author: By HURD, PJ.

text:
    IN RE APPROPRIATION OF PROPERTY OF COOLEY ELLIS BY OHIO TURNPIKE COMMISSION
    Ohio Appeals, Sixth District, Lucas County.
    No. 4778.
    Decided February 17, 1955.

      Bowman, Hanna & Middleton, Bowling Green, for plaintiff-appellant.
    Taylor, Cruey & Kelb, Toledo, for plaintiff-appellant.
    Frank C. Dunbar Jr., General Counsel, Columbus, and Fuller Harrington, Seney & Henry, Toledo, for defendant-appellee.
    (HURD, PJ, KOVACHY, J, SKEEL, J, of Eighth District sitting by designation in the Sixth District.)
   OPINION

By HURD, PJ.

This is an appeal on questions of law from a judgment entered upon the verdict of a jury in an action originating in the common pleas court of Lucas County. Plaintiff-appellant is Cooley Ellis, the land owner, and defendant-appellee is the Ohio Turnpike Commission, the parties being sometimes referred to herein, respectively as “Ellis” and the “Commission.”

This appeal involves a proceeding instituted by the Commission to appropriate property of the landowner familiarly known as “Storer Field” consisting of an irregularly shaped tract of land of approximately forty-five acres, lying north and east of the intersection of the Anthony Wayne Trail and Detroit Avenue in the City of Maumee, and in the vicinity of the property involved in an action between the same parties in appeal No. 4777 on the docket of this Court. The property is bounded by the two highways mentioned and by the right of way of the Toledo Terminal Railroad and by privately owned lands.

It is the contention of appellant that because of the location of this property and its ready accessibility from other parts of Toledo and Lucas County, by reason of the main arterial highways converging at and near the property, the same is ideally suited for the development of a shopping center, it being conceded by both parties that the entire property has been zoned for commercial purposes. It is also conceded that the right of way of the Ohio Turnpike cuts diagonally across and through the property in an easterly and westerly direction from the intersection of the two highways upon which the property abuts.

It is further the contention of the appellant that because of the non-access features of the Anthony Wayne Trail and because the residue of the property, after the taking, is landlocked, there is a complete isolation and total destruction of the value of that portion lying northerly of the right of way with the result that only twenty-two acres of land remain accessible and that this tract of twenty-two acres is too small for the development of the contemplated regional shopping center.

The jury returned a verdict for Ellis in the stun of $40,000 for eight and five-tenth (8-5/10) acres, as compensation for the land taken for the turnpike right of way, and $56,825.00 as damages to the residue, or a total sum of $96,825.00.

The property owner contends that as the entire value of the property is lost for all practical purposes, the verdict is grossly inadequate as the direct result of errors committed in the trial of the cause.

Appellant assigns as ground for reversal many errors, some of which were likewise assigned in cause No. 4777. The errors assigned are as follows:

1. The court erred in refusing to dismiss this proceeding at the preliminary hearing, and in overruling the owner’s motion to dismiss, the undisputed evidence showing that there was a failure to comply with mandatory provisions of the statute, §5537.06 K. C., requiring a bona fide offer and a resolution declaring the necessity of the appropriation before such proceeding may be brought.

2. The owner was deprived of a fair trial by the misconduct of counsel for the commission in his opening statement and the court erred in denying a mistrial and in failing to take any action to withdraw this matter from the consideration of the jury.

3. The court erred in admitting evidence of what Ellis had paid for the subject property.

4. The court erred in admitting evidence of the price paid for other properties and in refusing to exclude this evidence from the jury.

5. The court erred in admitting a purported financial statement of Ellis, exhibit 37, in evidence, and in refusing to withdraw this exhibit from the consideration of the jury.

6. The court erred in permitting the witness, Schenck, to testify as to his opinions of values.

7. The court erred in permitting the witness, Rupert, to testify as to his opinion of values.

8. The court erred in excluding the testimony, of the witness, Welch, as to his opinion of values.

9. The court erred in excluding evidence of the potential sales of the shopping center which represented the best use of the subject property

10. The court erred in excluding plans and diagrams exhibits 17-a and 17-b, which illustrated the best use of the property.

11. The court erred in excluding a lease of a part of the property, exhibits 32 and 32-a, and in refusing to permit the cross-examination of the Commission’s experts in relation thereto, or in relation to rentals generally.

12. The court erred in excluding a notice relating to a sale of one of the alleged comparable properties (exhibit 41).

13. The court erred in stating in the presence of the jury that Ellis was not qualified as an expert to testify as to the limited use of his remaining property after the appropriation.

14. The court erred in refusing to receive evidence in rebuttal relating to traffic.

15. The court erred and abused its discretion in limiting time for argument.

16. The court erred in giving to the jury before argument request No. 2 of the Commission.

17. The court erred in its general charge to the jury in charging on the subject of the sign rights and in failing to charge on the abutter’s rights appropriated.

18. The verdict and judgment are each contrary to the manifest weight of the evidence.

We shall not discuss these assignments of error seriatim nor shall we here discuss at length asignments of error passed upon in Appeal No. 4777, between the same parties, covering other lands, which are common to both appeals.

Error is assigned to the effect that counsel erroneously was permitted in his opening statement to the jury, to say:

“The evidence will show that under the law it is possible to get private right of way over the railroad. The Terminal Railroad runs down here. The evidence will show that the law permits under certain circumstances, private right of way so we believe that when you hear all the evidence, you will conclude that isn’t isolated — so that — forever—so that you can get into that other than by helicopter or balloon.”

The record shows that before the introduction of evidence, counsel for the owner requested that the foregoing statement be withdrawn from the jury, which was overruled by the court. Counsel for the Turnpike Commission argue that refusal to withdraw from the jury such a statement was not erroneous, citing Gratz v. Hake Erie & Western R. R. Co., 76 Oh St 230, in which it was held that irrespective of the statute, one who holds property on both sides of a railroad, regardless of when acquired, has a right to install a private crossing at his own expense. That case has no application to the instant case. Here, the evidence clearly shows that Ellis does not own the property on both sides of the railroad, as the railroad itself forms a border to the owner’s land and even if he were able to acquire 'a right of way across the railroad, which is doubtful, it would be of no value, unless in some way he acquired the land on the other side of the railroad. We think this statement of counsel, which obviously could not be substantiated by evidence, was prejudicial and an error which could have been cured if the trial court had granted the motion to withdraw the statement from the jury, which the trial court upon request refused to do. It is true that considerable latitude is allowed counsel in opening statements but counsel should not be permitted to make statements of law or fact which are obviously erroneous or over objection discuss questions of law with the jury in opening statements, questions of law being peculiarly within the exclusive jurisdiction of the court. In this case, a specific request having been made to instruct the jury to disregard the statement and the same having been overruled, we think the assignment of error is well taken and should be sustained.

The case of Breyman v. Penna. R. R. Co., 43 Oh Ap 473, while relating to similar conduct in final argument, should be equally applicable to opening statements when attention of the trial court is timely directed to the statements with the request to withdraw the same before evidence is presented. In that case the court said at page 480:

“Plaintiffs in error claim that to so argue was improper, and that the court should have intervened and said so to the jury. We also think that this should have been done. This court has heretofore emphasized the duty of a trial judge in this regard, and repetition will serve no good purpose. Suffice it to say, a trial judge may not remain silent when his attention has been called to a patent impropriety, however inadvertent and unintentional it may have been on the part of counsel. Unfortunately, righteous motives expressed in inept words are likely to be misunderstood. Counsel did not retract what he said, the court remained silent, and it is difficult to say what effect this statement of counsel had upon the minds of the jurors when they came to deliberate upon what the verdict should be. The suggestions made by counsel gave the' jury an opportunity to play upon their imaginations as to the possibilities that in fact should not have been considered by nor suggested to them, and we are therefore of the opinion that to so argue without retraction by counsel or suggestion by the court as to its impropriety, under the circumstances presented by the record, was prejudicial error.”

Errors are assigned to the exclusion of certain testimony of one Kenneth C. Welch of Grand Rapids, Michigan, a witness for the owner, and to the exclusion of certain plans and sketches marked exhibits 17-a and 17-b prepared by him, as showing the highest and best use of the subject property.

