text:
    LIABILITY FOR. INNOCENTLY MAKING FALSE REPRESENTATIONS AS TO VALUE.
    Court of Appeals for Hamilton County.
    Lizzie Gaisser v. John Hansen et al.

    Decided, October 23, 1915.

      Banh Stoclc — Given in Exchange for Property — Unexpectedly Proves Worthless Soon Thereafter — Action for Rescission of the Contract— Uabilitfi for False Representations Innocently Made — Defendant Given the Option of Malcing the Vendor Good or Submitting to_ a Rescission.

    1. Under the rule that one who obtains the property of another through untrue statements, though in ignorance of their falsity, must be held responsible for a legal fraud, the defendant in the present case is required to make good to plaintiff the amount of loss sustained by her by reason of her reliance on representations made by him as to the value of certain bank stock given to her in part payment for real estate.
    2. In an action for rescission of a contract for sale of real estate and reconveyance of the property to plaintiff, on the ground of misrepresentation as to value, a court of equity, upon finding that the misrepresentations were made as to a material fact and not as an expression of opinion will give the defendant the option of making the plaintiff whole as to the amount' lost by reason of such misrepresentations or a reconveyance of the property upon receiving the return of the consideration.

      Rlerrlinger & Dixon and Realy, Ferris & McAvoy, for plaintiff.

      Frank R. Kunkel, contra.
    Gorman, J.
    This case is here on appeal from the judgment of the court of common pleas.

      Motion to require the Court of Appeals to certify its record in this case overruled by the Supreme Court, February 29, J.916,

   It appears from the record in the case that the plaintiff, prior to March 27, 1912, was the owner in fee simple of certain real estate known as No. 1015 Main street, in the city of Cincinnati, which she was willing to sell for $14,000, and had offers to purchase the property, but not at this price. The defendant John Hansen had been her tenant for a long time in a part of the premises, and her brother, E. William Oesper, the other defendant, occupied an office iii a part of the building for several years prior to said date.

Hansen, learning that the plaintiff was willing to sell her property, asked that he have the first refusal or option on the property, and proposed to pay therefor $11,000 in cash. After plaintiff had agreed to accept $11,000 in cash, Hansen proposed verbally to plaintiff’s brother that he have the privilege of turning over to plaintiff certain stocks and a certain amount of cash, and give his note secured by mortgage on the property which he proposed to purchase, for the balance. He proposed this because he said he had not sufficient cash and that these stocks would be the equivalent of cash.

This plaintiff had known, the defendant Hansen for many years, and she and her brother were on the intimate terms usually existing between brother and sister. She had great confidence in her brother and also had confidence in Hansen, her tenant. After her brother had talked to her, she agreed to sell the property and receive in payment the stock, money and note and mortgage above mentioned, upon Hansen’s representation that the stocks were the equivalent of cash.

It appears that her brother thereupon prepared a paper for her to sign, in form making the proposal to sell come from her, whereas the proposal to buy came from the defendant Hansen. The following is the proposal:

“I, the undersigned, authorize E. W. Oesper to sell my house and lot No. 1.015 Main street, Cincinnati, Ohio, for the sum of eleven thousand ($11,000) dollars on the following terms, to-wit, to. take the following stock in part payment:
•“16 shares 2d National Bank stock to value of____$ 3,760
16 shares U. S. Printing to value................ 1,456
Cash......................................... 1,084
$6,300
“The balance tlie purchaser to give mortgage on this property to run 5 years at 6 % interest, the purchaser to have the privilege of paying $500 at any time. I will pay the taxes due in June, 1912, to the amount of $72. All other taxes and assessments to be paid by the purchaser.
“(Sgd.) Lizzie Gaisser.
“1 accept the above proposition.
“(Sgd.) John Hansen.”

The evidence tends to show that this paper was signed on or about March 27, 1912, although the negotiations were carried on for perhaps a week prior to that time. It further appears that during the negotiations, either before or at the time this proposition was signed by the plaintiff, her brother assured her that the stock of the Second National Bank was good, that he had bought some himself. Hansen told her the stock was worth $235; that he had paid $235 for it, and it was worth that and he was putting it in at $235 to her. The evidence discloses that she knew nothing about the value of the stock and that she relied upon the representations of Hansen and her brother. She had a right to rely upon the representations of Hansen in view of his friendly relations and long acquaintance with her, and she had a right to rely upon the representations of her brother as to the value of the stock.

After the agreement was entered into it was consummated by the conveyance to the defendant Hansen of the premises by Mrs. Gaisser. Hansen delivered to Mrs. Gaisser sixteen shares of Second National Bank stock, sixteen shares of United States Printing Company stock, paid her $1,084 in cash, and executed and delivered his note and mortgage for $4,700 in accordance witli the terms of the agreement. She placed the stock in a box of the Second National Bank, and in less than three weeks from the date of the consummation of the transaction the Second National Bank was known to be hopelessly insolvent, its entire capital stock and the greater part of its surplus wiped out under the orders of the Comptroller of the Currency and an assessment of one hundred cents on the dollar was then levied against the stockholders.

The evidence tends to show that at the time this agreement was entered into, March 27, 1912, this stock was worth about five dollars per share, or the entire sixteen shares were worth about eighty dollars. We think the evidence tends to show that Hansen believed the stock to be worth $235 when he bought it and when he put it in to Mrs. Gaisser at that price. The evidence does not disclose that Hansen had any fraudulent intent in representing the stock to be worth $235 per share, but he honestly believed it to be worth that, and it is probable that Oesper, the brother of plaintiff, believed the stock to be worth something in the neighborhood of $235, although he himself had bought the stock some time before at $210. .The evidence discloses that Oesper was anxious to consummate this sale. He was to get a commission from his sister on the sale. He was on friendly terms with Hansen and anxious to please him.

As soon as the plaintiff discovered that the stock was practically worthless, she tendered it back, together with the United States Printing Company stock and the cash she had received and the note and mortgage, and offered to cancel the mortgage, and she also asked for a reconveyance of the real estate. In other words, she rescinded the contract in so far as she could, as promptly as it could be done after the discovery of the fact that the Second National Bank stock was almost valueless. Hansen having refused to make a reconveyance, this action was brought praying for a rescission of the contract and a reconveyance of the real estate.

We shall not undertake to analyze the evidence but the statement above made substantially represents the facts necessary to be set out in the consideration of the legal questions involved.

It is claimed by the plaintiff that the representation by Hansen that the Second National Bank stock was worth $235 is tantamount to a guaranty that the stock was worth that amount; whereas it is claimed by the defendant Hansen that he acted in good faith and without any fraudulent motive or intent, and that he honestly believed the stock to be worth the amount which he said it was worth, and furthermore that it was but an expression of his opinion as to the value of the stock, and therefore the representation did not amount to a guaranty and a rescission should not be awarded.

We are of the opinion that the statement made by Hansen as to the value of the stock was not an expression of an opinion, but was a statement of fact as to the value, and that he must be held to the value which he placed upon this stock. The consequences to Mrs. Gaisser, the plaintiff, were just as disastrous as though Mr. Hansen had knowingly made a false statement as to the value of the stock. Her loss was just as great as though he had falsely and fraudulently represented the stock to be of the value of $235. He had no right to make a representation of this character to her, unless he knew the stock to be of the value which he put upon it. As was said by Judge Cooley in the ease of Converse v. Blumrich, 14 Mich., 109, at page 123:

" The courts must look at the effect of untrue statements upon the person to whom they are made, rather than to the corrupt motive of the one making them. If one obtains the property of another by means of untrue statements, though in ignorance of their falsity, he must be held responsible as for a legal fraud. ’ ’ See also, Holcombe v. Nobbe, 69 Mich., 396.

In Mulvey v. King, 39 O. S., 491, which was an action at law and not one in equity, the court on page 494 employs this language :

"It may be considered as well settled in this state, by the eases above cited” (26 O. S., 428; 33 O. S., 283; 15 O. S., 145),
‘ ‘ that an action for damages caused by misrepresentation can not ordinarily be maintained, without proof of actual fraud, or such gross negligence as amounts to fraud. When, however, a person claims the benefit of a contract into which he has induced another to enter by means of misrepresentations, however honestly made, the same principles can not be applied. It is then only necessary to prove that the representation was material and substantial, affecting the identity, value or character of the subject-matter of the contract, that it was false, that the other party had a right to reply upon it, and that he was induced by it to make the contract, in order to entitle him to relief either by rescission of the contract or by recoupment in a suit brought to enforce it.”

