author: By EMMONS, J.

text:
    HALE, Plaintiff, v. McCHESNEY et, Defendants.

      Common Pleas Court, Summit County.
    No. 175678.
    Decided February 6, 1951.
    William Whelton, Cuyahoga Falls, for plaintiff.
    Mark McChesney, Akron, for defendant.
   FINDING

By EMMONS, J.

Fred J. Hale, as plaintiff in this case which was filed April 17, 1950, claims that in May, 1948, the Auditor of Summit County, for himself and as agent for the State of Ohio, duly offered for sale at public auction certain lands and lots forfeited to the State for nonpayment of taxes, assessments, penalties, interest and costs, among said lots being lots 65, 67, 68 and 69 of the Mogadore Heights Allotment as recorded in Plat Book 28, pages 36 and 37 of the Summit County Record of Plats, said lots being situated in the Village of Mogadore in said County, and that said sale was in all respects in conformity to law.

It is further claimed that on the day of the sale he was the highest bidder for said property, and upon payment of the bid price a certificate of sale was issued for lot 65 on June 7th, 1948, and the Recorder accepted for notation this certificate on the same day, and that the Auditor’s certificates for lots 67, 68 and 69 were dated May 17, 1949, and accepted by the Recorder for notation on May 17, 1949, said certificates of sale being Torrens Instruments Nos. 73311, 76160, 76161, and 76162, and the Recorder did accept for notation on May 30, 1949, the Auditor’s deed for lot 65, being Torrens Instrument No. 75739, and on August 8, 1949, accepted for notation Auditor’s deed to lots 67, 68 and 69, being Torrens Instrument 76960; that the defendant, John McChesney, was "the owner of these four lots, acquiring title thereto August 5, 1948, by way of Administrator’s Deed, which the Recorder accepted for notation on August 17, 1948, being certificate No. 22935 issued by the Registered Land Division of Summit County, which deed was given subject to the rights of the State of Ohio and the several purchasers from the State of Ohio.

Plaintiff then asks that this matter be referred to an examiner of registered land titles in accordance with §8572-59 GC; that the Court order the Recorder of Summit County to register the titles of said lots 65, 67, 68 and 69 in the name of the plaintiff herein and to issue to the plaintiff a new certificate of title for such land, and such other relief as is just and equitable.

To these claims the defendants have filed a general denial, and this case came on to be heard upon the issues so raised, and upon trial being duly had the Court finds that on June 21, 1947, an action was commenced by the Administrator of the estate of Alice Norris, deceased, to sell these and other lots. On December 22, 1947, the Probate Court in its civil proceeding ordered the lots in question sold subject to the rights of the State of Ohio and the several purchasers from the State of Ohio, and on December 31, 1947, the Court of Common Pleas ordered the forfeiture of these lots to the State of Ohio. On August 5, 1948, after the title examiner’s report had been filed the Probate Court confirmed the sale and ordered the deed, which was registered in the name of John M. McChesney showing title in him as of August 17, 1948.

Counsel for the defendants ask the Court for determination of this question: Did the fact that the Probate Court of Summit. County entertained an action to sell the lots in question preclude the Common Pleas Court of Summit County from authority to order a foreclosure?

Sec. 5713 GC provides in part:

“The state shall have a first and best lien on the lands and lots described in the delinquent land list for the amount of taxes * * *”

In the confirmation of the sale by Probate Court the journal entry is as follows:

“It appearing further to the Court that during the pendency of this action said lands were declared forfeited to the State of Ohio and a part of said lands sold by the Auditor under such finding of forfeiture, that the deed aforesaid be made subject to the rights of the State of Ohio and the several purchasers without attempting in any manner to adjudicate the rights so acquired.”

The Probate Court ascertaining that a hearing on the forfeiture of these and other lots was ordered by the Common Pleas Court on December 2, 1947, said hearing to be held on December 29, 1947, and realizing by §7313 GC that the state had the first and best liens on these lots for taxes and so forth, sold them to the defendant subject to the rights of the State of Ohio and those purchasing from the State.

Whatever jurisdiction the Probate Court had as to the sale of these lots, it saw fit to surrender to the Common Pleas Court because of the forfeiture proceedings being maintained in the Common Pleas Court, and the defendant here cannot in this instance complain about the order of forfeiture not being filed by the Clerk with the Recorder and noted by him after he accepted the Administrator’s Deed subject to the rights of the State of Ohio and those claiming through the State, for to allow such a complaint to stand the Court would be permitting the defendant to circumvent the reservations contained in the deed. If such reservations had not been set out in the Administrator’s Deed then the forfeiture action could have been declared by this Court as non lis pendens because of a failure to comply with §8572-55 GC, and as such the proceedings in Probate Court would prevail to vest a good and sufficient title in the defendant, but in this instance the Probate Court’s reservation in the Administrator’s Deed is legally sufficient to invest the Common Pleas Court with sufficient jurisdiction.

The plaintiff asks the question in his brief as to whether the failure to comply strictly with all of the provisions of §§5704, 5707, 5718-1B GC deprive the Common Pleas Court to enter the - decree of foreclosure.

It is to be remembered that in this case we are dealing with Torrenized land as provided for in §8572-1 to §8572-118 GC.

This land is registered as compared with unregistered land. Owners of registered land are entitled to a more strict compliance with the statute than are the owners of unregistered lands. The very fact that the memorial of Torrenized land, kept by the Recorder, is of itself a definite certificate of title makes it mandatory for such a strict compliance with the statutes, whereas with unregistered land — especially in so far as the statutes dealing with the sale of forfeited lands are concerned — these should be loosely construed.

The case of Greenvale Homes Corporation v. Marting, CP 56 Abs 80, 86 Oh Ap 445, 93 North Eastern 2nd, 305:

“A failure to comply with all of the provisions of §§5704, 5707 and 5718-1B GC — e. g., the publication of only part of the delinquent tax list in one issue of one of the newspapers, and remainder of the list in another issue of the same paper; failure to include the closing words of the form of notice set out in §5707 GC at the end of the delinquent tax list in one issue of the two newspapers in which the list was published; and failure to publish the notice of hearing in newspapers of opposite political faith — does not deprive the Court of Common Pleas of jurisdiction to enter a decree of forfeiture; and such a decree, if entered, is a final order, whether or not erroneous, and whether or not the defects in question would have furnished a basis for objection at the time of said hearing.” Judge Perry Stevens, in his pronouncement in the Green-vale Homes Corporation case, supra, said:
“Sec. 5718-1C GC defines what are ‘legal objections’ as used in this grant of jurisdiction to the Common Pleas Court, and the irregularities shown by this record to have occurred antecedent to forfeiture are such as, under the statute, would have furnished a basis for the interposition of legal objections on the part of an objector. However, such irregularity, omission or informality not having been utilized as the basis for objection to the finding of the court, that finding, when entered, became a valid, subsisting judgment, not subject to collateral attack, and by law subject to appeal as in other civil actions.”

This case deals with unregistered land, and further, the statute of limitations had run — it being a longer period than one year after the deed to such property was recorded.

In 39 O. A. G. at page 1178, the attorney general said in his opinion:

“Where unregistered lands are sold at forfeiture sale, the purchaser acquires title as provided in §5762 GC, upon presenting his certificate of sale and the sum of $1.25 to the county auditor and receiving from the auditor a deed which is prima facie evidence of his title. In the case of registered lands, however, title does not pass until the purchaser has complied with the requirements of §8572-58 GC.”

