author: Richards, J.

text:
    FOR RECOVERY OF EXCESSIVE RATES CHARGED FOR SHIPMENTS OF COAL.
    Court of Appeals for Lucas County.
    Big 4 Coal Co. v. Hocking Valleb Ry.
    Decided, February 3, 1919.

      Railways — Action to Vacate Order of Utilities Commission — Results Only in Suspending Order Pending Litigation — Remedy of Shipper for Excessive Charges Not Limited to Action on the Bond.

    1. Sections 614-69 and 614-70 G. C., as amended 102 O. L., 571, were enacted for the .protection of shippers and to prevent illegal exact-ions of freight rates and other charges, and the giving of the undertaking provided for in the latter section does not vacate or nullify the order of the Public Utilities Commission, .but merely suspends the enforcement of the same during the pendency of the litigation.
    2. The remedy of a shipper who has been required to pay illegal freight rates is not limited to an action on the bond given under 102 O. L., 571, but the shipper may recover in an action for that purpose all •amounts paid in excess of the amounts authorized to be collected, and is not limited in such action to the penalty named in the bond.

      Silas T. Hurin and Thad S. Powell, for plaintiff! in error.

      Wilson & Rector and Brown, Geddes, Schmettau & Williams, for defendant in error.
   Richards, J.

Heard on error.

The original action out of wbicb this proceeding in error grows was brought in the court of common pleas by the Big 4 Coal Co. to recover .claimed excessive and unlawful rates and overpayments exacted of it in the shipment of coal from Nelson-ville, Ohio, to Toledo, on the defendant’s line of railroad. The petition was met by a general demurrer, which the court, on consideration, sustained, and the plaintiff not desiring to plead further final judgment -was rendered, dismissing the petition.

It appeal's from the allegations of the petition that the plaintiff is engaged in the business of buying and selling coal in Toledo, and that on June 27, 1911, the Railroad Commission of Ohio by an order effective July 27, 1911, reduced the freight upon coal shipped in carload lots from Nelsonville to Toledo, on defendant’s line, from $1.00 per ton to $.85 per ton, and fixed and established $.85 per ton as a legal and reasonable rate on shipments between said points. It is further alleged that the defendant [railroad company thereafter commenced proceedings in the Court of Common Pleas of Franklin county, against the Public Service Commission, the successor of the railroad commission, for the purpose of securing the vacation and suspension of said order so made by the commission, and that the court in which the action was pending stayed the order of the commission, upon the execution of a bond, but that on the final hearing of the case the court approved the order of the commission and dissolved the injunction. The case was carried, by proper proceedings, to> the court of appeals, where a like decree was rendered, and thereupon the case was carried to the supreme court of Ohio where the judgment of the court of appeals was affirmed.

The petition avers that during all the time that the order was stayed by said courts the defendant company continued to charge, and the plaintiff was required to pay, and did pay, $1.00 per ton freight on all coal shipped to plaintiff over the defendant’s line. The petition avers that the decision of the Supreme Court, finally approving the finding' and order of the commission fixing the rate at $.85 per ton, was rendered on July 2, 1915, and that the defendant company on the 27th day of that month filed its tariff effective July 28, 1915, making said rate from Nelsonville to Toledo $.85 per ton. It is averred that between July 27, 1911, and July 28, 1915, the plaintiff received at Toledo, 1,180 carloads of commercial coal, shipped over the defendant’s line from Nelsonville, containing 49,908.7 tons, for all of which the plaintiff was illegally charged and required to pay, and did pay, at the rate of $1.00 per ton as freight, whereas the defendant company was entitled to charge and receive for such shipments $.85 per ton and no more.

It is insisted that the demurrer was properly sustained and the petition dismissed because the commencement of the action by The Hocking Yalley Railway Company in the court of common pleas of Franklin county, to vacate and set aside the order of the Railroad Commission, did, in fact and in law, vacate the order of said commission, and that therefore the only lawful, existing rate during the time embraced in the petition was $1.00 per ton-, and that, in any event, the plaintiff could only recover by an action upon the 'bond which was given in the common pleas court of Franklin county and that if such recovery could be had in that manner the maximum amount of the recovery would be the penalty named in the bond. „

The court of common pleas adopted the view that the order of the railroad commission, establishing the $.85 rate, was vacated in the court of common pleas of Franklin county, and that the rate of $1.00 per ton was therefore the only legal rate, and for this reason sustained the demurrer and dismissed the petition.

A solution of the question depends upon a construction of Sec. 614-69, G. C., and Sec. 614-70, G. C., as amended in 102 O. L., 571. The action authorized by these sections is one to vacate and set aside an order of the commission. That is the ultimate relief sought by the plaintiff in such action, and the latter section cited authorizes the court to suspend the operation of the order, pending the litigation. One clause in the latter section provides that the commencement of such action to vacate and set aside the order “shall vacate and suspend the order of the commission” upon the giving of an undertaking in an amount to be determined by the court. The word “vacate” was not well chosen to express the evident legislative intent of the statute and as used in this section it can only be construed to mean the same as the word “suspend.” A reading of the entire act malíes it clearly manifest that the legislative purpose was to suspend the enforcement of the rates fixed by the commission until the termination of the litigation, and, if the result of the litigation should .establish the reasonableness of the rates fixed by the commission, then the amounts collected above the rates so fixed would be excessive. The same section provides that the condition of the undertaking to be given by the plaintiff in that litigation shall be that the railroad company shall refund to each of the users the amount collected 'by it in excess of the amount which shall finally be determined it is authorized to collect from such users. If the order of the Railroad Commission, fixing the $.85 rate, were to be vacated by the commencement of the action, there would be Tittle use for the execution of an undertaking, the condition of which was as above stated. "We construe this statute as one which merely suspends temporarily, and during the pendency of the action, the enforcement of the order of the Railroad Commission. If, as a final result of the litigation, the rates as fixed by the commission are sustained by the court, then those rates have been, during the litigation, the only lawful rates, but their enforcement prevented by order of court during the pendency of the action. In such event it would follow that an exaction above the $.85 rate per ton, fixed by the commission, would be unlawful, and as said in the Taylor-Williams Coal Co. v. Public Utilities Commission, 97 Ohio St., 224.

“The remedy of the shipper is by ■action in a court of competent jurisdiction against the company on its liability to refund the excess charged above the amount finally determined that it was authorized to collect.”

The case just cited involved a construction of the identical order made in the case now under consideration, and-in that case the court, speaking through Johnson, J., refers frequently to the order of the commission as being “suspended” during the pendency of the litigation, and nowhere is it referred to therein as “vacated.” It was held in that case that the charge made during the pendency of the litigation was not a proper subject for a complaint to the Public Utilities Commission for overcharge, but that the railroad company incurred a liability to refund and the remedy would be by an action at law to recover the amount.

This action is not brought on the bond given in the court of common pleas of Franklin county, but is one to recover the amounts claimed to have been unlawfully exacted. Counsel for defendant urge that no action will lie except one upon the bond given in that litigation. It is said, in argument, that the bond there given was for $25,000, and that the excessive amounts collected from various shippers, during that litigation, amount to $300,000. We are not persuaded that the only remedy allowed is an action upon the bond. The bond is given as a protection to the shipper and not as a limitation upon his right to recover. Long before the establishment of a railroad commission a remedy existed for overcharges made by common carriers, and it appears to this court that the remedy by action on the bond is only an additional or cumulative remedy. By staying the enforcement of the lawful rate fixed by the railroad commission, the plaintiff in that action incurred a liability to refund the amount collected by it in excess of the amount which it was authorized to collect. The bond which was there given was a mere incident of the liability to refund, a mere security for the repayment in so far as it might secure the same. In its final analysis the situation is not materially different from a case where a landlord and tenant are in controversy over the amount of monthly rental to be paid by the terms of their agreement, the landlord contending it is $100 per month and the tenant that it is $85 per month. Litigation arises to determine the rate agreed on, and while that litigation is pending the higher rate of $100 per month is ne-""-sarily paid. The litigation finally results in an adjudication that $85 per month was the lawful rent, but, in the meantime, '.he higher rate has been paid during the pendency of the litigation. We suppose there can be no doubt but that the tenant would be entitled to recover the excessive rent paid by him and that he may recover the amount so paid independent of any bond that may have been given to secure the same. New York v. Brown. 179 N. Y., 303.

Numerous cases have been determined by the courts, growing out of the collection by common carriers of amounts in excess of the rate fixed by various public commissions, and, while the statutes are, of course, not precisely the same, their general tenor is not dissimilar. The case of Fletcher Paper Co. v. Detroit & M. Ry., 198 Mich., 469 (164 N. W., 528), is a very instructive one on the issues in the case at bar. That ease, under the title of Detroit & M. Ry. v. Fletcher Paper Co., 248 U. S., 30, was affirmed on November 18, 1918, by the Supreme Court of the United States. It appears from that case that the rates fixed by the commission were to become effective twenty days after service on the railroad company, while the Ohio statute, Sec. 535, G. C., provides that such an order shall, of its own force, take effect and become operative thirty days after service thereof. In the Michigan case, as in the case at bar, the operation of the rates was suspended by litigation, brought to set aside the order of the commission on the ground that those rates were unlawful and unreasonable. The Supreme Court of Michigan allowed a recovery for the sums illegally exacted, putting aside the question whether the statute provided a method of recovering such payments, and asserting that no reason appeared for denying to the plaintiffs the right to recover in an action of assumpsit all of the money illegally taken from them, and that it was immaterial whether they declared upon the statute or upon the common counts.

