the claim of possession •thus acquired.

In the opinion of this court then, the proofs have wholly failed to establish such complete possession of this plant by the trustees as is neces■sary to support their claim that the contract is an executed contract. All of the rights of the intervening trustees depend upon this claim. To support their alleged right to the property in dispute, they are •obliged first to prove a contract of sale — which we have found to be an illegal contract — and secondly, the execution of that contract by a taking of possession, which we have found to have been incomplete and insufficient to pass title as against third parties.

As they themselves admit, it must follow that a court of equity will leave them where it found them. This is the universally accepted rule. Were any authorities needed in addition to the Ohio authorities previously cited in this opinion we need only to refer to the ease of McMullen v. Hoffman, 174 U. S. 639, 654 [19 Sup. Ct. Rep. 839; 43 L. Ed 1117], where it was said by Justice Peckham:

1 ‘ The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying-out the terms of an illegal contract. In case any action is brought in. which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged, rights directly springing from such contract. In cases of this kind the maxim is, “Potior est conditio defendentis.”

How then does this rule leave the interveners ?

We have found that the contract of purchase of this machinery, on which contract alone they base their claim for it, was an illegal contract. We have found that they were not in actual possession of this machinery at the time the receivers were appointed or at the time when the receivers took possession of it. If they were not in possession of it, the machinery must be held to have been in the possession of the Fliekinger Wheel Company. In that position the court found the parties. It must leave them just there. It cannot aid them in securing possession nor in preventing the receivers from obtaining possession, nor after the receivers have obtained possession, can it aid them in enforcing their illegal contract as against the proceeds of the sale of the machinery. Their organization was illegal; their contract was void; their possession was never an actual possession.

It follows that in this ease at bar they have no standing. If this apparently works a hardship upon them, it is only the result of their own violation of the law. If, on the other hand it is true, as seems possible, that the price paid, ostensibly for the plant, was in fact paid principally or wholly for the purpose of removing a competitor in violation of law, they have secured what they sought to secure.

If the view we have thus taken is correct, it follows that the' court of common pleas did not err in ordering the receivers to appraise and sell this property, or in confirming that sale, nor did -it err in finding that said Vehicle Wheel Company was an illegal combination, and that the terms of the contract of sale of said machinery, etc., are in restraint of trade and in direct contravention of the antitrust statutes-ol the state of Ohio, and, as such are against public policy and void and cannot be enforced.

Finding no other error, the judgment of the court of common pleas will be affirmed' with costs. Judgment against the interveners, for costs, execution awarded and cause remanded for execution.

Norris and Donnelly, JJ., concur.


source: Caselaw Access Project

author: HAYNES, J. PARKER, J. WILDMAN, J.,

license: Public Domain

text:
    ATTACHMENT — TEN PER CENT LAW.
    [Lucas (6th) Circuit Court,
    April 6, 1906.]
    Haynes, Parker and'Wildman, JJ.
    Joe Nemit v. John Vargo.
    1. Jurisdiction on Circuit Court to Review Action on Common Pleas Court in' Attachment Proceeding.
    A motion to discharge an attachment, having been overruled by the justice of the peace, the judgment of the common pleas court affirming such action is not final and the circuit court may review the action of the common pleas court.
    2. Necessity on Demand on Debtor in Garnishment Proceedings under the Ten Per Cent Law.
    Demand in writing of the debtor for 10- per cent of the debtor’s wages is a condition precedent to the right of the creditor to an order attaching such portion of the debtor’s wages under Rev. Stat. 6501 (Lan. 10078), providing for such garnishment proceedings. (Wildman, J., dissents.)
    [Syllabus approved by the court.]
    EeROR to Lucas common pleas <?ourt.
    Potter & Potter, for plaintiff in error'
    C. H. Durand, for defendant in error.
   HAYNES, J.

Yargo commenced a suit against Nemit for $20.42 before a justice of the peace in Oregon township, and caused an attachment to issue. There was a garnishee proceeding against the National Malleable Castings Company, and the order of attachment was served upon that company. After that Nemit, by his attorney, came in and moved to discharge the attachment for sundry and divers reasons, among others that no demand in writing had been made upon the said defendant for 10 per cent of his earnings or for any other amount of his earnings, as required by law. It does not appear here that the garnishee answered, but the justice, having overruled the motion to discharge the attachment which was made by the defendant, the case was brought up by appeal to the court of common pleas, under the statute, and the court of common pleas refused to discharge the attachment and affirmed the action of the justice of the peace, and the case has been brought here on error. ‘

The first point made by counsel for-Yargo is, that the matter having been taken to the court of common pleas by appeal, the action of that court is final in the ease, and that this court has no jurisdiction to hear the petition in error. Now, a part of Rev. Stat. 6494 (Lan. 10071), under the bead “How property discharged from attachment/' reads:

“Provided, that in any case the defendant may make a motion before the justice of the peace to dissolve the attachment, or release the property, money, or credits attached, or garnished, either or both; which if overruled may be appealed by the defendant to the court of common pleas, if in session, or to a judge thereof in vacation, by giving notice to that effect to the justice of the peace, but no bond shall be required. Upon such notice of appeal being given, the justice of the peace shall forthwith transmit to the clerk of the court of common pleas all the original papers; and thereupon within three days from such notice of appeal, or upon such further time as may be for good cause allowed, said court or judge shall hear and determine said motion in the same manner as though it was originally brought in said court of common pleas, and upon a final hearing said court or judge shall forthwith transmit the judgment with said original papers to ssfid justice of the peace, which judgment shall be entered upon the docket of said justice of the peace as the final determination of said motion; and said attachment property, moneys and credits shall be disposed of as directed in said judgment.'’

Revised Statutes 6709 (Lan. 10300) provides:

“A judgment rendered, os final order made by any court of common pleas, or a judge thereof, may be reversed, vacated or modified by the circuit court of the county wherein such court of common pleas is located, for errors appearing upon, the record. All errors assigned in the petition in error shall be passed upon by the court, and in every case where a judgment or order is reversed and remanded for a new trial or hearing, the circuit court shall, in its mandate to the court below, state the error or errors found in the record upon which the judgment is founded. This act shall apply to pending actions, prosecutions and proceedings.”