The record contains an imposing list of the qualifications of this witness as an expert, a detailed recital of which is unnecessary here. It should be noted, however, that he qualified as an expert city planner, consultant and architect, primarily in respect to commercial areas, including regional and community shopping centers. He had made numerous surveys of properties for regional and community shopping centers involving three burroughs in New York City, — Kings, Queens and the Bronx; one in Philadelphia; two in the Kansas City area; one in Omaha, Nebraska; and Dear-born, Michigan; two in Canada — Hamilton and Toronto; a center halfway between Bridgeport and New Haven, Connecticut and what is more important, as far as this case is concerned, four in the Toledo area, one each at the corner of Sylvania and Douglas;- Franklin Field; Secor and Central Avenues and one known as the Village Shopping Center.

He testified that in arriving at a conclusion as to the highest and best use and maximum value of Storer Field, he took the following factors into consideration; access to traffic, concentration of population; drawing power of center; time distance; competition; purchasing power of people in area; past retail sales in the area by types; annual sales in dollars and cents; influence of the turnpike; zoning; highway capacity; future growth of the area; and terrain (natural contours).

We think the record shows this witness eminently qualified by reason of education, knowledge and experience, particularly in respect to his previous surveys of four other Toledo properties used as shopping centers, to testify as to his opinion of the highest and best use of the subject property and its maximum value for such use.

Evidence was produced tending to show that Storer Field was ideally situated and that its highest and best use was as a regional shopping center, this being the type of center on which is located stores of all classes of merchandise.

The plans, sketches and lay-outs (marked exhibits 17-a and 17-b) were properly identified but objection was sustained to the offer in evidence of these exhibits, as illustrating the highest and best use of the property, on the ground that it was an attempt to show a particular use of the property, as distinguished from a general use. A proffer was made for the record, but the plans were excluded. The witness testifed that he was familiar with the value of commercial properties in the vicinity of the subject property, but on objection was not permitted to testify as to his opinion of the values of the subject property at the time of the taking, or as to the use and value of the remainder after taking.

The record shows that the witness was asked as to the best use of the remainder after the appropriation of the right of way. The record then shows the following:

“I am going to ask you to state whether or not — what, in your opinion, would be the best use of that property after the appropriation of the right-of-way indicated there, by the Ohio Turnpike?
“MR. HARRINGTON: If that is calling for a general use, I have no objection; if he is calling for a particular use, we do object.
“MR. CRUEY: We have already had evidence of what the entire parcel’s best use would be. Certainly, after the Turnpike had acquired it, he should be able to testify what the best use of the remainder was.
“THE COURT: Ladies and gentlemen of the jury, you may retire again. (Thereupon, the jury retired to the jury room.)
“THE COURT: The trouble with that question is if he gives his opinion as to the best use, that is a particular use.
“MR. TAYLOR: That is true, Your Honor, but we can also show the best use of the property, that would be true.
“THE COURT: Any particular use. That is the trouble with the question.
“MR. HARRINGTON: That’s what he started to give.
“THE COURT: That’s what he wants to give, as a matter of fact. No doubt about that.
“MR. TAYLOR: In order to give the best use of a piece of property, Your Honor, you give a particular use. You can’t help it.
“THE COURT: THEN IT IS IMPROPER.
“MR. TAYLOR: It is necessarily included. The Schaeffer case says you can show the highest and best use of the property.
“MR. HARRINGTON: Not a particular use.
“THE COURT: NOT A PARTICULAR USE, AND IT SAYS THAT IN PLAIN WORDS.”

From the foregoing, and other evidence, in the record, it is clear in this case as in appeal No. 4777, that counsel for the Turnpike Commission, as shown by their objections, and the trial judge as shown by his rulings, were of the opinion that it was improper to show any particular use of the subject property, even though the exclusion of such evidence prevented the land owner from producing evidence as to the best and highest use of the property. By reason of the exclusion of such testimony by the expert witness, the land owner’s offer to show the highest and best use of the property and the maximum value for any purpose for which its use was available was denied.

We are of the opinion that evidence tending to show a particular use was admissible because in logic and reason the highest and best use of the property cannot be shown without giving one or more particular uses for which it may be available. It is our view that the objection that such evidence was interdicted by the case of Sowers, Supt. v. Schaeffer, 155 Oh St 454, is not well taken.

An examination of the facts of the Schaeffer case, and the case of Goodin v. Cincinnati & Whitewater Co., 18 Oh St 169, is necessary to a correct interpretation of the phrase “not for any particular use” carried into syllabus 3 of the Schaeffer case.

Without detailing the facts at length in the Schaeffer case, supra, suffice it to say that in all there were forty buildings on the property, thirty - four of which were homes owned either by the Schaeffers or by various lessees; six of the buildings were classed as commercial buildings. The complaint in that case was made that it was not proper on direct examination to admit testimony as to the income from the business conducted on the property. The court passing on that question stated: that there was no testimony admitted as to income from business on the property, but testimony was received as to the rentals which Schaeffer received from the dwellings, and as to the nature of the business as to which the property was adapted. The court held that such testimony was competent.

In so holding the court said, at page 458:

“In our opinion, this testimony was competent. In estimating the value of property in an appropriation proceeding, it must be valued as to its worth generally, not for any particular use, but for any and all uses for which it may be suitable.
The true value of anything is what it is worth when applied to its natural and legitimate uses — its best and most valuable uses. Goodin v. Cincinnati & Whitewater Canal Co., 18 Oh St 169.
In ascertaining the amount which should be allowed in an appropriation proceeding, the jury should take into account not only the purposes for which the land is or has been applied, but any other beneficial purpose to which it may be applied. Cin. & Springfield Ry. Co. v. Excrs. of Longworth, 30 Oh St 108.
In the present case, the property involved was developed for recreation, summer home and permanent home purposes, and in ascertaining its value as a whole it is essential to show the value of the improvements, the rental value thereof and the nature of the businesses which can be suitably carried on upon the premises.”

The facts in the case of Goodin v. Cin. & Whitewater Canal Co. supra, are much more complicated and we shall advert to only such as bear upon the present issue.

In that case, Welch, J. speaking for a unanimous court, discussed inter alia the question of the value of the property of the Canal Company under appropriation proceedings. The facts showed that through fraudulent means, the president and directors of the Railroad Company had gained control of the Canal Company and then transferred the property of the Canal Company to the Railroad Company at a grossly inadequate price, under an agreement which could not be sustained in equity and the only remedy remaining was by condemnation proceedings. As the railroad had already acquired the property as a railroad right of way, the court found in a suit brought by minority stockholders of the Canal Company, that the property was of little value as a canal, that as such it was “played out” and “of no value as a canal.”

The court held that the estimate should have been of its value generally for any and all uses and not for any particular use such as a canal, which as such had no value, the court qualifying the words “and not for any particular use” with the words “and especially not for any inferior, or non-appropriate use.” This doctrine was embodied in the fourth paragraph of the syllabus which reads as follows:

“The rule of valuation in such cases is what the interest of the canal company was worth, not for canal purposes merely, or for any other particular use, but what it was worth generally, for any and all uses for which it might be suitable.”

We can readily deduce from the Schaeffer case and from the Goodin case that the words “not for any particular use” were used for the benefit of the land owner, and not for the benefit of the condemner. That is, in arriving at a conclusion of the value of the land taken, the land owner is not limited to evidence of any particular use, but may present evidence “for any and all uses for which it might be suitable.” Applying the Language of the Goodin case in which it was first used, it is clear that the Canal Company was not confined in evidence to a showing of what the land was worth for “canal purposes merely, or for any other particular use but what it was worth generally for any and all uses for which it might be suitable.” (Emphasis added.) In other words, the phrase “not for any particular use”, as used in the syllabus of the Schaeffer case, and the phrase, “not for canal purposes merely, or for any other particular use” contained in the syllabus of the Canal case, were words not of limitation upon the land owner as contended by counsel for the Commission, and concurred in by the trial court, but words of limitation upon the condemner by reason of which the condemner could not prevent a showing of the maximum value to the owner for any and all purposes for which the use of the land was available, including one or more particular uses — the weight of such testimony being for the jury under proper instructions.

This interpretation is confirmed by the later Supreme Court case of Langanean v. City of Cleveland, 159 Oh St 525 (1953) syl 3, which reads:

“It is the duty of the court in an appropriation proceeding to afford the property owner the right to fully show the extent and character of the real estate proposed to be taken and its maximum value for any purpose for which its use is available, including the use which is presently made of it.” (Emphasis added.)

As to the plans, sketches and layouts proffered in evidence and rejected by the court, we hold that the same were admissible for the reasons above set forth, and for the reasons discussed in our opinion in the case of Ellis v Turnpike Commission decided by this court in appeal No. 4777, on the docket of this court, in support of which we cited Railway v. Longworth, 30 Oh St 108; Sowers, Supt. v. Schaeffer, 155 Oh St 454 and Langaneau v. City of Cleveland, supra.