Other eases, containing analogous statutes and justifying a recovery for excessive charges, are the following): State v. Chicago & Alton Ry., 265 Mo., 646 (178 S. W., 129; 1916C L. R. A., 309); White v. Delano, 270 Mo., 16, and Love v. North American Co., 229 Fed., 103.

We are forced, on a consideration of the statutes and the decisions, to the conclusion that the petition states a good cause of action and that the demurrer thereto should have been overruled.

The statute was passed for the protection of shippers and to prevent their being required to pay unjust charges. It provides for the temporary suspension of the enforcement of the rate fixed by the commission, pending the litigation, and does not justify holding that the mere commencement of an action vacates and nullifies the schedule of rates fixed by the commission. If the rates, as established by the commission, are litigated, and ultimately sustained, and during the pendency of the litigation the railroad company collects a higher rate than that established by the commission, such company is liable to refund the excess collected above the rate established by the commission. To adopt any other construction would enable the shipper to say, and say justly, of the law and the courts, that they “keep the word of promise to our ear and break it to our hope.”

Judgment will be reversed and the cause remanded with directions to overrule the demurrer to the petition and for further proceedings.

Judgment reversed, and cause remanded.

Chittenden and Ejnkade, JJ., concur.

      Motion to require the Court of Appeals ito certify its record in this ease overruled by the Supreme Court,. March 25, 1919.


source: Caselaw Access Project

author: Kunkle, J.

license: Public Domain

text:
    VALIDITY OF ORDINANCE RELATING TO STREET OBSTRUCTIONS.
    Court of Appeals for Greene County.
    The City of Xenia v. H. E. Schmidt.

    Decided, November 26, 1919.

      Municipal Corporations — Ordinance Relating to Obstructions in Streets Discriminatory, When.

    An ordinance of a city which makes it unlawful to deposit certain temporary obstructions such as boxes, barrels, merchandise, etc., upon any street or sidewalk of said city but which excepts from its operation certain permanent obstructions such as steps, bay windows, columns, etc., is discriminatory and illegal.

      J. A. Finney and M. J. Hartley, for plaintiff in error.

      M. A. Broadsione, McGrew & Laybourne, Marcus Shoup and F. L. Johnson, for defendant in error.

      Motion to require the Court of Appeals of Greene County to certify its record in this case overruled by the Supreme Court, March 2, 1920.

   Kunkle, J.

Heard on error.

Defendant in error was charged, tried and convicted of violating an ordinance of the city of Xenia, Ohio, by placing certain temporary obstructions on the sidewalk in front of his place of business. The ordinance in question makes it unlawful to deposit upon any street, alley, sidewalk, etc., “any wood, coal, box, barrel, crate, cask, keg, casting, lumber, goods, wares, furniture merchandise or any other material or obstruction whatsoever unless for such reasonable time as may be actually necessary for receiving or discharging the same from store budding or other place, etc.”

The Court of Common Pleas reversed the judgment of the lower court upon the ground that the' ordinance in question was not of uniform operation but excepted from its provisions certain permanent obstructions such as permanent steps or approaches to buildings already abutting on any street and any balcony, bay window or column of any building already abutting on any street

This is an interesting and important case and we have carefully considered the authorities cited but will not attempt to review .the samo in detail. We will merely announce the conclusion at which we have arrived after an examination of such authorities.

From such examination we are dearly of opinion that an ordinance of a city cannot be upheld which is not of uniform operation or which discriminates between persons in substantially the same circumstances.

The exemptions from the provisions of the ordinance in question consist of permanent obstructions, while the ordinance attempts by its provisions to make it unlawful to deposit temporary obstructions.

"W'e are unable to see any good reason for prohibiting temporary obstructions and at the same time legalizing many obstructions of a permanent nature.

Counsel for plaintiff in error insist that the exceptions contained in the ordinance were intended to cover the permanent obstructions which had existed for such a length of time as to have acquired a lawful right in the sidewalks. It must be observed, however, that by the terms of the exceptions in the ordinance, no limitation is placed upon such permanent obstructions as have existed for twenty-one years or more. The exemptions from the provisions of the ordinance include permanent obstructions of the classes mentioned without any reference to the length of time such obstructions may have existed upon the sidewalks in the streets of Xenia.

We are in thorough accord with the sentiment expressed by the city solicitor that a city can be beautified to a great extent by clearing its sidewalks of obstructions and are prepared to assist the solicitor in this respect to the extent which we may be authorized by law, but as above stated, from an examination of the authorities we are of opinion that the same must be aceomplished by ordinances which are of uniform operation and which contain no unreasonable discriminations.

The written decision of Judge Clevenger of the Court of Common Pleas has been submitted to us. "We have read the same and in the main are in harmony with the reasoning contained therein insofar as the same applies to the case at bar.

Finding no error in the record which we consider prejudicial to plaintiff in error, the judgment of the lower court will be affirmed.

Allread and Fernding, JJ. concur.


author: Vickery, J.

text:
    CORPORATE CONTRACTS IN WHICH DIRECTORS HAVE A PERSONAL INTEREST.
    Court of Appeals for Summit County.
    Kirn et al v. Kraus Plumbing & Heating Co. et al.

    Decided, October 6, 1919.

      Corporations — Validity of Contracts Executed by Directors having a Personal Interest Therein — Increase by Directors of their Own Salaries as Officers.

    1. In the absence of statutory provisions prohibiting the directors of a corporation from voting upon or executing contracts in which they are personally interested, such contracts are not void unless they constitute a breach of the faith reposed in the directors by the stockholders.
    2. Where the by-laws of a corporation confer authority upon the directors to fix the salaries of the officers of such corporation, the action of the directors in voting to increase their own salaries as officers is not void, in the absence ,of a showing of fraud or unfair dealing toward the stockholders of the corporation.

      W. E. Pardee and F. E. Whittemore, for plaintiffs.

      Mather & Nesbitt, for defendants.

      Motion to require the Court of Appeals to certify its record in this ease overruled by the Supreme Court, December 22, 1919.

   Vickery, J.

Heard on appeal.

This action comes into this court on appeal from the court of common pleas of Summit county, and was heard below and here practically upon an agreed statement of facts, although an examination of the pleadings will disclose that all the facts admitted in the agreed statement of facts, or proved by the evidence, were set forth in the petition and admitted in the answer, so the question resolves itself practically into a question of law.

The action was brought by Walter F. Kirn and John IT. Shuman, as plaintiffs, against The Kraus Plumbing & Heating Company, Elmer D. Ruch, John Y. Kraus and Fred W. Koch, to enjoin the corporation, The Kraus Plumbing & Heating Company, from paying, and the other defendants from receiving, certain amounts of money w'hich had been voted to them as officers and employees of the said Kraus Plumbing & Heating Co.

It seems that the Kraus Plumbing & Heating Company is a corporation incorporated under the laws of the state of Ohio, with a capital stock of 250 shares, the par value of which is not disclosed in the record, but 'being presumably $100 per share, of which stock the plaintiffs own 90 shares, the rest being owned by the defendants, the principal stockholder being John Y. Kraus, who holds something like 140 shares, the rest being divided among the other three defendants.

It appears from the record that the two plaintiffs, together with the three defendants, constituted the board of directors of the Kraus company, and that on or about the 7th day of April, 1917, at a regular meeting of the board of directors of the Kraus company, the defendants were elected, respectively, Ruch, as president; Koch, as vice president, and John Y. Kraus, as general manager, and their salaries fixed as follows:

President Ruch, $70 per week.
Yice president Koch, $70 per week.
General Manager John Y. Kraus, $200 per week.

It also appears from tbe record, and is admitted in tbe pleadings, that the resolution providing for the salaries of the 'three officers herein referred to, together with salaries for other employees, was contained in a blanket resolution, that the resolution was introduced by one of the three defendants, that the resolution was carried by the votes of the three defendants, and that the two plaintiffs voted against said resolution; and upon the fact that the three defendants, who were interested parties, voted for their own salaries is based the contention of the plaintiffs, upon which they ask for an injunction, claiming that such contract, so-called, thus made, was absolutely void, and the suit is predicated upon that fact alone, for there is no allegation in the petition that these salaries thus1 fixed were unfair or unreasonable, nor that the business would not warrant such salaries, but it is simply urged that the parties interested, having no right to vote for their own salaries, the whole transaction is void and would warrant the intervention of a court of equity to prevent the payment of the money.

