author: HALE, J.

text:
    INSURANCE — WORDS AND PHRASES.
    [Summit (8th) Circuit Court,
    October 2, 1903.]
    Hale, Marvin and Winch, JJ.
    Michigan Fire & Marixe Insurance Co. v. J. P. Whitelaw et al.
    1. Construction of Contract of Insurance.
    While a contract of insurance should be liberally construed in favor of the insured, it must also receive a reasonable interpretation «consistent with the apparent object and plain intentions of both the parties. Hence, a provision, in a policy of lire insurance indemnifying against all direct loss and damage by fire except as therein'provided, which exempts a fire insurance company from liability for a loss caused directly or indirectly by riot, should not be limited to a loss caused by riot without a fire; but applies also to a loss by fire caused by rioters.
    2. Loss by Fire Caused by Rioters, is a “Loss Caused by’Riot.”
    The total destruction of a building covered in a policy of insurance by fire, caused by rioters setting fire to a city hall, which is communicated to an adjoining builditig and thence to the building insured, is a “loss caused by riot” within the meaning of a provision in the policy that the company “shall not be liable for loss caused directly or indirectly by * * * riot,” and in such event there can be no recovery under the policy.
    ’EreoRTo the court of common pleas of Summit county.
    Allen, Waters &'Andress and R. M. Wanamaker, for plaintiff in error.
    S. G. Rogers and Musser & Kohler, for defendants in error:
    It is well settled in this state that a contract of insurance must be liberally construed in favor of the 'insured. The contract should receive a reasonable construction so as not to defeat the intention of the parties; an exception in a policy should be strictly construed, and where there are two - constructions equally fair, that which, gives the greater indemnity should prevail. Guenther, Insurance Law Sec. 25; Snapp v. Insurance Co. 8 Ohio St. 458, 4(52; West v. Insurance Co. 27 Ohio St. 1, 7; Webster v. Insurance Co. 53 Ohio St. 558 [42 N. E. Rep. 5.46].
    And where, in view of the terms of the instrument and the relations of the contracting parties, it was doubtful whether certain words were used in an enlarged or restricted sense, other things being equal, that construction will be adopted which is most advantageous to the promisee. Guenther, Insurance Layr Sec. 25; Commercial Ins. Co. v. Robinson, 64 Ill. 265; Heffron v. Insurance Co. 132 Pa. St. 580 [20 Atl. Rep. 698].
    A court cannot make a contract for the parties, but it must take the policy of insurance as it found it and so construe it, if possible, to give insurance to the party who supposed he had it, to construe the exceptions in the policy most favorabfy to the insured, and by taking that view, it could not uninsure the property owner for loss by fire resulting from explosion by reading into the exceptions of the policy the words “by fire,” and we fail to see how this court can uninsure the property owner in this case by reading into the exception the words “by fire” or “loss occasioned by fire resulting from riot,” etc., and thereby deprive the property owner of his indemnity from loss by fire occasioned or brought about by riot, invasion, insurrection, etc. 3 Joyce, Insurance Secs. 2588 to 2592. .
    In the body of the policy, plaintiff, below was insured from loss or damage by fire on specified articles of property constituting an oil refinery. The object of inserting the ninth condition in the policy was to exempt the company from liability for certain losses insured against in the body of the policy. The condition is framed upon the evident theory that the company would be liable, under the policy, not only for the loss of the insured property by fire, but for any damage it might sustain by reason of certain destructive forces proximately connected with fire, although the property should not be burned. Whether the theory is well founded or not, it equally aids us in arriving at the intention and meaning of the language employed. In regard to lightning, the two kinds of damage that may be occasioned thereby are recognized; and the exemption from liability is confined to that arising only from the destructive force, where no fire ensues. It is contended that the case, of the United Life, F. & M. Ins. Co. v. Foote, 22 Ohio St. 340, warrants us in holding in this case that the exemption from damage occasioned by the explosion of gas, would have embraced that if fire resulting from explosion, but the insertion of those words in the clause tinder consideration distinguishes this case from that. It can hardly be supposed that it was the purpose to exempt the company from liability for fire resulting from explosion of gunpowder or gas, while it remained liable for damage occasioned by explosions where fire does not ensue. The more reasonable presumption would seem to be that, as gunpowder and gas when ignited, like lightning or steam, are destructive forces, the purpose was to exempt the company from' the kind of damage resulting from the explosive forces merely. Boatman’s Fire & Marine Ins. Co. v. Parker, 23 Ohio St. 85, 06.
   HALE, J.

Plaintiff in error, by its policy of insurance, dated October 10, 1899, insured J. P. Whitelaw, Hanni Whitelaw and PI. 13. Plumer, defendants in error, against loss or damage by fire to property specifically described in said policy to the amount of $700. The property insured was a frame building located on Main street in Akron, and the second building from the city hall or city building. On August 23, 1900, and while this policy was in force, there-was a serious riot in the city of Akron. The rioters set fire to the city building, which was wholly destroyed by fire. The fire was communicated to an adjoining building, or originally commenced in the adjoining building,. and thence communicated-to the building of the defendant in error, which was wholly destroyed. It is stipulated in the policy that the company does insure the insured against all direct loss and damage by fire, except as hereinafter provided; and among the numerous provisions thereinafter provided is the following:

“This company shall not be liable for loss caused directly or indirectly by invasion, insurrection, riot, civil war or commotion, or military or usurped power, or by order of any civil authority; or by theft; or by neglect of the insured to use all reasonable means to save and preserve the property at and after a fire or when the property is endangered by fire in neighboring premises; or (unless fire ensues, and, in that event, for the damage by fire only) by explosion of any kind, or lightning; but liability for direct damage by lightning may be assumed by specific agreement hereon.
“If a building or any part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease.”

In due time and form proof of loss was made by the insured and the payment by the company refused on the ground that the loss was not within the terms of the policy, but exempted by the clause which I have read. An action was commenced by the insured against the company and issues joined; trial had, a verdict and judgment in favor of the defendant in error.

Under the issues the defendants in error claimed the loss was within the terms of the policy, while the plaintiff in error asserted that the loss fell within the exception above quoted, and was a loss for which the company was not liable.

The trial court construed this policy in the charge to the jury, and said:

'‘If, on the night when the property insure^ by this policy wks destroyed by fire, three or more persons had assembled together on Main street to do an unlawful act, namely, to take the prisoner by force and rdolence from the city building, and the persons so assembled there together were then and there doing an unlawful act, and that while they were so engaged in their unlawful proceeding, a fire was communicated, by the persons so engaged, to the Columbia Rink and to the city building, and that it then spread in a southerly direction, so that the flames, or sparks from flames, communicated with the building of the plaintiffs, whereby such building was wholly destroyed by fire, such loss, under such circumstances, would not be within the exceptions of this policy.” •

The correctness of this construction is challenged. While it is true that a contract of insurance should be liberally construed in favor of the insured, it is, nevertheless, true that the contract should receive a reasonable interpretation consonant with the apparent object and .plain intent of the parties. The company insured the defendant in error against all direct loss or damage by fire except as provided in the exceptions. Leaving out all the intervening clauses except the one here invoked, it provides for an absolute indemnity against loss by fire', except for loss caused by riot, etc. The language is, “shall not be liable for loss caused directly or indirectly by riot.”

In argument it was conceded that the rule applicable here is precisely the same as it would have been had the rioters set fire to the city building, and the insurance been on that building. ■ In other words, it is not contended that this loss was not caused by riot, but the contention on the part of the insured is that this only exempted the company frofn loss caused by riot other than by fire; that loss by fire is not intended to be excepted, otherwise the policy would have specified that the company should not be liable for loss by fire caused by riot. Certainly the language employed is sufficient to indicate and include all loss caused by riot. If we are to employ the ordinary rules of interpretation to this contract, the insertion of the words “by fire” would be wholly superfluous. The indemnity is only against loss by fire. The two together read, “Does insure against all direct loss or damage by fire, except loss caused directly or indirectly by riot,” etc. The exception limits the risk which was otherwise assumed — an exception from a fire loss. Insurance against loss by fire except loss caused by riot surely means but one thing, and that is that the’company does not assume loss of any kind caused by riot. This is very much strengthened by the language of the latter part of the clause quoted. After the proviso relating to invasion, riot, etc., which we have been considering, the exception is further extended as follows: “or (unless fire ensues, and, in that event, for the damage by fire only) by explosion of any kind, or lightning; but damage by lightning may be assumed by specific agreement hereon.” Different kinds of losses may follow an explosion — the destruction of a building without fire, or the destruction of a building by fire, or the partial destruction of a building by explosion and a completion of the destruction by fire. In the first clame the loss and damage resulting from a cause is unlimited; they shall not be liable for loss or damage caused by riot; and in another clause limited to the destruction of the property other than by fire. Certainly no interpretation of the contract is permissible which leads to the conclusion that there m'ust be read into the first clause of this exception the same limitation that is expressed in the second clause. It seems clear to us that this contract will not bear the interpretation given it by the trial court. We hold that under the facts assumed in this charge there was1 no liability on the part of the company for the loss.

An examination of 'the cases cited leads to the conclusion that the liability of the insurance company in each case turned upon a proper interpretation given to the peculiar wording of the policy under consideration by the court. We find nothing in any of the cases that would require or justify a different holding from that here intimated.