Now in the case at bar the defendant Hansen is seeking to hold the benefit of a contract entered into between himself and Mrs. Gaisser. This is an action in equity, and whatever.may be the rule at law with reference to actual fraud, we apprehend that it will not be denied that in equity it is not necessary that the fraudulent intent be shown in order that a court of equity may grant relief to a complainant against consequences which result from a mis-statement of fact by a person who secures a benefit or advantage thereby. In this case the representation as to the value of this stock was material. It is not probable that Mrs. Gaisser would have sold her property for $3,760 less than $11,000. It is not probable that she would have taken the stock of the Second National Bank at $235 per share had she known that it was practically worthless. So there can be no question but that it was a material representation, nor can there be any question but that it was false, although not known to be false by Mr. Hansen.' Nor can it be questioned that Mrs. Gaisser relied upon the representation made by Hansen; and from her acquaintance with Hansen and her relations towards him she had a right to rely upon his representations. So that we think the rule laid down in Mulvey v. King is not only a sound rule as applied to a legal case, but also a much sounder rule when applied to a case in equity.

It can not be claimed, we think, that Hansen’s statement as to the value of this stock was an expression of opinion. He did not put it as an expression of opinion, but as a statement of fact, and it will be found that the eases in which a person is permitted to express an opinion and not be held liable, present quite a different situation from the ease in which a person makes a representation of fact on which another relies and has a right to rely and which is material to the transaction.

We have come to the conclusion in this case that if the parties ean be put in statu quo this court should grant a rescission of this contract, but we are not prepared to say that the parties can be restored to the situation in which they were at the time this contract was executed. It is quite probable that the value of this real estate has increased since the sale was made, and a rescission of this contract would give the benefits of this enhanced value to the plaintiff and deprive the defendant of this advantage when he had no intention of committing a wrong. We are of the opinion, therefore, that the defendant should be given the option of accepting a decree of rescission, or a decree allowing the plaintiff compensation for the loss which she has sustained on the Second National Bank stock.

There is evidence tending to show that the real value of this stock on the 27th of March, 1912, the time this contract was entered into, was about $5 per share according to the boobs. This is the testimony of Mr. Gutting, the assistant cashier of the bank. We are not speaking now of the market value of the stock, because there is no evidence of sales having been made about the time this contract was entered into. Furthermore, it is not a question of what was the market value of the stock under the representations made, but what was the real value of this stock. Mrs. Gaisser had a right to expect $11,000 or the equivalent thereof for her property. She though she was getting the equivalent of $11,000, and she was justified in believing this on the representations of Mr. ITansen. We find, therefore, that in this case there should be a rescission of this contract, unless the defendant Iiansen is willing to compensate Mrs. Gaisser for the loss she has sustained because of his misrepresentation as to the value of the Second National Bank stock. If Hansen is willing to compensate her to the extent of $3,680, which is the difference betunen the actual value of the stock and the value as represented by Hansen, a decree may be entered accordingly; otherwise, a decree may be entered rescinding the contract.

We are of the opinion that this course is warranted by this court sitting as a court of chancery, under the authorities. Section 237, Pomeroy’s Equity Jurisprudence, 3d Ed., 342:

“Tf a court of equity obtains jurisdiction of a suit for the purpose of granting some distinctly equitable relief, such, for example, as the specific performance of a contract, or the rescission or cancellation of some instrument, and it appears from facts disclosed on the hearing, but not known to the plaintiff when he brought his suit, that the special relief prayed for has become- impracticable, and the plaintiff is entitled to the only-alternative relief possible of damages, the court then may and generally will, instead of compelling the plaintiff to incur the double expense and trouble of an action at law, retain the cause, decide all the issues involved, and decree the payment of mere compensatory damages.”

In 24 Am. & Eng. Encyclopedia of Law, 2d Edition, page 616, we find a correct statement of the law as we understand it:

"Although in a given ease a court of equity refuses to grant rescission of a contract procured by fraud, because this relief under the circumstances would be inequitable, still as the court has jurisdiction of the cause for the purpose of granting purely equitable relief, it may proceed to do complete justice between the parties by making such a decree as the merits of the case will warrant, and thus it may give damages for the fraud, although this relief is purely legal. ’ ’

In support of this proposition see the following cases: Betts v. Gunn, 31 Ala., 219; Shaffeer v. Sleave, 7 Rlackf. (Ind.), 184; Carroll v. Rice, Walk. (Mich.), 374; Holland v. Anderson, 38 Mo., 55; Grymes v. Sanders, 93 U. S., 55; Thorne v. French, 4 Mis. Rep. (N. Y.), 436; McDaniel v. Lee, 37 Mo., 204.

A decree may be entered in this case in accordance with these conclusions.

Jones (E. H.), P. J., and Jones (Oliver B.), J., concur.


source: Caselaw Access Project

author: Powell, J.

license: Public Domain

text:
    ERROR. IN DIRECTING VERDICT ON STATEMENT OF COUNSEL.
    Court of Appeals for Coshocton County.
    The Compton-Price Piano Co. v. Thomas C. Stewart and Lillian C. Stewart.
    Decided, 1913.

      Judicial Discretion — Abuse of, in Directing a Verdict for Defendant on the Statement of Plaintiff’s Counsel — Right of Counsel to Modify or ¿Explain His Statement to the Jury.

    For a court to direct a verdict for the defendant, after hearing counsel state their case to the jury, is an arbitrary and unreasonable exercise of judicial authority and such an abuse of discretion as to require a reversal of the judgment by the reviewing court, where after the statement by counsel for the plaintiff had been challenged by the court no opportunity was given to modify or explain or add to the statement so made. _

      C. R. Bell and C. 0. Turner, for plaintiff in error.

      J. C. Adams, contra.
   Powell, J.

This action was commenced before a justice of the peace to recover a judgment for a balance due upon certain notes executed by the defendants in error to the plaintiff in error, the amount of said notes being $276, exclusive of interest. A chattel mortgage had been given by the defendants to secure the payment of said notes. This chattel mortgage was given by the defendants upon a piano and other property; $22 was paid by the defendants upon the purchase price, $12 of which should have been credited upon the/notes, and the same was so credited. The piano was replevined by the plaintiff and sold for the sum of $105, which amount was also credited upon the notes, leaving a balance of $164.85, exclusive of interest, due and unpaid upon the notes from the. defendants to the plaintiff. The case was taken by appeal from the judgment of the justice of the peace to the court of common pleas, where pleadings were'filed setting up the respective claims of the parties, and at the trial in that court upon the appeal, the plaintiff, by his counsel, stated his case to the jury that had been impaneled to' try the same, together with the evidence by which he intended or expected to support the same. The defendants, by their counsel, then made a statement of their defense, upon which the court announced that he would direct a verdict for the defendant upon the theory that the evidence which the plaintiff intended to offer, as shown by the statement of its counsel, would not sustain a verdict in its favor, and the court did so direct a verdict without giving to plaintiff’s counsel any opportunity to explain or qualify the statement that had been made by him with reference to the evidence that he intended to introduce.

The statement of counsel is a part of the trial of cases and is provided for by Section 11447 of the General Code.

That the court may direct a verdict or arrest the case from the jury and enter a judgment of dismissal of plaintiff’s petition and for costs, after the opening statement of counsel for plaintiff has been made and before the introduction of any evidence in the case, has been held to be the law in the case of Cornell v. Morrison, 87 O. S., 215, but in such case it must appear that such statement gives in detail all the evidence plaintiff proposes to offer in support of the averments of his petition, and if such statement be challenged by opposite counsel or the court, fair opportunity must be given for it to be explained and qualified and for additions to be made thereto if any part of the evidence has been overlooked, and then if it be apparent that such qualifed statement does not state such facts which, if true, will sustain the material averments of the petition, it becomes the duty of the trial court to arrest the case from the jury and enter judgment, dismissing the petition and for costs.

The record in this case discloses that the court below proceeded to direct a verdict without permitting any opportunity to plaintiff’s counsel to amend or qualify his statement to the jury, and without any opportunity to add to or explain any of the things stated by such counsel in such opening statement. The record does not show what such opening statement to the jury was, as the same was not taken down at the time it was made, but it does show that, after such statement was challenged by the court, counsel for plaintiff requested to be permitted to amend his statement, and the court refused to allow such amended statement to be made and no opportunity was given to qualify or explain the matters complained of. This, we think, was an unreasonable and arbitrary exercise of the authority of the court, and was such an abuse of its discretion as requires a reviewing court to set aside the verdict rendered upon such direction to the jury and to reverse the judgment rendered thereon.

The record shows that the court, after such direction had been given, permitted an amended statement to be made, and the same was entered as a part of the bill of exceptions, and which we have examined. This amended statement sets out a cause of action which, if sustained by the proof, entitles plaintiff to recover judgment thereon; and plaintiff should have been permitted on the trial to submit the same, together with his evidence, under proper instructions from the court, to the jury for determination. The verdict of the jury so ordered will be set aside and the judgment of the court of common pleas will be reversed. The cause will be remanded to that court for a new trial and for such other proceedings as are authorized by law.

