author: WILDMAN, J.

text:
    CHATTEL MORTGAGES — SALES.
    [Wood (6th) Circuit Court,
    November 25, 1905.]
    Haynes, Parker and Wildman, JJ.
    Benjamin Netzorg v. National Supply Co.
    1. Mortgage of After-acquired Chattels is a Mere Executory Contract for a Lien.
    The holder of a mortgage of after-acquired chattels has no lien upon such property until he has obtained possession of the same; such mortgage at most is no more than an executory contract for a lien on such after-acquired property which may or may not be executed by the mortgagor.
    2. A Sale is Good as against a Mortgage of After-acquired Chattels, even though Purchaser Had Notice of Mortgage.
    A sale of personal property will confer title good as against a mortgage purporting to cover the same, but executed before the mortgagor had title thereto, even though the vendee had knowledge of the existence of the mortgage at the time of making the purchase.

      ,3. MORTGAGE OF A “STRING OF TOOLS” WILL NOT COVER NEW TOOLS BOUGHT TO Take the Place of Others Destroyed.
    A mortgage on a chattel will be held to cover additions made to it by way of repair, provided the integrity of the article remains; but this rule will not be extended, in the ease of a mortgage of a “string of tools” used in sinking oil wells, to cover after-acquired appliances purchased to take the place of others which have been worn out.
    [Syllabus approved by the court.]
    ERROR to Lucas common pleas court.
    S. P. Harrison, for plaintiff:
    Mortgage of after acquired chattels. Swan’s Treatise (19 eel.) 677; Herman, Chat. Mort. Sec. 46; Stewart v. Loan Assn. 19 Mise. 49 [42 N. Y. Supp. 705]; Van Hoozer v. Corey, 34 Barb. 9; Gardner v. McEwen, 19 N. Y. 123; Farmers’ Loan & Tr. Co. v. Improvement Co. 27 Hun. 89; Kribbs v. Alford, 120 N. Y. 519 [24 N. E. Rep. 811]; Healey v. Dwight, 132 N. Y. 59 [30 N. E. Rep. 258; 18 L. R. A. 298]; Rochester Distilling Co. v. Rasey, 142 N. Y. 570 [37 N. E. Rep. 632; 40 Am. St. Rep. 635]; Carpenter v. Simmons, 28 How. Pr. 12; Beebe v. Light H. & P. Co. 13 Mise. 737 [35 N. Y. Supp.,1]; Anchor Brevjing Co. v. Burns, 52 N. Y. Supp. 1005 [32 App. Div. 272]; Andrew v. Newcomb, 32 N. Y. 417; Duffus v. Bangs, 122 N. Y. 423 [25 N. E. Rep. 980]; Fleetham v. Reddick, 82 Hun •390 [31 N. Y. Supp. 342].
    I. C. Taber, for defendant.
   WILDMAN, J.

In this case we have presented a very interesting question as to the legal effect of a clause in a chattel mortgage seeking to cover property not owned by the mortgagor at the time of the execution of the instrument.

The case was submitted to the court below upon the pleadings and an agreed statement of facts, together with the chattel mortgage referred to in the pleadings, and the court gave judgment for the plaintiff below, the National Supply Company, against the present plaintiff in error, Benjamin Netzorg. The chattel mortgage which is attached to the bill of exceptions describes a number of articles, specifying them in detail, they being certain implements and tools used for the purpose of drilling oil wells. In said description, in one part of the mortgage, this language is used: “Also all other fixtures, machinery fittings, connections and materials which the mortgagor may hereafter acquire by purchase or exchange and which shall be added to and used in connection with the above wells or in connecting same with powers and derricks and operating of said wells, shall become a part of and be included in this mortgage. ’ ’

The suit below was a replevin suit instituted by the National Supply Company against Netzorg to recover possession of what the petition denominates “two big-hole bits’1 together with certain other articles, described in the petition, but which other articles are not now connected with the controversy. The sole question is as to the title and right of possession of the bits mentioned. These bits were not among the items specifically mentioned in the chattel mortgage, but they were subsequently acquired by the mortgagor after the going out of use of two> bits that were specifically mentioned.

A clearer understanding of the ease will perhaps be obtained from reading the agreed statement of facts which is as follows:

“First: That on February 21, 1903, Samuel E. Niece gave to the National Supply Company the mortgage hereto attached. That in said string of tools there was included two big-hole bits; that said bits were afterwards worn out, and said Samuel E. Niece, after the date of the giving of said mortgage, purchased of the Hardy Machine Company two big-hole bits, being the bits replevined in this action. That the same were placed with the string of tools and used in place of the two bits that had been worn out that was included in the mortgage. One of the bits was actually used in completing a well, and the other was. dressed up ready to be used, but was not needed in the completion of the well.

‘ ‘ Second: That the National Supply Company took possession after-wards of the tools and attempted to take possession of these two bits, and was prevented from obtaining possession of them by Samuel E. Niece in whose possession they were at the time. That after the attempt of the National Supply Company to get possession of said tools, said Samuel E. Niece sold the same to the defendant in this case, Benjamin Netzorg, for' a valuable consideration.

“ It is agreed that the value of said bits is $35.

“Third: It is also agreed that the mortgage above referred to was filed with the township clerk of Henry township on February 24, 1903, and was refiled on February 15, 1904.

. “Fourth: It is also further agreed that the National Supply Company have possession of the tools described in this action at the present time, and at the commencement of this action.

“Fifth: It is also further agreed that the mortgagor, Samuel'E. Niece, never delivered possession of said big-hole bits to the mortgagee- and never agreed to deliver the same to them, and refused to have the same considered in said mortgage, and after the purchase of these bits-Niece never consented to deliver them to the National Supply Company and never did deliver them to the National Supply Company, bnt that they obtained possession thereof by replevining the same from the defendant in this action.”

This agreed statement of facts, together with the chattel mortgage, constitutes the only evidence submitted to the court below. The court having rendered a judgment in favor of the National Supply Company, holding that the mortgage covered these two bits acquired as shown after the execution of the mortgage, Netzorg filed a motion for a new trial which was overruled, and thereupon the petition in error was filed here for a reversal of the judgment below.

I will not tarry to examine the numerous cases which have been cited by counsel from other jurisdictions in which there appears a seeming conflict of authority as to the effect of such a clause as we find in this mortgage, as in my judgment we have decisions in Ohio which are decisive of the controversy, rendering it unnecessary to search elsewhere.

The first case to which attention should be directed is that of Chapman v. Weimer, 4 Ohio St. 481, the syllabus of which is as follows: “A chattel mortgage, purporting to create a lien on the stock in a grocery, and also on such as should be subsequently acquired by the mortgagor, creates no lien on the subsequently acquired property.

“When such mortgage authorizes the mortgagee to take possession of the property secured and attempted to be secured, it is a continuing executory contract; and when the mortgagor acquires such property after the execution of the mortgage, and actually delivers the same to the mortgagee, the latter thereby acquires a valid lien on such subsequently acquired property.”

Judge Kennon rendered the opinion, and on page 484, says:

“It may be safely said that Chapman did not, by the mere execution of this mortgage, acquire any legal title to, or lien on, such subsequently acquired property. But when, after the execution of the mortgage, and after the mortgagor had acquired title to property not owned by him nor in his power to deliver, at the time of the execution of the mortgage, he does acquire the title and possession of such property and actually delivers the same to the mortgagee, a very different question arises.”

I might read much more in elaboration of the idea suggested in the syllabus, but I will not take the time for it. The ease of Coe v. Railway, 10 Ohio St. 372, 391, 392 [78 Am. Dec. 518], incidentally touches the same question. The matter is not precisely the same where the rights of a railroad company are affected, because to some extent they are governed by legislation granting powers to railroad companies to pledge not only existing property but tbe income therefrom. But in this case there is a recognition of the doctrine enunciated in Chapman v. Weimer, supra.

I read from page 391 of the opinion: “As to the transfer of a title, a mortgage of goods and chattels, to be subsequently acquired, would stand upon the same ground in law and in equity. It could give no ‘legal title, nor any equitable title, to any specific goods.’ Congreve v. Evetts, 10 Exch. 298; Parke, B. It would amount to no more than an executory contract, — in equity, it might be regarded as a claim for a title, to be perfected by possession taken with the assent of the grantor or under his authority, or by a specific performance.”

The doctrine was recognized and further elaborated in the case of Francisco v. Ryan, 54 Ohio St. 307, 308 [43 N. E. Rep. 1045; 56 Am. St. Rep. 711].

