text:
    LEGALITY OF A COVENANT BY LESSEE TO SELL ONLY THE PRODUCTS OF LESSOR.
    Circuit Court of Putnam County.
    Chris. Diehl Brewing Co. v. Louis A. Konst.
    Decided, 1905.

      Landlord and Tenant — Construction of Lease of Premises for Saloon Purposes — Enforcement of Lease by Injunction — Covenant to Sell Only Beer Manufactured by the Lessor Does Not Invalidate the Lease.

    1. The provisions of a lease of premises for saloon purposes, wherein the lessee covenants not to sell any beer other than that manufactured by the lessor, extend to another room rented by the lessee and used by him with the lessor’s consent in connection with the saloon as originally operated; and the lessee can not, after the lessor at his request has installed new bar fixtures in the new room, tear out the new fixtures and repudiate his lease.
    2. The lessee of premises leased on condition that only beer manufactured by the lessor shall be sold on the premises, may be enjoined from a repudiation of his agreement not to sell other beer.
    3. A provision in a lease whereby the lessee engages to sell no beer on the leased premises other than that manufactured by the lessor, in nowise affects the public and is not invalid as in restraint of trade or in violation of the Valentine anti-trust law.

      B. F. Enos and Risser & Smith, for plaintiff.

      Bailey & Leasure, contra.
    Hurin, J.; Norris, J., and Vollrath, J., concur.
    Appeal from Putnam Common Pleas Court.
   Tbis action involves the validity of a contract between a brewing company and a saloon keeper, whereby the latter agreed for a term of years to sell no other beer on certain premises than that furnished by the former. The case was heard by us on appeal, the essential facts being agreed upon.

A somewhat lengthy statement of the facts will be necessary in order to make the issues plain.

Plaintiff, the brewing company, is the owner of a brick building, the first story of which has been occupied for some years by defendant as a saloon. Formerly he occupied this saloon under a lease from month to month, but on October 10, 1904, he entered into a written agreement of lease for a period of five years, agreeing to pay for the premises leased the sum of $360 per year in monthly installments.

By the terms of this lease defendant was to have the use of all the saloon furniture and fixtures then in said building free of cost.

The lease contains the following covenant, which is the bone of contention in the ease at bar:

“Said second party further covenants and agrees as a part of the consideration for said leased premises and use of said furniture and fixtures, to deal exclusively in the beer manufactured by said party of the first part and not to in any manner sell or expose for sale in said premises any beer not manufactured by said first party during the full period of this lease, and that any alterations or changes made in said building shall be made at the sole expense of said party of the second part and no such alteration or change shall be made until after first obtaining the written consent of said first party therefor in writing.”

. Defendant continued to occupy said property as a saloon under this lease for about two years until May, 1906, when he also rented of one Laura E. Andrews a business room adjoining that formerly used by him, but continued to occupy both rooms', using the Andrews room as a billiard and lunch room and plaintiff’s room as a saloon. For the first three months plaintiff paid a part of the rent of the Andrews room, and by agreement between plaintiff and defendant a doorway was cut in the wall between the two rooms, which door was used by defendant in the operation of the two branches of his business.

Soon afterwards defendant, by consent of plaintiff, moved the saloon fixtures into the Andrews room and the billiard tables and lunch counter into plaintiff’s room, the latter being a larger room, and more convenient for the purpose.

Plaintiff assented to this agreement, and at defendant’s request plaintiff later on put larger saloon fixtures in the Andrews room in place of those removed thither from the plaintiff’s room.

Afterwards defendant, with plaintiff’s consent, sold the billiard and lunch part of his business to one Diehl Richards, who operated it for a short time, but subsequently resold it to defend ant, who from that time to the'commencement of this suit continued to operate the business of both rooms as at first.

Both at the time of the cutting of the connecting door and of the sale of the billiard and lunch room business to Richards, plaintiff’s consent was given to these arrangements, with the mutual understanding that the terms of defendant’s lease should be in no way affected thereby.

Plaintiff at all times furnished to defendant all beer ordered by him and at the same price as that first agreed upon.

Immediately prior to the commencement of this suit defendant notified plaintiff that he intended to purchase other beer than the plaintiff’s, and defendant about the same time tore down the saloon furniture and fixtures installed by plaintiff and secured other furniture in their place which he is now using.

Plaintiff by this action seeks to enjoin the sale by defendant in either of said rooms of any beer other than that manufactured by plaintiff.

Defendant by its answer admits the lease of plaintiff’s room and the terms of the lease as to rental and fixtures, but pleads that the covenant to deal exclusively in beer manufactured by plaintiff and not to sell other beer in said premises is void as in violation of the. anti-trust laws of Ohio, and as in restraint of trade and against public policy.

We have not been favored with any brief by counsel for defendant, but in oral argument it is claimed that the sale of beer other than that manufactured by plaintiff is not a violation of the lease, if such beer is sold in the Andrews room and not in plaintiff’s room and that the lease has therefore been strictly complied -with.

Second. That the covenant not to sell other beer than the plaintiff’s is contrary to law and public policy and is therefore-void; and

Third. That injunction is not the proper remedy of plaintiff, who must sue, if at all, in an action at law for damages for breach of contract.

Defendant’s whole reliance as to the law of the case seems to be on two cases decided by the circuit courts of Lucas and Cuyahoga counties; the cases of Huebner-Toledo Breweries Co. v. Singlar, 8 C. C.—N. S., 49, and Cleveland & S. Brew. Co. v. Demko, 9 C. C.—N. S., 130.

The facts disclosed in the former case are so different from those in the case at bar, that that decision is only valuable in our discussion for the evident ability with which the authorities are therein reviewed.

As to the first defense suggested, we have no hesitancy in saying that it rests upon the thinnest of technicalities, unworthy of consideration by a court of equity.

As long as the saloon fixtures remained in plaintiff’s room, even after the two rooms were connected and became practically one, no question was raised. Defendant had recognized plaintiff’s rights under the lease by ashing and obtaining its consent to cutting the door connecting the two rooms, and this with the express agreement that the terms of the lease should not thereby be affected. Again defendant recognized plaintiff’s rights under the lease when he ashed and obtained from plaintiff its consent to mahe the exchange in the use-of the two rooms, removing the saloon business to the Andrews room. And again when the billiard and lunch business was sold temporarily to Richards by defendant, he did so under an express agreement that the terms of- the lease should be in no way affected thereby. Again it was at defendant’s request that larger and better saloon fixtures were by plaintiff installed in the Andrews room.