We have examined the cases cited in the briefs with much care, for apparently this exact question is a new question in Ohio and has never been directly decided. An abundance of authority is quoted outside of Ohio, some of which is based on statute and some not, which would seem to hold that such actions of boards of directors in making’ contracts in which the members of the board were directly interested were void, but we do not think that to be the rule in Ohio. .There is no statute in Ohio against boards of directors, or members of boards of directors, voting upon contracts in which they are personally interested, but it all resolves itself down to the question of good faith, and whether or not the stockholders of the corporation have been treated fairly or unfairly, and, as there is no allegation in the petition that these were unfair contracts, the question is made much easier;

Perhaps if the record would show that the contracts were unfair contracts and that the salaries were not warranted by the financial condition of the corporation, it would be the duty of a court of equity to scrutinize closely the acts of the directors in thus contracting with themselves, even though no such allegation was made, 'but from- the facts in this case it appears that this corporation was very prosperous, for at the same meeting, or one closely connected therewith, a dividend of forty per cent, was declared upon the outstanding capital stock, payable at once, and indeed the record shows an amendment to the motion to pay forty per cent, dividend was proposed by one of the plaintiffs to the effect that one hundred and forty per cent. dividend be paid, which motion was seconded by the other plaintiff. This would seem to indicate that the corporation was unusually prosperous, for they surely would not have sought to pay a dividend unless it had been earned, and assuming, then, that this corporation had earned a dividend of one hundred and forty per cent., one can not see why a salary for the general manager of two hundred dollars a week would be exorbitant, or why the other officers helping to manage such a successful business should not be entitled to at least seventy dollars a week under conditions as they existed in 1917 and subsequently. Indeed, the record discloses that the two plaintiffs were desirous of distributing a larger share of the corporation assets even than this, for the record shows that one of them moved that It was unnecessary to have so many assets, and sought to have a part distributed, and that the other seconded the motion for such distribution of .some of the property and a division of the proceeds amongst the stockholders pro rata in proportion to the amount- of stock held by each. We refer to these things to show that the corporation was in such financial condition that good salaries would be warranted, as bearing upon the question of the good faith of the directors in voting salaries to themselves.

In United States Rolling Stock Co. v. Atlantic & Great Western Ry., 34 Ohio St., 450, Judge Boynton, in speaking for the court, after reviewing a great many authorities, comes to this conclusion, and, referring to the citations above, says at page 465:

“These citations sufficiently show that, in England, a contract between a corporation and one’of its directors would, in the absence of a statute affecting. its validity, be upheld and enforced in her common-law tribunals. That the same rule prevails in this country is well established.”

He cites Ashurst’s Appeal, 60 Pa. St., 290, and Stark Bank v. United States Tottery Co., 34 Vt., 144.

The by-laws of the corporation under discussion here provide:

“Article 2, See. 1. Directors. The board of directors shall consist of five stockholders to be elected by ballot, to hold office for the term of one year and until their successors are elected and qualified.
“Article 2, See. 3. The board of directors shall meet for the election of officers and the transaction of business without unnecessary delay after each annual meeting of the stockholders, and without notice, provided a quorum of the board is present. Three members of the board of directors shall constitute a quorum.
“Article 3, Sec, 1. Election op Officers. The officers of this company shall be a president, general manager, vice president, secretary and treasurer, and they shall be paid such compensation as the board of directors determine. Such officers shall be elected for one year or until their successors are elected and qualified.”

It will be noted that here, by special authority of the stockholders, the directors have been delegated the authority and power to fix the salaries of the officers for the ensuing year. Indeed, the record discloses that all the stock was represented by the directors. Without such delegated authority, undoubtedly, under the law of the state of Ohio, the directors would still have it. Now, it will be noticed that there are but five directors, three of whom are the officers whose salaries were fixed by the directors, and, necessarily, the officers would have to vote upon their associates’ salaries, if not their own, and, as this board of directors was then constituted, if a director were prevented from voting upon his own salary he might still vote for his associates’ salaries, and there would be a tie vote between the two remaining directors and the two plaintiffs who seem to represent the minority stockholders, which would result in a deadlock if they voted as the record indicates they would vote under such circumstances, and thus no salaries could be fixed, which in turn would result in the taking of the corporation out of the hands of-those whose money was invested in the corporation and putting it in the hands' of strangers. I do not- think this is a- thing that is desired by our laws, for we have always supposed that the majority of the stock of a corporation controls and manages the corporation and may manage it over the protests of the minority, and the courts will not interfere unless there is clearly a wrong or fraud being perpetrated upon minority stockholders.

In Yeiser v. United States Board & Paper Co., 7 C. C. (N. S., 15, where the directors had acted unfairly and had committed a fraud on the members of the corporation, the circuit court of the first circuit first quotes from United States Board & Paper Co. v. Browne, 1 C. C. (N. S.), 345, to the effect that a contract made by the directors of a corporation with themselves was not void where there was no allegation that it was an unfair contract, and then sets aside the contract in the ease under consideration.

We have gone through the authorities cited with much care, and we have come to the conclusion that where there is no allegation of fraud alleged in the pleadings, and no evidence to show fraud or unfair dealings, but the contract under all the circumstances is fair, just and right, such contract will not be set aside, and that an injunction at the suit of some of the directors representing a small proportion of the capital stock of the corporation, who seem to be antagonistic to the management of the corporation, will not be allowed to prevent its being carried out.

It will be noted that all the contracts alluded to in the cases referred to are contracts where members of boards of directors have made contracts with themselves not in the way of salaries but in the way of dealings with the corporation from the outside, and the courts in Ohio have uniformly held that in the absence of bad faith even such contracts are sustainable. It would very much more truly follow that such contracts, if salaries of officers, if fair and reasonable, should be sustained.

We are therefore of the opinion that the plaintiffs are not entitled to the relief prayed for in their petition, and an injunction will 'be refused and the petition dismissed.

It will be noted that the view we have taken of the right to maintain this action will obviate the necessity of considering the other question involved — that of granting the relief prayed for after the fault complained of has been remedied by the subsequent act of the corporation, to-wit, that of increasing the number of directors voting on their own salaries. The preliminary injunction granted by the court of common pleas in the first instance having on motion' been dissolved by that court, no injunction having been since issued, and the money having-been drawn by the directors, the view we have-taken of the right of the plaintiff to maintain their action obviates the necessity for decision of what for above reasons is claimed to be a moot question.

Dunlap and Washburn, JJ., concur.


author: Ferneding, J.

text:
    BURDEN OF PROVING ILL HEALTH AND FALSE STATEMENTS BY ONE APPLYING FOR INSURANCE.
    Court of Appeals for Montgomery County.
    Mutual Life Insurance Co. of New York v. Long.

    Decided, October 9, 1919.

      Life Insurance — Defense of False Statements Wilfully Made by the Insured — Burden of, Showing on the Company — Bight to Open and: Close — Verdict Will Not be Set Aside, When.

    Where there are three defenses to an action upon an insurance policy: first, an admission of certain facts, followed by a general denial; second, that assured was not in good health at the time- of taking insurance, a condition which avoided the policy; and, third, wilfully false representations in the application for insurance, held:
    1. The burden of proof upon all the issues tendered -by the pleadings of plaintiff is upon the plain-tiff and he has the right to open and close the case.
    2. The burden of proving ill-health of the assured at the time the insurance was effected is upon the defendant, and the fact that the insurance company examined the accused and accepted the risk is evidence in favor of plaintiff, and the defendant must produce evidence to overcome the presumption.
    3. After finding that certain answers of the assured in his application were false the jury before finding the third defense complete must by virtue of Section 9391, General Code, find that the evidence olearly establishes that the answers were wilfully false.
    4. A verdict of a jury should not be set aside upon a mere difference of opinion between the court and jury, especially in a reviewing court, where the case is heard upon a transcript of the evidence.

      Stephens, Lincoln <& Stephens and E. H. & W. B. Turner, .for plaintiff in error.

      Mattern é Brumbaugh and John Boehm, for defendant in error.

      Motion to require the Court of Appeals to certify its record in this • case overruled by the Supreme Court, February 17, 1920.

   Ferneding, J.

Heard on error.

The original action was upon an insurance policy issued by the plaintiff in error upon the life of William E. Long. The policy was made payable upon death of the assured to the defendant in error as beneficiary. The policy was issued on November 27, 1916. The assured died on September 25, 1917. The answer contains three defenses. The first is an admission of certain facts; followed by a general denial. The second asserts a claim that by a condition of the policy it was to become void if the assured at the time of the application and delivery of the policy was not in good health; also, that as a matter of fact the assured was not at said time in good health. The third defense is that the application contained certain representations which were wilfully false.

The trial resulted in a verdict and judgment for the plaintiff in the amount of the policy.

The plaintiff in error insists, first, that the trial court erred in allowing plaintiff below to open and close the ease; second, that the court erred in several respects in its charge to the jury; and, third, that the verdict and judgment were against the weight of the evidence on both the second and third defenses.

This case was fully argued and- the oral argument wras supplemented by elaborate and painstaking briefs analyzing the evidence and authorities bearing upon the issues represented in the review of this case. We have carefully considered the record and the authorities cited.

Upon the right to open and close the case we have reached the conclusion that the burden of proof upon all the issues tendered by the pleadings of plaintiff was upon the plaintiff and not the insurance company.

The plaintiff alleged in the petition that she had complied with all the conditions of the policy. This averment was not admitted. It therefore fell within the general denial of the answer. Accordingly, it was incumbent upon the plaintiff to offer some evidence upon this averment. The plaintiff offered the application for the policy, and the policy itself, and then rested. While this averment of the petition was not the foundation of the real controversy, nevertheless, from a technical standpoint, the burden of proof was upon the plaintiff. The action of the trial court in putting the burden of proof and conferring the right to open and close the case upon the plaintiff was not erroneous.

Upon examination of the general charge, as well as the request for special charges, we are of opinion that there was no prejudicial error in respect to the charge.

The most difficult questions presented in the case are those involving the weight of evidence upon the second and third defenses.