In the case of United Life, Fire & Marine Ins. Co. v. Foote, 22 Ohio St. 340, 344, 351, there was a direct insurance against loss by fire to the extent of $5,000. Then this exception was contained in.the policy:

“This compan)- is not liable for loss or damage by lightning or tornado, unless expressly mentioned or insured against; but will be responsible for loss or damage to property consumed by fire occasioned by lightning. Nor will this company be responsible for any loss or damage to property consumed by fire happening by reason of, or occasioned by any invasion, insurrection, riot, or civil commotion, or of any military or usurped power, nor- where the loss is occasioned or superinduced by fraud, dishonesty, or criminal conduct of the insured, nor to any loss or damage occasioned by or resulting from any explosion whatever, whether of steam, gunpowder, camphene, coal oil, gas, nitro-glycerine, or any explosive article or substance, unless expressly insured against, and special premium paid therefor.”

It will be noticed that in the clause relating to riot the company will not be responsible for any loss or damage to property consumed by fire, and then is added the clause exempting the company for loss from explosion, the term “by fire,” is omitted; and in the argument, of the case Judge Mcllvaine, in speaking for the court, quoting that clause relating to explosion, says:

“Unless there is something in the subject matter of this clause that indicates that the words ‘by fire’ were omitted for the purpose of showing a design to adhere to and continue the general risk in case an explosion should result in a fire, we think that they or their equivalent should be supplied by implication or construction.”

This case is not in accord with many other cases, some of them more recent, but it was under review shortly after in the case of Boatman’s Fire & Marine Ins. Co. v. Parker, 23 Ohio St. 85, in which a different conclusion was reached upon a differently worded policy, but in the syllabus of the case it is said the two cases are to be distinguished.

I will not take the time to review the many cases cited, but will refer to the case of Commercial Ins. Co. v. Robinson, 64 Ill. 265 [16 Am. Rep. 557], That action was upon a policy insuring against loss by fire, which provided that the company should not be liable for any loss or damage by fire caused by means of an invasion, insurrection, riot, civil .commotion, military or usurped power, nor for any loss caused b}' the explosion of gunpowder, camphene, or any explosive substance, or explosion of any kind. It will be noticed then in the first clause of this exception relating to riot, the company shall not be liable for loss by fire, and in .the last clause relating to explosion the words “by fire” are omitted. It is very similar to the case of United Life, Fire & Marine Ins. Co. v. Foote, supra. The court, in disposing of this case, in the argument, say:

“It will be observed that, in a clause of the policy preceding the one under consideration, the company stipulated that it should not be liable ‘for any loss or damage by fire caused by means of an .invasion, insurrection,’ etc. Here exemption is specially secured against liability for losses by fire caused -in a certain manner. But the clause under consideration leaves out the words ‘by fire.’ It secures exemption from liability for losses caused by explosion, but not from liability for losses by fire caused by explosion. The difference in phraseology between the two clauses is so marked, that, when we consider their connection with each other, we cannot resist the conclusion that the difference was intended.”

So that because the first clause specifically exempted the companj'-from losses by fire, followed by a clause exempting the company from losses by explosion, omitting the words “by fire,” that court held that under the latter clause losses by fire were not included.

It will be noticed that the policy that we have is differently worded from that considered in either of these cases. Here the contract of indemnity is against all loss by fire, except for loss caused directly or indirectly by invasion, riot, etc., omitting the words “by fire,” followed by the clause relating to explosion, which reads, “unless fire ensues,” and, in that event, “for damage by fire only,” continuing the liability of the company under the policy for losses by fire .in case of explosion, and limiting the exception to loss or damage by explosion other than by fire. So that in Commercial Ins. Co. v. Robinson, supra, there were brought together in the exception two clauses, one relating to loss or damage by riot, etc., and the other relating to an explosion. The first clause in the exception used the term “by fire;” the second did not, and the court said, because of the different wording of these two clauses a different construction should be given.

The two clauses in the exception in the policy that we have before us are differently worded, that relating to loss or damage by riot, etc., and the other to losses by an explosion; that relating to an explosion follows the other. The first is general in its terms, and the second, lest it should be held to be general, provides that the company shall not be exempt for loss by fire. We are asked to give the same construction to these two clauses as supported by the Illinois case; but in the Illinois case a different-construction was given to the two clauses because they were differently worded. It does not support the plaintiff’s claim.

We are clear that no other reasonable construction can be given to this policy than that it was the intent and agreement of the parties that loss caused by riot should be exempted from its operation.

The judgment of the court of common pleas is reversed, and the cause remanded for further proceedings.


source: Caselaw Access Project

author: COOK, J.

license: Public Domain

text:
    CONTRACTS — EQUITY.
    [Portage (7th) Circuit Court,
    February Term, 1903.]
    Burrows, Laubie and Cook, JJ.
    John A. Ewing v. Erwin D. Davis.
    1. Contracts in Restraint of Trade — When Injunction will be Granted.
    Where one partner in the jewelry, optician and watchmaking business sells to his copartner his interest in the partnership business, and in the contract of sale covenants that he will not engage in the same business in the same county, and the contract sets forth that, for a violation of such covenant the covenantor will pay the covenantee the sum of $500 as liquidated damages: Held, that a court of equity has jurisdiction to enforce the covenant by injunction, notwithstanding the stipulation-as to liquidated damages.
    2. Same — When Covenant not to Engage in Business Will be Enforced.
    In such case when the parties are engaged in business in a village, and it is shown that the partner who sold his interest had been engaged in such business for a number of years and had a reputation throughout the county as an expert jeweler, optician and watchmaker: Held, that a covenant to not again engage in such business in the county so long as the purchaser remains in business in the village where the partnership was located, is not invalid and will be enforced in a court of equity.
    Stuart & Stuart, for plaintiff.
    Siddall & Rockwell, for defendant.
   COOK, J.

Plaintiff and defendant were- engaged as partners in the business of jewelers, opticians and watchmakers at Kent in this county. In June, 1900, plaintiff purchased from defendant for the consideration of $1,851'.44 his interest in the business; and in the written contract of .sale it was stipulated, “The said Davis further agrees for the consideration aforesaid not to engage again in business as a jeweler, optician or watchmaker, as jeweler merchant or jeweler salesman, manager or peddler, on his own account or in behalf of any one else at any place in Portage county, Ohio, so long as said Ewing is engaged in said business in said Kent. And said Davis further agrees for a violation hereof on his part of any of the conditions and stipulations hereof to pay to the said Ewing as liquidated damages the sum of $500.”

After the sale, Davis went to Cleveland, remaining there two years in business, and then returned to.Kent and opened up a business as jeweler, optician and watchmaker; he being the manager of the business, which belonged to his brother. Plaintiff is still in business in Kent in the same room occupied by plaintiff and defendant before the purchase.

Defendant had for over twenty-four years been engaged in the jewelry, optician and watchmaking business in Kent; for six years prior to the sale, being- associated with plaintiff, and had a good reputation as a successful jeweler, optician and watchmaker throughout Portage county. At the time of the sale to plaintiff of his interest in the business defendant fully expected to remain in Cleveland, ^nd stated to plaintiff that the amount of liquidated damages placed in the agreement was wholly immaterial to him, as he proposed to do business in the future in Cleveland.

The action is for an injunction to restrain defendant from conducting the business of jeweler, optician and .watchmaker in Portage county in accordance with his agreement. The principal objections made by defendant to the granting of an injunction are:

First. That the only remedy that plaintiff has is an action at law to recover the $500 set forth in the contract as liquidated damages.

Second. That the covenant embraces too much territory, and is unreasonable and oppressive.

As to the first objection. It is true that the contract provides for the payment of $500 as liquidated damages in case of failure to perform the restrictive covenant; but that of itself is not sufficient to defeat the jurisdiction of a court of equity. It is only when, from an inspection of the contract and the circumstances surrounding the parties at the time the contract was made, it appears that the covenantor was to have the alternative of performing the particular act or paying the specific sum, that an injunction will not be granted. If it was the intention of the parties at the time of the contract that the covenant was to be performed and the sum specified as liquidated damages was merely a security that it would be performed then the jurisdiction of a court of equity will not be excluded.

In the case of Diamond Watch Co. v. Roeber, 106 N. Y. 473 [13 N. E. Rep. 419, 423; 60 Am. Rep. 464], Roeber, the defendant, at the time of making the contract, executed to the purchaser a bond in the penalty of $15,000 conditioned to pay that sum as liquidated damages in case of a breach of his. covenant, and the court held that a^court of equity had jurisdiction to compel the performance of the covenant by injunction. Andrews, J., in the opinion says:

“It is, of course, competent for parties to a covenant to agree that a fixed sum shall be paid in case of a breach by the party in .default, and that this should be the exclusive remedy. The intention in this case would be manifest that the payment of the penalty should be the price of nonperformance, and to be accepted by the covenantee in lieu of performance. Phoenix Ins. Co. v. Insurance Co. 87 N. Y. 400, 405. But the taking qf a bond in connection with a covenant does not exclude the jurisdiction of equity in a case otherwise cognizable therein, and • the fact that the damages in the bond are liquidated does not change the rule. It is a question of intention, to be deduced from the whole instrument and the circumstances; and if it appear that the performance of the covenant was intended, and not merely the payment of damages in case of a breach, the covenant will be enforced. It was said in Long v. Bowring, 33 Beav. 585, which was an action in equity for the specific performance of a covenant, there being also a clause for liquidated damages, ‘All that is settled by this clause is that if they bring an action for damages the amount to be recovered shall be $1,000, neither more nor less.’ There can be no doubt upon the circumstances in this case that the parties intended that the covenant should be performed, and not that the defendant might at his-option purchase his right to manufacture and sell matches on payment of the liquidated damages.”