Sec. 5762 GC provides:

“The county auditor on making a sale of a tract of land to any person under this chapter shall give such purchaser a certificate thereof. On producing or returning to the county auditor the certificate of sale, the county auditor, on payment to him by the purchaser, his heirs, or assigns, of the sum of one dollar and twenty-five cents shall execute and deliver to such purchaser, his heirs, or assigns, a deed therefore in due form, which deed shall be prima facie evidence of title in the purchaser, his heirs, or assigns. When a tract of land has been duly forfeited to the state and sold agreeably to the provisions of this chapter, the conveyance of such real estate by the county auditor shall extinguish all previous title thereto and invest the purchaser with a new and perfect title, free from all liens and encumbrances, except such easements and covenants running with the land as were created prior to the time the taxes or assessments, for the non-payment of which the land was forfeited, became due and payable.”

Does this statute void §8572-58 GC, which is as follows:

“A tax deed of registered land, or an estate or interest therein, issued in pursuance of any sale for a tax, assessment or other imposition, made after the taking effect of this act, shall have only the effect of an agreement for the transfer of the title upon the register. And before any person dealing with such land shall be affected by such tax deed said deed must be filed in the recorder’s office and a memorial of such filing be made by the recorder on the registered certificate of title for such land. But no registration of title under such tax deed shall be made, or certificate of title issued thereon, unless the tax deed is filed within sixty days after its date, or in any case except upon the order of the court, on application therefor by petition to which all persons in interest shall be made parties and brought before the court. Any person interested in the land may show, as cause why such certificate of title shall not issue, any fact that might be shown at law or in equity on his behalf to set aside such tax deed; and the party named in the tax deed shall be required to show affirmatively that all of the requirements of the statute to entitle him to a deed have been strictly complied with; and in such suit the court may decree such deed and tax sale under which the same was issued to be invalid for the purposes of entitling the purchaser or grantee to a transfer of the title to said land and order the same to be cancelled upon the payment by any party in interest to said purchaser or grantee of the amount so paid by him on such tax sale and subsequently as taxes on the property, together with interest on all such sums.”

In 145 Oh St, page 447, State ex rel Droper et al v. Wilder, Recorder:

“Syllabus 1. Sec. 5762 GC, relating to the title acquired by the purchaser of land forfeited to the state for the nonpayment of taxes and sold by a county auditor at tax sale, does not repeal by implication §8572-58 GC, a part of the Torrens Act, setting forth the steps and procedure necessary to register title to theretofore registered land obtained under a tax deed * * *”

37 O. Jur., page 405, section 143:

“The rule is too well established to require discussion that the repeal of statutes by implication is not favored in law, and the presumption is always against the intention to repeal an existing statute when express terms indicating that intention are not employed.”

141 Oh St, page 553, Groene v. Boyle, County Treasurer:

“* * * the purpose of the Torrens Act is to secure by decree of court a title to land impregnable against attack, to make a permanent and complete record of the exact status of the title with all liens and incumbrances and claims against it, and to protect the registered owner against all claims and demands not noted on the back for the registration of titles.”

Judge Zimmerman, in 145 Oh St 452, quoted supra, made the following pronouncement:

“And then §8572-58 GC specifically covers the registration of titles to lands theretofore registered, which have been purchased at a tax sale, and expressly prescribes the steps necessary to obtain registration of the title of lands so purchased. Whether the Torrenization of the title of land is desirable is a disputed matter, but once Torrenization occurs the applicable statutes are controlling and may not be ignored.
“The chapter of the code entitled ‘Registration of Land Titles’ is complete and self-contained, and so long as it remains a part of the statutory law of this state it must be recognized.
“Now §5762 GC, as effective August 11th, 1943, was placed in the chapter headed ‘Forfeited Lands.’ Of course, it definitely applies to unregistered lands, but makes no reference to registered lands, as could have been done, and until the General Assembly sees fit to express itself clearly on the subject by appropriate legislation, we are unwilling to hold that §8572-58 GC has been repealed by implication.”

The defendant in his brief sets out the fact that §8572-83 GC provides that:

“No petition, order, affidavit, certificate registration or other proceeding under this act shall be invalid by reason of any informality, mistake, technical irregularity therein not affecting the substantial justice of the proceeding or the substantial rights of any party or person in interest.” and §8572-101 GC which provides:
“This act shall be construed liberally for the purpose of effecting its general intent,”

and claims, therefore, that as long as substantial justice is done the chapter dealing with registration of land titles should be construed liberally.

But in considering this claim the Court’s attention is directed to §8752-58 GC, which is also a part of the chapter on registration of land titles, and a part of which is as follows:

“and the party named in the tax deed shall be required to show affirmatively that all of the requirements of the statute to entitle him to a deed have been strictly complied with.”

37 O. Jur., page 409, section 150:

“As a general rule, general statutory provisions do not control or interfere with specific provisions, but on the contrary, to the extent of any irreconcilable conflict, the special provisions generally operate as an exception to the general provision, which accordingly must yield to the former.”

37 O. Jur., page 412, part of section 151:

“The general enactment must be taken to affect only such cases within its general language as are not within the provisions of the particular enactment.”

Secs. 8572-58, -83 and -101 GC were all passed at the same time, all being a part of the same bill, and repeal of statutes by implication will not be indulged in by the Court unless there is no possible reconciliation of these statutes, and unless the words of specific repeal are used — there is a presumption against legislative intent to repeal.

The provision of §8572-58 GC is a specific provision under the registration of land titles, and as such controls in so far as tax deeds of registered land or an estate or interest therein, for if the Court were to say that §§8572-83 and -101 GC are controlling it would be an attempt to make the provisions of §§8572-83 and -101 GC control over a specific provision, so that in so far as a tax deed of registered land or an estate or interest therein is concerned §8572-58 GC is the controlling statute, so that excepting for this type of sale or lien substantial compliance and liberal construction of the registration of land titles would, under this statute, prevail.

By §8572-58 GC the burden is upon the party named in the tax deed (who is the plaintiff in this action) to show affirmatively, or by the greater weight of the evidence, that all the requirements of the statute to entitle him to a deed have been complied with. ,

What are the facts in this case?

Instead of proving affirmatively that all of the requirements of the statutes to entitle the plaintiff herein to a deed have been strictly complied with, counsel for plaintiff admits there were some irregularities and informalities noted, but contends that these were in the preliminary steps and procedure concerning the forfeiture of these lots to the State of Ohio, and that informalities and irregularities in these steps of the preliminary matters up to and including the forfeiture does not vitiate the forfeiture proceedings under the doctrine laid down in Greenvale Homes Corporation v. Marting, cited supra.

With this contention the Court cannot agree, for that decision was rendered in a case involving unregistered land, while this concerns registered lands. Sections of the statutes applying to the sale of unregistered lands are loosely construed and a substantial compliance is sufficient, but as regards Torrenized land, a strict compliance with the statute is necessary to make tax forfeiture sales by the auditor valid. Further, in the Greenvale Homes Corporation case the statute of limitations also prevailed, and in this case it does not.

