author: By CRAMER, J.

text:
    JONES et, v. MIDDLETOWN (City) et.
    Common Pleas Court, Butler County.
    No. 61035.
    Decided January 5, 1948.
    On the Merits February 27, 1950.

      Doyle, Lewis & Warner, Toledo, C. W. Elliott, Middletown,. Fitton, Pierce & Black, Hamilton, for plaintiffs.
    Fred J. Sehatzmann, Middletown, for defendants.
   OPINION

By CRAMER, J.

This cause is before the Court upon a demurrer to the petition filed by the defendants on the following grounds:

(1) That there is a misjoinder of parties defendant. -

(2) That it appears on the face of the petition that the-facts therein contained do not constitute a cause of action in. favor of the plaintiffs and against any of the defendants.

Oral arguments, together with exhaustive and able briefs, and memoranda, were made and submitted by counsel for-the parties, in support of and contra to, the demurrer.

Plaintiffs by this action seek to recover damages from the City of Middletown, hereinafter referred to as the City, resulting from a breach of contract between them and also to-have the Court declare a trust and equitable lien upon certain funds received by the defendants from the Federal Works. Agency for the purpose of paying for the services of plaintiffs, namely, engineering services, and to enjoin all of the defendants from paying out and dissipating (as claimed) said: funds.

The substantive and essential allegations of the petition areas follows:

That plaintiffs are registered professional engineers with, their office at Toledo, Ohio.

That the City of Middletown is a municipal corporation and. the City Commission of that city is a board established by the charter of the City and under said charter exercises all legislative and executive functions.

The individually named defendants were on May 29, 1946- and ever since members of the City Commission of the City and Marvin Clark the Chairman thereof.

That the defendant Harry Campbell Is the Auditor of the City.

That on May 29, 1946 an ordinance, by number 2571, was enacted by the City Commission which authorized its Chairman to execute a contract on behalf of the City with the plaintiffs.

Said ordinance was entitled “an ordinance authorizing the Chairman of the City Commission to execute a contract on behalf of the City of Middletown, Butler County, Ohio with the engineering firm of Jones and Henry, Toledo, Ohio, and declaring an emergency.” The ordinance further provided that the doing of the things therein contemplated constituted an emergency. That it provided for the immediate preservation of peace, health and safety of the City by providing for plans and specifications for intercepting sewer and sewage treatment facilities of the City.

The Chairman was authorized to execute a contract with the plaintiffs and a copy of the contract was attached to and made a part of the ordinance.

The ordinance, being declared to be an emergency measure for the reasons above set out, provided that it should take effect and be in force from and after its adoption and publication.

The ordinance was unanimously adopted by the City Commission on the date aforesaid and was duly published on the 6th day of June, 1946, including the copy of the contract incorporated therein.

Thereafter the plaintiffs and the City acting by its Chairman duly executed the contract in the identical words and figures contained in the copy of such contract made a part of the ordinance.

The petition further recites the provisions of the ordinance and contract. The same provided that the plaintiff engineers were to be paid for their services a sum equal to four percent of the estimated cost of the improvements.

It is further alleged that the ordinance contract provided that the City had made application to the Federal Works Agency for funds to pay for such services and that the contract should not be in force and effect until after the Federal Works Agency had approved the City’s application and arrangements to secure funds for such payment with the F. W. A. had been completed.

The plaintiffs allege further that within one year after the execution of said contract and before the breach thereof they began to perform the services provided in the contract on their part to be performed by proceeding with the engineering work connected with the preparation of plans and specifications for the sewers, etc. They completed the basic design in data and had begun detailed construction drawings and general specifications.

That at the request of the defendants and in reliance upon said contract and without compensation other than that provided in said agreement to be paid them, in the event the City’s application to the Federal Works Agency for funds with which to carry out the engineers’ work should be granted, plaintiffs prepared certain documents and performed certain services required for procuring such funds from the Federal Works Agency. That the defendants accepted such services and that as a result thereof in October 1946 the Federal Works Agency granted to the City, for purpose of paying for the engineering work provided in the contract to be done by plaintiffs the sum of $49,000.00, and on or about March 10, 1947, $24,500.00 of said sum was actually paid to the City by the Federal Works Agency.

That in its application to the Federal Works Agency and to induce it to make said allocation and payment and as one of the representations upon which such funds were granted, the defendants represented that the plaintiffs would do the work for which said sum was applied and that the plaintiffs had been employed for such service.

It is further alleged that the plaintiffs began performance of the work for which they were employed in said contract within one year from its date. That they have an equitable lien upon the funds so received from the Federal Works •Agency and that said sum so allocated is impressed with a trust and held by the City for the payment of the amount provided in said contract to be paid the plaintiffs.

It is further alleged that notwithstanding the passage of said ordinance and contract with plaintiffs, and that the same were in full force and effect, the defendants on or about the 23rd day of April, 1947 purported to enact an emergency ordinance authorizing and directing the Chairman of the City Commission on behalf of the City to enter into a contract with another firm of engineers, namely, Floyd G. Browne and Associates, for the performance of the same services which the defendants had contracted with plaintiff to perform. That thereupon the City acting by the Chairman of the Commission did execute a purported contract employing Browne and Associates to perform the same services and to pay them therefore from said sum of $49,000.00 so allocated by the Federal Works Agency and paid to said City. That said contract with Browne and Associates was made with full knowledge on the part of the defendants and said Browne and Associates of the enactment of said ordinance No. 2571 and of the fact that the contract thereby authorized with plaintiffs had been executed and was in full force and effect.

It is further claimed by plaintiffs that on or about the 14th day of June, 1947 the defendants wholly repudiated their contract with them and refused to permit plaintiffs to proceed in performance thereof. That the plaintiffs had proceeded in good faith to perform the obligations of the contract and are ready, able and willing to complete the same when and if defendant will permit them tb do so.

That but for such action of the defendants, plaintiffs would have earned by the performance of said contract the sum of $46,600.00, in which sum they claim to have been damaged, and seek judgment therefor together with the equitable relief hereinbefore referred to.

The Court will take up first, the defendants’ contention that there is a misjoinder of parties defendant. In this connection it is claimed that there is a misjoinder since the City, a-municipal corporation, the City Commission, its governing body, are joined as party defendants with the individual members of the City Commission. That the individual members of the City Commission are not proper parties because their official action is merged into the official action of the board, itself as an entity. In view of the fact that the Code, particularly §11255 GC thereof, permits joinder of persons who are necessary parties to a complete determination of questions involved, and further in view of the equitable nature of the relief asked for here, the Court is of the opinion that there is no misjoinder, at least such as calls for sustaining a demurrer on that ground.

Furthermore, this particular ground of the demurrer is not being particularly urged by the defendants.

This ground of the demurrer will, therefore, be overruled.

In support of the defendants’ claim that the petition does not set out facts sufficient to constitute a cause of action on behalf of the plaintiffs against them, it is contended that:

(1) No recovery is permitted in this state against a municipality upon an implied contract or on quantum meruit, and that therefore an express contract entered into in compliance with all applicable statutes must be alleged.

(2) Plaintiffs, having alleged an express contract, have failed to allege full compliance with all applicable statutes.

(3) That no allegation is set out in the petition alleging the execution of a certificate of availability of funds with which to discharge the obligation of the City under the contract, by the fiscal officer of said City.

(4) That if plaintiffs are relying upon §3982-2 GC (popularly referred to as the engineers statute and which apparently dispenses with the necessity of such certificate of availability of funds) they have failed to bring themselves within its provisions since the petition fails to disclose strict and specific compliance with that statute.

In connection with this contention of the defendants it is asserted that the plaintiffs have failed to allege that the City strictly complied with the mandatory provisions of §3982-2 GC. That under this section it is the mandatory duty of the legislative authority of the City desiring to make such a survey (as herein alleged was made) to adopt a resolution declaring the purpose and necessity therefor. That the petition is fatally defective because it does not appear therein that the City adopted such a resolution.

(5) That the ordinance authorizing the contract, even though it recites the doing of the things therein contemplated constituted an emergency and declared as to the necessity for the employment of engineers and even though passed as an emergency measure is wholly insufficient to take the place of the resolution of necessity which should have been adopted by the Commission. This argument is based upon the claim that statutory requirements limit ordinances and resolutions to a single subject and that the subject be clearly expressed in the title. Sec. 4226 GC.