What was the intent of the parties to this contract? Davis and Ewing had built up a trade in the jewelry, optician and.watchmaking business. Davis had been a long time in the business, was known throughout the county as an expert jeweler, optician, and watchmaker. It was of great importance to Ewing- that he should not be a competitor against him in that locality. Davis had determined to permanently quit the business at Kent and go to Cleveland and build up a city business. From these circumstances it is apparent that both the parties intended that the covenant was to be performed. Furthermore the contract says, “And said Davis further agrees for a violation hereof on his part of any of the conditions and stipulations hereof to pay to the said Ewing- as liquidated damages the sum of $500,” showing clearly that it was intended as a penalty for a breach of the contract and a security for its performance, and not a consideration for the privilege of reentering business.

In Dooley v. Watson, 67 Mass. (1 Gray) 414, Shaw, C. J., says:

“The promise of the defendant to pay the plaintiff $100, if the defendant should fail to perform his agreement to convey the land, was merely a security for the performance of that agreement. When the penalty appears to be intended merely as a security for the performance of the agreement, the principal object of the parties will be carried out. The agreement between the parties in this case is clearly an alternative agreement. It was an absolute agreement to convey real estate, and may be treated in all respects as such either in a court of law or equity.”

In Phoenix Ins. Co. v. Insurance Co. 87 N. Y. 400, it is held, “If the primary intention was that the very thing covenanted should be done, the annexing of a penalty is regarded merely as a security for the performance of the covenant and not as a substitute for it.”

In Howard v. Hopkins, 2 Atk. 371, Lord Hardwicke said:

“In all cases where penalties are inserted in''an agreement in case of a nonperformance, this has never been held to release the parties from their agreement, but they must perform it notwithstanding.”

In French v. Macale, 2 Dru. & W. 269, Lord Chancellor Sugden very clearly puts the point. He says:

“The question for the court to ascertain is, whether the party is restricted by the covenant from doing the particular act, although if he do it a payment is reserved; or whether, according to the true construction of the contract, its meaning is that the one party shall have a right to do the act on payment of what is agreed upon as an equivalent.”

As we have said, tested by these rules, there can.be no question as. to the proper construction of the contract between these parties.

Counsel for defendant calls attention to the case of Dills v. Doebler, 62 Conn. 366 [26 Atl. Rep. 398, 399; 36 Am. St. Rep. 344], and relies very much upon it. The facts of that case are entirely different from the facts of the case under consideration. The clause of the contract passed upon was as follows:

“And it is further mutually understood and agreed by arid between the parties hereto that the said Doebler may be at liberty to practice dentistry in said Hartford at any time after the termination of this contract by the paying to said Dills $1,000.”

Andrews, C. J., who delivered the opinion, says:

“.-When the parties to an agreement have put into it a provision for the payment, in case of a breach, of a certain sum of money, which is truly • liquidated damages, and not a penalty; in other words, when the contract stipulates for one of two things in the alternative, or on the one side the doing or not doing of certain acts, and on the other the. payment of. a certain sum in money in lieu thereof, equity will not interfere, but will leave the party to his remedy of damages at law. Shiell v. McNitt, 9 Paige 101; Skinner v. Dayton, 2 Johns. Ch. 226, 235; Pomeroy, Eq. Jurisp. Sec. 447. The case turns on the construction to be given to the contract. If the defendant has agreed not to engage in the business of dentistry in Hartford for the term of ten years under a penalty of $1,000 for a breach, equity will restrain him; for a penalty is merely a security for the performance of the contract, and is not the price for doing what a man has expressly agreed not to do. But if, on the other hand, the true interpretation of the agTeement is that the $1,000 was intended to be liquidated damages, then the court should not interfere by injunction, because the plaintiff has his complete remedy at law, and this mainly on the ground of the nature of the contract.

And then the learned chief justice, in speaking of the contract, says:

“The contract presents an alternative. It virtually says to the defendant, ‘If you enter into the business of dentistry at Hartford after the termination of this agreement, you must pay the plaintiff the damages named.’ The language used indicates this thought, and there is nothing in the relation of the parties, or in the business of dentistry, nor in the surrounding circumstances, to indicate otherwise.”

The syllabus of the case is as follows:

“Injunction will not issue to compel the defendant not to exercise his trade or business in a city or in fifteen miles thereof, he having agreed that he would not so exercise it, and that if he did, he would pay complainant $1,000, and it further appearing that he has not paid such sum, and is insolvent.”

We see nothing in this case in conflict with the views that we have expressed or the authorities referred to. Indeed the decision is in full accord with the rule laid down by Lord Chancellor Sugden in French v. Macale; supra, which is the leading case upon the subject.

The second question made needs but little consideration as it seems to be well settled in this state that such a'contract will be enforced. The defendant was a jeweler, optician and watchmaker; his remaining out of business would not generally interfere with competition in that trade and could not therefore affect public policy. The restraint was partial, only applying to one county, and to continue only so long as plaintiff should remain in business at the village of Kent. Therefore it was not unreasonable or oppressive. There was also a valuable consideration. In Lange v. Werk, 2 Ohio St. 519, it is held:

“Before such a contract can be enforced, it must appear from the pleadings and proofs: 1. That the restraint is partial; 2. Founded upon a valuable consideration; and, 3. That the contract is reasonable and not oppressive.”

Furthermore the very effect of the clause was to provide against the defendant engaging in business where he had established a special reputation as an expert in his particular trade which, as shown by the testimony, included all or nearly all of Portage county.

In Morgan v. Perhamus, 36 Ohio St. 517, it is held:

“M., a married woman, engaged in carrying on the, business of millinery and dress making with her separate property, and on her own account, in the town of F., sold her stock of goods, together with the good will of the business, and engaged not to carry on the business at any time in the future at the town of F., or at any place within such distance of said town as would interfere with such business, whether the same was carried on by the purchasers, or their successors: Held, that such agreement in equity is binding, and that, in an action brought by the successors of the purchasers, M. will be enjoined from carrying on such business in violation of the agreement.”

Finding and decree in favor of plaintiff, enjoining the defendant as prayed for in the petition.


author: HAYNES, J.

text:
    PARTITION — WILLS—MORTGAGES.
    [Lucas (6th) Circuit Court,
    October 3, 1903.]
    Toledo Loan Co. v. Catherine Larkin et al.
    1. Provision in Will Forbidding Sale of Real Estate Does not Preclude Widow From Mortgaging Life Estate.
    Where a will gives a life estate in certain real property to testator’s widow with remainder to his children and provides that the property shall not be sold during the life of the widow, such proviso does not affect the right of the widow to dispose of her life estate or to release a part of it by joining in a mortgage with one of the children.
    2. Provision Against Sale Repugnant to Devise of Remainder.
    A clause in a will providing that property devised to testator’s widow for life with remainder to his heirs shall not be sold during the life of the widow is repugnant to the devise made to the heirs and is void.
    3. Mortgagee May Maintain Partition Against Life Tenant and Remainder-man.
    Where property devised by a testator to his widow for life with remainder to his children is mortgaged by one of the remaindermen, the widow joining in the mortgage, the mortgagee, after foreclosure and decree for the sale of the mortgagor’s interest therein, has a title in fee as to such interest, with the right of immediate possession and may maintain an action for partition to have that portion set off to him.
    4. Life Tenant Estopped to Deny Right of Mortgagee of Remainderman to Fee of Mortgaged Property.
    Where a life tenant joins with a remainderman in a mortgage of the latter’s undivided interest in the property therein and, upon foreclosure of such mortgage, is made a party but fails to appear he is estopped, in a subsequent action for partition by the mortgagee, to deny the title of such mortgagee to the fee of the property covered by the mortgage.
    Appeal from court of common pleas of Lucas county.
    King & Tracy, for plaintiff.
    Frank M. Sala, for defendant.
   HAYNES, J.