The most glaring violation of the statute as affecting the sale is the fact that the Court forfeiting certain lands to the State of Ohio (including lots 65, 67, 68 and 69) filed a journal entry of forfeiture on December 31, 1947. This entry was not certified under the hand and seal of the clerk and filed in the office of the recorder as provided by §8572-50 GC. Later a list of registered lands sold was filed, and this purported to be a journal entry of the Common Pleas Court correcting such oversight. However, such action does not comply with §8572-50 GC, and then such entry even fails to mention lot 65. Further, no notice of such entry or such certificate of sale and deeds was sent by registered letter or served personally upon McChesney in compliance with §8572-78 GC.

Did failure to comply with §§5704, 5707, 57X8-1B, 8572-50 and 8572-78 GC render said deed and tax sale, under which the same was issued, invalid so that the Court should order said deed cancelled upon payment by John McChesney to Fred Hale, the plaintiff, the amount so paid by Hale to the Auditor for lots 65, 67, 68 and 69 of the Mogadore Heights Allotment in Summit County, Ohio?

Sec. 8572-58 GC provides in part:

“But no registration of title under such tax deed shall be made or certificate of title issued thereon unless the tax deed is filed within sixty days after its date, or, in any case, except upon the order of the court on application therefor by petition to which all persons in interest shall be made parties and brought before the court. Any person interested in the land may show as cause why such certificate of title shall not issue, any fact that might be shown at law or equity on his behalf to set aside tax deed, and the party named in the tax deed shall be required to show affirmatively that all the requirements to entitle him to a deed have been strictly complied with.”

There is no question in the Court’s mind that an ambiguity exists in this particular part of the statute just referred to. Does it mean that if the tax deed is filed within sixty days after its date with the recorder, then no application or petition is needed to register the title to land? Does filing within sixty days preclude the former owner in presenting facts which might be shown in law or equity preventing the registration of the deed? Does filing within sixty days excuse the interested party from showing affirmatively all requirements to entitle him to a deed, have been strictly complied with? Does filing the deed after the expiration of sixty days preclude the grantee of the tax deed an opportunity of filing an application to register the same, and does it preclude the original owner the right to assert what interest he may have remaining in the said land?

This Court does not think so in any of the above respects.

In order to explain this ambiguity it will be necessary to refer to parts of §8572-6 and §8572-7 GC, which are parts of the same act.

Sec. 8572-6 GC provides in part:

“No title derived through or under any tax sale or tax deed shall be entitled to be first registered unless it shall be made to appear that title under tax sale or tax deed has been duly established and confirmed or acquired by a valid judgment or decree of a court of competent jurisdiction.”

Sec. 8572-7 GC provides in part:

“Application to register the title to land or to any estate or interest therein shall be made by petition as in the commencement of a civil action filed in the Probate or Common Pleas Court of the county in which the land is situated. Upon filing the application the clerk shall forthwith cause to be filed in the office of the recorder of Summit County * * * in which * * * the land lies a memorandum stating that application for registration has been filed, the date and place of filing and a copy of the description of the land contained in the application.”

Reading these statutes together, the Court came to the definite conclusion that that part of §8572-58 GC which provides:

“but no registration of title under such tax deed shall be made and certificate issued thereon unless the tax deed is filed within sixty days after its date”

is simply directory, while the part immediately following:

“or in any case except upon the order of the court upon application therefor by petition, to which all persons in interest shall be made parties and brought before the court”

is mandatory, and that unless this is followed, regardless of when the tax deed is filed, no registration of the tax deed can be affected.

Lot 65 was not filed within sixty days of the date of the tax deed, but lots 67, 68 and 69 were. However, since the Court has conclusively decided that an application for registration of a tax deed or an estate or interest therein can be made regardless of when the deed was filed,.then the dates of the filing of said deeds is of no concern to this Court.

In conclusion, the Court finds that since the administrator’s deed was given to John McChesney subject to the rights of the State of Ohio and purchasers from the State of Ohio, that the Probate Court relinquished whatever jurisdiction it acquired and allowed the Common Pleas Court to thereafter assume it; that an application or petition to register a tax deed or other estate or interest in registered lands may be filed at any time after the filing of the tax deed; that to entitle the petitioner permission to register his tax deed, the petitioner must prove affirmatively that he has strictly complied with the requirements of the statutes, which in this instance was not done.

It is therefore the conclusion of this Court that the two deeds — one for lot 65 and one for lots 67, 68 and 69 — are invalid, as well as the tax sale affecting these lots, and that the said deeds be cancelled upon the payment by John McChesney to said Fred Hale the amount so paid by Hale on said tax sale and subsequent taxes on said lots, together with interest on said sums.

Journal entry to be prepared to conform to the Court’s finding, saving exceptions to both plaintiff and defendant.


source: Caselaw Access Project

author: By HORNBECK, J:

license: Public Domain

text:
    GOWER et, Plaintiffs-Appellees, v. SMITH et, Defendants-Appellants.
    Ohio Appeals, Second District, Darke County.
    No. 681.
    Decided November 18, 1950.
    Spidel, Staley & Hole,- Greenville, for plaintiffs-appellees.
    Goubeaux & Goubeaux, Greenville, for defendants-appellants.
   OPINION

By HORNBECK, J:

This is an appeal on questions of law from a judgment for the plaintiff against the defendant in the sum of $769.22 on an account for materials and labor furnished by plaintiff to the defendant, Waldo Smith.

There are three defendants as carried in the caption of this case but upon the action for money, the first cause of action of the petition, the account was against the defendant, Waldo Smith, only and the prayer for money judgment is against said defendant only.

Appellant assigns three errors.

1. That upon the face of the record, the judgment is in excess of the amount shown to be due plaintiff.

2. That the verdict and judgment cannot be permitted to stand because entered against defendants, Waldo Smith and Lenora Smith and the plaintiff claims only against defendant, Waldo Smith.

3. That the verdict and judgment are incorrect and there is no authority to correct the same.

We discuss generally the errors assigned.

Although the petition makes no averment upon which a money judgment could be predicated against defendant, Lenora Smith, inadvertently the court, and counsel without objection, permitted a verdict to be submitted to the jury against both defendants and it was so returned. The court in its general charge referred to both defendants, Waldo Smith and Lenora Smith, as though the action proceeded against them.

The petition stating no cause of action against Lenora Smith and the proof affording no support for such a verdict, manifestly a judgment could not be properly entered against defendant, Lenora Smith. On the other hand, granting to the jury its prerogatives, the proof is ample to support the verdict against defendant Waldo Smith to the extent of the amount due on the account as set up in the petition.

The judgment entry on the verdict says:

“The court does hereby confirm said verdict and finds that there is due the plaintiffs, Adrian Gower and Jerry Rhodes doing business as Gower and Rhodes, Arcanum, Ohio, from the defendant, Waldo Smith on the first cause of action of plaintiff’s petition the sum of $769.22.”

Judgment is then formally entered against the defendant, Waldo Smith, only.

The only possible prejudice that could result to the defendant, Lenora Smith, in this entry would be in the confirmation of the verdict. It went no further and no effort was made to enter judgment against Lenora Smith.

We cannot find that the motion for new trial specifically requested that the court make any modification in the judgment entry but sought only a new trial because of the irregularity in the judgment against both defendants.