(6) That this contract was invalid at the time entered into in that it was not to go into full operation during the term for which all the members of the City Commission were elected. Such invalidity is asserted by reason of §4241 GC, which provides as follows: “The council shall not enter into any contract which is not to go into full operation during the term for which all the members of such council are elected.” In this connection the Court’s attention is called to the following language contained in the contract, found in paragraph eight thereof: “It is mutually understood and agreed that this contract shall not be in force and effect until the Federal Works Agency has approved the City’s application and arrangement to secure funds for said engineering work from the Federal Works Agency has been completed.” It is claimed by the defendants that this provision of the contract creates a condition upon which the effectiveness of the entire contract depends. That even though that condition could be fulfilled (as a matter of fact it was fulfilled) during the term for which all the members of the Commission were elected, nevertheless judged by §4241 GC at the time the contract was entered into it was invalid.

The position taken by the plaintiffs respecting the foregoing contentions of the defendants and support of their claim that their petition states a cause of action is as follows:

(1) Sec. 5625-33 GC (providing for certificate of the auditor of availability of funds being attached to the contract) does not apply to contracts employing an engineer on a percentage basis even though the consideration for such services would be payable from the city’s general fund.

(2) That the foregoing section is not applicable to a contract for the expenditure of money unless such expenditure-is from the general fund of the City raised by taxation; therefore it does not apply to the case at bar for the reason that-it appears from the petition that the contract was contingent on the grant of funds by the F. W. A. and that therefore the expenditure (to pay these plaintiffs) is not from general funds-of the City raised by taxation.

(3) That plaintiffs have substantially complied with the provisions of §3982-2 GC (this Section dispenses with the necessity of compliance with §5625-33 GC).

(4) That the provisions of §3982-2 GC are not mandatory.

(5) That even if such provisions of said Section were mandatory, a complete compliance therewith is shown by the averments of the petition.

(6) That this ordinance does not violate the requirements' of the statute respecting limiting ordinances and resolutions to a single subject and that the subject be clearly expressed in the title.

(7) That this contract does not come within the inhibitions ■contained in §4241 GC.

We deem it advisable to make, at the threshhold of this discussion and determination of the interesting questions raised by the demurrer (second ground thereof), some observations which we believe pertinent.

The City had the power to enter into this contract — the invalidity of which it now seeks to sustain and behind which (invalidity) it seeks refuge.

We assume, since the contract was for the benefit of the contracting parties, each fully intended to carry it into completion and neither desired to over-reach the other either in the course of its discharge or in the results to be obtained.

We are aware of the fact that contracts of a City — made in direct violation of the law — impose no liability upon it; that persons who deal with municipal bodies for their own profit are required to take notice — at their peril — of limitations upon their (Cities) powers which the law embodies.

However, we know of no rule of law which gives municipalities, merely because they are such, more freedom from escaping the consequences of a bad — though legal — bargain than that accorded individuals.

In the instant case no third person as tax-payer or otherwise, seeks to declare this contract invalid. Here one of the contracting parties, the City, seeks to escape liability from legislation and its resulting instrument — the contract — prepared, enacted and executed by it and upon which and the validity of which the other contracting party relied and performed under.

Needless to state this Court, in the interests of justice, will require the city, before relieving it of its obligation thus created, to strictly prove the law is as it claims it to be.

We now proceed to a consideration of the basis of defendant’s attack upon the petition, bearing in mind, of course, .that the averments of the petition are admitted.

The defendants’ assertion that no recovery can be had against a municipality on quantum meruit is well established in this state. 28 O. Jur., pages 924-925.

It is likewise true that plaintiffs’ petition must set forth facts showing that the contract here in question was executed and entered into in compliance with all the statutes applicable thereto.

Is the fact that plaintiffs have failed — as they have — to aver that a certificate of availability of funds — with which to discharge this contract — was executed by the fiscal officer of the City as required by §5625-33 GC, fatal to plaintiffs?

Sec. 5625-33, paragraph (d) GC provides in substance that no subdivision or taxing unit shall make any contract involving the expenditure of money unless there is attached thereto a certificate of the fiscal officer of the subdivision that the amount required to meet the same has been lawfully appropriated for such puprose and is in the treasury or process of collection to the credit of an appropriate fund free from any previous encumbrances. It further provides that every such contract made without such a certificate shall be void.

We are of the opinion that compliance with the aforementioned statute is not required nor is the same applicable when the contract calls for the expenditure of money from sources other than the general funds of the City which funds are raised by taxation.

In other words the statute applies only to such contracts as involve the expenditure of funds derived directly from taxation and not to contracts involving the expenditure of funds raised in other ways and which cause no deficit in the general fund. See 28 O. Jur., section 527, page 853 et seq. Also Vol. 33 O. Jur., page 661 et seq, and the numerous authorities therein cited.

The defendants assert in their brief that “there is nothing in the contract which says it is to be paid out of any other fund” (referring to the general fund).

It is their contention that the contract does not provide that the plaintiffs’ fees are to be paid out of money provided by the Federal Works Agency — merely that the contract is not to go into effect until the City obtains the federal grant. In support thereof they direct our attention to paragraph 8 of the contract which provides: “Whereas the City has made application to the Federal Works Agency for funds with which to carry out the engineering work specified herein, it is mutually understood and agreed that this shall not be in force and effect until after the Federal Works Agency has approved the City’s application and arrangements to secure funds for said engineering work from the Federal Works Agency has been completed.”

It is our conclusion that the foregoing portion of the contract definitely and clearly reveals that the source from which the funds were to be obtained to pay plaintiffs for their services was the Federal Works Agency. No other meaning can be given the following: “For funds with which to carry out the engineering works specified herein” without doing violence to the meaning conveyed by plain and unambiguous words.

Then too, the petition alleges that after executing this contract the City contracted with other engineers for the same services and to pay them therefor from the sum allocated to the City by the Federal Works Agency. A further indication— if one is needed — as to the source (other than the general fund) from which such engineering services were to be paid.

We have no right to assume — for the purpose of this demurrer — that eventually the City might be required to re-pay the Federal Works Agency out of the general fund. Any assumption should be to the contrary in view of the petition’s averment that such funds were granted to the City.

Having concluded that §5625-33 GC is inapplicable because the funds to discharge the contract are not to come from the general fund, it is unnecessary to pass upon plaintiffs’ claim that the fiscal officer’s certificate is unnecessary in view of the decision of the Supreme Court in Village of Mayfield Heights v. Irish, 128 Oh St, page 329, 191 N. E. 129, 130.

However, in passing we make the observation that the Irish case, supra, in view of the fact that Irish was employed as a public officer by and on the current pay-roll of the Village he sued, is not decisive of our question. It is to be noted that in the Irish case the Court noted the following excerpt from the provisions of §5625-33 GC, “the term ‘contract’ as used in this section, shall be construed as exclusive of current pay rolls or regular employees and officers” in reaching its decision.

It is further urged that even if §5625-33 GC is applicable to the facts as alleged and the Auditor’s certificate is required, nevertheless the petition is good as against this demurrer because compliance with §3982-2 GC is averred. The pertinent provisions of that section are as follows: “It shall be the duty of the legislative authority of such political subdivisions desiring to make such a survey (surveys of water works, sewage system, etc.) to adopt a resolution declaring the purpose and necessity therefor. * * * and the certificate of such fiscal officer as provided in §5625-33 GC shall not be required.”

It is to be noted that under this section compliance with §5625-33 GC is specifically dispensed with. However, the defendants assert that the petition fails to meet the mandatory requirements of §3982-2 GC because of the absence therefrom of allegations showing the adoption by the City of a resolution declaring the purpose of and necessity for such engineering survey.

The petition discloses that no resolution as such was adopted by the City. This, it is claimed is fatal to plaintiffs’ pleading since the language of the section is mandatory.

Plaintiffs insist, first, that such a resolution in fact was adopted (by virtue of the passage of the ordinance showing such purpose and necessity), and second, that the language of the section is not mandatory but directory only.

In fact plaintiffs’ position amounts to a stand that irrespective of its nomenclature as an ordinance the legislation adopted was in fact the resolution since its subject matter determines its character rather than the name given to it. Ample respectable authorities are advanced by plaintiffs in support of that claim. See Vol. 28, O. Jur., 435 et seq. Also 2 McQuillan (Municipal Corporations) page 657 et seq.

We are of the opinion that, if a resolution declaring the purpose and necessity be required, the act of the City (by the legislation enacted) setting forth as it does in clear language its purpose and necessity through the emergency provisions' and by the adoption of the language of the contract by incorporation which describes the purpose of employing engineers and the necessity therefor, meets the statutory requirements irrespective of the nomenclature given the act.

We find ourselves unable to agree with the defendants’ assertion that “the mere formal statement of an emergency providing for the immediate ‘preservation of peace, health and safety of the City of Middletown’ is hardly adequate as a requirement of a resolution declaring the necessity and purpose therefor.” In our opinion, such an expression well states a necessity and purpose.

