text:
    AS TO THE EXECUTION OF TESTAMENTARY TRUSTS.
    Circuit Court of Fayette County.
    Humphrey Jones v. A. R. Creamer, Administrator, et al.
    Decided, December 14, 1910.

      Trusts and Trustees — Trusts Enforcible in Accordance with Their Terms Until Equity Decrees Otherwise — Probate Court Can Not Terminate a Trust• — •Should Examine Accounts and Make Necessary Orders — Limitation on Acts of Trustee — Executor Can Not by Agreement Divert Trust Funds.

    1. It is the duty of the probate court (General Code, 11202) to examine accounts filed in that court, and sua sponte or on request of an interested party make such orders as are'proper and necessary to secure a faithful and correct administration of the trust.
    2. A testamentary trust, where possible of performance and .not contrary to law, must be enforced according to the provisions of the instrument creating it, until a court of equity decrees otherwise.
    3. The probate court has no power to terminate a testamentary trust.
    4. A trustee should confine his acts to the carrying into effect of the provisions of the trust under which he is acting, and if in doubt apply to the proper court for instruction (General Code, 10857).
    5. Where a testator in his will provided for the erection of a family vault and that a specific sum should be used for that purpose, and further provided “that the sum of $500 shall be set aside and in-’ vested in good farm piortgages, etc., and the income held as a perpetual fund for the care of such vault after the same is erected”-— Held: That the executor can not, even -by consent of all persons having an interest in the estate of the decedent, use sai'd sum in the erection of the vault, and if it is so used the executor is chargeable therewith and must account therefor as provided in said will.

      Humphreys Jones, for plaintiff.

      Creamer, Creamer & Thompson, contra.
    Rockel, J.; Dustin, J., and Allread, J., concur.
    Error to Common Pleas Court.
   This case originally arose on exceptions filed by the defendants in error in the probate court to the final account of Humphrey Jones, executor of the last will of Henry Windle, deceased. The exceptions were sustained by the probate court .and the plaintiff in error appealed therefrom to the court of common pleas, where the exceptions were again sustained and he prosecutes error from that finding to this court.

It appears that Henry Windle, the testator, died testate in 1902, childless, leaving one Clarissa Windle his widow. In February, 1906, and before the estate of said Henry Windle was fully settled, Clarissa Windle, his widow, died and A. R. Creamer was appointed administrator of her estate. She died intestate, leaving sisters, many nephews .and nieces as her sole heirs-at-law, some of whom are defendants in error.

Said Henry Windle, among other things, provided in his will that his entire estate should be converted into money, the same being about $20,000, and with the exception of a few small legacies, .all should be invested in a mausoleum; and $500 was set .aside as a trust fund to keep the same in repair. The items of his will relating thereto were as follows:

“I will and direct that the proceeds of the sale of my said two tracts of land and the money and other personal property which I may possess at my death, except said personal property bequeathed to my wife in item seven of this will and the sum of $500 as hereinafter provided, shall be used and expended by my executor in the erection of a family vault in •the Washington C. IT., Ohio, cemetery, arranged for the reception of the bodies of myself and wife; and my said executor is hereby authorized and empowered to purchase a suitable site for said vault, and contract for the erection of the same, and to do and perform all things needful and proper to fully carry out and effectuate my intentions and purposes in respect to said vault.
“I will and direct that the sum of $500 shall be set aside and invested by my executor in good farm mortgages in Fayette county, Ohio, at not to exceed one-half the value of the land exclusive of improvements, and the income of said sum shall be held as a perpetual fund to be used in the care and maintenance of said vault after the same is erected. ’ ’

The executor of Mr. Windle proceeded to convert the estate into money under the will of Henry Windle; the widow, if she elected to take thereunder, would receive practically nothing, as it was provided that all should be invested in this mausoleum.

After Windle’s death the widow made some claims against the estate ’ which, if true, might have absorbed the greater part of the estate, and in that way have defeated the will; but it appears that the widow was anxious that the mausoleum should be erected, and it appears that likewise the executor was very anxious that this should be done. It does not appear positively that the widow would have been so persistent in the assertion of her claims that the intention of the testator would have been defeated. However, finally she entered into a contract with the executor, in which she agreed that if the executor would put in all the funds of said estate, in said mausoleum, she would relinquish all claims she had against the estate and put in $1,000 of her money besides.

In accordance with this contract between the executor and the widow, he proceeded to the erection of the mausoleum and the widow paid to him the amount that she agreed to and likewise entered her election to take under the will and release all her claims against the estate.

The executor believed, as the widow was the sole heir at law of the deceased testator, that there could be no one else prejudiced, and that if she agreed that all of the funds of the estate might be put in this mausoleum, that he had a fight so to do, and that thereby he would be released from setting- aside or holding in trust the said sum of $500 which the testator had provided in item nine should be set aside and held in trust, for the purpose of maintaining said mausoleum.

The executor filed his final account setting forth the admin, istration of said estate in which it was shown that all of the funds of said estate had been used, and that he bad failed to reserve and set aside the sum of $500 for the purpose oí keeping said mausoleum in repair, as provided in item nine of testator’s will.'

The widow, Clarissa Windle, having in the meantime died, A. R. Creamer, one of the defendants in error, was appointed her administrator, who filed exceptions to his account, and among other things excepted to the same for the reason that said $500 had not been reserved or set aside to keep said manusoleum in repair, as provided in said will.

In the court below the executor filed a motion to dismiss the exceptions, because A. R. Creamer, as administrator of the estate of Clarissa Windle, deceased, had no interest, pecuniary or otherwise, in the matters involved in this case, and had no right under the law to file exceptions, or to become a party thereof. This motion was overruled and the matter was heard further upon the merits. This motion raises the interesting question, whether or not before a person can file exceptions in a court, he must have some pecuniary interest in the matter.

In the case under consideration, it will be admitted that neither the heirs of Clarrissa Windle nor her administrator could be financially benefited by requiring the executor to set aside the $500 as stated in the will. Whether by reason of the fact that this was to be a family vault and as such be an object in which the heirs of Clarissa Windle might have some interest in having it properly maintained, presents another question; and while not necessary in the decision of this case, it would appear that they ought to have some right to see that the grave of an ancestor was properly taken care of, and therefore if there was a testamentary provision made for that purpose, that they might see that it was enforced. It is, however, generally admitted that these heirs as well as the administrator, so far as they claim under or through Clarissa Windle, are estopped by the contract of Clarissa Windle, made with the executor. In a certain measure this may be true, but even upon this plea of estoppel there may be some doubt arising from the nature of estate devised.

In the recent case of Kroll v. Close, 82 Ohio St., 190, it is said, “the burden is upon the party who relies upon estoppel to prove clearly and unequivocally every fact essential to the estoppel. ’ ’

The case just cited is an interesting one when considered with the case at bar. In the case of Kroll v. Close, supra, the administrator, against the reluctant consent of the widow, had expended a rather large sum for funeral expenses, and exceptions were afterwards filed by her to such expenditure; and we think that in a ease involving a trust of the character of the ease at bar, the probate court has full and complete authority to go into the matter of exceptions to the account of the trustee or executor, on its own motion, and if that be true, it is an immaterial matter who may be instrumental in bringing the court into action.

The statute of Ohio (Revised Statutes, 6403; General Code, 11202) does not anywhere specifically state that a party filing exceptions must be an interested party.

General Code, 11202, provides that:

“The probate judge may examine under oath, all executors, administrators, guardians, and trustees, and assignees, trustees and commissioners of insolvents, touching their accounts. If he deems it proper to do so, he may reduce such examination to writing, and require such executor, administrator, assignee, trustee, or guardian to sign it. Such examination must be filed with the papers in the case.”

It is distinctly stated in a work on probate practice in Ohio, “that the mere fact that no exceptions have been filed to an account does not relieve the court of its duty to make an examination of the account, and, for matters unexplained by the account call the accountant into court to make an explanation” (Rockel, Prob. Prac., Section 734). And this doctrine seems to be approved in the case of Kroll v. Close, supra, in the third paragraph of the syllabus, where we find this statement:

“It is the duty of the probate judge, upon the hearing of an administrator’s or executor’s account, whether exceptions have been filed thereto or not, to scan closely the amounts claimed to have been paid for funeral expenses; and in the absence of statutory or testamentary provisions, the allowance for such expenses must be reasonable, having regard to the amount of the estate, the station in life of the deceased and the customs of the people in the same station, and if unreasonable and extravagant should be disallowed, even as against legatees and next of kin. ’ ’

If it is the duty to disallow an expenditure made for funeral expenses, even as against legatees and next of kin, how much more would it be the duty of the probate court to enforce a provisión of a will of a deceased testator. In some other states it is provided by statute that no one can file an exception, except he is an interested party, but even if that were a statutory provision of Ohio, upon the decision above quoted of the Supreme Court, and in accordance with our own ideas, we believe it to be the right and the duty of the court to enforce the provisions of a trust, when the same is being executed by a person, who is under the jurisdiction of the court. So we find that there was no prejudicial error in the court overruling this motion.

