text:
    TAXABILITY OF STOCK IN A FOREIGN CORPORATION.
    Circuit Court of Cuyahoga County.
    The Cleveland-Cliffs Iron Company v. James P. Madigan, County Treasurer.

    Decided, March 20, 1911.

      Taxation — Shares in Foreign Corporation Owned hy Foreign Corporation.

    1. Shares of stock in a foreign corporation owned by another foreign corporation doing business in this state are not taxable, notwithstanding the certificates evidencing such ownership are physically in the custody of officers of the latter corporation at a branch office maintained within the confines of the state.
    2. Shares in a joint stock association under the laws of Michigan, for purposes of taxation under the laws of Ohio, are not to be distinguished from shares in a corporation.

      Hoyt, Dustin, Kelley, McKeehan & Andrews, for plaintiff.

      N. E. Warwick and Walter D. Meals, contra.
    Henry, J.; Winci-i, J., and Marvin, J., concur.

       Affirmed without opinion, Madigan v. Cleveland-Cliffs Iron Co., 88 Ohio State.

   This proceeding in error is brought to reverse a judgment of $278,787.30 recovered at the January, 1911, term of the Cuya- . hoga Common Pleas Court by tbe treasurer of said county against tbe Cleveland-Cliffs Company for arrears of taxes alleged to be due for tbe years 1900 and to 1905 inclusive on shares of stock then owned by said corporation in certain Michigan .companies. There is no controversy about the facts.

The Cleveland-Cliffs Iron Company was organized under the laws of West Virginia as a “non-resident domestic corporation” with “its principal office, or place of business, in the city of Chicago, county of Cook, state of Illinois. ’ ’ By proper proceedings, in February,-1904, the articles of incorporation were so amended,11 That the place of the principal office of the Cleveland-Cliffs Iron Company be and hereby is- changed from the city of Chicago, county of Cook, state of Illinois, to the City of Ishp'eming, county of Marquette, state of Michigan.” By one of its- by-laws said company’s board of directors were empowered “to establish a branch office of the company in the city of Cleveland, county of Cuyahoga and state of Ohio, and at such other place or places as they may see fit, and at any such branch office when established all meetings of said board whether special or regular, and of the executive committee and of the stockholders can be held.” In July, 1891, a Cleveland office was accordingly, established at Nos. 4 and 5 Mercantile Bank Building, Cleveland, Ohio, and that office became and was in fact during all the period in controversy, the main office of the company, where its principal office business was transacted, and its corporate meetings were held, its records kept, and where the certificates of stock owned by it in other non-resident companies-were kept in the custody of its proper officers. The principal offices named in the articles of incorporation and the amendment thereto were only nominally such, but the company owned and operated large physical properties in Michigan. Under West Virginia statutes “domestic corporations are subdivided into two classes, resident and non-resident. A resident corporation is a domestic corporation whose principal place of business and chief works (if it have chief works) are located within this state, a non-resident corporation is a domestic corporation whose principal place of business or chief works is located without this state.” Non-resident domestic corporations of West Virginia are required to designate a statutory agent, resident of West Virginia, upon whom all process can be served, and an annual license fee, higher than that imposed upon resident domestic corporations, is exacted of them by the laws of that state.

The distinction thus recognized by the statutes of West Virginia is unknown to our laws; but the corporate character of the plaintiff in error, and its status in Ohio as a foreign corporation, duly authorized as such to do business in this state, subject to our statutes regulating foreign corporations which seek to do business here, must be acknowledged. Indeed it was sued in the original action in its corporate capacity, and if, as a nonresident domestic corporation of West Virginia, it had been organized with its principal office and place of business expressly located in Ohio, it would still have been, so far as our laws are concerned, a foreign corporation if corporation at all. Bank v. Hall, 35 Ohio St., 158; Newburg Petroleum Co. v. Weare, 27 Ohio St., 343; Hanna v. International Petroleum Co., 23 Ohio St., 622.

Whether or not the plaintiff in error is exceeding its corporate powers in maintaining what is in fact its principal office in Ohio, contrary to the provisions of its charter, is a question not presented for.our decision upon this record. Deriving whatever corporate powers it has or may justly exercise, from the laws of another state, it can not be deemed domestic to Ohio. Nor need we speculate as to what its status in that behalf may be in West Virginia and Michigan, in view of the anomalous provisions of the West Virginia laws, which it has invoked to become a non-resident domestic corporation of the former state, and in the latter a resident foreign corporation. These expressions are doubtless contradictions in terms, so far, at least, as the laws of Ohio are concerned. A domestic corporation can not, as such, become a non-resident of this state (State, ex rel, v. Taylor et al, 25 Ohio St., 278). Neither can a foreign corporation, as such, have a legal residence in this state (Lander, Treasurer of Cuyahoga County, v. Burke, 65 Ohio St., 532, 542; Humphreys v. State, 70 Ohio St., 68). In the latter ease, the benefit of the statutory exemption of public charities from the-Ohio collateral inheritance tax, was denied to certain foreign eleemosynary corporations, which, maintained benevolent institutions in this state, because being incorporated under the laws of other states, they were legally non-residents of Ohio, and hence not within the language, “any institution in said state for purposes of purely public' charity, or other exclusively public purposes.” Price, J., in the opinion of the court, at page 78 says:

“It is not a new proposition, that the home of the corporation is the state of its incorporation and when so incorporated under the laws of a state selected for that purpose, it has also selected its abiding place, and no longer can be recognized as homeless, or as abiding in every state where they have agencies carrying forward their work of benevolence and charity.” He quotes Mr. Justice Fields’ language in Paul v. Virginia, 8 Wallace, 168, 181:

“The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. As said by this court in Bank v. Earle, ‘It must dwell in the place of its creation, and can not migrate to another sovereignty.’ ”

Foreign corporations exercise their corporate powers in jurisdictions other than those of their creation, solely by the comity of states, which is presumed to suffer such exercise where it is not denied or qualified by law. The plaintiff in error, thus doing business in Ohio as a foreign corporation, must therefore be deemed to be a non-resident of this state, notwithstanding that its chief office and place of doing business is in fact here.

That the plaintiff in error is a non-resident of this state becomes important in the ascertainment of the situs for taxation of its intangible personal property, to-wit, Michigan stock.

Section 2744, Revised Statutes, provides:

“The president, secretary and principal accounting officer of every company, except banking or other corporations whose taxation is specifically provided for, for whatever purpose they may have been created, whether incorporated by any law of this state, or not, shall list for taxation, verified by the oath of the person so listing, all the personal property, which shall be held to include all such real estate as is necessary to the daily operations of the -company, money and credits of such company or corporations within the state at the actual value in money, in manner following.”

Section 2731, Revised Statutes, provides:

“All property whether real or personal in this state, and whether belonging to individuals or corporations; and all moneys, credits, investments in bonds-, stock, or otherwise, of persons residing in this state, shall be subject to taxation, except only such as may be expressly exempted therefrom; and such property, moneys, credits- and investments shall be entered on the list of taxable property as prescribed in this title.”

In Grant v. Jones, 39 Ohio St., 506, which construes this section, it was held that:

‘ ‘ Credits owned by a non-resident of this state are not taxable here unless they are held within this state by a guardian, trustee, or agent of the owner by whom they must be returned for taxation.”

In Bradley v. Bauder, 36 Ohio St., 28, 35, it was held that the situs of shares of stock,

“for the purposes of taxation, when not otherwise provided for by statute, is that of the domicil of the owner. That shares of stock may be separated from the person of the owner, by statute, and given a situs of their own, was held in Tappan v. Merchants’ National Bank, 19 Wall., 490. But when not so separated, that their situs- follows and adheres to the domicil of the owner is supported by a great weight of authority.”