The second defense challenges the good health of the assured at the time of the application and issuance of the policy. We think this was a question of fact to be determined by the jury. The burden of proof upon the merits of the case rested with the insurance company. The question was in the first instance one for the jury. The jury were entitled to consider the evidence of physicians, and others, having a direct bearing upon the question, and also the circumstances of the case. It must be kept in mind that the assured who made the application and procured the insurance was dead and his testimony unavailable. The insurance company was under the obligation to investigate the risk at the .time of the application and issuance of the policy. The fact that it did make the investigation and did conclude to accept the risk is some evidence, we think, in favor of the plaintiff, and called upon the insurance company for evidence to overcome the effect of this presumption. In the case of Mumaw v. Western & Southern Life Ins. Co., 97 Ohio St., 1 (119 N. E., 132), Judge Johnson speaks of “the difficulties and impracticable character” of compelling the beneficiary after the death of the assured to undertake the task of producing evidence of the good health of the assured at the time of the application and issuance of the policy.

He makes the following observations, at page 11:

“It is also common knowledge that policies are issued at the solicitation of the company, and it may well be said that it is the duty of the insurance company not to enter into a contract of such a character until it is convinced that the insured is in good health. It would seem to be a just and reasonable proposition that the insured has a right to believe that the company has become so convinced, and to rely on his contract, in the absence of fraud or misrepresentations on his part, or a failure of some warranty made by him. In such case the company is not denied any proper defense; but, if it asserts a defense, it must assume the burden of proving it. The time to demand from the insured such satisfactory evidence is when the contract is being made and while the insured is alive.”

Dr. Hatcher, who was called as a witness by the insurance company, testifies as follows:

‘ ‘ I said to him (Long) that he had better consult his physician and see whether or not he could not have his blood pressure reduced, feeling that it was not an organic type, and that if he was properly dieted and medicated that the blood pressure could be reduced and that he might be a favorable risk after that treatment. ”

If Dr. Hatcher, who had been especially consulted by Mr. Long, and who had the advantage of a personal examination, was of the opinion that the high blood pressure was not of an organic type and might be subject to treatment, certainly it would not be a far inference to assume that the assured himself felt that it was not a serious ailment or disease and might yield to a course of treatment.

Dr. A. H. Dunham was called by the insurance company as a witness. He made an examination of the assured prior to the present application for insurance. He testifies in full as to the- nature and extent of his personal examination, and states he found nothing wrong with the heart or with any of the other organs and that the insured was in his opinion a good insurance risk.

Dr. D. B. Conklin made the medical examination upon which the insurance policy was issued. He testifies to the extent of his examination and his opinion as to the assured’s good health.

Dr. Metier also testifies that Mr. Long was in splendid physical condition.

The insurance company for its defense relies largely upon the testimony of Dr. Clark Sullivan, who was the physician of the assured and treated him at different times for what he called “mitral valve lesion of the heart.” Dr. Sullivan’s testimony was by deposition, and in his opinion the assured had been suffering from the affliction described.

The conflict in the testimony of these several physicians therefore became one of credibility and fell within the peculiar province of the jury.

The third defense, based upon misrepresentation, is subject to the following statute:

“Sec. 9391. No answer to any interrogatory made by an applicant, in his or her application for a policy, shall bar the right to recover upon any policy issued thereon, or be used in evidence upon any trial to recover upon such policy, unless it be clearly proved that such answer is willfully false, was fraudulently made, that it is material, and induced the company to issue the policy, and that but for such answer the policy would not have been issued; and, also that the agent or company had no knowledge of the falsity or fraud of such answer. ’ ’

The questions and answers upon which the three defenses are founded are as follows:

“Question 14. I have never made an application nor submitted to an examination for life insurance upon which a policy has not been issued on the plan and premium rate originally applied for except to the following companies or associations: (if none, so state).
“A. None.
“Question 17. What illnesses, diseases, injuries or surgical operations have you had since childhood?
“A. Operation for left inguinal hernia; date 1900; duration two weeks; date of complete recovery 1900; Hemorrhoidal operation 1913; two days, very mild (removal of tags), complete recovery 1913 (Minor ailment).
“Question 18. State every physician or practitioner who had prescribed for or treated you or whom you have consulted in the past five years.
“A. Dr. Clark Sullivan, Dayton, Ohio, 1913. Hemorrhoids.
“Question 19. Have you stated in answer to question 17 all illnesses, diseases, injuries or surgical operations which you have had since childhood?
“A. Yes.
“Question 20. Have you stated in answer to question 18 every physician and practitioner consulted during the past five years and the dates of consultations?
“A. Yes.
“Question 21a. Are you in good health?
“A. Yes.
“Question 21b. If not, what is the impairment?
“A. None.
'“Question 22b. How much weight have you lost in the past year ?
“A. Seven pounds.
“Question 22e. If any change, state cause.
“A. Gymnastic training to reduce.”

The insurance company offered evidence that a former application for insurance was made by the assured to another company and rejected.'

It also offered the evidence of Dr. Clark Sullivan to the effect that shortly prior to the application in the present ease he treated the assured to reduce the blood pressure, and that this was done at the request of Long for the avowed purpose on the part of Long of making him? eligible for insurance, and that later the assured notified the witness that he did not desire to continue the treatment as he had obtained the insurance.

We would have no difficulty in finding that the answer to the interrogatory as to being rejected for other insurance was false and that the remaining answers did not fully disclose the facts. However, we think it was the duty of the jury before finding this defense complete to go further and find that the evidence clearly established that the answers to the interrogatories were wilfully false. The question of the credibility of the witnesses upon this particular issue was primarily for the jury to determine. The plaintiff in the verjr nature of the case was deprived of the answering and explanatory testimony of the assured. As to the rejection of a prior application for insurance the jury may have found that the assured was not fully advised of such rejection, or of the facts in respect to that application. The burden of proof being upon the insurance company, an inference might fairly be indulged under the evidence in favor of the plaintiff! upon the issue as to the assured having knowledge and information on this subject.

In respect to the answers to the other interrogatories, it was for the jury to consider and determine whether the evidence made it clear that the assured willfully misrepresented the facts or willfully concealed material facts definitely called for by the interrogatories. In this connection it appears that the jury made the following special finding in response to interrogatories :

“Was William T. Long treated by Dr. Clark Sullivan at Dayton, Ohio, for excessive blood pressure and overweight in the summer or fall of 1916, and did Mr. Long know this fact when he made his answers to the Medical Examiner of the defendant Company, Dr. Conklin?
“A. Yes.
“Did William E. Long state every physician and practitioner whom he had consulted during the five years previous to making the application for the policy sued on, with dates of consultation ?
“A. Yes.”

The first special finding is not conclusive of the fact that the assured knew that “excessive blood pressure and overweight were illnesses, diseases,” etc., within the general understanding of the application. One answer disclosed that the assured had undergone gymnastic training to reduce weight. Taking the answers together it would leave the question of blood pressure as the only question of real difficulty. This symptom has become somewhat alarming .to physicians, but it is not clear that the assured as a layman understood the significance of high blood pressure and some weight would naturally be given by the jury to the fact that even the company itself did not consider overweight of sufficient importance to require a medical examination and report upon that feature. It is clear that special interrogatories must be harmonized with the general verdict unless they are clearly repugnant. Dávis v. Twner, 69 Ohio St., 101 (68 N. E., 819), tends to support the second special finding of the jury’s general verdict.

The burden of proof being upon the defendant, the jury were entitled to weigh the evidence and determine the credibility of witnesses. It is clear that the verdict of th jury should not be set aside upon the mere difference of opinion between the court, and a jury. This is especially true where the case reaches a reviewing court and is heard upon the transcript of evidence. The rule is stated by Judge Mcllvaine in the case of Dean v. King, Pennock & King, 22 Ohio St., 118, at page 134. While there is some foundation for difference of opinion upon the weight of the evidence, we have reached the conclusion that the verdict of the jury and judgment of the trial court upon the issues joined by the second and third defenses are not contrary to the clear and manifest weight of the evidence. Finding no prejudicial error the judgment is affirmed.

Ferneding and Kunkle, JJ., concur.


text:
    PRIORITY BETWEEN MECHANICS’ AND VENDORS’ LIENS.
    Court of Appeals for Lucas 'County.
    Golner v. Bede et al.
    Decided, March 3, 1919.

      Liens — Vendor’s Lien for Unpaid Purchase Money Superior to that of Mechanics or Materialmen — To What Mechanics’ Liens Attach_ Vendor’s Lien not Waived by Acceptance of Mortgage — And isj Prior to Claim of a Subsequent Mortgagee with Knowledge.

    1. By virtue of the provisions of Sections 8310' and 8321 General 'Code, as amended (103 O. L., 369'), mechanics’ liens attach to whatever interest one in possession of real estate may have therein, and to any interest he may subsequently acquire, tout are subordinate to the lien of the vendor for unpaid purchase money.
    2. A vendor’s lien is not waived by the acceptance of a mortgage covering only the property conveyed, nor is its priority lost where a subsequent mortgage is left for record first, if sueli subsequent mortgage have knowledge that the vendor’s lien is unpaid.

      Myer Geleerd, for plaintiff.

      W. W. Campbell, Warren J. Duffey and George C. Bryce contra.
   Richards, J.

Heard on appeal.

The controversy in this action arose over a question as to the priority of liens on a lot of land and dwelling house thereon in the city of Toledo, the plaintiff claiming to have a first lien by way of mortgage, the defendants, George E. Pomeroy and F. M. Fuller, claiming a first lien by way of mortgage and vendor’s lien, and the defendants, The Collier-Barnett Company and The Toledo Pulp Plaster Company, claiming liens as materialmen for material supplied in the construction of the dwelling house on said lot.