Revised Statutes 6707 (Lan. 10297) provides what is a final order:

“An order affecting a substantial right in an action, when such order in effect determines the action and prevents a judgment, and an order affecting a substantial right made in a special proceeding, or upon a summary application in an action after judgment, is a final' order which may be vacated, modified, or reversed, as provided in this title. ’ ’

In Watson v. Sullivan, 5 Ohio St. 42, the Supreme Court decided that an order to discharge an attachment was a proceeding that might be taken upon a petition in error, before final judgment in the case, and that has been the law ever since. And we have no doubt that this order of the court of common pleas may be reversed by this court, or. affirmed by it; that is to say, we have jurisdiction to hear it and pass upon it, and, therefore, the motion which was made to quash the writ will be overruled.

Coming now to the merits of the ease, the question which has been presented here is one on which the circuits of this state have been unable to agree. The circuit court at Cincinnati holding in one direction, and the circuit court of Cuyahoga county in another direction, they being the only circuit courts that have passed on the question so far as we can learn. It was said in argument that counsel are anxious to have this court pass upon the question so that the court of common pleas could be guided by this court. This court is divided on the subject. The majority of us have come to certain conclusions, and we hope that one of these parties will take the case to the Supreme Court and have a final decision that will be binding on all courts throughout the state.

Now, in this case Mr. McLeary, acting as justice of the peace, received the following affidavit:

“I, Benjamin F. Mallett, make oath and say that I am the agent of the plaintiff in the above entitled action, and that the claim in this action is for an amount due for groceries and meat sold and delivered to the defendant at his request, and I also make oath that the said claim is just and that I verily believe plaintiff ought to recover thereon the sum of $20.42; that the property about to be attached is not exempt from execution. I also make oath that the said claim is for necessaries. I further say on my oath aforesaid that I have good reason to, and do' believe, that the National Malleable Castings Company is indebted to said defendant and has property, moneys and rights in action of said defendant in its possession or under its control subject to be attached in this action.”

The affidavit was made before him. Then was issued the order of attachment. The statute in regard to attachments before a justice of the peace commences at Rev. Stat. 6489 (Lan. 10066):

“The plaintiff shall have an order of attachment against any property of the defendant (except as hereinafter provided) in a civil action before a justice of the peace, for the recovery of money, before or after the commencement thereof, when there is filed in this office an affidavit of the plaintiff, his agent or attorney, showing the nature of the plaintiff's claim, that it is just, the amount the affiant believes the plaintiff ought to recover, and that the property sought to be attached is not exempt from execution, and, if the personal earnings of the defendant are sought to be attached, that the defendant is not the head or support of a family, and bas not in good faitb the maintenance and support of .a widowed mother, wholly dependent upon him for support, or that such, earnings are not for services rendered within three months before the commencement of this action, or, that being earned within that time, the same amount to more than one hundred and fifty dollars, and that only the excess over that amount is sought to be attached; or that the claim on which judgment is sought is for work or labor or for necessaries, and except when the claim is for work, or labor or for necessaries; also the existence of some one or more of the following particulars:
* # * iino attachment1 shall issue by virtue of this chapter against the personal earnings of any defendant for services rendered by such defendant within three months before the commencement of the action or the issuing of the attachment, unless the defendant is not the' head or support of a family, or unless the amount of such earnings exceeds one hundred and fifty dollars, and then only as to the excess over that amount, or unless the claim is one for necessaries, and then for only ten per centum of such personal earnings.”

The affidavit filed in this case does not set out these facts, but simply says there is property there not exempt from execution. Now, having proceeded that far, the chapter goes on as to the garnishee, and states that it shall bind the earnings due at the time of such service and that shall become due from the time of service until the trial of such cause,

“Provided, however, that of the personal earnings now exempted under the provisions of Sees. 5430, 5441, 5483, 5548 [Lan. 8958, 8970, 9012, 9077] Rev. Stat. as amended April 26, 1898, shall, in addition to the 10 per centum for necessaries”— this clause all relates to the exemption of 90 per cent of the earnings — “be further liable to the plaintiff for the actual costs of any proceeding brought to recover the same in any sum not exceeding four dollar's, and such garnishee may pay to such debtor an amount equal to ninety per cent of such personal earnings, less the sum of four dollars for actual costs as herein provided, which shall be due at the time of the service of process, or which may become due after such service and before trial, ‘and be released from any liabilty to such creditor.”

Now, down to 1894, that is the way the law stood. The statute al. lowed an attachment for necessaries without filing affidavit of fraud, nonresidence, etc., as allowed by the statute, Rev. Stat. 6849 (Lan. 10456), but expressly declares that they shall only have the excess over .and above the amount that the party has exempted from liability. That in this particular ease would be 10 per cent of the earnings before he bad bis attachment, and when the garnishee paid the amount of 10 per cent of the earnings it was first applied to the four dollars of costs. In 1894, the statute was amended by adding the following clause:

“Provided further, that the person bringing an action for necessaries shall first make a demand in writing for the excess over and above ninety per centum of the personal earnings of the debtor; and no costs •or expense shall b,e chargeable to the defendant debtor in such action if he tender payment in money or duly accepted order for the excess of his personal earnings over and above ninety per centum thereof upon such written demand made therefor.”

There comes the .stress of the case. Some courts, and one member of this court, are of the opinion that the attachment issued lawfully, but upon showing being made that no demand was made, that the costs shall not be charged against the debtor, and that was the opinion of the court below. That is the opinion of the circuit court of Cuyahoga county. On the other hand, the circuit court of Hamilton county held a contrary doctrine, and held that the attachment cannot issue until the •demand has been made, and of that opinion is a majority of this court.

The statute provides expressly that a person bringing an action for necessaries shall first make a demand in writing for the excess over and above 90 per cent of the earnings of the debtor, and he shall not be charged with any expenses if he makes payment or gives an accepted order for 10 per cent of his personal earnings. The majority of this court are of the opinion that that demand must first be made before the party has a right to issue his order of attachment. It would seem to be very proper to require that that should be set forth in the affidavit for the information of the court. But at any rate/ it is agreed in this ease that no demand was made, and that the order was issued. And holding this view of the ease, the majority of the court are of the opinion that the court erred in refusing to dismiss the attachment. We think that that was a condition that was fixed by law precedent to his right to have an order of attachment issue, and that he should have followed the statute; and that there ought not to be an order of attachment issued and thereby compel the debtor to hire a lawyer to go in and try to make a defense. It seems to us that the clear view of the legislature was, that the demand must first be made as a condition to having that order of attachment issued, and holding this view an order has been made reversing the action of the court of common pleas.