We hold, therefore, that the testimony of the witness Welch, except as to estimated potential income from commercial business, should not have been excluded, either on the ground that the same was an attempt to show a particular use, or that he did not show sufficient qualifications to permit him to testify as to the highest and best uses of the subject property and its maximum value for which its use was available.

Error is likewise assigned here, as in Appeal No. 4777, to the admission of evidence, concerning sales of alleged comparable properties, concerning a sale of 8.8 acres of land by the county commissioners of Lucas County, by advertisement in a newspaper requiring sealed bids subject to a condition that the purchaser waive any claim for damages by reason of the construction of the Ohio Turnpike. We held in Appeal No. 4777 that the admission of evidence of this character as a comparable sale was erroneous as it was subject to unusual conditions of waiver and was not in the nature of a free sale negotiated between a willing seller who was not obliged to sell and a willing purchaser who was not obliged to purchase. However, additional error is assigned here because on objection the court excluded from the evidence exhibit No. 41 being a legal notice of said sale by the Commissioners, setting forth in substance that the Board of County Commissioners of Lucas County would offer for sale upon receipt of sealed bids the property therein described by metes and bounds for cash to the highest responsible bidder, the successful bidder and purchaser being required to furnish a written waiver of any and all claims for damages to said real estate by reason of the construction of the Ohio Turnpike. The record shows that Exhibit No. 41 was offered, refused and then re-offered, and again refused, despite the fact that comparable testimony was allowed in Appeal No. 4777. Assuming for the purpose of discussion only, that the court was correct in admitting the evidence of this sale, it certainly was prejudicial error in any event to exclude evidence of the unusual terms and conditions under which the sale was conducted by the county commissioners.

Complaint is also made that the court, in the presence of the jury, remarked that Ellis was not competent as an expert to testify as to the limited use of the remaining property The evidence shows that he was a developer of real estate and a builder for twenty-eight years and in addition thereto had made a study of shopping centers with a view to building a shopping center on the subject property.

Considering all evidence appearing in the record, it is our opinion that he showed ample qualifications to testify as an expert as well as an owner of real estate and the ruling and comment of the court that he was not an expert was erroneous because it unnecessarily deprecated in the presence of the jury the testimony of the owner and may have had an adverse effect upon his testimony as a witness.

Coming now to a consideration of the complaint that the judgment is manifestly against the weight of the evidence, there certainly is grave doubt as to the adequacy of the verdict, but the three judges being unable to agree that the verdict is manifestly against the weight of the evidence, this assignment of error is overruled.

Error is assigned because of refusal of the court to receive testimony in rebuttal relating to traffic conditions for which counsel for Ellis sought a short continuance from 3 P. M. to the following day at 9 A. M., when the Commission rested its case prior to the time its' counsel had indicated. We think this was a matter within the sound discretion of the court, but as the request was a reasonable one, we think it should have been granted, which could easily have been done without any prejudice to the Commission.

Error is assigned in this case, as in Appeal No. 4777, that the court erred in admitting a purported financial statement of Ellis which the evidence failed to show was authorized by him but which purportedly had been used in litigation incident to a divorce case between Ellis and his former wife, which extended for a period of more than three years and terminated in a divorce in August, 1951, a little over two years before this appropriation case was instituted. This financial statement, marked Exhibit 37 in this case, was allowed in evidence over the objection of Ellis and the court overruled a motion to withdraw the same from the consideration of the jury.

For the reasons stated at some length in our opinion in Appeal No. 4777, we hold that the domestic difficulties of Ellis with his former wife and his total financial worth represented by the statement (the subject property being shown at cost six years before) should not have been admitted in evidence and the request to have it withdrawn from the consideration of the jury should have been granted. The statement was completely irrelevant to any issue in this case and was highly prejudicial as discussed in our opinion in Appeal No. 4777.

Error is here assigned in permitting the witness (Schenck) for the Commission to testify as to sales and values of other properties, based solely and exclusively on information gleaned from examination of public records, considerations shown on deeds and computation of revenue stamps on deeds.

For the reasons set forth in our opinion in Appeal No. 4777, decided contemporaneously herewith, we hold that such evidence was inadmissible and constituted error, as mere hearsay, and inadequate proof of the competency of the witness. Furthermore, public documents speak for themselves and if their contents are admissible for any purpose, the best evidence rule requires their production in open court.

We have reviewed the other others assigned herein, but find no others of a prejudicial nature.

It is our view, however, that for the reasons herein set forth the appellant was not afforded a fair trial and that therefore the judgment of the Court of Common Pleas should be and the same is reversed and the cause remanded for further proceedings according to law.

A journal entry may be drawn in accordance herewith. Exceptions noted.

KOVACHY, J, concurs.

SKEEL, J, dissents for the reasons as set forth generally in the dissenting opinion filed in Appeal No. 4777, rendered contemporaneously herewith.


source: Caselaw Access Project

author: By FULTON, J.

license: Public Domain

text:
    STATE, Plaintiff, v. SILBERBERG, Defendant. STATE, Plaintiff, v. SILBERBERG et, Defendants.
    Common Pleas Court, Cuyahoga County.
    Nos. 64412, 64414.

      Fred Frey, Asst. Prosecuting Atty., Cleveland, for State.
    Peter E. Klein, Hon. Neil W. McGill, Morris Benik, Cleveland, for defendant.
   OPINION STATEMENT OF CASE

By FULTON, J.

These two cases based on criminal indictments were heard together. The first case, No. 64412, embraces two counts based upon the Ohio Securities Act against Silberberg only. Count One alleges a prohibited sale of an alleged security which was not registered or qualified, not exempted, and which was not the subject matter of a transaction exempted by law. Count Two alleges that Silberberg made the sale of the alleged security described in Count One when he, Silberberg, was not licensed to make such sale.

It is clear that both counts in Case No. 64412 arise from the same transaction.

The second case, No. 64414, embraces six counts based upon the same laws against Silberberg and the Euclid Green Development Company of which the latter, Silberberg, is president, a director, and manager. These two defendants are charged in each of three counts with selling a non-registered, non-qualified, non-exempted alleged security and which sale was in no wise the subject matter of an exempted transaction under the law. In each of the three counts it is charged that Silberberg, and the corporation were not licensed by law to sell these alleged securities.

The counts in Case No. 64414 are in couplets. One in each couplet of counts charges that an alleged security was sold and the other in each couplet of counts charges that neither Silberberg nor the corporation were licensed under the law to sell these alleged securities.

It is clear that each couplet of counts arises from the same transaction.

The instruments or documents in both cases are alike and similar. They are not, however, precisely identical.

Generally speaking, the instruments are contracts to sell or convey an undivided interest in real estate improved by resident, structures; and these resident structures are divided into living suites, either vertical (terrace-like) or horizontal (apartment-like). However these instruments or documents provide not only for the sales and conveyances aforesaid— but “plus”. In these instruments the defendants are the vendors (lessors or what-not); and the other parties are the vendees (lessess or what-not).

The “plus”, advocates the prosecution, makes these instruments securities under the Ohio Securities Act. The “plus”, asserts the defense, in no wise impeaches the purity and simplicity of, nor changes the character of them from remaining, land contracts.

The defense says that fraud is the important and only factor in prosecution under the Ohio Securities Law. On the other hand the prosecution claims the tests to be (a) Are the instruments securities, (b) Are they registered or qualified or do they arise from an exempt transaction, and if not (c) Are the defendants licensed to sell them.

STATEMENT OF COURT’S VIEWS

I

These instruments are not pure and simple land contracts either to sell or to lease an undivided or aliquot portion of land, or a specific portion thereof. They purport (1) to sell an undivided or aliquot portion of real estate and (2) to permit occupancy by the vendee of a specific portion. They contain a provision for conveyance to the vendee of an undivided portion of the real estate when the payment conditions are met by the vendee and at that time impliedly (not expressly) permit occupancy of a specific portion thereafter by the vendee. They provide for interim reservation to vendor, as if he were only a lessor, to furnish “water, heat, and other expenses in connection with the building” as well as “taxes, assessments and insurance” — all payable however with vendees’ funds.

The foregoing indicates that the documents or instruments are not simple land contracts.

Then there are incorporated provisions which clearly demonstrate the instruments are not pure land contracts for the ultimate direct conveyance of a fee or leasehold interest. Some of these are now summarized (It should be noted that the scrivener made no distinction between the words “shall” and “will”.)