The title to the lot stood in the name of George E. Pomeroy and F. M. Fuller, and under some arrangement between them and one Harry C. Smith, Smith took possession of the lot, made an excavation for a cellar and commenced the construction of foundation walls preparatory to the erection of a dwelling house. In July, 1917, while Smith had possession, the Toledo Pulp Plaster Company began furnishing material under a contract with him for the construction of said building, and in October, 1917, the Collier-Barnett Company began furnishing material therefore under a like contract. On November 6, 1917, Pomeroy and Fuller conveyed the premises, by warranty deed, to Harry C. Smith, and took from the grantee a mortgage for $1,000 to secure the purchase money, the mortgage reciting that the same was for the purchase money, of the premises. On November 8, 1917, Harry C. Smith executed a mortgage on the same premises to the plaintiff, J. C. G-olner, for $2,500. The deed from Pomeroy and Fuller to Smith was left for record with the recorder of Lucas county on November 9, 1917, at 2 o’clock, p. m., the mortgage from Smith to Golner was left for record at 2:01 o’clock p. m., and the purchase money mortgage from Smith, to Pomeroy and Fuller was left for record at 2:35 o’clock p. m., of the same day. At the time of the execution of the mortgage from Smith to Golner the foundation wall of the cellar of the premises was partly constructed, and thereafter the mechanics’ liens of the Toledo Pulp Plaster Company and the Collier Barnett Company were duly perfected. The lien claimed by Pomeroy and Fuller amounts to $1,000 and interest, less some trifling payments. The mortgage held by Golner amounts to $2,500 and interest, and the mechanics’ liens held by the other named defendants amount to $500 or $600.

Under this state of fact we are called on to determine the priorities among these several lienholders, the property not being sufficiently valuable to pajr all of them.

At the time the materialmen began furnishing material for the construction of the dwelling house, Smith had no deed for the property, but their liens would attach to such title as he had and would date from the time they furnished the first material, such being the provision of Secs. 8310 and 8321, G. C., as amended 103 Ohio Laws, 369. These liens, however, could not attach to an interest which Smith did not have; but when Smith subsequently acquired a complete title by conveyance from the owners, the liens of the materialmen would then attach to the title so acquired, but would be subordinate to the amount remaining due to the vendors, Pomeroy and Fuller. The claim of the vendors to be paid the amount remaining due to them on the purchase price of the premises would necessarily be paramount to the lien of the materialmen, under the doctrine of the Mutual Aid Building & Loan Co. v. Gashe, 56 Ohio St., 273. There would seem to be little difficulty in arriving at a conclusion that as between the vendors and the materialmen the lien of the vendors would be the prior one.

A more difficult question arises, however, when we come to consider the priority as between the claim of the vendors, Pomeroy and Fuller, and the mortgage of the plaintiff, Golner. While the mortgage of Pomeroy and Fuller was prior in point of time, and was for the purchase money of the premises, it was not left with the recorder for record until after the mortgage held by the plaintiff, Golner, and if the priority of right between these parties is to be determined by the mortgage alone, independent of the vendor’s lien, Golner would, by the terms of Sec. 8542, G. C., have the first lien, because of the fact that his mortgage was first left for record with the county recorder. "We must not, however, lose sight of the fact that Pomeroy and Fuller were the vendors and that the mortgage held by them represented simply the amount of the vendor’s lien held by them, and the mortgage itself recites that fact. The record discloses that Golner had full knowledge of the fact that the amount due to Pomeroy and Fuller was the unpaid portion of the purchase money, and his mortgage was taken with such knowledge. He was very particular to see that the mortgage taken by him should appear first upon the record and insisted upon verifying that fact from an abstract of title, before he advanced any money under his mortgage. The abstract of title which was furnished to him showed that the mortgage held by Pomeroy and Fuller was to secure the unpaid purchase money. The evidence contained in the bill of exceptions fails to show any agreement between Golner and Pomeroy and Fuller that their claim should be subordinate to the claim of Golner. There is some testimony in the record that one Bede, who was about to buy the property of Smith, spoke of the fact that Pomeroy and Fuller were to have a second mortgage, but this would be mere hearsay and in no sense binding upon Pomeroy and Fuller, who were not present at the time such statement was made by Bede to Golner, and neither Bede nor Pomeroy nor Fuller was called as a witness. The plaintiff himself does not claim to have been present at the time any such agreement was made, if it was made. If the evidence established an agreement of that character there would be substantial reason for contending that the case falls within the rule announced by this court in Walbridge v. Barrett, 21 C. C., 522, and to insist that under such agreement the amount of unpaid purchase money should be paid to Golner. But, as we have said, it does not appear that any such agreement was made between the parties.

It is a fundamental law that the vendor’s lien held by Pomeroy and Fuller was not extinguished by their taking a mortgage upon the same property to secure the payment of the amount due. Elliott v. Plattor, 43 Ohio St., 198, 209.

It is insisted on behalf of Golner that he is entitled to protection by virtue of the terms of Sec. 8321-1, G. C., which was enacted to safeguard the rights of a mortgagee whose address is given in the mortgage and whose mortgage contains a covenant authorizing and empowering the mortgagee to proceed in accordance with that act. This contention is sufficiently answered by the fact that the mortgage taken by Golner contains no such covenant and no address, and is not, therefore, within the terms of that section. By virtue of the terms of Sec. 8321, G. C., the liens held by the materialmen are entitled to priority over the mortgage held by Golner. See also the West Side Lumber & Manufacturing Co. v. Lancaster Paper Mill Co., 5 Ohio App., 253; 26 C. C. (N. S.), 413.

Under the facts contained in the record, the priorities of liens in this case are fixed and established as follows:

First, the vendor’s lien held by Pomeroy and Fuller.

Second, the materialmen’s liens held by the Toledo Pulp Plaster Company and the Collier-Barnett Company.

Third, the mortgage held by J. O. Golner.

Decree accordingly.

Kinkade and Chittenden, JJ., concur.


author: Kitnkle, J.

text:
    NEW TRIALS ON WEIGHT OF EVIDENCE.
    Court of Appeals for Greene County.
    Miami Conser-ancy District v. Shade et al.

    Decided, December 2, 1919.

      Talesmen — Jury in Appropriation Case Under Conservancy Act may be Filled, With — New Trials on Weight of the Evidence.

    1. In an appropriation case, under the conservancy act, the trial judge is required to fill vacancies in the panel by ordering the sheriff to fill the same with talesmen. The trial judge is not required to fill such vacancies hy issuing a special venire.
    2. Where a trial court has once granted a new trial upon the weight of the evidence, and the case has been retried, such trial court has no jurisdiction to grant a second new trial upon the weight of the evidence.
    3. Where the trial court has no jurisdiction to grant a new trial upon the weight of the evidence, the court of appeals has no jurisdiction to grant a new trial upon the weight of the evidence or reverse the judgment of the trial court for refusing such new trial upon said ground.

      O. B. Brown, Mctttem & Brumbaugh and Nevin & KaTbfus, for plaintiff in error.

      Charles L. Darlington, Marcus Shoup and Harry B. Smith, for defendants in error.

      Motion to require the Court of Appeals to certify its record in this ease overruled hy the Supreme Court, April 12, 1920.

   Kitnkle, J.

Heard on error.

This is a proceeding to appropriate land for conservancy purposes. The official appraisers of the Conservancy District appraised the land in question, which consists of 83.74 acres, at slightly less than $190 per acre. The property owner appealed to the court of common pleas, as provided by Sec. 34 of the Conservancy Act (See. 6828-34, G. C.).

Upon the first trial in the court of common pleas the jury returned a verdict fixing the value of the land at $280 per acre. The trial court held that this verdict was excessive, and set aside the verdict upon the weight of the evidence.

The second trial resulted in a verdict fixing the value at $303 per acre, plus.

Motion for a new trial was overruled and judgment rendered upon the verdict.

Various errors are assigned in the petition in error. The errors chiefly relied upon, however, are as follows:

1. Error in instrncting the jury that a verdict might be returned by the concurrence of nine or more jurors.

2. Error in refusing to issue a special venire to fill the panel, and in ordering the sheriff to fill the panel.

3. The verdict is excessive and contrary to the weight of the evidence.

It is now definitely settled that the three-fourths jury law applies to cases of this nature, and this was conceded at the time of the hearing of the case in this court.

The question as to filling the panel is not without difficulty and some doubt.

The Conservancy Act (See. 6828-34, G. C.), provides:

“Which suit shall be proceeded with in accordance with the statute regulating appropriations by other than municipal corporations. ’ ’

Section 11051, G. C., which relates to appropriations by other than municipal corporations, provides for filling vacancies in the panel as follows:

“The judge shall order the sheriff to fill the vacancies with talesmen.”

This section further provides:

‘ ‘ The judge shall order the sheriff to fill the remaining vacancies in the jury box required to make up the number of twelve with talesmen.”

Counsel for plaintiff in error rely upon the following sections of the code, namely: Secs. 11212 and 11434. The material provisions of See. 11212.are as follows:

“The provisions of law governing civil proceedings in the court of common pleas, so far as applicable, shall govern like proceedings in the probate court, when there is no provision on the subject in this title.” (Title 3, Part third.)