I read from the syllabus:

“A stipulation in such a mortgage, that it shall be a lien on any goods the mortgagor may thereafter purchase, and place in stock to supply the place of those he should sell, while not creating a present lien, nor a lien when and as the goods are purchased, constitutes a valid contract for a lien on such after acquired property; and possession thereof lawfully taken by the mortgagee has the same effect of protecting it in his hands from the claims of the mortgagor’s creditors, as has possession taken of the property owned by the mortgagor at the time of the execution of the mortgage.
“Sufficient authority is conferred on the mortgagee to take possession of all the property on which the mortgage purports to create a lien, including the after-acquired property, as well as the stock owned when the mortgage was executed, by a clause therein which provides that if, at any time before the maturity of the debt, the mortgagee shall ‘deem • it necessary for his more perfect and complete security,’ he may enter the store or place where the goods may be, and ‘take and carry away the mortgaged property,’ and ‘dispose of the same at public or private sale.’ ”

And on page 315, the judge, speaking for the court, says:

“Courts have differed in regard to the effect of mortgages intended to create a lien on goods which the mortgagor did not own at the time of its execution, but which it was contemplated he would thereafter acquire. This difference has arisen chiefly from the nature of the jurisdiction exercised by the courts. Those of equitable cognizance applying' the maxim that equity regards that as done which ought to be done, hold that under such a mortgage a lien attaches to the property as soon as it comes to the mortgagor’s ownership; while at law, it has been' held that it creates no present lien, nor one as the property is acquired, but as between the parties it operates only as a contract for a lien,, which may be made effectual for the* benefit of the mortgagee by possession lawfully obtained of the property, not only as against the mortgagor himself, but also as against any subsequent legal process issued against him,1 or disposition attempted to be made by him. Whether, or in: what instance, in actions under a civil code like ours, by which the two' systems of remedial justice are blended and administered in the same' courts, and often in the same proceeding, the equitable rule should be applied, is a question upon which the courts are not agreed, and one whose decision is not necessary in this case.”

Then the decision of Chapman v. Waimer, supra, receives attention, the court here not disputing the principle as there announced. The substance of this decision in Francisco v. Ryan, supra, is that the power given to the mortgagee to take possession of the property when he deems it necessary for his own more effectual security, applies not only to the property actually covered by the mortgage, but also the property which the parties afterwards acquire. It is manifest, however, from all these decisions that the mortgagee has no lien upon the property under the Ohio rule until the moment when he acquires possession of the property.

In this case the agreed statement of the facts expressly informs us that the mortgagee did not obtain possession of the property prior to its sale by Niece to Netzorg. He attempted to do it, but possession was refused, and this fact is two or three times repeated in the agreed statement. The property still remained in the possession of Niece until the sale to Netzorg. It was then transferred to Netzorg and replevined from him by the National Supply Company, and our judgment is that under the circumstances, Netzorg received title to the property.

It is not said that he was a bona fide purchaser in this statement; that he had no knowledge of the existence of the executory contract between Niece and the National Supply Company, but we think that under the authorities that makes no difference. No lien had been acquired by the National Supply Company. It is a case where there-was only an executory contract which might or might not be performed. '

I do not lose sight of the suggestion made by counsel for the defendant in error in an able argument, that these articles were a part of a string of tools; that they were to supply the place of some which might wear out, and that they were to be used in common with the property mortgaged. Reference was made in argument to an often-cited! case of the repair of a rifle by giving it a new stock, wherein it was held that a chattel mortgage upon the rifle would cover not only the original implement, but also the repairs. Another case is that of Southwarth v. Isham, 3 Sandf. 448, where additional sails were applied to a vessel. A mortgage had been placed upon the vessel, and the mortgage was held to be a lien not only on the vessel but also on some new sails. An examination of that case, however, shows that the question arose after possession had been taken by the mortgagee, so that even if it were independent property, under .our rule, the mortgagee having taken possession, his mortgage would cover' the sails as well as the vessel.

We do not think tiiese two bits are to be likened to the ease of a part of the rifle which is repaired or any other implement or tool so repaired. It is not to be doubted that a mortgage placed upon some one article, will cover that article as subsequently changed, provided the integrity of the article remains. Precisely as with a mortgage upon a house and lot, where the mortgage will remain a lien upon the house although painted and improved during the time of the existence of the mortgage and before it is foreclosed.

i I should add that some reference was made in argument to the case of Read v. Ginsburg, 64 Ohio St. 11-24 [59 N. E. Rep. 738], but we think that that ease does not aid the present inquiry. The question arose there in reference to a railroad mortgage. It does not seem to have special bearing upon the principles involved in this ease, and it does not alter our judgment. I have already invited attention to the ease in Coe v. Railway, supra, with the statement that statutes conferring powers upon railroad companies to mortgage not only property, but the income thereof, induced the holding that a mortgage of after-acquired property which was the result of income would create a lien upon that property.

These cases of railroad mortgages do not in any way disturb the principle applied to mortgages among or between individuals.

Our judgment is that Netzorg should prevail, — that the title and possession to and in this property remained in him up to the time of the suit in replevin, and the property having gone into the possession of the mortgagee, the National Supply Company, there should be a judgment upon the agreed statement of facts and the pleadings, for the amount agreed upon as the value of the property, with interest from the •date of the taking possession by the National Supply Company, and costs. v

The judgment .of the court below is reversed and judgment will be entered in this court in accordance with the foregoing opinion.

Haynes and Parker, JJ., concur.


source: Caselaw Access Project

author: HAYNES, J.

license: Public Domain

text:
    GAS AND OIL.
    [Wood (6th) Circuit Court,
    April 29, 1905.]
    Hull, Haynes and Parker, JJ.
    Hull, J., not sitting.
    George Zeller v. G. M. Book et al.
    1. On. Lease to Run as Long as Oil Pound in Paying Quantities will not be Vacated because Terbitoby is Light.
    An oil lease conditioned to run five years from the date thereof, or as long as oil or gas should he found in paying quantities, will not be vacated by a court of equity on the ground that the territory is so light as not to warrant the sinking of more wells.
    3. Lessee in such Case is Sole Judge of Question of Profitableness of Oil Lease.
    The fact that it is questionable whether oil wells on land held under a lease operative only so long as oil or gas should be found in paying quantities will ever yield a reasonable profit on the investment, is not sufficient . ground for vacating the lease; the lessee is the sole judge on this question, and as long as he can make a profit therefrom, he will be permitted to do so.
    :3. The Mere Pact that Oil Lessee has not Operated Wells for some Time is not Ground for Vacating Lease.
    The mere fact that a lessee, under an oil lease conditioned to run as long as it is a profitable investment, has failed to operate the wells for some time, will not be ground for vacating such lease, where such lessee shows good and sufficient reason why it has been impracticable for him so to do.
    [Syllabus approved by the court.]
    Appeal from Wood common pleas court.
    Jesse Stephens, for plaintiff:
    That the terms of this lease has expired. Bryan, Petroleum & Nat. Gas 172; North Western Ohio Nat. Gas Co. v. Davis, 6 Circ. Dee. 529 (9 R. ■551); Harris v. Oil Co. 57 Ohio St. 118 [48 N. B. Rep. 502]; Detlor v. Holland, 57 Ohio St. 492 [49 N. E. Rep. 690; 40 L. R. A. 266]; Blair v. •Gas Co. 5 Circ. Dec. 619 (12 R. 78); Northwestern Ohio Nat. Gas Co. y. Tiffln, 59 Ohio St. 42Ó [54 N. B. Rep. 77].
    Abandonment. Bryan, Petroleum & Nat. Gas 172.
    Lack of facilities no excuse. Bryan, Petroleum & Nat. Gas. 181-184.. A lease on seventy-three acres forfeiture as to undrilled territory. Bryan, Petroleum & Nat. Gas 196, 198.
    The injury received by one of the defendants on insufficient excuse. Bryan, Petroleum & Nat. Gas 164.
    J. 0. Troup, for defendant.
   HAYNES, J.

This case comes into this court by appeal and is an action that was brought in the court of common pleas for the purpose of declaring-a certain oil lease terminated, and to have the sam’e cancelled. I shall state the ease very briefly. There was an oil lease made upon this land sometime 'in 1893, and there were three wells drilled on the property, and which have been operated most of the time from that date forward. The lease has passed through several hands, the land has been sold, and finally on November 22, 1901, the plaintiff bought the property. On January 27, 1902, he commenced this action. The terms of the lease run for five years from the date thereof, or as long as'oil or gas shall be found in paying quantities. The plaintiff in his petition claims that the wells have ceased to be paying wells, and claims that they have been left to stand idle- and unoperated for some time, and claims for these reasons that the lease should be declared ended and cancelled, and that the defendants should be required to re'move their material from the premsics, and the lease cancelled of record. The plaintiff at the time he purchased this land, took it subject to this lease, and, as will be seen, he was in possession but a few days before he commenced to take steps to lay the foundation for this action, and to bring the action. It appears from the testimony that the wells were not very productive. In common with a great deal of the territory in this section of the county, they have ceased to be large producing wells, if they were run. The whole territory in this immediate vicinity is rather poor for the production of oil — light territory it is termed. Nevertheless these wells have been drilled and money has been expended, and the defendant Book has come into the possession of the lease; he owns the wells and equipment and he has endeavored to make some money out of them; endeavored to make his living perhaps, out of them. The improvements in regard to the operation and management of the wells are such that they can be run at very little expense, and we find in regard to them that they will yield some profit, — not a large-profit, but some.