The plaintiff in error and executor in justification of his not setting aside the $500 as' provided in the said will, claims that if he would not have made the contract with Mrs. Windle, whereby she agreed to waive her claims against the estate, that it would have been impossible to erect a mausoleum at all, and the trust would have failed. We are not so sure that the testimony shows that such would have been the result. It appears from the testimony that the widow was very anxious to have this mausoleum erected and it does not appear whether the claims that she asserted against the estate would have been such as would have prevented the building of a mausoleum; perhaps not as costly a one as the one that finally was erected. The plaintiff in error has sought to have the doctrine of cy pres applied. It is questionable whether this doctrine is applicable to a case of this kind. It seems that the doctrine of cy pres has been applied solely for the purpose of preventing a failure of a devise to charity made by a testator in his last will and testament.

The erection of a monument over a person’s grave can hardly be considered in the light of a devise to a charitable object or for charitable purpose.

If the executor was in doubt as to the proper construction of this will, and he wished to know what his rights and duties were, the statute (Revised Statutes, 6202; General Code, 10857) makes ample provision for his filing a petition, and have a court of equity, act and instruct him in a proper performance of his duties; but he claims that even if he has not done so in this case, that if he had practically done that which a court of equity would have ordered him to do, that his action should be sustained. This would be, as we think, the approval of a dangerous doctrine in reference to trustees in the performance of their duty. • .. .

If a trust is useless or impracticable, etc., a court of equity upon a proper showing may terminate it.

In the -case at bar, it is clearly evident from the testimony that the executor built the mausoleum and used all the funds on the theory that there was no one else that had any interest but the widow, and in that way no exception could be taken, even if the provision of the will was not complied with.

If a person is to have the right to' dispose of all his property by testamentary provision, in any manner that he may see fit, so long as the same is not contrary to law, then it should be the duty of the court to enforce that right and not permit heirs and devisees and legatees, merely because they think differently and without any sanction of the court, proceed to annul a testator’s disposition. If Henry Windle had the right to dispose of his property as he saw fit, he had a right to make a provision that the sum of $500 should be set aside as mentioned in item nine of his will, and the following from the case of Kroll v. Close, supra, is not inapplicable to the case at bar

“The administrator appears to have been a person having knowledge of the usual duties of an administrator, for he had been a clerk in the office of the probate judge. (In the case at bar he is an able lawyer.) He was there as a trustee for creditors and the legatee. He was not bound to listen to the desires and importunities of persons who desired to be liberal with money which was not theirs to spend. He is presumed to have known the law, and that, no matter who desired it or who assented to it, his act in purchasing that casket was liable to be reviewed, either with or without exceptions, by the probate court when he should account for the assets of the estate. ’ ’

We therefore find no prejudicial error in the judgment of the court below and the, same is affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    PLEADING AS TO NEGLIGENCE WHICH WAS PRIMA FACIA.
    Circuit Court of Lucas County.
    Lake Shore Electric Railway Co. v. Earl M. Hobart.
    Decided, June 26, 1909.

      Negligence — Need Not be Charged in Terms when Facts are Alleged which Show Prima Facie Negligence — Presumption of Negligence from Derailment of Passenger Car — Allegations and Proof as to Injuries — Amendment to Petition After the Evidence Has Been Submitted — Statements by Physician as to the Subjective Conditions Incompetent — Hypothetical Questions — Identification of X-Ray SMograph.

    1. A petition which alleges specific facts making a prima facie case of negligence is not demurrable because negligence is not alleged in terms.
    2. The derailment of a passenger'car, directly resulting in injury to a ' passenger on such car, raises a presumption of negligence under • the principle of res ipsa loquitur.

    3. Under mention in a petition of injury as a permanent scar, it is error to admit proof that such scar might be of a cancerous and malignant nature; the petition should set. out specifically the nature of the injuries relied upon for damages.
    4: It is an abuse of discretion for the trial court, after close of all the evidence and while instructions are being given, to grant leave to amend the petition so as to insert additional elements of damage to conform to proof which has been admitted against objection.
    5. Hypothetical questions addressed to experts are improper when they assume facts as to which there is no evidence.
    6. An x-ray skiograph, claimed to be that of the plaintiff, should be properly identified as such before it can properly be admitted as evidence.
    Y. The testimony of expert witnesses is not competent as to statements made by the'plaintiff during the examination of plaintiff to qualify such experts to testify of subjective conditions, pain, etc., ' which would not be disclosed by visual observations or some other objective test which a doctor might make.
    Wildman, J.; Kinkade, J., concurs; Parker, J., not sitting.
    Error to Lucas Common Pleas Court.
   Hobart brought suit in the court below for an alleged personal injury and obtained a verdict and judgment against the Lake Shore Electric Railway Company in the sum of $9,750. The proceeding here is instituted to reverse that judgment, and numerous errors are assigned as occurring upon the trial below.

I will not attempt to recite specifically all of them, but will pay attention to those deemed by us of the most importance.

It was claimed in the trial court and is very earnestly urged to us, that the petition of the plaintiff is demurrable on the ground that it does not state facts constituting a cause of action against the defendant. The petition is a peculiar one. It alleges that the plaintiff was a passenger upon a car of the defendant; that the car was derailed, or left the track, at some point along the line of the defendant’s road, and that by reason of this derailment the plaintiff received serious injuries recited in his petition and upon which he claims damages. It is not in terms alleged that the defendant company was negligent. In other words, it does not appear anywhere by any expressions in the petition that the fact that the ear left the track was due to any negligence of the' defendant company, and because of this omission it is insisted that the petition is insufficient. Numerous authorities are cited which tend to sustain this contention, hut we feel compelled by the conclusion reached and expressed by the Supreme Court' in the Baltimore & Ohio Ry. v. Kreager, 61 Ohio St., 312, to overrule the contention and to hold that the demurrer to the petition was not well taken. That was a case in which the Supreme Court was called upon to construe the statute relative to fires occurring, either upon a railway company’s right-of-way or lands adjacent thereto. The Supreme Court held that where averments were made in the petition of facts which under the statute would constitute a prima facie case of negligence, it was unnecessary directly to allege that the railway company was negligent.

There .has been some question, and we have very carefully considered it, as to whether this principle so announced by the Supreme Court and made controlling in the Kreager case would apply to a case of derailment, or whether it would apply to any case where instead of facts being made prima facie evidence by any statute they are so simply by the course of adjudication and practice in the courts; where, in other words, the doctrine of res ipsa loquitur applies. One of the circuit courts has applied the doctrine to the derailment of a car; another case applies it to the colliding of a ear with some obstruction, not another train or ear, along the line of the road. Without reciting the language of any of these decisions, I will content myself with simply referring to them so that they may be found in this opinion in case it should be reported. Baltimore & O. Ry. v. Kreager, supra; Cincinnati St. Ry. v. Kelsey, 9 C. C., 170, and C. H. & D. Ry. v. Brown, 9 C. C. 198, a case which was affirmed by the Supreme Court, without report (Railway v. Brown, 55 Ohio St., 665) are Ohio cases which bear closely upon the question. Cases outside of Ohio which will throw great light upon the question, and in which numerous authorities are collated, are the cases of Spellman v. Transit Co., 36 Neb., 890, and Barnowski v. Helson (89 Mich., 523), 15 L. R. A., 33, in which a note will be found on page 36, citing numerous authorities upon the general question as to what kinds of accidents occurring to railway trains or cars and bringing injury to a passenger will be deemed prima facie negligence without further evidence. Judge Cooley, in his work on Torts, second edition, top paging 795 or star paging 662, discusses the question, and in his usual clear and forceful manner gives reasons for the conclusions arrived at. Our view is that under the Ohio authorities, supported as they are by some authorities outside of our state, this petition was not demurrable, and that the court did not err in overruling the demurrer to it.