It is difficult to conceive that separate and distinct enactments (a resolution and an ordinance) are required by this statute. Especially is this true since this section of the Code provides no limit of time to expire between the declaration of the necessity and purpose of employing engineers and their actual employment by execution of a contract with them.

There is no magic in setting forth in two separate enactments that which can well be and is permitted to be set forth in one. We are not here concerned with a referendum period nór a separation of enactments so as to permit of a referendum for that question is not properly before us.

In our opinion the application of the principle of estoppel should be applied (even though ordinarily not applicable against a municipality) in reference to this particular contention. See Vol. 28 O. Jur., page 926 et seq.

In view of our conclusion that the plaintiffs have averred compliance with this section under discussion, it becomes unnecessary to pass upon the question raised as to whether such provisions thereof are mandatory or directory.

Suffice it to state that from the many authorities cited by the parties, we are inclined to the position that the same are not mandatory. At least an averment showing a substantial compliance with these provisions is, in our opinion, sufficient to meet the demurrer.

We are unable to agree with the argument advanced by the defendants that the enactment must fall because it violates the statute (§4226 GC) limiting ordinances and resolutions to a single subject and that the subject be clearly expressed in the title.

We do not believe that here there is a “union in one act of diverse, incongruous and disconnected matters, having no relation to or connection with each other” which the Supreme Court of Ohio in Heffner v. City of Toledo, 75 Oh St 413, at page 426, 80 N. E. 8, at page 10, condemns.

Rather it meets the approval of those authorities which permit “the inclusion of matters which are germane to the general subject expressed in the title.” See 28 O. Jur., page 439 and citations supporting the text.

Uniting in one enactment the thing to be done with the declaration of purpose and necessity for doing it, seems to us a perfect, natural and logical union.

At any rate such unity does not produce the result of “effecting its passage by uniting in its support all those in favor of any of such (diverse subjects or measures) and to prevent the adoption of ordinances by the votes of councilmen ignorant of their contents. See 28 O. Jur., page 439; 75 Oh St at page 413, 80 N. E. 8.

It is further asserted that the contract in question is invalid since by its very terms it was “not to go into full operation during the term for which all the members of such council are elected.” That therefore it violates §4241 GC which provides as follows: “The council shall not enter into any contract which is not to go into full operation during the term for which all the members of such council are elected.”

Sec. 3525 GC, provides in part as follows: “When a municipal corporation is organized by the election of its officers, notice of its existence shall be taken in all judicial proceedings.” We, therefore, presume that we are to take judicial notice of the terms of all the members of the City Commission of Middletown.

The question, however, still remains as to whether or not this contract is to go into full operation during the term for which all members of the City Commission are elected.

It has been held that the foregoing restriction as to contracts, §4241 GC, does not mean that performance of every term or stipulation of the contract shall begin during the term of such of the members in office at the time the contract is entered into. Nor does it require that the contract be completed during such period. The authorities lead us to the conclusion that a contract goes into “full operation” within the meaning of this section upon its execution.

It is claimed, however, that the operation of this contract depended upon a contingency, namely, the allocation to the City of the F. W. A. grant and that even though the happening of the contingency might have occurred during the term of such Commissioners, still the contract would be invalid because it is inhibited by §4241 GC.

The plaintiffs have drawn a most interesting analogy between this section and §8621 ■ GC, which section provides that “No action shall be brought whereby to charge the defendant * ' * upon an agreement that is not to be performed within one year from the making thereof.” They contend that the construction placed upon §8621 GC by the Courts applies with equal force to §4241 GC. And that the Courts have held that before a contract comes within the terms of §8621 GC it must contain upon its face provisions which make it utterly impossible to perform the contract within one year; that contracts which may be performed within one year, or which are to be performed upon a contingency which might conceivably occur within one year, are not within the terms of §8621 GC. This construction they claim is supported by the text and authorities in support thereof found in 19 O. Jur., pages 638 and 639.

It is our conclusion that §4241 GC should bear the same construction which the Courts have placed upon §8621 GC, even though this latter section is a part of the statute of frauds. It is our further conclusion that it was not only possible for this so-called contingency to occur within the term of the members of the City Commission but from the allegations of the petition it is revealed that such contingency actually did occur within the term of all of them. We believe that the contract went into operation upon its execution and that the contingency therein provided did not prevent it being effective in that respect, but merely, if it did not occur, would cause its operation to cease. Our conclusion, therefore, is that this contract does not fall within the inhibitions of §4241 GC.

It is further intimated that aside from §4241 GC, the provisions of the contract — those which provide that it shall not be in force and effect until after the F. W. A. application has been approved — destroy the validity thereof. That such provisions in effect bind the City to employ plaintiffs in futuro and commit it to the employment of the plaintiffs to the exclusion of any one else.

In reference to this claim we know of no rule of law, and have been cited to none, which makes such a contract invalid merely because it contains a contingency such as that contained in the one before us. Furthermore, defendants’ speculation as to the effect upon this contract of disallowance or rejection of the City’s application to the F. W. A. is answered completely, in our opinion, by the averments of the petition which reveal that the application had been granted and partial payment made thereunder by the Federal Agency to the City.

The defendants have briefed the question of damages claimed by plaintiffs. They take the position that the plaintiffs are not, under the law, permitted to recover as damages, the full amount of their compensation provided in the contract. This issue was raised by the Court itself in the course of the oral argument, merely by inquiring of counsel as to the measure of damages in a case of this kind. However, we are of the opinion that this particular matter has really no bearing upon whether or not plaintiffs have stated a cause of action. The question of the method of calculating plaintiffs’ damages, while a most interesting one, would not arise until after the case proceeds to trial and a cause of action is made out. We will therefore give no consideration to this particular matter at this time.

The Court concludes that the plaintiffs have alleged facts sufficient to constitute a cause of action against the defendants and therefore the demurrer will be overruled.

On the Merits

This cause was submitted to the court without the intervention of a jury and it is now before us upon the pleadings and the evidence. Counsel have furnished the court with extensive briefs.

The plaintiffs, at the time the action was filed, were Harvey P. Jones and Thomas B. Henry, professional engineers, partners doing business under the name and style of Jones and Harvey. During the pendency of this cause Harvey P. Jones died and the action was revived in the name of Ina P. Jones, Executrix of the estate of Harvey P. Jones. The evidence in this cause showed that Thomas B. Henry purchased the interest of Harvey P. Jones, ^deceased, in the partnership and that he as such surviving partner has succeeded to Harvey P. Jones’ interest in the partnership. In this opinion the plaintiffs will be referred to as they stood at the time the action was brought.

Plaintiffs seek to recover damages from the City of Middle-town for breach of contract. The contract sued upon was entered into between the plaintiffs and the City of Middle-town, Ohio, as a result of an ordinance adopted by the City, for that purpose on the 29th day of May, 1946. Under said contract the City employed the plaintiffs to perform engineering services in connection with the preparation of plans and specifications and doing all the necessary engineering work in connection therewith for intercepting sewers and sewage treatment in the City of Middletown. The contract fixed plaintiffs’ compensation at four percent of the estimated cost of the construction.

Plaintiffs claim that the City breached this contract, prevented the plaintiffs from fully performing thereunder and repudiated the same in that a contract for the same work the plaintiffs were to perform, was awarded in April of 1947 to engineers other than the plaintiffs.

Many of the facts set forth in the petition are admitted by the City in its amended answer. Among such admissions are the following: The adoption by the City on May 29, 1946 of the ordinance authorizing the City to enter into the contract with the plaintiffs which is sued upon; that the ordinance which included a copy of the contract, the subject of this action, authorizes the Chairman of the City Commission to exercise a contract on behalf of the City with plaintiffs in accordance with the contract attached to the ordinance; that in 1945 plaintiffs, among other things, made a preliminary study and report on the sewage system of the City under contract with the City and made certain recommendations with respect to the sewage disposal plant and estimated costs of construction of sewers, relief and intercepting, and a sewage disposal plant. It is further admitted by the City that an application was made to the Federal Works Agency of the United States Government for an allocation of funds from the government for the advance planning intercepting sewers, industrial waste sewer, and a sewage disposal plant; that on November 27, 1946 the application was approved and that an allocation for the advance planning in the sum of $49,000.00 was approved by the Federal Works Agency, and that on February 13,1947 a check in the sum of $24,500.00 was advanced to the City. It is further admitted that the City Commission of the City of Middletown on the 23rd day of April, 1947 passed an emergency ordinance authorizing its chairman to enter into a contract with Floyd G. Brown and Associates of Marion, Ohio for the performance of said engineering work set forth in said contract.