In Hubbard, as Treasurer, v. Brush, 61 Ohio St., 252, construing the provision of Section 2746, Revised Statutes, that “no person shall be required to list for taxation any share or shares of the capital stock of any company, the capital stock of which is taxed in the name of such company,” it was held that a resident of Ohio is not taxable upon his stock in a foreign corporation, all of whose tangible property is situated and taxable in Ohio, and whose other property, consisting wholly of credits derived from its business transacted here, is under the provisions of' Section 2744, Revised Statutes, above quoted, likewise taxable in Ohio. It was observed in that case, by Bradbury, C. J., at pages 262-4:

“that the corporation whose stock defendant in error held, was a foreign corporation, but that all of its property was situated within this state and its business wholly conducted herein. Whatever situs, in fact, its choses in action possessed, was also herein, for it appears that it maintained no office and did no business whatever in West Yirginia, the state by which it was created, but that its office was in this state where its property was situated and its business transacted. And whether these choses in action consisted of promissory notes, book accounts or other evidence of indebtedness, they must be presumed to have been kept in its office in this state. However, notwithstanding all this, doubtless the legal situs of this intangible property for most purposes, was that of the residence of the corporation, which, in law, is within the state by whose authority it was created.
“Does that situs for all purposes adhere to the corporate residence, or many choses in action, having the relation, connection and situation in which these were found, be held to possess such a situs in this state as will clothe the state with jurisdiction over them for taxation? The state attempts by Section 2744, Revised Statutes, to assert and exercise such power of jurisdiction.
“We perceive no reason for denying to the state the power asserted by this section. If men choose to resort to another state or county for authority to organize a corporation for the purpose of engaging in business in this state, or if that was not their original purpose, choose afterwards to plant themselves herein, and in either case transact the corporate business and hold the corporate property wholly within our borders, and enjoy the protection o'f our laws, it is only just and reasonable that its property should be subject to taxation herein as fully as if its organization had been effected under our own laws, and the right of taxation should not be defeated nor limited upon the ground that for some other purpose the situs of a part of its property should be regarded as being in the state or country where the corporation was organized.
“Where foreign corporations voluntarily bring their property and business into this state to avail themselves of advantages found here which they believe will enhance the probabilities that the business they intend to pursue will be profitable, they should not be heard to complain of laws which tax them as domestic corporations are taxed by the state. We hold, therefore, that the provisions of Section 2744, which make it the duty of foreign corporations to list for taxation in this state, their choses in action where they are held within the state and grow out of the business they conduct therein, is a valid exercise of the taxing powers vested in the state.”

The second paragraph of the syllabus accordingly declares, concerning the taxability of the "credits of such company or corporation within the state,” that:

"Chuses in action, whether book accounts, promissory notes, or the like, or foreign corporations that are kept in this state and arise out of the corporate business transacted here, are subject to taxation under the provisions of Section 2744, Revised Statutes.”

Construing Sections 2731, 2744, Revised Statutes, and cognate sections, the Circuit Court of Appeals of this Circuit, in Western Assurance Co. v. Halliday, 126 Fed., 257, in its opinion by Lurton, C. J., says, at page 262:

"When the several sections are read and construed together, it is obvious that the intent and purpose of the Legislature is to subject to taxation every form of personal property having a situs in this state, including such forms of personal property as money, credits, bonds, and stocks, provided only that these latter are held or owned by a person residing in the state. If they are owned by a person residing in Ohio, they are subjected to taxation without regard to the place of their deposit or lodgment, but if not owned by a person residing in the state, their taxability is made to depend upon their being 'held’ in the state by some one residing therein, who holds and controls same for the non-resident owner as agent or otherwise. In the one case Ohio exercises its power to tax by reason of the presence of the property within the state, and in the other by virtue of the domicile of the owner and the saying ‘Mobilia sequuntur personam. ! ”

In that ease muncipal bonds, deposited by the Western Assurance Company, incorporated under the laws of the Dominion of Canada, with the superintendent of insurance of the state of Ohio, pursuant to the provisions of Section 3660, Revised Statutes, and registered in his name, were held to be taxable in Ohio as the personal property or credits of a foreign corporation, held in this state.

In the present case, the stocks sought to be taxed are held by the corporation itself, and not by a trustee or depositary who resides in this state and holds the property for a non-resident. Our statutes make no distinction between the corporation and its proper officers in this respect. Under Section 2744, Revised Statutes, the corporation is required to make its returns' for taxation by and through the president, secretary, and principal accounting officer, who are thus deemed to act for the corporation. None of these corporate officers, are required in that capacity, to make return of the taxable corporate property “as agent or attorney, or on account of any other person or persons, company or corporation,” under Section 2734, Revised Statutes, but directly for and in the name of the corporation itself, under Section 2744, Revised Statutes. The stocks in question are held and owned by and in the name of the plaintiff in error, and by no one else. It holds the legal title and the certificates are issued to its name. Municipal bonds, especially when registered, in the name, not of the non-resident owner, but of the resident agent, trustee, or depositary, and actually lodged with and held by him in this state; and credits arising here out of business transacted by a non-resident corporation doing business in this state, are, as we have seen, properly deemed to have a situs for taxation here. But it would be enlarging the meaning and scope of our statutes, beyond anything warranted by their language or by any authoritative construction thereof laid down in the cases cited, or elsewhere, to hold that foreign stocks which are owned and held by a foreign corporation, or other non-resident, doing business in this state, and which are in no way derived from the business transacted here, are nevertheless taxable in Ohio, under our present laws, simply because the certificates evidencing such ownership are physically in the custody of their owner within the confines of the state. In no proper sense can it be said that the property evidenced by such certificates of stock in foreign -corporations, whose property is located wholly without the borders of the state is within the state, unless the owner of such stocks resides here. And as already observed, the plaintiff in error, being a foreign corporation, is in the present state of our laws conclusively presumed to be a non-resident of this state.

As regards the shares of the Munising Paper Company, which is a company in the nature of a joint stock association, organized and doing business in the state pf Michigan, we think they are not to be discriminated for tbe purpose of this case from the shares of stock owned by the plaintiff in error in Michigan corporations, strictly so-called. Express Co. v. State, 55 Ohio St., 79.

The judgment of the court of common pleas, being manifestly contrary to law, is reversed, and final judgment is here rendered for the plaintiff in error.


source: Caselaw Access Project

license: Public Domain

text:
    LIABILITY OF PAYEE AS ENDORSER.
    Circuit Court of Cuyahoga County.
    The A. R. Linn Company v. C. T. Denly.
    Decided, March 20, 1911.

      Negotiable Instruments — Drawer, as Endorsee, Can Not Hold Payee as Endorser.

    Under the negotiable instruments act, the drawer of a bill, who subsequently becomes its holder, can not hold the payee on his endorsement.

      Wing, Myler & Tu-rney, for plaintiff in error.

      A. A. ic& A. H. Bemis, contra.
    Henry, J.; Winci-i, J., and Marvin, J., concur.
   The parties stand here as they did below, where the plaintiff sued on the following bill of exchange, which it acquired after maturity, from the drawer, in whose shoes therefore it stands:

“$67.96. Cleveland, Ohio, Sept. 10, 1908.
‘ ‘ September 30th, after date, pay to the order of C. T. Denly, Sixty-Seven and 96-100 dollars, payable at the Garfield Savings Bank, Euclid Avenue. Value received, and charge the same to the account of
A. R. Linn, Bro. Agt:
‘ ‘ To the Denly Company,
Cleveland, Ohio.
‘ ‘ Indorsements:
‘ ‘ Accepted: The Denly Company,
By C. T. Denly, Prest.
C. T. Denly.”

The petition alleges that Linn, a sugar broker, in negotiating a sale of that commodity to the Denly Company, refused to make the sale unless the prices were secured by the personal credit of the defendant here. The transaction was accordingly completed in the left handed manner indicated by the bill of exchange above copied. The Denly Company having become insolvent, the plaintiff seeks to hold the defendant as a party secondarily liable on the bill of exchange.

The action was strictly upon the instrument, and the question is whether the drawer of a bill, who becomes the holder, can hold the payee on his endorsement, as a party liable secondarily, or at.all.

Under the plain provisions of Sections 8155, 8166 and 8226, General Code, Sections 3172-y, 3173/ and 3175, Revised Statutes, we are perfectly clear that he can not. When a bill makes a circuit and comes back into the hands of a prior party, the intervening parties are discharged of liability. Here Linn, the drawer, subsequently became the holder. Denly is an intervening party, and as such was discharged.

This may not have been the intention of the parties; but their intention can not override the plain provisions of our Negotiable Instruments Act, in actions brought upon such instruments.