The petition, as I have said, alleged numerous injuries complained of by the plaintiff and made the basis of his petition for a verdict. On the trial the court allowed evidence of. injuries, as we look at this evidence, of a character not described in the petition. We think that the petition, in other words, is not broad enough to cover all 'the elements of damage which were permitted by-, the court to be considered by the jury. As am illustration, the petition mentioned a certain scar upon the back of the neck of the plaintiff, alleging it to be permanent, but with regard to which nothing was indicated in the petition other than that it might be a disfigurement. But upon the trial, out of the mouths of several witnesses, medical experts, evidence was given that this sear may be of a cancerous and malignant nature, and we conceive that it may have been deemed by the jury highly important in their estimate of the amount of damage sustained by the plaintiff. There was evidence of other disease or troubles, ailments, which were not mentioned in the petition, and the court permitted this, although the introduction of this class of evidence where there were no express averments in the petition, was strenuously objected to by counsel for the defendant. After the introduction of the evidence had closed and some instructions had been given by the court to the jury a request was made by the plaintiff through his counsel for leave to amend the petition so as to insert additional elements of damage, some of these matters to which objections had been interposed and in regard to which evidence had been introduced over such objection. The court permitted this amendment, but even then there was no amendment of the allegation with regard to the sear; and the evidence of its malignant nature and the possibility that it may be of serious injury to the man, as of a cancerous nature, was permitted to stand over the objection of the defendant.

We think that the court erred; that it was an abuse of discretion to permit the amendment as to the other matters at that stage of the ease, and to conform the pleading to facts shown against objection. It' is true that our statute provides that in furtherance of justice a trial judge may allow an amendment to conform the plaintiff’s pleadings to the facts proved, but it has been held by the courts that this will not be permitted, that it is not in furtherance of justice, where the evéidence has been introduced to support claims not disclosed by the pleading and where the introduction is objected to by counsel and its admission is nowhere waived. As I stated to counsel during the argument, I had a case at one time, the case of Roe v. Railway, 13 Dec., 260, when I was trial judge, in which I did permit such an amendment at the close of plaintiff’s evidence, and I was subsequently convinced by an examination of the authorities that I was in error in so doing. The evidence had gone in under objection, and for that reason I granted a new trial of the ease. I have no reason since to depart from the conclusion at which I then arrived on the hearing of the motion for a new trial.

We think also -that the trial court erred in the admission of certain questions of a hypothetical nature addressed to experts in which some facts were assumed that do not appear in the bill of exceptions as evidence. We are in doubt whether the introduction of this evidence as to some of these questions operated particularly to the prejudice of the plaintiff,' or at least so substantially so that we would be inclined to reverse the judgment upon that ground. There was one item in one of the hypothetical questions that to our minds was of a very serious character, and if the objection to the question had been based upon the incorporation in the question of that item we should have little doubt that the court erred to the great prejudice of the plaintiff in error in permitting the question to be answered. The question' recited certain facts including among them the facts of the accident, the derailment of the car, and the plaintiff’s injury, and mentioned that others were hurt and killed at the time of the accident, when it does not appear that any others were killed, and we think that the jury may very well have had their feelings to some extent or their indignation aroused against the railway company, and have been led to render a verdict more readily against the defendant, or for a greater amount than they otherwise would have rendered. But the objection to that particular question was not that certain things were incorporated in the hypothetical question which ought not to be, but only that the hypothetical- question ought to disclose something else, to-wit, the manner in which the plaintiff had been treated by the physican, and the court having its attention directed to that particular complaint as to the form of the question, overruled the objection. Hypothetical questions sometimes are quite long, not so very long in this case, but still somewhat longer than ordinary questions, and a trial judge may very well be excused for not remembering at the close of the question every item of it when an objection is made as to some alleged particular defect, and we think that the court can hardly be said to have erred as to that particular question.

We think that the court did err in admitting an ex-ray skiograph or radiograph marked PH, which was not sufficiently identified by the evidence as a skiograph of the spine of the plaintiff in this case. We think that the court erred also in permitting testimony of expert witnesses, as to statements made by the plaintiff of subjective conditions, pain and perhaps other symptoms, which would not be disclosed by visual observation, or any other objective test which the doctor might make. Indeed one of these physicans, in speaking of the opinion which he formed, said that it was based as to one point entirely upon the statement made to him by the plaintiff, and it appears that the plaintiff at the time when he was having the examination made was not under treatment by the physician who made it, but that he was having it made for the purpose of using the physician as a witness upon the trial of this case.

Now, the verdict here is a large one. We do not know that it is so large, as under all the circumstances of the case to justify a holding that it was influenced by passion or prejudice on the part of the jury. Evidence had been erroneously introduced or-permitted by the court to be introduced to the jury, and being before the jury it was the duty of the jury to consider it. Considering it all, including all these ailments described by the plaintiff and his experts, and especially the one as to the cancerous character of the so-called sear on the back of the neck, the jury may have been justified in rendering the large verdict. But for the prejudicial errors which have been pointed out, the judgment of the court below will be reversed and the case remanded for a new trial.


text:
    TITLE TO CERTIFICATES OF STOCK.
    Circuit Court of Hamilton County.
    Thomas Carll v. Little Miami Railroad Company et al.
    Decided, February 25, 1911.

      Power of Attorney for the Transfer of Stock — Power Not Exercised by the One Named Therein During Her Lifetime — But Stock Assigned to Her Son — Interpretation of a Deed Covering Real Estate and Belongings Thereto. '

    1. A power of attorney endorsed on a certificate of stock by a husband iti favor of his wife, on the same day on which the certificate was issued to him, will be construed as a general power to transfer the stock on the books of.the company, which not having been exercised by the wife during her lifetime ceased at her death, and her attempt to sign the certificate over to her son conveyed no title.
    2. A deed conveying certain real estate upon which was situated a health college, and also covering belongings of the college in the form of personal property specifically described, can not be construed as covering a certificate of stock in possession of the grantor at his home in another state, where the negotiations for the transfer of the property were had and the deed was executed.

      H. S. Stevenson, Louis J. Dolle, Walter C. Taylor and J. B. O’Donnell, for Carll.

      Gideon C. Wilson, for Curts.

      Robert P. Hargitt, for the estate.
    Giffen, P. J.; Smith, J., concurs; Swing, J., dissents in part.
   The representative character of the defendant, Nelson L. Seeley, as administrator of the estate of John B. Campbell, deceased, is sufficiently shown by his deposition, and if not the court would reopen the case for further proof, the letters of administration being submitted with the papers in the ease, although apparently not offered in evidence.

The- title of plaintiff to twenty-five shares of stock of the Little Miami Railroad Company depends primarily on a power of attorney endorsed on the certificate by John B. Campbell in favor of his wife, Jennie Campbell, who afterwards endorsed the certificate as follows:

“I sign this paper over to my son, Thomas W. Carll.
“Mrs. Jennie Campbell.”

The declarations of Jennie Campbell, deceased, if competent, are to the effect that her husband gave her the stock; but this is merely her interpretation of the acts of Campbell himself, to-wit, the execution of the power of attorney and delivery of the stock, and the same construction is now insisted upon by counsel for plaintiff. In other words that a complete title to the stock was vested in Mrs. Campbell.

The power of attorney is dated the same day on which the certificate was issued, and it is not probable that the owner would have the stock issued in his name for the sole purpose of transferring it to his wife. The object he may have had and the person to whom it should be transferred does not appear, and we are justified in holding that it was a general power to transfer the stock on the books of the company, which not being exercised during her lifetime, ceased at her death. The attempt to assign the stock to her son, the plaintiff, is beyond the power conferred and therefore conveyed no title. ' If she had also caused a transfer to be made on the books of the company a different question would be presented. A Iona fide purchaser would no doubt be protected, but a donee probably not.

The petition should therefore be dismissed.

The other twenty-five shares of stock claimed by the defendant, J. C. Curts, were not endorsed in any way, but the claim is based upon a deed conveying to him-—

“The following described property and real estate in Fair-mount, Hamilton county, Cincinnati, Ohio, to-wit (real estate described) , and this grant includes all that belongs to the Vitapathic System as described in the lease paper to Dr. R. S. Clymer, to-wit, patent rights, copyrights, electrotypes and copies of diploma and certificate of ordination and boobs and all equipments of the college, including the American Health Religious College and its belongings in name and nature. ’ ’

Although articles of incorporation were issued by the Secretary of State, the corporation was never duly organized, and the property of the college really belonged to John B. Campbell.

The care with which he describes, in the above deed, the things which would naturally be considered a part of the college outfit, and were located in the college building in Ohio, would seem to exclude, from the general and comprehensive word belongings, railroad stock in his possession at his home in Citronelle, Alabama, where the negotiations of sale were had and deed executed. The grantee himself gives in effect a like interpretation of the deed in letters written to Campbell’s administrator. These let-' ters were objected to as irrelevant, immaterial and incompetent when offered as part of the deposition of the administrator taken in Alabama.

The objection is now made that the signature was not proved. We think sufficient proof of the genuineness of the letters was made, and that the objection now made is too late. If the deed was intended to convey all the effects of the college, then the cash found in the box along with the railroad stock, and the cash in bank, if any, would pass to the grantee. We discover no such intention either in the deed itself, nor when read in the light of surrounding circumstances.