By all of -these actions defendant impliedly, and by some of them expressly and for valuable considerations, agreed that plaintiff’s lease should be considered as extended over the enlarged quarters. It is unquestioned that in the use of the two rooms defendant was operating simply an enlargement of his former business, not a separate saloon business, but the same saloon business, and especially is this shown by his express agreement made with plaintiff (when he sold out the restaurant and billiard business to Richards) that the sale of that part of his business should in no way affect the lease although he was thereafter to operate his saloon business- in the Andrews room and not in plaintiff’s roon.

Having thus recognized plaintiff’s rights under the lease in the business conducted in the Andrews room, he can not at will and in his own time and without plaintiff’s consent repudiate those acknowledged rights.

To say that the sale of another brewer’s beer in the Andrews room is not a sale of it in plaintiff’s room, may be literally true; but since the rooms have been so connected as to be conveniently used togther in carrying on defendant’s business and that too by the mutual agreement of plaintiff and defendant, and with the express agreement that the terms of the lease shall not be affected thereby; and in view of the continuous course of conduct of defendant in conducting his business in the two rooms and in recognizing plaintiff’s rights under his lease in the Adrews room, defendant is now estopped from denying those rights.

The covenants of the lease provided not only that defendant should not sell other beer than plaintiff’s in plaintiff’s room, but also that he, the defendant, during the full period of five years and in consideration of said lease and the use of plaintiff’s furniture and fixtures, should deal exclusively in the beer manufactured by plaintiff. He can not avoid this agreement by any such flimsy pretext as that now raised.

Passing the second defense for a moment and coming to the third defense, i. .e., that the proper remedy of plaintiff is by action for damages and not by injunction, we have even less difficulty.

Plaintiff has definite rights under his contract, and has the right, if the contract is lawful, to insist that it shall be lived up to. The possession .and use of plaintiff’s property is involved.

Plaintiff rented that property for a definite purpose — the sa’e of its beer, not for the sale of a rival’s beer; not to be shut up while a rival is doing a rushing business next door; and not, in the expressive language of plaintiff’s counsel, to be used as a Sunday school or Y. M. C. A. It was rented for a saloon to be run in plaintiff’s interest and in plaintiff’s interest only.

Whatever we may think of the liquor business as a business, it has certain recognized rights under the laws of Ohio, and those rights must be recognized by courts as long as the Legislature continues to grant them.

A beer contract, if not invalid on constitutional grounds or on grounds of public policy, must be enforced like any other contract, and where, as in this ease, the conflict is between two or more liquor dealers, their rights must be determined in reliance on the same legal principles as in any other analogous case.

It is evident that in the case at bar an action for damages would have afforded no adequate remedy and that plaintiff’s interest can only be protected by preventing a continuous violation of his lease.

While an action for damages- might afford a remedy for past violations of plaintiff’s rights under the lease, there is here a case of threatened, continuous future misuse of plaintiff’s property in violation of a written contract and to the continuous injury of plaintiff’s property rights. This future abuse plaintiff now seeks to prevent. To do this, injunction is the proper remedy. See opinion of Judge White in Stines v. Dorman, 25 Ohio State, 580, 584.

But the main reliance of defendant is apparently on his second defense, that is,.that the covenant in the lease that plaintiff’s beer alone shall be sold on the leased premises or by defendant, is in violation of the Valentine anti-trust law, 93 O. L., 143 (4427-1, et seq., Revised Statutes), as in restraint of trade and is against public policy and void. This raises a more difficult question of law.

Defendant’s counsel relies strongly on the case of Huebner-Toledo Breweries Co. v. Singlar, supra. The court in that case holds that:

“A covenant in a lease of certain premises by which the lessee agrees to sell only the lessor’s beer thereon or within a radius of one mile for a period of five years 'is in restraint of trade and void as against public policy if there is no conveyance to him of a good will attaching thereto. ’ ’

And that:

“A contract by the vendor of a certain business not to thereafter enter into competition with the vendee in that locality is enforcible at law; but a contract, based upon no matter how valuable a consideration, by a lessee of property not to enter into competition with the lessor in other localities is void as against public policy, and unenforcible. ’ ’

In that case a brewing company leased property to two tenants, Joseph and Annie Singlar, with the stipulation that they should sell no other beer than that supplied by lessor, either in the building so leased or within a radius of a mile thereof. These tenants owned another piece of property within a mile of the leased property; in fact, within one hundred feet of it, but unconnected with it, and they attempted to sell other beer than the plaintiff’s' in the property owned by them. The court held that the contract in so far as it restricted such sale in property not connected with the leased property was invalid as against public policy. That case has no bearing upon the question before us.

As we view the ease at bar, the two rooms operated by defendant were by defendant himself practically made one. He occupied them both in connection, and had for various valid considerations bound himself repeatedly to extend the covenants of the lease over both rooms. This is a very different case from one involving pieces of property, not used for one and the same business and located far apart, even though the business of each was of the same kind and run by different members of the same family.

In what respect then is the contract in question a contract in restraint of trade or against public policy? The fact that this contract relates to liquor can not vary the principles by which it must be governed.

It must be presumed that this defendant has paid his tax under the Aiken law, or he would not be doing business at all. Having paid this tax, he is not to be molested under the provisions of the law in the sale of liquor of any kind, unless he can, by his own acts, limit his rights to sell. He has attempted by private contract and for a valuable consideration so to limit his rights. Had he not so contracted, he would not have obtained control of the property which he now enjoys.

Suppose a miller owns a storeroom and rents that storeroom to a grocer with the stipulation that the grocer may sell what he pleases there except only that he shall sell no other brand of flour than that made by his lessor, the miller. Suppose a manufacturer of boots and shoes rents a room to a man in the retail shoe business with the stipulation that he shall sell only the line of shoes made by his lessor. Suppose a newspaper press agency rents its facilities for gathering news to a newspaper company, under the stipulation that no other press agency’s service shall be employed for a certain period of time — five years. Suppose a newspaper manager employs an editor for the period of five years at a stipulated salary with the proviso that all of his time and talents are to be employed in the service of his employer.

In all of these cases there is a restriction in the free use of property and services and ability; but are they in restraint of trade? Is any monopoly created thereby? Is the public prevented thereby from buying other flour or another make of shoes or from reading other newspapers supplied with news from other sources, or from reading the effusions of other gifted editors?

The theory on which an act or contract in restraint of trade is prohibited by law is, as we understand it, based upon the supposed injury to the public by the restraint of its powers of free trade. It is contrary to a wise public policy that the public should be prevented from freely buying and selling merchandize wherever it can do so to the best advantage. Such a policy does not extend so far as to prohibit a man from agreeing to devote his attention to particular lines of activity, unless such a limitation of his powers can be shown to amount to public injury.