Judgment affirmed.


text:
    CLAIM THAT INJURY TO PLAINTIFF RESULTED FROM A DIFFERENT ACCIDENT THAN THE ONE IN SUIT.
    Court of Appeals for Clermont County.
    The Cincinnati, Milford & Loveland Traction Company v. Vena Hatfield.
    Decided, May, 1913.

      Negligence — Intending Passenger Dragged by Premature Starting of Gar — Treatment of Injury Delayed for Pour Months — Gontention that Injury Resulted Otherwise than in the Accident in Suit— Competency of Evidence.

    An adverse witness may, on proper foundation being laid, be contradicted or impeached by proof of his statements or acts inconsistent with his testimony on the trial.

      Thorne Baker and Eli E. Spiedel, for plaintiff in error.

      C. C. Kearns, Louis Kicks and Griffiths <& Nichols, contra.
    Jones, O. B., J.; Jones, E. H., J., concurs; Swing, P. J., not sitting.
   This is a proceeding to reverse the judgment obtained against the plaintiff in error by Vena Hatfield, defendant in error, for an injury claimed to have been received in attempting to board one of its traction cars as a passenger, at Conover’s stop, in Clermont county, Ohio, in February, 1908. The car had stopped at that station for the purpose of taking on passengers. Her father and brother had preceded her in boarding the ear, and she was in the act of getting on the ear with one foot on the step and her left hand holding to one of the handle bars, when the car was started and she was thrown from the step, and her hand and wrist slipped through the handle bar between it and the end of the car in such a way that she could not withdraw it, and she was dragged for some little distance — about seventy-five or a hundred yards — before the car was again stopped and she was released and taken on the car. As a result of said injuries her arm became stiff and she lost the entire use of the elbow joint. It is apparent that the injury was not given the prompt attention which it deserved, as no regular physician was called to treat it until she went to the hospital about four months after the accident.

There is considerable conflict in the evidence, the traction company denying that the accident occurred at all upon its car, and the ease has been tried before a jury .three different times resulting each time in a verdict for the plaintiff. The present verdict of $4,000 was reduced by consent of plaintiff, at the suggestion of the trial judge, by remittitur of $1,400.

A number of errors are urged and fully argued by counsel for plaintiff in error, but a careful examination of the entire record fails to show us any prejudicial error as against plaintiff in error, or .any reason why the verdict of the jury should be disturbed by a reviewing court.

It is specially contended by counsel for plaintiff in error that the testimony of the witnesses Cherry and Johnson as found in the present record is the same as the testimony of the same, witnesses in the last previous trial, which was found by the Supreme Court in its unreported decision, 86 O. S., 356, to have been hearsay. Counsel are not accurate in this contention, as the testimony of the witness Johnson is not found at all in the present record, and the only testimony given by the witness Cherry is the statement which directly contradicts the testimony of the witness Jap Slone, the foundation for such contradiction having first been laid by asking the same question of Slone. The testimony given by both the witnesses Cherry and Johnson, in the previous trial, contains objectionable hearsay outside of that testimony of the witness Cherry which is reported in this record and to which exceptions had been reserved, and the ruling of the Supreme Court in basing the reversal in part upon the improper admission of that hearsay testimony was undoubtedly correct. The court did not point out the particular question and answer in the testimony of the witness Cherry which alone appear in this record, as being embraced in such objectionable hearsay, and no doubt referred to the other objectionable testimony. Because we think that Cherry rs testimony in this case is competent as coming within the rule laid down in Abbott’s Trial Brief (Civ. Jury Trial), 176, and Attorney-General v. Hitchcock, 1 Exch., 99; Kent v. State, 42 O. S., 426; as this testimony involves a question vital to the case, being whether the injury was caused by the traction company, or by a fall on the ice, or by scuffling, and the testimony of Cherry was properly introduced as proving that the witness Slone had made a statement to him contradicting other parts of his testimony in which he denied any knowledge of an injury to her by the traction company.

The admission of so much of Cherry's testimony as is contained in this record is not therefore, in the opinion of this court, prejudicial error or in conflict with the ruling of the Supreme Court.

Judgment affirmed.


text:
    RECOVERY OF INSURANCE POLICY, ISSUED BUT NOT DELIVERED.
    Court of Appeals for Richland County.
    The Prudential Insurance Company of America v. Florence Shively.
    Decided, January Term, 1913.

      Life Insurance — Pleading Where Company Relies on Violation of Special Conditions — Policy Issued'But Delivery Withheld Because Applicant Had Become III — Applicant Dies and Company Held Liable — Agency —Waiver—Ratification—Estoppel—Failure to Charge Specially Where No Request so to do Was Made.

    1. In an action on a policy of life insurance, failure of the company to plead any of the conditions of the policy as a special defense, renders it doubtful whether the plaintiff would be required to offer any proof in support of an averment of waiver, but would rather be entitled to a judgmen'- on the pleadings.
    2. An assignment of error ’ /ed upon failure of the court to charge specifically upon any bi mh of the case, or upon any issue made by the pleadings, can no' e considered where the record fails to disclose that any reque was made of the court to so charge.

      3. A court is within the law in charging the jury that the act of the company in mailing a policy to its agent, to be by him delivered to the insured, constitutes delivery to the insured where the first premium has been paid. The contract is consummated by acceptance of the application for insurance, executing the policy and the depositing of it in the mail directed to the agent for delivery to the applicant, and delivery in law becomes complete without actual manual delivery being made.
    4. Where the agent of a life insurance company, having knowledge that a policy has been issued on an application made through him, visits the insured and collects the first premium, but finding the insured complaining of being ill delays delivery of the policy but retains the premium, and in the meantime typhoid fever develops and the insured dies therefrom, the company is liable on the policy on the principle of ratification and estoppel.
    Marriott, J.; Shields, J., and Voorhees, J., concnr.
   This case comes to this court on error from the judgment of the Court of Common Pleas of Richland County. The action below was brought ■ by defendant in error, Florence Shively, against the Prudential Insurance Company, plaintiff in error, upon a policy of life insurance. The issues were made by the pleadings and the cause was tried to a jury, which returned its verdict for the plaintiff. Motion for a new trial was duly filed, the same overruled by the court, and judgment was entered upon the verdict.

To reverse this judgment error is now prosecuted to this court, and the grounds of error complained of are set out in the petition in error and are:

First. Error of the court in overruling the motion for a new trial.

Second. The verdict and judgment are against the weight of the evidence.

• Third. The verdict and judgment are contrary to law.

Fourth. Error of the court in its charge to the jury.

Fifth. Error of the court in refusing to charge the jury as requested by defendant (plaintiff in error).

Sixth. Error of the court in rejecting evidence offered by . the plaintiff in error.

Seventh. Error of the court in admitting evidence objected to by plaintiff in error.

Eighth. Error of the court in refusing to take the case from the jury, made at the close of plaintiff’s evidence and renewed at the close of all the evidence.

. The case below was tried upon the issues made by the first amended petition, to answer thereto, and the evidence. -The amended petition alleges in part as follows:

That on or about the 4th day of August, 1909, John Shively, husband of the plaintiff, at the solicitation of Frank M. Peters, who was then acting as the agent and representative of defendant, made his application to defendant company for a certain policy of insurance, commonly known as a “twenty year endowment policy” on his life, for the sum of $1,000, to be paid to his wife, Florence Shively, the plaintiff herein, in the event of his death, and after due notice of his death had been, given said defendant company, in consideration of the payment by him, the said John Shively, to said defendant company, of an annual premium, of $45.09, with a further provision that said contract or policy of insurance should not take effect until it had been issued and delivered by said defendant company and the first premium paid in full, while his health was in the same condition as described in said application. Said John Shively was examined by a local physician or examiner of said company on the 5th day^ of August, 1909, and by said examiner found to be a good and proper risk for life insurance, and so reported, and said report, together with said application, was forthwith mailed to said defendant company at its home office in Newark, N. J., on or about the 6th day of August, 1909. Defendant company agreed with said John Shively by and through its agent and representative, that if said applicant was found to be a desirable risk, it would forthwith issue and deliver to him a policy in the form prescribed by law and provided for in his said application, by the terms of which it would agree to pay to his wife, Florence Shively, the sum of $1,000, in the event of his death, provided the annual premium provided for in said policy had been paid, and the company had due notice and proof of his death.