In the brief time allowed, we have not attempted to here review all the evidence, nor to quote authorities; but, after full consideration, we hold that the burden of proof has not been sustained by the plaintiff, nor the cross-petitioner, Curts.

Decree accordingly.

Judge Swing dissents to that portion of decision relative to the claim of J. C. Curts, defendant.


text:
    BANKER. HELD TO HAVE ACTED AS AGENT IN; PURCHASE OF STOCK FROM A CUSTOMER.
    Circuit Court of Cuyahoga County.
    William E. Telling v. J. J. Sullivan and Corliss Sullivan.
    Decided, February 14, 1911.

      Agency — Banker Pretending to Sell Stock for a Customer, Purchases It Himself — Identity Not Having Been Disclosed, He is Held to Have Acted as Agent — Equity of Customer Not Barred by Lapse of Less than Pour Years Time.

    1. A hank official who gratuitously engages to find a purchaser for certain stock owned by a customer of the bank, thereby becomes the agent of said customer and can hot thereafter himsélf become the purchaser of said stock without full disclosure of that fact to his principal and the latter’s assent thereto.
    2. Mere lapse of time, short of four years from the discovery by the principal that the agent bought the stock for himself will not bar an action in equity for the restoration of the stock, notwithstanding meanwhile it has greatly increased in value.

      Smith, Taft & Arter and Shirley H. Tolies, for plaintiff,

      ‘White, Johnson $ Cannonf contra.

      Winch, J.; Marvin, J., and Henry, J., concur.
   By this action, which is brought here on appeal, the plaintiff seeks to effect a rescission of the sale, which was made by him to the defendants, May 20, 1908, of 170 shares of stock in the Peerless Motor Car Company. The purchase price of $90 per share, or $15,300 in all, has been tendered back, and the plaintiff prays for the restoration to him of said stock and for an accounting of the dividends meanwhile paid to the defendants thereon. He contends that the defendant, J. J. Sullivan, while acting for the plaintiff, as his.agent to sell said stock, purchased the same for himself and his son Corliss, without disclosing to plaintiff their identity as such purchasers. The defendant, J. J. Sullivan, was president of the bank where plaintiff and his firm, the Telling Brothers, did some, at least, of their banking business, and it is admitted that plaintiff consulted him about the sale of this stock; but Colonel Sullivan now denies that he undertook to act for plaintiff in that behalf. His first answer filed herein is, however, significant as setting forth in detail, on oath and over his own signature, his version of the conversation had between plaintiff and himself. This answer is superseded, as a pleading in the case, by the amended answer subsequently filed on leave obtained. But its admissions are in evidence, and the language used by the parties in their interviews is so carefully and minutely rehearsed, in contradistinction to plaintiff’s version thereof as alleged in his petition, that we can not acquiesce in the suggestion now made, of a misconception by defendants’ counsel as to the words used by his client, and of an oversight by the latter in signing and 'verifying the same when embodied in the answer.

It is worth while to quote the averments of the original answer at length:

"He denies that he had with plaintiff the conversations set forth in said petition, or that he ever, in any way, acted as agent for plaintiff in and about the sale of the stock mentioned in said petition, or any part of it, or as the representative of plaintiff in and about such sale; he denies that he ever advised plaintiff to sell said stock, or any of it, or was, in any way, responsible or the cause of his making said sale,
“He avers that the statements contained in said petition, in manner and form as therein stated, are untrue, and avers that the facts in reation thereto are these:
“About the 5th day of May, 1908, plaintiff told this defendant that he thought of selling his stock in the Peerless Motor Car Company, which he said had cost him- par, and said he thought he ought to get that for it. This defendant replied to plaintiff that he would see what could be done about it. About the 15th day of May, 1908, plaintiff asked defendant if he had heard of -any probable buyer, and defendant told him that he knew of a person who would give him ninety ($90) dollars a share cash. Plaintiff said he did not like to sell it for less than it cost him, but would think about it. About the 20th of May plaintiff informed defendant that he had made up his mind to let his stock go at $90. This defendant asked plaintiff: ‘Why do you want to sell it’? Plaintiff said: ‘Oh, I want to raise a good deal of money at present. ’ Defendant replied: ‘ I would be glad to loan you all you ’want, ’ to which plaintiff answered: ‘ I would rather sell some things I have than go in debt so much. ’
“This defendant did not advise said sale, but instead sought to dissuade plaintiff from making it.
“In the interval between plaintiff’s first speaking to this defendant on the subject, and said 20th day of May, this defendant had made inquiries as to what could be got for the stock, and had not been able to find anyone who would give more than $90 per share, and that offer was made by said defendant, Corliss E. Sullivan, the son of this defendant. Said defendant, Corliss E. Sullivan, was a director in the Peerless Motor Car Company, having nominally fifty shares of stock in his name, which had been loaned to hiin by this defendant to qualify him to act as a member of the board of directors. He authorized this defendant to pay $90 per share for said stock, and this defendant paid plaintiff on said 20th day of May, 1908, at said rate for said one hundred and seventy shares of stock. Thereafter, when said Corliss E. Sullivan settled with this defendant for said purchase, he, for the first time, requested this defendant to keep seventy shares of said stock, as he did not want to borrow the amount he would have to if he paid for the whole stock, and he also repaid this defendant the fifty shares of stock which had been loaned to him by this defendant.
“This defendant denies that said stock was worth more than $90 per share, or that this defendant had any knowledge that said stock was worth more than $90 per share, and avers that $90 per share was as much as could then be got for said stock. The statement made to plaintiff by this defendant, that the best offer that lie liad been able to get of $90 per share, was true. He denies that he made any statement to plaintiff which was false or untrue, or made for the purpose of deceiving plaintiff, or which did deceive plaintiff, or that plaintiff relied upon any statement made by this defendant, of that this defendant was the banker of said the Peerless Motor Car Company, or fully, or at all informed as to the condition of said company, or that the book value of said stock at the time of said transfer was more than $90 per share, or that, at that time,- large profits had been made, or that either of said defendants had any knowledge of the making of large profits by said the Peerless Motor Car Company, or that the book value of said stock was more than $90 per share, or that either of these defendants had any knowledge, either as to the profits made by said the Peerless Motor Car Company, or the book value of said stock, which was not disclosed to plaintiff, or that was not equally as accessible to plaintiff as to these defendants, or either of them.
“Defendant avers that he and said Corliss E. Sullivan dealt with plaintiff at arms’ length, and not in any respect as agents or trustees, or in a confidential relation.
“The probabilities of dividends being declared on said stock were as much within the'knowledge of plaintiff as of this defendant.
“He avers that the transfer of the property of said corporation, and the issuance of stock in payment thereof, was entirely the result of matters and negotiations not known to exist, or existing, at the time of said purchase.”

It will be noticed that in this answer the defendant, J. J. Sullivan, declares that when the sale of the stock was broached, he “replied to plaintiff that he would see what could be done about it.” Again, he says, that he later “made inquiries as to what could be got for the stock and had not been able to find any one who would give more than $90 per share.” Still further he avers, that, “The statement made to plaintiff by this defendant that the best offer that he had been able .to get of $90 per •share, was true.”

With these allegations the original answer, though it perhaps repelled the ascription of actual fraud to the defendant, J. J. Sullivan, clearly fixes upon him both the obligation of a fiduciary, and the breach of such obligation. But apart from the original answer, it is perfectly evident'from. Colonel Sullivan !s own testimony that the plaintiff at least conceived their relation to be one of confidence reposed and accepted.

While it requires no citation of authorities to establish the proposition that the relation of banker and client is not necessarily of a fiduciary character, it is nevertheless evident that the relation may easily assume that character. The circumstances here were such as to make this transition easy. The plaintiff was not only a depositor in, but a borrower from, the defendant’s bank. The stock which he sold was in a company which not only occupied a like relation to the bank, but in which Colonel Sullivan, its president, was a stockholder and represented by his son upon the board of directors, the son having been qualified for that office by the loan to him of some of his father’s stock. Under these circumstances an express form of words would hardly be -necessary to characterize any effort on Mr. Sullivan’s part to comply with the plaintiff’s expressed wish to find a purchaser for his stock, as efforts made on behalf of the plaintiff and as his agent.

Their second interview was begun, according to Colonel Sullivan’s own testimony, with the inquiry by plaintiff: “Have you heard of anyone who would be apt to buy my stock in the Peerless Company?”