It has been held in Michigan, Maryland, Massachusetts and other states that where the restraint contracted for appears to have been a just and honest purpose, for the protection of the legitimate interest of the party in whose favor it is imposed, reasonable as between the parties and not especially injurious to the public, the restraint will be held valid. Hubbard v. Miller, 27 Mich., 15; Guerand v. Dandelet, 32 Maryland, 561; Pierce v. Woodward, 23 Mass. (6 Pick.), 206.

An agreement not to engage in a particular trade or business in a certain place within a specified time is valid (Arnold v. Kreutzer, 67 Ia., 214). And if this is so, if a man can lawfully bind himself not to engage in business at all, why can he not also lawfully bind himself not to engage in a part of a business, or not to use lessor’s premises for the purpose of engaging in the sale of a rival’s product?

Cases are numerous where parties have contracted not to engage for a number of years in the practice of law or of medicine in a certain place, and such contracts have generally been held valid. Usually in such cases there has been a sale of the good will of the practice, but that is only a form of consideration for the contract, and other considerations would doubtless be equally valid.

In a New Jersey case, a rule wa§ laid down, which seems to be fair and sound, viz.:

" The test to be applied in determining whether a restraint is reasonable or not is to consider whether it is only such as is necessary to afford a fair protection to the interest of the party in whose favor it is given and not so large as to interfere with the interest of the public.” Mandeville v. Harman, 42 N. J., Eq. 185.

In the case at bar we have no evidence that the interest of the public will be in any degree interfered with by the performance of the contract in question. It does appear that the interest of the brewing company requires some such protection as it had contracted for — the violation of the contract by defendant and his attempt to favor a rival of plaintiff at plaintiff’s expense is sufficient proof of that necessity.

We are unable to find that any sound public policy requires the annulling of this contract or that the contract is to any unreasonable extent a contract in restraint of trade, but we do find that equity and fair dealing on the other hand require its enforcement.

There will therefore be a finding and decree for the plaintiff; an injunction will be granted as prayed for; judgment against defendant for costs and execution for costs, awarded.


source: Caselaw Access Project

license: Public Domain

text:
    ADJUSTMENT OF EQUITIES UNDER AN OIL LEASE.
    Circuit Court of Wood County.
    George Hollister v. T. J. Vandergrift et al.
    Decided, October 29, 1892.

      ■Oil and Gas — Belay in Completing Well Before Expiration of Extended Term — Hot Excused by Accident to Apparatus — Lessor May Treat the Lease as Terminated — Adjustment of Equities in Connection with Uncompleted Well.

    1. At the expiration of an oil and gas contract for a term of three years, with a provision for its extension so long as gas and oil should be produced in paying quantities, the lessees upon consideration were granted an extension of one more year but failed to commence drilling the first well until within seven days of the end of the extended term, and it was impossible to complete the well during that time. Held: That the fact that the lessees made an arrangement with a contractor to commence drilling in sufficient time to complete the well before the expiration of the extended term, but on account of an accident to his apparatus he was compelled to disappoint them and it became necessary to contract with another operator who was unable to begin drilling until too late to finish a well before the term expired, was not a sufficient excuse for the delay, and the owner had a right to treat the contract as at an end.
    2. A court of equity, in a suit to enjoin further operations and to quiet the title of the lessor to premises under an expired oil and gas lease and extension thereof, will grant the relief sought; but where the lessees have made an effort to complete a first well within the term, and have met with delay but not of an excusable character which would extend the lease, equity will permit the completion of the well for the purpose of ascertaining the results of the work, and will apportion the cost between the parties.

      B. F. James and Edward Beverstock, Parker & Moore, for plaintiff.

      Doyle, Scott & Lewis, contra.
    Scribner, J.; Bentley, J., and Haynes, J., concur.
    Appeal from Wood Common Pleas Court.
   This is the ease -of George Hollister vs T. J.Yander grift et al. The substantial parties to this controversy are the plaintiff, George Hollister, and the defendant, the Northwestern Ohio Natural Gas Company.

It appears by the pleadings and proof in this ease that on July 12, 1886, the’ plaintiff and the defendant, T. J. Yandergrift, entered into an agreement in writing, commonly called a gas and oil contract, a copy of which is contained in the petition in this case. By this agreement the plaintiff granted, demised and let unto Yandergrift and his heirs and assigns for the purpose,- and with the exclusive right of drilling and operating for petroleum and gas, all that certain tract of land described in the lease containing 160 acres of land situate in Wood county.

It was provided by this contract that the party of the second part,, his heirs and assigns, are to have and to hold the said premises for the term of three years from the date hereof and as much longer as oil or gas is produced or found in paying quantities thereon. In consideration of said grant and demise, the said party of the second part agrees to give or pay to the party of the first part, the full equal one-eighth part of all the petroleum or rock oil produced or found on said premises, and to deliver the same, free of expense, into tanks or pipe lines to the credit of the first party — to the lessor, Hollister — and should gas be found in sufficient quantities to justify marketing, the consideration in full shall be $300 per annum for the gas from each well so long as it shall be sold therefrom. Now here comes a very material provision in this contract:

“It is further agreed that the party of the second part shall complete a well on the above described premises within six months from the date hereof, and in case of failure to complete such well within such time, the party of the second part agrees to pay to the party of the first part for such delay a yearly rental of $1.00 per acre on the premises herein leased from the time of completing such well as above specified, until such well shall be completed, the said yearly rental amounting to one hundred and sixty dollars shall be deposited to the credit of the first party in the Farmer’s National Bank of Findlay, or be paid direct to said first party. And a failure to complete such well or make such deposit or payment as above mentioned, shall render this lease null and void and to remain without effect between the parties hereto.”

Then there are some reservations, not material, and the further provisions that all the conditions between the parties to the agreement shall extend to their heirs, executors and assigns.

This lease, by its terms, it will be perceived extended from July 12, 1886, to July 12, 1889.

It seems nothing was done under it by either party until May 23, 1889, something less than two months from the date when it would have expired by its terms and conditions unless gas or oil should be found in paying quantities on the premises within that time.

On May 23, 1889, this arrangement was entered into:

‘ ‘ For and in consideration of the sum of four hundred dollars to me in hand paid, covering all back rental also the advance rental in full on my farm of 160 acres in section twenty, Portage township, Wood county, Ohio, and which was leased to T. J. Vandergrift, July 12, 1886, the. receipt whereof I hereby acknowledge, I hereby extend the term of said lease from one year ending July 12, 1890. In witness whereof I hereby set my hand and seal on this twenty-third day of May, 1889.” Signed, “George Hollister.” There is a certificate of acknowledgment attached to this.