Said application was duly received by defendant company, but in violation of said agreement was held in suspense and not acted upon by defendant company until the 12th day of August, 1909, when defendant company did issue and deliver its certain policy, to-wit, Policy No. 10887113, in the form provided for in said application, and forwarded it by mail to its local agent at Mansfield, Ohio.

On the 13th day of August, 1909, John Shively paid to the agent and representative of defendant the first premium on said policy, to-wit, the sum of $45.09, upon the express representation and agreement of said agent that his application had been accepted and his policy issued, and that said policy would to be delivered promptly to him as soon as it was received at Mansfield, Ohio.

It is further alleged that said policy of insurance was received at Mansfield, Ohio, on or about the 13th day of August, 1909, but it was not tendered or delivered to John Shively, or to this plaintiff, and said premium so paid by John Shively was not returned or tendered back to John Shively until September 9, 1909, in the afternoon of said day, and that said John Shively died about seven o’clock in the morning of September 9, 1909.

Plaintiff says that when the said John Shively paid the premium on said policy of insurance, the agent of defendant, with full knowledge of said John Shively’s health and physical condition represented to him that the policy was no doubt issued and on the way to the agent, and that if he would pay the premium the policy would be delivered to him and the insurance would be effected.

Plaintiff says that said John Shively, relying on said representations, paid said premium, and the policy was received by the agent of defendant at Mansfield within a few hours of the time the premium was paid, and while said John Shively’s health and physical condition was the same as it was when the premium was paid and accepted by defendant’s agent; and the plaintiff says that the defendant waived the conditions with respect to the applicant’s health being in the same condition as described in the application, and waived all of the conditions to the delivery of the policy, and said John Shively was entitled to the immediate delivery of the policy by the agent of the defendant. Due notice of the death of John Shively was given to defendant company on or about the 13th day of September, 1909, and demand made on said defendant company for the sum of $1,000, as the proceeds of said policy or contract of insurance above set forth, on or about the 28th day of September, 1909, which defendant has wholly failed and refused to pay. It is further alleged that plaintiff and her late husband, John Shively, have done and performed all the conditions of said contract on their part to be performed. A copy of said policy of insurance which was contracted for as above alleged is hereto attached, marked Exhibit “A,” and plaintiff prays for judgment for $1,000, with interest from the 9th day of September, 1909.

The answer, which controverts but few of the averments of the petition, made the following admissions and denials:

Admits that on or about the 4th day of August, 1909, John Shively was the husband of plaintiff; that on or about said date John Shively made application for a policy of insurance, commonly known as an endowment policy, on his life in the sum of $1,000, to be paid to the plaintiff in the event of the death of said John Shively; that said application was made to defendant company; that the annual premium on said policy was to be the sum of $45.09; that there was a provision that said contract of insurance should not take effect until it had been issued and delivered by said defendant company and the first premium paid in full while his health was in the same condition as described in said application. Admits that said John Shively was examined by the local physician of the defendant company on the 5th day of August, 1909, and found to be a proper risk for life insurance. Admits that said report of said physician, together with the said application, was forwarded to the defendant company at its office in the city of Newark, N. J.; also further admits that it issued its certain policy No. 10887113 and mailed the same to its agent at Mansfield, Ohio; admits that it tendered the premium to John Shively on the 9th day of September, 1909; admits that defendant company received notice of the death of John Shively on or about the 13th day of September, 1909, and that demand was made on defendant company for the sum of $1,000, on or about the 28th day of September, 1909. Defendant further answering denies each and every other allegation in said petition contained not herein specifically admitted.

From these pleadings it will be observed that there were few controverted questions of fact; practically the only material allegation of the petition put in issue by the answer, under the denials pleaded, is the averment of the petition pleading a waiver of one of the conditions of the policy as contained in the application, which application is made a part of the policy.

It will be observed that the defendant below did not plead any of the conditions of the policy as a separate defense, which. under the rule would be necessary in order to avail itself of the special provisions of the policy as a special defense.

The plaintiff after pleading a special condition of the application that “said contract or policy of insurance should hot take effect until it had been issued and delivered by said defendant company, and the first premium paid in full, while his (Shively’s) health was in the same condition as described in said application,” and then averring that the defendant company waived the condition with respect to the applicant’s health-being in the same condition as- described in the application, averred that “plaintiff and her husband, John Shively, have done and performed all the conditions of said contract on their part to be performed.”

It is held in Insurance Co. v. Titus, 82 O. S., 161-173, that:

“The defendant in order to put the plaintiff to her proof as to the performance of this condition should have denied performance of all the conditions and should have pleaded specially the provisions of the policy.”

The averment that “plaintiff and her husband, John Shively, have done and performed all the conditions of said contract on their part to be performed,” is not put in issue by a general denial; but to make that an issue and to place upon the insured the burden of proving a waiver of those facts, they should be pleaded by the insurer. Ins. Co. v. Titus, supra, 2d Syl.

Under this state of the pleadings it is .doubtful whether the plaintiff below was required to offer any proof in support of the ayerment of a waiver, and if not the plaintiff below would have been entitled to a judgment upon the pleadings; but without deciding this question, how does the ease stand upon the issues as tried as it comes to this court upon the record?

After the jury was sworn and before any evidence was offered, the defendant below moved the court for a judgment upon the pleadings, and the court overruled the motion, and defendant excepted.

In this we think the court was clearly right and committed no error in so holding.

During the progress of the trial* the defendant offered numerous objections to the introduction of testimony on the part of the plaintiff, and the court overruled the objections, and defendant noted its exceptions.

We have carefully read the entire bill of exceptions, and carefully considered all objections to the testimony, and are entirely satisfied that the court committed no prejudicial error in the admission of the testimony complained of.

One of the grounds of error complained of in the petition in error was the refusal of the court to charge the jury as requested by plaintiff in error.

The record failing to show that the plaintiff in error asked the court to charge specially upon any branch of the case, or as to any issue made by the pleadings, and made no request whatever of the court to charge the jury, this alleged error need not be considered. There is nothing before the court to review as to that claimed error.

. At the close of all the testimony the defendant below renewed its motion for a judgment and moved the court to arrest the case from the jury, and instructed the jury to return its verdict for the defendant. The court overruled the motion and the defendant excepted. • In so ruling we think the court committed no error.

The court then charged the jury generally upon the issues made by the pleadings. The defendant excepted to the charge as a whole and to each and every part thereof.

We have carefully reviewed and considered the charge as given by the trial judge to the jury, and have reached the conclusion that the same fairly submitted to the jury the issues made by the pleadings; that it was a plain, fair statement of the issues for the determination of the jury. It certainly was not prejudicial to the plaintiff in error.

Upon the law we think the court correctly instructed the jury that “as a general proposition it may be said to you, I think, as a matter of law applicable to this case, that when an insurance company places a policy in the hands of one of its agents for delivery, it impliedly authorizes him to act in all things necessary in order to consummate the delivery in a particular manner. ’ ’

The court might have well gone farther and instructed the jury that the act of the company in mailing the policy to the agent, to be by him delivered to the insured, would in law constitute delivery to the insured; that when an applicant for insurance pays the first premium to the agent, the contract is consummated when the company accepts the application, executes a policy, and deposits it in the mail, directed to its agent, for delivery to the applicant, and delivery in law is complete without the actual manual delivery to the insured. Kimbourne v. Prudential Life Ins. Co., 108 N. W., 863; Vol. 28 Century Digest, “Insurance,” Sections 198-223.

The agent of the company was for the purpose of delivery the agent of the assured as well. Insurance Co. v. Erskine, 74 N. W., 398; Insurance Co. v. Foote, 79 Ill., --; Currier v. Continental Life Ins. Co., 53 N. H., 538.

We find no prejudicial error in the court’s charge as a whole.