The evidence, together with the admissions set forth in the pleadings clearly establishes the fact that the contract as pled was entered into between the plaintiffs and the City of Middletown, and that the same was repudiated and breached by the City, and the plaintiffs were thereby prevented from performing the same.

- The defendants’ defense to this action consists entirely in denying the validity of the contract sued upon. The defendants take the position that the invalidity of the contract which it made with the plaintiffs, precludes a recovery against them. In their amended answer and as a second defense therein, the defendants set up a number of grounds which they assert render this contract invalid and defeat plaintiffs’ claim.

A demurrer was filed by the defendants on the ground that the plaintiffs’ petition did not set forth facts constituting a cause of action. In support of that demurrer many claims were advanced by the defendants as to why the contract set forth in the petition had no validity and therefore plaintiffs had no cause of action. Counsel thoroughly briefed the matters raised by the demurrer. The court was furnished with many authorities in support of and contra to the petition.

In December of 1947 this court in an opinion reviewing the authorities and the arguments advanced by the parties, held that the petition did state a cause of action and overruled the demurrer.

The defendants now reiterate their claim that the plaintiffs cannot succeed in this action because the contract admittedly made between the parties was not valid; and urge the same grounds to sustain their position which they claimed supported their position in respect to the petition not stating a cause of action. While the defendants, in their brief, now submit additional reasons (other than those urged at the time of the hearing on the demurrer) to support their claim that the contract has no legal effect and submitted some additional authorities, they rely principally upon claims heretofore made, considered, and decided by this court.

In our consideration of the demurrer we rather exhaustively treated the matters now again submitted by the defendants. No useful purpose would be served, in either reciting the arguments advanced by the defendants, or our conclusions thereon. Suffice it to say that our position now, after hearing this cause on the merits, in respect to the claimed invalidity of this contract, remains unaltered. The new matters which defendants assert under the evidence submitted, are not, in our opinion, of sufficient merit to cause us to conclude that this contract is not binding upon the defendants.

We find that the contract sued upon in this case is a valid one and that the City of Middletown is bound by it. That the City of Middletown breached the same and prevented plaintiffs from performing thereunder, and that the City is liable to the plaintiffs for the damages sustained by them.

The evidence offered by the plaintiffs, respecting the damages which they sustained, consisted of a showing as to the amount of the cost, to them, to perform the services which they were obligated to render under the contract. It was shown that this cost would have been in the sum of $23,000.00. Mr. Henry, one of the plaintiffs, testified that that sum was arrived at as a result of his experience with projects similar to the one called for by the Middletown contract, and upon his firm’s accounting and record of costs for performance of similar services. These plaintiffs had a similar contract with the City of Tiffin, Ohio to perform substantially the same services called for in the Middletown contract and covering about the same period of time. The evidence showed that the cost of performing the engineering services in the Tiffin contract, as established from the books and records of the plaintiffs, was used as a measure of determining what would be the reasonable cost to them of performing the services under the Middletown contract. The estimated cost of the Tiffin project was $1,169,000.00, while that of Middletown was $1,165,000.00; both involved intercepting sewers. Mr. Henry testified that from his experience he estimated that the work required under the Middletown contract would normally have been completed by the plaintiffs in approximately eight months.

The contract provided that the plaintiffs were to receive for their services the sum of four percent of the estimated cost of the construction of the project. This estimate, as shown by the application made by the City to the Federal Works Agency, was calculated at $1,165,000.00. Therefore, the services of plaintiffs would have called for the payment of the sum of $46,600.00 to them.

The foregoing, respecting the amount of damages claimed to have been sustained by plaintiffs, was the only evidence offered in respect thereto.

While the plaintiffs in their petition seek to recover the full contract price, namely, $46,600.00 with interest, they apparently realized that the full contract price was not the measure of damages. The evidence submitted on this question was upon the theory that the measure of damages is the difference between the contract price and the cost of performance to the plaintiffs. In other words, the measure of damages is the profit which the plaintiffs would have made had they been permitted to perform and complete the contract. This amount is arrived at in this case by giving plaintiffs the full contract price less the amount they saved by reason of the City’s repudiation. The amount so saved is what it would have cost the plaintiffs to perform.

The weight of authority is to the effect that the foregoing is the proper measure of damages in a case of this kind. See Williston on Contracts, Vol. 5, Section 1363, etc.; 13 O. Jur., page 103; Restatement of Law of Contracts, Section 338, etc.; other authorities set forth in plaintiffs’ reply brief.

The defendants claim that even though this contract might be found good in other respects, that it is too indefinite as to compensation, and that the court could not with any degree of certainty ascertain what would be allowable compensatory damage. It is the City’s claim that there was no actual estimate as to the cost of the project and that the plaintiffs’ compensation was based upon a percentage of that cost. However, the contract calls for payment to plaintiffs ti four percent 01 the estimated cost of the construction. The City accepted the estimated cost of the construction, which estimate was furnished by the plaintiffs to the City and the City in turn gave that estimate to the Federal Works Agency in its application for funds for the engineering work. As a matter of fact, the City did receive $24,500.00 from the Federal Works Agency, as a pre-payment of one-half-of the amount applied for, based upon the cost of construction as estimated by plaintiffs ($1,165,000.00) and accepted by the City, by which estimate it is bound, at least for the purposes of this contract. We do not find, as claimed by the City here, “that there was no figure which could be reasonably used in calculating the percentage of compensation the plaintiffs might receive or, as stated before, there were no actual estimates on the cost of the work.” We further do not find that there is any merit to the City’s contention that there was a variance between the pleadings and the evidence which misled the defendants to their prejudice. This claim of the defendants is based upon the fact that the plaintiffs in their petition seek to recover the full contract price but offered evidence only as to loss of profit. We fail to find how that constituted a variance. The most that could be said is that the proof failed to measure up to the full amount claimed in the petition. Furthermore, it is most difficult to perceive in what manner defendants were prejudiced by plaintiffs’ failure to prove as much in damages as they claimed in their petition. If anything, such failure benefits them.

The City cites the case of Refrigeration & Air Conditioning Institute v. Rine, 80 Oh Ap 317, 75 N. E. 2d 473, at page 476. This is a Court of Appeals case on the question of the proper measure of damages and holds that the full contract price is not the measure of damages, but actual loss sustained. The court does say in the course of its opinion as follows: “The second item of actual damages is loss of profit, where profit was contemplated. * * * We recognize that the rule of the past- was repugnant to allowance of damages for loss of profits, but such is now the case. We believe it to be now well settled that loss of profits may be an element of damages in breaches of partly performed contracts, where such profits are not too remote, are not speculative and can be shown with fair accuracy, definiteness and certainty.”

We are of the opinion that here the profits plaintiff would have made are not too remote, are not speculative, and were shown with reasonable definiteness and accuracy.

The plaintiffs further claim interest upon their damages and claim the same from October 1, 1947 which is the date, on which they claim the evidence shows, they would reasonably have been expected to finally perform. It was to the effect that they would have performed their part of the contract within eight months. October 1, 1947 was eight months following the date the contract went into effect. We believe that the plaintiffs are entitled to recover interest on the damages which the evidence shows they sustained, namely, the sum of $23,600.00 from October 1, 1947.

An entry may be prepared in accordance with this opinion, finding upon the issues joined in favor of the plaintiffs and against the defendants and finding the amount to which the plaintiffs are entitled to recover to be in the sum of $23,600.00 with interest thereon at six percent per annum from the first day of October, 1947, and their costs.


source: Caselaw Access Project

author: By LINDLEY, CJ.

license: Public Domain

text:
    In re LUSTRON CORP. LaFAYETTE STEEL CO. v. LUSTRON CORP.
    United States Court of Appeals, Seventh Circuit.
    No. 10212.
    Decided October 23, 1950.
    Louis M. Mantynband, Sidney R. Zatz, G. Gale Roberson, Chicago, 111., Benjamin H. Schwartz, Cleveland, Henry J. Shames, Chicago, 111., of counsel, for appellant.
    Joseph H. Schwartz, Jacob Cohen, Michael Gesas, Leonard Gesas, William S. Collen, Martin J. McNally, Raymond F. Hayes, Chicago, HI., for appellee.
    Before KERNER, FINNEGAN and LINDLEY, Circuit Judges.
   OPINION

By LINDLEY, CJ.

This appeal grows out of the proceedings involved in Nos. 10203 and 10213. Consequently the facts related in our opinion disposing of those two appeals are included in this opinion by way of reference.