•The .Northwestern Ohio Natural Gas Company became the owner of this contract. Matters remained in statu quo until about June 17, 1890, when the lessee or grantee of the rights provided for under this agreement, gave orders to its employes to proceed with the work of drilling on these premises. Orders were issued to erect a derrick and to make the usual and necessary provisions for prosecuting the work of drilling.

Some time between the seventeenth of June and fifth of July the derrick was erected and lines were laid for furnishing a supply of fuel in order that the operations necessary might be prosecuted. Work was actually commenced — the work of drilling or “spudding” as it is termed, on the fifth of July, seven days before the expiration of the term provided for in the lease as extended by arrangement of May 23, 1889.

This work was prosecuted with considerable energy until July 14, 1889, when the plaintiff, Hollister, brought this action to restrain further proceedings under the lease, alleging that he 'was the owner of these premises; that the time within which work was to be commenced and prosecuted had expired; that no oil or gas had been found by the lessee, the Northwestern Ohio Natural Gas Company, and that in violation of the rights of the plaintiff they were proceeding to drill upon the premises in search of oil or gas; and in substance he prayed the court to quiet his title in these lands and to enjoin the defendants or the Northwestern Ohio Natural Gas Company from further entering, trespassing or proceeding with the work upon which they had entered.

The lease under the terms of the extension terminated on the twelfth of July; that occurred on Saturday. The plaintiff is a non-resident of the county and was residing during the time covered by -this contract- about one hundred miles or more from the county of Wood where the lands are located.

About noon on the eleventh of July, according to his testimony, he first learned that the defendant, the gas company, was drilling upon his premises. The suit was commenced on Monday, the fourteenth, following. According to his sworn testimony he had no notice whatever that the defendant was- proceeding with his -work until .about noon Friday, the eleventh. It seems there were men engaged in removing timber from the place, and had been so engaged for some time prior to the commencement of this work under a contract, by the terms of which they became the purchasers of the timber. This contract, as testified to by the plaintiff, would not constitute the contr.actees as agents or tenants so as to charge him with notice of any knowledge on their part. Whether you regard it as established in this case by the evidence that the plaintiff had no knowledge of the proceedings complained of until Friday, the eleventh of July, the lease terminating by its term on the next day, and the action having been commenced and the papers prepared and the action commenced on the following Monday, and the lease by its terms not expiring until midnight, it can hardly be charged against the plaintiff that he was guilty of laches in ascertaining his rights, whatever they may be under this contract.

It is shown on the part of the defendant, the gas company, as I have stated, that they had given orders to erect this derrick and proceed with this work as early as the seventeenth of June, and if these orders had been regarded and the work prosecuted from that time forward, there seems to be no reasonable doubt but that the work of drilling this one well would have been completed within the specified time, and these parties advised whether oil or gas could be found in that particular locality. It seems from the testimony that the party upon whom they relied for doing their drilling was not an employe of the company, but a contractor who met with some misfortune' in having his drilling tools caught and become fast in a well which he was engaged upon, and they were obliged to make arrangements for drilling with another party, and that other party was not able to get around to work until about the fifth of July.

Now as we have held and has been announced this morning in the case that has just been decided, Miller v. Vandergrift, 12 C. C.—N. S., 475, as we construe these instruments they are to be regarded as sales of the substances of oil underneath the surface of the. earth — of the oil or gas that may be found thereunder. The lessee becomes the purchaser of all these substances. As a part of the contract, he is licensed to enter and remove these substances and make return to the owner of the land for a certain proportion of the land thereof. This right to remove these substances expires ordinarily with the period limited by the terms of the contract (in this case it was to be three years and in many cases as stipulated in these contracts it would be five years), the time granted for the removal of the oil and gas expires at the time named in the leases, unless within that time oil or gas is found in paying quantities. In that event, as we understand these agreements, the lessee or purchaser of the oil or gas has the time extended for removing the oil or gas so long as it shall be found there in such paying quantities as would justify the marketing of it.

Now according to the strict terms of this contract, according to the strict legal rights of these parties, this plaintiff has the right to treat the lease as having expired at the end of the period of extension. While it may be true that had this work been prosecuted with due and reasonable diligence from the seventeenth of June, that the test would have been made before the expiration of the extended period, before July 12, 1890, yet we do not think the reasons 'given for the delay are entirely sufficient to excuse the delay.

It may be that men were not to be had; it may be that work was being done to such an extent in that region as alleged, that it was difficult if not nearly impossible to employ men; and it is probable that if the accident had not occurred to the man who was contracted with to do this work, that the work would have been successfully .prosecuted within the proper period; but nevertheless, we do not think that either of these misfortunes are of such a character as to excuse the defendant company from the non-performance of its contract within the period stipulated, and to be brief, our final conclusion in this regard is that we are of the opinion that as to all this territory, except that immediately adjacent to this well, the plaintiff is entitled to the injunction prayed for,' and as to the land on which this particular well in question is being drilled, while according to the strict legal rights of the parties under the terms and conditions of this contract it would appear that the defendant is justified for-the delay and for the status of the work, nevertheless, inasmuch as the plaintiff had apealed to us as a court of equity to interfere in his behalf, and is here standing upon his strict legal rights under the exact terms of this contract, we are disposed to say to him and to hold that we will give him his decree as to the lands not occupied by this well; but as to that particular portion of this territory we will extend the time for .a short period to enable the defendant, if he chooses, to prosecute the work with a view of ascertaining what may be the result.

In so doing, we simply exercise the power which we have as a court of equity not to refuse relief unless it be shown that some equitable consideration shall be extended to the party who is being proceeded against, namely here, the Northwestern Ohio Natural Gas Company. It would seem, for example, if a man had bought timber, upon certain premises, or stone, and was engaged in the' act of removing it at the hour when the period stipulated for within which the timber or stone was to be removed, and he had not quite gotten off his timber or stone, and the owner of the land should come into court and ash equitable relief, that the court in granting it would do so upon some condition such as we have in this case.

The decree will be that the plaintiff shall be quieted in his title as to all his lands except one acre or thereabouts immediately adjacent to this well as being drilled. As to that the defendant shall have a period of twenty days from the entering of this decree in which to complete the well. The plaintiff shall pay one-third of the.costs and the defendant two-thirds of the same.

For this extension, the defendant, the gas company, shall pay as further compensation the sum of $20. Our recollection of the testimony being that the year’s compensation was $240, the defendant to be permitted within this period of twenty days to ascertain whether gas or oil shall be found in paying quantities in the region where the well is being drilled; in ease that it shall be found, then the defendant shall be permitted to proceed with the work of extracting and disposing of the oil or gas according to the terms of the contract, and to have such facilities in remov-. ing it-as are ordinarily used in such cases.


text:
    DOW TAX NOT OPERATIVE IN DRY COUNTIES.
    Circuit Court of Ashtabula County.
    William G. Haas v. Perry C. Remick, Auditor, and B. E. Thayer, Treasurer of Ashtabula County.
    Decided, March, 1910.