Was the verdict and judgment contrary to law? The determination of this question involves a consideration of the terms and conditions of the contract of insurance as expressed in the policy and application, construed in the light of the acts and conduct of the parties as- disclosed in the record. The policy, with a copy of the application, is filed with the petition as an exhibit. No provision of the policy, as a condition precedent to the plaintiff’s right to recover, is pleaded by the defendant company as a defense. It is not averred in the answer or claimed by the company that the policy is void by reason-of the violation of any of the provisions thereof, either by the assured or by the defendant in error, beneficiary. It is admitted that the application was accepted and the policy issued. But the whole defense is based upon the claim that the policy was not delivered by the company and the first premium paid while the insured was in the same condition of health as described in the application.

It is not denied that the premium was paid and received by the agent, Peters, who had authority to receive the same. It is not denied but that the agent deposited the money in the bank to the credit and in the name of the company, but it is claimed at the time the agent received the premium, to-wit, August 13th, the insured was not “in the same condition of health as described in the application”; that the policy, though issued on the 12th day of August, had not reached the agent, and that when it did reach the agent to whom it was mailed to be delivered to the assured, the applicant was sick of typhoid fever, and for that reason delivery was withheld.

It is admitted that at the time the assured paid the premium to the agent, he was informed and knew that Shively was “not feeling well,” was indisposed, and that with full knowledge of that fact he received the money, reported it to the company, and deposited same to the credit of the company, and the company has ever since retained it, never.having tendered it back or-offered to return the same, until after the death of the assured.

Frank M. Peters was district agent of the company, was superintendent of agencies, with assistant superintendents and agents. There were nine counties- embraced in his district. He was a vice-principal, with power and authority to represent the company in all matters and things necessary in furtherance of the company’s business, except to pass upon applications and to grant policies; he had no authority to change or waive any of the conditions of a policy after it had been issued, without the consent of the company. He was authorized to collect premiums, and to do all things usual and necessary in the collection thereof. He had full discretion in the premises, except he could not extend the time of payment.

The application upon which the policy in suit was based was made August 4, 1909. The applicant was examined by the company’s local medical examiner at Mansfield, on the 5th day of August, 1909, and the applicant was found to be a good risk for life insurance. Shively was at- the time 41 years of age.

The application and medical examiner’s report were forwarded to the home office at Newark, New Jersey, where they were re-received August 9th. The physician’s report was acted upon by the medical staff of the company, approved, and policy recommended August 12th. On the same day, August 12th, the policy in controversy was issued by the company, and was thereafter mailed to its superintendent, Frank M. Peters, to be by him delivered to the assured, upon the payment of the first premium.

The record does not disclose the actual date the policy was mailed from the home office, or the date it was received by the agent at Mansfield. The answer to the interrogatory attached to the petition was signed by the agent Peters, and this fixes the date of mailing as August 16th, but in his evidence given upon the trial he states he does not know the date the policy was mailed, nor the date it was received; that he was absent on a vacation after the 13th, and when he returned in the latter part of the month he found the policy in his office; that it had not reached him on the 13th, the day he collected the premium.

It is evident from the record that the company did not mail the policy until it had received the report of the payment of the premium from its agent Peters, and the date of payment of the premium being the 13th of August, it is quite probable that the policy was mailed on or about the 16th.

This fact is important as fixing the date when the contract was consummated, showing with reasonable certainty that the company had notice and knowledge that the premium had been paid, evidencing a ratification of the act of the agent in the collection of the premium at the time, and knew of the agreements made by the agent with Shively.

On August 13th, and before the policy had reached Mansfield, but after the company had approved the application and issued the policy, the agent, who had evidently received information of the granting of the policy, went to the home of the assured to collect the premium. He found Shively in his room, somewhat indisposed; when upon inquiry as to his health the record shows the following conversation was had between the agent, Peters, and Mr. Shively, in the presence of Mrs. Shively, defendant in error:

‘ ‘ Q. What' did Mr. Peters say when he went into Mr. Shively’s room? A. He said ‘Hello, old boy, you are not looking as well as when I saw you last.’

“Q. And what did Mr. Shively say in reply to that? A. I am not feeling as well.

“Q. Do you know how much money was turned over at that time? A. There was something less than $100. (This $100 refers to a loan of $100 which the company was making to Shively-)

‘ ‘ Q. When you handed this from Mr. Peters to Mr. Shively, what did Mr. Shively say? A. He said: ‘How about this, Mr. Peters, will I get my policy if I pay this premium.’

‘ ‘ Q. And what further did Mr. Shively say ? A. He said he was sick and nobody knew what he had, or whether he would get out again, Mr. Shively said to Mr. Peters; and Mr. Peters said: ‘Sure you will, your application is in and your policy probably coming this way.’

“Q. Did Mr. Peters say anything about what Dr. Bushnell had reported to him? A. Pie said ‘you are sound as a dollar.’ That is what Peters said the doctor said.”

At this time Peters received payments of the first annual premium $45.09, and gave a receipt therefor reading as follows:

“Aug. 13, 1909.
“Received from John Shively (applicant) the sum of forty-five and 09-100 dollars, being a payment on account of the first annual premium on a policy applied for in the Prudential Insur- ' anee Company of America.
“It is understood that this payment is in no way binding upon the said company, except that said company agrees to return the amount mentioned hereon in case the company declines to grant a policy on the life of said applicant.
“Frank M. Peters, Supt.”

Across the end of said receipt is the following:

“Ordinary department. Receipt for advance payment on account of premium.” “This receipt must be completed, detached and given to the applicant by the agent in exchange for the advance payment.”

It will be noted that this receipt bound the company to return the annual premium in case the company declined to grant the policy. We will speak of this farther in discussing the rights and obligations of the parties under it.

This instrument, while denominated a receipt, is both a receipt and a contract. It is dual in its character. In so far as it is a receipt for money paid it is subject to the rule of explanation by extraneous evidence. It was competent, therefore, for the plaintiff to offer the testimony of Mrs. Shively to say what was said and done at the time the money was paid, for which the receipt was given, as evidencing the conditions upon which it was given, and there was no error in the admission of that testimony.

The application signed by Shively, besides containing the usual questions and answers, contains the following declaration:

“I hereby declare that all the statements and answers to the above questions are complete and true to the best of my knowledge and belief, and I agree that the foregoing, together with this declaration, shall constitute the application and become a part of the contract of insurance hereby applied for, and it is further agreed that the policy herein applied for shall be accepted subject to the privileges and provisions therein contained, and said policy shall not take effect until the same shall be issued and delivered by the said company, and the first premium paid thereon in full, while my health is in the same condition as described in this application.
“The applicant will please read answers written after each of above questions before signing.
“Frank M. Peters.
“Signature of person whose life is to be insured:
“John Shively.
“Witness to signature:
“Dated at Mansfield, Ohio, this 4th day of August, 1909.”

It is shown by the record (page 26) that from the date of the application, August 4th, to the 13th, Shively was in his usual health, at least not consciously aware of any sickness or that he was threatened with any. He was engaged in' his usual work up until the 13th, and worked the day preceding the 13th, when he is shown to have remained at home. It was not known until August 16th that he had typhoid fever. He died on September 9th, in the early morning, and his physician in his report of the death to the company states that the duration of his sickness was twenty-five days; so going back would show that it began on the 16th of August.

Garey C. Lewis, a witness for plaintiff below, testified that on the last of August he went to the office of the agent, Peters, at the request of the plaintiff, and “told Mr. Peters that Mrs. Shively sent him there for a policy of insurance”; that Peters said “How is Mr. Shively.” I told him Shively was sick, but he thought on the mend; that Peters said, “he has typhoid fever, hasn’t he,” and I told him he had; and he said “under the circumstances I can’t deliver the policy.” That on Labor day, the 6th of September, he again went to the office of the agent and told him that Mrs. Shively had sent him down to demand the policy, and he said he wouldn’t deliver it; and I told him he surely would have to deliver the policy or the premium, if the insurance was not in force she could use the money, and he refused to pay me either; he said if Mr. Shively gets well he would give me the policy; if not the premium would be returned. I demanded either the premium or the policy, and he said he wouldn’t deliver it. At this time Lewis saw and examined the policy in the office of the agent.

Peters denies that he stated to the witness that if Shively got well he would deliver the policy, but if he died he would return the premium; but he admits the demand and that he refused either to surrender the policy or return the premium.