This Court under its constitutional authority on review can without prejudice to the defendant, Lenora Smith, modify the judgment entry so that it will recite that the verdict, in so far as it purports to make a finding against the defendant, Lenora Smith, is unauthorized under the pleadings and proof and that, therefore, judgment may not be entered upon it against said defendant. Otherwise the judgment in form protects all interests to which the defendants are entitled. As to the power of this Court to modify a judgment upon error proceedings see opinion of Judge Matthias in Toledo Rys. & Light Co. v. Paulin, 93 Oh St 401. Also Midland Acceptance Corp. v. General Motors Acceptance Corp., 49 Oh Ap 243.

The first cause of action of the petition sets out an itemized account showing a total of $3,137.13 with credits totaling $2300.00 leaving a balance due of $837.13 for which judgment is prayed. The true sum of the items constituting the account totals $3,002.07, a difference of $135.06 between the total as stated in the petition and the total of the items constituting the account. There is some variation in the proof supporting the itemization in the first cause of action but counsel for appellant makes no point of this variation but does insist that the judgment may not properly be entered for more than $702.07. Counsel for appellees direct attention to the fact that the proof substantially conforms in the total amount due to the amount prayed for in the petition. Unfortunately, the record shows no application to amend the itemization of the account to conform to the proof. It follows that plaintiffs are remanded to the account as pleaded by items. 31 O. Jur. 966; C. C. C. & St. L. Ry. v. Potter, 113 Oh St 591; Brown v. Dusha, 10 Oh Ap 232.

In Exhibit 4 there seems to be a labor charge of $125.00 but this is not set up in the itemized account and no attempt was made to plead it. In the situation thus presented we know of no manner in which the items which could have been incorporated in the account but were not, may be properly included in the verdict or carried into the judgment. The proof will support a verdict and judgment for $702.07 with interest and costs. If plaintiffs will enter a remittitur for all over this sum the judgment will be affirmed in the amount of $702.07 with interest and costs. If not, the cause will be remanded for new trial.

.We find no support for the claim of appellants that they were denied the privilege of developing testimony which would tend to show improper or excessive charges in the account sued upon. A judgment entry may be prepared in accordance with this opinion and cause will be remanded.

MILLER, PJ, and WISEMAN, J, concur.


author: By DAVIES, J.

text:
    AHRENS, et al. v. BOARD OF COUNTY COMMISSIONERS, et al.
    Probate Court, Hamilton County.
    No. 3344.
    Decided June 16, 1949.
    Clarence M. Smith, Cincinnati, for Village of Mt. Healthy, Ohio.
    Carson Hoy, Pros. Atty., William J. Schmid, Asst. Pros. Atty., Cincinnati, for Board of County Commissioners, Hamilton County, Ohio.
    Ewing O. Cossaboom, Cincinnati, for Edna B. Ahrens, et al.
   OPINION

By DAVIES, J.

This matter is before the court upon the defendants' mo- ■ tion for a judgment notwithstanding the verdict.

The facts, briefly stated, are as follows:

The Board of County Commissioners of Hamilton County, by resolution, on February 9, 1949, under the provisions of §6906 et seq GC, found that the public convenience and welfare required the improving of Compton Road within the corporate limits of the Village of Mt. Healthy, Ohio, and ordered the Hamilton County Engineer to prepare the necessary surveys, plans, profiles, cross-sections, estimates of cost and specifications for said improvement, which were subsequently filed by the Engineer with the Commissioners. Subsequently, the Commissioners and the Village of Mt. Healthy entered into an agreement by the terms of which the Village undertook to pay part of the cost of the said improvement which included grading, draining, paving the roadway with concrete, repairing sidewalks, building curbs and gutters and the installation of water mains.

Nine property owners, whose properties front on Compton Road within the Village of Mt. Healthy, following the provisions of §6890 et seq GC, effected an appeal from the Commissioners’ order establishing the proposed improvement of Compton Road in Mt. Healthy, Ohio.

The County Commissioners transmitted to the Probate Court the original papers in the proceeding and a certified transcript of their record of all proceedings in connection with said improvement. The cause was docketed, and in due course a jury was impaneled and sworn, evidence was presented to the jury, and the Court submitted to the jury for its consideration the issue as to whether or not the proposed improvement of Compton Road would be conducive to the public convenience and welfare. The jury returned a verdict in favor of the plaintiff-appellants. The defendants at the beginning of, during and at the conclusion of the testimony made motions to dismiss the action on the ground that the Probate Court had no jurisdiction to hear the appeal. The defendants, the County Commissioners and the Village of Mt. Healthy, Ohio, now ask the Court for a judgment, notwithstanding the verdict rendered, on the grounds that appellants could not, under the law, effect an appeal under the provisions of §6890 et seq GC from an order of the County Commissioners, made under the provisions of §6906 et seq GC “establishing” the proposed improvement of Compton Road.

Sec. 6860 GC, provides that

“The county commissioners shall have power to locate, establish, alter, widen, straighten, vacate or change the direction of roads * *
and, §6863 GC, sets forth that the word “improvement” signifies any “location, establishment, alteration, widening, straightening, vacation or change in the direction of a public road

Sec. 6862 et seq GC, provides that when the County Commissioners are of the opinion that it will be for the public convenience or welfare to make an “improvement”, they shall so declare by resolution, and the section sets forth exactly what procedure shall be followed in completing that improvement.

Sec. 6870 GC, provides that

“If the commissioners at their final hearing on said improvement order the same established, they shall fix a date for hearing claims for compensation and damages, and they shall forthwith cause notice in writing of the time and place of such hearing to be given to the owner or owners through or upon whose lands said improvement is to be established or located.” (Emphasis ours.)

Sec. 6890 GC, provides that

“No order of the county commissioners for locating, establishing, altering, straightening, widening or changing the direction of a public road, shall be executed until ten days have elapsed after the county commissioners have made their final order in the matter of compensation and damages, on. account of said improvement.”

Although the word “vacate,” found in §6860 GC, is not included under the language of §6890 GC, the Supreme Court of Ohio, in the case of Board of Commissioners of Crawford County et al. v. Gibson et al., 110 Oh St, 290, found that an appeal does lie from the final order of the County Commissioners vacating a county road or any part thereof.

See. 6891 GC, provides that

“Any person, firm or corporation interested therein, may appeal from the final order or judgment of the county commissioners made in the proceeding ■ and entered upon their journal determining either of the following matters:
“1. The compensation for land appropriated.
“2. The damages claimed to property affected by the improvement.
“3. The order establishing the proposed improvement.
“4. The order dismissing or refusing to grant the prayer of the petition for the proposed improvement.”

It is clear that the Legislature has granted to any person, firm or corporation interested therein the right to appeal from the final order of the County Commissioners, under the provisions of §6860-§6889 GC, inclusive, in the matter of compensation for land appropriated, damages claimed to property affected by the improvement, or “the order establishing the proposed improvement,” when the improvement included either the locating, establishing, altering, widening, straightening, vacating or changing the direction of a public road.

The court is now asked to decide whether or not it was the intention of the Legislature to grant to a person, firm or corporation, under the provisions of §6891 GC, the right to appeal from a final order of the County Commissioners in the matter of “the order establishing the proposed improvement,” when the County Commissioners proceeded under the provisions of §6906 et seq GC, to improve, reconstruct or repair an existing public road.