PARKER, J.

~Wé are all in accord upon one proposition, and that is, that this statute is exceedingly hard of interpretation. There is not one of us quite sure we are right on any one point. It is true that in this language, “the person bringing an action for necessaries shall first make a demand in writing for the excess over and above 90 pen centum of the personal earnings of the debtor,” the term “action” is qualified by Judge Haynes to signify “such actioni. e., the special proceeding under consideration or treatment and yet the term “proceeding” having-been used in the same section in a number of instances, and the whole section dealing with a matter of reaching wages, otherwise exempt, by a special proceeding, in certain cases, that is, either by attachment or a proceeding in aid of execution, which is also contemplated here, we believe thatf we are authorized to conclude that the legislature had such special proceedings in mind in the use of the word “action,” — %. e., action of that character, though strictly, the word “action” applies to a civil action. I am not sure but the circuit court of Hamilton county has construed this statute as meaning that before the civil action for the money is instituted the demand must be made, but we are inclined to think that that is going rather farther than was intended by the- legislature. Because there is no provision in this statute as to what shall result from a failure of the plaintiff to make a demand, whereby opportunity may be given to the defendant to pay without suit and thus save himself costs, and provision is made for the result flowing from such demand, whether complied with or not, it seems to me that a failure to make such- demand was not contemplated, but that it was contemplated that the demand would be made in all cases.

It will be noted that the casting of the burden of costs upon the plaintiff where no demand is made i's not expressly provided for in this statute at all, but in order to reach that result it- is necessary to read something into the statute. ■ In other words, it is necessary to read into the statute that if the creditor shall fail to make demand before instituting the suit or before instituting the proceeding, then the result shall be, that he shall not collect this additional four dollars costs out of the 90 per cent that the debtor might otherwise retain. It is apparent that it is just and proper that some such result should flow from his failing to make the demand, but if we rely upon the letter of the statute, the creditor could avoid this result, and could require the debtor to pay this additional four dollars costs by simply failing to make any demand. The results, we repeat, flowing from the making of the demand if complied with, and flowing from the making of the demand if not complied with, are provided for in the statute; but a result to flow from the failure to make any demand at all, as I read the statute, is not expressly provided for. Certain of the courts have read into tbe statute, or have so construed tbe statute, as that the result of failing to make tbe demand shall be a failure to maintain the special proceeding, bolding that the demand in writing is a condition precedent to the institution of the suit, just as the demand upon a tenant in forcible detainer to vacate the premises is a condition precedent to the institution of the suit, and just as the demand upon a claim against an administrator before suit is begun is a condition precedent to the institution of the suit; and other illustrations might be mentioned.

This provision as to the demand follows the word “provided,” and is in a clause which starts out with the word “provided.” It is true that ordinarily a clause starting out with this word is a proviso intended to qualify in some respect, that which has gone before, — it does not' stand as an independent provision, — but I think a- careful reading of this whole section will show that the framer of it did not use the word “provided” in that technical sense, because it occurs several times in the course of this statute, and in some cases it cannot be regarded as a clause qualifying that which has preceded, but it is the introductory word of independent provisions when the conjunction “and” would have served the same purpose. I shall not take time to read the statute to illustrate this, and it would take some time to discuss the section fully under this head, but upon reading it, it will be seen that the word “provided” occurs four or five times in the course of the section at the beginning of sentences, and that it is certainly not in all cases used in the technical sense of the introduction of a provision qualifying what has preceded it. I concur with Judge Haynes in his conclusion.

WILDMAN, J.,

dissenting:

Upon the first question involved, raised by the motion to quash service, as it is in form, although perhaps it should be a motion to dismiss the proceeding in error, I am in accord with the majority of the court. I think that neither a motion to quash service nor a motion to dismiss the proceeding in error should prevail upon the grounds urged in argument, or any other that occur to me.

I desire, however, to offer a few words in explanation of my dissent from the conclusion arrived at by a majority of the court, which conclusion has led to the reversal of the judgment of the court below. The construction of Rev. Stat. 6501 (Lan. 10078) is one of much difficulty. The question is a close one, and it is not surprising that courts and attorneys differ in their views. I do not think that it is clearly provided by this statute, as Judge Haynes holds, that before bringing an action for necessaries, even if property is attached in the proceeding, there must be to give tbe court jurisdiction, a preliminary demand for 10 per cent of the earnings sought to be attached.

An examination of this statute discloses that it is simply a modification of previous enactments, Rev. Stat. 5430, 5441, 5483, 5548 (Lan. 8958, 8970, 9010, 9077). Without stopping to read those sections it is enough to say that they also provide for the-subjecting of 10 per cent of the earnings of the debtor to the payment of his debt for necessaries, but there is no provision in those sections that any portion of the 90 per cent remaining may be applied to the payment of costs in the suit in which the attachment was obtained. The legislature, apparently recognizing that much of the benefit of the provision in favor of a creditor suing for necessaries by reason of the giving to him of 10 per cent of the earnings would be unavailable to him if he were required to pay the costs of the proceeding out of his own pocket, provided by Rev. Stat. 6501 (Lan. 10078) that the debtor, in addition to his liability for the 10 per cent, should be further liable to the plaintiff for the actual, costs of any proceeding brought to recover the same in any sum not to exceed four dollars, the legislature carefully guarding the interests of the debtor by fixing the maximum costs which might be so taken out of his 90 per cent, and then adds this language:

“And such garnishee may pay to such debtor an amount equal to ninety per centum of such personal earnings, less the sum of four dollars for actual costs as herein provided, which shall be due at the time of the service of process or which may become due after such service and before trial, and be released from any liability to such creditor.”

That is, as had been provided in the sections before, the garnishee may pay over to the debtor 90 per cent, leaving only the 10 per cent to be applied, and he would then be exonerated from any further liability to the creditor by reason of having released all the earnings excepting the 10 per cent. But the law in Rev. Stat. 6501 (Lan. 10078) qualifies that by permitting the paying of the .costs to the maximum amount of four dollars, from the 90 per cent, and then adds: “provided further, that the person bringing an action for necessaries shall first make a demand in writing for the excess over and above ninety per centum of the personal earnings of the debtor.”