The plaintiff comes into a court of equity and asks that this lease be terminated; that the property is very poor paying territory and there is no probability of oil being found there. The plaintiff offers no testimony whatever that there.is any probability that it is paying territory, that wells ought to be found upon the territory; in other-words the whole drift of the testimony is that the territory is poor and that the wells, if producing, would be very light, and that a prudent man would not be warranted in drilling a well with the expectation of ever getting his money back, so that, so far as the outcome is concerned, the plaintiff is suffering no injury so far as we can see. So far as the defendant is concerned, he seems to be trying to make his living out of' tbe lease, and we think it would be manifestly unjust to deprive him of this property if he is able to produce oil enough to pay him for the expense and make him some little profit, or at least furnish him the means of a livelihood. We are of the opinion that it is unnecessary to' show that he can expect to get back the cost of drilling a well. His profit from what little he could get out of it would simply be salvage and would produce very little in the market, and it seems too a necessity that he should go forward and pump his wells so long as he can do, so if it pay him anything like a reasonable return. It seems to us that a court of equity ought not to interfere with it unless it is necessary to do so. He is operating upon his own judgment of what he deems best and authorities are cited, especially a case in Young v. Oil Co. 194 Pa. St. 243 [45 Atl. Rep. 121], indicating that it is the option of the lessee himself to decide whether he will proceed, or how long he will proceed. It is presumed of course that he will, operate in his own interest, and so long as he is acting in good faith and máking an effort to get some production out of the well, he has a right to go forward and decide for himself. This right of the lessee to. exercise his own judgment seems to be authorized in the cases cited to us. We think that view is right and just and the natural outlook of the case, and we hold therefor that so far as this man is operating in good faith, it would be unjust to disturb' him and compel him to give up what he has in the lease, — to take out his casing and material and sell it. It will be time enough to do that after he ceases to operate the lease. We do not think equitjr would require that this lease should be cancelled so long as he is acting in good faith, and we think in this case he is.

It is said that there has been an omission for some time to operate.. The testimony of the defendant shows that he has been in a condition physically for some time, where he could not carry forward the work. He gives what we deem good and fair reasons for allowing the wells to remain idle that are now on the lease. There was a storm and the derricks were blown down, — a very heavy storm; and while in this situation the derricks were burned, and the man seems to have had one trouble upon another, and yet he has been fighting along against these difficulties and doing the best he can under the circumstances, and we think the court ought to permit him to hold the premises and continue to operate the wells, so long as he, in his judgment, thinks it profitable, and without further discussion we hold that the petition should be dismissed and judgment awarded the defendant for his costs in the case.

Parker, J., concurs»


author: .SWING, J.

text:
    ERROR — DEBTOR AND CREDITOR.
    [Hamilton (1st) Circuit Court,
    January 11, 1906.]
    Jelke, Swing and Giffen, JJ.
    Hadley et al. v. Ellis et al.
    In Suit as to Ownership of Disputed Fund, Judgment against Debtor is Eeboneous aftep. Dismissal oe Claimant eos Lack of Seevice.
    In a suit involving the ownership of a certain fund, in which the debtor admits the validity of the claim and that the amount in question is due, hut alleges that a controversy exists as to the division to be made thereof, and offers to pay the same into court pending the determination of the equities in the case, and one of the parties to such controversy is dismissed from the action on a motion to quash the service of summons, a judgment thereafter given on the pleadings against such debtor will be erroneous. '

    [Syllabus approved by the court.]
    ERROR to Hamilton common pleas court.
    W. H. Sheldon, prosecuting attorney, for plaintiff:
    Interested party. McArthur v. Scott, 5 O. F. D. 357 [113 U. S. 340; 5 Sup. Ct. Rep. 652; 28 L. Ed. 1015]; McArthur v. Franklin, 15 Ohio St. 485; Star, Eq. PI. Sec. 72-76; Denton v. Nanny, 8 Barb. 618; Mills v. Van Voorhies, 20 N. Y. 412; St. Marys Mach. Co. v. Supply Co. 68 Ohio St. 534 [67 N. E. Rep. 1055; 96 Am. St. 677];Trimble v. Booihby, 14 Ohio 109 [45 Am. Dec. 526]; Gibler v. Trimble, 14 Ohio 323; Irvin v. Smith, 17 Ohio 226; Osborn v. McClelland, 43 Ohio St. 284 [1 N. E. Rep. 644]; Reformed Presbyterian Church v. Nelson, 35 Ohio St. 638; Stone v. Viele, 38 Ohio St. 314; Penn v. Hayward, 14 Ohio St. 302; Benson v. Stein, 34 Ohio St. 294.
    Amendments to pleadings. Irwin v. Bank, 6 Ohio St. 81; Milius v. Jilarsh, 12 Dec. Re. 765 (1 Disn. 512) ; Clark v. Clark, 20 Ohio St. 128; Broch v. Becker, 5 Dec. Re. 519 (6 Rec. 380; 2 Bull. 262); Lake Shore <& M. S. By. y. Hutchins, 37 Ohio St. 282, 291; Clarke v. Thomas, 34 Ohio St. 46; Newburg Petroleum Co. v. Weare, 44 Ohio St. 604 [9 N. E. Rep. 845]; Boot v. Bailway, 45 Ohio St. 222 [12 N. E. Rep. 812]; Cincinnati v. Cameron, 33 Ohio St. 336; Babcock v. Camp, 12 Ohio St. 11; Grant v. Ludlotv, 8 Ohio St. 1; Morgan v.. Spangler, 20 Ohio St. 38; Barr v. Chapman, 3 Cire. Dec. 36 (5 R. 69).
    Jurisdiction of two courts. Bateman v. Morris, 7 Dec. 287 (4 N. P. 397).
    L. J. DoIIe, Harper & Allen and Brenan & Middleswart, for defendant.
   .SWING, J.

This action is here on error to the judgment of the court of common pleas of this county. In that court Ellis & Company brought an action, alleging in substance that it had entered into a contract with Hadley and others, commissioners of Washington county, Ohio, for the building of a court house at Marietta, Ohio, and that the work was completed. The petition further alleges that it sublet certain portions of the work to the Paige Concrete Fire Proofing Company, who in turn sublet to the Ransome Concrete Company, who in turn sublet certain parts to the Champion Iron Works. That the said Champion Iron AYorks have filed with the auditor of Washington county a mechanic’s lien for the sum of $2,368 for work and material furnished by it in the ■construction of said court house.

The plaintiff alleges that there is only due by it to the Ransome •Company the sum of $1,613.97, leaving a balance due it of $754.03. It .asks that all the defendants may be made parties, and the rights of the several parties to said fund may be determined.

The parties to the action are the Ransome Company, the Champion Iron Company (of Kenton, Ohio), and the commissioners of Washington county.

The commissioners of Washington county filed an answer iñ which they allege that the Champion Iron Works had filed a mechanic’s lien in a proper way, claiming that there was due it the sum of $2,368; that it had notified the plaintiff and the Ransome Company of the filing of The same, and that both parties had disputed the claim, and that it had therefore 'retained said sum out of the amount due the plaintiff on its contract; that it still held said sum and was willing to pay it to whomsoever the court might find entitled to it, or to pay it into the hands of the court, if so ordered, and asked to be protected. The commissioners further set up that an action was pending in Washington county between said several parties as to said sum of $2,368.

The Ransome Company filed an answer admitting the allegations of the petition as to matters between it and the plaintiff.

The Champion Iron Works filed a motion to quash the service of summons on it, which on hearing, the court sustained, and the Champion Iron Works, therefore, are now out of the case. .

After this, the court on motion of the plaintiff for judgment on "the pleadings, rendered judgment against the commissioners for the sum of $754.03, as claimed in the petition.

Was the court justified in rendering such a judgment?

The petition and answers disclose this state of facts: A contract for the building of the court house; its completion; a balance due on the same of $2,368; of this sum the plaintiff claimed $754.03, and the Ran-some Company $1,613.97, both plaintiff and the Ransome Company agreeing to this; the Champion Iron Works claiming it .all, and Washington county, by its commissioners, admitting it owed this amount on the contract, and asserting that the other parties all claimed it and were disputing each other’s claims, and saying that it stood ready to pay the sum to whom the court should find entitled to it. The Champion Iron Works goes out of the case.

A glance at the pleadings shows that in order to determine the rights of the parties claiming this fund, the Champion Iron Works. was a necessary party. In fact, according to the pleadings, the claim of the Champion Iron Works was the only controversy in the case, and was the matter upon which the court could be called upon to pass. It was the gist of the action and was the only ground upon which it was possible to bring the commissioners of Washington county to this forum. If it had not been for the claim filed according to law by the Champion Iron Works, the same would have been paid to Ellis & Company. There was no controversy between Ellis & Company and the commissioners. There was nothing to try or adjudicate between them, but there was a question between the Champion Iron Works and the plaintiff, and the Ransome Company, and by reason of that fact, the commissioners of Washington county were necessary and proper parties, not in an adversary character, but in order to render complete and necessary justice; in other words, having admitted the debt due to some of those-' claiming it, the court having found who was rightfully entitled to the-same, could direct the commissioners to whom it should be paid. ' -

Without determining the only question raised, viz., who of these three parties is entitled to this fund, the court rendered judgment on the pleadings against the commissioners, and in favor of the plaintiff. We are unable to find anything in the pleadings which authorizes such judgment.

It is apparent from the pleadings, that after the Champion Iron Works got out of this action, that it might maintain an action in any other forum and there have determined the very question which the petitioa in this ease sought to have determined, viz., who, as between plaintiff-, the Champion Iron Works, and the Ransome Company, was; entitled to this fund, admitted to be due by the commissioners; and any judgment rendered in this action would be no bar to any judgment rendered by the court in the action instituted 'by the Champion Iron Works. And the record discloses that this is just what was done. For the Champion Iron Works brought an action, making all the parties in this action defendants, and had determined in that action that it was entitled to the whole amount of this fund, to wit, $2,368, together with interest. The result must be, if the judgment in this case stands, that the commissioners of Washington county will have to pay the money twice, and this through no fault of theirs; instead of being equitable, this would be inequitable.