      Liquor Laws — Rose Law and Dow Law Gan Not be Operative in the Same County — To Traffick in Intoxicating Liquors a Common Law Right — Where the Right is Lawfully Abolished, It Can Not be Taxed — Prohibitory Ordinance of a Municipality Distinguished from a State Law — Traffick in Non-Intoxicants Distinguished from Trafflclc in Intoxicants — Tax Upon a Trafflclc not a license, When —Definitions of “License” — Seizure of Property of a Non-Resident for Dow Tax Illegal, When — Due Process of Law — Sections 4864-9, Revised St-atutes, and 6108, New General Code.

    1. The Dow tax law is not valid and operative in a county which has been voted “dry” under the Rose local option law.
    2. Injunction will lie against levy by a county treasurer, for unpaid Dow tax, on a boat belonging to a citizen of another state, which has been brought without his consent into the waters of this state, and intoxicating liquors sold therefrom within the limits of a county which has been voted “dry” under the Rose county local option law.

      Mott G. Spaulding and Allen M. Cox, for plaintiff.

      F. B. Rogue, for defendants.
    Laubie, J.; Metcalfe, J., concurs.
    This case is in this court on appeal. The action was brought by the plaintiff to enjoin the deféndant's from enforcing the payment of a tax known as the Dow tax,' as amended by the Aiken statute, imposed upon William Doering for carrying on the traffic in intoxicating liquors bn an electric power boat or launch in Ashtabula county, belonging to the plaintiff, and from selling said boat to satisfy such tax.
   The tax was assessed for a year from May 24th, 1909, in the sum of $1,000, with $200 added thereto as penalty, as prescribed in said statute, and the plaintiff alleged in his second amended petition that said county of'Ashtabula then was, and still is, what is known as a “dry” county under what is known as the Rose law; that therefore said Dow statute as amended was inoperative in and void as to such county, and was unconstitutional as to “dry” counties!

, Plaintiff further alleged that he and said Doering were citizens and residents of the state of Pennsylvania; that he was the owner of said boat and had entrusted it to the care of said William Doering, to be kept and used in the waters of Erie Bay in Lake Erie in -said state of Pennsylvania; that said Doering had surreptitiously, and without plaintiff’s knowledge or consent, unlawfully taken and moved said boat from said Erie Bay to Conneaut Bay in said county of Ashtabula; that he did not authorize said Doering to sell liquor on said boat, and did not know that Doering was selling liquor on said boat, and that the defendants had levied upon and are intending to sell said boat without notification of any kind to him, and refused to deliver it to plaintiff, and would sell the same if not restrained by order of the court.

To this petition the defendants filed a general demurrer, which was sustained by the court below, and plaintiff not desiring to further plead, judgment was rendered against him and the ease dismissed; and the plaintiff-appealed the case to this court.

The defendants urge that the plaintiff is not entitled to the relief asked upon either of the claims set up in his petition, and assert that the Dow law is valid and operative in “dry” .as well as in “wet” counties, and that under its provisions they have the right to sell the boat wherein the traffic was carried on, without regard to its ownership, or notice to its real owner.

These are the propositions we are called upon to determine. In its application is the Dow tax law valid and operative as to, and in what is known as “dry” counties? The question is thus limited, as no one disputes its validity and operation in wet counties. We do not think it is because (1) it is in conflict with the local option statute commonly called and known as the Rose law; and (2) if valid and operative therein, it would amount to a license to sell intoxicating liquors, and be unconstitutional.

As to proposition 1: The local option statute — the Rose law —was enacted years after the Dow law, and while the Dow law, as amended by the Aiken statute, was in force and effect; and if their provisions are in conflict, the latter act prevails, and to the extent in which they conflict the former act is inoperative.

How is it in this case ? What is a tax ? A tax is an assessment levied yearly by the state upon property which the owner is required to list; and personal rights are property; as, for instance, the common law right to traffic in any lawful business.

The right to traffic in intoxicating liquors is a common law right possessed by the people — a property right, a lawful subject of taxation, and recognized as such in this state. To enforce payment of such tax in any such case .against an individual, two facts must exist, viz.: the right to carry on the business where located, and 'the ownership of such right in the party assessed; and when the state has lawfully abolished such right and ownership, how can it lawfully impose a tax thereon?

The state in the Dow law recognized those.rights and heavily taxed the persons engaged in the exercise of those rights; but now, through the enforcement of the Rose law, it has abolished those rights in a greater part of the state, and made their exercise a misdemeanor.

We say the state has done this as the Rose law is a general law, applicable to the whole state, the state being composed of counties, and they are component parts of the state, and when the Legislature authorized its constituent parts to abolish such rights, and made the exercise thereof an offense against the state itself, certainly the abolition of such rights in any county, is in effect the act of and binding in every respect upon the state.

Suppose every county in the state was “dry” under the operation of the Rose law, where could the Dow law be in force and effect 1 Would not the Rose law render it inoperative and in effect repeal it ? And if so why would it not have the same effect now in the “dry” counties, although all are not “dry.”

In Ashtabula county at the time in question, and now, to engage in such traffic was and is an offense against the state, and how is it possible that an older law could also be in force and effect there, which recognized and permitted the right in the people to carry on such traffic by the imposition of a yearly tax.

The statute expressly declares the tax is imposed upon the “business of trafficking in spirituous, vinous, malt or other intoxicating liquors,” and hence it expressly recognizes the right to carry on such business, and is a permit to do it, and this is made more manifest by the provision in the statute that if the party does not begin the traffic until after the day the yearly tax is to be assessed under the statute, to-wit, the fourth Monday in May, the tax is to be apportioned accordingly; as for instance, if the traffic is not begun until six months after the fourth Monday of May, the tax is to be but one-half of the yearly tax; or, if such party began the business at the beginning of the year, and pays The tax, and afterwards retires from the business before the end of the year, there shall be returned to him a proportionate share of such tax; but in no event shall the. tax to be paid, or retained, be less than $200.

It is apparent, therefore, that the statute recognizes the right of, and permits and makes it lawful- for, such person to engage in and carry on such traffic for the length of time for which he pays the tax.

If, therefore, both of these statutes are lawfully operative in a “dry” county, then the persons engaged in such traffic therein can be compelled to pay the tax, and at the same time be prosecuted and fined for the selling, as Doering was in this instance, and all of their liquors taken from them and confiscated.

These statutes are therefore clearly in conflict and the latter one makes the former one inoperative in “dry” counties.