By the provisions of §6906 GC, it is provided that

“The board of county commissioners of any county shall have power, * * * to construct a public road by laying out and building a new public road, or by improving, reconstructing or repairing any existing public road or part thereof by grading, paving, widening, altering, straightening, vacating, changing the direction, draining, dragging, graveling, macadamizing, resurfacing or applying dust preventatives, or by otherwise improving the same, and where an established road has been relocated, to construct and maintain such connecting roads between the old and new locations as will provide reasonable access thereto.”

It will be noted that, under the provisions of §6863 GC, the word “improvement” includes the language found in §6860 GC, giving the County Commissioners power “to locate establish, alter, widen, straighten, vacate or change the direction of roads.”

The Legislature, in §6906 GC, gave the County Commissioners authority to “construct a public road by laying out and building a new public road, or by improving, reconstructing or repairing any existing public road or part thereof by grading, paving, widening, altering, straightening, vacating, changing the direction, draining, dragging, graveling, macadamizing, resurfacing or applying dust preventatives or by otherwise improving the same.”

Under the provisions of §6911 GC, the Board of County Commissioners may by resolution unanimously adopted find that the public convenience and welfare require the improving of any public road or part thereof by grading, draining, paving, straightening or widening the same and constructing or reconstructing any bridges and culverts necessary for such improvement, and this and following sections outline the procedure to be followed in making such improvement. Provision is made for the filing and allowing by the County Commissioners of claims for damages sustained on account of or incident to such improvement, and provides the method for the filing of property owners of claims for compensation and damages with the Board of Commissioners.

Sec. 6916 GC provides that

“Any person, firm or corporation aggrieved by the finding of the commissioners upon any application for compensation or damages, may appeal to the probate court by giving the notice provided for in the chapter of this act (106 v. 574 to 666) relating to appeals in road cases, and by filing the bond therein provided, and such proceedings shall be thereafter had upon such appeal, as are provided for in said chapter.”

It will be noted that, by the provisions of §6916 GC, an appeal to the Probate Court is given only to any person, firm or corporation aggrieved by the finding of the Commissioners upon any application for compensation or damages. In the instant case, no question of compensation or damages is involved.

It is evident that the “proposed improvement” referred to in §8891 GC relates to the word “improvement” defined in §6863 GC which includes the power of the County Commissioners “to locate, establish, alter, widen, straighten, vacate or change the direction of roads,” provided in §6860 et seq GC, and does not refer to the word “improving” or “improvement” found in §6906 et seq GC.

Under §6906 GC, the Legislature gave to the County Commissioners power “to construct a public road by laying out and building a new pubicl road” or power “to construct a public road — by improving — any existing public road or part thereof by grading, paving, widening, altering, straightening — , or by otherwise improving the same — .”

In the case under consideration, as above stated, the County Commissioners undertook to construct a public road (Compton Road) by improving a part of an existing public road (Compton road was in existence) by grading, paving, widening or by otherwise improving the same under the provisions of §6906 et seq GC.

Sec. 6916 GC does not give to any person the right of appeal to the Probate Court from an order of the County Commissioners, proceeding under §6906 et seq GC. to construct a public road by improving, reconstructing or repairing any existing public road or part thereof by grading, paving, widening, altering, straightening, vacating, changing the direction, draining, dragging, graveling, macadamizing, resurfacing or applying dust preventatives, or by otherwise improving the same.

The defendants’ motion for judgment notwithstanding the verdict, therefore, will be sustained.


author: By McNAMEE, J:

text:
    FISCO, Plaintiff-Appellee, v. EAST CLEVELAND (City), Defendant-Appellant.
    Ohio Appeals, Eighth District, Cuyahoga County.
    No. 21742.
    Decided December 26, 1950.
    J. B. Dworken, Cleveland, for plaintiff-appellee.
    A. E. Griffith, Cleveland, for defendant-appellant.
   OPINION

By McNAMEE, J:

Plaintiff is the owner of a parcel of land located at the southwest corner of Euclid Avenue and Brightwood Avenue in the City of East Cleveland. The property has a frontage of ninety-four feet on Euclid and a depth of one hundred sixty seven feet. Two dwelling houses are situated on the Euclid Avenue frontage. Five garages are located in the rear with a driveway entrance thereto on Brightwood Avenue. A few of the rooms in one of the houses are used as offices for the A. A. A. Electric Sewer Cleaning Company which is owned and operated by plaintiff's husband and son. The remaining rooms in both houses are rented to roomers.

The premises are in a section of East Cleveland situated within the U-3 or retail business district of the zoning ordinance of the city. The ordinance expressly permits the use of property in such district for “retail business” and for an “office.” The zoning ordinance also provides that “an accessory use customarily incidental to a Class U-3 use shall be permitted in a Class U-3 District.” Section 18 directs that the ordinance shall be enforced by the building inspector of the city. Section 24 of the ordinance provides for a fine “of not to exceed $500.00” for violation of its terms.

For about twelve years prior to the commencement of this suit in Common Pleas Court, plaintiff and her family conducted the business affairs of the Sewer Cleaning Company from the office located upon the premises. The actual work of cleaning sewers is done upon the, properties of various customers of the company. The Sewer Cleaning Company serves the needs of its customers through the use of ten panel trucks in each of which there is kept, at all times while not in use, the sewer cleaning equipment used by the company.

Some time prior to February, 1949, the city established a bus stop and safety zone at the southwest corner of Euclid and Brightwood thereby removing the parking facilities theretofore available on the street in front of plaintiff’s property. In February, 1949, plaintiff applied for and obtained a permit to cut the curbing on Euclid Avenue to provide a driveway entrance for vehicles to the front portion of the premises. In March, 1949, plaintiff secured a permit to excavate the premises and immediately thereafter, at a cost of about $2,000.00, she constructed a parking area between the sidewalk and the front of the two houses facing Euclid Avenue. The parking area has a depth of 36 feet and extends across the major portion of Euclid Avenue frontage. The parking area was used by plaintiff, her tenants and customers and by the Sewer Cleaning Company itself for “off the street” parking.

The city raised no objection to the use of the parking space during the business hours of the day, but the building inspector notified plaintiff that the parking of trucks thereon at night would be considered a violation of the ordinance for which plaintiff would be subject to arrest and prosecution. Asserting that the parking of trucks at night was an authorized accessory use, plaintiff appealed to the Zoning Board of Appeals for an interpretation of the ordinance that would permit the parking of trucks at night. The Zoning Board of Appeals, however, upheld the building inspector’s construction of the ordinance and denied plaintiff’s appeal. Plaintiff then instituted suit in Common Pleas Court to enjoin the defendant officials from enforcing the penal provisions of the ordinance against her for parking trucks at night upon the area in question.

Plaintiff makes no attack upon the constitutionality of the ordinance. She concedes it to be a valid enactment. Her sole claim is that the building inspector’s construction of the ordinance is arbitrary and unreasonable and unlawfully deprives her of a use of the property which she claims is an accessory use as defined by the ordinance.

The answer filed by defendants in Common Pleas Court sought no affirmative relief; it contains a general denial plus an averment that plaintiff’s present and proposed use of the premises is permissible only in a Class U-4 district. The Class U-4 section of the ordinance inter-alia permits “storage in bulk or a warehouse for such materials as contractor’s equipment * * In support of this latter averment, defendants in Common Pleas Court introduced evidence disclosing that in addition to operating an office on the premises, plaintiff also stored supplies and materials such as sand, gravel, pipe, etc., in the basement, under the porch of one of the houses and in the garages at the rear of the premises. The Common Pleas Court made no determination whether the storage of these supplies and materials constituted a violation of the ordinance holding that the sole issue “concerns the construction of the zoning ordinance as applied to the parking of these trucks.”