Voorhees, J., and Shields, J., concur.


text:
    ACTION FOR INJURIES RECEIVED ON A DEFECTIVE SIDEWALK.
    Court of Appeals for Warren County.
    Village of Lebanon v. Schwartz.
    Decided, Fabruary 4, 1915.

      Municipal Corporations — Injury on Defective Sidewalk — Evidence as to the Condition of the Walk Both at the Time of the Accident and Subsequent Thereto — For What Purpose Such Evidence is Admissible — Failure to Restrict Evidence to Its Proper Purpose in Instruction to Jury.

    Where, in an action for damages for personal (injuries received by reason of a defective! sidewalk, a view of the sidewalk is had by the jury, and afterwards during the trial of the case evidence is offered and admitted, over repeated objections of counsel for the village, showing change in and labor performed on the sidewalk since the accident, and where objecting counsel, though not asking for an instruction limiting the effect of such evidence, based the objection to such evidence upon the ground that it was “not restricted to the proper purpose.” Held: Such evidence was admissible only to show control by the village and the changed condition of the walk and not as proof of negligence, and the failure of the trial judge to so instruct the jury was error which requires a reversal of the judgment.

      Hamilton & Langdon, for plaintiff in error.

      Milton Claris: and Robert J. Shawhan, for defendant in error.
    Jones (E. H.), J.
    Heard on error.
   The defendant in error, Mary A. Schwartz, recovered a judgment against plaintiff in error, the village of Lebanon, in the court below on account of personal injuries received by her from slipping upon an alleged defective sidewalk.

We are of the opinion that the trial court erred to the prejudice of plaintiff in error by failing to instruct the jury that the evidence as to a change in the sidewalk in question caused by the hauling of gravel and by labor performed at the point where the accident occurred, and admitted over the objection of plaintiff in error, was only competent to show the changed condition and the control of the village, and was not to be considered by them as any evidence of actionable negligence on the part of the village.

It is argued by counsel for defendant in error that this error can not be relied upon for reversal, for the reason that the court was not asked to so restrict the evidence at the time.

"While the objection was repeatedly, and we might say in every instance, made to this evidence as being incompetent, irrelevant and immaterial, there is but one place so far as we have been able to find where the court was given any intimation as to the specific ground of objection. On page 92 we find the following :

“Have you recently hauled any gravel or placed any gravel at the end of the walk on the west side, or just north of the laundry where the sidewalk on Broadway runs down to the Cincinnati pike?
“ (Objection by Mr. Langdon. Objection overruled and exception taken.)
“By Mr. Langdon,: We object to the general form of the question as not restricted to the proper purpose.”

As a matter of practice, what counsel should have done was to have asked the court to restrict the evidence “to the proper purpose.” But in view of the well'settled principle of law, as laid down in the cases cited in brief of counsel for plaintiff in error, as well as in many other cases in Ohio, we feel that it was the duty of the court to so charge the jury upon admitting the evidence over the objection of counsel, without a request so to do; and the omission to so restrict the evidence at the time must be held to be prejudicial to plaintiff in error. See Brewing Co. v. Bauer, 50 Ohio St., 560; City of Circleville v. Sohn, 20 C. C., 377.

It is practically conceded by counsel for defendant in error, in their brief, that if the trial court had been asked at the time to limit the scope of this evidence, it would have been prejudicial error for him not to have done so. In support of the proposition that the instruction must have been asked in order that the failure to instruct shall be a ground for reversal, we are cited to 1 Thompson on Trials' (2d Ed.), Section 693, and to the case of Brooklyn St. Rd. Co. v. Kelley, 6 C. C., 155.

The second paragraph of the syllabus in the case cited is in no wise in conflict with our finding in this case. We find no reference in the syllabus, which is supposed to state the law of the case, to the duty of the court to restrict the scope of the evidence in any way; and from a reading of the opinion it seems that the court’s attention was not called in any manner to the inadmissibility of the evidence except by a general objection. The court, on pages 157 and 158, say:

“The objection to this question is a general objection. If it had been objected to on the ground that it could not be introduced to show negligence, or that it could not be introduced unless the time was fixed before the accident, to show notice — • if the objection had been of that character, and then the question had been admitted, it is fair to presume the court would have confined the testimony to showing simply the character of the place. If the court had admitted it for the other purposes, it would have been error — but being a general objection, and the testimony being admissible for one purpose, it was not error for the court to admit it.”

This language supports the position we have taken in this case. While it would have been better practice for the attorneys to have more explicitly and clearly called the attention of the court to the limitations of this evidence, we find that by the objection and statement of counsel above quoted sufficient was done to meet the requirements and to call the attention of the judge to the instruction which should have been given.

We have carefully examined the section in Thompson on Trials to which we have been cited, and from the illustrations given in the closing part of the section are of the opinion that the proposition there laid down does not bear close relation to the question in this ease. It seems that the author had in mind the duty resting upon an attorney to make clear the ground of his objection where same pertained to a defect or invalidity in a written instrument offered in evidence. So far as the doctrine laid down by Thompson applies to this case, or applies to tbe duty of counsel to ask an instruction limiting tbe effect of evidence, we tbink it bas been complied with in this case, as shown by the record. For tbe reasons given tbe judgment is reversed and tbe cause remanded for a new trial.

Judgment reversed and cause remanded.

Jones (Oliver B.), J., concurs; Swing, J., not participating.


author: Allread, J.

text:
    CARRIER. ENTITLED TO COLLECT CHARGES ONLY ON SHIPMENTS AUTHORIZED BY THE SHIPPER..
    Court of Appeals for Franklin County.
    Maynard Coal Co. v. Chicago, Kalamazoo & Saginaw Railway Company.

    Decided, October 20, 1915.

      Railways — Shipments en Route Should he Stopped on Notice from Shipper — Connecting Carrier Not Entitled to Charges for Carrying Shipment After it Was Ordered Stopped — Authority of Forwarding Carrier — Demurrage.
    1. Where a shipper notifies a carrier to stop certain carload shipments at a designated point en route and to hold for further shipping orders, such carrier is bound to do so, if not an unreasonable interference with the carrier’s business.
    2. A connecting carrier receiving goods for transportation by virtue only of the authority of the previous carrier, is bound to take notice of the authority of the latter at the time the goods are so received.
    3. A carrier directed by the shipper to make a certain delivery of the goods shipped is bound to do so promptly, and is not authorized to hold the same because of a controversy with associated carriers over a division of the freight charges and to charge the demurrage occasioned thereby to the shipper.

      Charles J. Pretzman, for plaintiff in error.

      Wilson & Rector, for defendant in error.

       Motion to require the Court of Appeals to certify its record in this case overruled by the Supreme Court, December 11, 1915.

   Allread, J.

The Chicago, Kalamazoo & Saginaw Railway Company brought suit in the court below against the Maynard Coal Company to recover the sum of $1,749 with interest, upon an account for switching charges and car service (demurrage) upon certain shipments of coal in carload lots during the months of April and May, 1912.

Upon the issues made by the pleadings and the trial statement of counsel for the coal company, the court instructed the jury to return a verdict in favor of plaintiff for the full amount claimed. This was done and a judgment was rendered upon the verdict. A motion for a new trial was overruled and bill of exceptions taken embodying the statements of counsel.

Error is prosecuted to this court.

The coal company rests largely upon the second defense of its second amended answer. This defense, in brief, is that the coal company delivered certain carloads of coal to an initial carrier for through shipment to Kalamazoo, Michigan; that the initial carrier delivered the coal to the Lake Shore & Michigan Southern Railway Company as an intermediate carrier, which in turn delivered the same to the Chicago, Kalamazoo & Saginaw Railway Company for carriage and final delivery; that the coal company, on April 11, 1912, notified the Lake Shore & Michigan Southern Railway Company to deliver no more of said shipments to the Kalamazoo company, but to retain the same for further shipping orders. Thereafter the coal company sold said coal to the Labe Shore & Michigan Southern Railway Company and ordered the Kalamazoo company to deliver said coal to the Lake Shore & Michigan Southern Railway Company, but that, owing to a controversy between the Kalamazoo company and the Labe Shore company as to division of freight charges, the Kalamazoo company refused to deliver said coal as directed, but continued to hold the same subject to demurrage charges until the coal company, in order to procure the delivery of the coal to the Lake Shore company, sent a telegram agreeing to pay the demurrage and car-service charges of the Kalamazoo company.

The coal company further avers that the initial carrier and the Lake Shore and Kalamazoo companies were conducted as a single system, for the purpose of traffic, known as the New York Central Lines. Issue was joined in the reply by general denial.

It appears from the statement of counsel that it was proposed to be shown that notwithstanding the order of April 11, 1912, the Lake Shore company continued to deliver the shipments of coal to the Kalamazoo company according to the original order of shipment. Counsel also offered to show that after the order of the coal company to re-deliver the coal to the Lake Shore company, the Kalamazoo company retained the same on account of a controversy between it and the Lake Shore Company as to the division of the freight rate, and that the coal company was compelled to agree to pay the switching and demurrage charges in order'to obtain a delivery of the coal. The offer in the telegram of May 14 is void under the common law unless independent thereof the charges were legal, and is equally void under the present regulatory statutes.