Conwell v. Sears, Treasurer, 65 O. S., 49, affirming the holding of this court in Plarrison county, has no bearing upon this question. That arose in a municipality in respect of a prohibitory ordinance.

A municipality is but a creature of the state and not a component part of it like a county, and municipal ordinances do not prohibit the state from passing and enforcing laws in such municipality in regard to the same matters. This was formally determined years ago by the Supreme Court in Koch v. State, 53 O. S., 433, the syllabus of which is:

“A former conviction before a mayor for the violation of an ordinance is not a bar to the prosecution of an information charging the same act as a violation of a statute.”

The case of La Follete, Treasurer, v. Murray, recently decided by the Supreme Court, has no bearing upon the question in this case either, as the question involved in that case related solely to the sale of non-intoxicants — it being admitted by the treasurer that the beer sold was not intoxicating.

If the traffic in non-intoxicating beer is subject to the Dow tax, such traffic is not prohibited by the Rose law, and hence in that respect the two acts are not in conflict, and the Dow law to that extent is in force and operative in “dry” counties, as the state has the right to impose a tax upon a business that is not unlawful.

But how is it as to intoxicants? The tax is not upon articles of property and according to their value, but upon the right in a person to deal in them, a personal right only. How can the state compel a person to pay a tax on such a personal right when such a right is not owned by him, does not in fact exist, and the attempt to use it is a misdemeanor — an offense against the state.

And this brings us to the second proposition, viz: If the Dow law is in force and operative in “dry” counties, does it not in effect operate as a grant of a license, instead of imposing a tax? If a license, it is of course unconstitutional, and the law void.

It can not be treated as a penalty as the penalty is affixed by the later Rose law.

When and how does a tax become a license ? A tax becomes a license when imposed upon a traffic that is forbidden and unlawful; as a tax can not be imposed upon a personal right which the people do not and can not own, and the attempt to exercise which is a criminal offense. The Supreme Court has in effect so held.

In State v. Hipp, 38 O. S., 199, and Butzman v. Whitbeck, 42 O. S., 223, and State v. Sinks, Ibid, 345, it was held that, “The constitutionality of a statute depends upon its operation and effect, and not upon the form it may be made to assume, ’ ’ and in each case the statutes then in force, imposing a tax upon the traffic in intoxicating liquors, was held to be a license and void.

In the Iiipp case it was so held, by reason of the provision in the Pond law, which required a person engaged in such traffic on the premises of another person to give a bond, which if he failed to give, or if the bond was forfeited, he should be deemed guilty of a misdemeanor, and fined or imprisoned, as the provisions of the statute took away the right to engage in such traffic on the premises of another person in effect, and then granted that right to those who would execute such bond.

In State v. Sinks, the court held that, by reason of such provision in the Scott law, it rendered the whole act unconstitutional and void.

In Butzman v. Whitbeck, ante, upon the same principle, the Scott law was held to be a license as it provided that whoever engaged in, or continued in such traffic on land or premises not owned by him, without the consent of the owner, should be held guilty of a misdemeanor.

In State v. Frame, 39 O. S., 399, and in Adler v. Whitbeck, 44 O. S., 539, and Anderson v. Brewster, Ibid, 576, these prior cases were referred to but not reversed.

In these six eases each decision was by a majority only, but all substantially agreed as to the definition of the word “license,” and disagreed only as to its application to the statutes in question, under the facts in t"he cases.

In State v. Frame, 39 O. S., in the majority opinion, Judge McIlvaine, who united in the holding in Hipp v. State, on page 412 said:

“While there is no disposition on the part of the court to overrule the decision in that case (the ITipp case) or to depart from the definition of a license as therein laid down, we find that there are fundamental differences between the two statutes in relation to provisions upon which this question depends. ’ ’

And on the same page he states that the question _ of lien or license was not necessarily involved in that case, and that the court passed upon such questions merely because counsel had argued them.

In Adler v. Whitbeck, in the opinion on pages 558, 560, 561 and 562, the following appears:

“There seems, however, little difference of opinion as to the definition of a license. It is defined, in its general sense, by Okey, J., in Stale v. Hipp, as permission granted by some competent authority to do an act which, without such permission, would be illegal.’ This agrees, in substance, with the definition as given in a number of other eases. * * * In Chilvers v. People, 11 Mich., 43, it is said: ‘The object of a license is to confer a right that does not exist without a license. ’ ‘ The popular understanding of the word license undoubtedly is,’ says Cooley, J., in Youngblood v. Sexton, 32 Mich., 406, ‘a permission to do something which without, the license would not be allowed’; and he adds, ‘this is also the legal meaning.’ In State v. Frame, 39 Ohio St., 399, the language employed by McIlvaine, J., is somewhat different, but the definition is in substance the same. He says ‘A license is essentially the granting of a sp.eeial privilege to one or more persons, not enjoyed by citizens generally, or, at least, not enjoyed by a class of citizens to which the license belongs. A common right is not the creature of a license. The result of the definitions that have been given of a license is implied in its etymology, is in conformity to the sense in which the word is ordinarily used, and may be regarded as strictly accurate. That is permitted which can not be done without permission; and to say that a person is permitted, licensed, to do what he may lawfully do without permission, is a misuse of words. * * * Every person has the right under the statute to rent property and engage in the business if he desires to do so. * * * As shown, the nature of a license is to create a right that did not exist and could not exist without the license. * * * In what way would the payment of the tax be a license to do what he had an unbridled license to do before he paid it.’ ” (The italicizing is mine.)

In the later case, Anderson v. Brewster, the tax was held not to be a license mainly upon the ground-that the traffic was not prohibited, -and was lawful whether taxed or not, the opposite of the question we have here.

In the majority opinion in that case, commencing on page 587, it is said:'

“A license in law may be simply and well defined as a permission, but it is a permission given by some competent authority to do an act which, without the permission, would not be legal. * * * He enters upon the traffic in intoxicating liquors, without a license, -and when found in the business the law suffers it to continue, but charged with the burden of a tax. The distinction is clearly recognized, between a-license granted or required as a condition precedent before a certain thing can be done, and a tax assessed -on a business which one is authorized to engage in. * * * The object of a license, says Mr. Justice Manning; ‘is to confer a right that does not exist without a license’ (Chilvers v. People, 11 Mich., 43, 49). Within this definition, a mere tax upon the traffic can not be a license of the traffic unless the tax confers some right to carry on the traffic which otherwise would not have existed. We do not understand that such is the case here. The very act which imposed this tax repealed the previous law which forbade the traffic and declared it illegal. The trade then became lawful, whether taxed or not; and this law imposing the tax did not declare the trade illegal in case the tax was not paid. If the tax is paid, the traffic is lawful; but if not paid the traffic is equally lawful. * * * The state has provided for the taxation of a business which was found in existence, and the carrying on of which it no longer prohibits.” (The italicizing is mine.)