We think the jury were entirely warranted in accepting the testimony of Mrs. Shively and witness Lewis as against that of Peters. His manner and conduct as a witness, his apparent want of frankness, his seeming effort to evade a disclosure of facts of which he must have had knowledge, his refusal to produce correspondence and other written evidence, his equivocation when appealed to disclose the manner of keeping the company’s bank account — all these things do not favorably recommend him or his evidence to the court.

The plaintiff in error in argument seeks to invoke a provision of the policy which provides that no condition, provision or privilege of this policy can be waived or modified in any case except by an indorsement hereon signed by the president, or one of the viee.-presidents, the secretary, one of the assistant secretaries, the actuary or the assistant actuaries. That no agent has power in behalf of the company to make or modify this or other contract of insurance, to extend the time for paying a premium, to waive any forfeiture, or bind the company by making or receiving any representation or information.

Under the issues as made by the pleadings we hold that the plaintiff in error can not now avail itself of this condition or provision of the policy.

If the company wished to defend against the enforcement of the policy, it was its duty to have affirmatively pleaded this condition of the policy as a defense. The general rule'is that where an insurance company relies upon the breach of a condition as a defense in an action on the policy, such breach can not be shown under a general denial, but the insurer must set up in an answer each and every condition upon which it relies for a defense, and aver the breach thereof. Such defenses are affirmative and must be specially pleaded. Selby v. Mutual Life Ins. Co., 67 Fed. Rep., 490; Helvetia, etc., Ins. Co. v. Allice Co., 53 Pac. Rep., —; Farmers, etc., Ins. Co. v. Wiard, 59 Neb., 451; Pickett v. Fidelity Co., 38 S. E. Rep., 160.

It has been held by our own Supreme. Court that all conditions of the policy not covered by the plaintiff’s averment of performance, that is, all clauses, stipulations or conditions, whose operation is to defeat, suspend or limit the liability, whether by the doing, omitting or happening of an event, should be specially-pleaded by the defendant in its answer. That conditions precedent, performance of which the plaintiff is required to plead in an action on said policy, include only those affirmative acts which are necessary in order to perfect his right of action on the policy, such as giving notice and making proof of loss, furnishing the certificate of the magistrate when required by the policy, and it may be other acts of like nature. Conditions which provide that the policy shall become void or inoperative, or the insurer relieved wholly or partially from liability, upon the happening of some event, the doing or omitting to do some act, are matters of defense and to be available must be pleaded and their breach alleged. Moody v. Insurance Co., 5.2 O. S., 12-18.

The court bases its conclusions that the policy was in force at the time of the death of Shively, not so much upon the question of a waiver by the company of a condition of the policy, as upon the principle of ratification and the principle of estoppel.

Under the issues made by the pleadings, and from the foregoing facts as disclosed in the record, we hold:

(1) That the payment of the premium by Shively to the agent, Peters, was a payment to the company; (2) that the company in receiving the premium is held to have notice and knowledge of the conditions under which it was paid to its agent; (3) that it had knowledge of the terms of the receipt given by the agent at the time the premium was paid; (4) that it was bound thereby; (5) that it was the duty of the company, when it had notice and knowledge that at the time the premium was paid Shively was not in the same condition of health as at the time of making the application, if it intended to _ disclaim the agent’s acts, it should have done so immediately or within a reasonable time, and returned tire premium or tendered its return; (6) that by retaining the money and refusing to return the same upon demand, it is estopped under every principle of law from defending upon the ground that at the time the premium was paid Shively was not in the same condition of health that he was in at the time the application was made; (7) that it could not retain both the money and the policy until after the loss, and then relieve itself from liability by-tendering or offering to return the money; (8) that receiving and retaining the premium, with knowledge of the conditions and agreements under which it was paid, was a ratification of the agent’s acts, and the company would be estopped after loss to disclaim his (the agent’s) acts.

The company dealt with Shively through Peters, its agent. Tie was not only its representative'to receive and forward applications, but was also its representative expressly authorized to complete the negotiations, collect the premium, and deliver the policy. He was the only medium through whom the business was carried on. AVithin the scope of that employment his hand was the hand of the insurance company, .his voice was the company’s voice, and his promises and assurances were the promises and assurances of, the company, if made within the scope of his authority, notwithstanding any undisclosed restriction or limitation existing in his contract of employment. The applicant would only be put upon notice and bound by such restrictions and limitations upon the power of the agent as were disclosed or of which he had notice.

Any other rule would place in the hands of insurance companies the power to escape liability by repudiating the acts of its agent done and performed in the regular course of its business, and contracts of insurance would have no more strength or stability than a rope of sand.

Peters was authorized and empowered to communicate to the applicant the company’s action upon his application, and was authorized to collect and receipt for premiums, either' before or after the delivery of a policy. Under elementary rules his representations and statements, within the line of that duty, would be binding upon the principal.

This authority qualified the agent to impart information with respect to things which had already been done as to the insurance, as well as to impart information as to things to be done by the applicant. How else could a contract be consummated? The insurance company could only speak through its agent, until a written contract was effected based upon representations and negotiations preceding and preliminary to the consummated contract. The company having intrusted to its agent, Peters, the responsibility of closing the contract with Shively by collecting the premium on the policy, which only remained to be delivered to become effective, it would not be permitted to repudiate the agent’s representations in respect-thereto after a loss had occurred.

After the issuance and mailing of the policy to Peters to be delivered to the assured, nothing remained to be done on the part of the company. Shively had paid the premium in advance of the delivery, and therefore nothing remained to be done on his part to fully consummate the contract. The delivery of the policy to Peters to be by him delivered to the assured, was a delivery to Shively, the premium having been paid. Peters was merely the medium through whom the company delivered the policy to Shively. The contract was complete; nothing on the part of either of the contracting parties remained to be done.

If Peters, as agent of the company, had no power on behalf of the company to make, modify, alter or change a contract, he clearly could have no power to annul a contract which the company had made. To say that the withholding of delivery of the policy could in any manner affect the rights of the parties under it, would be to hold that Peters had power not only to “modify” a contract “on behalf of the company,” but to alter, change, recall or cancel a contract already made by the company.

We think the mailing of the policy by the company to Peters, to be delivered to the assured, effected a delivery to Shively, as fully as if the policy had been mailed direct to Mr. Shively (he having paid the premium), and that all conditions precedent to the taking effect of the policy had been performed, and the policy was in full force at the death of the assured.

The general rule of law imputing to a principal notice given to of possessed by his agent, applies to insurance not less than to other principals. While principals in this business have taken greater pains than those in any other to exempt themselves from the operation of this rule, they have been generally, if not universally, unsuccessful. Policies usually contain many conditions and restrictions inserted' for the purpose of relieving the insurer from liability for all acts done by and all notice given to, and all knowledge acquired by their agents. *

Nevertheless, irrespective of the stipulations contained in the policy, if it can be said that in doing any act one was in fact the agent of the insurer and acting as such, his principal, though without the actual knowledge possessed by the agent, must be deemed to have acted with such knowledge and held to be bound or estopped to the same extent as if the agent had actually imparted to his principal knowledge of all the material facts known to him when acting for his principal.

Generally, the breach of a condition in a policy of insurance does not forfeit it absolutely. The condition was inserted for the benefit of the insurer, who may avail himself of it or not, as he may choose, after receiving information of the facts. "We think the better rule is that he must act with at least reasonable diligence in asserting his right of forfeiture, and can not leave the assured under the delusion that his policy remains in force, and then inform him to the contrary after he has suffered the loss, against which he sought to indemnify himself by the insurance.

Conceding that the knowledge of the cause of forfeiture is brought home to the insurer, he must within reasonable time act upon it, and failing to notify the assured of any action imperiling his rights, the forfeiture must be deemed waived. The usual mode of notification to an insured is by the cancellation of his policy. Hence, a failure to cancel when the insurer has notice of the cause of forfeiture is generally deemed an election that the contract may remain in force, and estops the insurer from subsequently insisting on a cause of forfeiture.

This rule would apply with great force in the case at bar to estop the company from insisting on the forfeiture while it held the premium and refused to return it upon demand. The retaining of the money with knowledge that Shively was not in as good health when the money was paid as when the application was made, would be deemed an election on the part of the company that the policy remain in force, and. would estop the company from subsequently, and especially after the loss had occurred, insisting on a forfeiture.