In other words, the garnishee shall be so exonerated from liability provided that the creditor has first made this demand.

.I think that there is no provision in this statute that before the beginning of an action the creditor shall make a demand. That would be something of an anomaly in our law. In other words, it would seem absurd to make a provision that a person suing for the price of nee-. essaries must make a demand before instituting suit in order to give the court jurisdiction, when a person suing for any other thing need make no demand in order to give the court such jurisdiction. Now, to avoid this absurdity the majority of the court, as I understand their position, think that there should be read into this statute — and there is no other way of avoiding it — some language after the words “bringing an action,” so to make it express the idea that it is considering only the ease of a person bringing an action for necessaries in which he -seeks to subject earnings or 10 per cent of the earnings of his debtor; by attachment; but that language is not found in the statute, and the construction for which I contend requires no interpolation.

My impression is, that the office of a proviso in a statute is to qualify that which goes before. Here is an enactment, not that the creditor shall make a demand before suit; but that the garnishee may be exonerated from liability provided that the demand is first made. It is a provision that the enactment of the section immediately preceding shall be operative in case of such demand, and then, in order to make the matter more clear, the statute proceeds to provide that even if the demand is made, no cost or expense shall be chargeable to the defendant •debtor if he tender, in the way provided, the amount of the excess over 90 per cent of his personal earnings.

I think that the court below was right in the construction which it placed upon the statute, and in holding that a demand was not essential to give the court jurisdiction of either the action for necessaries or the attachment proceeding. I am disposed to follow the judgment of the Cuyahoga county court, consisting of Judges Winch, Hale and Marvin, rather than that of the circuit court of Hamilton county. For convenience reference may bq made as supporting the view of the majority of the court to the case in Friedman v. Hannare, 12 Dec. 438, a decision of the Clarke county common pleas. The decision of the Cuyahoga circuit court, holding that the demand is not essential to confer jurisdiction, is reported in K. B. Co. v. Batie, 25 O. C. C. 432.

I do not know that I care to add anything to what I have already said except perhaps that the provision as to notice in a forcible detainer suit is based altogether upon a different statute and one where the phraseolgy is so dissimilar to that employed here that it seems to me it can have no application. I think that this whole section, which is amendatory of the original Eev. Stat. 6501 (see Lan. 10078), has especial reference to the matter of costs, permitting the same to be taken from the 90 per cent, with the limitation that the maximum amour; thereof shall not exceed four dollars. It seems clear to me that that was what was in the mind of the enactors of the section. It does not occur to me that the treatment of the clause relating to demand, as a mere proviso or qualification of what precedes it, is a technical construction. It appears to me to be the natural one, and the other construction,, which is maintained by a majority of the court, to be the one more difficult to sustain and one requiring, as I have already suggested, a, change in the phraseology of the statute.


author: PARKER, J.

text:
    ACTIONS — ERROR—ELECTION—NEGLIGENCE.
    [Lucas (6th) Circuit Court,
    June 16, 1906.]
    Parker, Haynes and Wildman, JJ.
    Robert V. French, Admr. v. Central Construction Co. et al.
    1. Ebroe mat be Prosecuted on Order' Dismissing Action for Refusal by Plaintiff to Elect against which of two Defendants he will Elect to Prosecute his Action.
    Where an action is prosecuted jointly against a company and its agent for an injury to plaintiff alleged to have been sustained by the agent’s-negligence, and, at the conclusion of the plaintiff’s testimony, a motion is made and allowed, requiring plaintiff to elect against which of the two he-will prosecute his action, and, on plaintiff’s refusal to elect, the court dismisses his action without prejudice to the merits of the plaintiff’s case,, this is such an ordei determining the action and preventing judgment under Rev. Stat. 6707 (Lan. 1Q297) as may be reviewed by proceedings in error.
    2. Joinder of Defendants — Injury Caused by Negligence of Company’s Servant-does not G-ive Rise to Joint Action against Servant and Company.
    One who has sustained an injury by reason of the negligence of a company’» servant who had been directed by the company to superintend the work of building a bridge may not join the company and the servant, in a joint action to recover for the injuries he has sustained. Ciarle v. Fry, 8 Ohio» St. 358, followed.
    [Syllabus approved by the court.]
    Error to Lucas common pleas court.
    C. A. Thatcher, for plaintiff in error.
    Smith & Baker and W. H. McLellan, Jr., for defendants in error.
   PARKER, J.

The action in the court below was by [Robert V. French, administrator of the estate of Raymond March, deceased] the plaintiff in error against the [Central Construction Co. et al.] defendants in error,, and was to recover on account of the death of the decedent, which was; charged was caused by the negligence of the defendants. The issues were made up, and after evidence had been introdilced on behalf of the-plaintiff and the plaintiff had rested his case, the following action was taken, as set forth in the journal entries:

“The plaintiff having introduced all his evidence, and having rested his case, the defendant, Edward S. Hatch, moved the court to require the plaintiff to elect as to whether he would prosecute this action against the said defendant, Hatch, or against the defendant, -the Central Construction Company.
“Upon consideration of the said motion, the same was granted by ■the court and the plaintiff was ordered and directed to prosecute his action against either the defendant, Hatch, or the defendant, the Central Construction Company, and was denied the right to prosecute the .same jointly against the defendants hereto, to which action of the court the plaintiff then and there duly excepted, and with which order of the court the plaintiff then and there refused to comply, and requested that the case be submitted to the jury, which request was denied, to which the plaintiff excepted.
“Thereupon, by reason of the failure of the plaintiff to comply with the said order, the court withdrew a juror and dismissed this action. To all of which the plaintiff duly excepted.
“This action is dismissed solely upon the refusal of the plaintiff ■to comply with the order of the court requiring him to elect which of said defendants he shall prosecute, herein, and not upon the merits of the plaintiff’s cause of action.”

Thereafter certain other steps were taken in the case, in pursuance of an effort of the plaintiff to havé a new trial and to obtain leave to file an amendment to his petition, which we need not note particularly.

Plaintiff in error complains of this action on the part of the court, .but on behalf of the defendants in error it is contended that error does not lie to reverse an order of this kind; that it is an order made in pursuance of clause 5 of Rev. Stat. 5314 (Lan. 8830), to wit, “By the court, for disobedience by the plaintiff of an order concerning the proceedings in the action;” that the dismissal is without prejudice, and is simply in the nature of a penalty for the disobedience of the court’s order in the premises, and is not such a final order or judgment as that error lies to it.