This is an action in partition. William Larkin died possessed of certain real estate in this county, being farm, land and about sixty-nine acres in extent. He had made a will and willed that his widow, Catherine, should have the use of the property during her life and the remainder was to be divided among his seven children. He also made a proviso in this will that the property should not be sold during the life of his widow. One of the sons, desiring to raise money, made a mortgage to the Toledo Loan Company, his mother joining in the mortgage, by which he mortgaged to the loan company a one-seventh interest in said premises. The ban was not paid, and the loan company brought suit to foreclose the mortgage, making, of course, the mortgagor and also Mrs. Larkin, the widow, parties to the suit; and such proceedings were had m the case that a decree was taken for the sale of one undivided one-seventh of the property. The widow in that case did not answer or set up any defense. 'After the purchase was made by the loan company, it brought a suit in partition to have a part of it set off to it, being one undivided one-seventh of the property, in severalty. Now the defense is made by the heirs and by the widow also, or, rather, they set up the claim that a partition cannot be had at the present time. She sets up further that she had no interest in the loan, received no portion of it and that it was a loan to her son; that she'had been told it was necessary for her to sign the mortgage in order to enable her son to borrow the money. There is some color to that claim in the language that is used in the mortgage itself: but in the suit to foreclose the whole matter is set up, and it is claimed by the plaintiff that it is entitled to an undivided one-seventh, and the widow makes no objection to that. If she had set up in that suit what she sets up in this, the matter could have been litigated there y but, she having failed to do anything of the kind, we think that ba'rs her from setting it up in this suit; the case must be disposed of here as upon the fact that the loan company has a right to one-seventh of that property, in fee, and the right to possess it.

The first question made is, that the widow could not transfer or release a portion of her life estate; that therefore her son did not take a full fee, and that the loan company, standing in his shoes, simply has his interest in the property, subject to the right of possession in the widow during her lifetime. To this contention we are unable to agree. We understand the law to be (and the matter is recognized, we think, by the courts of this state) that the widow would have the right to dispose of her life estate, and if so, we see no reason why she cannot dispose of a portion of it by releasing her right to the use of a portion of the estate and retain her remainder of that portion.

The next question that came up was in regard to the clause in the will, that the property should not be sold during the life of the widow. The testator had willed the use of the property to the widow during her life. We may take it for granted that that conveyed to her a life estate, and that in the enjo)unent of that property she would be entitled to possession of the property. It did not create a trust, but she was entitled to the possession, and the remainder, subject to that, was given to these heirs. We are clearly of the opinion that that clause of the will (the clause against alienation) is repugnant to the devise made to the children of this property, and is therefore void, and that that clause has no force or effect and cannot have in any decision we may make in this case.

It is true that the Supreme Court of this state has held, in the case of Tabler v. Wiseman, 2 Ohio St. 207, 208, that where there is a vested life estate in property, no one of the remaindermen can have a partition. That proceeds upon the theory that a partition does not create a title, but simply separates the property and gives to each one who is entitled to possession the right to possess a certain part of the property as his own. There is in this case cited a very full 'discussion of the question by Judge Ran-ney, wherein it is shown that the right of possession, as well as the right to the land, must exist in order to enable the party to maintain partition. There are two cases in this state that have a bearing on this question. This whole.case of Tabler v. Wiseman, supra, has a bearing, and should be read, in order to fully understand the views of the court upon that question. But there was a case, Morgan v. Staley, 11 Ohio 389, which was discussed by Judge Ranney in Tabler v. Wiseman, supra, at page 216. That was a case where a man died and his property descended to his heirs. The plaintiff in that case had one-sixth interest in the estate, subject to the widow’s dower, and'he was also the owner, by purchase, of the widow’s dower. Now he had the widow’s dower and had one-sixth of the estate by virtue of his heirship, and the court held that so far ás the one-sixth of the land was concerned, he had a title to it in fee simple with a right of possession, and so decreed. There is aj decision found in Elrod v. Bass, 1 Circ. Dec. 23, 24 (1 R. 38), rendered by Judge Smith. This was a case in which there had been a will made of the property, under divers and sundry conditions, and a life estate had been bought in by one of the persons who owned the reversion or remainder, and the question there came up, whether that party might maintain an action in partition, and this is the syllabus:

“One of several remaindermen, if he is also the owner of the life estate, may maintain partition, but no division among the other reversioners ought to be made unless by their consent, nor ought there to be a sale subject to the life estate if division is possible; but if the life tenant agrees to a sale free of the life estate, it may be had if not prejudicial to the other parties.
“Remaindermen, or reversioners owning no interest in the life estate, cannot maintain partition until the estate expires.”

They hold:

“1. That if there be an outstanding life estate .on the whole of a particular tract of land, held by a person who is not an owner of any reversionary interest or estate in remainder in said premises, an action for the partition thereof cannot be maintained by any owner of any interest in reversion or remainder therein.”

And then cite Tabler v. Wiseman, supra.

“2. But if one of the remaindermen, or a reversioner is also the owner of the life estate in the' whole premises, he may maintain such an action, and if his interest therein can be set off to him without injury to the value of the residue of the estate, it may be done. This may be necessary to enable such owner of the life estate and an interest in remainder, properly to enjoy and improve his share of the estate. But (unless by consent of the owners of the remainder), there ought not be a partition of the residue among them, for the reason that, if it should be done, they could acquire thereby no present right in the possession of their shares so set off, and the value of such shares, on account of depreciation of the buildings or improvements thereon, or for other reasons, may greatly change before the termination of the outstanding life estate. Nor ought there to be a sale of the premises, subject to said life estate, if it cannot be so divided without such consent; for in such case the owner of the life estate manifestly would have a great advantage over the other parties in interest, or persons proposing to be purchasers thereof. If the owner of the life estate agrees to the sale of the premises free of his life estate therein, and consents to take the value thereof in money, to be fixed and ascertained by the court, we are of the opinion that such sale may be had, if it appear to the court that it will not be to the prejudice of the other parties in interest.”

Citing Tabler v. Wiseman, 2 Ohio St. 207, 208, and Morgan v. Staley, 11 Ohio 389. That case we think good law, and in the case 'at bar we think the loan company have a title in fee with the right to immediate possession of one-seventh of this land, under this decision which we have cited, and to have that portion set off. Whether they had a right to have a sale of the premises, if partition could not be made, is a question which perhaps is not necessary to decide here, because the plaintiff only seeks a portion of that life estate and the balance remains in the remaining portion of the land; and, as said by Judge Smith in that case, a partition ought not to be made, because the conditions may be greatly changed by the time of the death of the widow, but, for stated reasons we hold that a partition be ordered of the premises, setting off a one-seventh interest, and that is as far as our order goes at present.


text:
    BANKRUPTCY.'
    [Summit (8th) Circuit Court;
    April Term, 1903.)
    Hale, Marvin and Winch, JJ.
    Catherine Knapp v. Charles B. Harold.
    Section 17 of the Bankruptcy Act of 1898 Does not Require Actual Service of Notice of Such Proceedings.
    That clause of the bankruptcy act of 1898, Sec. 17, which provides, that a discharge will not release a bankrupt from debts which “have not been duly scheduled in time for proof and allowance with the name of the creditor, if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy,” does not require the service upon the creditor of the written notice provided by another section of the act, but actual notice is sufficient, and facts occurring before or after the commencement of the proceedings are competent to establish such notice.
    Error to the court of common pleas of Summit county.
    R. M. Smith and N. D. Tibbals, for plaintiff in error.
    C. F. Grant and Parsons & Burch, for defendant in error.
   HALE, J.

Error is prosecuted in this court to reverse a judgment of the court of common pleas. We think this judgment should be reversed.'

The action was prosecuted to enforce the payment of a promissory note signed by Mr. and Mrs. Knapp. After the execution of the note each filed a petition in bankruptcy, and in due process of such proceedings received their discharge in bankruptcy. Knapp placed this note on his schedule of indebtedness, the creditor received the proper notice under the bankruptcy act, and, it is conceded, he is released from the payment of the note by that proceeding. ,Mrs. Knapp did not schedule this claim among her indebtedness, and the holder of the claim received no written notice under the provision of the bankrupt act. The question is, was she discharged by that proceeding from the payment of this note? The regularity of the proceedings in the bankrupt court is not questioned. This indebtedness ■ was not scheduled and Harold had no written notice under the bankrupt act of its existence. The true answer is found in a proper construction of a clause of the bankrupt- act of 1898, Sec. 17, which reads: ,

“A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (3) have not been duly scheduled in time for proof and allowance with the name of the creditor, if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy.”

Where the court has jurisdiction and claims have been placed upon ihe schedule, or if omitted from it, the' creditors have notice or actual knowledge of the proceedings, the debt, if provable, is released by the discharge. Counsel for defendant in error insist that the notice referred to in this clause of the bankrupt act refers to the written notice required by another section of the bankrupt act. We think otherwise. Manifestly it provides for a case in which the debt has not been scheduled and in which no notice under the bankrupt act had been served upon the creditor. In such case the bankrupt is discharged if he had notice within the meaning of this act, or actual knowledge of the bankrupt proceedings. It is simply a fact whether he had notice or whether he had actual knowledge of the proceedings.. There is no iron-clad rule that the fact of notice can only be proved by facts and circumstances transpiring after the bankruptcy proceedings. All facts, whether occurring before or after the commencement of the proceedings, tending to establish notice, are competent to be given in evidence. There is nothing peculiar in establishing notice to a creditor in bankruptcy proceedings. If facts exist such as should reasonably put the creditor upon inquiry, he should make the inquiry, and whether he makes it or not he is charged with notice of all facts concerning which he was bound to inquire.

The'court adopted the theory of the defendant in' error, and, upon this question of notice, said to the jury:

“If you find from the evidence that she (that is, Mrs. Knapp) knew of the name of the plaintiff as one of her creditors at the time this schedule was made out, and you find that his name (the creditor) was not placed in the schedule; that, however, is admitted; but if you find further that he did not know of the bankruptcy proceedings so far as she is concerned, had no actual knowledge of the fact, then those proceedings would not bar him from recovering in this action.”