It is not denied that the Kalamazoo company performed the services for which the charges were made. The only question is whether it was justified under the facts of the case in the performance of such services and charging the same to the coal company. We are unable to agree with the trial court that the Kalamazoo company was justified in charging the coal company with the demurrage after it had received notice to deliver the same to the Lake Shore company. It was clearly the duty of the Kalamazoo company to make such delivery promptly upon receiving notice to that effect, and it had no right because of a controversy between it and the Lake Shore company to hold the shipment and charge demurrage to the shipper.

Whether the Lake Shore company was bound by the notice of April 11, 1912, to hold further shipments subject to the order of the shipper and whether the Kalamazoo company was bound by such notice are much more difficult questions.

The ease of Cleveland & Pittsburgh Rd. Co. v. Sargent, 19 Ohio St., 438, holds:

“Where a party delivers to a railroad company chattels to be transported from the point of delivery to another designated point on its line, and pays the charges for such transportation in advance, he has the right as against the company, to resume the exclusive possession and control of his chattels before they have reached the destination named in the bill of lading, whenever and wherever he can do so without unreasonable interference with the business of the company. ’ ’

No issue is tendered as to unreasonable interference. The reply is a general denial. We therefore conclude that the question of interference with the carrier’s business is not presented.

In the absence of a claim of unreasonable interference we think it follows that it was the duty of the Lake Shore company, upon receipt of the notice of April 11, to hold all shipments then or thereafter in its possession in obedience to said notice.

It is claimed, however, that the Kalamazoo company was not bound by the notice to the Lake Shore company and was justified in accepting the shipments tendered by the latter and in forwarding the same under the original contract with the initial carrier.

The pleadings and proffer of evidence are to the effect that the contract was made by the shipper with the initial carrier for through shipment. No routes beyond the initial carrier’s line were designated by the shipper, and no special contract was made by the shipper for carriage over the Kalamazoo company route.

The initial carrier was, therefore, authorized by the shipper’s contract to carry over its own line to a convenient connecting point and thence over the lines of connecting carriers.

The initial carrier in the present case made its delivery to the Lake Shore company as the first connecting carrier. The latter company, not being able or desiring to complete the shipment, delivered the same to the Kalamazoo company as a connecting carrier for final delivery. The Kalamazoo company therefore received the shipment from the Labe Shore company as intermediate carrier. The right of the Kalamazoo company to receive the shipment, forward it and make final delivery rested upon the special authority of the Labe Shore company under the original contract of shipment. The Lake Shore company was not a general agent of the shipper, but acted under special authority. When that special authority was revoked by the notice of April 11, its delivery to the Kalamazoo company was wholly unauthorized so far as the shipper was concerned. The Kalamazoo company, therefore, had no authority after the notice of April 11 to the Lake Shore company to complete the shipment and make any charges in connection therewith against the shipper.

It is urged that notice should have been given also to the Kalamazoo company, but it must be kept in view that the Kalamazoo company was not designated by the shipper and it does not appear that the shipper knew that that company would be asked to make the shipment. It would be an extraordinary burden to require the shipper to notify all carriers who might possibly be asked to carry the goods.

We think the more reasonable rule is to require the connecting carrier to take notice of the authority of the forwarding carrier, and especially should this be the rule in cases where all the carriers involved are associated together in one general system.

It is urged that when a public carrier receives goods and performs a service, such carrier is entitled to charge against the shipper the regular tariff rates, regardless of authority from the shipper to make the shipment or perform the service; in other words, that the charges follow inexorably from the fact of service. This would be a harsh and unjust construction. We think a more reasonable interpretation of the statute regulating carriers would be to hold that they apply only to shipments duly authorized by th^ shipper.

The trial court, therefore, erred in ignoring the defense in its entirety and in instructing a verdict for the full amount of the plaintiff’s claim.

Judgment reversed and cause remanded for a new trial.

Ferneding, J., and Kunkle, J., concur.


text:
    APPLICATION OF THE INDETERMINATE SENTENCE STATUTE.
    Court of Appeals for Franklin County.
    Francis v. State of Ohio.
    Decided, October 28, 1915.

      Indeterminate Sentence — Not Applicable in Cases of Offenses Committed Prior to Its Passage.

    The indeterminate sentence statute, passed February 13, 1913 (103 O. L., 29), does not apply to prior offenses.

      W. A. James, for plaintiff in error.

      Robert P. Duncan, Prosecuting Attorney, for defendant in error.
   Allread, J.

Plaintiff in error, Frank Francis, was indicted upon a charge of grand larceny. Upon plea of guilty he was sentenced to imprisonment in the Ohio penitentiary “for the term of not less than one year, nor more than seven years and that he stand committed until discharged according to law.”

The offense was committed in 1911. The present indeterminate-sentence law was passed in February, 1913. The plaintiff in error was sentenced in December, 1913.

Counsel for plaintiff in error contends that the law providing for indeterminate sentences was ex post facto and that the sentence should have been entered according to the law existing at the time the offense was committed.

Section 7388-6, Revised Stauttes, gave discretionary authority to the court to enter an indeterminate sentence. This statute, however, appears to have been repealed by the General Code. It is true that Sections 2160 and 13697, General Code, recognized general sentences, but these sections are consistent with an intention to provide for proceedings in cases of general sentence previously entered. The absence of a provision authorizing a court to sentence an offender for an indefinite period is consistent only with an intention to repeal that provision of Seetion 7388-6, Revised Statutes, and to leave in force the definite-sentence statute. See State v. Toney, 81 Ohio St., 130.

The indeterminate-sentence act of 1913 should be applied prospectively. It was not intended it would be an ex post facto law and to that extent invalid. In re Lambrecht, 137 Mich., 450; In re Marion, 140 Mich., 219; People v. Fisher, 144 Mich., 570.

It is contended by the state that the sentence of the court is responsive to Section 12447, General Code, under which the indictment was presented and which provides:

“"Whoever steals anything of value is guilty of larceny, and if the value of the thing stolen is thirty-five dollars or more, shall be imprisoned in the penitentiary not less than one year nor more than seven years,” etc.

Independent of a statute authorizing indeterminate sentences, the court’s duty under this section would be to impose a definite sentence.

In the case of Picket v. The State, 22 Ohio St., 405, it was held:

“The terms of a sentence of imprisonment ought to be so definite and certain, as to advise the prisoner and the officer charged with the execution of the sentence of the time of its commencement and termination.”

That case has been cited with approval in the recent case of Hamilton v. The State, 78 Ohio St., 76, 85, holding that the termination of the sentence must be definitely fixed in the judgment.

It does not appear that exceptions were noted at the time of sentence and it is probable that the attention of the trial judge was not called to this question. Nevertheless, we think an exception to the sentence was not necessary to preserve the question. Commercial Bank of Cincinnati et al v. Buckingham et al, 12 Ohio St., 402; Justice v. Lowe, 26 Ohio St., 372.

The judgment, therefore, in that it fails to fix a definite term for the ending of the sentence, is erroneous.

It follows that the sentence of the court of common pleas should be reversed and the cause remanded with instructions to so modify the sentence as to fix a definite time for the termination thereof.

Judgment reversed.

Ferneding, J., and Kunkle, J., concur.


author: Sayre, J.

text:
    CONSTRUCTION OF WILL AS TO CERTAIN VESTED REMAINDERS.
    Court of Appeals for Hocking County.
    McCarthy v. Hansel et al.
    Decided, April 8, 1915.

      Title — Deed Made by Child — Subject to be Divested During Continuance of a Life Estate — Conveyed no Interest in the Property so Passing by Will — When the Word “Owners” Means Absolute Ownership or a Fee Simple Interest.

    1. The will of a testator contained a provision devising his estate to his widow for life and the following: “After the death of my wife, I give, devise and bequeath unto my children all of my estate, real or personal, of whatsoever kind and wheresoever situated, share and share alike; if any of my children should die previous to that time, leaving heirs of their body, then and in that case such heirs to take the share or shares, which would have been due to their parent or parents, if living.” Held: That the estate devised to each child was a vested remainder, subject to be divested by his death during the continuance of the life estate, and a deed made by such child during such time conveyed no interest in the property.
    2. The word “owners,” when used in a conveyance of real estate in which the grantors covenant “that they are the true and lawful owners of said premises,” means absolute ownership or interest in fee simple.

      Wilson & McBride and John G. Pettit, for plaintiff.

      Binns & MacGonhey and TS. M. Baldridge, for Frances E. and Alma H. McCartby.