(a) A provision that the vendor shall create a corporation and distribute its shares.

“It is understood and agreed that the party of the first part shall incorporate a corporation as its own expense on or before June 1, 1959, capitalize at the sale price of said land and building thereon and to issue shares in said corporation in proportion to the value of the interest purchased by the party of the second part.”

(b) A provision that the vendee will convey his premises to this corporation by warranty deed — presumably if the vendee by that time shall have paid the full consideration price.

“It is understood and agreed that when said corporation has been duly formed, that the present owner will transfer by Warranty Deed with title guarantee at his own expense, all his right, title and interest, including the releasing of any dower right in said property to the said corporation: that taxes and assessments and insurance will be prorated as of the day of transfer to the corporation.”

(c) A provision which specifically states that the distribution of the shares of stock in such corporation are deliverable “when the principal sum, deposit, payments and all and any other conditions of this contract have been fully complied with and payment of the same has been made in full.”

(d) Varying provisions that such organized corporation should be “profit” and as Silberberg stated should be “non-profit”; that the corporation should be turned over to the particular vendee designated in the contract; and some to vendee and others.

(e) A provision that “control and use of deposit monies is absolute in the vendor” and that vendor’s “accounting will be final.”

These documents are not land contracts — either pure or simple. These documents are of a promissory nature and to the extent that they provide for the creation of a corporation and the issuance of its shares to the vendees, constitute securities. In one contract it was provided that after the vendee had reconveyed his title to an undivided interest in the real estate for which he had paid in full and by reason of which he received these shares of stock, the vendee should receive a 99-year lease to the specific suite or apartment occupied.

The court finds that these documents are securities within the intendment and contemplation of the Ohio Securities Law.

II

These securities as hereinbefore defined were not registered either by description or by qualification as by law required and the transaction through which these securities (so-called land contract) were issued were neither registered nor exempted by law. Nor were these securities exempted under the securities statutes. See §§1707.01 to 1707.99 R. C., and especially §1707.02 (G to 1 inclusive) R. €.; §1707.03 (B to L inclusive and P & Q) R. C.; §1707.04- R. C.; §§1707.06 and 1707.34 R. C. The foregoing-sections relate to registered securities .and exempted securities and exempted transactions and are referred to in §1707.44 R. C., which is, according to §1707.99 R. C., the foundation underlying and the framework for these indictments.

III

The court was a little troubled about the applicability of §1707.03 K-3 R. C., which is one of the sections describing an exempt transaction. K-3 describes and defines “the sale of pre-organization subscriptions for shares of stock of a corporation prior to the incorporation thereof” as “exempt” provided “such sale is evidenced by a written agreement, no remuneration is given, or promised directly or indirectly, for or in connection with the sale of such securities, and no consideration is received directly or indirectly by any person from the purchasers of such securities until registration * *

However it is obvious that the consideration in dollars for the acquisistion of the undivided interest in the real estate supports all of the promises and obligations made and to be performed by the vendor. Were this not so each and every provision beyond the purchase of the interest in the real estate by the land contract would be “nudum pactum.”

In consequence, therefore, if one considers the proposed sale -or transr fer of shares in the contemplated corporation a§ the equivalent of “pie-organization subscriptions” the conclusion is irresistible that the paper writing or instruments in this case provide for “renumeration” and “consideration” for their proposed issuance. They do not therefore fall within the definition of an exempt transaction.

IV

Secs. 1707.14 through 1707.19 R. C., relate to licensure and by reference through §1707.99 and §1707.44 B. C., also specifically underly the non-license counts of these indictments.

The defendants in these indictments did not comply with these provisions respecting licensure. They were not licensed to sell securities under the law.

V

Defense counsel suggested reliance upon “L” of §1707.03 B. C., (exempt transactions). That provision reads “the issuance of securities in exchange for * *• * outstanding securities, claims, or property interests * * * ” Here the defense was faced with a dilemma. It was necessary to reverse the reading and meaning of “L” by looking to the time when the shares of stock in the corporation would be issued to the vendees named in these documents in exchange for their property interests, rather than the exchange of the so-called land contract for the interest derived through them for the proposed future corporate stock issue. This argument compelled them to embrace the viewpoint that the shares of stock are securities.

There can be no doubt that the “issuance of securities” in “L” means the present interest “in exchange for * * * outstanding securities, claims or property interest * * *.” It does not and cannot mean a contemplated uncertain, possible, probable or even a certain future issue.

VI

The only tests of penal responsibility are whether the securities are exempt or registered or are issued out of an exempt transaction and whether those who sell the securities are licensed so to do. Intent in the ordinary sense of criminal law is not an essential element. The intent is either nonexistence or inheres in and flows from the prohibited acts. What the law prohibits is that “no person * * * shall knowingly engage in any act or practice” prohibited by §1707.01 to §1707.45 B. C. (See §1707.44 G R. C.)

See. 1707.29 R. C., provides that “The accused shall be deemed to have had knowledge of any matter of fact, where in the exercise of reasonable diligence he should, prior to the alleged commission of the offense in question, have secured such knowledge.” Here Silberberg, upon learning, by rumor, of the viewpoint of the Securities Division with regard to the proposed corporation and its shares distribution, struck out those paragraphs and obtained the signature of Mr. and Mrs. Matthew (State’s Exhibit 31 — similar oflense).

VII

Although §1707.45 R. C., places the burden of proof upon the defendant to show his entitlement to the benefits under any of the sections of the law. this court reads that provision in contest. The same section provides that the indictment need not negative the facts of registration dr exemption respecting either securities or the transactions through which the securities are issued. This court concludes that while the burden is upon the defense in this case to explain that these documents do not fall without the embracement of the Securities law, there still remains with the State the burden of proof beyond a reasonable doubt that defendants committed offenses.

Upon all of the evidence the court is convinced to a moral certainty of the truth of the charges made in these indictments, even though (a) the burden of proof of guilt is placed on the State, and (b) these securities sections must be strictly construed because (1) they are penal in nature, and (2) in derogation of the common law rule of “caveat emptor ”

VIII

The defense argued vehemently that the purpose of the Ohio Securities Law like that of the S. E. C. is to prevent frauds. S. E. C. v. Joiner, 320 U. S. 344, 353. That is unquestionably true. In addition to that laudable purpose the Ohio Securities Law has set forth prescribed violations. These violations such as the sale of securities without a license may exist even though no fraud is perpetrated, just as by analogy one may be found guilty of using the mails to defraud in violation of U. S. Statutes even though no one is defrauded. (Even a casual analysis of the ultimate possibilites which might confront the vendees in these transactions reveals the potentiality of fraud — if that were the basis for adjudication here.)

The principle pronounced by the Court of Appeals for the 8th District in Commercial Bank and Trust Company v. Doyle, 13 Abs 354 aptly applies. There in an opinion by Judge Leighley, the judgment based upon which was concurred in by Judges Levine and Weygandt, it was written that the Ohio Securities Act “punishes persons that do not comply therewith” even though that same act “does not render void” the sale or act of which the seller violated the law. That case dealt with the sale of real estate. (Real estate and its handling has from time to time challenged the legislature.)

This court is not impressed by. nor is it required to be controlled by, the decision of the Appellate Court of Illinois in the case of Brothers v. McMahon, 351 Illinois Appeals 321, 115 N. E. 2d Series 116. That case was a civil action. It was based upon the Illinois and not the Ohio Act. Here we deal with the Ohio act and we are not dealing with the right between the vendor and any of his vendees. We are dealing with the rights between the State of Ohio and the vendors. By analogy deaths from the automobile accidents present instances where the causer of the death may be guilty of manslaughter in a criminal case and not be liable in damages for the death of the deceased.

It is the duty of the court to ¿pply the statutes passed by the legislature because these are the will of the people expressed through their representatives. There are many pieces of legislation with which this writer does not agree. In transactions such as in this case, he belives that the doctrine of “caveat emptor” should apply. He considers that the buyer does not need the protection of laws like the Ohio Securities Law because every man has a constitutional right, or ought to have such constitutional right, to make a fool of himself. However, this judge seems to be out of step with the people who think to the contrary and their will has been expressed through legislation and this court will apply such legislation, including the penalties thereof since he knows the statutes are valid constitutionally and otherwise.

If the court’s viewpoint were followed there would be no Ohio Securities Law and these defendants would not be before this court. There is, however, an Ohio Securities Law and these defendants have been before this court as alleged violators thereof; and from the foregoing findings these laws have been violated and the penalties must be applied One should not give lip service to the wisdom of a statute and then wink at the penalty thereof.