Here the company was speculating on the life of Shively— gambling on the chance of his getting well or dying. If he recovered the company would deliver the policy; if he died it would return the premium. That is, the company would hold his insurance and receive the benefit of the premium if Shively recovered; if he died it would return the premium. This action of the company was manifestly unfair and was in violation of its plain duty.

It was the duty of the agent to either deliver the policy or return the premium upon demand. Refusing to do either operated as a fraud upon the insured. When the company refused to deliver the policy it was bound, under every condition under which it accepted payment, to return the premium, and this duty was all the more incumbent on the company when it had knowledge, as it did at the time of the demand, that Shively was not then in as good health as when the application was made. Failing to do so may well be held to estop the company to defend against the policy after loss.

We have examined many of the authorities cited by able counsel for plaintiff in error in support of their contention, and we have concluded that they are not in conflict with the conclusions we have reached.

The court finds no reversible error in the record, and the judgment of the court of common pleas is affirmed with costs, but without penalty.


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    LIABILITY OF ASSIGNEE OF RENTS TO MAKE REPAIRS.
    Circuit Court of Cuyahoga County.
    The S. H. Cohn Company v. Hermine A. Simon.
    Decided, March 20, 1911.

      Assignee of Rents — Rot Answerable for Failure to Malee Repairs.

    1. The right to receive rents due or to become due under a lease may be severed from the reversion and by assignment become vested in the assignee.
    2. The mere assignee of the rents, though she has agreed with her assignor to make necessary repairs, is not answerable to the tenant for her failure to make such repairs.

      Hidy, Kléin & Harris, for plaintiff in error.
    W. D. Meals and Sanders & Sanders, contra.
    ITbnry, J.; Winch, J., and Marvin, J., concur.
   The parties to this proceeding in error stand in the relation opposite to that in which they stood below. There ITermine A. Simon, as assignee of the rents of a certain block, sued the Cohn Company, which is the assignee of a lease -of a certain store in said block, in an action for rent. The defendant, by cross-petition counter-claims for damage to its goods in said store by water from leaky pipes in a part of the block retained and controlled by the lessor. The defendant in error’s right to the rents was acquired before the damage to plaintiff in error’s goods occurred.

A demurrer to the petition was overruled and recovery on the counter-claim was denied by exclusion of certain evidence and peremptory charge of the court.

Neither party to the suit is an original party to the lease.

In support of the demurrer it is agreed that there is privity neither of estate nor of contract between the parties and Smith v. Harrison, 42 Ohio St., 164, is cited to show that:

“The foundation of the action by the assignee of the reversion against the assignee of the leasehold, is the privity of estate between them. The principle is that the latter shall not enjoy the former’s property without the payment of rent.”

And, again, at page 185 :•

‘ ‘ The right to sue for and recover rents follows the fee simple estate, and the action therefor must be in the name of the owner of the fee at the time the rent accrues.”

,We discern no reason, however, why his right may .not be severed from the reversion and by assignment become vested in the assignee. The books are. full of such cases of severance.

The rulings on the cross-petition were likewise correct. True, the defendant in error, as assignee of the rents, had expressly agreed with her assignor to make necessary repairs; but that agreement was solely for his benefit, and he, as the reversioner, is alone answerable for breach of duty to his tenant. The defendant in error, as assignee of the rents, assumed no duty to the plaintiff in error.

Judgment affirmed.


text:
    APPLICATION OF DOCTRINE OF RES IPSA LOQUITUR.
    Circuit Court of Cuyahoga County.
    The Foster City Provision Co. v. Adolph Blaha.
    Decided, March 24, 1911.

      Proof of Negligence in Accident to Employe Through Defect in Machinery.

    In the case of an injury to plaintiff’s arm by the sudden and unexpected descent of the plunger in a sausage machine, although the doctrine of res ipsa loquitur does not apply, negligence on the part of the defendant employer may be inferred from proof of facts pointing to insufficiency in construction or repair of the machine, though several distinct defects are alleged and the proof points as strongly to one of them as the cause of the accident as any other.

      Beaton & Paine, for plaintiff in error.
    W. B. Beebe and A. W. Lamson, contra.
    Henry, J.; Winch, J., and Marvin, J., concur.
   A former proceeding in error, No. 4663, growing out of the same original action, was decided by this court June 28, 1910. The opinion by Marvin, J., shows that Blaha had then recovered a verdict and judgment for damages for personal injuries, upon substantially the same allegations and evidence of negligence as are presented upon this record. That judgment was reversed, upon the authority-of The Baltimore & Ohio Railroad Company v. Lockwood, 72 Ohio St., 586, “for error on the part of the court in failing to properly state to the jury the issues in the case.” The opinion concludes:

“An examination of the record fails to disclose any other reversible error.”

In the present proceeding a re-examination of the evidence is invoked, by the claim of “error in applying the doctrine res ipsa loquitur to this ease, and in submitting the ease to the jury,” as well as by the request “for final judgment in this court. ’ ’

Without encumbering this opinion with an exhaustive analysis of the mechanical details, the clear and candid statement of the facts, presented in the admirable printed brief of the plaintiff in error may be quoted:

“Plaintiff was a sausage maker in the employ of defendant. He lost his right arm below the elbow by reason of an injury received while working at a sausage stuffier.
“Said sausage stuffier consisted of two parts, the upper part being a steam cylinder in an-upright position. The lower part a sausage cylinder, open at the top, and situated directly under the steam cylinder, and about two feet below it.
“The steam cylinder was equipped with an ordinary piston rod and piston head. The piston rod was long enough to reach to the bottom of the sausage cylinder below. On the lower end of the piston rod was circular piece of iron that just fitted into the sausage cylinder.
“Steam was admitted into the steam cylinder'through a valve box on its side at about its center. This valve box was equipped with an ordinary sliding valve. The valve was connected with an iron handle by a valve stem and two iron rods, the handle and rods forming a system of levers by which the valve was moved up and down.
“In the operation of the machine the sausage cylinder was filled with sausage meat. The handle would then be pulled down,'this would slide the valve so that steam would enter the upper end of the steam cylinder and be shut off from the lower end thereof. The steam pressure would drive the piston rod downward, the circular iron plate at the end of the piston rod would enter the sausage cylinder, and the pressure exerted by the steam would force the sausage meat out of a spout at the bottom of the sausage cylinder into eases.
“When the sausage cylinder was emptied, the handle would be pushed up, this would slide the valve upward and reverse the steam pressure, steam would be shut off from the upper end of the steam cylinder and be admitted to the lower end of the piston rod, and its attachments would be driven upward and be retained in position by the pressure of the steam below 'the piston head. The sausage cylinder would again be filled with meat and the operation repeated. !
‘ ‘ This sausage stuffer thus operated just as does a steam engine by the alternate changing of the steam pressure from one end of the steam cylinder to the other, by means of a sliding valve, the valve being moved not automatically as in a steam engine, but by the raising and lowering of this handle by the operator of the stuffier.
“He had finished stuffing a cylinder of sausage meat, he pushed up the handle to its full extent, and the piston rod and its attached circular iron plate, termed by the witness, ‘the plunger’ went up and was retained in position as usual. He put his right arm and hand into the sausage cylinder to remove a piece of skin, the plunger remained up for about a minute, when without his touching the handle or doing anything to put the machine into operation, a reversal of the steam put the machine into operation, and the plunger was driven downward, his arm was caught between the plunger and the top of the sausage cylinder, and so injured as to require its amputation.”