      G. V. Wright and H. M. Whitcraft, for Homer G-. Hansel.
   Sayre, J.

Dennis McCarthy died January 22, 1868, leaving Alcinda McCarthy, his widow, and the following children: Charles, Catherine, Frances E., Alma IT., Thomas F., William and Mary A.

The widow died January 11, 1914.

All the children are living except (1) Thomas F., who died October 16, 1900, leaving Merrick F. McCarthy, the plaintiff, Corinne Godfrey and Idena Wilson, his children; (2) William, who died August 27, 1887, leaving Margaret Frash, Alma I. Wuebben and Philip McCarthy, his children; (3) Mary A., who died April 27, 1912, leaving Hugh A. Green and Robert H. Green, her children.

By Dennis McCarthy’s last will and testament he devised his farm of about 260 acres to his widow during her natural life. The third item of the will is copied in the syllabus.

Subsequent to the death of Dennis McCarthy his widow and all of his children, by deed and mortgage, undertook to convey all such real estate with covenants reciting that they were “the true and lawful owners of said premises and have full power to convey the same; that the title so conveyed is clear, free and unincumbered; and that they will forever warrant and defend the same against the claims of all persons whomsoever.”

The mortgage was foreclosed, and the defendant, Homer G. Hansel, claims now, by virtue of the deed, mortgage and foreclosure proceedings, to be the owner in fee simple of all the premises.

The children of Thomas F. McCarthy and Mary A. Green claim that the attempted conveyance of Thomas F. and Mary A. passed no title and that they are the owners of the undivided two-sevenths of the property under the provisions of the will of their grandfather.

This suit is for partition.

The first question to be determined is: What estate did the children of Dennis McCarthy take in his real property by the provisions of his will?

It is contended that the estate did not vest until the death of the widow because of the language, “After the death of my wife, I give, devise and bequeath * * * ,” found in the third item of the will.

But adverbs of time, such as “when,” “then,” “after,” “thereafter,” “from and,after,” etc., all refer to the exact instant when the life estate ends, and in a devise of a remainder are construed to relate merely to the time of the enjoyment of the estate and not to the time of vesting. Linton v. Laycock, 33 Ohio St., 128; Doe, Lessee of Poor, v. Considine, 6 Wall., 458, 18 L. Ed., 869; Johnson v. Valentine, 4 Sandf., 36, 43; Moore v. Lyons, 25 Wend., 119; Boraston’s Case, 3 Coke, 16a; Mining v. Batdorff, 5 Pa., 503; Rives v. Frizzle, 8 Ired. Eq., 237; Staples v. Mead, 137 N. Y. Supp., 847; Connelly v. O’Brien, 166 N. Y., 406; Hersee v. Simpson, 154 N. Y., 496.

■ It is further contended that the language ‘ ‘ which would have been due to their parent, or parents, if living,” at the end of the third item of the will, indicates that the interests of the children did not vest until the termination of the life estate, for if, it is claimed, the interests had already vested they could not be still due.

But it seems a fair interpretation that this language also has reference to the possession and enjoyment of the real estate. The heirs of the body of deceased children are, at the death of the wife, to possess and enjoy that which would have been due their parents to possess and enjoy if they had outlived the widow of the testator. This in no way interferes with the idea of an immediate vesting, subject to the rights of the life tenant.

In the case of Flanagan v. Staples, 51 N. Y. Supp., 10, the language of the will was:

“Upon the death of my said wife, I give, bequeath, and devise all my estate and property unto my children, in equal shares or portions, share and share alike, absolutely and forever. In the event of the death of any of my children, leaving issue * * * such issue shall take the share or portion * * * which the parent would have taken if living.”

The court held the remainder was vested.

The language “.which would have been due to their parent, or parents, if living,” and the language “which the parent would have taken if living, ’ ’ mean substantially the same thing.

In the case of Camp v. Cronkright, 13 N. Y. Supp., 307, the language of the will was:

“Upon her [the widow’s]' death then I give and devise the same unto my children, share and share alike, absolutely and forever, the child or children of any deceased child of mine to take the share which his, her, or their parent would have taken if living.”

The court held that the remainder was vested.

Similar language and the same holding will be found in the case of In re McCauley et al, 144 N. Y. Supp., 313.

Some rules for distinguishing between contingent and vested remainders which are found in the books and which are assembled in the case of Doe, Lessor of Poor, v. Considine, supra, may be repeated here and considered in the further examination of the will in controversy:

1. “The law will not construe a limitation in a will into an executory devise when it can take effect as a remainder, nor a remainder to be contingent when it can be taken to be vested. ’ ’
2. - “It is a rule of law that estates shall be held to vest at the earliest possible period, unless there be a clear manifestation of the intention of the testator to the contrary.”
3. “A vested remainder is where a present interest passes to a certain and definite person, but to be enjoyed in futuro. There must be a particular estate to support it. The remainder must pass out of the grantor at the creation of the particular estate. It must vest in the grantee during the continuance of the estate or eo instmti that it determines.”
4. “Where a remainder is limited to a person in esse and ascertained, to take effect by express limitation, on the termination of the preceding particular estate, the remainder is unquestionably vested.”
5. “Where a remainder is limited to take effect in possession, if ever, immediately upon the determination of a particular estate, which estate is to be determined by an event that must unavoidably happen by the efflux of time, the remainder vests in interest as soon as the reinainder-man is in esse and ascertained, provided nothing but his own death before the determination of the particular estate, will prevent such remainder from vesting in possession.”
6. “It is the uncertainty of the right of enjoyment, and not the uncertainty of its actual enjoyment, which renders a remainder contingent. ’ ’
7. “It should be remembered, too, that no degree of uncertainty as to the remainder-man’s ever enjoying the estate which is limited to him by way of remainder will render such remainder a contingent one, provided he has, by such limitation, a present absolute right to have the estate the instant the prior estate shall determine.”
8. “The present capacity of taking effect in possession — if the possession were to become vacant — distinguishes a vested from a contingent remainder, and not the certainty that the possession will ever become vacant while the remainder continues.”
9. “The contingent remainder is where the estate in remainder is limited either to a dubious and uncertain person, or upon the happening of a dubious and uncertain event.”

In the instant ease a present interest, on the death of the testator, did pass to certain and definite persons — that is, his children — to be enjoyed in the future. There was a life estate to support the interest which passed to each of them. The remainder passed out of the grantor on the creation of the life estate which was devised to his widow. It vested in the children at the very instant the life estate commenced. The possession and enjoyment passed to the children immediately upon the termination of the life estate. The remainders devised to the children of Dennis McCarthy were limited to take effect immediately upon the determination of the life estate of his widow, which estate was to determine by an event (the death of the widow) that must unavoidably happen by the efhu-x of time, and upon the death of Dennis McCarthy the remaindermen, his children, were in esse and ascertained, and nothing but their own deaths, before the determination of the life estate of the widow, could have prevented their remainders from vesting in possession. There is no uncertainty of the right of enjoyment in the children. They had a present absolute right to have the estate in possession the instant the prior estate determined. The remainders are limited to certain and definite persons — testator’s children — and upon a certain and definite event — the death of the widow.

Another familiar rule is stated thus: “An estate once vested will not be divested unless the intent to divest clearly appears. ’ ’

The following rule will be found in Gray’s The Rule Against Perpetuities (3d Ed.), page 85:

“Whether a remainder is vested or contingent depends upon the language employed. If the conditional element is incorporated into the description of, or into the gift to the remainder-man, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested. Thus on a devise to A. for life, remainder to his children, but if any child dies in the lifetime of A. his share to go to those who survive, the share of each child is vested, subject to be divested by its death. But on a devise to A. for life, remainder to such of his children as survive him, the remainder is contingent.”

In the will of Dennis McCarthy there is a complete devise of a vested interest, subject to the life estate; then a clause is added after the semicolon divesting the interest on the contingency of death of the devisee before the life tenant. And under this rule the vested interest is subject to be divested upon the happening of such contingency.

A full statement of the rule marked 5, in Doe, Lessor of Poor, v. Considine, supra, is as follows:

“Where a remainder is limited to take effect in possession, if ever, immediately upon the determination of a particular estate, which estate is to determine by an event that must unavoidably happen by the efflux of time, the remainder vests in' interest as soon as the remainderman is in esse and ascertained, provided nothing but his own death before the determination of the particular estate, will prevent such remainder from vesting in possession; yet, if the estate is limited over to another in the event of the death of the remainderman before the determination of the particular estate, his vested estate will be subject to be divested by that event, and the interest of the substituted remainderman which was before either an executory devise or a contingent remainder, will, if he is in esse and ascertained, be immediately converted into a vested remainder.”

In the case at bar the estate is limited over in the event of the death of any child of Dennis McCarthy before the determination of the life estate, and under the rule it is subject to be divested by the death of any child and vests in the heirs of his body if in esse and ascertained.