From all of the foregoing the court finds and adjudges the defendant, Hirch Silberberg, guilty of both counts in indictment No. 64412; and finds and adjudges Hirch Silberberg and the Euclid Green Development Company each and both guilty of all six counts of the indictment in Case No. 64414.

The penalties will be given by oral pronouncement. Exceptions are given all parties.


author: By WISEMAN, PJ.:

text:
    VANGROW et, Plaintiffs-Appellees, v. WEISS et, Defendants-Appellants.
    Ohio Appeals, Second District, Montgomery County.
    No. 2254.
    Decided November 19, 1953.

      Robert S. Nevin and H. J. T. Herzog, Dayton, for plaintiffs-appellees.
    A. W. S'chulman, Dayton, for defendants-appellants.
   OPINION

By WISEMAN, PJ.:

This is a law appeal from the judgment of the Common Pleas Court of Montgomery County, rendered in favor of the plaintiffs in an action in which plaintiffs sought recovery of rent for the use of the fourth floor of a building, the basement, first and second floors of which the defendants occupied under a lease entered into with the plaintiffs.

In February, 1951, the defendants were permitted to move merchandise from the basement to the fourth floor, due to the unusable condition of the basement. The basement was placed in proper condition and the plaintiffs requested the defendants to vacate the fourth floor and move the merchandise to the basement, which the defendants failed to do. On August 15, 1951, counsel for the plaintiffs wrote a letter to the defendants, the pertinent part of which is as follows: “Since permission has been granted you to use the 4th floor of your share of the building without rent heretofore, the rent for this area will now be charged at the rate of $300.00 per month for as long as you occupy the building or until a new agreement is entered into. Said rent is due from August 1, 1951. If these terms cannot be met, you will please leave the premises within three days after receipt of this letter.”

After the receipt of this letter the defendants continued to occupy the fourth floor. Subsequently plaintiffs and defendants and their counsel held a conference at which time they resolved most of their differences, but at no time did the defendants either agree or dissent on the question of the payment of rent for the occupancy of the fourth floor. The plaintiffs sent to the defendants a statement for the rent for the months of August and September, which the defendants ignored. The defendants continued to occupy the fourth floor through the winter of 1951-1952. On March 24, 1952, counsel for the plaintiffs sent a letter to the defendants which reads as follows: “Will you please vacate your portion of the 4th floor of the building you now occupy at 119 E. Fifth Street? No rent has been charged for these premises and none will be if you vacate before April 1st. 1952. Mr. Vangrow can no longer permit occupancy of this space as he needs it for his own purposes.”

After the receipt of this letter the defendants stated that they would vacate the fourth floor by April 1, 1952, but the evidence shows that they continued to occupy the premises through the month of May, 1952. On May 20, 1952, the plaintiffs brought an action against the defendants to evict them from the fourth floor. On June 3, 1952, defendants signed an entry in the eviction case agreeing to remove all merchandise on the fourth floor, which was done.

Plaintiffs sought a recovery of $300.00 per month from August 1st, 1951 to May 18, 1952. The trial court rendered judgment in the amount of $600.00, being the rent for the fourth floor for the months of April and May, 1952. No cross appeal has been filed.

On the factual issue as to whether the defendants dissented after the receipt of the letter dated August 15th, 1951, the trial court found for the plaintiffs. The trial court was the judge of the credibility of the witnesses There is ample evidence to support- the conclusion of the trial court that the defendants neither assented nor dissented regarding the payment of $300.00 per month for the use of the fourth floor.

The trial court held that by a failure to dissent after the receipt of the letter of August 15, 1951, an implied contract arose between the parties to pay the rent stipulated.

The defendants-appellants have assigned six grounds of error, which raise three propositions. First, the court erred in holding that an implied contract arose between the parties. Second, the court erred in rendering a judgment for the plaintiff in the absence of any evidence showing the reasonable rental value of the premises. And, third, the court erred in refusing to vacate the judgment and grant a new trial for the purpose of the introduction of evidence as to the reasonable rental value of the premises.

The principal issue presented is whether an implied contract arose between the parties by reason of the plaintiffs demand for rent at the rate of $300.00 per month for the use of the fourth floor, and the defendants' failure to dissent, together with the continued occupancy of the premises. We conclude, as did the trial court, that an implied contract arose between the parties. The letter of March 24, 1952 did not abrogate the implied contract; at most it may be construed as an expression of a willingness on the part of the plaintiffs to forego to April 1, 1952 the payment of the rent for the use of the fourth floor; but it reaffirmed plaintiffs’ determination to enforce payment of rent after April 1, 1952, if defendants still continued to occupy the premises. The letter of March 24, 1952 related to and must be construed in light of the contents of the letter of August 15, 1951.

A person who enters on land by permission of the owner for an indefinite period and without the reservation of any rent is a tenant at will by implication. Vol. 32 Am. Jur. page 82, Section 66. In Vol, 109 A. L. R 197 is found an annotation briefing this and related questions. On page 218 the following rule is stated:

“It seems that, ordinarily at least, a tenant at will or by sufferance, who, without expressing his nonassent, remains in possession of the premises after the date when, as specified by a notice from the landlord, a stated rental is to go into effect, becomes liable for such rental.”

In Lane v. Greene, 21 Oh Ap 62, the court on page 68 said:

“The better rule would seem to be that, if a tenant holds over after the landlord has fixed an increased rent, and the tenant is silent as to the new terms, an implied contract arises that the tenant will pay the increased rental.”

In Moore v. Harter 67 Oh St 250, the court on page 255 said:

“The continuing in possesion, after notice from the landlord to the tenant that he could not do so except under prescribed conditions, is presumed to be a possession under the named conditions,”

See, also, Bumiller v. Walker, 95 Oh St 344, at page 352.

The above cases are not on all fours with the instant case on the facts, but the principle of law' laid down in those cases is applicable to the issue raised in the instant case.

We agree with the trial court that an implied contract arose between the parties to pay $300.00 per month for the use of the fourth floor. The letter under date of March 24, 1952 operated as a waiver of the enforcement of the collection of the rent prior to April 1st, 1952. In our opinion the trial court properly rendered judgment for the months of April and May, 1952.

The action was not brought on quantum meruit, but if it had been so brought, there was evidence that the reasonable rental value for the fourth floor was $300.00 per month.

We find no assignment of error well made. Finding no error in the record prejudicial to the appellants, the judgment is affirmed.

MILLER and HORNBECK, JJ, concur.


text:
    CLEVELAND TRUST COMPANY, Appellant, v. BOWERS, Tax Commr., Appellee.
    Board of Tax Appeals.
    No. 27079.
    Decided November 29, 1954.
    Frederick K. Cox, Cleveland, Bricker, Marburger, Evatt & Barton, William S. Evatt, Columbus, for appellant.
    C. William O’Neill, Atty. Geni., William E. Herron, Columbus, for appellee.
   OPINION

This cause and matter came on to be considered by the Board of Tax Appeals upon a notice of appeal filed herein under date of August 18, 1954 by the appellant, above named, from a final order of the tax commissioner dated July 21, 1954 in and by which final order the tax commissioner denied appellant’s application for review and redetermination of an intangible tax certification for the year 1951.

The cause was submitted to the Board of Tax Appeals on the notice of appeal, a stipulation of facts filed herein under date of October 13, 1954, the transcript of the tax commissioner, and briefs of counsel.

The final order of the tax commissioner appealed from reads as follows:

“This proceeding being the application of The Cleveland Trust Company, a financial institution, Cleveland, Ohio, for review and redetermination of an intangible tax certification for the year 1951, after being duly heard, came on to be considered.
“Audit of the applicant’s return for the year 1951 resulted in an increase of both deposits and capital. The applicant objects only to that part of the increased assessment which resulted from the inclusion of the deposit of the Cleveland Metropolitan Housing Authority in net taxable deposits. The applicant contends that said deposit is exempt from taxation, and to the extent that it was included in the value as certified, said certificate was in error.
“Upon consideration whereof the Tax Commissioner finds there was no error in the certification as issued’ and, as issued, said certification is hereby affirmed.”