The material provisions of Sec. 11434 are as follows:

“When it is necessary to summon talesmen, the court, on the motion of either party, shall select them, and cause to be issued immediately a venire for as many persons having the qualification of a juror as, in the opinion of the court, may be necessary,” etc.

It is contended by counsel for plaintiff in error that the word “talesmen,” as used in See. 11051, is subject to the definition and description contained in Sec. 11434, and that both sections are to be considered together.

We are unable to reach the conclusion that See. 11434 was intended to define the word “talesmen.” We think the latter section relates to the manner of selecting talesmen in cases not otherwise provided for.

The ease at bar is governed by See. 11051, G-. C., and rests upon the construction of that particular statute.

We think the fair construction of Sec. 11051 would be to uphold a trial court in refusing to proceed under Sec. 11434, and in following the express provisions of Sec. 11051.

There was, in our opinion, therefore, no prejudicial error in respect to the selection of a jury.

The remaining question relates to the weight of the evidence. The journal entry shows the first verdict was set aside by the trial court upon the weight of the evidence.

Section 11577, G. C., provides:

“The same court shall not grant more than one new trial on the weight of the evidence against the same party in the same case, nor shall the same court grant more than one judgment of reversal on the weight of the evidence against the same party in the same ease.”

The trial court was not authorized to grant a second new .trial upon the ground of the weight of the evidence. The court of appeals, being merely a reviewing court, would not, in our judgment, be authorized to reverse the judgment of the trial court on the weight of the evidence when the trial court was not authorized to set the verdict aside on such ground.

In other words, we could not find that the trial court committed prejudicial error in refusing to set aside the verdict upon the weight of the evidence, when such court was expressly prevented from so doing.

We have examined all of the grounds of error suggested by counsel for plaintiff in error, but finding no error in the record which we consider prejudicial to plaintiff in error, the judgment of the lower court will be affirmed.

Allread and Ferneding, JJ., concur.


author: Dunlap, P. J.

text:
    RELEIF TO DEFAULTING PARTIES UNDER LAND CONTRACTS.
    Court of Appeals for Cuyahoga County.
    Curtis v. Factory Site Co.
    Decided, July 2, 1919.

      Forfeiture Glauses — Failure of Purchasers, to Perform Will he Disregarded, When — Enfordhle where Time is the Essence of the Stipulation — Effect of 'Equivocal Conduct of Vendor as to his Bights under Forfeiture Clause.

    1. The usual forfeiture clause in a land contract will, on the failure of the purchaser to perform at the specified time, be disregarded and set aside by a court of equity, unless the failure is intentional or results in loss to the vendor which can not be compensated by interest.
    2. Where the parties to a contract for the sale of land containing a ■forfeiture clause have so stipulated as to make time of payment the essence of the contract, a court of equity can not give relief to a defaulting party.
    3. A court of equity will not regard time the essence of a land contract, so that forfeiture ipso facto occurs upon default of payment by vendee, where the vendor has the option to declare all payments due, or at his election to avoid the contract, repossess the premises and retain as stipulated damages all sums paid, and the conduct of the vendor fails to disclose an unequivocal intention to exercise his rights under the contract.

      Smith, Olds & Smith, for plaintiff.

      Squire, Sanders & Dempsey, for defendant.
   Dunlap, P. J.

Heard on appeal.

This is a suit for specific performance of a land contract, and is here heard upon.appeal.

The evidence discloses that on January 29, 1917, the Factory Site Co., the defendant, and the West Side Land & Supply Co., both corporations, entered into a written contract for the sale of certain real estate by the first-named corporation to the second-named corporation, its successors and assigns. The contract provided that the purchase price should be $10,000 payable as follows:

‘ ‘ One Thousand Dollars cash in hand . paid, the receipt whereof is hereby acknowledged; Two Thousand Dollars on or before thirty days from the date hereof; Two Thousand Dollars on or before eight months from the date hereof. When the aggregate amount of Five Thousand Dollars'shall have been paid then the party of the first part shall execute its deed to the party of the second part, and contemporaneously therewith the party of the second part shall give its four promissory notes in equal amounts evidencing the remaining Five Thousand Dollars payable respectively in one, two, three and four years from the date of this contract, all bearing interest at the rate of six per cent, per annum payable semi-annually, and secured by a purchase money mortgage on the aforesaid premises.”

The contract contained the following provision:

“If any one of said installments, or the interest accrued thereon, shall not be paid when due, then all of said installments remaining unpaid shall at once become due and payable, at the option of the party of the first part.”

Also the following:

“In case default shall be made by the party of the second part, its successors and assigns, in any of the conditions above stipulated to be performed by it or them, it shall and will be lawful for the party of the first part, if it so elect, to treat this contract as henceforth void, and to re-enter upon said premises at any time after such default without serving on the party of the second part, or any person 'holding under it, a notice to quit said land; and in ease this contract shall be so treated as thenceforth void, the party of the.second part, or those claiming under it, shall thenceforth be deemed a mere tenant at will under said party of the first part, and be liable to be proceeded against without notice to. quit, under the provisions of the law regulating proceedings in cases of forcible detainer; and the party of the first part, in such case, shall be at liberty to sell the land and premises to any person, whatsoever without being liable in lgw or in equity to the party of the second part or any person claiming under it for any damages in consequence of such sale or to return any payments made on account of or under this contract, and the payments shall have been made may be retained by the party of the first party as stipulated damages for the non-performance of this contract on the part of the party of the second part.”

The evidence further discloses that the West Side Sand & Supply Co., in its attempt to carry out the provisions of this contract, made the following payments:

January 23, 1917, six days before the signing of the contract, $500, and on January 29, 1917, when the contract was signed, $500, so that the initial payment was fully made; then upon August 18, 9937, the payment of $2,000, which should have been made on March 1 (or thirty days after January 29), was made. Nothing further in the way of actual payment to the Factory Site Co., was made. The evidence, however, discloses that the Factory Site Co. is composed of three very eminent members of the Cleveland Bar, Mr. Dempsey, Mr. Squire and Judge Sanders; that the business of this company is transacted almost entirely by its president, Mr. Dempsey; and that on or about September 11, 1918, Mr. Dempsey, upon the solicitation of the Sand & Supply Co., consented to use his influence or the influence of his firm with the New York Central Ry. in the securing of a contract from said railroad company for the putting in of a switch, and accepted from 'the Sand & Supply Co., a deposit of $1,000 which it was though advisable to pay to the rairoad company in advance upon said contract. The purpose of offering this evidence in the case to show that at any rate up to that time the Sand & Supply Co., was at least “persona grata” to Mr. Dempsey and that he had no sincere intention of declaring the contract forfeited, but that on the contrary, and in spit of some rather terrifying notices of which he had been the author, and which had been fruitful in forcing the payment of $2,000 just a short time before, yet long after it was due, he had at heart the best interests of the “young fellows” who composed that company. Tt also had a tendency to show his knowledge of the improvements which the Sand & Supply Co. was putting into the premises, which amounted at that time to about $2,000; and it is to be here stated that the railroad company, no doubt influenced by Mr. Dempsey’s persuasive words, after some delay entered into a contract with the Sand & Supply Co., in the early part of 1918, and the Sand & Supply Co. assumed the carrying out on its part of said contract, involving itself in a liability of several thousand dollars by reason thereof, and did the necessary grading, all at an expense of $500, in the spring of 1918, long after the date fixed for the payment of the $2,000 which by the terms of the contract was to become due in eight months after the making thereof, and the nonpayment of which now furnishes the sole basis for any claimed forfeiture which exists in this case.

It is most evident that up to the time of this payment Mr. Dempsey or his company had neither exercised the option which by the contract 'belonged to them, to make “all of the installments remaining unpaid * * * become due any payable,” nor elected to treat the contract as void. No amount of talk or conversation, pleadings on the one part or harsh threats upon the other, could override this plain and necessary conclusion, nor could mental reservations, or beliefs that steps looking to a forfeiture had been taken, have any effect upon the situation as it then existed. Any exercise of an option to make all the installments come due at once, or any election to treat the contract as void, must necessarily have been made after this time.

Now, the evidence shows that the next step taken by Mr. Dempsey was the writing of a letter on April 17, 1918, in which, among other things, the following language is used:

“I have extended to the West Side Sand & Supply Co. every reasonable courtesy, and while I do not say that the payment, if made on April 25th, together with all interest in arrears, will not be' accepted, you must understand that I am not making an\y further extensions whatsoever.”

Plainly there is no election here either to declare the remaining; installments all due-or;to declare the contract void. The rights of the purchasers were again saved, assuming that Mr. Dempsey had a right to act for his company, and there is no intimation that he did not have such right. It may be said in passing that the Factory Site Co. appears affirmatively by the testimony to have taken no corporate action in the matter whatsoever. It would appear that Mr. Dempsey acted upon his own initiative all the time up to some time in September, 1918, when he called in Mr. Squire and informed him of the situation, and it is by virtue only of the words and actions of Mr. Dempsey that his corporation can claim .the benefit of a forfeiture, and it is thus upon these words and acts that it must here succeed or fail.

On April 25, 1918, Mr. Farver, who was one of the officers of the West Side Sand & Supply Co., wrote Mr. Dempsey the following letter:

“I wish to advise that I will be unable to malee payment as promised on the West Side Sand & Supply Co. land contract today as expected.

“The money is to be raised through the office of Guthery & Guthery and it will take more time than was anticipated at the time I wrote you.