Revised Statutes 6707 (Lan. 10297) provides that “an order affecting a substantial right in an action, when such order in effect determines the action and prevents a judgment” is a final order which may be vacated, modified or reversed. We think that means an order which in effect determines the particular action pending, not an.order which necessarily determines the right of action, and that when a court, against plaintiff’s protest, dismisses bis action so as to prevent a judgment in that particular action, if the action of the court is not warranted by the law, its reversal may be obtained by proceedings in error. Evans v. Iles, 7 Ohio St. 233.

It is agreed by counsel that the action of the court in requiring an election was based upon the opinion of the court that the cause of action stated in the petition was not joint as against the Central Construction Company and Edward S. Hatch, but was several as against one, or perhaps both. It is also agreed that the real purpose of the motion on behalf of defendants, upon which the court made this order, was to put the matter in such shape as that if the plaintiff should elect to proceed against the Central Construction Company, then a motion might be made to dismiss his cause as to that company, for the reason that the court had no jurisdiction over its person; at least, jurisdiction over its person had not been rightfully obtained.

The petition, and the record otherwise, discloses that the Central Construction Company is a corporation organized under the laws of' the state of Ohio, having an office and place of business in Medina,. Medina county, Ohio, and it is averred in the petition that it also has a place of doing business in Lucas county, Ohio. Mr. Hatch was a resident of Lucas county. Upon the petition being filed, a praecipe was filed for summons for each of the defendants, to be directed to the-sheriff of Lucas county; also a summons for the Central Construction Company, to be directed to the sheriff of Medina county. Service was made upon Hatch in Lucas county, and upon the construction company, reading from the return, “by delivering to Edward S. Hatch,, managing agent of said company, & true and certified copy of this writ with indorsements hereon. The president, chairman or president of the board of directors, cashier, treasurer, secretary and clerk, and all other officers and agents of said company, could not be found by me in Lucas,county, Ohio.” That is a part of the return upon the summons issued to the sheriff of Lucas county. It appears from the record that upon motion' of the construction company this service was set aside, upon a showing that Hatch did not occupy this position in the company, and that the company did not have an office and place of business in Lucas county, Ohio. Thereupon summons was sent to the sheriff of Medina county, Ohio, and was sérved on the Central Construction Company there.

As the petition stood, with the averment in it that the construction company had an office and place of doing business in Lucas county, Ohio, the construction company could not raise the question of jurisdiction over its person by demurrer to tbe petition, for the statute provides that a corporation may be sued in any county in the state where it has an office and place of doing business. So it appears that in order to present this question of jurisdiction, the construction company was required to and did answer, and in the opening paragraph, it says this:

“Now comes the Central Construction Company, one of the defendants herein, and protesting that this court has not obtained jurisdiction over the person of the defendant, files this, its answer, to the plaintiff’s petition herein.”

Then follows its answer to the merits.

It has seemed to the parties, and it is perhaps true, that it could' not be made clearly manifest whether this was a joint cause of action or a several cause of action, until after the plaintiff’s case had been developed by the testimony introduced on his behalf. The court and counsel seem to have proceeded upon that theory, and therefore after the evidence was all in the action which I have mentioned respecting election was taken, with the purpose of presenting this question to the court.

' Now, it appears from the evidence that if the construction company was liable at all on 'account of the negligence charged against Hatch, it was so liable under the doctrine of respondeat superior. The construction company was building a bridge across the Maumee river at Grand Rapids, Ohio. Hatch, in the employ of the construction company, was superintending the building of the bridge. March was an employe of the construction company, and was at work upon the bridge. Hatch was his superior. By an alleged negligent act done by Hatch .personally, or by his direction, or under his supervision, a part of the apparatus which supported March while at work was disarranged and as a consequence March fell to the river on the rocks beneath and was killed. This the evidence at least tends to show. The construction company had not directed Hatch to do this particular thing. The construction company was not in the position of an employer who was present directing the particular act complained of. It was a corporation; it was absent. The authority of Hatch and the directions to Hatch wTere general, to superintend the work. So that I say it appears that if the construction company was liable at all it was liable under the doctrine of respondeat superior, because of the negligence of its servant, Hatch, and solely because of his misfeasance.

Under such circumstances, as we understand the law as laid down by the Supreme Court of this state, the cause of action is not against Hatch and the construction company jointly. Assuming' that what the evidence tends to show is the true state of affairs, we are of the opinion that it would constitute a cause of action against Hatch on account of his wrongful and negligent act, and also a cause of action against the construction company under the doctrine of respondeat superior, but not against them jointly. This we understand to be the doctrine of the ease of Clark v. Fry, 8 Ohio St. 358 [72 Am. Dec. 590]. The question of whether this would constitute a cause of action against Hatch at all has been discussed, but we do not regard the decision of that question as being necessary here, though I have already intimated the opinion of the court upon it; that is, that this is not a mere non-feasance upon the part of Hatch, in which case there would be no cause of action against him in favor of the estate of March, but it is a misfeasance, accompanied by a physical act on the part of Hatch, resulting in the injury to March, and therefore giving rise to a cause of action against Hatch.

In the case of Clark v. Fry, supra, Freeman was the employe of Clark in the digging of a cellar upon certain premises owned by Clark and an area at the front thereof, extending into the street. This excavation within the lines of the street was not sufficiently guarded, and Fry, a pedestrian on the street, fell into the excavation and was injured. Fry brought an action against both Clark and Freeman and judgment was obtained against both. Clark prosecuted error; the judgment against Freeman was allowed to stand without question. It did not appear in that case that Clark was personally present directing the work being done by Freeman, and therefore it appeared, and was held, that if Clark was liable at all he was liable only under the doctrine of respondeat superior. In discussing the matter, Chief Justice Bartley has this to say, reading from page 377:

“But whether the liability to the defendant in error, if any existed, attached to Freeman alone, or to Clark for the negligence of his servant or agent or to Clark and Freeman, as joint tort-feasors, depended upon a legal question arising upon the relation between Clark and Freeman in respect to the transaction alleged as the occasion of the injury. If the excavation had been ipso facto unlawful as an unnecessary encroachment on the street, Clark and Freeman would have been liable, if any liability existed, jointly, as wrongdoers. But if there was nothing-in the work that Clark had required by the contract to be done which was in itself unlawful, or which, properly done, cquld be the occasion of an injury to anyone, and Freeman, wholly free from the control of Clark as to the manner of doing the work, had, by his own wrongful and negligent conduct, been the cause of the injury, he alone would be liable. If, however, Freeman, acting under the control and direction <of Clark, as his servant or agent, had negligently and wrongfully allowed the excavation to be in an unfenced or otherwise dangerous condition, whereby the injury was sustained, Clark would be liable, although not jointly, with Freeman. In this last instance supposed, either Clark or Freeman might be sued separately; but inasmuch as Clark, although he could not excuse himself on the ground that the nuisance had been occasioned by the negligence of Freeman, would have a right of action against Freeman for the recovery of such damages'as he might be compelled to pay by reason of his negligence, he (Clark) could not be joined in the same action with Freeman. This doctrine was expressly ruled in Parsons v. Winchell, 59 Mass. (5 Cush.) 592 [52 Am. Dec. 745], and it appears to. rest upon a reason which is -entirely satisfactory.”

Judge Bartley does not mention what that reason is, but we have taken occasion to examine the ease of Parsons v. Winchell, supra, and it seems to us that the reason stated is one that had its foundation in the common-law practice. Whether it obtains now seems to us doubtful, but the case of Clark v. Fry, supra, has not been overruled or questioned by our own Supreme Court, and it has been followed by the lower courts of this state in a great many cases. We find one case reported, the case of Seelen v. Ryan, 13 Dec. Re. 828 (2 C. S. C. 158), and it is cited with approval by the circuit court of the United States for the district of Kentucky in the case of Warax v. Railway, 72 Fed. Rep. 637. The opinion in that case is by Judge Taft. He says in the course of the opinion:

“The cases which support the view that the master .cannot be joined .as defendant in the action against his servant for negligence, where the master is not personally concerned in the negligence, either by his presence or express direction, are as follows:” And then follows the citation of a number of cases, including the case of Clark v. Fry, supra.

The syllabus in Warax v. Railway, supra, distinctly upholds the contention of counsel for the defendant in error. I read the second and third clauses:

“2. When the engineer of a railroad train starts such train, without giving warning, while he knows or ought to know tliat a switchman is between the cars of the train, engaged in uncoupling them, in consequence of which the switchman is injured, the engineer’s act is misfeasance, not nonfeasance.
“3. When a master is made liable for the negligent or wrongful act of his servant solely upon the ground of the relationship between them, under the doctrine of respondeat superior, and not by reason of any personal share in the negligent or wrongful act, by his presence or express direction, he is liable severally only, and not jointly with the servant. ’ ’

I go back now for a moment to quote from the opinion by Metcalf, J., in the case of Parsons v. Winchell, supra,— the reason of the rule, that though the parties may both be liable they may not be sued jointly, page 593:

“To maintain an actioi. against two or more jointly, the plaintiff must show a joint cause of action. In an action ex delicto, the act complained of must be the joint act of all the defendants, either in fact, or in legal intendment and effect. In trespass, all are principals, and he who commands a trespass to be committed, though absent when it is committed, is regarded as a trespasser, and may be sued alone, or jointly with him who obeyed his command. And it has been decided, where one of several proprietors of a coach and horses acted as driver, in the absence of the others, and injured a third party, by negligent driving, that he and the other proprietors were jointly liable to such party, in an action on the case. Moreton v. Hardern, 6 Dowl. & Ryl. 275, and 4 Barn. & Cr. 223. They were all held to be responsible for the conduct of the person whom they suffered to drive, whether he was one of themselves or their servant. But the act of a servant is' not the act of the master,, even, in legal intendment or effect, unless the master previously directs or subsequently adopts it. In other cases, he is liable for the acts of his servant, when liable at all, not as if the acts were done by himself, but because the law makes him answerable therefor. ‘He is liable/' says Lord Kenyon, ‘to make a compensation for the damage consequential from his employing of an unskillful, or negligent servant.’ 1 East. 108. The servant also is answerable to the party injured by his acts done as servant, and is answerable to the master for any damages which the master may be compelled to pay for his wrongful acts, unless-those acts were directed by the master. But if the master and servant were jointly liable to an action like this, the judgment and execution would be against them-jointly, as joint wrongdoers, and the master, if he alone should satisfy the execution, could not call on the servant for-reimbursement, nor even for contribution. Merryweather v. Mixan, 8 Term. 186; Voss v. Grant, 15 Mass. 505, 521.”

I repeat, whether that is so now we are inclined to doubt. If the-action should proceed against the master and his servant jointly and a joint judgment be rendered against them, and the master should satisfy it and it should turn out that the fault was that of the servant, that is, as between the master and the servant, the servant should answer to the master and make him whole. We are inclined to think that under our practice a joint judgment in a joint action against them would not be a bar to an action by the master against the servant to require him to make the master whole. Because it would have been a bar or would have prevented such action by the master against the servant under the common-law methods of procedure is the reason, as we understand it, why the’ action against them jointly was not allowed to go forward.

I speak of a case where the recovery is on account of the wrongful act of the servant and the servant is liable because of his own act, and the master is liable solely because of the servant’s act. If in a case of that kind judgment should be rendered against both, and the master should satisfy it, the master ought to have an action against the servant to recover the whole amount — not contribution. This would not conflict with the doctrine that contribution between joint tort feasors cannot be compelled. The servant has violated his duty to the master, whereby the master has been mulcted in damages, and the servant should relieve the master of all burden. But we suggest this simply as a question that has arisen in our minds in the ease. We feel bound to adhere to the rule laid down by the Supreme Court in the case of Clark v. Fry, supra, until that court shall see fit to adopt a different rule.

In the case of American Bridge Co. v. Hunt, 14 O. F. D. 713 [130 Fed. Rep. 302, 304; 64 C. C. A. 548]; Judge Lurton, delivering the opinion of the circuit court of appeals, sixth circuit, calls attention to the fact that there is a difference of opinion upon this question among the courts of the country. I quote, page 716:

“Whether there is such legal identity of master and servant, or concert between them, as to justify a joint action when the act of negligence charged is that of the servant alone, and the liability of the master is bottomed not upon any immediate fault of the master, but upon the liability of the latter for the negligent acts of the servant, may admit of much discussion.”