The trial court granted an injunction restraining the defendants—

“from in any way interfering with or prohibiting the plaintiff, her tenants, customers and others from using the parking area located upon plaintiff’s property as described in the petition, for the parking of their automobiles, trucks and other motor vehicles at any and all times which said plaintiff may choose.”

As evidenced by its memorandum opinion, the trial court adopted the view that in the granting of the permits to construct the parking area the city impliedly recognized plaintiff’s right to use it at all times. Trial Court said—

“The City of East Cleveland acquiesced in the parking of these trucks upon this parking space during the day time and their only objection is to the use of the parking space during the evening. It therefore appears to the Court that the City of East Cleveland by its officers have construed this ordinance' and have held that it does not apply to the parking of these trucks in the day time or in the night time.”

In addition to appealing upon questions of law and fact from the judgmerft rendered by the Common Pleas Court, the defendants filed a cross-petition in this Court, in which for the first time they pray for an injunction restraining plain-. tiff from using the premises for the purpose of conducting a sewer cleaning business. The issues raised by defendants’ cross-petition cannot be considered in this appeal. It is firmly settled that an appellate court cannot hear and determine upon appeal, a cause of action which was not tried in the court of original jurisdiction. Barnes v. Christy, 102 Oh St 160. The governing principle is stated in 2 O. Jur. Rev. 973 as follows:

“The general rule against allowing amendments which introduce new and different causes of action applies with especial force to amendments offered in the appellate court, since it is manifestly improper that a case which could not originate in the appellate court should, without having been heard below, be brought before it under guise of such an appeal from the judgment in a case founded upon an entirely different cause of action.”

The defendants’ cross-petition is therefore dismissed.

In determining the issues raised by the record in this appeal, we inquire first as to the circumstances in which a court of equity has jurisdiction to stay the hand of the Executive Branch of the government in the enforcement of the penal provisions of a valid ordinance. Generally, a court of equity will not interfere with the enforcement of criminal laws by restraining the duly constituted authorities. 28 Amer. Juris. 413, Sec. 233; 21 O. Jur. 1231, Sec. 157.

An exception to this general rule that is recognized by the courts is noted in 21 O. Jur. 1234, Sec. 159 as follows:

“The general rule that equity will not interfere by injunction to restrain criminal proceedings is not without exceptions and modifications. One exception is that when property rights will otherwise be destroyed, an unlawful interference by criminal proceedings under a void law or ordinance may be restrained or controlled by a court of equity.” The same authority expresses the view that—
“It has been said that the overwhelming weight of authority is against the right of equity to enjoin criminal proceedings under a valid statute, even though property interests are involved.” 21 O. Jur. 1235, Sec. 159.

It has been held in other jurisdictions that where prosecution is threatened under a misapplication of a valid law with consequent injury to property rights, courts of equity will intervene by use of the injunctive process. 28 Amer. Juris. 217-18, Sec. 235, and cases there cited.

It is axiomatic that a duly enacted law or ordinance is presumed to be valid and will not be declared unconstitutional in the absence of a showing that the provisions thereof are •plainly and manifestly repugnant to the Constitution. It is the imdeviating policy of courts therefore to resolve all doubts in favor of the validity of a law or ordinance under attack. Even though injury to property rights is threatened, courts of equity will not interfere to prevent criminal proceedings under a law or ordinance alleged to be void unless its invalidity is clearly demonstrated. The same basic principles govern where the interposition of equity is sought to restrain criminal proceedings under a valid ordinance upon the claim that the prosecuting officials have misconstrued its provisions. In such cases before equity will intervene it must be clearly shown that the prosecuting officials’ interpretation of the law is clearly erroneous. All doubts will be resolved in favor of the correctness of the construction of the ordinance by the officials charged with its enforcement. Courts will not encroach upon the duties and prerogatives of other co-ordinate branches of the government. Where a law or ordinance is declared to be void it is because the legislative branch of the government has transcended its powers. Upon like reason, a court of equity will not intervene to prevent criminal proceedings under a valid ordinance except where it is shown beyond doubt that the duly constituted public officials are about to transcend the powers conferred upon them by law. It is only where a threatened usurpation of power is shown that equity will act to prevent injury to property rights by criminal proceedings under a valid ordinance.

Plaintiff concedes the validity of the zoning ordinance. Her claim that the building commissioner and zoning board of appeals have arbitrarily misconstrued the terms of the zoning-ordinance rests upon the contention that the parking of trucks at night upon the area in question is a permissible accessory-use under the Class U-3 provisions of the ordinance. In order to prevail, the burden is upon plaintiff to establish that the parking of trucks upon the area at night is a use “customarily incidental” to a principal U-3 use. In addition she must show that a denial of such claimed accessory use will result in irreparable damage and that she has no adequate remedy at law.

We are in disagreement with the view that the City of East Cleveland through its officers, construed the ordinance not to apply to parking of plaintiff’s trucks “in the day time or in the night time.” It appears from the record that in granting the necessary permits to construct the parking space the city officials proceeded upon the evident assumption that plaintiff’s principal use of the property was a lawful one. It is also fairly to be inferred that by acquiescing in the use of the parking area during the day time and prohibiting the parking of trucks thereon at night the building inspector and zoning board of appeals so construed the ordinance as to hold it applicable to the use of the parking area in question.

We are not convinced that the construction placed upon the ordinance by the city officials is arbitrary nor can we say that a distinction between “parking” during business hours and storing trucks on the premises at night, is not founded upon reason.

The Court of Appeals of New York in the case of Monument Garage Co. v. Levy, 266 N. Y. 339, noted the distinction between “parking” and “storage” as follows:

“ ‘Storage’ connotes a certain degree of permanency whereas ‘parking,’ or a place for the standing of a vehicle unattended by a person capable of operating it, connotes ‘transcience.’ ”

Parking during the day permits the sewer cleaning company to bring its trucks upon the area when necessary for the proper and efficient conduct of its business. This advantage compensates adequately for the loss of parking facilities on Euclid Avenue occasioned by the establishment of a bus stop and a safety zone. However, the right to park trucks at night on the area includes more than the privilege of temporary parking of vehicles as an incident to the proper operation of plaintiff’s business. The unrestricted right to park trucks in the area at night would permit the sewer cleaning company to use the parking space as a place for the overnight storage of its trucks and the sewer cleaning equipment kept therein. It would grant to plaintiff and the sewer cleaning company the right to use the parking area as an “out-door garage” for its fleet of trucks all night, every night, and at all other times.

In the absence of evidence on the subject we cannot say that such a use is either customary or incidental to a Class U-3 use of the premises. We are not unmindful of the fact that the sewer cleaning company receives emergency calls at night. While this circumstance might warrant the use of a parking area at night by trucks engaged in rendering emergency service it does not require that all of the company’s trucks be stored on the parking area at all times.

Reasonable men may differ with the building inspector and the zoning board of appeals in their construction of the ordinance. However, doubt as to the validity of such construction is not sufficient warrant for the issuance of an injunction against criminal proceedings under a valid ordinance. Plaintiff has an adequate remedy at law in her defense to a criminal action in which she may demand trial by jury.