No reference is made in that charge to the effect of notice. The language of the statute is, “had notice or actual knowledge.” The court here says, unless he had actual knowledge the verdict should be for the defendant. He was then interrupted by Judge Tibbals.

“If he had that notice, then, Your Honor, what?”

The Court: “Certainly, the converse is true if he had that knowledge —if he had knowledge of those proceedings; that is, actually knew of those proceedings going on at any time preceding the twenty-fifth day of February, 1899, that would be a complete release.”

That date is all wrong. It limits the time in which knowledge might have been given to him shorter than the time fixed by the statute. Then Mr. Parsons said:

“May I ask the court to further charge that notice of the expectancy or probability of the defendant, Catherine Knapp, availing herself of the bankruptcy act, would not be notice of her actually doing so ?”
The Court: “I don’t just get your meaning.”
Mr. Parsons: “That is to say, before these proceedings were brought, if someone, an agent of Catherine Knapp or Frank J. Knapp, or both of them, should call up and say that both or either of them expected to go into bankruptcy, that would not be notice of the fact they had so done, if at that time they hadn’t filed their petition in bankruptcy?”
The Court: “In other words, gentlemen, on the subject of notice, it means this: The burden is on the defendant to show that the plaintiff in this case actually had notice that these proceedings were going on at some time prior to the twenty-fifth day of February, 1899. If he didn’t have that notice (and the burden is on the defendant to show that fact) then that would be no bar to -the plaintiff’s right to recover. Now, you are the sole judges of the weight to be given to this testimony, and of the credibilhy to be given to witnesses. Those are matters for you and for you only.”
Mr. Parsons:. “Do I understand the court to mean by that, if the jury should find a certain notice was given and this notice was given before the proceedings were actually had or entered into and the petition filed, that that was not notice?”
The Court: “No, it means that after the proceedings were commenced.”
Mr. Pa'rsons: “Any statement that might have been made before the proceedings were commenced was not notice?”
The Court: “I mean to say, after the proceedings in bankruptcy were commenced, and not until after they were commenced, when it reached a point thát it devolved upon the creditors who were notified to file their claims, if at any time between that time and the time the discharge was handed out- to her, the plaintiff had actual notice or notice and actual knowledge of these proceedings that had thus far been instituted, that would amount to notice so that he would not be entitled to recover so far as that proposition is concerned. Now, I think I have made myself as plain .upon the matter, as I could.”

This charge manifestly was misleading. There was evidence tending to show that while the schedules were being prepared this very creditor was told that both the Knapps were going into bankruptcy. He was asked if he had any claim, and he replied he had a claim against Mr. Knapp, but said nothing about Mrs. Knapp. We think that that was competent testimony as one step towards bringing notice home to this defendant in error, and, taken in connection with the investigations, and circumstances that followed it, the jury may have found, under a proper charge, that defendant in error had knowledge or notice of the proceedings in bankruptcy. Indeed, we think the finding of the jury should, under a proper charge, have been that the defendant- in error had such notice of the proceedings in bankruptcy as is contemplated by the bankrupt act, and that she was, in fact, discharged from that indebtedness by that proceeding.

We find no other error in this record.

The question of payment, the question of estoppel, were properly disposed of by the ,court and jury in the court below.

For the error in the charge of the court as misleading, and because the verdict of the jury was not sustained by sufficient evidence, this judgment is reversed and the cause remanded.


author: HULL, J.

text:
    EMINENT DOMAIN — ERROR-BONDS.
    Lucas (6th) Circuit Court,
    October 10, 1903.]
    Haynes, Parker' and Hull, JJ.
    State, ex rel. Henry Keller et al., as Keller Brothers, v. Richard Waite, Probate Judge, etc.
    1. Order of Probate Court Confirming Verdict in Appropriation Proceeding, a Final 'Order Review able on Error.
    An order of'the probate court confirming the verdict of a jury in*an appropriation proceeding commenced by a railroad company under Sec. 6414 Rev. Stat. et seq. (notwithstanding the company is not required by such order to absolutely 'pay the mon.ey into court as prescribed by Sec. 6434 Rev. Stat., but has the option to pay or abandon the proceeding), is a final order under Sec. 6708 Rev. Stat., which may be reviewed on error.
    2. Amount of Verdict Need not be Paid or Deposited During Pendency of Error Proceeding.
    Where a railroad company has duly filed a petition in error to review an order of the probate court confirming the verdict of a jury in an appropriation proceeding under Sec. 6414 Rev. Stat. et seq., and has given an undertaking under Sec. 6718 and Sec. 6725 Rev. Stat., but has not taken possession of the property appropriated, mandamus will not lie to compel the probate court during the , pendency of the error proceeding, on motion of defendant made at the proper time under Sec. 6434 Rev. Stat., to order the company to pay the amount of the verdict into court.
    3. No Abandonment Under Sec. 6434 Rev. Stat. During Pendency of Proceedings in Error.
    Section 6,434 Rev. Stat., which provides that upon failure of a corporation in an . appropriation proceeding to make payment to or deposit with the probate court the amount of the verdict within thirty days after its confirmation, the court, on motion of the party entitled thereto made within ten days thereafter, may enter an order directing the payment or deposit, and a failure of the corporation to comply with such order within thirty days from its date shall be held and considered as an abandonment by it of the property, rights and interests appropriated, has no application during the pendency of a proceeding in error therein commenced by the corporation to review the verdict and order of confirmation in the probate court, since the landowner would be entitled to demand and receive the money if deposited with the court, thus compelling the railway company to take'its chances to recover back the whole or part of such deposit, if the judgment were reversed.
    4. Undertaking in Error to Include Costs and Attorney Fees — Damages From Owner's Inability to Sell, etc.
    An undertaking given by a railroad company under Sec. 6718 Rev. Stat., in a proceeding in error to review the verdict and Order of confirmation of theprobate court in an appropriation proceeding, is not sufficient to stay execution, but an undertaking must also be given under Sec. 6725 Rev. Stat. to secure the costs and the attorney fees accruing in the probate court in case of an abandonment by the company of the property appropriated, hut it need not include the damage that may result from the owner’s inability to sell or encumber the property.
    In MaNdamus.
    James M. Brown and Frank G. Crane, for relators, cited:
    State v. Railway Co. 17 Ohio St. 103; Drath v. Railway Co. 15 Neb. 367 [18 N. W. Rep. 717] 1
    Clarence Brown and Charles A. Schmettan, for respondents.
   HULL, J.

This is an action in mandamus, brought to require Richard Waite,’ probate judge of Lucas county, by writ of mandamus, to make a certain order in an appropriation proceeding in the probate court of this county. The defendant refused, upon motion, to order the Toledo, St. Louis & Kansas City Railroad Company (known as “The Clover Leaf”) to pay into court the amount of a verdict, to wit, $8,411, awarded by a jury to the relators in this case, in a proceeding to condemn and appropriate property for railroad purposes. The refusal of the judge to make this order is the basis of this action, and the petition asks that the judge be required to amend the journal of the court so as to allow said order instead of refusing it.- The action came on for hearing before us on a petition applying for ^ writ of mandamus and a demurrer to the petition; the demurrer being made upon the ground that the petition does not state sufficient facts to warrant the issuing of a writ of mandamus. The question perhaps might have been- raised without the filing of a demurrer, but simply upon the face of the application. '

The facts, briefly, are, that proceedings were 'commenced in the probate court to condemn and appropriate certain land belonging to the relators, and after the preliminary proceedings and the finding by the court that it was necessary to appropriate, a trial was had in due and proper form, and on August 13, 1903, a verdict was rendered by the jury for $8,411. On the twenty-fifth of the same month, a motion for a new trial, made by the railroad company, was overruled and the verdict was confirmed by the court according to the provisions of the statute, and a judgment entered. After that, on September 21, a petition in error was filed by the railroad company in the court of common pleas, to reverse the judgment, and bond given to stay the execution of the judgment, under Sec. 6118 Rev. Stat. Within ten days after thirty days had expired from the time t'he judgment was confirmed, the motion to which I have referred was filed in the probate court, under Sec. 64-34 Rev. Stat., and on September 30, 1903, the motion was heard by the court and overruled, the court refusing to order the railroad company to pa}’’ into court the amount of the verdict, on the ground that the railroad company had filed a petition in error in the court of common pleas to reverse this judgment and had given an undertaking in the court of common pleas in said cause, under Sec. 6118 Rev. Stat., to stay execution in said cause. These reasons for the action of the court are set forth in the journal entry.

It is argued that the railroad company, by letting the time go by within which they are required by Sec. 6434 Rev. Stat. to pay the money into court (and instead of doing which' they have prosecuted error in the common pleas court) should be regarded as having abandoned their rights in the premises to appropriate; and that the probate court, under Sec. 6434 Rev. Stat. should have ordered the railroad company to pay this money into court notwithstanding the fact that it was prosecuting error in the court of common pleas and had given an undertaking there to stay execution.