He then proceeds to cite Warax v. Railway, supra, and a number of other eases in support of the rule that they may not be sued jointly, and then says:

“It must be confessed, however, that the doctrine of the common law with reference to the joinder of master and servant in one suit based alone upon the tort of the servant, as in the War ax case and other eases cited above, is shaken by contrary intimation found in Powers v. Railway, 169 U. S. 92-97 [18 Sup. Ct. Rep. 264; 42 L. Ed. 673]; and Chesapeake & Ohio Ry. v. Dixon, 179 U. S. 131-137 [21 Sup. Ct. Rep. 67; 45 L. Ed. 121]. This question, though a nice one, and not foreclosed by authoritative decision, does not necessarily arise upon this transcript as we construe the averments of the plaintiff’s petition.”

So nothing was decided upon that point in that case.

I call attention to this to show that it seems to be regarded in some courts as still an open or debatable question. Counsel cite other authorities indicating the same thing.

The practice pursued in this case in the court of common pleas is not familiar to us, but we cannot see why it was not appropriate and right. We suppose that the same results might have been reached in other ways, but that is .not important. We cannot see why, when this evidence came in, the construction company might not have been dismissed from the ease at once upon its own motion, it appearing that it was not jointly liable with Hatch and'that it did not have an office or a place of business in this county; but it is perhaps immaterial which course was pursued. I think the course pursued was one that was as favorable as possible to the plaintiff in error here. Perhaps, the court below might have gone even further; certainly it eould have done so under the common-law practice. It could have at once dismissed the case as to both without saying anything about election, upon the ground that there was a joint cause of action stated and improperly prosecuted against two defendants and no attempt to-prosecute a several cause of action against either.

But the court, as I say, took the course most favorable to the plaintiff in error. It gave him an opportunity to amend by dropping out one of the parties and proceeding against the other, and gave him his election as to which he would drop out and which he would proceed against. But the plaintiff did not choose to avail himself of this opportunity. He insisted upon his right to proceed against both as upon a joint cause of action. We think the court was right in requiring him to proceed against one only, and it is conceded by counsel for' plaintiff in error that if the court was right in its ruling upon this question, it follows that the court was right in its further action of dismissing the action as to both because of noncompliance by the plaintiff in error with its order in the premises; and we are of the opinion that there was nothing else left for the court to do. Having made that order respecting election, if it was not obeyed, the court could not well do anything else but dismiss the action and refuse to allow the plaintiff to proceed with his action against both; and this order of dismissal, we think, is justified by the fact that the court was correct -in its ruling that it was not & joint cause of action — not one against which the defendants could be. required to answer jointly.

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

Haynes and Wildman, JJ., concur.


author: HAYNES, J.

text:
    DAMAGES — GAS AND OIL.
    [Wood (6th) Circuit Court,
    November 25, 1906.]
    Haynes, Parker and Wildman, JJ.
    George C. Leffler v. Bishop Witten et al.
    1. Measuse or Damages for Breach of Contract of Employment to Drill ah Oil Well.
    In an action by a driller of oil wells, against one who had agreed to employ the former to drill a well for an agreed price, the damages for a breach will be the difference between the contract price and the probable cost of doing the work, taking into consideration all the hazards and probabilities of the occupation.
    2. Damages — Probable Expense of Drilling an Oil Well may be Computed.
    The hazards of oil well drilling, even though they make the actual expense of drilling a well somewhat uncertain, are not so great as ,to make that expense impossible to compute.
    [Syllabus approved by the court.]
    Error to Wood common pleas court.
    W. H. McMillen and J. O. Troup, for plaintiff in error-.
    Baldwin & Harrington, for defendants in error.
   HAYNES, J.

(Orally.)

The petition, filed by Bishop Witten and Herman A. Schultz, partners, against George C. Leffler, in the common pleas court, sets forth, that they entered into a contract with Leffler whereby among other things they agreed to drill an oil well on the property of Leffler. Leffler agreed to furnish the fuel necessary for the work of drilling, and agreed to erect, and have ready for use, a derrick at the location of the well to be drilled, and to have the derrick in readiness within five weeks from the date of the contract. Leffler agreed to pay the contract price, one-half in cash and the other half in four months from the completion and! acceptance of the well, the plaintiffs agreeing to drill the well to a depth of four hundred feet in the sand or oil bearing rock. The eon-tract is in writing. The plaintiffs aver that at the expiration of said five weeks from the date of the contract they were ready and willing to drill the well and demanded of Leffler that he fnrnish the derrick and permit the plaintiffs to proceed with the drilling of the well according to the terms of the contract. The plaintiffs aver they have done and performed all the things required of them on their part, bnt that the defendant disregarding his contract and in violation of the same, did not erect and have ready the rig or derrick for the drilling of the well at the expiration of the five weeks, or at any time at all, and that defendant when requested to permit plaintiffs to drill said well, refused to let them do so, which they say was a damage to them in the sum of $495, the difference between what they aver would be the expense of drilling the well, and the profits they expected to make.

The testimony of the plaintiffs was in regard to the breach of the contract and refusal on the part of the defendant, and the cost of that kind of work. They had already drilled one well on the property, and they called witnesses — experts, who were carrying on that kind of business — to show what the cost would be, ordinarily, for the completion of a well of that kind; and the defendant in cross-examination developed the fact that in the drilling of wells of that kind, there was a liability to various misadventures which would tend to render the drilling of the well uncertain and indefinite and that the prospective profits would be less followed up by the cost and expense of overcoming these defects. They have technical names for them in the prosecution of this business; sometimes it results in the loss of a string of tools as it is called; and some testimony was developed in regard to the probability of that class of accidents, and statements made in regard to their experience.

After this line of testimony had been given to the jury and the testimony on each side had been closed, the defendant requested the court in writing to charge the jury as follows, which was refused, to ■which refusal the defendant excepted:

“The plaintiff can only recover on the first cause of action, such damage as they actually sustained. They cannot recover profits which they might have made if they had drilled the well. ’ ’

Thereupon the court proceeded to charge the jury very briefly indeed and says to them:

“If after a careful consideration of the evidence relating to this cause of action, you find in favor of the plaintiffs, they would be entitled to recover the contract price for drilling said well, less the actual cost of drilling the same. That is, they would be entitled to recover the profits which they would have made, had they been permitted to drill this well as‘provided by their contract.”