The specifications of error alleged to have been made by appellee in issuing said order are as follows:

“1. The Tax Commissioner erred in finding that the deposits of the Cleveland Metropolitan Housing Authority were properly included in net taxable deposits in the amount of $525,292.45 for a tax of $1,022.78 in the appellant’s 1951 financial institution return.
“The Tax Commissioner should have found from the evidence that such deposits of the Cleveland Metropolitan Housing Authority were not taxable and should have been excluded in the computation of such net taxable deposits.
“2. The Tax Commissioner erred as a matter of law in not finding-that deposits of the Cleveland Metropolitan Housing Authority are exempt under §1078-36 GC, now §3735.34 R. C.
“The Tax Commissioner should have found as a matter of law that such deposits are exempt from taxation, and that the same should have been excluded from net taxable deposits in the appellant’s 1951 financial institution return.
“3. The Tax Commissioner erred as a matter of law in not finding that deposits of the Cleveland Metropolitan Housing Authority are exempt from taxation under §5328-la GC, now §5799.04 R. C.
“The Tax Commissioner should have found as a matter of law that deposits of such an authority are exempt from taxation and should have been excluded from net taxable deposits in the appellant’s 1951 financial institution return.”

The stipulation of facts, signed by counsel for both parties, reads as follows:

“It is stipulated by and between the parties to the above action:
“1. Appellant is a banking institution, organized under the laws of Ohio, and is a financial institution as defined by §5725.91 R. C.
“2. The Cleveland Metropolitan Housing Authority is a body corporate and politic, organized and existing under §3735.27, et seq., R. C.
“3. On November 14, 1950, the day of that year fixed by the Board of Tax Appeals of the Department of Taxation of Ohio for the listing of taxable deposits, The Cleveland Metropolitan Housing Authority had on deposit by appellant $525,292.45 in three commercial checking accounts, which checking accounts were used by said authority for the purpose of exercising the powers set forth in §§3735.27 to 3735.59, inclusive, R. C.
“The foregoing includes all facts pertinent to a determination of the issue raised by the above captioned appeal. However, the right is reserved to each of the parties to object to any part thereof upon the grounds of relevancy or materiality or to the legal sufficiency of said facts.”

Sec. 3735.34 R. C., as amended in 1949 (123 Ohio Laws 453) reads as follows:

“All property, both real and personal, acquired or owned by a metropolitan housing authority and used for the purposes of exercising the powers set forth in §§3735.27 to 3735.59, inclusive, R. C., shall be public property used exclusively for a public purpose within the meaning of Sec. 2 of Art. XII, Ohio Constitution, and shall be exempt from all taxation. All accounting and other transactions of the authority shall be subject to the inspection and approval of the bureau of inspection and supervision of public offices, which shall transmit its report to the state board of housing.”

We are of the opinion that the words “all property, both real and personal,” as used in §3735.34 R. C„ were meant by the legislature to embrace all property of a metropolitan housing authority used for the purposes of exercising the powers' set forth in §§3735.27 to 3735.59 R. C., inclusive whether tangible or intangible. We are further of the opinion that the legislature, as a matter of policy, has said in this section of the Revised Code that such property shall be exempt from taxation.

In connection with the power of the General Assembly to exempt personal property from taxation, the parties are referred to the case of the State, ex rel. Struble, v. Davis et al., Tax Commission, 132 Oh St 555, 8 O. O. 552, wherein the first two sections of the syllabus read as follows:

“1. Sec. 2 of Art. XII of the state Constitution requires only lands and improvements thereon to be taxed by uniform rule according to value. By reason of the removal of previous constitutional limitations and restrictions, the power of the General Assembly to determine the subjects and methods of taxation and exemption of personal property therefrom is limited only by Art. I of the Constitution of the state.
“2. In the matter of classification of property for taxation purposes, broad power is conferred upon the Legislature. Its action in that regard will not be set aside by the courts unless the classification attempted results in such discrimination against members of the same class as to deny them the equal protection of the law.”

It thus appears clear to us that the deposits involved in this case come squarely within the provisions of §5709.04 R. C., which section reads as follows:

“Money, credits, investments, deposits, and other intangible property belonging, either legally or beneficially, to corporations, trust (s), associations, funds, foundations, or community chests, organized and operated exclusively for religious, charitable, scientific, literary, health, hospital, educational, or public purposes, exclusively for the prevention of cruelty to children or animals, or exclusively for contributing financial support to any such purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation, shall not be subject to taxation.”

It is noted that this section of the Revised Code goes much farther than merely exempting these deposits from taxation in that said section provides that such deposits “shall not be subject to taxation.”

The final order of the tax commissioner is, therefore, reversed and it is our finding and order that the deposits involved in this case are not subject to taxation.


author: Per CURIAM:

text:
    KENNEDY, Plaintiff-Appellant, v. CUYAHOGA, LAKE & GEAUGA COUNTIES CARPENTERS DISTRICT COUNCIL et, Defendants-Appellees.
    Ohio Appeals, Eighth District, Cuyahoga County.
    No. 22647.
    Decided February 9, 1953.
    Farley & I-Iyland, Cleveland, for plaintiff-appellant.
    Zucker & Curtis, Cleveland, for defendants-appellees.
   OPINION

Per CURIAM:

Plaintiff appeals from a judgment of the Common Pleas Court directing a verdict for defendants on the second amended petition and the opening statements of counsel.

A detailed examination of the bill of exceptions shows that counsel for defendants, after selection of a jury but before opening statements, made a motion for dismissal of the petition on the ground that it failed to state a cause of action. The court reserved ruling on this motion. Thereafter, counsel for plaintiff made an opening statement in which the petition was incorporated by reference. The court stated that the second amended petition would be considered as part of the opening statement. Counsel for defendants then made motions “for judgment for each of the defendants and dismissal of the second amended petition on the ground that the second amended petition and the opening statement shows no cause of action against any of these defendants.” The court reserved ruling on these motions until counsel for defendants had made an opening statement. Whereupon motions for judgment previously made by counsel for defendant were renewed. The court then overruled the motion for judgment made subsequently to the selection of the jury but granted the motion for judgment made at the conclusion of plaintiff’s opening statement.

For the purposes of the motion, the defendants admit the truth of the allegations of the petition and the truth of the statements the plaintiff purposes to establish by his evidence.

In our opinion, the judgment of the Common Fleas Court must be reversed on the ground that the allegations of the second amended petition and opening statements of counsel construed together state facts sufficient to constitute a cause of action.

Furthermore, the bill of exceptions fails to disclose, after the sufficiency of the opening statement counsel was challenged, that plaintiff was given full and fair opportunity to make such additions thereto as in his opinion the proofs at his command would establish.

The instant case must be distinguished from Cornell v. Morrison, 87 Oh St 215, in one respect and that is that the decision there was directed to the proposition that the facts proposed to be proved by counsel in his opening statement would not sustain the essential averments of his petition and authorize a verdict for the plaintiff, as appears by paragraph two of the syllabus, while in this case the motion for judgment was in the nature of an oral demurrer to the petition as well as the opening statement. See Flax v. Williams, 25 Abs 680 (Court of Appeals 2nd Dist.).

For the reasons stated the judgment is reversed and the cause is remanded for further proceedings according to law. Exc. Order-see journal.

SKEEL, PJ, HURD, J, KOVACHY, J, concur.


author: By KINDER, J.

text:
    HAGGERTY, Deceased, Estate of, In Re.
    Probate Court, Cuyahoga County.
    No. 402480.
   OPINION

By KINDER, J.

In this case there is before the Court an application by the co-trustee, Central National Bank of Cleveland, hereinafter called “Bank” for (a) compensation for extraordinary services and (b) compensation for payment of attorney’s fees to counsel employed by it. These charges are said to relate to questions arising during the administration of this trust and are said to have arisen out of the performance by the co-trustee bank of services not required in the common course of its duty. The compensation asked by the co-trustee for extraordinary services is in the amount of $1250.00, and the services of its counsel are said to be of the reasonable value of $2500.00. The applications are supported by itemized statements in both instances as required by Rule 26 of the Court.

Objections are lodged to the application by Marion Barber, life beneficiary under the Trust in question and who is represented by Willis T. Barber as counsel. Mr. Barber is also co-trustee with the Bank. The position of the objector, the life beneficiary, is that the application of the co-trustee bank for extraordinary services should be denied because such services were not extraordinary in nature, but fall within those services ordinarily required of a fiduciary in the common course of his duty. Further, while not questioning the right and propriety of the co-trustee bank in the employment of counsel the objector urges that the amount of attorney’s fees is unreasonable and excessive.

There is no substantial dispute in the facts. The objector, however, raises questions having to do with the proper application of the rules relating to the compensation of a fiduciary — here a trustee— as established by statute and rule of Court. Further in view of the number of applications of this sort which are being and will continue to be addressed to the Court and this whether by corporate or individual trustees and in further view of the variety of circumstances existing with respect to such applications not only as they concern extra fiduciary compensation but also the related matter of compensation for counsel for the fiduciary in such circumstances, it has been considered appropriate that the rule applicable thereto be reviewed and in a sense restated.