“I said, ‘I know a man who will give you $90 a share for it.’ He said ‘Will it be in cash’? I said ‘yes, certainly.’ He then said ‘It cost me par and I would like to get that for it.’ And with that remark he left the bank.
“Q. Is that all that was said on the occasion of this visit? A. That was all that was said on the occasion of this visit.
“Q. Prior to that time had you talked with anybody about buying the Peerless stock other than with Corliss? A. No, sir.
‘ ‘ Q. And you never did try to sell his stock to anybody other than to Corliss ? A. That question is not a correct question; I didn’t try to sell it to Corliss.
“Q. Well, you never told anybody else but Corliss that-Telling was willing to sell his stock? A. I don’t recall now having made a statement about it to anybody else. ’ ’

At page 182 of the transcript of testimony Colonel Sullivan testifies -again concerning this interview with the plaintiff:

“On or about the loth of May he called at the bank, and I am not sure which bank it was in, I think it was -the Central National Bank. I was sitting at my desk .and he said, ‘Have you heard anything about the sto’ck of the Peerless Motor Car Company’? I said ‘I know a man — a person, I believe is what I said — who will give $90 a share for it. Mr. Telling didn’t ask .me who it was. He didn’t ask me my advice as to the propriety of selling, but he said, ‘Will it be in cash’? and I said, ‘Certainly.’ He then said, ‘Well, it cost me par and I would like to get that for it, but I will think it over,’ he said, and he then left the bank.”

Thus it appears by the testimony of Colonel Sullivan himself that the plaintiff did not consider himself to be dealing at arms ’ length, but the contrary.

The relationship was one of trust and confidence, and Colonel Sullivan’s undertaking, though gratuitous and by no means absolute, was that of agency for the sale of plaintiff’s stock.

The obligations arising from such a relationship are fully set forth by Boynton, J., in The United States Rolling Stock Company v. The Atlantic & Great Western Railroad Company, 34 Ohio St., 450, at page 460:

“The rule that an agent or trustee in matters touching his agency, or pertaining to the trust, can not bind the principal or cestui que trust, without his consent, by a contract in which the former is adversely interested, rests upon a very satisfactory foundation, and is supported by a great weight of authority. Wade v. Pettibone, 11 Ohio, 57; Morison v. Thompson, L. R., 9 Q. B., 480; 1 Leading Cases in Eq., 210.
“In Story ' on Agency, Section 210, the rule is said to be founded ‘upon the plain and obvious consideration, that the principal bargains, in the employment, for the exercise of the disinterested skill, diligence, and zeal of the agent for his own exclusive benefit. It is a confidence necessarily reposed in the agent, that he will act with a sole regard to the interest of his principal as far as he lawfully may. ’ And, in 2 Kent’s Com., 618, the same principle is asserted, in the following language: ‘An agent, acting as such, can .not take upon himself, at the same time, an incompatible duty. He can not have an adverse Interest or employment. .He can not be both buyer and seller; for this would expose his fiduciary trust to abuse and fraud.’ In Bennett ex parte, 10 Ves., 393, Lord Eldon, commenting on a sale of the trust property to the trustee, stated the reason of the rule denying the right of the trustee to buy the trust property to be, ‘ that it would not' be safe, with reference to the administration of justice in the general affairs of the trust, that a trustee, should be permitted to purchase; for human infirmity will, in very few instances, permit a man to exert against himself that providence which a vendor ought to exert, in order to sell to the best advantage, and which a purchaser is at liberty to exert for himself, in order to purchase at the lowest price. ’ The rule which prevents the agent or -trustee from acting- for himself in a matter where his interest would conflict with his duty, also prevents him from acting for another whose interest is adverse to that of the principal; and, in rail cases where, without the assent of the principal, the agent has assumed to act in such double capacity, the principal way avoid the. transaction, at his election.
“No question of its fairness or unfairness can be raised. The law holds it constructively fraudulent, and voidable at the elec- ■ tion of the principal.”

It is evident from the foregoing that Colonel Sullivan being, the agent for the plaintiff, his purchase of the stock, if he did purchase it, was constructively fraudulent, and voidable at the' election of the plaintiff.

This brings us to the second question in the case: Did Colonel Sullivan become the purchaser of the stock, or was he merely executing the order of his son Corliss for the purchase thereof? On this point, Colonel Sullivan testifies at page 181, that having talked the matter over with his son at the dinner table in their' home, the latter finally said “that while he would give $90 a share for it, he didn’t think it wrould be a great buy at that, owing to the general uncertainty in which the industrial world was enveloped at that time.”

“Q. Did he say anything about the amount of money and number of shares of stock? A. Yes.
‘1Q. What ? A. He said, ‘ It is a good deal of money to raise in these times; and he said ‘if I get it why I will have to fall back on the bank.’
“Q. Yes, and what else did he say? A. Well, that is about all that I can recall now. ’ ’

At page 184 Colonel Sullivan testifies to his final interview, with the plaintiff, as follows:

“He called at the Superior Savings & Trust Company, oil which company I am president, on the 20th of May, 1908, and the first salutation was, ‘Well, I have made up my mind to let my stock go at $90 a share.’ And I said, ‘Why do you want to-sell it’? He said, ‘I want to raise a good deal of money at this time.’ I said, ‘Very well, I will be glad to loan you all the money you want.’ ITe said, ‘I would rather sell some things I have than to go in debt so much.’ I said, ‘Very well, if you have made up your mind to sell your stock, I will settle for it here and the party can pay me.’ He didn’t ask my advice; he didn’t ask my opinion. We are frequently ashed advice and opinions in matters of that sort, but as a rule,'the general rule in Our bank', each of the banks, we never advise people as 'to the sale or purchase of stocks. Our experience teaches us that there are apt to come up, as the result of such advice, pro and con, eonplications such as this. Hence the rule-is that we do not offer advice.
“Q. What else occurred at that time? A. I said to him.. ‘Have you got the stock with you’? lie.said, ‘I have some of it and I can get the balance very shortly. ' Then I called Mr. Darling, the secretary of the Superior Savings & Trust Company, and I said, ‘Mr. Darling, you settle with Mr. Telling for 170 shares of stock of the Peerless Motor Car Company at $90 a share.’ Mr. Darling was in my room at that time and he then stepped out into his room' which is connected by an open door, and he and Mr. Telling settled for the stock in Mr. Darling’s room. There was somebody waiting for me at that time and he came into my room and took up another subject. Mr. Darling prepared the checks for Mr. Telling in manner and form and in amounts as he desired, brought them to me and I looked them over, put the footing together so as to be sure that they aggregated the right amount, and I signed the checks and Mr. Darling handed them to Mr. Telling.
“Q. Have you now told all that was said between you and Mr. Telling on that occasion? A. Yes.
“Q. Did you at that time communicate to him in any way anything that had been said to you by Corliss? A. No.
“Q. Did you say anything to him about the- value of the stock? A. Not a word.”

Again at page 186, Colonel Sullivan testifies:

“Q. Returning to the 20th of May, 1908, what talk was there between you and Corliss Sullivan that night ? A. I believe the matter first came up — I don’t want the court to infer that we only talk business at my table — but as a matter of fact, we have discussed the incidents of the day quite frequently at the dinner table. I told Corliss that Telling had called at the bank and said that he had made up his mind to let his 170 shares of stock in the Peerless Motor Car Company go at $90 a share.
“Q. Go on. A. Corliss remarked, ‘Well, I will have to depend on you to help me out a little in furnishing the money,’ and I said, ‘ Now that is a good deal of money at this time. ’ lie said, ‘ I know it is. ’ I said, ‘ How much would you want ? ’* Well, ’ he said he ‘wouldn’t know until tomorrow morning, I will figure up and see where I stand.’ And I said to him, ‘I paid for the stock, I gave Mr. Telling my cheeks for the stock so that whenever you are ready you come down to my office and settle for it.’ lie said, ‘All right, I will go .down to the bank in the morning and I will pay you for it. ’
“ Q. Is that all that occurred that night ? A. That was about all that occurred that night. ’ ’

Again at page 188 Colonel Sullivan testifies :

“The next morning Corliss called at the bank about, as near as I can remember, ten o’clock, and he said, ‘I have been figuring over that matter and I am a little afraid that it will involve me in debt too much if I should borrow all the money required to pay for all the stock. I then laughed at him. I said, ‘ I thought you were over-reaching yourself a little,’ and he said, ‘Well, I have made up my mind that I don’t want to go in debt to the extent that I would be required to go in debt to pay for the 170 shares, ’ and he said, ‘ I wish that you would take seventy shares of it off my hands.’
“Q. What did you say? A. I said, ‘I don’t want the stock’; I said, ‘I could have bought it all from Mr. Telling if I wanted any of it, but I didn’t want any of it and don’t want any of it now.’ lie said, ‘Well, of course, if you feel that you don’t want it, I will have to arrange for it, but I would a little rather not take it all.’ So I then said, ‘Very well, if you feel that way about it, and you don’t want it all and you want me to take seventy shares of it, I will do it.’
“Q. Is that all? A. That is about all, except that I turned the stock over to Corliss. Mr. Darling, I believe, held the stock over night in his possession for me. I turned the stock over to Corliss.
‘ ‘ Q. Will you state whether this was the first time that there had been any talk about your taking any of the stock ? A. That was the first time that any talk had been between Corliss and me relative to my taking any portion of the 170 shares of stock which Mr. Telling had sold.”