In the ease of Jeffers v. Lampson, 10 Ohio St., 101, 104, the share of the son dying before the widow was to go to a survivor, and the Supreme Court held the share vested, subject to be divested upon the contingency therein stated.

In the case of Flannagan v. Staples, supra, the court held that each child of the testator took a vested interest, subject to be divested, in case of his death before the decease of the widow, in favor of his surviving issue.

The same holding will be found in Camp v. Cronkright, supra; In re McCauley et al, supra.

In Lyons v. Ostrander, 167 N. Y., 135, 60 N. E. Rep., 334, the will, after making provision for Jacob Weeks Cornwell during his life, contains this clause:

“Upon his death I give, devise and bequeath the said lots of land and buildings to Virginia Cornwell, wife of said Jacob Weeks Cornwell, Ida Van Cott, Clarissa Lyon and Millard Fillmore Cornwell, children of said Jacob Weeks Cornwell, share and share alike, the issue of such as may have died to take the share to which his, her or their parents would, if living, have been entitled.”

The court of appeals of New York held that the remainder-men took vested interests, “and where one predeceases the life beneficiary her share becomes divested and vests in her issue, and a trustee under her will does not take any interest in the property.”

The following authorities sustain the rule: Ranhofer v. A. C. & H. M. Hall Realty Co., 128 N. Y. Supp., 230; Schwartz v. Rehfuss, 114 N. Y. Supp., 92; Boyd v. Sanders, 141 Ga., 405, 81 S. E. Rep., 205; Sumpter v. Carter, 115 Ga., 893, 42 S. E. Rep., 324; Fields v. Lewis, 118 Ga., 573, 45 S. E. Rep., 437; Hervey v. McLaughlin, 1 Price Eng. Ex., 264; Straus v. Rost, 67 Md., 465, 10 Atl. Rep., 74; McArthur v. Scott, 113 U. S., 340, 28 L. Ed., 1015; White v. Smith, 87 Conn., 663, 89 Atl. Rep., 272, 275, and cases there cited; 2 Underhill on Wills, Section 867.

The case under consideration is not controlled by Linton v. Laycock, 33 Ohio St., 128. That case approves Brasher et al v. Marsh et al, 15 Ohio St., 103, and the third paragraph of the syllabus in the latter case reads:

“The words ‘or their heirs’ were designated to provide for the case of such children as might die before the final distribution — not a new class of beneficiaries. ‘Heirs’ is used as a word of limitation, and those only can claim under it who derive title through a deceased child.”

In the former case the court, in the opinion, page 136, say:

“It is reasonable to presume that the testator had in view the disposition which the law makes of intestate estates.”

And again, on the same page, the writer of the opinion uses these words:

“That is to say, in case of the death of one of his children, his share was not to go to the survivors, but to be considered as if inherited by the heir of the deceased.”

The will of Dennis McCarthy shows no intention on his part to have the shares of his children pass as they would under the laws governing intestate estates. On the contrary, the will clearly shows an intention to change such devolution, and the share of a deceased child passes to the “heirs of the. body.” The “heirs of the body” of the children do not inherit from the parent, but are by the will substituted for the parent. So if they take any estate, they take by the will of the grandfather, not by inheritance from their parent. While the words “heirs of the body” are usually construed as words of limitation, they are here used as words of purchase. The estate which came to the grandchildren came by devise and not by inheritance.

Counsel for Frances E. and Alma IT. McCarthy, two of the children who signed the deed and mortgage but survived their mother, contend that their conveyances pass only a determinable fee, that the language of those instruments is not sufficient to pass to the defendant, Hansel, the indefeasible title which they acquired upon the death of the widow of Dennis McCarthy, and that they are not estopped to dispute the claims of such defendant.

The grantors in the - deed to Hansel and in the mortgage through which he derived his title covenanted that they are “the true and lawful owners of said premises and have full power to convey the same,” etc. It is contended that the words “owners of said premises” are not equivalent to “seized in fee” of said premises, and that “the children owned determinable fees by operation of law; these they conveyed, and these they warranted, and nothing more. ’ ’

No doubt the meaning of the word “owner” depends upon the connection in which it is used, and may or may not mean one who holds the fee simple or highest estate, as held in Baltimore & Ohio Rd. Co. v. Walker, 45 Ohio St., 577, 585. But what does it mean in the covenants referred to ? As applied to land it usually denotes a fee simple title.

In Irvine v. Irvine, 9 Wall., 617, 19 L. Ed,, 800, the first paragraph of the syllabus reads: “When one makes a deed of land eovenating therein that he is the owner, and subsequently acquires an outstanding and adverse title, his new acquisition enures to the grantee on the principle of estoppel.”

The deed recited that the grantor was “well seized in fee, and had good right to sell and convey in fee.” The federal Supreme Court treated that language as equivalent to the word “owner.”

See also, Coombs v. People, 198 Ill., 586, 64 N. E. Rep., 1056; Wright v. Bennett, 4 Ill. (3 Scamm.), 258; The Ill. Mut. Fire Ins. Co. v. Marseilles Mfg. Co., 6 Ill. (1 Gilm.), 236; Jarrot v. Vaughn, I Ill. (2 Gilm.), 132; Whiteside v. Divers, 5 Ill. (4 Scamm.), 336; Hadlock v. Hadlock, 22 Ill., 384; McFeters v. Pierson et al, 15 Colo., 201, 24 Pac. Rep., 1076, 22 Am. St. Rep., 388; Bouvier’s Law Dictionary.

The defendants, Frances E. and Alma H. McCarthy, are estopped by the covenants in their conveyances to claim any estate in the premises devised to them by their father.

Judgment accordingly.

Walters, J., and MIerriman, J., concur.


text:
    DETERMINATION OF THE AMOUNT DUE FROM A COMPENSATED SURETY COMPANY ON A BUILDING CONTRACT.
    Court of Appeals for Fayette County.
    Southern Surety Company v. Masonic Temple Company of Washington Court House.
    Decided, November 11, 1915.

      Default Under a Building Contract — Compensated Surety Not Released by Minor Changes in Building Plans Made to Conform with State Regulations< — Nor by Excessive Progress Estimates by Architect, When — Loans to Contractor for Purchase of Material — Notice to Surety as to Defaults — Evidence.
    1. Changes of a minor character in the building plans made to conform the building to state regulations, reported to the agent of the surety company during the progress of the -work and not objected to by him, do not release the surety guaranteeing performance of the building contract by the contractor.
    2. Where the building contractor delegates to an architect authority to make progress estimates, the payment of such estimates made by such architect which are regular upon their face, but shown by extrinsic evidence to be in excess of the amount fixed in the contract as the basis for the architect certificate, does not, in the absence of fraud or collusion, release the ¡surety upon the contractor’s bond; nor, in the absence of collusion or bad faith, is the owner bound to give notice to the surety of the fact that such estimates are actually in excess of the stipulated basis.
    3. Loans to the contractor made to enable him to obtain material and upon the agreement that such loans are to be repaid out of the estimates when made, do not release the surety upon the contractor’s bond.
    4. Failure of owner to notify the surety of minor defaults will not bar recovery upon the surety’s bond for other and substantial defaults of which the surety was duly notified.
    5. The certificate of the architect as to damages is not rendered incompetent as evidence nor invalid by the inclusion therein of the statement that it covers matters “brought to our notice” and that it was made partly “in view of sworn statements” of the agent of the owner.

      0. L. Rider, for plaintiff in error.

      John Logan and IS. L. Bush, contra.
   Allread, J.

The Masonic Temple Company brought suit in the court of common pleas against E. E. Bope as principal and the Southern Surety Company as surety upon a bond for the performance of a building contract entered into by Bope with the Masonic Temple Company for the construction of a mercantile and lodge building in Washington Court House.

Bope defaulted, the surety company declined to complete the work and the temple company thereupon completed the building. The action is for the loss, including damages for delay.

The temple company recovered a verdict and judgment for $9,078.14. The judgment is brought here for review upon petition in error.

The defenses chiefly relied upon by the surety company are:

1. Change in the building contract subsequent to the giving of the bond and without the knowledge or consent of the surety.
2. Payment of estimates based upon full amount instead of ninety per cent, of wrought and fifty per cent, of unwrought material.
3. Advance payments to contractor.
4. Failure to notify surety company of prior defaults of contractor.
5. Insufficiency of evidence to support damages for delay.

Preliminary to the general consideration of the defenses it may be stated that the rule of striciissimi juris is not to be applied in all its latitude to cases of compensated sureties, but the surety’s contract “should receive a reasonable construction in order to carry out the presumed intention of the parties as expressed by the language used.” Bryant v. The American Bonding Co., 77 Ohio St., 90.