We think the court of common pleas was in error in rendering judgment in favor of the plaintiff and against the commissioners, and this is shown by the pleadings, whether the court considered the amendment to the answer of the commissioners or not, for the reason that when the Champion Iron Works went out of the case, it left nothing to be determined against the commissioners.

Jelke and Giffen, JJ., concur.


author: JELKE, J.

text:
    COURTS — EXECUTORS AND ADMINISTRATORS.
    [Hamilton (1st) Circuit Court,
    December 18, 1905.]
    Jelke, Swing and Giffen, JJ.
    Emma B. Sargent v. Mary Corbley et al.
    1. Court may in its Discretion Waive its own Rules.
    Rules of court are not principles of law, but are of tbe court’s own making; hence, if the court, for reasons satisfactory to itself, sees fit to break or waive them, such action cannot be charged to it as an abuse of discretion.
    2. Other Things Being Equal, the Court will Appoint as Administrator the One Desired by the Beneeiciaries.
    In the appointment of an administrator of a decedent’s estate, the court will, as between parties otherwise equally well qualified, select the one possessing the confidence of, and desired by the larger number of the beneficiaries.
    3. Appointment of Administrator will not be Set Aside because Reviewing Court might have Made Other Selection.
    The appointment of an administrator will not be set aside merely because the appellate' court might have made a different selection, in the absence of proof that the appointee was so unsuitable as to warrant the presumption that there was an a.buse of discretion.
    [Syllabus approved by the court.]
    Error to Hamilton common pleas court.
    Strieker & Johnson, for plaintiff:
    The uneontradicted proof show's that Emma B. Sargent was “a suit-» able person” to be appointed as administratrix wdthin the meaning of Rev. Stat. 6005 (Lan. 9544). Todhunter v. Stewart, 39 Obio St. 181 j. Schumacher v. McCallip, 69 Ohio St. 500 [69 N. E. Rep. 986].
    Mary Corbley and William Sargent were not “suitable for the discharge of the trust” within the meaning of the statute. 0shorn v. Bank of United States, 22 U. S. (9 Wheat.) 738 [6 L. Ed. 204]; Bex v. Wilkes, 4 Burr. 2527; Peters v. Public Administrator, 1 Bradf. 200; State v. Johnson, 105 Wis. 164 [83 N. W. Rep. 320].
    W. A. Hicks, for defendant;
   JELKE, J.

This matter came on for hearing in the probate court of Hamilton, county, for the appointment of an administrator of Rebecca J. Griffin, deceased. It came on primarily upon the application of E. J. Hiatt and W. A. Hicks, and also on the application of Emma B. Sargent, and subsequently upon the application of Mary Corbley and William B. Sargent. After considerable controversy, the record of which is brought up by a bill of exceptions, the application of Messrs. Hiatt and Hicks was withdrawn, and the application of Emma B. Sargent rejected, and Mary B. Corbley and William B. Sargent were appointed by said court as administratrix and administrator jointly of said estate.

Error was prosecuted to the order of the probate court in the court of common pleas, where said order was affirmed.

Error is now further prosecuted in this court to such order of appointment.

It appears from the record that Emma B. Sargent, Mary Corbley and William B. Sargent are all next of kin of the decedent, Rebecca J. Griffin, and on an equal footing of kinship as to their right to administer under Rev. Stat. 6005 (Lan. 9544).

On the question of suitability of the respective applicants, it is now charged that there was a gross abuse of discretion upon the part of the court in selecting the persons appointed. As to Emma B. Sargent, so far as the record discloses, she was and is in every respect an eminently qualified and suitable person. The only ground of discrimination to be found against her in the record is the fact that the interest which she represented was quite small in comparison with the Interests represented by the other applicants, and the fact that the other applicants who were largely interested in the administration of the estate did not want her appointed.

The objection urged to Mary Corbley was that she was aged and thei efore unfit to perform the duties of administratrix.

The objection urged to William B. Sargent was that he was not a resident of Hamilton county, but of Clermont county, and Ms appointment would violate one of the rules of the probate court.

The attitude of these latter parties, Mary Corbley and William B. Sargent was that they themselves did not particularly' desire the appointment, but rather than have Emma B. Sargent appointed theyVould stand upon the legal right given them by Rev. Stat. 6005 (Lan. 9544), and ask for the appointment.

Emma B. Sargent and her counsel evidently experienced acute feelings of disappointment in the action of the court. It may be that another judge, on the same showing disclosed in the record, would have acted differently; but it is better that one appointed to a place of responsibility and trust should not only have the capacity and qualifications for the performance of the duty of the trust, but should also enjoy the confidence of the beneficiaries of the trust and of those interested therein. While this consideration is far from controlling, it is a matter which may well be entertained by a court in the exercise of its discretion in the matter of such appointment. The rule of the probate court is not a principle of law, but a rule of the court’s own making for the expedient transaction and dispatch of business in said court, and if said court, for reasons satisfactory to itself, sees fit to break or waive such rule, it is not to be charged to it as an abuse of discretion. The appointment as made is clearly within the provision of the law, and is not so unsuitable as to justify the charge of gross abuse of discretion.

We are therefore of the opinion that the judgment of the court of common pleas should be affirmed.

Swing and Giffen, JJ., concur.


author: GIFFEN, J.

text:
    EVIDENCE — NEGOTIABLE INSTRUMENTS — EXECUTORS AND ADMINISTRATORS.
    [Hamilton (1st) Circuit Court,
    January 20, 1906.]
    Jelke, .Swing and Giffen, JJ.
    Theresa J. Wehrman v. Paul W. Beech et al.
    1. Revised Statutes 5242 (Lan. 8751) Applies to all Facts Occurring Prior to Death.
    The inhibition of Rev. Stat. 5242 (Lan. 8751) as to the introduction of testimony in suits against executors, administrators, etc., applies not only to transactions with the decedent, but also to facts which occurred before his death; testimony, therefore, as to transactions with the agent of such decedent is as inadmissible as though with the decedent himself.
    2. Presumption that Holder of Note Took same for Value before Maturitt.
    Under the provision of Rev. Stat. 3172q (Lan. 4942) as well as under the law merchant, it will be prima facie presumed in favor of the holder of a promissory note that he took it for value in the usual course of trade' before maturity.
    [Syllabus approved by the court.]
    Ereor to Hamilton common pleas court.
    Kelley & Hauck, for plaintiff in error,
    cited:

      Baker v. Jerome, 50 Ohio St. 682 [35 N. E. Rep. 1113] ; Farley v. Lisey, 55 Ohio St. 627 [45 N. E. Rep. 1103] ; Paddock v. Adams, 56 Ohio St. 242 [46 N. E. Rep. 1068]; Ranh, In re, 65 Ohio St. 128 [61 N. E. Rep. 701]; Chapman v. Lee, 45 Ohio St. 356 [13 N. E. Rep. 736] ; Safer, In re, 12 Gire. Dec. 102 (21 R. 445) ; Williams v. Stearns, 59 Ohio St. 28 [51 N. E. Rep. 439]; Bradford Belting Co. v. Gibson, 68 Ohio St. 442 [67 N. E. Rep. 888]; Chicago Cottage Organ Co. v. Bichforth, 24 O. C. C. 660; Lester v. Snyder, 12 Colo. App. 351 [55 Pac. Rep. 613] ; Kernohan v. Durham, 48 Ohio St. 1 [26 N. E. Rep. 982; 12 L. R. A. 41]; Holloger v. Bates, 43 Ohio St. 437 [2 N. E. Rep. 841] ; Hitchcock v. Kelley, 4 Gire. Dec. 180 (18 R. 808) ; Barstow v. Stone, 10 Colo. App. 396 [52 Pac. Rep. 48]; Chappelear v:.Martin, 45 Ohio St. 126 [12 N. E. Rep. 448]; Daniels, Neg. Instr. 608; Rev. Stat. 3172q (Lan. 4942) ; 8 Cye. 227; Osborn v. McClelland, 43 Ohio St. 284 [1 N. E. Rep. 644]; Davis v. Justice, 31 Ohio St. 359 [27 Am. Rep. 514]; Lytle v. Boyer, 33 Ohio St. 511 [31 Am. Rep. 561]; New York, C. & St. L. By.,v. Swartout, 6 Circ. Dec. 768 (14 R. 582).
    Cobb, Howard & Bailey, for defendant.
   GIFFEN, J.

Three separate actions were consolidated and tried under the above title, each being founded upon a promissory note or notes. In two of the cases, the only issue well pleaded was whether the notes were duly •assigned and transferred to the plaintiff in due course of business for valuable consideration before maturity.

The allegation in the answers, that defendants paid to J. Fred "Woltz, the holder and owner of the promissory notes, stated no defense of payment unless he was the holder and 'owner of the notes, in which case that of itself would be a complete defense.

If the jury, in returning a verdict for the defendants, based it upon a finding that the notes were not transferred to Mr. Wehrman in due course, it is not sustained by sufficient evidence, and if, on the •other hand, it was based upon a finding that the notes were paid to Mr. Wehrman, or his agent, it is not supported by any pleading in the case.