After the entry of the restraining order by the bankruptcy court on June 8, 1950, appellant, Lafayette Steel Company, Inc., hereinafter referred to as Lafayette, filed a petition to modify the order to the extent necessary to permit the receiver in the Ohio court to deliver the property for which Lafayette had bid $645,000 at the receiver’s sale, to the bidder. Lafayette also made a motion for leave to intervene in the bankruptcy proceedings. The court, on July 6, 1950, holding that Lafayette was not a party in interest and not entitled to intervene, dismissed the petition and denied intervention. Prom this order, this appeal is taken.

Appellant contends that it is a bona fide purchaser of the property in question at a judicial sale and entitled, as a matter of law, to have the sale confirmed, irrespective of the intervention of bankruptcy, that the institution of bankruptcy did not deprive the Ohio court of jurisdiction to confirm the sale and that it had a right to intervene to obtain modification of the injunction.

Bearing in mind the facts that appear in our opinion in 7 Cir., 184 P. 2d 789, we think it clear that the court rightfully denied the petition for modification of the injunction. We have seen that the Ohio proceeding was trifold in character. RFC there sought, first, judgment upon its indebtedness, second, foreclosure of its purported mortgages, and, third, a proceeding in rem, whereby the court took possession of all the assets located in that jurisdiction for the benefit of all creditors, appointed a receiver and gave to him the custody of such assets and all the power of a receiver in equity in insolvency proceedings. We have also seen that general assets “not covered by the mortgages” were ordered sold; that these belonged to the general assets and, therefore, to the unsecured creditors in bankruptcy, in case such proceeding should be instituted; that such general assets had been sold to Lafayette, subject to confirmation by the court; that the sale had not been confirmed when the bankruptcy proceedings were instituted; that the bankruptcy court enjoined confirmation of the sale and that the receiver in Ohio, in deference to the injunction, refused to deliver the assets to Lafayette or to accept the unpaid portion of the purchase price.

It is well established that where property of the debtor later adjudged a bankrupt is in the hands of an equity receiver in an equity insolvency proceedings, where no lien exists upon the general assets involved antedating bankruptcy by more than four months, the bankruptcy court’s jurisdiction over the assets in the hands of a non-bankruptcy receiver is paramount and exclusive. Thus, in Taylor v. Sternberg, 293 U. S. 470, 55 S. Ct. 260, 261, 79 L. Ed. 599, the court said: “Upon such filing, the jurisdiction of the bankruptcy court becomes paramount and exclusive; and thereafter that court’s possession and control of the estate cannot be affected by proceedings in other courts, whether state or federal. (Citing cases.) This applies while the possession is constructive as well as when it becomes actual. (Citing cases.) * * * In the present case, with the supervening bankruptcy, the possession of the state court came to an end, and that of the bankruptcy court immediately attached.” And 293 U. S. at page 473, 55 S. Ct. at page 262: “Thereafter, the estate in its entirety was held by the receiver as a mere repository for the bankruptcy court and therefore not adversely;” * * *.

The law is well stated in In re Diamond’s Estate, 6 Cir., 259 P. 70, 73, where the court announced: “Upon the adjudication of bankruptcy, the District Court acquired jurisdiction essentially exclusive to administer the estate of the bankrupts generally, including the determination of claims to or liens upon their property, as well as questions of disbursement and distribution generally. * * * This exclusive jurisdiction the bankruptcy court was not at liberty to surrender * * *, and after bankruptcy supervened the state court (broadly speaking) no longer had power, unless under circumstances of emergency not applicable to the order here, to so dispose of the bankrupts’ estate, in whole or in part, as to deprive the bankruptcy court of power to determine finally the propriety of such disposition.” This is in accord with Section 69, sub. d of the Bankruptcy Act, U. S. C. A. Title 11, Section 109, sub. d which provides that “d. * * * Such receiver or trustee, with knowledge of the filing of such bankruptcy proceeding, shall not make any disbursements or take any action in the administration of such property without first obtaining authorization therefor from the bankruptcy court.” After bankruptcy has occurred the bankruptcy court is without power to surrender its paramount and exclusive jurisdiction. Isaacs v. Hobbs Tie and Timber Co., 282 U. S. 734, 739, 51 S. Ct. 270, 75 L. Ed. 645 and United States Fidelity & G. Co. v. Bray, 225 U. S. 205, 32 S. Ct. 620, 56 L. Ed. 1055. See also In re Watts, 190 U. S. 1, 27, 23 S. Ct. 718, 47 L. Ed. 933; Lion Bonding & S. Co. v. Karatz, 262 U. S. 640, 642, 43 S. Ct. 641, 67 L. Ed. 1151 and Moore v. Scott, 9 Cir., 55 F. 2d 863, 865, Brennan v. Trimpert Rough Hat Co., D. C., 8 F. Supp. 926. Consequently upon the filing of the petition in bankruptcy, followed by adjudication and election of trustees, the exclusive title vested in those trustees as of the date of the filing of the petition. Thereupon the court in Ohio, in so far as its proceeding affected general assets, lost jurisdiction to proceed and the receiver of that court held those assets subject to the demands of the trustee in bankruptcy. Consequently the court rightfully restrained the confirmation of the sale to Lafayette, for it alone had jurisdiction thereafter to administer and dispose of the general assets of Lustron.

What we have said should dispose of the case finally and completely but, perhaps, it is well to consider further some of the contentions of appellant. It insists that at, the sale, subject to confirmation by the court, it became a bona fide purchaser at a judicial sale whose title was then perfected so that no court could thereafter interfere with the same and cites a number of cases holding that in such situation, the purchaser has certain equitable rights, including the right to have the sale confirmed in the absence of fraud, mistake or other circumstances sufficient in law to invalidate the sale or prevent its confirmation. We have no quarrel with the proposition that a purchaser has a right to apply to the court for confirmation and, if the sale is legal and not subject to attack in any manner, have the sale confirmed. But these cases have no relevancy or applicability to a sale of general assets which remains unconfirmed, at the time bankruptcy has intervened. A receiver’s sale in an equity insolvency receivership, subject to confirmation, is a judicial sale which is not complete until confirmation. Until that event occurs, even an accepted bid makes of the bidder no more than one whose proposal has been recommended. In bankruptcy, such a bidder before confirmation is not even vested with an equitable title to the property and can not restrict the power of

the bankruptcy court under Section 70 of the Act, 11 U. S. C. A. Section 110. In other words, while the highest bidder is entitled ordinarily to have his bid accepted, he is not a purchaser and has no title until the sale is confirmed. In re Klein’s Rapid Shoe Repair Co., 2 Cir., 54 F. 2d 495, and cases there cited, Hartford Accident & Indemnity Co. v. Crow, 6 Cir., 83 F. 2d 386, In re Wolke Lead Batteries Co., 6 Cir., 294 F. 509, The East Hampton, 2 Cir., 48 F. 2d 542, Heller v. Lamar, 64 App. D. C. 266, 77 F. 2d 389, In re Realty Foundation, 2 Cir., 75 F. 2d 286, 288.

It is of no importance that the Ohio law regarding such sales differs, if that were the fact, for, in view of the paramount character of the bankruptcy jurisdiction, any disposition of general assets contrary to the provisions of the bankruptcy act by another court, state or federal, must fail when it infringes upon that jurisdiction. However, an examination of the authorities discloses that the Ohio law is not at variance with what we have said. Reed v. Radigan, 42 Oh St 292, Weir v. Snider Saw Mill Co., 88 Oh St 424, 103 N. E. 133, Beaumont v. Herrick, 24 Oh St 445, 456, Howell v. French, 74 Oh Ap 257, 29 O. O. 372, 58 N. E. 2d 237, Walters v. Homberg, 3 Oh Ap 326. In this connection appellant insists that it had a right, under the law, to have the sale confirmed in the absence of fraud, unfairness or mistake. This proposition is correct so far as it goes but, in view of the jurisdiction in bankruptcy, to that postulate should be added that there must be likewise absence of intervention of a superior jurisdiction, such as bankruptcy.

Appellant insists that the assets which it purchased were subject to the lien of the RFC. However, as we have observed, the Ohio proceedings included not only foreclosure of RFC’s liens but also a general equity receivership for unincumbered assets, and the receiver appointed by that court found a substantial sum of money on hand and certain assets which he reported to the court were not covered .by any mortgage and as to which he asked instructions from the court. Thereupon the court ordered sale of assets “not covered by the mortgages.” If RFC ever had a mortgage purporting to cover the assets sold to Lafayette, it certainly waived any such lien in the Ohio proceedings. Those assets were correctly treated by the court as general assets as to which, the Ohio proceeding was a general equity receivership of an insolvent corporation wherein the right to administer the property came to an end as a matter of law upon institution of bankruptcy proceedings.