Being required to dismiss defendant’s cross-petition we make no determination whether plaintiff is violating the ordinance by storing materials and supplies in the residence and in the garage at the rear of the premises. As we view its this issue is not presented by the record on appeal. Nor would a determination of such issue effect plaintiff’s rights to use the parking area. Whether the sewer cleaning company is restricted to the use of the premises as an “office” or the storage of materials and supplies be considered a permissible use for a retail service business is immaterial on the issue of parking. In either event, plaintiff will continue to possess such rights in the parking area as are within the uses “customary and incidental” to an authorized principal Class U-3 use.

A Decree may be entered for the defendants. Order see journal. Exc.

SKEEL, PJ, HURD, J, concur.


author: By THE COURT:

text:
    BATTLE, Plaintiff-Appellee, v. PATSY AUTO SALES, INC., et, Defendants-Appellants.
    Ohio Appeals, First District, Hamilton County.
    No. 7348.
    Decided February 20, 1951

      Harry Falk, Carl B. Rubin, Cincinnati, for plaintiff-appellee.
    Peterman, Calhoun & McPherson, Cincinnati, for defendant-appellant, Colonial Finance Co.
   OPINION

By THE COURT:

The plaintiff alleged that he exchanged automobiles with the defendant, Patsy Auto Sales, Inc., and to make up the deficiency in value, he agreed to pay $4,000.00 in 24 equal monthly instalments. He then alleged that without his knowledge this balance was “financed as an instalment note for twenty-four months, which note including the principal of $4,000.00; interest; insurance and other charges not known to the plaintiff, was in the total sum of $5,654.40 payable to the order of Patsy Auto Sales, Inc., at the rate of $235.00 per month.” He also alleged that this note was transferred by Patsy Auto Sales, Inc., without recourse to the defendant, Colonial Finance Co., an Ohio corporation, authorized and doing business under the Ohio Small Loan Act.

After alleging the payments he had made on the note, he then alleged that the note provided for interest in excess of the rate allowed by law under the Small Loan Act, and that the entire transaction was arranged as a subterfuge to conceal the exaction of a usurious rate of interest, and that “the said note and chattel mortgage are void.”

It will be noted that the plaintiff does not allege that he signed the note with unfilled blanks in it. Nor does he allege that the note was not signed by him. His allegation is that the note is usurious and for that reason is void.

The plaintiff’s prayer was for a declaratory judgment defining the rights of the parties, and declaring the note and chattel mortgage to be void, and for other relief.

The defendant, Colonial Finance Company answered, admitting that the plaintiff purchased an automobile from defendant, Patsy Auto Sales, Inc., and executed and delivered to Patsy Auto Sales, Inc., a note for the unpaid balance of the purchase price for the sum of $4,000.00, and that Patsy Auto Sales, Inc., endorsed and delivered said note to Colonial Finance Company “without recourse except for a partial guaranty in the sum of $500.00.”

The defendant, Patsy’Auto Sales, Inc., answered, admitting that it sold an automobile to the plaintiff, that it received a note secured by chattel mortgage, which it discounted with the defendant, Colonial Finance Company, and then denied each and every other allegation in the petition.

No reply was filed.

Upon the trial of the issues raised by these pleadings, the court found that the plaintiff “is liable only for the following sum, to-wit: $4,000.00 plus interest at the rate of 8% per annum, plus insurance premium, and said plaintiff shall be credited with the sum of $3999.40 payments on said balance owing.” It is from this judgment that this appeal was taken by the defendant, Colonial Finance Company.

No question is raised here as to the sufficiency of the judgment as a declaration of rights. The claim is, rather, that the documents executed by the plaintiff fixed his liability and that inasmuch as the finding of the court departs therefrom it is erroneous.

The record discloses that the plaintiff owned a 1942 Buick automobile which he had bought in 1943, the purchase of which he had financed through the Personal Loan Company on which he owed $400.00, secured by mortgage. He came to the place of business of Patsy Auto Sales, Inc., on July 15th, 1948, and negotiated for the Lincoln automobile referred to in the pleadings in this case. He and Patsy Auto Sales, Inc., agreed on a price of $6,000.00, and that Patsy Auto Sales, Inc., would take title to his Buick and allow him $2000.00 therefor, as a credit, making a balance of $4,000.00 still due Patsy Auto Sales, Inc. There were items of sales tax and insurance premium, amounting to $190.85 added, but they seem to have no significance, although they are included in the principal of the mortgage and note. He paid the balance of $400.00 which he owed on the Buick, transferred title thereto to Patsy Auto Sales, Inc., signed an agreement to buy the Lincoln automobile, and also a chattel mortgage thereon, securing the note.

In the contract or order the details of the transaction are set forth showing the balance of $4,000.00 remaining unpaid. Below this balance on the printed form with blank spaces is provision for insertion of the terms of payment and in the documents introduced in evidence the blank spaces are filled in, showing that the $4,000.00 was to be paid in 24 monthly payments of $235.60 each. However, the plaintiff testified that when he signed this order or contract those blanks were not filled in and that he was told that he could pay the $4,000.00 in 24 monthly payments of $175.00 each. He also signed a chattel mortgage and note, each of which now shows the unpaid balance of $5654.40, with an itemized statement of the transaction showing the amount of $4,000.00, which was the unpaid balance to be financed, and the financing charge of $1654.40 including insurance. The plaintiff testified that he signed this chattel mortgage and note at the request of Patsy Auto Sales, Inc., but that at the time none of the blank spaces were filled in. The record is very vague as to what was said at the time, but it is clear the plaintiff knew that Patsy Auto Sales, Inc., intended to fill in the blank spaces.

Notwithstanding the plaintiff’s testimony that he was told his monthly payments would be $175.00, his first payment was $235.00, and he continued for the next seven months to pay $235.60 per month. Thereafter, he made 26 payments, not one of which was $175.00. It is clear that if he did not authorize the provision for monthly payments, he later ratified it by this conduct.

By §8119 GC, it is provided that a signature on a blank paper, delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. We think the plaintiff’s own evidence indicates an actual authority to fill in, but if that is not so, then the law raises a prima facie presumption of authority. And §8119 GC, also provides that if after completion, the note is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given.

In this case, Colonial Finance pleaded the defense of holder in due course, and the defense was not placed in issue by the filing of a reply denying the allegations of the answer.

If this were an action by Colonial Finance Company on this note and the defendant had pleaded the two defenses of usury and that the blanks were filled in for an amount in excess of that authorized, a reply setting forth that Colonial Finance Company was a holder in due course, and that the defendant maker was estopped, would have presented two grounds of avoidance of the defenses.

We are of opinion that the plaintiff herein is estopped from denying at this time that he authorized the Patsy Auto Gales, Inc., to insert $235.60 as the monthly payment and $5,654.40 as the principal of the note. After having acquiesced for months by making payments in accordance with the note, he cannot now be permitted to take a contrary position. 19 Am. Jur., 676, et seq. This conclusion, however, leaves untouched the defense of usury, which, if it existed, could only be avoided by proof that plaintiff was a holder in due course, and there is no proof that Colonial Finance Company was ignorant of any of the facts.