In the third case, the defense is that the note was an accommodation paper, and was not assigned or transferred to Mr. Wehrman before maturity, nor for any consideration. The testimony is clear that the defendant executed the note as an accommodation, and if Mr. Wehr-man took it after it became due, the defendant would not be liable. The evidence probably sustained the verdict of the jury as to this note, provided the testimony of the witness, Woltz, is competent and was relied on by the jury. It is contended that his testimony was incompetent under Rev. Stat. 5242 (Lan. 8751), but he was not a party to any of the original actions, and although made such after the consolidation, no relief was asked against him, nor did he file any answer. He was merely a nominal party without any interest in the result, and clearly comes within the ease of Bell v. Wilson, 17 Ohio St. 640, and Baker v. Kellogg, 29 Ohio St. 663.

The court also admitted over the objection of the plaintiff, the testimony of the defendant, Beech, concerning facts that occurred prior to the death of the testator. It is claimed by counsel for the defendants that this testimony was competent, because he testified to no transactions with Mr. Wehrman, but only concerning transactions with Adam T. Toll, his alleged agent, but the operation of the section is not limited to transactions with the party, but to facts which occurred prior to the death of the testator. It seems clear, therefore, that the court erred In receiving his testimony.

The court refused to give the following special charge, which the plaintiff requested be given before the argument to the jury:

“I charge you as a matter of law that the law presumes prima facia in favor of every holder of negotiable paper:
“First. That he is the owner of it.
“Second. That he took it for value before maturity.
“Third. That be took it in the usual course of'trade; and the-plaintiff is entitled to recover unless these presumptions of law are-overcome by proof in the case, and the burden of proof is on the defendants. ’ ’

In 2 Daniels, Neg. Instr. 608, it is said:

“The mere possession of a negotiable instrument, produced in evidence by the endorsee, or by the assignee where no indorsement is necessary, imports prima facie that he acquired it tona fide for full value, in the usual course of business, before maturity, and without notice of any circumstance impeaching its validity; and that he is the owner thereof, entitled to recover the full amount against all prior parties. In other words, the production of the instrument and'proof that it is-genuine (where indeed such proof is necessary), prima facie establishes his case; and he may there rest it. ’ ’

Devised Statutes 3172q (Lan. 4942) provides as follows:

“Except where an endorsement bears date after the maturity of the instrument, every negotiation is deemed prima facie to have been effected before the instrument was overdue.”

It appears,.therefore, that by statute as well as by the law merchant; the presumption embraced within the special charge prevails in favor of the holder of a negotiable instrument.

The court erred in refusing to give the instruction as requested.

Judgment reversed and cause remanded for a new,trial.

Swing and Jelke, JJ., concur.


author: VOLLRATH, J.

text:
    EMINENT DOMAIN — TELEGRAPHS AND TELEPHONES.
    [Putnam (3d) Circuit Court,
    1905.]
    Norris, Hurin and Vollrath, J.J.
    Central Union Tel. Co. v. Columbus Grove (Vil.).
    1. Right of Eminent Domain must be Cleaelt Plead and Pboven if not Expressly CONFEEBED BY STATUTE.
    The right of eminent domain involves an attribute of sovereignty and' is a'n interference with private rights, and must, therefore, always be-strictly construed; a'nd every assumption of this right not conferred by statutory enactment within the judicial notice of the court must b® clearly plead and as clearly proven.
    2. Pobeign Telephone Company cannot Appeopbiate Pbopeety fob Local? Purposes in Absence of Statutory Permission.
    Interstate comity will not be extended to cases wherein foreign corporations doing business in this state seek to assume a'nd exercise the attributes nf sovereignty as against the private rights of the citizens of this state; and in the absence of statutory provisions expressly conferring the right of eminent domain o'n siich foreign corporations, there is no inherent power vested in a telephone company to condemn private property for purely local purposes, and not as a part of any interstate system.
    3. Petition by Foreign Telephone Company to Condemn Pbopeety heee must Allege Right of Eminent Domain in Home State.
    In a condemnation proceeding brought by a foreign telephone -company, its petition must allege, not only that the petitioner is a corporation of its home state, duly created for the purpose of erecting and maintaining lines of telephone within such state, but also that it is empowered by its charter to condemn and appropriate private property therein, and in tK. absence of such averments the petition will be bad on demurrer.
    [Syllabus approved by the court.]
    Error to Putnam common pleas court.
    Long & Kyle, for plaintiff in error.
    Handy & Unverferth, for defendant in error-.
   VOLLRATH, J.

The plaintiff filed its petition in the probate court of Putnam county averring corporate capacity in the following language;

“The plaintiff, the Central Union Telephone Company, respectfully represents that it is a corporation duly created, organized, and existing under the laws of the state of Illinois, for the purpose of constructing, erecting, operating and maintaining lines of telephone and telephone exchanges within and without said state of Illinois, and that it has likewise been duly authorized and empowered to construct, erect, operate and maintain lines of telephone and telephone exchanges within the state of Ohio, in accordance with the statutes of the state of Ohio, and it is so constructing, erecting-, operating and maintaining lines of telephone and telephone exchanges in many cities and villages in said state of Ohio at this time.
“That by the statutes of said state of Ohio your petitioner, the plaintiff herein, is given and granted the right to use the lands authorized to be appropriated to the use of telephone companies, which lands are subject to the easement of streets, alleys, public ways, or other public uses within the limits of any city, or village, in said state of Ohio, and especially the right to use the land subjected to the easement of the streets, alleys, public ways or other public uses, within the incorporate village of Columbus Grove, Putnam county, Ohio, said village of Columbus Grove being a municipal corporation, organized and •existing under the laws of the state of Ohio, located in the county of Putnam, in the said state, and being of the class of municipal corporations termed ‘villages,’ by the laws of said state of Ohio, by entering "thereon and therein, in accordance with the laws of said state of.Ohio for the purpose of making preliminary surveys and using and occupying said streets, alleys, public ways, with poles, wires and other necessary appliances for the purpose of constructing, erecting, operating and maintaining lines, telephones and telephone exchanges.”

The plaintiff further alleges that in the establishment and conduct of its business it is necessary for it to use certain land within the village of Columbus Grove, subject to the easement of the streets, etc., of said village; that some time in July, 1903, plaintiff made application to the council of said village of Columbus Grove for an ordinance granting it the right to use said streets, etc., and presented a form of enactment to said council therefor; said council on September 21, 1903, rejected said ordinance, and that plaintiff and defendant are consequently unable to agree upon terms for such use although plaintiff claims to have made diligent effort to secure such agreement and that said council refuses to pass any ordinance as to the mode of use of said streets by plaintiff and that plaintiff is compelled therefore to apply to said court under authority of Rev. Stat. 3461 (Lan. 5587), and ask that said court fix, determine and prescribe the mode of use of said streets, etc., by plaintiff, so that plaintiff may be authorized to construct, operate and maintain its said line of exchange over said streets, alleys, etc. Plaintiff, therefore, prays that a proper summons issue out of said court to require defendant to be present at a date named therein and show cause to the court why a finding, order and decree, should not be made in the premises and that plaintiff may be authorized and empowered to construct, erect, operate and maintain the telephone line, telephone exchange and toll line in said defendant village as by the statutes of Ohio provided, and for other and further relief.

To this petition the defendant filed its demurrer upon the grounds:

1. That the plaintiff has not the legal capacity to sue.

2. That the court had no jurisdiction of the subject-matter of the action.

3. That the petition does not state facts sufficient to constitute a cause of action.

Upon a hearing in the probate court, the demurrer was sustained as to the first and third grounds. Error was prosecuted in the court of common pleas of Putnam county, and upon a hearing in that epurt, the judgment of the probate court was affirmed. Error is now prosecuted here to reverse said judgment of the court of common pleas.

The error, if any, in this case, arises from the action of the court in sustaining said demurrer and this presents several very interesting questions. As indicated in the petition, the plaintiff is an Illinois corporation and it seeks by the proceeding in the probate court to exercise the right of eminent domain in a municipality in the state of Ohio. This is attempted under Rev. Stat. 3461 (Lan. 5587). which reads as follows:

“When any lands authorized to be appropriated to the use of a company are subject to the easement of a street, alley, public way, or other public use, within the limits of any city or village, the mode of use shall be such as shall be agreed upon between the municipal authorities of the city or village and the company; and if they cannot agree, or the municipal authorities unreasonably delay to enter into any agreement, the probate court of the county, in a proceeding instituted for the purpose, shall direct in what mode such telegraph line shall be constructed along such street, alley, or public way, so as not to incommode the public in the use of the same; but nothing in this section shall be so construed as to authorize any municipal corporation to demand or receive any compensation for the use-of a street, alley, or public way, beyond what may be necessary to restore the pavement to its former state of usefulness.”

The “company” mentioned in the above section is defined in Rev. Stat. 3454 (Lan. 5574) which reads as follows:

“A magnetic telegraph company heretofore or hereafter created mav construct telegraph lines, from point to point, along and upon any public road, by the erection of the necessary fixtures, including posts, piers, and abutments necessary for the wires; but the same shall not incommode the public.in the use of such road.”

By the terms of Rev. Stat. 3471 (Lan. 5598), the provisions of the sections above named also apply to telephone companies.