It is contended by the relators that they should not be required to wait until error is prosecuted through the various courts, by the railroad company; that they have a right to have the appropriation proceedings in the probate court ended, one way or the other — either to have their land taken and paid for, or the railroad company adjudged to have abandoned its rights and required to pay the costs and expenses of litigation, including attorney’s fees, as provided in Sec. 6434 Rev. Stat. It is urged that the pendency of these proceedings in the courts creates a cloud resting upon the title of this property that prevents the owners selling it and converting it into money, if they see fit, or encumbering it by mortgage or otherwise; that, in fact, their property is tied up and their right to sell or encumber it as .their own private property is interfered with ánd taken from them during the pendency of these proceedings, and that for such interference they have received no compensation, and that, in view of these facts, they were entitled to the order which they asked of the court.

The constitution of the state provides, that private property shall not be taken for such a purpose as this unless compensation is first made in money or secured by the deposit of money. The various sections of the statutes relating to appropriation proceedings lay down the method in which the appropriation of property shall proceed, which are in accordance with the safeguards and provisions of the constitution.

It is claimed that a railroad company cannot prosecute error from an order of the probate judge confirming a verdict — that it is not a final order; that error cannot be prosecuted until the amount fixed by the jury has been paid into court. We hold, however, and it has been decided in this court, that the order of the probate court confirming a verdict is a final order to which error can be prosecuted under Sec. 6708 Rev. Stat. That order is a judgment, and it is so called in the statute; it is a judgment to all intents and purposes, although it does not require the company to absolutely pay the money in; it has an option to pay it in or abandon; but before it pays the money in, it may prosecute error to this order of confirmance. This has been held by this-court in a case decided at the January term, 1892, and the question is fully discussed by Judge Haynes, who delivered the opinion. The case is Toledo, Ann Arbor & N. M. Ry. Co. v. Railway Co. 3 Circ. Dec. 566 (6 R. 521). The syllabus is:

“A petition in error cannot be prosecuted to reverse the finding and order of the probate court made upon the preliminary hearing in proceedings instituted and conducted under the provisions of Secs. 6414, 6453 Rev. Stat. relating to the appropriation of private property for public uses, until after the verdict of the jury has been rendered, and judgment under Sec. 6432, confirming it, has been entered.”

And in another case, Toledo Consolidated St. Ry. Co. v. Railway Co. 3 Circ. Dec. 493 (6 R. 362), two cases being heard together, it is so decided, also by this court, the opinion being delivered by Judge Scribner, and in which many other questions were discussed.

The sixth paragraph of the syllabus is as follows:

.“Where, in appropriation proceedings, instituted and carried on in . the probate court under the Revised Statutes sections (6414, 6453) a verdict, fixing the amount of compensation to be paid, has been rendered by the jury empanelled in the case, and an order or judgment of confirmation of such verdict entered by the court under Sec. 6432 Rev. Stat. proceedings in error may be prosecuted under Sec. 6708 Rev. Stat. by the defendant in ■ the proceedings, to reverse such order or judgment of confirmation, before the compensation awarded by the jury has been paid or the order provided for in Sec. 6433 Rev. Stat. made.”

This case cited went to the Supreme Court and was affirmed. Toledo Consolidated St. Ry. Co. v. Railway Co. 50 Ohio St. 603 [36 N. E. Rep. 312]. While this question was not discussed by' the Supreme Court in the opinion, it was before the court, and if error could not have been prosecuted in the case, the Supreme Court would have had no jurisdiction to hear it. The same holding was made in Cincinnati, J. & M. Ry. Co. v. Barcalow, 2 Circ. Dec. 413 (4 R. 49), the opinion being delivered by Judge Smith.

So that the railroad company is properly and lawfully prosecuting error to this order of the probate court confirming the verdict, without first paying in the money; and they have given an undertaking to stay execution under Sec. 6718 Rev. Stat., which provides that:

“No proceeding to reverse, vacate, or modify a judgment or final order rendered in the probate court, common pleas court, or circuit court, except as provided in the fourth subdivision of this section, and in sections sis thousand seven hundred and twenty and six thousand seven hundred and twenty-one, shall operate to stay execution, unless the clerk of the court in which the record of such judgment or final order is made take a written undertaking, to be executed on the part of the plaintiff in error to the adverse party, with sufficient surety, as follows:
“1. When the judgment or final order sought to be reversed directs the payment of money, the written undertaking shall be in double the amount of the judgment or order, to the effect that the plaintiff in error will pay the condemnation money, and costs, if the judgment or final order be affirmed, in whole or in part.”

Pursuant to this section the company has given an undertaking in the amount of $17,000. Section 6437 Rev. Stat. of the chapter on the appropriation of property, provides expressly for error proceedings in appropriation cases. It provides :

“Either party may file a petition in error in the court of common pleas of the proper county, within thirty days from the rendition of the final judgment in the probate court and the proceedings in error shall be conducted as in civil actions; but the corporation may, on the rendition of the final judgment in the probate court, pay into said court the amount of the judgment for compensation and costs therein rendered, and proceed to enter upon and appropriate the property, notwithstanding the pendency of the proceedings in error.”

The statute therefore provides that the corporation may, if it choose, pay into the probate court the amount of the judgment notwithstanding the pendency of proceedings in error and take possession. In this case, it has not paid in, but has proceeded in error without so doing. Section 6438 Rev. Stat. provides that if the judgment is reversed in the court of common pleas, the case shall be set down for trial in that court. The case does not go back to the probate court, but is tried in the court of common pleas dc novo, except so far as the preliminary proceedings are concerned, which are not heard over again by the common pleas court, but the appropriation proceedings proper, by way of determining the value, etc., are tried in the common pleas'court before a jury the same as in the probate court, and there are various provisions as to costs. And it has been decided by the Supreme Court that the reversal by the common pleas court of the judgment of the probate court cannot be reviewed by the circuit court or the Supreme Court on error, but the case must then be set down in the common pleas court for trial, according to the' provisions of this section.

So we find that there was a final judgment entered in this case; that proceedings in error are properly being prosecuted from that judgment, and the question is, whether, under this state of facts, the landowners had a right, under Sec. 6434 Rev. Stat., to require the railroad company to pay this amount of something over $8,000 into court, of, failing to do that, that it be held to have abandoned its rights in the premises and be required to pay the costs, including the attorney’s fees, and lose its right to appropriate the property. This is the claim of the relators; and it is further claimed that in any event the bond which was filed in the court of common pleas is not sufficient to protect the relators in all of the damages that they may suffer on account of these proceedings in error.

Section 6434 Rev. Stat. provides :

“The corporation may abandon any case or proceeding after paying into court the amount of the defendant’s costs, expenses, and attorney fees, as found by the court. If the corporation fail in any case to make payment or 'deposit, as. provided in the preceding section, within thirty days after confirmation of the verdict, the probate judge, on motion of the party entitled to such payment, to be filed within ten days after the expiration of said thirty days, shall enter an order directing the corporation to make such payment or deposit within thirty days after the date of such order; and unless such corporation, within said thirty days, make such payment or deposit, it shall be held and considered to have thereby abandoned the property, rights, or interests so appropriated, and all claims thereon under its proceeding, and the judge shall issue an order to that effect; the judge shall also enter a judgment against the corporation, and in favor of the party entitled to such payment, for such amount of expenses, including time spent, and attorney fees, incurred by him in the proceeding, as the court, upon the evidence offered in that behalf deems just and reasonable, for which execution may be issued against the corporation; and the directors of the corporation, individually, shall be-liable upon such judgment, and may be made parties thereto by action.”

In this case more than thirty days have expired from the time of the confirmation of the verdict. The relators filed a motion within ten days after the expiration of the thirty days, asking the court to entel-an order directing the corporation to pay the money into court, or deposit it with the court within thirty days. This the court refused to do; and, there being1 no such order as that on the journal, it is urged that the relators have no right to make a motion, and that the court had no jurisdiction to entertain a motion to require them to pay the costs and attorney’s fees. That motion and order is predicated upon the former one, which required them to pay the money into court, and they claim that they now have the right to have their attorney’s fees and expenses. I will quote the exact language of the petition showing- what we are asked to do in this case, which is found in the prayer of the petition:

“Wherefore plaintiffs pray that the said defendant may be ordered and required to correct "the journal of said court, and to enter thereon, as of the proper date, the order asked for in said motion, by said judge overruled, on said thirtieth day of September, 1903, and for all other and proper relief.”

And that motion was this:

“Now come the defendants, Henry Keller, Frank Keller, and Andrew Keller, Jr., and move the court to direct the plaintiff, The Toledo, St. Louis & Western Railroad Company, by order, in the manner provided by law, to make.payment to the parties entitled thereto, or deposit with the probate judge, the amount of the verdict in this action, to wit, $8,411, with interest and such costs as have lawfully accrued in the case up to the time of said payment,; within the time allowed by law.”

This exact question has never been passed upon by the Supreme Court, but there are several decisions of the Supreme Court bearing on different questions arising out of the appropriation of property and the rights of the parties and the powers and duties of the court.

' It was held by the Supreme Court in State v. Meiley, 22 Ohio St. 534, that a probate judge could not be compelled by mandamus to pay the money over to the party entitled to it after it had been paid into his hands, for the reason that the probate judge was liable in an action personally upon his bond, and therefore that mandamus would not lie.