The petition’s allegations of negligence on the part of the defendant below are that it

“furnished and provided a second-hand machine in a womout and defective condition; that the piston head and steam cylinder of the same was so worn, defective and out of repair that the steam was permitted to escape out from the lower to the upper portion of said cylinder. That the valve, connecting parts, pipes, reversing mechanism and appliances', including said lever, the operation of which caused said piston head and plunger to move up and' down, were so worn, defective and out of repair as not to properly discharge and perform the duties of the same in controlling the operations of said piston and said plunger in said cylinders, and that all the parts and appliances connected with said steam cylinder and with said machine, which controlled the operation of the same as herein described, were so worn, and defective and out of repair as to be unsuitable for use, unfit and unable to perform the duty of holding and maintaining said plunger so as to enable this plaintiff, on the occasion of the said injury, to safely place his hand and arm in the said meat cylinder as he was required to do in the operation of said machine; that said machine and all of its parts herein designated had been in such condition for a period of many months prior and down until the time of the plaintiff’s injury herein described and all of which was well known to the said defendant. That the said defendant, well knowing the wornout, second-hand condition of said machine and defective condition thereof, made or caused to be made no inspection thereof at any time for six months prior and down until the time of said plaintiff’s said injury and during all 'of said time negligently and carelessly allowed and permitted said machine to be and remain in said wornout, defective and dangerous condition. That the said defendant well knowing the wornout and defective condition of said machine and its appliances as herein described caused to be used-on the occasion of the plaintiff’s injury, an excessively dangerous- high steam pressure. Plaintiff says that by reason of said defective machine, as herein described and of the use of said high dangerously excessive steam pressure, said piston head and said plunger connected therewith as aforesaid, was caused suddenly to drop and this plaintiff was injured thereby as hereinbefore described.”

The defendant below sought to analyze, or separate, these averments of negligence into half a score of independent items; and, by requests presented in writing before argument, it asked to have each item, in turn, eliminated from the case, for want of evidence to support the same. These requests- were all denied, and we are not prepared to say that the court erred'in thus ruling. The evidence in support of the allegations of negligence, was not massed directly upon one or more of these items. It consisted of many details and circumstances which the jury, in performing their function of drawing inferences' of fact, were invited to fit into a mosaic, corresponding to the allegations of negligence in the petition. The items were not entirely independent, but to some extent, at least, were mutually related. Much of the evidence, bearing upon one, bore also directly or indirectly, positively or negatively upon others.

Complaint is made, however, that such negative proof of negligence is nothing else than the application of the doctrine of res ipsa loquitur, and that this is inadmissible on this sort of a case. Generally speaking it is true that negligence is not to be inferred merely from the happening of an accident. But this record discloses evidence, positive as well as negative, on the subject of the defective condition of this machine.

In order to demonstrate its claim that no negligence was proved against it, plaintiff in error reclassifies, from the evidence offered by the plaintiff below, the “actors which kept the handle up when pushed up” as follows:

(a.) The friction at the various points of the lever formed by the handle and the rods that connected it with the valve stem.
(i.) The friction of the packing around the valve stem.
“ (c.) The pressure of the steam on the back of the valve itself.”

The plaintiff in error contends that, as shown by the evidence,, any one of these factors alone, except perhaps the last, would have sufficed to keep the handle up. We note, however, the positive testimony of the plaintiff’s witness, William A. Toole, on page 160 of the bill of exceptions, as follows:

“Q. ITow is this valve made as to being smooth or not, on its face? A. When it’s right it looks like a looking-glass when it is not out.

“Q. Now, would the pressure of the steam alone on that valve, when the lever is up, be sufficient to hold the lever in position and maintain the valve without moving? A. I don’t think it would.

“Q. And can you in practice tighten up the nuts to the various — and the bolts holding these various members together, so as to hold the lever up and valve in place, and have it so the lever would work practically in the operation of the machine ? A. Yes sir.”

At page 394, defendant’s witness, William McClellan, the engineer at its plant, when Blaha was hurt, testifies:

' “ Q. What do you say it is that holds the lever up when you put it up? A. Why, the steam pressure holds it up; helps to hold it up.”

At page 396 he testifies further:

“Q. In this machine, before Blaha was hurt, did the bolts that hold the various members of the lever together, have anything to do with keeping the lever up when it was put up ? A. Why, there was a little friction there, not much.
“Q. Now in packing that stuffing box what, if anything, before Blaha was hurt did the stuffing box have to do with keeping the handle up, I mean the condition the handle was in? A. Why, there wag a little friction on the rod, that is all.
“Q. A little friction on the rod? A. A little friction on the rod. That stuffing box just pulled in there tight enough to hold the steam from escaping.”

From all this, and other similar evidence, it appears that gravity all the while tended to cause the handle to drop and start the machine, and the combined friction of the lever points, of the valve stem and of the valve itself, was all that kept it from falling. From time to time the bolts or nuts at the lever joints had to be tightened. From time to time the valve stem had to be repacked to prevent the escape of steam. Failing the usual slight friction at these points, the sole remaining reliance became the steam pressure on the valve itself, which Toole testified was not enough to hold the handle up.

True, the engineer says that the lever joints were tight at the time of the accident, and there is perhaps no direct and positive evidence of any looseness at either the valve stem or the lever joints. But it is evident that the engineer never depended upon the “slight friction” at these points as having any proper office or effect in, keeping the handle up. He relied chiefly upon the steam pressure on the valve, if not wholly upon it. Such reliance appears to have been of ,at least doubtful warrant. The whole mechanism was ill-advised. Once before and once after the accident whereby Blaha was injured, similar or kindred incidents demonstrated the dangerous character of the mechanism; and the former of these occurrences tended to affect the owner with notice thereof. In so far as they were otherwise explainable, cross-examination could and did bring out the distinguishing facts. We hold that evidence of these incidents was .admissible for the purposes named, to which, in fact, their effect was properly limited at the time the objections thereto were finally overruled.

It is claimed, however, that the application of the res ipsa loquitur rule is squarely raised by the fifteenth request of the defendant below to charge before argument. That request was refused by the court and is as follows:

“The testimony of the plaintiff that the handle and plunger of this machine came down without plaintiff doing anything to cause them to come down does not raise a prima facie presumption of negligence on the part of defendant in the respects claimed in the petition or in any respect.
‘ ‘ It devolved upon the plaintiff to trace the fault for his injury to the defendant; plaintiff must have presented some affirmative evidence from which there may be a logical inference of negligence, in addition to the mere unexplained descent of the plunger and handle. And unless plaintiff has done so, your verdict must be for the defendant.”

The latter part of this request is doubtless correct, and the former part would also be correct if the testimony referred to therein were considered alone. So far, however, as the terms of the request disclosed, the testimony was not to be taken by itself, but in connection with all the other circumstances of the case. In that setting, it might well be inferred by the jury, as a matter of fact, to raise the presumption, or inference of negligence which the request affirms it would raise. The request was therefore misleading and was properly refused.

A similar vice lurks .also in the eighteenth request, which was refused. The incident of the plunger’s fall some time after the accident, is doubtless explainable as indicated in said request; but, taken with the other circumstances brought out in evidence, it might well have been thought by the jury to show that the friction at other points than the valve itself was insufficient to keep handle and plunger from falling. And whether the mere pressure of steam on the valve to hold the handle and plunger was sufficient, when the steam was on, was a matter concerning which the other evidence conflicted. It is not necessarily true, therefore, that a descent of the plunger under such circumstances .is no “evidence of any defect in the machine.”

The general charge is complained of in two respects: first, in that it impliedly authorizes the jury to apply the res ipsa loqmtwr doctrine, and, secondly, in. that it expressly authorizes the jury to infer that excessive steam pressure caused the plunger to fall. The court did correctly charge that proof of negligence may consist of “proof of facts from which negligence may reasonably be presumed;” and he thereafter alluded to, the inference, or presumption, of negligence, which may arise “from physical facts alone,” pointing “to insufficiency in the construction or repair of machinery as the producing cause of the accident.” Such language does not mean that an inference of defendant’s negligence may be drawn from the mere fact of this accident to plaintiff in and by the plunger falling upon his arms, but it does properly intimate that the dangerous character of the mechanism might be inferred’ from the happening of other similar events, and from this together with other direct or circumstantial evidence, negligence might be inferred.

As to the possibility of causal relation between high steam pressure and the plunger’s fall, in such wise as to injure the plaintiff below in the manner complained of, we are not clear, from 'all the evidence, that, under some circumstances, as, for example, a leakage of steam in the cylinder, high pressure might not suddenly and forcibly have shifted the valve or, at least, have accelerated the descent of the plunger so as to catch, or more severely injure, plaintiff’s arm. As the witness Wiegand says, at page 94, it would shoot the plunger down like lightning —get more pressure on.” ®

Finding none of the assigned errors to be well taken, we hold that the judgment must be and it is affirmed.