author: OPINION 'By MILLER, PJ.

text:
    SMITH, Admr., Plaintiff-Appellee, v. UNTERBURGER et, Defendants-Appellees, CLINE et, Defendants-Appellants.
    Ohio Appeals, Second District, Greene County.
    No. 509.
    Decided March 29, 1949.
    Smith & Smith, George H. Smith, Xenia, of Counsel, for plaintiff-appellee and defendants-appellees.

      Miller & Finney, Xenia, Neal W. Hunter, Jamestown, for ■defendants-appellants,
   OPINION

'By MILLER, PJ.

This is a law appeal from the Probate Court of Greene County, Ohio. The sole question presented is whether the trial court erred in holding that the so-called half and half section, to wit, §10503-5 GC, does not apply to the alleged and admitted facts as set forth in the pleadings and agreed .statement of facts. These facts show that Charles Cline, husband of Barbara Cline, died July 4, 1946, intestate, without issue, leaving no surviving parents, and Barbara Cline, his surviving spouse and sole heir at law; that said Barbara Cline, prior to the death of her husband, was an incompetent person and a ward of the Dayton State Hospital, and that George H. Smith was her duly appointed, qualified and acting guardian; that it was necessary to sell the real and personal property to pay debts, widow’s allowance and costs of administration; that the relict wife’s distributive share from the estate amounted to $4345.47 which was paid to her guardian, George H Smith, in the form of several checks drawn upon The Farmers and Traders Bank of Jamestown, Ohio, who immediately deposited said checks in his name as guardian of Barbara Cline in The Spring Valley National Bank of Spring Valley, Ohio. This the guardian was authorized to do by virtue of §10506-46. In addition to the aforesaid amount other checks were deposited in the guardianship account representing the widow’s exempt property and her year’s allowance. This account was in existence at the time of the relict’s death, although withdrawals had been made from time to time for her necessary expenses. Counsel agree that §10503-5 GC is applicable to the facts here presented, provided the property the relict left was the “identical” property she received from her husband’s estate. The appellants urge that it is, that the assets came to the guardian as a chose in action and that they were still such at the time of the relict’s death. This may well be true, but the question still remains, are the two dioses in action “identical?” We do not think they are. The chose in action the guardian received was in the form of checks drawn upon The Farmers and Traders Bank. The chose in action of which she died seized was one against The Spring Valley National Bank. It cannot be said that they are “identical”, for they are against different banking institutions.

In the case of Spidel, Admr. v. Schaller, 73 Oh Ap 141, the relict widow transferred certain municipal bonds in exchange for the same corporation’s refunding bonds. The Court held that these were not identical within the meaning of §10503-5 GC. Many of the cases cited by counsel are not of much assistance to us as the facts are not on all fours with the case at bar. However, in the case of Kolthoff, Admx., v. Kolthoff, 79 Oh Ap, 427, the facts are almost identical with the exception that the proceeds were deposited in a savings account instead of a commercial account. At page 431 Stevens, J., says:

“Was the $3700 savings account of Philip Opper the identical property which he received from the estate of his deceased wife?

The answer is obviously ‘no’, for deposits, whether savings or commercial, received by a bank from a depositor, in the absence of an agreement to the contrary, become the property of the bank and give rise to a relationship of debtor and creditor between them. Smith, et al., Trustees, v. Fuller, 86 Oh St, 57; 99 N. E. 214, L. R. A. 1916C, 6 Ann. Cas. 1913D, 387. Hence Philip Opper was a creditor of the bank, having owing to him an obligation which the bank could and was required to pay in accordance with its regulations, to which Opper subscribed when he placed his money in a savings account.

His claim was not against specific money held by the bank, but against its commingled assets.

There was no identity of what he received and what he left at his death.

The (§10593-5 GC) had no application under the facts of this case, and the Common Pleas Court correctly resolved that question.”

We are in accord with the legal principles announced in the Kolthoff case, supra, and therefore are of the opinion that the trial court did not err in holding that the property under consideration was not identical property and therefore does not pass under §10503-5 GC.

The judgment is affirmed.

HORNBECK and WISEMAN, JJ, concur.


source: Caselaw Access Project

author: By FESS, J.

license: Public Domain

text:
    MARTIN, Guardian-Appellant, v. MARTIN, Ward-Appellee.
    Ohio Appeals, Eighth District, Cuyahoga County.
    No. 21287.
    Decided May 16, 1949.
    Albert D. Nesbitt, Cleveland, for guardian-appellant.
    Walter T. Matia, for ward-appellee.
   OPINION

By FESS, J.

This is an appeal on questions of law from an order of the Probate Court upon exceptions to a final account of appellant as guardian surcharging appellant with the sum of $500.00 and disallowing in part a claim in the sum of $1,179.94 on the part of the guardian for support of herself as dependent spouse of the ward and minor child.

Paul Martin entered the State Hospital on October 15, 1947. On January 28, 1948, Mary Martin, his wife, was appointed guardian of his person and estate, and qualified by giving bond on January 31, 1948.

Paul Martin having been discharged from the hospital, a motion to terminate the guardianship was filed June 12, 1948. On the same date the appellant filed her inventory as guardian which did not include $500.00 in cash which, the ward claimed was among his assets secreted in their home prior to his leaving for the hospital. The order of the Court amending the account to include this item of $500.00 we-find to be manifestly against the weight of the evidence.