In State v. Railway Co. 17 Ohio St. 103, the court held that where a railroad company had abandoned the proceeding after verdict, it could not be compelled to pay the amount found to be the value of the land by the jury; the railroad company in that case having expressly abandoned the land, and, besides that, having constructed the railroad over another piece of land.

And in Meily v. Zurmehly, 23 Ohio St. 627, the court hold that when a railroad company takes land and takes, possession of.it, it must pay the money into court, and the probate judge must pay the money over to the landowner, notwithstanding proceedings in error have been commenced by the railroad company. After stating the facts this is stated in the syllabus:

“Held, that it was the duty of the probate judge, on the demand of the party in whose favor the judgment was .rendered, to pay over to him the amount of such judgment, notwithstanding the pendency of the proceedings in error and the objection of the corporation; and his failure to do so is a breach of his official bond.”

So that we find by this case that if the probate court had required the Clover Leaf Road to pay this $8,411 into court, that the fandowners would have had-the right to demand the money of the court, and the court would have been compelled to pay it over to the landowners, and the railroad company would have had to take its chances on being able to recover back any of the money, in case the judgment should finally be reversed by a court of error on the ground that the judgment was excessive or that the court had proceeded according to some erroneous rule as to the measure of damages, or for,any other reason. The moment the money is paid into the hands of the probate judge the landowner has a right to it, and it is the duty of the judge to pay it over to him.

Wagner v. Railway Co. 38 Ohio St. 32, is an interesting case In discussing some of the questions arising upon matters of this kind, the court say, on page 36 :

“Something more than a verdict of the jury is required, before the corporation can deposit the money and demand possession.”

The question there was, whether the railway co'mpany had a right to go into possession of the property before the verdict had been confirmed by the court, under Secs. 6432, 6433 Rév. Stat. Section 6432 Rev. Stat. provides:

“The jury shall render its verdict in writing, signed by the foreman, to the judge, who shall cause it to be entered of record; and unless for good-cause shown, upon motion to be filed within ten days after verdict is rendered, a new trial be granted, the judge shall enter a judgment confirming such verdict.”

•Section 6433 Rev. Stat. provides:

“Upon payment to the party entitled thereto, or deposit with the probate judge, of the amount of the verdict, and' such costs as have lawfully accrued in the case up to the time against the corporation, the corporation shall be entitled to take possession of, and shall hold, the property, rights, or interests so appropriated, for the uses and purposes for which the appropriation was sought, as set forth in the petition, and the judge shall enter of record an order to that effect, and if necessary, proper process shall be issued to place the corporation in possession thereof.”

The court held in Wagner v. Railway Co. supra, that the railroad company could not take possession of the property and proceed to convert it to its own use until the verdict had been confirmed b)f the court. They say, on page 36 :

“The constitution contemplates a judicial proceeding, in which the effect of the judgment is to divest the owner of the title and possession of his property, and to invest both, to the extent of the condemnation, in the corporation.
“No right of possession is divested until the appropriation is complete.”

It appears then from the constitution and these sections of the statutes as stated here by the Supreme Court, that a judicial proceeding is contemplated — that a jury shall be in the jury-box to pass upon questions of fact, and a judge on the bench to decide, the questions of law, and the j ury is charged and the trial proceeds in the ordinary way; and under the sections relating to error, the railroad company has the right, upon confirmation of the verdict by the court, to prosecute error, as in civil cases, to the court of common pleas. And in our 'judgment, the prosecution of error and the giving of an undertaking, if one be given sufficiently broad to cover any damage that the landowner may sustain, acts as and causes a stay of the execution of the order and judgment of the probate court confirming the verdict of the jury. That judgment is in the nature of a judgment for money, but the railroad company is not required to pay it, for it may abandon its rights; but if the railroad company desires to take possession, as provided for by. Sec. 6434 Rev. Stat., which has been read, the company is first required to pay the money into court for the benefit of the landowner.

But it is of this judgment confirming the verdict that the railroad company complains. It complains in its motion for a new trial, and in its petition in error, among other things, that the court permitted damages to be awarded to the landowners for personal property — for machinery, and perhaps some other property which was not fixtures; it complains of that ruling of the court; complains that the judgment is excessive, and to correct these errors which it claims occurred upon the trial, it filed its petition in error in the court of common pleas, and gave its bond to stay execution. Now it would be of but little value in many cases to the railroad company to provide that it might prosecute error when such a judgment is entered and at the same time to require that it immediately pay into court for the benefit of the landowner the amount of money that had been awarded by the jury. Error is prosecuted in such a case not to settle some mooted question of law, something in debate or dispute, but it is prosecuted in order that by the judgment of a reviewing court a less amount may be awarded to the landowner, upon the ground that errors have been committed by the court or jury and a larger amount has been awarded than should be to the owner, and the plaintiff in error seeks, in such a case, to reduce the amount that shall be awarded and paid, and to require the company, in order to retain its rights, to pay into court the amount of the judgment of which it is complaining notwithstanding a bond has been given, and to have it paid over to the landowner, we think would be very far from a proper construction of these statutes. Section 6434 Rev. Stat., providing for this order and the payment of the money into court, is to be construed in connection with the other sections of the statutes providing for error proceedings. It is to be read in the light of those sections. It was the purpose of the legislature to provide means for the railroad company to prosecute its case in error in the ordinary way and to preserve its rights in the same manner that they might be preserved in a civil action. The statute says that error may be prosecuted from the judgment of the probate court as in civil actions. We are of the opinion, assuming that the bond was sufficient, that Judge Waite was right when he refused to enter the order asked in this case, requiring the money to be paid into court, upon the ground that error was being prosecuted in the court of common pleas and that an undertaking had been given.

We take only this exception to the proceedings (which may be cured), and that is, that the bond which was filed in the court of common pleas, in our judgment, is not broad enought to cover all of the damage or loss that might result to the landowner by reason of the prosecution of the proceedings in error, in .that there is no provision in the bond securing the payment of the costs in the probate court and expenses and attorney’s fees in that proceeding in case the railroad company should finally abandon their right to appropriate and refuse to take the property if the judgment should be affirmed in the higher courts; for the railroad company would still have the right, as provided in Sec. 6434 Rev. Stat., to abandon its rights in the probate court and refuse to take the property, and in that event it would be required to pay the costs, expenses and attorney's fees which accrued in that court. There is notifying in this bond which was filed to cover such possible costs or expenses. The bond was perhaps large enough to cover any probable amount of costs and expenses that might accrue in addition to the judgment, it being for $17,000 — but we are of the opinion that an additional bond should be filed, under Sec. 0725 Rev. Stat., which provides:

“Execution of a judgment or final order, other than those enumerated in this chapter, of any judicial tribunal, or the levy or collection of any tax or assessment therein litigated, may be stayed, on such terms as may be prescribed by the court in which the petition in error is filed, or by a judge thereof.”

It is our judgment that the court of common pleas, proceeding under this section, should prescribe the form of the bond and the amount, to secure these possible costs and expenses to which I have referred. It is plain here that the railroad company is prosecuting error in good faith, and have undertaken to give a bond which would protect the landowner, and we take it for granted that a bond will be given in the court of common pleas in accordance with the suggestions made in this opinion; and when that is done, the petition may be amended setting that forth, or an answer may be filed setting that up, and the application for a writ of mandamus will then be denied and the petition dismissed. We think counsel should go to the court of common pleas and ask that court to fix the amount and prescribe and approve of the form of the bond as provided in Sec. 6725 Rev. Stat.

It is argued that there is no provision in the bond that has been given to protect relators (the landowners) against any damage they might suffer by reason of their inability to sell their land or encumber it by mortgage or otherwise during the pendency of these proceedings in error, and that, therefore, they are not fully protected. We are of the opinion, and hold, that they are not entitled to such a bond. Although these proceedings are pending, they still have the right to sell their property. It is not exactly a cloud upon the title, whoever bought the property would take it subject to these proceedings, but a man who buys any property takes it subject to the right of a corporation to condemn it by appropriation proceedings. Relator’s right to sell their property is not taken from them or their right to encumber it. If an action was brought to foreclose a mortgage upon property and the mortgage had in fact been paid, such an action would be a cloud upon the title, but error proceedings might be prosecuted to a judgment adjudging the mortgage paid and cancelled, and such proceedings pending would interfere with the sale of the property as much as this proceeding, but the plaintiff in error would not be required to give a bond to protect the landowner from any damage that he might suffer on account of not being able to sell his property; he would still have the right to sell it or encumber it, and the purchaser would have to take his chances upon the pending litigation. We find no provision of the statute, nor do we think justice requires a bond to be given to cover such possible damage; if there is any damage of that kind, it would come within the rule of damnum absque injuria.

For the reasons stated, if the bond is given in the court of common pleas in the form suggested, the application for a writ of mandamus will be denied and the petition dismissed.