Insofar as executors and administrators are concerned the rule is contained in the statutes, §§2113.35 and 2113.36 R. C. The first provides in substance that executors and administrators shall be allowed specified “commissions” upon the amount of the personal estate including the income therefrom and upon proceeds of real estate sold under authority contained in the will. These commissions “must be received in full compensation for all their ordinary services”. The commission fixed in the statute is 6% of the first $1000.00, 4% of the next $4000.00 and 2% above $5000.00.

The statute fixes as a basis of valuation on property sold the gross proceeds of sale, and for property distributed in kind the valuation fixed by the inventory and appraisement. It will be observed that in view of the use of the word “must” the limit of compensation for ordinary services is mandatory and it follows that the executor or administrator upon his undertaking to act in such fiduciary capacity is of course bound by the statutory regulation insofar as ordinary services are concerned.

Sec. 2113.36 R. C. contemplates further allowance to the executor or administrator for extraordinary services not required (a) “in the common course of his duty” and (b) “actual and necessary expenses including reasonable attorney fees where an attorney has been employed and paid by the fiduciary.” To the Court is confided the duty to “fix the amount of such fees” and this upon “the application of the executor or administrator or attorney.” There is a further provision made that where a will fixes compensation to an executor the amount therein fixed “shall be in full satisfaction of his services” unless within four months from his appointment the executor in writing “renounces all claim to compensation given by the will.” Insofar as concerns other fiduciaries including trustees and guardians it is provided, §2109.23 R. C., that the Court “shall make allowance to fiduciaries for their services and expenses in executing their trust.”

In accordance with these statutes and to provide procedural methods for their observance there has been included in the Rules of this Court effective June 1, 1954, Rules 26, 27 and 21.

Rule 26 refers to “Counsel Fees and Fiduciary’s Compensation for Extraordinary Services.” The substance of this rule provides that where the aggregate amount of compensation paid to a fiduciary’s counsel does not exceed the amount payable to the fiduciary for ordinary services no application for allowance of counsel fees is necessary where the amount has been approved in writing either by the fiduciary or by the interested parties. Here the approval of such allowance is to be considered by the Court in the hearing on the account. Here, however, if the amount of compensation exceeds $750.00 an itemized statement for services is required. Where, however, the total amount of compensation to be paid to fiduciary’s counsel exceeds the amount of commissions payable to the fiduciary for ordinary services or where the amount cannot be agreed on or where the fiduciary acts as his own counsel an application for allowance of fees is necessary. An itemized statement'for such services is required. In matters involving fiduciaries in proceedings other than in the administration of estates counsel fees for services rendered to the fiduciary are to be considered by the Court on application supported by a statement of the extent and nature of the services and the amount claimed.

Turning now to the matter of compensation for extraordinary services rendered by fiduciaries. An application therefore is necessary. This shall include a statement of the nature and extent of the services rendered and the amount claimed. It is to be noted and emphasized that aside from the exceptions stated in Rule 26, the Court may and as a matter of practice does require that the application for fees for compensation be set for hearing and written notice thereof given to all interested parties in the manner provided in §2101.26 R. C., and that the notice contain a statement of the amount applied for.

Rule 27 regulates the matter of “Trustee’s Compensation.” Here in the absence of a provision in the trust for compensation, testamentary trustees may charge annually for ordinary services (a) an income fee of 5% on the first $10,000.00 of gross income, and 3% on the balance — such fee chargeable to income unless otherwise ordered and (b) a principal fee of $1.50 per thousand on the first $100,000.00 of fair principal value, $1.00 a thousand on the next $150,000.00, and 50c per thousand on the next $750,000.00, and 25c a thousand on the balance. Such principal fee to be chargeable to principal unless otherwise ordered. The trustee on final distribution may also charge a fee equal to one percent of the fair value of the property distributed. The matter of additional compensation for extraordinary services is to be applied for and the matter set for hearing on written notice to all interested parties as provided in §2101.26 R. C. The notice shall contain the amount of the compensation applied for.

Rule 21 is regulatory of “Guardian’s Compensation” for ordinary services. This in substance provides that in estates having a fair market value under $50,000.00 there is allowed a guardian’s fee of 3% on all moneys received and 3% on moneys disbursed during the accounting period on sums not exceeding $1,000.00; on sums in excess of $1,000.00, 2% on moneys received and moneys paid out are allowed.

In estates having a market value in excess of $50,000.00 there is allowed an income fee of 5% on the first $10,000.00 of gross income, 3% on the balance, such fee being chargeable to income unless otherwise ordered. In addition there is a principal fee of $1.50 on the first $100,000.00 of principal value, $1.00 a thousand on the next $150,000.00, 50c a thousand on the next $750,000.00 and 25c a thousand on the balance. This fee is chargeable to principal unless otherwise ordered. Insofar as compensation for extraordinary services here is concerned there must be an application therefor with written notice of hearing to be given under §2101.26 R. C„ such notice to contain a statement of the amount of fees or compensation applied for.

It will be thus observed that by statute and rule a distinction is clearly drawn so far as concerns the matter of compensation to the fiduciary between ordinary services and extraordinary services and while the controlling standard in each case is not susceptible of exact definition and is dependent upon the circumstances of each case it may be desirable to state or review some of the applicable and established principles involved.

In the first place and so far as counsel fees are concerned executors and administrators are personally liable for the services of counsel employed by them and their contracts therefor do not bind the estate. However, in a proper case the executor or administrator is entitled to receive credit in the settlement of his accounts for such fees if reasonable as constituting a part of expenses of administration. Thomas, Admrx., v. Moore, 52 Oh St 200; Smith v. Rhodes and Wilt, 68 Oh St 500. The amount of such fees may be either included in the settlement account to be allowed by the Court or approved upon an application on notice to the interested parties. Trumpler, Admr., v. Royer, 95 Oh St 194; Kern v. Heilker, 56 Oh Ap 371. In this Court under its rules above referred to the latter method is required.

We turn now to some of the considerations underlying the question of ordinary and extraordinary services of a fiduciary.

As a preliminary matter it is to be pointed out that the question of extraordinary services and compensation therefor concerns the fiduciary alone and does not concern the matter of counsel fees. This is emphasized because in many cases application for counsel or attorney’s fees either bear the legend “fees for extraordinary services” or “application for extraordinary fees.” There is no warrant in the statute or rules of law for this sort of characterization or legend. Counsel in proper cases are entitled to reasonable compensation for services performed and this whether or not fiduciary services are ordinary or extraordinary in nature. Such counsel fees when approved or allowed become under the authorities, supra, a part of the expenses of the administration of the estate or trust.

What then are the “ordinary services” of a fiduciary, i. e., those required in the common course of his duty as distinguished from extraordinary services?

It seems to the Court that at the threshold of such an inquiry lies the question of the nature of the work which confronts the fiduciary when he undertakes the office, whether it be as executor or trustee under a will, an administrator under the law, or a guardian of the person and estate of a ward. Such undertaking by the fiduciary is voluntary as a matter of law and he may decline to act.

In the case, for example, of an executor or testamentary trustee the will and its terms afford to a great extent the measure of his obligation and consequent responsibility. In the case of an administrator or guardian the fiduciary’s duties and responsibilities are for the most part defined by law. Where the fiduciary proceeds to the administration of an estate either under a will or under the law he undertakes certain well defined duties having to do among other things with his qualification as fiduciary; investigation in such capacity as to the identity of the beneficiaries; the nature and extent of the assets; the arrangements for appraisals leading to the preparation and filing of the inventory and appraisement; the determination and payment of inheritance and other taxes; the filing of schedule of debts; and the determination and allowance of claims against the estate. Further and at an appropriate time he must attend to the matters of transfers of real estate, sale of personal property or its distribution in kind. He is of course required in connection with the administration of the estate to set up and maintain accounts showing the receipt of moneys and assets and payment of bills, expenses and distributions. From the very nature of things his duties include the matter of numerous conferences with parties interested in the estate either as creditors or beneficiaries. He is further required to file in Court from time to time an accounting of his administration.