Appellant takes the position that it is protected by Section 67, sub. a (3) of the Bankruptcy Act, ü. S. C. A., Title 11, Sec. 107, sub. a(3), where it is provided that if any property affected by any lien is deemed null and void, the property shall pass to the trustee or debtor as the case may be except that the court on due notice, may order such lien to be preserved for the benefit of the estate and direct conveyance of the title, provided, however, that the title of a bona fide purchaser of such property shall be valid. It insists that the sale of the receiver to it was made in pursuance of satisfaction of a lien. The short answer is, as we have pointed out, that the Ohio receiver’s sale was not in pursuance of any lien but a sale of general assets. Nor did the entry of judgment by the Ohio court or the appointment of a receiver impose, under the Ohio law, a lien in favor of RFC upon the property in the hands of the receiver valid against bankruptcy proceedings as contended by appellant, for that judgment worked no lien valid as against the trustees in bankruptcy. The sale was not made in pursuance of the judgment or to satisfy it but was made pursuant to the court’s administration of the general assets of the bankrupt. Even under Ohio law, had the sale been in pursuance of the judgment, there was no lien because of the judgment in the absence of-an execution. Sec. 11656-1 GC; Jackman v. Hallock, 1 Ohio 318, 320; Langel v. Moore, 119 Oh St, 299, 164 N. E. 118.

The orders of the District Court from which the appeal is taken dismissed the petition for modification of the injunction order and denied appellant’s motion to intervene. Perhaps the court might more appropriately have provided that Lafayette might intervene and then dismissed its claim for want of equity. But this, we think, is immaterial, for the essential final effect of the orders is the same as if they had so provided. So far as legal effect is concerned, they were a determination that the facts set up in the petition did not state a valid claim for relief on the part of Lafayette. Therefore, the court dismissed the petition and denied intervention as rutilo.

The court has a right, of course, in the exercise of its jurisdiction in the administration of the bankruptcy assets to determine whether eventually the sale shall be permanently enjoined or whether it shall be approved and the proceeds of sale delivered to the trustee in bankruptcy; but these are details of administration properly within the function of the District Court. If, in making such determinations, the interests of Lafayette are involved, the District Court will undoubtedly very properly and appropriately permit intervention for the protection of such interests.

The orders are affirmed.


author: By HORNBECK, J:

text:
    BUFFENBARGER, Plaintiff-Appellee, v. SIDNEY GRAIN MACHINERY CO., Defendant-Appellant.
    Ohio Appeals, Second District, Shelby County.
    No. 154.
    Decided November 8, 1950.
    H. K. Forsyth, Sidney, for plaintiff-appellee.
    Cummins & Boiler, Sidney, for defendant-appellant.
   OPINION

By HORNBECK, J:

This is an appeal on questions of law from a judgment of the Common Pleas Court for the plaintiff in the sum of $514.88 with costs. The action was for breach of a contract of employment between the plaintiff, as employee, and defendant, as employer, by the terms of which the plaintiff was to be paid $100.00 per week plus his expenses and 25 per cent of net profits earned by the engineering department of defendant company.

No claim was made for money due on net profits.

The action was for one week’s salary preceding the date that plaintiff left his work with the company and expenses together with $400.00 at the rate of $100.00 per week for the claimed wrongful termination of the contract in the failure of the defendant to give the plaintiff thirty days notice in advance of its intention to terminate the contract. Against' this sum total plaintiff admitted a credit in the sum of $115.00 for money advanced to him by the defendant company. The defendant answered and after admitting the contract, generally denied all other averments of the petition. The plaintiff, among other things, plead faithful per-1 formance of the terms of the contract which was traversed by the general denial of the answer. The cause went to trial to judge and jury resulting in a verdict signed by eleven jurors, the twelfth having been excused during the trial because of illness.

There was an issue whether or not the defendant had breached its contract in that it discharged the plaintiff without notice, its claim being that he voluntarily left the employment. However, no error, is assigned to any of the proceedings excepting only the refusal of the trial judge to permit certain questions, propounded by counsel for the defend'ant, to be answered on the cross-examination of Edwin P. Seving, a witness for the plaintiff.

Plaintiff, in making his case, offered, in detail, proof of the work that he had done in the office and in the field and specified particularly the engineering jobs upon which he had rendered service and the expenses incurred in connection therewith. It also appeared as a part of the transaction by which the plaintiff entered the employment of the defendant that he had sold to the defendant certain office equipment in Decatur, Indiana, which he had used in connection with his engineering business there and also some $1,800.00 worth of bills receivable by plaintiff’s business concern. The purchase price for this business, supplies and bills receivable was $2,000.00. Although there was no issue upon any claim of the plaintiff for money due by reason of the net profit provision in the contract considerable testimony was developed respecting this phase of the contract. It appeared that in determining net profits the contract provided.

“For such purposes, all services furnished by said Buffenbarger directly to The Sidney Grain Machinery Company including assistance on sales made by company representatives, but which are not charged separately to the customer will be charged to the company at the rate of Two dollars and a half per hour.”

Defendant offered considerable testimony to the effect that there had been complaints respecting the service of the plaintiff in the field; that the company had been required to make certain changes on jobs that the plaintiff had engineered.

Leading up to the immediate question presented by this appeal defendant on cross-examination interrogated the plaintiff at length respecting the charges of $20.00 a day, presumably, eight hours at $2.50 an hour, that had been made against the company by the plaintiff in connection with the carrying on of the business at Decatur and the moving of the furniture and supplies of this business to Sidney.

Beginning at page 58, counsel for defendant propounded and plaintiff answered, as follows:

Q. The contract of employment provides, does it not, that when you worked directly for the company you were to charge $2.50 an hour, is that right?

A. That’s right.

Q. And that $2.50 an hour would be considered as gross sales by your department in determining at the end of the year whether you made a profit?

A. That’s right.

Q. So that every dollar of that which you charged went to help make a profit in the department?

A. Yes.

Q. And if your department made a profit during the year, you got twenty-five percent after the $100.00 a week and the expenses had been deducted?

A. Twenty-five percent of the profit, yes.

Q. So, for that purpose you charged $20.00 a day for seven or eight days from August 31st to September 9th, 1948 for moving your office to Sidney, is that right?

A. Right.

Q. And you charged $20.00 a day for August 27, August 28 and August 30 for just getting ready to move your office to Sidney?

A. Yes.

Q. And you charged $20.00 a day October 1, 2 and 4 for getting yourself into the building over there?

A. That’s right.

Q. And you charged $20.00 a day for so-called office work on October 30th, November 4th, November 6th and November 9th, which you testified this morning was for getting a stove and hauling some coal for a fire?

A. Yes, among other things.

Q. Did your ever consult with anybody about that?

A. He said if the janitor can’t do it, I should do it.

Q. Did he understand you were charging $20.00 a day for it?

A. I think so.

Q. Did you tell him?

A. He knew that.

Q. Did you tell him?

Not answered.

Q. Did you tell Mr. Seving you were going to charge $20.00 a day for that purpose?

A. No.

Mr. Seving, Secretary, Treasurer and Assistant Manager of defendant company during the time that plaintiff was in its employ and his superior officer testified at length. On cross-examination he was questioned on the subject of the $2.50 per hour charge, at

Q. You remember that under the contract, Mr. Buffenbarger when he worked directly for the Company, was entitled to charge S2.50 an hour, is that right?

A. It was averaged out some way that the company was to receive for those services $20.00 a day.

Q. And that amount of $20.00 a day would be credited to the gross sales of Buffenbarger’s engineering department, to be used in determining whether he made a profit at the end of the year?

A. Right.

Q. Did you ever know that he charged the company $20.00 a day for three days getting ready to move his office from Decatur to Sidney?

A. I presume it would be customary.

Q. Were you ever notified?

A. He was paid his regular weekly salary.

Then follow the questions to which the trial judge sustained the objections and which rulings are made the subject of this appeal, at page 87 of the record:

Q. Were you ever notified or told before it happened that Mr. Buffenbarger intended to charge Sidney Grain Machinery Co. $20.00 a day for getting ready to move his office from Decatur to Sidney?

Q. Were you ever told, Mr. Seving, by Mr. Buffenbarger, that he was charging $20.00 a day for August 31st, September 1st, 2nd, 3rd, 4th, 8th and 9th, of 1948 for—

Q. Were you ever told, Mr. Seving, by Mr. Buffenbarger, that he was charging $20.00 a day for August 31st, September 1st, 2nd, 3rd, -4th, 8th and 9th of 1948 for the purpose of moving his office from Decatur, Indiana, to Sidney, Ohio?

Q. Mr. Seving, were you notified by Mr. Buffenbarger or anyone else, that on October 30th, November 4th, November 6th, November 9th and November 11th, 1948, Mr. Buffenbarger was charging the Company $20.00 a day for the purpose of getting a stove and coal into his office in Sidney?