Apply that ruling to this ease, and how does it stand ? Is the traffic lawful in “dry” counties whether the tax is paid or not? Is it no longer prohibited by the state in such counties ?

Under such ruling, the answers to these questions would conclusively show, that if the Dow tax is held to be legal and operative in such counties, it is a license instead of a tax.

No one can lawfully carry on such traffic in such parts of the state without the permission of the state, and that permission is granted when the state recognizes the right, and allows one to carry on such traffic as long as he pays the tax.

This idea is borne out by the opinion expressed by Judge McIlvaine in State v. Frame, ante, commencing on page 413, where he says:

“The right to traffic in intoxicating liquors for the purpose of drinking, before the passage of the Scott law, was the common right of each and every citizen of the state. It so remained after its passage. * * * The personal right to engage in the traffic is not taken away from any person.” (The italicizing is mine.)

How was it in this instance when the tax was assessed against Doering? The right had been taken away from every person in that county. It was a criminal offense to exercise it, and he was arrested and paid a fine for doing it. A tax upon any traffic is upon the right of those engaged in it to carry it on — recognizing that right; but when that right is taken away by statute, if an older statute is held to be in force which allows the right to carry on the traffic as long as desired by the trafficker by paying the tax specified in such statute, certainly such tax is turned into a license, as such traffic could not then be carried on except under some authority from the state, and that authority would be in effect a license; and it is evident from the contrary opinions rendered in the cases cited, .ante, that such would have been the holding of -the courts in those cases, as those decisions were based in substance upon the sole ground that the common law right of the people to traffic in intoxicating liquors was not then forbidden and made unlawful by the state.

There is the further point to be considered, as presented by the plaintiff. . *Mr. Haas, the owner of the boat, is a citizen of the state of Pennsylvania, and as it was brought here from that state unlawfully and without his consent and knowledge, and the traffic engaged in without his consent and knowledge, what right would the county or the state have to levy upon and sell it for a tax assessed upon another person, upon Doering, the man who had substantially stolen the boat ?

What authority could there be in such a ease to take that boat from this owner and sell it, and that too without any notice to him; without giving him any right to a hearing before a court or even before the treasurer?

It is claimed that by virtue of the authority granted in the statute, which provides for the collection of a tax in the case of a non-payment, that the treasurer “shall levy upon the goods and chattels of such person, corporation or co-partnership, where-ever found in said county, or on the bar, fixtures or furniture, liquors, leasehold and other goods and chattels used in carrying on such business, which levy shall take precedence of any and all liens, mortgages, conveyances, or incumbrances hereafter taken or had on such goods and chattels, so used in carrying on such business; nor shall any claim of .property by any third person to such goods and chattels, so used in carrying on such business, avail against such levy so made by the treasurer.”

Now we do not doubt but what by the terms of the act itself the right was attempted to be taken away from any person who claimed to be the owner of the property upon which the sale was illegally made. That is substantially the wording of the act, and which it is claimed has to a certain extent been upheld by the Supreme Court in the cases heretofore referred to; but the question here is a new one, viz: is it a legal provision and-effective as against a citizen of another state who claims the property in the manner claimed here by the plaintiff, that this boat was stolen from him substantially and brought into this state, and the traffic carried on without his knowledge or consent or approval in any way. Can this property be taken from him to pay the tax assessed against the man who stole the boat?

The Constitution of the United States which applies to and covers this case and the parties, forbids this by the provision that no man’s property shall be taken from him except by due process of law. By what due process of law is this property of the citizen of another state sought to be taken and sold for a tax assessed upon the man who unlawfully carried it off from such other state? It.can not be claimed for an instant, we think, that due process of law against the thief is due process against the owner. To satisfy those provisions, the property can only be taken by due'process of law against the owner in such a case as this. Otherwise what right has a citizen of another state to his property that has been surreptitiously and unlawfully taken from him and carried into this state.

But even as to citizens of the state, we think this question is fully settled in Minick v. Grimes, Treasurer, and Sunday Creek Co. v. Woodworth, 79 O. S., 174, under the provision of our own state Constitution. In those cases the statute in question provided for the levy of a per capita tax upon dogs, and authorized the collection thereof by a sale of the real estate upon which the dogs may have been kept and harbored by a tenant, although the owner of such real estate, the lessor, had no knowledge thereof, and did not consent thereto; and which statute the. court held to be inconsistent with the constitutional rights of such owner, and void.

In the opinion Judge Davis, on page 180, defines the question as follows:

‘‘ Thus the property of an innocent person may be taken without notice, and-without due process of law to recompense an injury to another committed by a third person who holds no relation to the land owner except that of a tenant under a lease. ’ ’

AVe think the doctrine of that case establishes the right of this plaintiff of itself to the relief asked, under the facts alleged in the petition, but we fully considered the prior constitutional questions herein, because counsel for defendants express the desire to file an answer if the demurrer is 'Overruled, and there can be no issues of fact raised except as to those alleged in regard to this last point; and if it were shown that the plaintiff had consented to the acts of Doering, it .could not in any way change his right to the relief asked.

The demurrer is overruled.


text:
    DISCRIMINATION BY A PUBLIC LIGHTING COMPANY.
    Circuit Court of Hamilton County.
    State of Ohio, on Relation of Henry T. Hunt, Prosecuting Attorney of Hamilton County, Ohio, v. The Union Gas & Electric Company.
    Decided, February 5, 1910.

      Public Utilities — Discrimination by a Gas and Electric Company Not Unlawful, When — Lack, of Uniformity in Rates — Competition— Pleading — Quo Warranto.

    Mere discrimination by a public service corporation without substantial injury is not necessarily unlawful; and it follows that allegations will not lie as to discrimination in rates charged for electric current, where made without regard to circumstances and conditions or any averment that consumers are unfavorably affected thereby.

      Miller Outcalt, Lawrence Maxwell and J. 8. Graydon, for the motion.

      Henry T. Hunt, Prosecuting Attorney, contra.
    The defendant, a corporation under the laws of Ohio, exercising rights and privileges in the city of Cincinnati, and engaged in supplying gas to the inhabitants thereof, and also electric current for light and power, was charged in the petition with discrimination in the matter of rates, which the petition alleged were not uniform but are based on whim, favor and caprice; and the court was asked because of the. discrimination so practiced to oust the company from its rights and franchises.
    Giffen, P. J.; Smith, J., and Swing, J., concur.
   It is charged in the petition that—

“The defendant discriminates in the price charged and exacted from the users and consumers of its product, basing said prices in multitudious instances not upon the cost of service, but upon various other irrelevant and unlawful facts, circumstances and conditions:

“1st. It charges a less rate per kilowatt for electric current used for power than for electric current used for light.”