It is claimed, however, that notwithstanding the sections cited, a foreign corporation may not exercise the right of eminent domain in this state unless the right be expressly conferred by statute and that the provisions cited, not being, by express terms, made applicable to foreign corporations, they apply merely to. local companies. It is claimed that this view is sustained by the act of our legislature as expressed in Rev. Stat. 3399 (Lan. 5480), expressly giving the right of eminent domain to railroad companies extending into, and through, this state even though foreign corporations. It is argued that the fact of such enactment but emphasizes the proposition that without it the railroad company could not exercise such right, and, therefore, as there is no similar section with reference to telephone companies, the latter also may not exercise this right.

In the case of State v. Sherman, 22 Ohio St. 411, 434, it is held that the policy of this state has been, and is, not only to permit, but to invite and encourage, ownership of railróads in this state by foreign companies on an equal footing with domestic companies. It was stated that to invite their co-operation in works of great public concern and then to discriminate against them in point of right to use and enjoy their right to property in the state would not only be unjust to them but unwise for the state.

“If any discrimination does exist,” saith the court, “it is in regard to the power of condemning and appropriating private property to the use of the roads. In this case we find what we construe to be an express grant of that power. The Pennsylvania act incorporating the defendants,” the Pittsburgh, Ft. Wayne & Chicago Railroad Company, “gives them power to condemn and appropriate private property,” etc.

It will be noted that while in the above opinion the court places foreign and domestic corporations upon the same basis in all other matters so far as ownership and use of property is concerned, yet while it does not expressly deny, yet it does not concede to foreign corporations the right of eminent domain in this state where it is not expressly conferred. In the case, State v. Sherman, supra, the legislature of Pennsylvania had empowered the defendant company to appropriate private property, and it was held by the court that in view of the provisions of Rev. Stat. 3399 (Lan. 5480) above quoted, this power could be exercised by them in this state. This, however, does not answer the question with reference to the plaintiff in this case. There is no express law giving to foreign telephone companies the right of eminent domain in this state and especially for local purposes and the right of eminent domain may not be presumed in favor of foreign corporations.

In the case of Zanesville v. Telegraph & Tel. Co. 64 Ohio St. 67, 68 [59 N. E. Rep. 781; 52 L. R. A. 150; 83 Am. St. Rep. 725], it is held that,

“Telephone companies organized under the laws of this state have the right, by virtue of sections 3454, 3461-1 and 3471 Rev. Stat. [Lan. 5574, 5577, 5598], to construct their lines along the streets and public ways of municipal corporations, in accordance with the order of the probate court made in pursuance of Sec. 3461 [Lan. 5587].”

Here again it will be noticed that the right to invoke this law, to wit, Rev. Stat. 3461 (Lan. 5587), is limited by this case to telephone companies organized under the laws of this state.

While the court does not expressly deny the right to foreign corporations, yet this decision includes merely domestic corporations.

The same idea appears in the body of the decision to wit, on pages 88 and 89, it is stated:

“It is competent for the state, through its legislative department, to grant to telephone and telegraph companies’organized under its authority, the right to construct their lines in the streets of municipalities, and in the present instance the grant was so made.”

Here again the line is drawn just this side of foreign corporations and the court apparently made an extra effort to avoid including foreign corporations in its deliberation over the rights of a domestic corporation.

It is evident from the foregoing that, to' say the least, the courts in this state have not only failed to recognize the right of eminent domain in foreign corporations, unless expressly provided by statute, but apparently indicate that the right, if not absolutely denied, is yet of doubtful propriety and an unsettled quantity. The right of eminent •domain involving as it does, an attribute of sovereignty and interfering with private rights, must always be strictly construed and is always subject to the closest scrutiny. Every assumption of this right, where not conferred by statutory enactment within the judicial notice of the court, must be clearly plead and as clearly proven. This has been repeatedly held by' our Supreme Court. Moreover, it is held in the case of Atkinson v. Railway, 15 Ohio St. 21, that corporate existence and the right to exercise the power of eminent domain can only be derived from legislative enactment; and before a company can demand a judgment of condemnation, it must show that such powers have been conferred upon it by a valid law and that it has substantially complied with the condition which the law has'annexed to the exercising of the-power.

It is held in Coppin v. Greenlees, 38 Ohio St. 275, 279 [43 Am. Rep. 425], that a corporation possesses no powers except such as are-conferred upon it by its charter, either by express grant or necessary implication; and this principle has been frequently declared by the-Supreme Court of this state, and by no court more emphatically than by this court.

In this connection it may not be amiss to call attention briefly to the matter of the power which plaintiff seeks to exercise in this ease. As stated by our Supreme Court in Giesy v. Railway, 4 Ohio St. 308, 323:

“The power itself is an inseparable incident of sovereignty, and its exercise was delegated by the sovereign power to the general assembly-in the general grant of legislative authority. It may be defined to be, the right of the sovereign without the consent of the owner, when necessary, to make private property ‘subservient to the public welfare.*'
“It rests upon the public necessity (subordinates the rights of One to the welfare of all) and is just as broad as that necessity, and no broader. ”

When, therefore, a private corporation claims the right to exercise such power, its claims must not only be clearly proven but its petition must just as clearly set forth the grounds upon which its claims rest and which it must prove in order to sustain them else the petition is. obnoxious to the demurrer.

In the case at bar, the petition, while averring that the plaintiff is an Illinois corporation, created for the purpose of constructing, erecting, operating and maintaining lines of telephone, etc., within and without said state of Illinois, yet nowhere declares that it is empowered by its charter to condemn and appropriate private property. This, seems to have been the saving feature in the case of State v. Sherman, 22 Ohio St. 411. The Pennsylvania act, incorporating the Pitts-burg, Ft. Wayne & Chicago Railroad Company gave it power to condemn and appropriate private property. Nothing of this kind appears in the petition before us. We consider, therefore, that the petition is-defective in this particular and that the demurrer was properly sustained.

The further averments in the petition that plaintiff is authorized by the laws of Ohio to appropriate streets, etc., is rather gratuitous than otherwise in view of the condition of the laws of our state. We have? no law expressly conferring upon foreign telephone corporations the right of eminent domain. Moreover, while the question is, perhaps, not squarely before us at this time, yet we are of the opinion that even if the averment were properly made, that the plaintiff in this ease has the right of eminent domain by the terms of its charter, yet it could not, under the condition of our laws at this juncture, exercise that right in this state in the case at bar. The purpose for which the use of the streets in question is sought is local in its scope. It does not appear that the extension of lines, poles, etc., to be erected and constructed is part of an interstate transportation system or anything of the kind. It is simply a local telephone exchange. We do not think that the comity between states extends to cases where foreign corporations in this state seek to assume and exercise the attributes of sovereignty as against the. private rights of the citizens of the state.

Holding these views, it is the judgment of this court that there is no error in the record before us and the judgment of the court of common pleas is therefore affirmed with costs.

Norris and Hurin, JJ., concur.


author: WINCH, J.

text:
    COMITY — CORPORATIONS—JUDGMENTS—RECEIVERS.
    [Cuyahoga (8th) Circuit Court,
    October 27, 1905.]
    Marvin, Winch and Henry, JJ.
    Henry W. Leman v. John C. MacLennan.
    1. Cokporate Receiver cannot Sue in Foreign Jurisdiction to Realize Assets unless Title in him Vested.
    The receiver of a corporation is an officer of the court who appoints him, and in the absence of some conveyance or statute vesting the title to the corporate assets and property in him, cannot be empowered by such court to sue in a foreign jurisdiction, either in his own name or in that of the corporation, to realize its assets.
    2. Personal Judgment not Valid on Nonresident Served only by Publication, • who did not Defend.
    A personal judgment has no validity in this state, if rendered by the court of another in an action against a nonresident of such state who was served by publication, but upon whom no personal service of process within the state was made, and who did not waive service of process by his appearance.
    3. If Corporate Director Estopped to Levy on Certain Stock, Decree op Court will not Operate as such, ip Invalid as Judgment.
    In a case in which the directors of a corporation would be estopped to make an assessment against certain shares of stock, the decree of the court of a foreign state not operative here as a judgment will not amount to a legal assessment binding upon such shares. Great Western-Tel. Go. v. Purdy, 162 U. S. 329, distinguished.