“Mr. Lundwall and myself are having an uphill fight to put this matter through as there is a lack of harmony among those interested. However, we will accomplish it I am sure.

“I can not bring myself to ask further extensions from you, but I am going to say this that we have every reason to believe that we will have the payment with interest to offer you within the next ten days and hope that it will be acceptable to you at that time.

“Thanking you, I beg to be,

“Very truly yours,

’‘Chas. S. Farver.”

This letter was not answer, and in our opinion matters remained in stahi quo; i. e., there was at this time no election and no forfeiture declared.

We think it is a general doctrine of equity, and held in a great numbers of cases, that the forfeiture provided for by a clause in a land contract, similar to the one here, will, on the failure of the purchaser to fulfill at the proper time, be disregarded and set aside by a court of equity unless such failure is intentional or results in loss to the vendor which can not be compensated by interest, and we think that this conclusion is in plain accordance with the general principle of equity in relation to relief against forfeitures. It is not, however, the universal rule; but the decisions upholding a contrary decision seem to us to ignore- the equitable principle of relief from penalties and forfeiture. It may be stated as settled that where the parties have so stipulated as to make the time of payment of the essence of the contract, a court of equity can not relieve a vendee who has made default, but the difficulty in applying this rule is to determine when time has thus been made essential. We think it self-evident that time can not be regarded as of the essence of a contract, so that a forfeiture shall ipso facto occur upon failure of the vendee to make a required payment, when the contract contains language to the effect that if any installments shall not be paid when due then all installments remaining unpaid shall at once become due and payable at the option of the vendor, and when the additional clause is inserted that in case of default it shall be lawful for the vendor, if it so elect, to treat the contract as void and re-enter upon the premises and retain the money paid as stipulated damages.

We think that under a contract like the one in the case at bar the happening of two things is essential to create a forfeiture ; first, the exercise of an option to declare all unpaid installments due, which of itself presupposes- and necessitates the giving of a reasonable notice and an opportunity to make those payments; and, second, an election to treat the contract as void. Even if the first step was not a requisite, can the election to so treat the contract be read in -Mir. Dempsey’s letter of April. 17th! We think not. We have examined Mr. Dempsey’s testimony carefully and are unable to discover in it a recital of an intentional rescission of this contract. We of course can not be much impressed, or our .judgment in any way affected by any of the conversations he had w.ich the vendee or its agents prior to the actual payment of the $2,000 in August, 1917, nor by Mr. Seymour’s 'letter,' which was prior to that payment, which needs no other comment than the statement that after it was written this payment was accepted; and, taking his view of the conversation with Mr. Williams as correct, we are unable to find in it an unequivocal repudiation or rescission of the contract, outside of his statement that the contract is “forfeited and is now a dead letter,” which statement appears to be only a statement of his conclusions regarding the situation. We find nothing therein which in and of itself creates a forfeiture. On the contrary we find him making suggestions as to how the situation might be cleared up. The following statement, for instance, is perfectly inconsistent with the idea that an unequivocal forfeiture was either declared or was in existence. Speaking of the fact that the contract was forfeited, he said:

' ‘As far as that difficulty is concerned, I think of a way that might be arranged. The Factory -Site Go. owes the Society for Savings some money, and it is among the possibilities that the society might take a mortgage of $5,000, having it made directly to it, and credit that amount of money on the obligation of the Factory Site Co.
“ ‘Well,’ he, Williams, said, ‘Would you do that?’
“I said, ‘No, I wouldn’t say that I would.’ I said, ‘I will not say what I will do.’ I said, ‘If you get around where' you know what you can do, and will do, and there is somebody talking that can talk with authority, and it will go through, I will consider propositions that may be made.”

That conversation was had some time in April or May of 1918. In the summer, Mr. Williams had another conversation with Mr. Dempsey, when Mr. Williams concededly told him that he was thinking of selling the property. The following ensued:

“ ‘Have you a purchaser in mind?’ He said, ‘Yes,’ and I said 'For what purpose?’ and he said, ‘A manufacturing purpose.’ I said, ‘Well, I would have no objection to that; that is what that land is for over there as far as we are concerned, that is what we expect to sell it for — a good factory there would be satisfactory to me, but I would want some other conditions surrounding it. # # * Well, I will have to say to you, I will consider anything, because I will consider anything that a reasonable man brings to me, but I will not promise you a thing.’ ”

We thus reach the conclusion that the Factory Site Co. acting through its president, Mr. Dempsey, never took the proper steps to declare a forfeiture except in the very first instancs where he had Mr. Seymour write a letter, but the effects of this letter were clearly obviated and the forfeiture waived by the acceptance .of the next payment at a later date, and we find no .similar action occurring later, and the necessary conclusion from the foregoing is that this contract had some validity at the time of the assignment to the plaintiff in this case, and that the plaintiff in this case is entitled to all the equitable rights of the West Side Sand & Supply Co.

Taking the case as a whole, we think it falls fairly within the spirit of the case of Rummington v. Kelley, 7 Ohio (part 2) 97, from which we quote the following at page 102:

‘ ‘ In case there has not been on the one part' a strict compliance, still if the conduct of the opposite party has been such as to evince acquiescence in the delay, such acquiescence will be construed favorably for the party apparently in default, and the opposite. party can not be exonerated from performance. For instance, a vendee takes possession of the land purchased, and with the knowledge and assent of the vendor makes lasting and valuable improvements; in such case, a court of equity would be inclined to enforce a specific performance, although payment of the purchase money had not been punctually made. More especially would this be the ease where improvements had been made without objection, after default of payment. So the receipt of a part or the whole of the purchase money, after the time of payment had elapsed, might be construed into a waiver on the part of a vendor, of any advantage he might have taken in consequence of the default of the vendee. And the same would be the case, should the vendor by any other conduct manifest that he did not intend to insist upon a strict- and literal performance by the other party. And even where the purchase money is payable in installments, and there should be a failure in the punctual payment of one of these installments, I am not prepared to say that a vendor should be exonerated from performance, if, within a reasonable time, the vendee should make payment.”

A decree may be entered for the plaintiff, decreeing specific performance of this land contract, the defendant to exercise the option of whether it shall have the payment all in cash or in the manner of deferred payments as provided for in the contract. Defendant to pay the costs.

Washburn and Vickery. JJ., concur.

       Motion to require the Court of Appeals to certify its record in this. case overruled by the Supreme Court, December-22,'-1919.


author: Patterson, J.

text:
    JURISDICTION LOST THROUGH DEFECTIVE APPEAL BOND.
    Court of Appeals of Columbiana County.
    Rich v. Rupert.
    Decided, November 8, 1919.

      Appeal — Party to Litigation Can Not Sign Bond as Sitrety — Bond so Signed Gives No Jurisdiction to the Oourt of Appeals.

    A party desiring to appeal is required to give, an undertaking with sufficient surety, as provided in Section 12226 G. C., and where an appeal is attempted to be taken by one of several defendants, and the undertaking is signed by another defendant, such undertaking is a nullity, and is not such a compliance with Section 12226 as will give the court of appeals jurisdiction under Section 12232 to order the change or renewal of the undertaking or that, a new one foe given.

      C. C. Connell, for plaintiff.

      C. 8. Speaker, for defendants.
   Patterson, J.

On motion to dismiss appeal.

The plaintiff filed his petition against the defendants praying that they be enjoined from passing over certain portions of his lands.

A joint demurrer to this petition was filed by all the defendants, which was overruled. The defendant Martha J. Rupert then filed her answer and cross petition, • and to this- the plaintiff filed his reply, and upon the issues thus joined the court of common pleas decreed

“That the defendants A. P. Rupert, Martha J. Rupert, Clarence Felger and Alma E. F.elger, and all other persons claiming right, title or interest through or under them, be and they hereby are perpetually enjoined from traveling on, over or across plaintiff’s lands along the south line thereof.”

An appeal bond was filed and approved by the clerk within thirty days, which bond was signed by A. P. Rupert as principal and Martha J. Rupert as surety, both of whom are parties defendant.

A motion was filed in this court by the plaintiff to dismiss ' the appeal, for the reason that the defendants have not filed an undertaking with surety as provided by See. 12226, G. C., and the defendant A. P. Rupert filed his motion that should the court find the appeal bond defective, or the surety thereon not sufficient, it order the amendment, change or renewal of said bond, or that a new bond be given with security to be approved by the clerk.

Sec. 12226 sets forth the requirements of an undertaking in appeal.

See. 12232 is as follows:

“When a surety in an appeal bond has removed from the state, or is not sufficient, or in form or amount the bond is insufficient, on motion the court of appeals may order its change or renewal or that a new one be given, with security to be approved by the court or its clerk. If such order be complied with, the cause shall be heard and determined.as though it had not been made; but otherwise the appeal must be dismissed.”

In the case at bar there is no appeal bond with surety, the bond does not comply with the statutes relating to an undertaking in appeal, and the only question in the case is whether there is a sufficient compliance therewith to give the court jurisdiction to order its change or renewal or that a new one be given under S.ec. 12232.

The defendants rely upon Reformed Presbyterian Church v. Nelson, 35 Ohio St., 638, as decisive of the question. This was an action to set aside a will, appealed by tbe plaintiffs to. the district court, the bond in appeal being signed by two of the defendants, and the court overruled the motion to dismiss the appeal.