[Said bond was given forthwith and judgment entered against the plaintiff,]


author: SWING, J.

text:
    TAXATION.
    [Hamilton (1st) Circuit Court,
    February, 1903.]
    Giffen, Jelke and Swing, JJ.
    State, ex rel. Kramer, v. Lewis (Auditor).
    1. Errors in Additions to Tax Valuations, When Fundamental, not Reviewable. \
    An error in judgment of a board of equalization, proceeding according to law, in placing an addition to a tax valuation of property, is fundamental in character, and cannot be reviewed or corrected by a county auditor.
    2. Clerical Errors in Tax Valuations Corrected by Auditor.
    Where the acts of a board of equalization are without warrant of law or in excess of their authority in matters of taxation, the errors so committed are clerical, and not fundamental, and may be corrected by the county auditors.
    3. Additions to Duplicate Without Notice, a Clerical Error.
    An addition to the tax duplicate by a board of equalization, without notice to the ■ property owner is without warrant of law, and is a manifest clerical error, which it is the duty of the county auditor to correct..
    4. Additions on Account of Alteration of Structure Only Made After Notice.
    A board of equalization is without legal authority to make an addition to a tax valuation on the duplicate on account of a repair, alteration or modification of an old structure which does not destroy its original identity so as to. amount to a new structure, without notice to the owner.
    5. Mandamus the Remedy to Compel County Auditor to Correct Clerical Error in Duplicate.
    Mandamus is a proper remedy to compel a county auditor to correct a clerical error of the board of equalization in making an addition to the tax duplicate without warrant of law, and to call the attention of the county commissioners' thereto.

      Dan. Thew Wright, for the relator:
    Section 2804 Rev. Stat., by the requirement of “notice to all persons directly interested,” constitutes “notice,” a preliminar)'- which is essential to the board’s jurisdiction, and without which the action of the board is altogether void.
    “The board of review can make no addition to the taxable value of real estate until the owner has been served with the copy of a notice of their intention to do so. (Sec. 2804 Rev. Stat.) The statutory requirement for service must be strictly pursued.” Britt v. Hagerty, 5 Circ. Dec. 64 (11 R. 115), “Affirmed on the grounds stated in Britt v. Hagerty, 5 Circ. Dec. 64 (11 R. 115) ;” Hagerty v. Britt, 56 Ohio St. 790 [49 N. E. Rep. 1110].
    f We cannot regard the provision of the statute requiring notice as directory merely. It is not matter- of form only, but of substance. The party interested has a clear right to a héaring and a day in court, as well by the express terms of the statute as by the plainest principles of justice. Judge Scott in Champaign Co. Bank v. Smith, 7 Ohio St. 42, 49, 50; Perkins v. Zumstein, 2 Circ. Dec. 601 (4 R. 371) ; Euclid Avenue Sav. Banking Co. v. Hubbard, 12 Circ. Dec. 279 (22 R. 20) ; Darling v. Cunn, 55 Ill. 424; Dykes v. Mortgage Co. 57 Kan. 419 [46 Pac. Rep. 711]; State v. Harrison, 39 N. J. Law 51, 4>4, 55; Alleghany Co. (Comrs.) v. Mining Co. 76 Md. 549, 551 [25 Atl. Rep. 864] ; Cooley, Taxation 365.
    The section requires “notice” in all except cases of “new structures,” so that the increases at bar were void unless they were cases of “new structures.” Schindler v. Lewis, 9 Circ. Dec. 174 (16 R. 348).
    A fixture, or betterment, is “not the subject of a separate valuation. It can only be valued with and as part of the real estate.” Humphrey v. Safe Deposit Co. 29 Ohio St. 608, 610.
    The legal effect of this statute (Sec. 5848 Rev. Stat.), is to protect the rights of the citizens in every case as completely as if the right of appeal should be given from the taxing officers to the courts direct. The right of the citizen to test the le'gality of a tax or assessment, under Sec. 5848 Rev. Stat., cannot be taken away by any record that can be made by a taxing officer or board. Hagerty v. Huddleston, 60 Ohio St. 166 [53 N. E. Rep. 960],
    This case shows that the term “clerical error” is not limited to such mistakes as occur in copying or in computations. Errors by which property escapes its lawful share of taxation must of necessity be either fundamental, and thus beyond the power of a county auditor to correct, or clerical merely, and therefore within that power. The difficulty, however, lies in the attempt to distinguish them. While we are not required in this case to lay down rules, if that were possible, by which in all cases, the character of these errors may be determined, yet certainly those only are to be deemed fundamental that pertain to the very foundation upon which a tax rests; this of course includes defects and imperfections in the law itself, and errors of judgment committed by public boards acting within the scope of their authority. But can an error be said to be fundamental, and thereby placed beyond the power of a count}- auditor to correct, where it has been committed by a board of equalization, or by any other board or officer, while acting without authority of law or in excess thereof? We think not; and if, when we come to examine the acts of the boards of equalization which are under consideration in this action, it shall appear that they acted without warrant of law or in excess of their authority, their errors, so committed, are not in any proper sense of the term fundamental, • and may therefore be corrected by the county auditor. State v. Raine, 47 Ohio St. 447, 457 [25 X. E. Rep. 54],
    The errors at bar being clerical, and for corrections by the auditor, and he having no discretion in either the matter of correcting them or of calling the attention of the county commissioners thereto, it follows that mandamus is the appropriate remedy. Hagerty v. State, 7 Circ. Dec. 88 (14 R. 95) ; Lewis v. State, 12 Circ. Dec. 718; Lewis v. State, 59 Ohio St. 37 [51 N. E. Rep. 440], ■
    Ampt, Ireton & Collins, contra.
   SWING, J.

This is an action in mandamus. The relator asks to have the auditor correct his tax list as to a certain lot owned by him, and to call the attention of the county commissioners thereto, as is provided under Sec. 1038 Rev. Stat.

The case is submitted on an agreed statement of facts.

Under the decision in case of Schindler v. Lewis, 9 Circ. Dec. 174 (16 R. 348), the addition made to' the valuation of the relator’s property by the board of supervisors was not for a new structure,' but for the alteration of an old structure.

It was therefore necessary 'for said board to give notice to the property owner before making such an addition, and this, it is admitted, was not done. Therefore, it must be admitted that the board had no authority in law to make the addition which was made.

There is only one question, therefore, presented to us, whether Sec.' 1038 Rev. Stat. affords to the relator the relief asked.

It is claimed by the auditor that only clerical errors can be corrected by him under this section; and that the one in question is not clerical, but fundamental.

This section of the statute was before the Supreme Court of Ohio in the case of State v. Raine, 47 Ohio St. 447 [25 N. E. Rep. 54]. The fourth proposition of the syllabus is as follows:

“When such boards undertake to reduce the valuation of certain lots or tracts of land found on the duplicate of the preceding year without adding to other parcels thereof an amount at least equal to the attempted reduction, they exceed their authority, and their action being without warrant of law, should be disregarded by the county auditor, and if, instead of disregarding the same, he transfers to the new tax duplicate such lands at the reduced valuation, the error thereby committed is not fundamental, but is a clerical one, which it is his duty to correct; and the auditor of state has authority to direct and require him to make the correction.”

At page 456, Judge Bradbury says:

“McIlvaine, J., on page 574, saying in this connection: ‘True it was held in State v. Montgomery County (Comrs.), 31 Ohio St. 271, that the corrections which the auditor may make under this section are merely clerical. The error to be corrected in relation to the plaintiff’s taxes was the deduction of the reinsurance item from its credits. No fact is to be inquired into. Every necessary fact appears on the face of the return. Charge the proper rate of taxes upon the amount of credits returned without any deduction on account of the reinsurance item and the error in the amount of plaintiff’s taxes will be corrected — clerical work merely.’ This case shows that the term ‘clerical error’ is not limited to such mistakes as occur in copying or in computations. Errors by which property escapes its lawful share of taxation must of necessity be either fundamental, and thus beyond the power of a county auditor to correct, or clerical merely, and therefore within that power. The difficulty, however, lies in the attempt to distinguish them. While we are not required in this case to lay down rules, if that were possible, by which in all cases the character of these errors — as being fundamental or merely clerical — may be determined, yet, certainly, those only are to be deemed fundamental that pertain to the very foundation upon which a tax rests. This, of course, includes defects and imperfections in the law itself, and errors of judgment committed by public boards acting within the scope of their authority. But can an error be said to be fundamental and thereby placed beyond the power of a county auditor to correct, when it has been committed by a board of equalization, or by any other board or officer while acting without authority of law, or in excess thereof? We think not; and if, when we come to examine the acts of the boards of equalization which are under consideration in this action, it shall appear that they acted without warrant of law or exceeded their authority, their errors so committed are not in any sense of the term fundamental and may therefore be corrected by the county auditor.”

It seems to us that this decision fully covers the question here presented, and is decisive of it.

If it were a question as to whether the board of supervisors had placed a correct addition to the tax valuation of the property in dispute, it would be a matter that the auditor could not correct, for that is a matter that is left to the judgment of that board, and the error, if any, would be fundamental ; but this board can only place an addition to the tax valuation of a piece of property when it proceeds according to law, and in this case, after it has given notice to the property owner, which it was admitted was not done here. In fixing the amount that should be added, the board exercised its judgment, but in placing it on the duplicate it was not exercising any judgment and was not proceeding according to law, but on the contrary, it was purely arbitrary and contrary to law. This is an error that the auditor should correct, and in doing so, he is not undoing anything which they had a right to do, but simply correcting a manifest error that they had done without the slightest authority of law to do.

The Harris case is the same in principle as this, and is governed by it.

Decree for plaintiff.