      ■4. Petition by Foreign Receiver to Enforce Stockholder’s Liability not Invalid for Nonjoinder of all Stockholders.
    In an action by the receiver of a foreign corporation to enforce a stock- - holder’s liability in this state, a petition is not defective because of the nonjoinder as parties defendant of all the stockholders of such company.
    5. If Record Shows Service by Publication Affirmatively, Evidence not Admissible to Show other Service.
    If a record and decree contain an affirmative finding that service upon a ■ defendant was by publication, no proof that the court otherwise acquired jurisdiction will be admissible.
    [Syllabus approved by the court.]
    ERROR to Cuyahoga common pleas court.
    Smith, Beardsley & Morgan, for plaintiff in error.
    Hoyt, Dustin & Kelley, for defendant in error:
    In a collateral attack upon a judgment rendered before a court of ■general jurisdiction, a presumption of jurisdiction is indulged to sustain tbe judgment, wherever the record is silent on the subjfect. If, however, the record itself shows the manner in which jurisdiction was acquired, neither presumption nor evidence can be entertained to show that jurisdiction was obtained in any other or different'way, for the very simple reason that such presumption or evidence would contradict the record itself, which imports absolute verity. Freeman, Judgments Sec. 125; 17 Am. & Eng. Enc. Law 1077; Settlemier v. Sulliv.an, 97 U. S. 449 [24 L. Ed. 1110]; Scott v. Hull, 14 Ind. 136; Cleveland Leader Ptg. Co. v. Green, 52 Ohio St. 487 [40 N. E. Rep. 201; 49 Am. St. Rep. 725]; Morgan v. Burnet, 18 Ohio 535; Trimble v. Longworth, 13 Ohio St. 431.
    The proceeding in question cannot be regarded as a judgment or ■decree as against defendant in the sense in which those terms are generally used, as it discloses on its face that service was made on him by publication only, and it, therefore, is not binding upon him, either as .a cause of action, or as evidence. Pennoyer v. Neff, 95 U. S. 714 [24 L. Ed. 565]; Oil Well Supply Co. v. Koen, 64 Ohio St. 422 [60 N. E. Rep. 603] ; Arndt v. Arndt, 15 Ohio 33; Penny wit v. Foote, 27 Ohio St. 600 [22 Am. Rep. 340]; Freeman, Judgments Secs. 116-119, 564-567.
    Where stock was issued in payment for property delivered to a ■corporation, such a transaction is good-as to the corporation, and can only be set aside as to creditors on the ground of fraud; pre-existing creditors and those creditors whose obligations were contracted with the knowledge that the stock was paid for by the conveyance of the property, can have no recovery for the very simple reason that the transaction as to them is not fraudulent. Only those creditors who have been defrauded can avail themselves of this remedy. Medler v. Hotel ■& Opera House Go. 6 N. M. 331 [28 Pac. Rep. 551]; Cook, Corporations (5 ed.) Secs. 35, 42; Great Western Min. & Mfg. Go. v. Harris, 128 Fed. Rep. 321; affirmed, 198 U. S. 561 [25 Sup. Ct. Rep. 770] ; Goit v. Gold Amalgamating Go. 119 U. S. 343 [7 Sup. Ct. Rep. 231; 30 L. Ed. 420]; Handley v.,Stute, 139 U. S. 417 [11 Sup. Ct. Rep. 530; 35 L. Ed. 227] ; Dickerman v. Trust Go. 176 U. S. 181 [20 Sup. Ct. Rep. 311; 44 L. Ed. 423] ; Orton v. Machinery Go. 27 O. C. C. 107.
    The proceedings in New Mexico cannot be regarded as an assessment, and having been entered in a proceeding in which defendant was not personally present, is not a judgment, decree or order, nor can it be used as evidence. Freeman, Judgments Secs. 116-119, 564-567; Pen-noyer v. Neff, 95 U. S. 714 [24 L. Ed. 564]; Arndt v. Arndt, 15 Ohio 33.
    The plaintiff receiver here is not vested with that cause of action. He is not the real party in interest. Brown v. Ginn, 66 Ohio St. 316 [64 N. E. Rep. 123]; Hale v. Hardon, .89 Fed. Rep. 283; Hale v. Allin-son, 188 U. S. 56 [23 Sup. Ct. Rep. 244; 47 L. Ed. 380]; Hilliker v. Hale, 117 Fed. Rep. 220 [54 C. C A. 252]; Hale v. Hilliker, 188 U. S. 739 [23 Sup. Ct. Rep. 848; 47 L. Ed. 677]; Great Western Min. <& Mfg. Go. v. Harris, 128 Fed. Rep. 321; affirmed, Great Western Min. efe Mfg. Co. v. Harris, 198 U. S. 561 [25 Sup. Ct. Rep. 770] ; Manhattan Co. v. Steel Co. 1 Dec. 286 (31 Bull. 100); Parkinson v. Bank, 5 Dec. Re. 317 (4 Am. D. Rec. 401) ; 1Wilson V. Gifford, 5 Circ. Dee. 680 (12 R. 597).
   WINCH, J.

The plaintiff brought his action in the common pleas court, and in his third amended petition alleged three causes of action against the defendant.

In his first cause of action he recites that on February 5, 1898, in a certain action pending in the district court of New Mexico, at Santa Fe, a court of general jurisdiction, the Mexican Southeastern Railroad ■Company, defendant in said action, was declared insolvent and plaintiff was duly appointed its receiver, with the usual powers of receivers and was ordered to bring suit against the stockholders of the corporation to recover such amounts as might be due from them, respectively, on account of unpaid stock liability.

That in compliance with said order, plaintiff as receiver, brought ■suit in said district court against all the stockholders -of said company .and the corporation, defendant, John D. MacLennan being one of the defendants in said suit, and being a nonresideht of New Mexico, said ■defendant was served by publication, and several creditors of the •corporation having filed intervening answers and the. corporation having answered, that said court entered its decree which is set forth in. full in the said first cause of action.

From said decree it appears that the court allowed certain claims against the corporation, aggregating $26,369, which it found due said intervening creditors; that $9,000,000 of the capital stock of the corporation was issued by it to one George B. Detwiler and one Emil' B. Bafy, in consideration of the transfer by them to the corporation of a certain concession from the republic of Mexico to them, and for no other consideration; that said concession had no actual value and that, its transfer to the company did not constitute payment for said stock, or any part thereof; that before the incurring of said indebtedness to said intervening creditors, the defendant, John D. MacLennan, with full knowledge that said stock had not been paid up, became, and was, at the time of said decree, the owner and holder of 15,649 shares of said stock, of the par value of $1,564,900 and that certain other stockholders, named in said decree, were also holders of said stock which had not been paid up.

Said decree further finds that said defendant was liable to said’ receiver for the use and benefit of the creditors whose claims had been allowed, in the sum of $1,564,900, or such part as might be necessary to pay the claims of said creditors, and orders the receiver to proceed to collect the amount of said claims from said defendant, John D. Mac-Lennan, and other stockholders, or either of them, wherever they might be found.

The first cause of action concludes with an averment that by virtue of said decree there is due from defendant to plaintiff the sum of $26,-369.06 with interest.

The second cause of action, after incorporating in it all the allegations of the first defense and a statement that the pleader is uncertain as a matter of law, how far the findings of fact and law, set forth in said decree are binding and conclusive against the defendant “in that the record in said cause and decree as entitled therein shows and contains a finding that the defendant was brought into court by due publication of the pendency of said suit, as required by law, and having made default therein a decree pro confesso had been theretofore entered against him in said cause, said record and decree being silent and making no other finding whatever of any kind of service than is above stated, and being silent and making no finding whatever of any appearance in said action by said MacLennan, either in person or by attorney,” yet that said MacLennan did in fact enter his appearance in said cause by a regularly authorized attorney who took part in the argument of said cause, and argued the same on behalf of this defendant.

The third cause of action, reineorporating the allegations of the first cause of action with an allegation of the pleader’s doubts as to the “binding .force of said decrees upon this defendant, proceeds to set forth the several findings in said decrees as facts, independent of said decrees.

To each of these causes of action, the defendant demurred upon the following grounds:

First. The plaintiff as receiver of the Mexican Southeastern Railroad Company, appointed as such by the court in New Mexico, is without authority outside of New Mexico, and has no legal capacity as •such receiver to maintain this action.

Second. The .plaintiff, as such receiver, has no title to the claims •described in said cause of action.

Third. The facts stated in said so-called first cause of action are not sufficient to constitute a cause of action against defendant.

Fourth. There is a defect of parties defendant, in that all stockholders of said company should be joined as parties defendant hereto.

The demurrer being sustained by the common pleas court and judgment entered thereon, plaintiff brought the matter to this court on error, for a review of the rulings on said demurrer.

As to the fourth ground of demurrer, defect of parties defendant, we think defendant’s position is not well taken. Blair v. Newbegin, 65 Ohio St. 425 [62 N. E. Rep. 1040; 58 L. R. A. 644].

The third ground of demurrer, so far as it raises the question that the decree pleaded in the first and second causes of action has no effect or validity as a judgment against defendant, we think is well taken.

“A personal judgment is without any validity, if it be rendered by a state court in an action upon a money demand against a nonresident of the state, who was served by a publication of summons, but upon whom no personal service of process within the state was made, and who did not appear.” Pennoyer v. Neff, 95 U. S. 714 [24 L. Ed. 565]; Oil Well Supply Co. v. Koen, 64 Ohio St. 422 [60 N. E. Rep. 603].

The record and decree contains an affirmative finding that the service upon MacLennan was by publication and no proof that the court otherwise acquired jurisdiction over him could be made, for it would tend to contradict the record, which is not permitted. 17 Am. & Eng. Enc. Law (2 ed.) 1077, 1081.

But plaintiff claims that the decree, if not good as a judgment, at least amounts to an assessment upon MacLennan as a stockholder in the company, and that a corporation can make an assessment upon its stockholders without their presence and, upon the insolvency of the corporation, a court may make a like assessment, good as such, though not binding as a judgment.

Some support to this general claim is found in the case of Great Western Tel. Co. v. Purdy, 162 U. S. 329 [16 Sup. Ct. Rep. 810; 40 L. Ed. 986], but we think that case distinguishable from the case at bar. Mr. Justice Gray, in delivering the opinion of the court, seemed to lay stress upon the fact the assessment made by the court was such as the-directors might have made before the appointment of a receiver. Manifestly the directors of the Mexican Southeastern Railroad Company could not have made the assessment the district court of New Mexico made in this case, for, as between the corporation and the stockholders, the issue of stock in payment for the Mexican concession was good. Orton v. Machinery Co. 27 O. C. C. 107.