It is the claim of the appellant that the answers to these questions may have reflected dishonest practice on the part of the plaintiff and, therefore, assisted the defendant in establishing its denial that the plaintiff had faithfully-performed his obligations under the contract.

It is our opinion that the refusal to admit this testimony was within the discretionary right of the trial judge. He could have permitted the answers to be made or he could have refused to admit them. This is true because of the development of the testimony on the subject as it had been produced theretofore in the trial. The form of the questions, as propounded by counsel, indicated that the contract provided that if Mr. Buffenbarger worked directly for the company he was entitled to charge $2.50 an hour for his services. Of course, it is understood that at no time did Mr. Buffenbarger receive $2.50 an hour. He was paid on the basis of his weekly salary and this $2.50 an hour provision only would be considered as a basis of computation of net profit if, and when, the parties reached that question. It appeared that Mr. Buffenbarger made some request for such an allowance but no agreement with respect thereto was effected by the parties.

Mr. Buffenbarger admitted, without qualification, that he had made the charge of $2.50 an hour for the services rendered at the times mentioned at the Decatur office. This, then, was not in controversy. Mr. Seving also testified that he considered such charges customary and the inference is that he felt they were proper. What difference then did it make whether he had been formerly told of these charges? It was obvious what his opinion would have been had he been told.

The testimony sought to be elicited did not come upon cross-examination of a witness who had testified as to the general reputation of the plaintiff wherein he might possibly have been interrogated as counsel attempted to do.

We are unable to conclude that the denial to receive the answers to these questions couid have been prejudicial to the defendant. 2 O. Jur. 1279. Had Mr. Seving said that he had not heard of the charges, it follows that the jury would have known no more as to the feet that they had been made than it had already learned from the admissions of Mr. Buffenbarger. On the other hand, had the witness replied that he had heard and knew all about the charges and the subject had been developed, his answer would, in probability, be no different than his former statement that he considered such ■charges customary.

The answers if permitted could not have been probative as to the honesty of the plaintiff. The jury would have received nothing more than it had already heard on the subject upon which it had to pass judgment, viz: the faithfulness of the plaintiff in meeting his obligations under the contract. This issue was squarely presented in the general charge.

We are satisfied that the rulings of the trial judge were not prejudicially erroneous to the defendant in the trial of the cause.

The judgment will be affirmed.

MILLER, PJ, and WISEMAN, J, concur.


author: By DAVIES, J.

text:
    SHOOK, Exr., v. McCONNELL, et al.
    Probate Court, Hamilton County.
    No. 3483.
    Decided January 22, 1951.
    Berry, McClain and White, Cincinnati, for Norman J. Childs. W. B. Bush, Cincinnati, for Lucy McConnell.
    Selma Raphaelson, Cincinnati, for executor.
   OPINION

By DAVIES, J.

In this action, Chester R. Shook, executor of the estate of James H. Ross, who died on March 30, 1950, seeks a declaratory judgment to determine what persons are entitled to distribution under Item III of the will of said testator.

Item I of the will provides for the payment of debts and funeral expenses. Item II gives the testator’s barber shop located in Cincinnati, Ohio, to all of his employes working in said shop at the time of his decease. Item III of the will reads as follows:

“I hereby give, devise and bequeath all of the balance of my estate, real, personal and mixed, of whatsoever nature and wheresoever the same may be situated, which I may own or have the right to dispose of at the time of my decease, to my heirs, in accordance with the laws and statutes of Descent and Distribution of Ohio in effect at the time of my decease.”

Items IV and V provide for the appointment of a fiduciary and give said representative full and complete power to sell, at either public or private sale, all or any part of decedent’s property, without authority of court and without the necessity of the purchaser looking to the application of the purchase money.

Among the assets in the estate of James H. Ross, deceased, is the sum of $4267.00 in cash which is the identical cash which came to him as a bequest from the estate of his wife, Mary L. Ross, who died on December 15, 1949. James H. Ross, the husband, died without issue and at the time of his death was survived by a sister, Lucy McConnell, a niece, Margaret Parker, the daughter of his predeceased sister, Mary Ross, a niece and nephew, Mary Ann Eady and Charles Ross Jackson, the two children of his predeceased sister, Christine Jackson, and a niece and nephew, Nettie Ross Davis and Claudius L. Ross, the two children of his predeceased brother, William Ross. At the time of James H. Ross’ death, his predeceased wife, Mary L. Ross, was survived by her brother, Norman J. Childs and two nephews, Culbreth B. Cook, Jr. and Charles W. Cook, the children of a predeceased sister, Kate Cook.

Under these circumstances, a controversy has arisen between the blood heirs of the husband and the named heirs of the predeceased wife as to the proper distribution of the $4267.00 in the husband’s estate which came to him from his wife’s estate. The husband’s blood heirs claim that they are entitled to all of said property, and the heirs of the wife contend that they are entitled to one-half of said property under the provisions of §10503-5 GC, which reads as follows:

“When a relict of a deceased husband or wife dies intestate and without issue, possessed of identical real estate or personal property which came to such relict from any deceased spouse, by deed of gift, devise, bequest or descent, or by virtue of an election to take under the statute of descent and distribution, then such estate real and personal, except one-half thereof which shall pass to and vest in the surviving spouse, if any, of such relict, shall pass to and vest in the children of the deceased spouse from whom such real estate or personal property came, or their lineal descendants, per stirpes. If there are no children, or their lineal descendants, then such estate, real and personal, except for the one-half passing to the surviving spouse, if any, of such relict, shall pass and descend as follows: one-half to the other heirs of such relict, under the provisions of the other statutes of descent and distribution, in the same manner and proportions as if the relict had left no surviving spouse; and one-half to the parents of the deceased spouse from whom such real estate or personal property came, equally, or the survivor of such parents, and if there be no parent surviving, to the brothers- and sisters, whether of the whole or of the half blood of such deceased spouse, or their lineal descendants, per stirpes. * *

Although James H. Ross died without surviving issue and possessed of identical personal property which came to him from his predeceased spouse, §10503-5 GC, can have no direct application because the husband died testate and not intestate. We, however, are faced with the problem of determining to what heirs he intended to give and devise the identical personal property which came to him from his wife. The cardinal rule of interpretation of a will is to ascertain and give effect to the intention of the testator. That intention must be ascertained from the language used in the will. The testator must be presumed to have meant what he said. Smith et al. v. Hunter et al., 86 Oh St, 106, 99 N. E. 91. The words contained in the will, if technical, must be taken in their technical sense, and if not technical, in their ordinary-sense, unless it appear from the context that they were used by the testator in some secondary sense. Townsend v. Townsend, et al., 25 Oh St, 477.

The term heirs, when used in a will, is flexible and should be so construed as to give effect to the manifest intention of the testator as ascertained by a due consideration of all the provisions of the will. It is presumed in the construction of a will that the testator was acquainted with the rules of law and with the laws of descent and distribution. Foster et al. v. Clifford et al., 87 Oh St, 394, 101 N. E., 269.

At common law an “heir” is defined to be one who is born or begotten in wedlock and upon whom the law casts the estate in lands, tenements or hereditaments, immediately upon the death of the ancestor. 14 O. Jur. 178; Walker v. Walker, 283 Ill., 11, 118 N. E., 1014. According to Bouvier’s Law Dictionary, the word “heir” as defined in its strict and technical import applies to the person or persons appointed by law to succeed to the estate in case of intestacy.

The primary significance to be given the word “heir”, as used in a testamentary instrument, is, in the absence of any contrary context, those persons who would take the property of the person designated as ancestor in case of his death intestate. 57 Am. Jur. 908, Sec. 1369.

The phrase “heirs at law” is not restricted to blood relatives of the testator unless such an intention is made manifest. In the case of Smith et al. v. Hunter et al., supra, language devising a remainder of an estate to the heirs at law of the beneficiary for life is regarded as including an adopted child of the beneficiary on the ground that the words “heirs at law” meant those who by law might be entitled to succeed to the property of which the testator should die seized as of an estate of inheritance.

In Miller et al. v. Miller, 9 O. C. C. (N.S.) 242, affirmed in 77 Oh St, 643, it was held that where a testator devises a parcel of real estate to his son for life, with remainder to his lawful heirs, and the son marries after the death of the testator, upon the death of the son, his wife takes as heir, where there is nothing in the will tending to show that the testator used the words lawful heirs in a different sense from their strict and technical import, since, under, the statute of descent and distribution, the wife would inherit from her husband.

The right to make a will is in no sense a property right or a so-called natural right. It is not a right protected by any of the constitutional provisions whereby property is protected and is not an inherent right, but it is purely a statutory right, subject to the complete control of the Legislature. Page on Wills, Vol. 1, Sec. 25, page 49.