The foregoing does not comprise a complete list of fiduciary’s duties but will serve to indicate what a fiduciary acting as executor or administrator usually encounters in the common course of his duties. It is of course the right of the executor or administrator to employ counsel to assist him in the performance of these ordinary services and the compensation of such counsel, if found to be reasonable, is a legitimate part of the expense of administration. This, however, does not appear to, under all circumstances, justify the employment of counsel to perform the services or duties imposed upon the fiduciary or justify the duplication of services by the fiduciary and counsel. At the same time the carrying out of the obligations of a fiduciary may entail the practice of law which if the fiduciary is not a lawyer necessarily contemplates the employment of counsel. The question here is sometimes complicated by the fact that the individual fiduciary, being a lawyer, acts as his own counsel, a situation which will hereafter be considered.

In any event the foregoing will serve as a general outline of what seems to the Court to be ordinary services by a fiduciary acting as executor or administrator. (See Opinion of Rockel, J., In the Matter of Exceptions, 4 O. N. P. 336, 338.) It is to be remarked that for such services the statute §2113.25 R. C. provides that the percentages fixed “must be received in full compensation.”

Extraordinary services on the other hand is a matter which lies out of and beyond the limit of the above outline. Such services would seem to include various forms of litigation if necessary, such as the filing of an action to construe a will, or services in the defense of a will; action for declaratory judgment; prosecution or defense of litigation necessary tc protect the estate; actions to sell real estate. These matters involve in the Court’s opinion, extraordinary service and such situations usually require the employment by the fiduciary of counsel and the fiduciary is entitled to be reimbursed for the reasonable value of such services by attorneys. Under the statute §2113.36 R. C. allowance for these extraordinary services by the fiduciary is to be on the basis of what is just and reasonable.

It has been stated that the Court “will consider the amount and difficulty of the services rendered * * * the risks run by the trustee and the responsibilities imposed upon him and his skill and success in administering the trust.” 2 Scott on Trusts, Page 1385. The word “reasonable” has been defined as follows:

“In this connection ‘reasonable’ means what is fair in view of the size of the estate, the responsibilities involved, the character of the work required, the special problems and difficulties met in doing the work, the results achieved, the knowledge, skill and judgment required of and used by the executors, the manner and promptitude in which the estate has been settled and the time and service required, and any other circumstances which may appear in the case and are relevant and material to this determination.” Hayward v Plant, 98 Conn. 374, 384;
Again we quote from Rockel, J., in “In the Matter of Exceptions,” supra, as follows:
“The law means to deal justly between the administrator or executor and heir, and equity to all should alone control the court in its decision. Light and frivolous charges for services of questionable value should receive no consideration by the court. * * * The rules of equity should be applied, that he who would have equity must do equity, and that he must come into court with clean hands. The law does not intend that the settlement of an estate shall be a sinecure to the administrator. In all cases it will devolve upon the administrator to prove the justness of his claims, and that the expenses or services were rendered in the performance of some act required ‘in the common course of his duty.’ ”

In view of the rule that the burden is upon the fiduciary to establish his right to compensation whether for ordinary or extraordinary services it would seem necessary and certainly desirable that the fiduciary keep and maintain during the administration of his trust, a detailed account of the services rendered including the time spent by him. Such records should be. allocated as between ordinary and extraordinary services if any Such records and allocation would not only inure to the benefit of the fiduciary and the estate, but would be of substantial assistance to the Court in matters of this sort. In fact inquiry into such records has been upheld as material and relevant in a determination of the question of the reasonable value of services of attorneys, In re Estate of Morrison. 159 Oh St 285. Lack of such records clearly goes to the weight to be given to the evidence tendered upon the question of the reasonable value thereof.

It seems clear that the foregoing considerations apply to fiduciaries acting as executors, administrators, trustees and guardians, and that in each case a record of services performed and time spent by such fiduciaries in the performance of their duties be kept and maintained, and in an appropriate case such services and time spent should be allocated between ordinary and extraordinary services, if the latter are involved.

One other matter remains to be considered and that is the problem involved where the fiduciary acts as his own counsel. The Court does not see but that in such a situation the fiduciary in addition to being entitled to compensation for services as such, would also be entitled to compensation for his legal services. King, Ex. v. Alt; 11 O. N. P (N. S.) 433, 436. Here however, it seems doubly important that an accurate record be kept by the fiduciary for (a) the time and services rendered by him as fiduciary and (b) the time and services rendered by him as counsel.

As above indicated, the facts in the instant case are not in material dispute. An examination of the Court files confirms the fact that for some time differences arose and have existed between the life beneficiary and her husband, a co-trustee, on the one hand, and the Bank, as co-trustee, on the other. These differences concerned (a), the matter of advances to the life beneficiary from principal of the estate, the co-trustees, Willis T. Barber and the Bank being authorized under Item 3 of the will to “use principal, if they deemed it advisable, for the support, maintenance and comfort of my said daughter, or the support, maintenance and education of her children” and (b), matters relating to the kind and type of securities into which the trust estate was to be invested, a matter as to which the trustees possessed wide power and discretion under Item 5 of testator’s will. Without going into the detail of these differences, the scope of which is indicated by correspondence, Bank Ex. A to E, inclusive, the matter finally culminated in the filing, on September 24, 1954, of a petition for a declaratory judgment. This action was filed by Willis T Barber and his wife, Marion H. Barber, against the Bank and the minor children of Mr. and Mrs. Barber. In this petition the Bank, as co-trustee, was charged with refusal and neglect to consider the investment counsel of its co-trustee, Mr. Barber; that it had in violation of the trust instrument embarked on an investment program resulting in a reduction of income to the life beneficiary: that hostility had arisen between Mr. and Mrs. Barber on the one hand and the Bank on the other and that controversy had arisen as to the intent and purpose of the testator as expressed in the trust provisions of the will. Finally it was claimed that in the circumstances, the administration of the trust estate would be jeopardized in the absence of instructions of the Court. In the petition a declaration was asked generally regulatory of the Bank, as co-trustee, in respect of the advancements of principal and character of investments of the trust estate.

In its answer the Bank in substance not only denied any non-performance or misperformance of its obligations, but justified its conduct of the Trust, not only with respect to the investment program advanced by and insisted upon by it but also with regard to its position in respect of the advancements to the life beneficiary. Here it is alleged and upon the hearing no denial thereof is made that between October, 1948 and September, 1954, there was advanced to the life beneficiary from principal the sum of $25,839.28. Further, it is alleged that at the time of the creation of the Trust the income therefrom was practically $12,000.00 per year and that presently, after the withdrawal of principal in the above amount, the income is approximately $8,700.00 per year. Parenthetically it is to be noted that the present value of the Trust assets approximates $225,000.00, as against an original value of approximately $185,000.00.

The Bank’s answer likewise joined in the prayer of the petition that the Court declare the meaning of the Trust provisions so far as they related to the differences then existing between the parties.

Summarized the action as reflected in the allegations of the petition and the answer did not reflect a friendly resort to the Court for a construction of the will and consequent instructions, but on the contrary involved charges serious in nature and' adversary in character.

The case was, according to the records, partly heard by Judge Pollock of Painesville Ohio, sitting here by designation, but such hearing ended in a withdrawal of the action. In this connection it was stated at the Bar that in the course of the hearing, some sort of an adjustment had been reached by the interested parties. This is the subject of comment contained in Bank’s Ex. F.

It is in respect of these differences that the co-trustee asks compensation, it being claimed that such services were extraordinary in nature and not rendered in the common course of its duty as co-trustee. Likewise, it is to these differences and the subsequent litigation that counsel fees are asked.

The Court has examined the itemized statements of the Bank, filed in support of its claim for extraordinary services and likewise examined the itemized statement of services of counsel. Evidence" was offered that amounts claimed by the co-trustee and the amount of counsel fees were reasonable, having in mind the size of the estate, the questions faced and the solution finally reached. No evidence to the contrary was offered by way of opinion or otherwise. Representatives of the Bank and their counsel were, however, cross-examined with respect to these itemized statements of time and services.

Under all the facts and circumstances the Court concludes services of the Bank were extraordinary in character, that is to say outside of its common course of duty, and that it is entitled to compensation therefor. Upon the record the Court is unable to say that the amount applied for, i. e., $1250.00 is unreasonable. The Court feels that in the circumstances the Bank had a clear right to employ counsel with respect to the problem created by the differences between the parties and to represent it in the action brought by Mr. and Mrs. Barber. The Court further finds that the amount applied for in respect of counsel fees is reasonable and, therefore, a proper charge.

An order may be drawn accordingly, with exceptions to the objectors.

While Judge Merrick did not participate in the consideration or decision of the- instant case, I am authorized to state that he concurs in the views herein expressed in respect of the duties and compensation of fiduciaries and counsel under the standards provided in the statutes referred to and the rules of this Court.