The controversy is in regard to the alleged returns of the contract, which on one side were called profits and on the other side are said to be a remuneration for their labor. It is not very material what they call it'; it is what they expected to make out of the job. Counsel for plaintiff in error contend that they cannot recover at all for profits and they ■cite the general rule, that where profits are uncertain they are mere profits and that the court will not permit a recovery of that class of ■profits. That is very true in regard to a certain class of cases. •

We may say that this question of profit is one that is rather difficult in its application, and we find a great variety of cases upon the subject, ,-some coming near to it, and some quite remote.

A case is cited by counsel for plaintiff in error found in Acme Cycle Co. v. Clark, 61 N. E. Rep. 561 [157 Ind. 271]. This was a case where a man was'carrying on a bicycle factory, and had everything that was necessary to make the wheels except the hubs, and he made some arrangement with the defendants to furnish them, which they failed to do. He was then sued for the value of certain things that had furnished him and he set up as a counterclaim the nondelivery of these hubs. He wished to prove the profits he expected to make upon the bicycles, and the supreme court of Indiana held against him, holding under the general decisions in that class of eases.

The court held, “That a demurrer to the counterclaim should be ‘ sustained on the ground that the loss of profits on the bicycles, which defendant might possibly have manufactured, and sold, cannot be considered as damages arising naturally from the breach of the contract to deliver the hub machine at the time fixed by the contract,” and holding further, “That speculative and contingent profits on probable sales cannot be held to have been in contemplation of both parties at the time of the contract, so as to render plaintiff liable therefor.”

This is not exactly a case of manufactured articles. These men took a contract to do a certain piece of work — the work of drilling an oil well. They might do the whole thing by their own labor. What, they expected to get was a remuneration for their labor and for the use of the machinery and tools, and for the labor they had to employ, and in all that they expect to get what may be termed a profit or to make something out of it, or to make good wages for themselves and get •something for the use of the machinery and tools. It comes in that way, although it may be indefinite, and belongs to that large class o£ cases where contracts are taken to do work where there is an expectation of getting good wages or making something upon the contract.

We have been cited in this case by counsel for plaintiff in error to a case decided by our Supreme Court, Rhodes v. Baird, 16 Ohio St. 573. In this case there was a contract between the parties whereby ‘the defendant, Baird, agreed to make a lease, for a term of ten years, for a piece of land for a peach orchard ánd the breach consisted in the-failure of the defendant to make the lease, and his causing the plaintiff, within two years from his taking possession, to be evicted from the premises, but after the peach trees were planted. On the trial the-plaintiff was permitted to give evidence of the probable profits that might in future be realized from the orchard,- judging by the number of crops and the prices of peaches in the .county for the last ten or fifteen years, and it was held:

“1. The evidence as to the probable future profits was incompetent to be given in chief by the plaintiff, as furnishing a basis for the assessment of damages by the jury, such evidence being uncertain and speculative in its nature and in a great degree conjectural.
“2. To the extent that the damages depended on the loss of the use-of the property for the term, its market value at the time of the eviction, subject to the performance of the contract on the part of the plaintiff, furnished the standard for assessing the damages. If it had no general market value, its value should be ascertained from witnesses whose skill and experience enabled them to testify directly to such value, in view of the hazards and chances of the business to which the land was to be devoted.”

It will be seen that while the profits '.may be uncertain, yet in that case the court recognized the fact that the parties should have damages for the breach of the contract. But the court held that they should have called what might be termed expert witnesses to show, first, whether there was a market value of a lease of that kind; if it had no geheral market value, its value should have been ascertained from witnesses whose skill and experiences enabled them to testify directly to such value, in view of the hazards and chances of the business to which the orchard was devoted. After all, it will be seen without calling any witnesses, that the question came right back to the chances and hazards of the business of peach growing; that is to say, the probability of their having a crop every year, or of losing many crops during the term, and all the various incidents and hazards attending the cultivation of a peach orchard.

We had a case in this circuit, which was decided in 1891 Ey this court, Judge Moore taking the place of Judge Scribner. It was the case of Toledo v. Libbie, 8 Circ. Dec. 589 (19 R. 704), wherein a man took a contract for building sidewalks and he expected to make a certain profit out of tbe work. He expected to do tbe work and get a certain sum for bis labor and make a certain profit on tbe materials that went into tbe construction, — get an ample compensation out of tbe two; that after be had partially entered into tbe performance of his contract, tbe city council stopped further construction and prohibited him from further pursuing his contract, and tbe court in that case held:

“In an action by a contractor against a city for damages for having prevented such contractor from performing or completing bis contract, tbe plaintiff would be entitled to recover the difference between tbe contract price and what it would have actually cost to have completed tbe contract, — in other words, tbe profit be would have made. Where, therefore, the contractor has taken the contract at less than it was worth to do tbe labor, it would be error in the court to permit him to offer evidence to prove what it was reasonably worth to do the work. If the contractor took the contract at a price at which there was no profit in it, he lost nothing by the action of the city abandoning' the contract and he can recover nothing; but if his contract price was in excess of what it would be worth to complete the work, that wculd be the measure of damages.”

This case was affirmed by the Supreme Court in Toledo v. Libbie, 51 Ohio St. 562.

This case at bar lies along the line of that class of cases. The testimony is not so full and complete perhaps as I would like to have seen it, speaking for myself, but there was testimony on all of those points and there was a charge of the court. The court’s charge is short and brief and there was a denial prayed for by the plaintiff in error, but we aré of the opinion, taking the whole of the testimony together in the case and its application, that the charge of the court should be sustained.

It is shown by the record that the jury in its verdict returned, on-this point in the petition, about $250 or about half of the claim of the plaintiffs below, and it is evident that they took into consideration the cost of doing the work, its hazards and probabilities. That 'is all that the' Supreme Court of this state requires in regard to anything. Taking all the probabilities into consideration in this case, the jury, reduced the claim of the plaintiffs about one-half and it looks to us as if that deduction was proper and right. This party made a contract and broke it and he should pay such damages as would in the judgment of the jury, result from a. breach of the contract, and the judgment of the court of common pleas will' be affirmed, without penalty.

Parker and Wildman, JJ., concur.