The Legislature has the right to determine by statute to what heirs a distribution of a decedent’s estate shall be made. Having once determined the method of descent of intestate property, the Legislature has the right, and very frequently asserts the right, to change that order of descent.

When James H. Ross died, and at present, §10503-4 GC, provided generally for the descent and distribution of a person’s estate when he died intestate, and other sections immediately following in the same chapter dealing with descent and distribution provided what the descent of an estate should be in certain specific circumstances.

The aforesaid §10503-5 GC, commonly referred to as the-Half and Half Statute, is an integral part of the statutes of descent and distribution under the laws of Ohio. Applying the above rules of construction and principles of law, it is not difficult to determine the identity of the heirs, to whom James H. Ross desired to give the balance of his. estate under the provisions of Item III of his will. When he gave said balance to his heirs, in accordance with the laws and'. statutes of descent and distribution of Ohio in effect at the-time of his decease, he clearly intended that said balance should be distributed to those individuals who would be entitled to the same in the event he would die intestate. This means, that he intended that the $4267.00 which came to him from his wife should be distributed under the laws of intestate-succession of Ohio. Since he died without issue, possessed of this identical cash, under the provisions of §10503-5 GC, one-half of said sum of $4267.00 remaining after deducting therefrom the proportionate share of the costs of administration- and debts chargeable to said sum shall pass and descend as. follows: one-half to the aforementioned brother and nephews^ of Mary L. Ross, deceased, and one-half to the named sister and lineal descendants of the predeceased sisters and brother of James H. Ross, deceased. Since the whole of James H. Ross’ estate consists of personal property, the percentage-of the costs chargeable to said sum of $4267.00 shall be determined from a fraction in which said sum is the numerator and the total assets of the estate, including said sum, is the-denominator.

Accordingly, the amount remaining of said $4267.00, after-deducting therefrom the costs of administration and debts,, determined as aforesaid, shall be divided as follows:

Norman J. Childs 4/16ths

Culbreth B. Cook Jr. 2/16ths

Charles W. Cook 2/16ths

Lucy McConnell 2/16ths

Margaret Parker 2/16ths

Mary Ann Eady l/16th

Charles Ross Jackson l/16th

Nettie Ross Davis l/16th

Claudius L. Ross l/16th


author: PER CURIAM.

text:
    DOLAN, Petitioner-Appellant, v. ALVIS et, Respondents-Appellees.
    United States Court of Appeals For the Sixth Circuit.
    No. 11186.
    Decided January 19, 1951.
    Donald Dolan, in propria persona.
    Alan E. Schwarzwalder, Asst. Atty. Geni., Columbus, for respondents-appellees.
    Before ALLEN, McALLISTER and MILLER, Circuit Judges.
   OPINION

PER CURIAM.

Appellant filed a petition for a writ of habeas corpus in the district court, setting forth that he had been convicted of crime in the Court of Common Pleas of Hamilton County, Ohio; that he had been denied legal and lawful arraignment prior to his trial; that he had been denied the right to contact and consult counsel; that he was not lawfully indicted; that he was denied compulsory process for obtaining witnesses in his favor; that he was denied the right to examine jurors on his trial to determine their fairness and impartiality; and that he was denied due process of law and the equal protection of the law from the time of his arrest on May 25, 1945, to the date of filing his petition for a writ of habeas corpus on February 6, 1950, all of the foregoing being in violation of the federal Constitution. Petitioner further alleged that he had exhausted all his available remedies in the courts of the State of Ohio; that while he had appealed his conviction to the Court of Appeals, and that court had affirmed the conviction, petitioner subsequently filed in the Court of Appeals a notice of appeal to the Ohio Supreme Court, but that he was thereafter denied access to that court; that he attempted to file a petition for a writ of habeas corpus in the Court of Common Pleas of Franklin County, Ohio, on six different dates during 1946, 1947 and 1948, and was denied access to that court; that he further attempted to file a petition for a writ of habeas corpus in the Court of Appeals of Ohio on four different occasions during 1946, 1947 and 1948, and was denied access to that court; and that he attempted to file a petition for a writ of habeas corpus in the Supreme Court of Ohio on six different dates during 1946, 1947, 1948 and 1949, and .was denied access to that court because it was required that the docket fees for filing such petition must be paid in advance and that petitioner had no funds to make such payment, and according to the rules of that court he was not permitted to proceed in forma pauperis.

Respondent warden and the State of Ohio filed no answers to the petition for the writ of habeas corpus, and it was thereafter denied by the district court in a pro forma order dated April 18, 1950. Thereafter, the district court granted petitioner leave to appeal from the order in forma pauperis On the appeal from the order of the district court, there was filed in this court a brief by the Attorney General of Ohio on behalf of respondent, stating that respondent had no knowledge whether the facts stated by petitioner in regard to his trial in the courts of the State of Ohio were true, or whether the alleged proceedings in regard to his petitions for writs of habeas corpus in that state were true. The State, in its brief, merely contended that appellant had not exhausted his state court remedies, setting forth that the laws of Ohio provided that, in a criminal case, the judgment of a court inferior to the court of appeals, may be reviewed by the court of appeals, and a judgment of the court of appeals may be reviewed by the supreme court upon good cause shown, and, further, that a writ of habeas corpus may be granted by the supreme court, the court of appeals, the common pleas court, or the probate court of Ohio, or by a judge of either. The foregoing statements in the brief of the Attorney General, however, do not answer petitioner’s contentions that he was without funds and that the State of Ohio did not permit him to file a petition for a writ of habeas corpus without prepayment of funds and made no provision for proceedings in forma pauperis. Moreover, the State, in its brief,- does not counter the allegations in the petition that petitioner had been denied access to the Supreme Court of Ohio in the presentation of his case on appeal.

If a prisoner is without funds or unable to obtain them, and may not present his case on appeal to a state court or file a petition for a writ of habeas corpus without prepayment of fees that he is unable to make, he would not be precluded from filing a petition for a writ of habeas corpus in a federal court on the ground that he has not exhausted his remedies in the state courts, for in such a case, he must be held to have exhausted such remedies.

The above cause is remanded to the district court for the filing of answers by respondent warden and the State of Ohio, and for further proceedings and findings by the district court, as to whether petitioner has exhausted his state court remedies,, and if he has, for consideration of the merits and determination of the petition for the writ of habeas corpus. See Mothershead v. King, 112 F. (2d) 1004 (C. C. A. 8).


author: By PECK, J.

text:
    THOMPSON v. COOPER.
    Common Pleas Court, Hamilton County.
    No. A-119189.
    Decided November 24, 1950.
    John M. McCaslin, Jr., Cincinnati, for plaintiff.
    Robert F. Dreidame, Cincinnati, for defendant.
   OPINION

By PECK, J.

This matter is before the court on the plaintiff’s motion for a new trial. The case is one arising out of an accident involving the two automobiles of the two parties, and was tried upon the plaintiff’s petition and defendant’s cross-petition. The jury found neither party entitled to recover.

The only point raised upon the motion here felt entitled to consideration is a novel one in the law of Ohio; as a matter of fact, we have not been cited to any case in point from any jurisdiction. It involves the plaintiff’s proffered testimony that at some time after the accident the green light controlling the movement of traffic in the direction in which the defendant was moving had burned out, defendant having testified that the light was burning green when he entered the intersection.

The novelty of the proposition arises from the fact that it is apparently an attempted inversion of the legal maxim that a condition once shown to exist will be presumed to continue until the converse is shown. In other words, can a condition be shown to exist at a given moment by proving that that condition existed at some subsequent time? We think not. While the maxim referred to may by reason of logic work very well in prospect, it is difficult to see how it may be said to operate in reprospect.

While it is not essential to the result here reached, we feel that we may very well take judicial notice of the scientific fact that an electric light bulb may burn out in an instant of time. If we were to adopt the position contended for by the plaintiff we would be ignoring the possibility that the light might have burned out at any instant between the time of the occurrence of the accident and the subsequent time when the plaintiff offered to prove that it was in a burned out condition.

■ We are cited to the case of Menz v. Nau, 9 Abs, 313, in which a party was permitted to testify as to the existence of marks in a pavement the day following the accident. It was held that the length of time elapsing between the accident and the observation of the marks would have some bearing on the weight to be given the testimony, but would not make it inadmissible. However, in that case other witnesses had testified that they had seen the marks “immediately following the accident.” Therefore the testimony at issue was merely corroborative or an elaboration of the previous testimony, and could not be the basis for admitting the proffered testimony in the present case.

The motion for a new trial will accordingly be overruled and an entry accomplishing that result may be presented.