Corliss testifies on the same subject: “I said I would give $90 a share for this stock.” And again: “I said that $90 a share was what I could give for the 170 shares that Mr. Telling had.”

Detailing the conversation between himself and his father at some length, and in substantial accord with his father’s testimony, Corliss Sullivan adds:

“There was nothing unusual in my father’s speaking to me about money matters and the occurrences of the day. We do it quite frequently. Daily, practically.”

Corliss further testifies:

“The third time I had a talk with father about Telling’s stock was a week or ten days after the second time. Father came home in the evening, and in going over the news of the day mentioned this matter to me; that Telling had been in, and said that he would sell his stock at $90 a share, and I said all right. I said what shape is it ini Did he deliver the certificates, and father said: ‘yes, he left them with me, and I paid him for them.’ I said, ‘all right, I will be down tomorrow morning and fix up the matter with you.’ ”

The next day, “I said to my father, I will have to get $9,300 in order to pay for it and I would much rather not borrow that much money at this time; I would like to have you take about seventy shares of this and I will take the one hundred.” His answer to that was: “Well now, you went ahead and bought this; I thought you were going pretty strong on it, but it is too late now;, and if you will only take the one hundred, I will have to take the seventy. ’ ’

From the foregoing it is apparent first, that although Corliss authorized the statement that he would buy the stock, he gave no express directions to his father either to purchase it for him or to pay for it in his behalf.

Colonel Sullivan advised Telling that he knew of a person who would purchase the stock, and thereafter he received and paid for the same, without further disclosing the purchaser’s identity. This undisclosed person was his own son, a member of his own family, with whom he constantly maintained the closest and most confidential relations. In settling the transaction with his son the following day, he found himself constrained to keep a large part of the stock, which he did accordingly; and for the son’s purchase of the remainder, the father, through the bank, of which he was president, loaned the purchase price to the son. These were not separate transactions; they were all parts of a single transaction. Under the circumstances that existed, Colonel Sullivan not only had no right, without full disclosure of the fact, to purchase the stock, or any part of it himself, but he could not act as plaintiff’s agent-in the sale of the whole or any part thereof to'his son, except with plaintiff’s full knowledge and consent. In fact, he himself became the purchaser when he paid the purchase price, and the division of the stock between himself and his son does not alter the case.

The whole transaction was constructively fraudulent and voidable.

The only question remaining is the defense of laches. The plaintiff discovered the identity of the real purchasers of the stock in August, 1908. Petition was filed in this case on January 18, 1910.

The defendants claim that this lapse of time Is sufficient in an action in equity to bar a recovery, though were the action at law the statute of limitations, four years from the discovery of the fraud, would apply. It is asserted that we have here a stale equity. This defense also assumes the form of a claim of ratification of the transaction by acquiescence therein.

In the Ohio cases on the subject, the doctrine is variously stated as follows:

In Larrowe v. Beam, 10 Ohio, 498, at page 503, Judge Gimke says:

“If the party be guilty of such laches in prosecuting his title as would bar him if his title were solely at law, he shall be barred in equity.”

Read, J., in Gibler v. Trimble, 14 Ohio, 323, at page 343, says:

‘ ‘ Stale equities will not be enforced when a party, having an equity, neglects to enforce it, for a period which would constitute a bar at law, under the statute of limitations— in analogy to the statute — it will also be barred in equity.”

In the ease of Longworth v. Hunt et al, 11 O. S., 194, at page 201, Brinkerhoff, C. J., says:

“In eases of which courts of equity, and courts of law, have concurrent jurisdiction, the’former act in obedience to statutes of limitation, but in cases of which equity has exclusive jurisdiction, they act only in analogy to them. This case is of the latter kind; for, the bar of the statute being complete at law, a court of equity, alone, can give relief. The statute of limitations does not, in terms, apply to this proceeding; and we are, therefore, left to the exercise of a sound legal discretion as to whether or not we will hold a lapse of time correspondent co the time constituting a statutory bar at law, to be a bar to this proceeding.
“An attempt of Benjamin v. Hunt to set up the lapse of time in defense to the claim of Piatt’s heirs in view of the relation which he sustained to them when the survey was made, would be most unconscionable; and, being at liberty to close our ears against it, we are unwilling to listen to it when it comes from those who represent him. ’ ’

In the case of Mack v. Brammer, 28 O. S., 508, at page 516, the court say:

“But it is said the plaintiff’s claim is barred by lapse of time; not that it is barred by the statute of limitations, but that it can not be enforced in equity, for the reason that it has become stale. It is only necessary to say upon this point, that it is questionable if the plaintiff had a distinct knowledge of her rights until near the time the action was brought.”

In the case of Paschall v. Hinderer, 28 Ohio St., 569, the Supreme Court Commission, speaking by Johnson, J., at page 580, say.-

“What constitutes a stale equity is a vexed question hardly susceptible of an accurate definition. Length of time alone is not-a test of staleness.”

The doctrine of laches, merging into ratification, is nowhere more forcibly expressed than in the case of Rolling Stock Co. v. Railroad, supra, wherein Boynton, J., says at page 462:

“Mr. Wharton, in his work on Agency, Section 244, says: ‘So, also, a principal, when fully knowing the facts, can ratify the agent’s action, though tainted with employment by an opposing party. ’
“The doctrine is equally well settled that the option to avoid the contract must be exercised by the principal within a reasonable time after being fully apprised of the circumstances of the agent’s engagement.
“ ‘Where the principal is informed of what has been done, he must dissent, and give notice of it within a reasonable time; and if he does not, his assent and ratification will be presumed.’ 2 Kent’s Com., 616; Paley on Agency, Section 172.
“What constitutes a reasonable time must largely, if not wholly, depend on the circumstances of the particular ease. Where the consequences of delay are or may prove injurious to the other contracting party, especially where large expenditures, to the knowledge of the principal, are being made, on the faith of the validity of the contract, the law requires prompt action on his part, if he would avoid responsibility for the acts of the agent. Iiis right to avoid being one arising in equity is governed by the rules upon which that court administers justice. He must speak when he should, or he will not be permitted to speak when he would. In Smith v. Clay, 3 Bro. C. C., 639 (n), Lord Camden, adverting to the principles which govern a court of equity, where a party has slept upon his rights, said: ‘A court of equity has always refused its aid to stale demands, where a party has slept on his_ right, and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience, good faith, and reasonable diligence. Where these are wanting, the court is passive, and does nothing. Laches and neglect-are always discountenanced.’ ”

A fair summary of the Ohio law on the subject is found in the opinion of a federal judge in another state. Farrington, District Judge, in the case of Bissell v. Knapp, 155 Fed. Rep., 809, says:

“The rules- controlling the application of the doctrine of laches are among the most characteristic in equity jurisprudence. If unreasonable delay in seeking relief is the only element to be considered, courts of equity will usually follow the statute of limitations, if there be one which is applicable. The statute of limitations is an arbitrary rule. The doctrine of laches is flexible. Its application depends upon the circumstances of each case. It will not, save in exceptional cases, be applied unless there are conditions other than mere lapse of time which render the maintenance of the suit inequitable and unjust. Laches is not merely a matter of time. It is a question of equity or inequity, of justice Or injustice. Kelley v. Boettcher, 85 Fed., 55, 62; 29 C. C. A., 14; Williamson v. Monroe (C.C.), 101 Fed., 322, 330. ‘Laches’ says the Supreme Court of the United States in Galliher v. Cadwell, 145 U. S., 368, 373 (12 Sup. Ct., 873, 875, 36 L. Ed., 738), ‘is not, like limitation, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced — an inequity founded upon some change in the condition or relations of the property or the parties.’
‘ ‘ The questions which must be asked and answered in deciding each case are: Has the delay been unreasonable? If so, have the conditions or the relations of the property, or of the parties, so changed that it would be inequitable and unjust to permit the plaintiff to enforce his claim? If, during the long delay, important testimony has been lost or destroyed, and the memory of the original transaction becomes hazy and indistinct, a court of equity may refuse to grant relief because of its inability to do certain and complete justice. Speidell v. Henrici (C. C.) 15 Fed., 753, 756; Selden’s Ex’r v. Kennedy, 32 S. E., 635; 104 Va., 826, 4 L. R. A. (N.S.), 944. If during the delay, the property in dispute has passed into the hands of innocent purchasers, or the defendant has been lulled into doing something which he would not have done, except he had been led to believe that the claim was abandoned, the rule of laches may be applied. Tazewell’s Ex’r v. Saunders, 13 Grat. (Va.), 354, 362.
“If the defendant has risked large sums of money developing the property, as a result of which it has greatly increased in value, and the plaintiff has suffered this to be done, intending if the venture proved profitable to assert his claim, but, if unprofitable, to allow the defendant to pay all the losses, then in such a case the court Will be justified in saying to the plaintiff: 'You have been guilty of laches, your delay was not without a motive, and that motive was not good. You were silent while the defendant was risking his money and his labor, but now, when there are no chances to take, you are Willing to come in and share the profits.’ The dominant idea in cases where the doctrine or laches has been applied is that the" delay has been productive of changes which render it unjust and unfair to prosecute the suit. If the delay has not prejudiced the defendant, there is no laches. Pacific R. R. Co. v. Atlantic & P. R. Co. (C.C.), 20 Fed., 277; Bartlett v. Ambrose, 78 Fed., 839, 24 C.C.A., 397; Williamson v. Monroe (C.C.), 101 Fed., 322, 329; London & San Franciso Bank V. Dexter Horton & Co., 126 Fed., 593. 601 (61 C. C. A., 515); Galliner v. Cadwell, 145 U. S., 368. 373 (12 Sup. Ct., 873, 36 L. Ed., 738); Cahill v. Superior Ct., 78 Pac., 467, 469 (145 Cal., 42); Cook v. Ceas, 82 Pac., 370 (147 Cal., 614); Hawley v. Von Lanken (Neb.), 106 N. W., 456; Daggers v. Van Dyck, 37 N. J. Eq., 130; Rozell v. Chicago Mill & Lumber Co., 89 S. W., 469 (76 Ark., 525); Demuth v. Bank, 37 Atl., 266 (85 Md., 326; 60 Am. St. Rep., 322).”

If the application of the doctrine of laches depends upon the circumstances of each ease, the inquiry arises: What are the circumstances of this ease?

The transaction here in question occurred May 20, 1908. The stock continued to rise in value thereafter. Rumors of this came to Telling. In the neighborhood of a couple of months afterward Telling met Sullivan in the middle of the floor as he was walking in the bank and said: “Colonel, haven’t 1 made an awful mistake in letting this Peerless stock go?” He said, “Yes,” and walked away without telling who the real purchaser of the stock was.

Kittredge, president of the Peerless Company, testifies that in August Telling came to his office and they discussed matters. Telling said “Who got my stock? ’’ Kittridge replied: 1 ‘ Colonel Sullivan got some of it.” Telling said, “The hell you say?” “We then drifted into lighter vein.”

The lighter vein was to the effect that Telling said: “Of course I would like the Peerless stock, and probably made a mistake in selling it, but I am satisfied.”.

Cameron, assistant cashier of the Central 'National Bank, testifies to a conversation with Telling several months after the transaction (probably in August) in which Telling said he had made a hell of a mistake selling that Peerless stock and added:

“Of course I can’t blame anybody but myself, and I took the money I got out of that and did very well with'it in other matters, and while I had better have disposed of something else than that, as they are doing a very fine business out there — he thought it was a great mistake.”

Telling admits the profane remarks attributed to him by Kittredge and Cameron but denies that he said to either of them that he was satisfied and his expletives quoted lead us to the conclusion that he was not satisfied.

Telling further testifies:

“Anyway I knew that Colonel Sullivan had this stock in the summer of 1908. I knew it when I saw Kittredge for the first time, positively. That was in the summer of 1908. (We knew from Kittredge that it was in August.) That was the first time I heard it positively; I had heard rumors before. I wanted to be sure, so I went to Mr. Kittredge and asked it. Mr. Siddell asked me why-I had not come to see him before I sold him; that he would have told me what it was worth. I did not go to see Colonel Sullivan after the sale of the stock because I thought he was too slick for xne; I always patted him as he patted me, with a glad hand! I knew I would have to bring suit some day, when my 'attorney from New York got back, but he is there yet. ”

His attorney was B. B. Avery, who went to New York on traction matters and remained there. After waiting for his return, he finally sought another lawyer, but not until the middle of September of the next year, when he retained Judge F. L. Taft to look after his interests. It is questionable whether" the plaintiff had a distinct knowledge of his rights until he consulted Judge Taft. Judge Taft appears to have used due diligence in investigating the facts and took the matter up with Colonel Sullivan, writing him a letter October 18, 1909. The latter put him off until the day after election in November, when Taft made a formal tender of the amount paid by Mr. Sullivan to Mr. Telling with interest down to that time.

Judge Taft then heard from Mr. Cannon, attorney for Mr. Sullivan, and gave to him a petition he had prepared, “in order that he might file an answer at the same time the petition was filed.” This was at Mr. Cannon’s request.

“Later the South Cleveland Bank failed and Mr. Cannon telephoned to me, ’ ’ says Judge Taft, ‘ ‘ and requested that he might delay filing the petition. Shortly before the South Cleveland Bank failed, the Werner Company had gone into the hands of the Superior Savings & Trust Company, as receiver, and Mr. Cannon suggested that it was -not a good thing to be filing suits against bankers, and would I let the matter stand "a few days. It did stand then until I called Mr. Cannon up and urged him to file the petition, or else I would have to get another copy and file it myself, as considerable delay had taken place. And finally the petition was filed at the time indicated, in January. ”

The petition was verified December 17, 1909, and filed January 18, 1910.

It thus appears, that Telling did nothing but await the return of Avery," from August, 1908, to.September 1909, thirteen "months.

The testimony discloses that the stock commenced going rip in August, 1908, and after the election of that year it went up enormously, the full effects of the increased business not being ascertained until December, 1908. Before September, 1909, the value of the stock was doubled and large dividends were paid.

It seems apparent from the record that Telling kept track of the value of the stock from and after his talk with Kittredge in August, 1908.

There has been no change in the position of the defendants. They still retain the stock in question and the defendant, J. J. Sullivan, in now a stockholder in the Peerless Motor Car Company to the extent of more than the number of shares in controversy. The only change has been in the value of the stock. The defendants have not incurred any expense, but hav-e received large dividends.

It thus appears that the mere lapse of time is the only thing upon which the defendants rely as establishing their defense of laches. Counsel points out a single inequity resulting therefrom —that the delay enabled the plaintiff to speculate upon the transaction. 'It is said that plaintiff would not have brought this action if the stock had not gone up. That may be conceded. All suits are brought because the plaintiff anticipates some advantage therefrom.

But is it not inequitable to allow the defendant to realize this large profit from a transaction which the law says was at least constructively fraudulent? Good morals would not interpose this defense,, but would suggest that at the time the transaction occurred, the defendant- might himself have limited any delay and obviated any speculation by candidly stating who the purchasers were and calling upon the plaintiff to ratify or rescind the sale within what he considered a reasonable time. He had the opportunity to do so, but passed it by. He should not now be heard to claim that thirteen months was too long a time for the defendant to take to make up his mind.

Longer time was not held to create a stale equity in the following eases: Pacific R. R. v. Atlantic & P. R. R. Co., 20 Fed., 277; Bogan v. Mortgage Co., 63 Fed., 192; Ide v. Carpet Co., 115 Fed., 137; Brun v, Mann, 151 Fed., 145,

It is doubtless true, however, that where mere lapse of time has been relied upon, the statute of limitations alone has been raised and the defense of stale equity has not even been suggested. Hence, while many eases have been cited where other circumstances than mere lapse of time have led to the court’s applying the doctrine of laches, few are found where this defense has been denied. See the case of Moore v. Central National Bank, decided by this court a year ago — a case very similar to this, yet the defense of laches was not raised. The statute of limitations alone was relied upon.

It has been well said that “the profitableness of a fraudulent transaction can- never be its justification, and it can never shorten the arm of the court.”.

The parties in this action are in almost exactly the same situation they were in at the time the wrong complained of was committed, and relief can be given the plaintiff, without doing any injustice whatever to the defendant.

We find that the defendant-, J. J. Sullivan, is in a position to turn over to the plaintiff, 170 shares' of stock in the Peerless Motor Car Company and receive therefor all the money he parted with, with interest to date, and such is the order of the court.

This conclusion addresses itself to the sound discretion of the court in the premises and conforms not alone to good morals, but to the equities of the ease. Indeed, the two should be, and usually are, synonymous.