There is no averment that the rate charged for electric current used for light is unreasonable, nor is there any averment of other facts' tending to prove that the discrimination is unjust or unlawful. On the other hand the very difference in the conditions suggests a discrimination in rates, and the burden of alleging and proving its illegality rests upon the relator.

“2d. It charges rates based on the average consumption of electric current per 16-candle-power lamp possessed and available by the said users and consumers, and not upon the actual amount of current consumed.”

The objection to this discrimination is, like the first instance, based on the theory that the rate should be uniform, regardless of conditions. If one consumer has available ten times as many lamps as another, but they both use the same number, it is manifest that the additional expense of preparing for the unused lamps should be borne by the customer causing it. Hence the actual amount of current consumed is not the true and correct basis for fixing rates, unless the circumstances and conditions are similar.

‘ ‘ 3d. ' It charges such users and consumers as have access to other sources of supply, a less rate per kilowatt consumed than the rate per kilowatt charged to such users and consumers as have not access to other sources of supply. ’ ’

There is no averment that the rate charged to the latter class is unreasonable, nor that the discrimination in favor of the former class is unjust to the latter, nor of facts warranting such inference. It is manifest that this discrimination is based upon competition, which is a proper element to be considered in fixing rates, although by no means conclusive. If the discriminating rate will tend to create a monopoly by excluding from the market the products of the competitors of the favored class it is not justifiable, even though defendant could not otherwise secure the custom. State, ex rel, v. Ry. Co., 47 O. S., 130.

The same objection applies with equal force to paragraphs four and five of the petition, and assailed, by the motion of the defendant, which in effect is, that the pleader assumes the only correct basis for determining the rates to be charged is the amount of current consumed, without regard to circumstances and conditions, and whether or not injuriously affecting consumers. The question whether the charges of a public service corporation are unjust and unreasonable, and whether they unjustly discriminate, often depends upon a variety of circumstances, mating it complex and difficult of solution, as shown by the exhaustive discussion in the case of Scofield v. Railway Co., 43 O. S., 571.

It is apparent from that case, as well as others following and approving it, that mere discrimination, without substantial injury is insufficient to mate it unjust -and unlawful,-but the facts-showing such injury must be averred and proved.

We are of opinion therefore that the motion to strike out certain paragraphs of the petition should be sustained.


text:
    AS TO REISSUE OF NEGOTIABLE MUNICIPAL BONDS.
    Circuit Court of Hamilton County.
    Citizens National Bank of Cincinnati v. City of Cincinnati.

    Decided, February 26, 1910.

      Municipal Corporations — Legislative Authority to Issue Bonds Distinguished from Express Power to Borrow Money — Power to Reissue Registered Bonds in Exchange for Ordinary• Coupon Bonds — Does Not Imply Power to Reissue a Negotiable Bond which has been Lost — Section 1536-290.

    A municipality is without power to reissue one of. its negotiable bonds which' has been lost by the owner, and such power can not be conferred by decree of court.

      Paxton, Warrington Seasongood, for- plaintiff in error.

      Geoffrey Goldsmith, contra.
    Gikken, P J.; Smith, J., and Swing, J., concur.

       Affirming Citizens National Bank v. Cincinnati et al, 8 N. P. — N. S., 393.

   The question presented by the record is whether -a municipal corporation or its- officers may be. compelled by a court of equity to issue a bond, negotiable by delivery, or a non-negotiable bond, in place of its negotiable bond lost by the owner. The answer depends upon the power, expressed or implied, of the municipality to voluntarily do what it is sought to accomplish by decree of court, for otherwise the order of the court would be legislative rather than judicial.

It is well settled in this state that a municipal corporation can exercise such powers only as are expressly conferred or necessarily implied. The power to issue the original bond, which is now lost, was derived, not by implication from the express power to borrow money, but from legislative grant. The General Assembly has thus recognized, what has been judicially determined, that the power to issue bonds negotiable by delivery may not be implied from the right to borrow money. In the case of Commissioners v. State, 78 O. S., 287, at 302, the Supreme Court, speaking through Summers, J., has said:

“The power to issue bonds, or other negotiable securities, is not necessarily incident to a power expressly conferred upon a municipal corporation to borrow money, but generally the one power as well as the other must be expressly granted.”

This being so, it follows that when the bonds are once issued, the power is exhausted unless a reissue is made in lieu of the original bonds only when surrendered and canceled. This power of reissue is recognized and conferred by statute. Section 98 of the municipal code as amended (97 O. L., 516), provides as follows:

“Municipal, corporations may, on demand of the owner or holder of any of its coupon bonds heretofore or hereafter issued, issue in lieu thereof a registered bond or bonds, of the corporation, not exceeding in amount the coupon bonds offered in exchange. * * * No registered bonds shall be issued by'a municipal corporation, until the bonds and coupons offered in exchange shall have been canceled or destroyed.”

While this section does not expressly authorize a reissue of bonds negotiable by delivery in place of like bonds surrendered and canceled, yet under certain circumstances the .authority may fairly be implied. Suppose, for example, that such bonds were, by accident, so mutilated that although their identity was preserved their negotiable quality was destroyed. In such case it can hardly be doubted that upon surrender and cancellation of the bonds, like evidence of indebtedness could lawfully be issued. The exercise of such power would be merely in aid of or a fullfilment of the original power expressly granted. The weakness of the case presented by the petition consists in requiring the city through its officers to issue its bond, whether negotiable by delivery or otherwise, in 1-ieu of an outstanding negotiable bond. It' may be, and probably is true, that 'the security offered would be ample protection against loss by reason of the presentment for payment of the lost bond by a third party, and therefore impose no serious burden nor inconvenience upon the city; but that fact does not avoid the objection of a want of power to do the act in question. It might with equal force be urged that a municipality can not lawfully refuse to pay for material furnished to and used by it; yet there can be no recovery, unless the same was supplied under a contract made in the mode provided by statute.

It is true that the bank could be deprived of the privilege of negotiating the bond; but it will ultimately sustain no other loss, as an action at law may be maintained upon the interest coupons and the bond itself as they severally mature. The difficulty of perpetuating the testimony is met by Sections 5873 to 5879, inclusive, Revised Statutes.

If the owner of the lost bond were an individual, a greater hardship might result than can or will be suffered by the plaintiff; but in either case the courts are powerless to supply that which is clearly a subject for legislation.

It follows, therefore, that the court properly sustained the demurrer to the petition, and the judgment dismissing the same will be affirmed.