At page 641 the court say:

‘ ‘ In the present case, two of the defendants, William Forsyth and Thomas Mintier, executed the undertaking, or appeal bond, on behalf of the plaintiffs. The plaintiffs were the appellants, and as Forsythe and Mintier could not execute an undertaking, or a bond, to themselves, the instrument could only be operative in favor of the other defendants. Such an instrument, though not in conformity to the statute, was. sufficient to give the appellate court jurisdiction, and to bring the ease within th'e provisions of the act of April 8, 1856, supplementary to the act regulating appeals, S. & C. 1169.”

Had the bond been signed by the plaintiffs alone a very different question would have been presented to the court.

Our attention has been called to the case of Shires v. Fesler, 21 C. C. (N. S.), 253, the syllabus of which is as follows:

“Where steps have been taken by a party to give an appeal bond which is in proper form in every respect .except that the same is signed by a party and not by a surety, and where such bond has been approved by the clerk, the court has authority to permit its amendment or renewal.”

This case was decided December 12, 1914, and on January-20, 1915, the following entry appears:

“It appearing to the court that the entry heretofore made on the 29th day of October, 1914, was inadvertently drawn and made, the court hereby directs that said entry be set aside on’ the authority of Steele v. Garn et al, being cause No. 14008, decided by the Supreme Court of Ohio November 24, 1914, and on the authority of said ease the motion of plaintiff in this case to dismiss the appeal is hereby sustained and said appeal is hereby dismissed.”

While this case was reversed by the court hearing it, and almost immediately after it was reported, yet nowhere in • the .digest do we find any reference to the journal entry of reversal as .quoted above.

We have before us the record in the ease of Steele v. Garn et al, 91 Ohio St., 381,.reported without opinion, which record discloses the facts to be that the plaintiff, Edgar L. Steele, recovered a judgment against the defendants, Sadie Garn, Manie Garn, Fanny Kaufman and John Kaufman; that the defendant Sadie Garn undertook to perfect an appeal to the court of appeals and filed an appeal bond signed by herself and by the defendant John Kaufman. A motion was made to dismiss the appeal, which the court of appeals overruled. Error was prosecuted to the Supreme Court, and at page 381, will be found the journal entry of that court, as follows:

"It is ordered and adjudged by this court, that the judgment of the said circuit court be, and the same hereby is, reversed for the reason that said circuit court erred in overruling the motion of the plaintiff to dismiss the appeal on the grounds set forth in said motion. And coming now to render the judgment which the said circuit court should have rendered,' it is hereby ordered and adjudged that the said appeal from the court of common pleas to the circuit be, and the same is hereby, dismissed, and this cause is remanded to the court of common pleas with instructions to carry its former judgment into execution.”

The bond in the Steele v. Garn case is almost identical with the bond executed in the case at bar. In both bonds it is recited that one of the defendants desires to appeal; in both cases there were judgments against four defendants; in both bonds two of the defendants signed; in neither of the bonds is there any surety.

An undertaking such as was given, or attempted to be given, by the defendants in the ease at bar is a nullity and therefore does not come within the curative provisions of Sec. 12232. It will be conceded that every attempt to give a bond can not be cured by this section. F'or instance, should a party attempt to give a good and sufficient bond thirty-five days after the rendition of .judgment in the court below it would not be claimed that this bond could be amended or a new bond given to bring it within the purview of the section.

The motion of the plaintiff to dismiss the appeal will be. sustained, and the motion of defendant to amend the bond, or give a new bond, will be overruled.

Metcalfe, P. J., and Pollock, J., concur.


author: Lieghlby, J.

text:
    REJECTION OF EVIDENCE WHICH WOULD NOT HAVE CHANGED THE RESULT.
    Court of Appeals for Cuyahoga County.
    The Cleveland Railway Co. v. Hoynes.
    Decided, April 1, 1918.

      Error — In Rejecting Evidence — Not Ground for Reversal, When^-Refusal to Admit Statement Signed Toy the Injured' Man After the Accident.

    1. A judgment should not be reversed for the rejection of evidence on the ground that the same constitutes prejudicial error, unless there is some reason to think that its admission would have or might have resulted in a different verdict.
    2. Where shortly after an accident the injured signed a statement containing details of the accident and at the trial gave testimony which contradicted in some particulars the written statement, the'action of the court in refusing to admit the statement in evidence, -while erroneous, did not constitute reversible error where the contents; of such written statement were incorporated piecemeal in questions propounded to plaintiff and other Witnesses, and were thus read before the jury. „ .

      Squire, Sanders & Dempsey and W. G. Boyle, for plaintiff in error.

      Wm. M. Byrnes, for defendant in error.
    Heard on error.
   Lieghlby, J.

The parties stood in reverse order in the court below and for convenience will be mentioned herein as they there stood.

Plaintiff, Frances H. Hoynes, filed her petition in the common pleas court praying for damages for injuries which she sustained while a passenger on a street car of the defendant company. The same proceeded to trial with the intervention of a jury and resulted in a verdict and judgment for plaintiff, from which judgment error is prosecuted to this court to reverse the same.

The error assigned and relied upon by the defendant to obtain a reversal of this judgment is the rejection of evidence offered by the defendant.

The plaintiff offered herself and a witness, Mrs. Smith, and others, to sustain her claims. Both plaintiff and Mrs. Smith testified orally at the trial below. It is claimed by the defendant that both made written statements a few days after the date of the injuries sustained by plaintiff. It is claimed that each statement contains contradictions of the testimony given by each at the trial. The alleged contradictions relate principally to the location and the size and kind of a seat upon which the plaintiff was seated, and from which she fell and injured herself by reason of the careless and negligent handling of said street ear by the -employees of the defendant company.

Mrs. Smith gave her testimony in chief, and on cross examination was confronted with a written statement claimed to have been prepared by one Williams, an investigator for the company, and signed by her a few days after the accident. She claimed not to remember having signed it. The contents of the paper writing were then incorporated piecemeal in questions by tlie cross examiner to the witness, and inquiry made of her whether she did not so state to the investigator. The contents of the paper writing were thus read in the presence of the jury. The paper had not yet been identified, but was offered and rejected. The- investigator, Williams, was called by the defense after the plaintiff had rested, who testified that-the paper writing corrctly recited the statements of this witness made to him at the time, and that it was signed by her in his presence. It was again offered and rejected. Again, the entire contents of this paper writing were recited in questions to this witness, and inquiry made whether Mrs. Smith had so stated to him at the time of his investigation, to.which questions the witness answered in all instances in the affirma-' tive. Thus the contents of this paper were again recited in the presence of the jury.

The plaintiff took the stand in her own behalf and. was examined in chief and cross examined by the defendant. On rebuttal she was recalled for further cross examination by the defendant, and inquiry made of her in reference to a certain written statement claimed by the defendant to have been made by her a few days after the accident. She was confronted with the written statement and asked whether she signed it, and her position was such that identification thereof became necessary •to make it competent in proof. The entire contents of the written paper were then incorporated in various questions by the cross examiner, and the plaintiff was asked whether she had made those statements to the investigator, some of which she answered in the affirmative and some in the negative. The contents of this paper were thus read before the jury and in its presence. In surrebuttal one Petrash, an investigator for the company, was called by the defendant, who testified that he prepared the written statement for the plaintiff and that the same contained a true recital of her statements to him and that she signed the same. This written statement of the plaintiff was offered and rejected by the trial court.

These written statements do contain some matters contradictory and inconsistent with statements made by the witnesses at the trial. As stated, the contradictions relate to the location of the seat- which the plaintiff occupied at the time of the accident, and its size and kind and direction with, reference to the length of the ear. Assuming that the statements were properly and sufficiently identified as claimed by the defendant, the same should have been admitted. ;• : •••-.•.■

Was their exclusion prejudicial error? .It is- claimed in the briefs that the contradictions relate only to the location Of the seat occupied by tbe plaintiff and her manner 'of occupying the same. The jury had before it the statements of these witnesses made in chief. It also had before it the contents of the written papers by incorporation in questions by the cross examiner, and wha,t the witness had to say about those written state ments. It tihereby had before it the alleged ctontradjictions and inconsistencies. It did not have before it, and as exhibits to be taken with it to the jury room, the written statements themselves.

In this respect the facts of this case present a very much different situation than is presented in a number of Ohio authorities bearing upon this subject. In these authorities the jury was not acquainted with the contents of the paper writings or the character of the proof excluded. Shriedley v. State, 23 Ohio St., 130, and Dilcher v. State, 39 Ohio St., 130.

We think the greater weight of the authority is to the effect that a judgment should not be reversed for the rejection of evidence ■ on the ground that the same constitutes prejudicial error, unless there is some reason to think that its admission would have or might have resulted in a different verdict. In view of the subject matter of the alleged contradictions and inconsistencies in the testimony of the plaintiff and Mrs. Smith given at the trial and their written statements made a few days after the accident, and in view of the further fact that the contents of these statements were before the jury one or more times by reason' of the manner of the cross examination, and that the jury had before it the conduct of these witnesses in respect to these statements and what they had to say about them, we are unable to conjure up any hypothesis upon' which it may be said the jury might have arrived at a different verdict if those written statements had been admitted and the jurors had had an opportunity to actually examine their contents. We do not think, that error has intervened in the trial of this case prejudicial to the rights of the defendant. Jones on Evidence, Section 896.

The judgment of the court below .is affirmed.

Grant and" Dúnlapp, Jj., concur. •