Judgment' for the plaintiff. Of course there must be an accounting of the dividends. Certain rulings on evidence have been requested which will be indicated on the bill of exceptions.


text:
    BUILDING INJURED BY EXPLOSIONiOF DYNAMITE.
    Circuit Court of Hamilton County.
    Catherine Morrissey v. City of Cincinnati.
    Decided, March, 1911.

      Negligence — Doctrine of Respondeat Superior as Applied to a, City Contractor — Use of Dynamite in City Streets — Liability of the Municipality for Injury to Surrounding Buildings.

    1. Under a contract for city work, where the specifications provide that “the work is to be commenced at such time after date of contract as the board of public service may order and carried on in such places and in such manner as the engineer or inspector shall direct,” the relation between the parties is not independent and the rule of respondeat superior applies.
    2. In an action for damages on account of injury to a building from the explosion of dynamite in the street, the question of negligence in •the amount of dynamite used and the effects of its explosion upon surrounding buildi'ngs, and particularly that of the plaintiff, should be submitted to the jury.

      Rogers Wright, Nathaniel' Wright and John E. Fitzpatrick, for plaintiff in error.

      Constant Southworth, Assistant City Solicitor, contra.
    Jones, J.; Smith, P. J., and Swing, J., concur.
   The plaintiff in error, Catherine Morrissey, filed her petition in the court of common pleas against the city of Cincinnati and John E. Mahoney.

She asks for damages against the defendants, alleging that while they were engaged in constructing a sewer in Kineon (now Bowman) avenue in said city, they “negligently and without the observance of proper care and caution exploded a large and excessive amount of dynamite, and that by reason of said explosion the foundations and walls of said plaintiff’s house were shattered, the house walls were cracked, ’ ’ etc.

A demurrer was filed by Mahoney, which was afterward sustained without objection from plaintiff, and the case proceeded to trial against the city only. At the close of plaintiff’s evidence, and upon motion of defendant the court directed the jury to return a verdict in favor of defendant. Later a judgment was entered upon said verdict, and it is to reverse this judgment that error is prosecuted in this court.

It appears that the ground upon which the court below granted the motion for a verdict was that the work was being done by an independent contractor (Mahoney) for whose acts the city was not liable. The contract between the city and Ma-honey is in writing, and is a part of the bill of excepions herein.

Where the entire contract is in writing, and the question of “independent contractor” is raised, it is doubtless within the province of the court to determine the relations of the contracting parties with respect to that question before submitting the ease to the jury, as was done in this case.

The plaintiff in error contends that the lower court erred in holding that Mahoney was an independent contractor; and further, claims that the judgment below must be affirmed because there was no negligence shown by the evidence.

This leads us to a consideration of the two questions presented by the petition in error, and the able and exhaustive briefs of counsel in this case:

First. Was Mahoney an independent contractor?

Second. If not, is there any evidence, as shown by the bill of exceptions, tending to prove negligence on the part of Ma-. honey or his employes?

As has been said, the first question depends upon the written contract between the city and the contractor, and it must be determined from the language of that instrument whether or not Mahoney was an “independent contractor,” as that term has been defined by the courts of this and other states.

From a careful examination of the authorities cited, there appears to be little or no conflict as to the proper tests and principles to be applied and followed in determining whether- the relation created by a given contract is an independent one or that of master. and- servant. .

I The American & Eng. .Encyclop.dia, Yol.-.16, page 187. (-2d Ed.),, says:; ■ . -.. ..'

“The chief consideration which determines one to be an independent contractor, is the fact that the employer has no right of control as to the mode of doing the work contracted for, * * *. If the employer has the right of control, it is immaterial whether he actually exercises it.”

It is true that contracts have in numerous instances been held to be independent where the right of inspection and supervision by engineers and inspectors is frequently reserved throughout the instrument, but in all of such cases the courts hold that from a reading of the whole contract it is apparent that the only purpose of such supervision is to bring about a satisfactory result, rather than to control the means used to bring about that result.

Section 51 of the general specifications, which are made a part of the contract in the case under consideration, is as follows:

“The work is to be commenced at such time after date of contract as the board of public service may order, and carried on in such places and in such manner as the engineer or inspector shall direct.”

The excavation for the sewer was part of the work contracted for, and we think it clear that, under the provision just quoted, the city engineer or inspector had the right to control the manner of making the excavation, and to determine whether same should be by pick and shovel, blasting, steam shovel or otherwise, such .right to be exercised reasonably and with a proper regard for the welfare of persons and property likely to be affected as well as for the advantage of the contractor in the adoption of such method or manner as would cheapen and facilitate the execution of the contract.

It seems to us that the contract secures such right to the city without ambiguity. If any aids to construction were necessary, we think all the circumstances — the character of the ground, depth of excavation, power and duty of the city with reference to streets, contiguous buildings — all make such reservation on the part of the city appear reasonable and necessary.

In the ease of Cincinnati v. Stone, 5 O. S., 38, the court in its syllabus says:

“Where the employer retains the control and direction over the mode and manner of doing the work, -¡and an injury results, from the negligence or misconduct of the contractor, or his servant or agent, the employer is placed under a liability equal and similar to that which exists in the ordinary case of principal and agent.”

The language upon which the city was held liable in the Stone case was as follows:

“The work to be done under the direction of the civil engineer, who shall have entire control over the manner of doing and shaping all or any part of the same, and whose directions must be strictly obeyed.”

It might be claimed that this is a greater control than given the employer in the case under consideration, but we are of the opinion that the contract in the present case gives the city the same right as was given the same city in the Stone case, and that the two clauses must be construed to mean the same.

In the ease of Hughes v. Railway Co., 39 O. S., 461, where it was sought to hold the railway company for the negligent acts of an employe, the Supreme Court affirmed the lower courts in holding the relation to be one of independent contractor, for the reason as stated in the opinion, that the company retained no control over the mode and manner of doing the work. In that opinion the court incorporates a copy of the contract, and no such right of control over the manner of doing the work, as is found in the case at bar, is reserved.

We are of -the opinion that the relation between the parties to. the contract in this ease w;as not an independent one and that the rule of respondeat superior applies.

With reference to the second proposition we think there was evidence of negligence sufficient to warrant a consideration by the jury. Before trial the plaintiff amended her original petition reaffirming the allegations thereof, and adding the allegation that: ' ‘ The use of dynamite for making the excavation in said street was negligence on the part of the defendant.”

This court has since held that the use of dynamite for blasting is not negligence per se, which decision was affirmed by the Supreme Court, without report. Armstrong v. Cincinnati, 12 C.C. (N.S.), 76; affirmed, 82 O. S., 454.

Accordingly, the plaintiff added nothing to her case by the amendment. Neither did she snbstract anything, and the allegation of negligence in the petition, as quoted above, remained. The defendant was charged with negligently using an excessive amount óf dynamite, which, fairly construed, must be taken to mean that there was negligence on the part of the defendant in the quantity of the explosive used.

Other' things being equal the jar or concussion produced by dynamite is in exact proportion to the amount of dynamite used.

Negligence is the want of care. It is the violation of a duty which one owes to so conduct himself and his business as not to injure others in person or property. In other words, it is a want of such a degree of care as a person of ordinary prudence and foresight would exercise under like circumstances.

The use of a given quantity of dynamite, for instance, in the open country, clearing land of trees and stumps, might be proper and harmless, while the use of the same quantity in a populous city for blasting would be grossly negligent or even criminal.

The evidence in this case showed the use of one and a half or two sticks of dynamite; showed where, and for what purpose it was used. Also, showed the effect of the discharge upon adjacent houses, especially that of plaintiff.

We find nothing in the Armstrong case or other eases on the same point cited by counsel for defendant in error which will excuse the use of dynamite in such quantity as will do substantial injury to adjacent owners where such injury could have been foreseen as the natural result of such act.

The position taken by the city in presenting this phase of the case seems to be that under the rule laid down in the Armstrong case, holding that the use of dynamite is not negligence per se, the user of such explosive is only required to use care with reference to preparations for the explosion without .any reference to quantity used or consequential injury to others.

That ease does not so decide, and the proposition needs but to be stated to show the dangers and absurdities to which it would lead.

The language of the court in Cherryvale v. Studyvin, 76 Kan., 285, is in point:

“Negligence will not be presumed from the jarring of the earth or the concussion of the air, but the burden is upon the claimant to make it appear that the explosion was unnecessarily violent and carelessly prepared for, having regard to the place, and the surroundings.”

In this ease, plaintiff’s evidence shows the amount of dynamite used, the place and surroundings, the damage to. plaintiff’s-property, -and the question of negligence is one of fact, to be determined by the jury.

The judgment of the court of common pleas will be reversed.