That brings us to a consideration of the true nature of this transaction. In form, the transaction between the plaintiff and Patsy Auto Sales, Inc., is clearly a sale or exchange of automobiles with a note to equalize the difference in value. As between Patsy Auto Sales, Inc., and Colonial Finance Company, the transaction bears the outward form of a sale or negotiation of that note with a partial guaranty to the extent of $500.00 by the payee-endorser. So long as these transactions are accepted at face, at what they purport to be, there can be no usury, because there has been no loan of money and no charge for the use of money. Before it can be found that the transaction is infected with usury, the transaction must be entirely reconstructed as a loaning of money by Colonial Finance Company to Patsy Auto Sales, Inc. and Maple Battle, and as there is no evidence whatever of any dealings of any description between Colonial Finance Company and Battle at or before the time of this transaction, if there is to be a reconstruction, it must be on the foundation of the dealings between Colonial Finance Company and Patsy Auto Sales, Inc. Before the form can be disregarded, the evidence must establish an identity of the two in their dealings with the plaintiff.

The only evidence on this subject is found in the testimony of Pat Weintrop, who was called by the plaintiff, and who said that he was doing business as Patsy Auto Sales, Inc. He testified that the selling price of the automobile was $6,000.00, upon which there was a credit of $2,000.00, leaving $4,000.00 as the balance, which was to be financed, which means, as we understand it, that some arrangement was necessary so that the buyer could pay that balance in installments. Weintrop testified that the note was for $5,654.40. He was then asked how that was computed, to which he responded: “Well, I don’t know, just exactly. We have an authority of the Finance Company that tells us what the payments are, a chart.” He then testified as follows:

“Q. Do I understand that the Finance Company computes in advance how you are to be paid for a balance of $4,000.00?
“A. Well, it is much simpler when we have a chart to look at.
“Q. And who supplies you with the chart, do you say?
“A. The Finance Company we are doing business with.
“Q. In this case?
“A. Colonial Finance Co.”

All this evidence tends to prove is that the Colonial Finance Company furnished Patsy Auto Sales, Inc. a method of computing the instalment selling price from a given cash selling price. The only conceivable reason for furnishing this information and the forms was the hope that Patsy Auto Sales, Inc., would discount or sell the note to Colonal Finance Company for the amount that would have been received by Patsy Auto Sales, Inc., had the sale been for cash — in this instance, $4,000.00' — which was paid for the note.

The plaintiff contends that these circumstances stamp the transaction as a usurious lending of money, notwithstanding its form is that of a negotiation or sale of a note. Plaintiff, in his petition, and his counsel, in their arguments, assert that this transaction violates the Small Loan Act (§8624-50 et seq., GC), but that act applies only to loans of $1,000.00 or less, and even as to transactions involving $1,000.00 or less, it is expressly provided in that act that: “Nothing herein shall preclude the acquiring, directly or indirectly, by purchase or discount, of a bona fide obligation for goods or services when such obligation is payable directly to the person who provided such goods or services.”

This distinction between a loan and a sale or discount of a note, recognized in the Ohio Small Loan Act has been recognized in all the text books and cases on the subject of interest and usury, and as all states have general statutes limiting interest rates similar to Ohio’s general statute on- that subject, the cases are numerous. We shall refer to a few.

In 55 Am. Jur., 344 & 345, it is stated:

“Bills and notes, like other property, may be bought and sold on such terms as may be agreed upon, and a discount at any rate, although paid by a credit to account, is not usurious, if value has once been given, unless the transfer is merely a cloak for a usurious loan or violative of a usury statute covering discounts as well as loans. And the fact that the holder of an instrument is required to indorse it or otherwise guarantee it, so that he becomes conditionally liable to pay the purchaser an amount greater than the legal interest and the sum he received, is held by many authorities, although some decisions have taken other positions, not to constitute the transaction a loan, but rather a valid sale of a chattel with a warranty of soundness.”

It is significant that in this case Patsy Auto Sales, Inc., guaranteed this note only to the extent of $500.00. There was no obligation on its part beyond that. This whole subject was exhaustively treated in the recent quo warranto proceeding in which the attorney general sought to oust the Contract Purchase Corporation from doing business in Michigan. The case is Attorney General v. Contract Purchase Corporation, 327 Mich., 636. The nature of the proceeding made it necessary to consider the entire course of business of defendant. From an examination of the opinion, it will be found that the defendant engaged in all the practices either proven or implied against these defendants. The court held that the defendant was not engaged in loaning money, and, therefore, had not violated the statute against usury. The ninth paragraph of the syllabus shows the similarity of the transactions to that under review in the case at bar. We quote that paragraph:

“The mere fact that a corporation purchased a note at a. discount beyond the legal rate of interest does not constitute the transaction a usurious one and solicitation of such business from automobile dealers and furnishing schedules for that purpose and blank forms would not affect: a transaction involving the bona fide sale of an automobile,, valid when made.”

In that case, as in the case at bar, the discount far exceeded the allowable rate of interest on a loan of this amount, although the Small Loan Act authorizes a rate in excess of this discount on loans of $300.00 or less. As to this, the court in that case said at 643: “However, in the absence of a statute limiting the rate of discount on notes and commercial paper, a bona fide sale of such paper is not deemed usurious no matter how low the price paid.”

This subject of sale of choses in action, as it relates to usury, is elaborately discussed in an annotation to the case of Milana v. Credit Discount Co., (27 Cal. [2d.] 335) 163 P. (2d.) 869, 165 A. L. R. 621. It makes extended discussion unnecessary.

We are of the opinion that the evidence discloses an actual sale of an automobile for a cash payment of $2,000.00 and for 24 deferred payments of $235.60, payable monthly, making a total deferred payments of $5,654.40, upon which $3,999.40 had been paid at time of trial in the Common Pleas Court.

A judgment by this court declaring the rights in conformity to this conclusion may be prepared.

HILDEBRANT, PJ, MATTHEWS & ROSS, JJ, concur.


author: By WEBER, J.

text:
    STATE, Plaintiff-Appellee, v. FOCKS, Defendant-Appellant.
    Common Pleas Court, Hamilton County.
    No. A-116032.
    Decided February 28, 1950.

      Samuel L. Chalfie, Cincinnati, for appellant.
    Henry M. Bruestle, City Solicitor, Robert J. Paul, City Prosecutor, Ralph E. Cors, Asst. City Prosecutor, Thorndyke & Becker, Cincinnati, for appellee.
   OPINION

By WEBER, J.

The defendant was convicted and sentenced in the Municipal Court of conversion, having been charged therewith under §12475 GC. The cause is before the Common Pleas Court on appeal.

Upon consideration of the briefs and the evidence contained in the bill of exceptions, this court finds that the money alleged to have been converted was not merely in the possession of the defendant as trustee, bailee or in any other fiduciary (capacity. The title to said money was transferred to the defendant in compliance with the terms of a building contract. •The defendant failed to fully perform the building contract, and the value of the construction work done on the building did not equal the amount of money delivered. A civil judgment for damages for breach of contract was obtained. The fact that said judgment has not been paid cannot be the basis for a criminal prosecution for conversion. The court further finds that the motion for dismissal made at the close of the state’s evidence, and the motion made for dismissal at the close of the defendant’s evidence should have been granted.

For the foregoing reasons the conviction and sentence of the Municipal Court should be and is hereby reversed and it is ordered that the defendant be discharged.