The changes in the plans of the building complained of were largely if not wholly made at the order of the state inspector. They did not change substantially the building, but were intended to conform the same to state regulations. The original plans included a public hall. The parties were presumed as a matter of law to contract with reference to the state inspection laws and to contemplate that changes of a minor character might be ordered. Besides, the testimony shows that shortly thereafter, and.before any substantial part of the changes were constructed, Mr. Smith, vice-president of the surety company, was notified of the changes ordered and made no objections thereto. This was supplemented by additional evidence to the effect that after Bope’s default the list of incompletions was furnished Mr. Smith and no objections were made as to them. The temple company then proceeded to complete the' building with the changes incorporated.

It is also objected in this connection that these changes, in order to be binding on the surety, should also have been approved by the architect and prices agreed upon or fixed by arbitration. Whatever might have been the effect if either Bope or the temple company had objected, we are not called upon to decide. Both parties to the construction contract accepted these changes, and by aequiescense of all parties the additional cost was fixed by the architect under other provisions of the contract. In view of these circumstances wo do not consider that such changes constitute a defense to the surety company’s liability.

The building contract provided that payments to the contractor should be made "only upon certificates of the architects, as follows: based upon an allowance of ninety per cent, of material and labor actually in place in the building, and fifty per cent, of the material on ground. * * * And all payments shall be due when certificates for the same are issued. ’ ’ It appears that the architect did not follow this provision-strictly, and it is claimed that estimates based upon the full amount of material and work were given from time to time and paid by the temple company.

The estimates of the architect were regular in form and did not show upon their face that they were made upon an irregular basis. There is no claim of collusion or fraud upon the part of the temple company, but it is claimed that the temple company knew of the basis upon which the certificates were made.

This is denied and there may be some doubt as to proof of this fact, but in view of the special instructions given by the court to the jury we may ignore the conflict of evidence upon this point and assume that there was some evidence upon which the jury might have found that the temple company had knowl edge of the actual basis of the certificates. This, therefore, brings us to the question of whether the temple company was bound to revise or review the estimates of the contractor before making payment.

Counsel for the temple company italicize the concluding sen tenee that “All payments shall be due when certificates for the same are issued.” Counsel for the surety company emphasize the clause providing that payment shall be made only upon certificates founded upon the stipulated percentage. This question is not free from difficulty and is one upon which the authorities in other states are in conflict. "We feel it to be our duty, in view of the conflict of authority, to adopt such construction as would seem to be just and reasonable and best calculated to preserve and carry out the apparent intention of the parties to the contract.

It must be kept in mind that the architect was not the agent of the temple company, nor was he in any manner under its control. The architect was selected by the terms of the contract as an independent authority or umpire. If the estimates were too low the contractor had no right to object, and if they were too high the owner was equally bound. So long as there was no fraud or collusion we think the temple company was justified in making payments strictly in conformity with the architect’s estimates. Many of the authorities cited by learned counsel for the surety companyare cases where the obligation to make payments only upon certain percentages of work and material was placed upon the owner and not upon an independent architect.

From the spirit and general import of the contract we think that both parties expected to be bound in the progress of the work by the architect’s estimates.

The surety company contends, and not without a show of reason, that in its bond it reserved a contingent interest in the retained percentages and deferred payments, and also the right to notice of final payment. This condition of the bond would be quite pertinent in a case where the owner had not followed strictly the progress estimates of the architect and had paid amounts in excess of the architect’s certificates, but we think it does not apply where the owner is proceeding strictly according to the architect’s estimates.

The surety company, being a compensated surety, is presumed to have fashioned the conditions of its bond, and if it was desired to hold the owner to a stricter liability as to retained percentages and deferred payments such liability should have been definitely stated. -

All the evidence offered tends to show that the advances made to the contractor were made as loans and not as advance payments. It is true that the understanding was that the loans were to be repaid out of estimates when available for that purpose. While there is conflict upon this subject, still we think the weight of authority sustains the view that such collateral loans did not vitiate the bond nor avoid liability thereon. Stuts v. Strayer, 60 Ohio St., 384.

It is contended that this question is eliminated by the admission of the reply that payments were made from time to time to Bope, but nevertheless we think that it was competent to show that the advances were loans and that the payments were not actually made until the loans were surrendered and the credit, given upon the estimates.

It is also contended, both with respect to the advances and with respect to the payments upon the estimates, that the temple company was bound in justice to notify the surety company of the true basis of the estimates and of the advance payments and that the failure to notify them would be so prejudicial as to have the effect,of discharging the surety.

The case of Koppitz-Melchers Brewing Co. v. Schultz et al, 68 Ohio St., 407, is cited, but it will be observed in considering that case that the obligee of the surety bond had expressly bound himself not to make the third shipment until the first had been paid for. That was an obligation upon which the surety had a right to rely. Here there was no such contract obligation on the part of the temple company. Both parties had agreed to submit the matter of estimates to the architect, and neither party, in the absence of fraud or collusion, would be bound to keep the other advised as to the action of the architect in the absence of some stipulation to that effect.

The bond of the surety company provided for notice of default of the contractor and that the failure to give such notice would relieve the surety. Reading both conditions of the surety’s bond, we think the default contemplated is one terminating the building contract or is one upon which the liability is based. It would be unreasonable to extend the letter of the first condition of the bond to every technical default or slight variance from the principal contract. To so hold would make surety bonds of little consequence.

We think the certificate of the architect was competent evidence on the subject of damages. The statement in the architect’s certificate that it covered matters “brought to our notice” and was made partly in view of the sworn statements of E. L. Bush, did not affect its competency. These merely show the basis of the certificate and the evidence upon which the architect acted.

The case at bar is, in our judgment, distinguished from the ease of Spencer v. Duplan Silk Co., 112 Fed. Rep., 638.

It is also contended that the stipulated damages for delay amounted to a penalty and not liquidated damages. We think prima facie they should be considered liquidated damages and the burden was upon the surety company to impeach the prima facie effect of the contract.

It is also urged that the trial court erred in placing the burden of proof upon the surety company. In view of the averment of the petition as to the architect’s certificate and of the failure of the answer to deny the giving of this certificate, a prima facie case was made out in favor of the temple company and the burden of proof under the pleadings was upon the defendant to impeach that certificate.

There are other assignments of error, but upon the whole record we have reached the conclusion that there is no prejudicial error.

Judgment affirmed.

Ferneding, J., and Ktjnkle, J., concur.


author: Richards, J.

text:
    ALLOWANCES TO THE EXECUTOR. UNDER A WILL WHICH WAS SET ASIDE.
    Court of Appeals for Wood County.
    Thurston v. Ludwig et al.
    Decided, November 19, 1915.

      Executor — Not Entitled to Expenses in Defending a Will Which Was Set Aside — Apportionment of Commissions Between an Executor Named in the Will and His Successor in Office.

    1. An executor is not entitled to charge the estate for the expense of conducting a defense of the will where it is adjudged invalid, notwithstanding the executor is, by virtue of Section 12080, General Code, a necessary party.
    2. In case of the resignation of an executor after he has collected but not disbursed the assets of the estate, and the appointment of a successor to complete the administration, the commissions provided for by Section 10837, General Code, for all ordinary services, should be apportioned by the probate court between the two in accordance with the services performed by each.

      Harrington & Dunn, for plaintiff in error.

      E. M. Fries, for defendants in error.
   Richards, J.

Isaac Ludwig died in February, 1906, leaving a written instrument which was afterwards probated as his last will and testament and in which he named as his executor the plaintiff in error, Azor Thurston. Mr. Thurston qualified as executor and served in that capacity for seven or eight years. During about seven years of this period litigation was pending which involved a contest of the will of Isaac Ludwig, deceased, the same being finally determined in the Supreme Court against the validity of the will. After this written instrument was held not to be the valid last will and testament of Isaac Ludwig, the executor named therein, Azor Thurston, resigned and thereupon the defendant, E. M. Fries, was appointed to administer the estate. The estate at the death of Isaac Ludwig, amounted to about $10,500, most of which was in bank or in cash, and of this sum the executor, with the approval of the probate court, invested $8,840 in stock of a national bank. This stock since the investment was made has become greatly enhanced in value.

Upon the resignation of the executor his accounts were filed in the probate court and on a settlement of the same that court refused to allow disbursements made by him in the defense of the will of Isaac Ludwig, deceased, the items, specifically, being attorneys’ fees and the amount paid for a bill of exceptions. The probate court further held that the executor was not entitled to any compensation upon moneys received by him which had not been'actually disbursed but remained on hand and were paid over to his successor. From this decision of the probate court Azor Thurston' appealed to the court of common pleas, and in that court, on a trial of the case, the same judgment was entered as had been entered in the probate court, and from the judgment of the common pleas court this proceeding in error is brought.