But, if we are wrong in this conclusion, we think the whole case depends upon the authority of the receiver to maintain this suit in Ohio, a proposition raised by the first ground of the demurrer.

This question may be considered settled adversely to the claims of' plaintiff in the federal courts. The most recent utterance of the Supreme 'Court of the United States upon the subject is found in the ease of Great Northern Min. & Mfg. Co. v. Harris, 198 U. S. 561 [25 Sup. Ct. Rep. 770; 49 L. Ed. 1163], the syllabus of which case reads as. follows:

“The receiver of a corporation, with no other title to its assets and property than that derived from his appointment in a suit brought to adjudicate and enforce liens and subject the property to the payment of the claims of creditors, cannot be empowered by the court of' his appointment to sue in a foreign jurisdiction, either in his own name or in that of the corporation, to realize its assets."

Mr. Justice Day delivering the opinion of the court, makes the following observations: '

“As to the power of the court to authorize the receiver to sue, we think the case is ruled by Booth v. Clark, 58 U. S. (17 How.) 338 [15 L. Ed. 170], in which case the authority of the court to authorize a receiver appointed in one jurisdiction to sue in a foreign jurisdiction was the subject of very' full consideration. In that case, it was held that a receiver is an officer of the court which appoints him, and, in the ab-senee o'f some conveyance or statute vesting the property of the debtor in him, he cannot sue in courts of a foreign jurisdiction upon the order of the court which appointed him, to recover the property of the debtor. While that case was decided in 1854, its authority has been frequently recognized in this court, and as late as Hale v. Allison, 188 U. S. 56 [23 Sup. Ct. Rep. 244; 47 L. Ed. 380], it was held by Mm Justice Peekham, who delivered the opinion of the court:
“ ‘We do not think anything has been said or decided in this court which destroys or limits the controlling authority of that case.’ ”
“It will thus be seen that the decision in Booth v. Clark rests upon the principle that the receiver’s right to sue in a foreign jurisdiction is not recognized upon principles of comity, and the court of his appointment can clothe him with no power to exercise his official duties beyond its jurisdiction. The grounds of this conclusion is, that every jurisdiction, in which it is sought, by means of a receiver, to subject property to the control of the court, has the right and power to determine for itself who the receiver shall be, and to make such distribution of the funds realized within its own jurisdiction as will protect the rights of local parties interested therein, and not permit a foreign court to prejudice the rights of local creditors by removing assets from the local jurisdiction without an order of the court, or its approval as to the officer who shall act in the holding and distribution of the property recovered.”
“It is urged that jurisdiction in this ease is sustained by the case of Great Western Tel. Co. v. Purdy, 162 U. S. 329 [16 Sup. Ct. Rep. 810; 40 L. Ed. 986 [, in which it was held that the assets and affairs of an insolvent corporation being in the hands of a receiver, the court might direct the calls or assessments upon delinquent shareholders who had not paid for their shares, thereby using the authority the directors might have exercised before the appointment of the receiver. In that case, a receiver appointed by the circuit court of Cook county, in Illinois, under the direction of that court brought an action in the name of the Great Western Telegraph Company, an Illinois corporation, by its receiver, against Purdy, a citizen of Iowa, to recover a sum alleged to be due from him upon an assessment upon his stock subscription, and it was held that the Illinois court might make the assessment and calls necessary to collect the stock which would be binding in another court. The jurisdiction of the Iowa court was not called in question in the state court of Iowa, where the original action was brought, nor was the question of jurisdiction raised in this court, or passed upon in deciding the ease. While not detracting from the authority of that case as to the matter decided, we see nothing in it to indicate that, had the question herein presented been nlade, it would have been decided otherwise than herein indicated.”

We think the receiver herein is of the class mentioned in thq cases of Booth v. Clark and Great Northern Min. & Mfg. Co. v. Harris, supra; and not one vested with the property of the corporation. The petition alleges that plaintiff was duly appointed “with the usual powers of receivers and was ordered to bring suit against the stockholders. ’ ’

We think the rule laid down by the federal cases cited should be followed and applied in the ease before us, notwithstanding it is claimed by counsel for plaintiff that the rule is otherwise in Ohio, by reason of the decision of our own Supreme Court in the case of Bank v. McLeod, 38 Ohio St. 174.

We are not disposed, however, to apply the doctrine of that case beyond' the special facts stated and limitations made in its syllabus, which reads as follows:

“In a suit in chancery pending in a Kentucky court, wherein the trustees of an insolvent railroad corporation sought to enforce their rights under certain mortgages of the road and its equipment, the conditions of which had been broken, an application was made for the appointment of a receiver to take charge of and operate the road. Pending this application, certain rolling stock covered by tjfie mortgages was temporarily in Ohio, and while here was seized in attachment by an unsecured Kentucky creditor. The entire property was insufficient to pay the debts secured by the mortgages, or to earn income to pay the interest. The order of the court appointing the receiver, made subsequent to the seizure in attachment, ordered him to take possession of all the property, including that seized, and authorized him to sue in his own name as such receiver, whenever necessary to perform his duties: Held, that the mortgages covered the rolling stock, though temporarily in this state, and the receiver might, under the comity between states, by an action brought in this state in his own name, assert his right to the possession thereof, where such right is not in conflict with the rights of our own citizens, nor against the policy of our laws.”

The case of Booth v. Clark, supra, was fully considered in the decision of the case, and a careful reading of the statement of facts and opinion of the court will disclose the reasons given by the Supreme Court for not following tbe doctrine of Booth v. Clark, supra, in tbs determination of the ease before it.

The common pleas court was not in error in sustaining the demurrer to the third amended petition and its judgment is therefore ■affirmed.

Marvin and Henry, JJ., concur.


author: HENRY, J.

text:
    WILLS.
    [Cuyahoga (8th) Circuit Court,
    February 21, 1905.]
    Marvin, Winch and Henry, JJ.
    Elizabeth Steuer v. Joseph Steuer et al.
    Will Held to Dispose of Estate in Fee.
    Under a will containing a devise to A generally, with no power of disposal expressed, but followed by a devise to B of what shall remain undisposed ■of at A’s death, A takes an estate in fee simple and the attempted limitation over is void.
    [Syllabus by the court.]
    Appeal from Cuyahoga common pleas court.
    J. W. Sykora and W. C. Rogers, for plaintiff.
    Foran & McTighe, for defendants.
   HENRY, J.

This is an appeal in a suit for partition. Jacob Steuer died testate, leaving a widow and children. Afterwards his son Thomas died intestate, leaving a widow, who is plaintiff here. Later the elder widow died testate. Her will gives Thomas’ widow $200 and divides the rest of the property among the other children, defendants here. Plaintiff claims that Jacob Steuer’s will gave his widow a life estate only, with remainder over to.his children, and that Thomas’ interest having thus vested in the latter’s lifetime descends to plaintiff. Defendants claim that under Jacob Steuer’s will his widow took a fee, and that the testator’s attempt to control the disposal of what should remain of the property at her death is ineffectual. The essentials of the will are as follows:

‘•‘I give, devise and bequeath to my beloved wife, Anna Marie Steuer, my real estate and personal property of every description.”
“I appoint my said wife, Anna Marie Steuer, executrix of this my last will and testament.”
“It is my will that whatever is left of my estate after my wife’s decease, shall be equally divided amongst all my children.”

Wills of this character may contain any of four sorts of provisions, viz.: ■ '

1. Devise to A in terms for life but with absolute power of disposal and followed by a devise to B. A’s estate is not enlarged by the power into a fee but is for life only. The power is simply annexed. .This is illustrated by Bishop v. Remple, 11 Ohio St. 277.

2. Devise to A generally with absolute power of disposal but followed by a devise of the entire estate to B. A’s estate is for life only. This limitation over of the corpus of the estate is illustrated in Baxter v. Bowyer, 19 Ohio St. 490. Some authorities, however, deny the rule thus formulated, though they approve the decision cited, on the ground that the power given was not absolute but restricted to the benefit of the estate.

3. Devise to A generally but with qualified power of disposal and followed by a devise to B of what shall remain undisposed of at A’s death. A’s estate is for life only. Johnson v. Johnson, 51 Ohio St. 446 [38 N. E. Rep. 61], illustrates a qualification of power whereby the first taker’s right of disposal is restricted to what may be consumed.

4. Devise to A generally with no power of disposal expressed, or with an absolute power, but followed by a devise to B of what shall remain undisposed of at A’s death. A takes an estate in fee simple and the attempted limitation over is impossible and void. Widows’ Home v. Lippardt, 70 Ohio St. 261 [71 N. E. Rep. 770], affords illustration of a will of this sort. Though the decision there turns finally on the construction of the power rather than of the estate devised, yet the authorities cited approvingly in the court’s opinion clearly establish the rule as thus formulated.

Jacob Steuer’s will is of the fourth sort and we hold that the interest acquired thereunder by his widow was an estate in fee simple;' that the attempted limitation over is void for repugnancy; that their son, Thomas, took nothing under his father’s will and that he consequently transmitted to his widow no interest in the estate left by his: father.

The petition is, therefore, dismissed at plaintiff’s costs.

Marvin and Winch, JJ., concur.