The defendants, so far as the disallowance of disbursements made for the unsuccessful defense of the will are concerned, rely on Executors of Andrews v. His Administrators, 7 Ohio St., 143, where it was directly held that an executor would not be entitled to charge the estate with the expense of maintaining an unsuccessful defense of a will. On the other hand, it is insisted by the plaintiff that at the time of the decision rendered in the ease above cited there was no requirement that the executor should be made a party defendant, while now, by virtue of the provisions of the statute (Section 12080, General Code), he is a necessary party in an action to contest a will. The Supreme Court, however, in the case above cited state, on page 151, that it has been the general and perhaps uniform practice to make executors parties defendant, and they further say that, granting the propriety, and even the necessity, of this practice, it does not follow that the executor is bound to take upon himself the burden of the contest.

In McArthur v. Scott, 113 U. S., 340, the Supreme Court of the United States had under consideration .a case coming from the Southern District of Ohio and involving the contest of a will which became effective before there was any statutory requirement making the executor a necessary party, and that court, speaking through Mr. Justice Gray, say, on page 404:

“Executors and trustees, appointed by the testator to perform the trusts of the will and to protect the interests of his beneficiaries, are as necessary parties to a proceeding to annul a probate, as the heirs at law are to a suit to establish the validity of a will. And upon a review of the cases no precedent has been found, either in a court of probate or in a court of chancery, in which a decree disallowing a will, rendered in a suit brought to set it aside, or to assert an adverse title in the estate, without making such executors, or an administrator with the will annexed, a party to the suit, has been held binding upon persons not before the court.”

We hold that the principle announced by the Supreme Court of Ohio in the Andrews case, supra, is still applicable and that no error was committed in the courts below in refusing to allow the executor for amounts expended in the unsuccessful defense of the will of Isaac Ludwig, deceased.

The remaining question concerns the statutory allowance of an executor for the ordinary services rendered by him as such executor. The amount to be allowed depends upon a construction of Section 10837, General Code, which provides, in substance, that executors may be allowed commissions upon the amount of the personal estate collected and accounted for by them, which sum shall be in full compensation for all their ordinary services, the amounts fixed by the statute being six per cent, for the first thousand dollars, four per cent, for the next four thousand dollars and two per cent, for all in excess of five thousand dollars. The probate court and the court of common pleas held that the executor could not be allowed, under this statute, any compensation for services except upon amounts not only collected by him but accounted for, and they construed the expression “accounted for” as disbursed in the administration of the estate. It is apparent from a fair construction of the statute that the amounts authorized to be allowed thereby are intended t'o be for all ordinary services rendered in the full and complete administration of the estate, and in that sense the expression “accounted for” does not mean simply entered upon the books and paid over to the successor in office, but it means disbursed in the administration of the estate. It will be noticed that the statute does not require the allowance of the percentages named therein, but provides that those commissions may be allowed. The trial court, construing the expression “accounted for” to mean as above stated, reached the conclusion that no compensation whatever could be allowed for amounts which had been collected but not expended in the administration of the estate. If this construction were to be adopted and the executor who has collected the funds of the estate but not disbursed them, should for that reason be deprived of an allowance for ordinary services because he had not accounted for the sums collected, it would, by parity of reasoning, follow that his successor in office should also be refused an allowance because he would not have collected the sums and therefore would not come literally within the provisions of the statute. This construction would, of course, be unjust to those who serve in the capacity of executors or administrators in the settlement of estates. On the other hand, to hold that an executor who collects but does not account for or disburse in the administration of the estate the funds so collected should be allowed the full statutory compensation, and then on the same reasoning to pay the full compensation to his successor, would work an injustice to the estate. In the opinion of the court neither of these constructions is the true one to be applied to this statute and neither construction is a fair interpretation of the statute. A better interpretation is that the probate court in fixing the compensation for all ordinary services rendered in the settlement of the estate, under this statute, has authority, where an executor has collected but not accounted for — that is, disbursed — the funds so collected in the administration of the estate, to allow a reasonable amount in payment of such services, within the limitation contained in the statute, and of course it would follow that the successor in office of such executor who does not collect but who accounts for and disburses the funds in the administration of the estate would be entitled to the remaining portion of the compensation.

The statute of the state of New York providing for allowances in such cases is made by its terms to cover “receiving and paying out all sums of money, ’ ’ which means the same as the Ohio statute, which allows compensation for collecting and accounting for the moneys of the estate. Under this statute it was held In re Accounting of Mason et al, 98 N. Y., 527, that one-half of the statutory amount should be allowed where the sums had been collected but not paid out.

In McAlpin et al v. Potter et al, 126 N. Y., 285, 290, the court use the following language:

“A further question is raised over the allowance to the executors of half commissions for receiving the funds of the estate. The law allows a specific rate for ‘receiving and paying out all sums of money/ The statute indicates no division of the commissions which should apportion one-half to the receiving and the balance to the paying out, though the courts have allowed it in proper cases. But the allowance here was premature. The bulk of the estate came to the executors already invested and in the form of securities which have not been turned into money. No law justifies the allowance of one-half commissions upon their estimated value in advance of their conversion into money or its equivalent. It was proper enough to allow one-half commissions upon all sums of money received, but until the securities become sums of money, either by conversion into cash or by their acceptance as cash by those entitled, the allowance is premature. ’ ’

To the same effect is In re Hurst’s Estate et al, 97 N. Y. Supp., 697. See also In re Owen’s Estate, 32 Utah, 469. In this latter case, where the statute provided that an administrator should be allowed commissions on the amount of the estate accounted for by him, it was held that where an estate was administered by successive personal representatives compensation should be apportioned among them according to the services rendered. To the same effect is In re Estate of Baxley, 47 Md., 555.

In view alike of reason and authority we hold that a fair interpretation of Section 10837, General Code, requires that in a case where an executor has resigned after collecting, but not disbursing, the funds of the estate in the administration thereof, and a successor is appointed to complete the administration of the estate, the commissions allowed for all ordinary services rendered by them should be apportioned by the court between the two in accordance with the services performed by each.

It results that the judgment must be reversed and the cause remanded to the court of common pleas for further proceedings in accordance with this opinion.

Judgment reversed.

Chittenden, J., and Kinkade, J., concur.


text:
    NEGLIGENCE OF A MUNICIPALITY IN PERFORMING A MINISTERIAL DUTY.
    Circuit Court of Cuyahoga County.
    Etzensperger & Orschak v. City of Cleveland.
    Decided, February 11, 1902.

      Municipal Corporations Liable for Negligence of Officers iohen Acting in Ministerial Capacity — Liable for Negligence in Constructing a Public Building.

    1. Though municipal corporations are not liable for injuries caused by the negligence of officers while acting in a governmental, legislative or judicial capacity, they are liable to the same extent as private corporations where the injury is caused by negligence in performing some duty which is purely ministerial.
    2. While the preparation and adoption of plans for a public building are the exercise of governmental and judicial functions, the construction of the building is ministerial, and. where it is so negligently done that the building collapses upon the property of another, the municipality is liable in damages.

      Poppleton, Billman & Billman, for plaintiff in error.

      Beacon, Baker, Gage c& Carey, contra.
    Hale, J.; Caldwell, J., and Marvin, J., concur.
    Error to court of common pleas.
   Error is prosecuted in this court to reverse a judgment of the court of common pleas in sustaining a demurrer' to the petition.

The petition charges that the city and one Francis Campbell in the winter of 1900 were building an engine-house for the use of the fire department of the city, at No. 36 Hill street in said city. That they so negligently, carelessly and recklessly built and constructed the south wall thereof, which was composeu of stone, brick and mortar, that a part of the same, on or about the 3d day of March, 1901, fell down upon the property of the plaintiff which was next to and adjoining said engine-house, and completely demolished and destroyed the same and the contents thereof, to the plaintiff’s damages in the sum of about three thousand dollars.

The petition specifies the particular acts of negligence relied on.

On behalf of the city a demurrer was filed to this petition which was sustained and judgment rendered in favor of the city.

It seems to be well settled that a municipal corporation, acting in its governmental, legislative or judicial capacity, is not responsible for injury caused to person or property, by its negligence in the performance of such duties. -Whether or not the municipality will exercise such powers is a matter of discretion with the proper officers or board charged with such duty, and such discretion can not be controlled by the courts. But, in the performance of duties which are purely ministerial, a municipal corporation is liable for its negligence in the same manner and to the same extent as private corporations.

We hold that the adoption of plans for and the direction to construct a public building, are acts judicial and governmental and included in the class first named. That the prosecution of the work in the construction of such building in accordance with the plans and determination of the municipality, is purely ministerial, and the duty rests upon the municipality to see that the work is done with ordinary care, and if injury to others is caused by the negligence of the municipality in the performance of such duty, a liability attaches. The petition, then, brings this case within this latter rule and states a cause of action.

The fact that the building is constructed for the use of the fire department, does not change the rule, as above stated.

For error in sustaining the demurrer to the petition and rendering judgment in favor of the defendant, the judgment of the court of common pleas is reversed and the cause remanded for further proceedings.