On July 16, 1948, appellant filed an application setting forth, that it was necessary for her as guardian and wife to make-certain charges against the estate for necessaries in the-sum of $1,179.94 to support the lawful dependents of the-ward and prayed for an order authorizing her to charge said sum against the estate.

After hearing the court found said sum to be in excess of the reasonable needs of the wife for support for the period, from January 28th, to June 25, 1948, and that the sum of $625.00 was sufficient to provide for her and to reimburse-her for any funds she may have advanced to the ward.

On this appeal, appellant contends that she is entitled to-an allowance for support of herself and minor child from the-time her husband entered the hospital in October, 1947, and that the court erred in limiting the allowance to the period, of guardianship alone.

Under §7997 GC, a husband must support his wife and minor-children out of his property or his labor. If he is unable to do so, the wife must assist him so far as she is able. His liability for necessaries furnished his wife is not affected by the fact that he may be insane. Badger v. Orr, 1 Oh Ap 293.

The inventory filed by the guardian discloses $4,000.00 in cash and bonds as well as a one-half interest in real estate occupied as their home, so the ward’s estate was ample to provide support for his wife and minor child for a reasonable period of time. The fact that the wife and child were employed and had some income did not relieve the husband from his duty to support them. The reasonable value of the support of the wife and child for the period prior to the appointment of the guardian was therefore a valid claim against the estate and should have been allowed. Cf. Louden v. Patterson, 41 Oh St 206. In passing it may be noted that the appellant made no claim for compensation for services as guardian, §10506-52 GC.

Judgment reversed and cause remanded to the Probate Court for further proceedings according to law. Exc. Order See Journal.

SKEEL, PJ, HURD, J, concur.


author: By ROSS, PJ.:

text:
    DUEMER et, Plaintiffs-Appellees, v. DUEMER et, Defendants-Appellants.
    Ohio Appeals, First District, Butler County.
    No. 954.
    Decided April 15, 1949.

      Andrews & Weiss, Hamilton, for plaintiffs-appellees.
    Kautz, Holbrock & Bosch, Hamilton, Fitton, Pierce & Black, Hamilton, for defendants-appellants.
   OPINION

By ROSS, PJ.:

This is an-appeal on questions of law from a decree of the Court of ’Common Pleas of Butler County, rendered in a chancery case in favor of the plaintiffs, upon motion for judgment upon the pleadings.

These consist of a petition filed by Louis Richard Duemer and Walter Corlliss Duemer, children of Walter A. Duemer, deceased, who was a brother of Louis J. Duemer, an answer and cross-petition of said Louis J. Duemer and his wife, verified only by Louis J. Duemer, a reply of the plaintiffs, verified only by the next friend of Walter Corlliss Duemer, a minor, an answer and cross-petition of The Second National Bank of Hamilton, Ohio, trustee under the will of Walter A. Duemer, deceased.

No motion for judgment on the pleadings appears in the Bill of Exceptions or among the original papers. However, the entry of the Court, in which judgment is rendered on the pleadings, recites that such a motion was made by the plaintiffs.

In the petition it is alleged that Walter A. Duemer died December 19, 1944, leaving the defendant Hilda H. Duemer as his surviving spouse and the plaintiffs Louis Richard Duemer and Walter Corlliss as his sons and heirs-at-law; that Walter A. Duemer died testate; that his will was admitted to probate January 10, 1945; that, by his will, his entire estate was bequeathed and devised to the Second National Bank of Hamilton, Ohio, pursuant to a trust agreement, executed by the said Walter A. Duemer November 21, 1942; that by the terms of such instrument the widow of decedent was to receive the income of such estate for life; that upon her death, the corpus was to be distributed to plaintiffs; that on June 11th, 1940, the decedent “signed a paper writing designated an agreement, providing that certain real estate hereinafter described and of which he was then an owner should be sold to the defendant Louis J. Duemer for a cash consideration of One Thousand ($1000.00) Dollars, the agreement to be effective and the sale to be made whenever the seller shall cease to operate his business known as Louis Duemer & Sons or shall die, that such instrument was signed by the decedent and his then wife, the defendant Louis J. Duemer and his wife.”

The real estate involved is then described in detail.

Further allegations of the petition are, that the only consideration for the agreement to sell such real estate for the price named was “the execution of a similiar instrument by the said Louis J. Duemer and the other parties to the agreemment” executed by the decedent, his then wife and Louis J. Duemer and his wife, “by which it was provided that the said Louis J. Duemer should sell his one-half (%) interest in said real estate, being the other % interest therein to the said Walter A. Duemer for One Thousand ($1,000.00) Dollars in cash, to be effective and to obligate the parties whenever the seller should cease to operate his business known as Louis Duemer Pattern Works or shall die.”

The petition contains further allegations charging that the consideration of $1,000.00 is grossly inadequate, that the agreement is unenforceable in law because of the death of Walter A. Duemer, that the agreement is without consideration, and constitutes a fraud upon the plaintiffs, that the widow of the decedent and The Second National Bank of Hamilton, Ohio, both feel obligated to carry out the terms of the agreement and will do so unless restrained by order of Court.

For a second cause of action, the plaintiffs charge that the agreement executed by decedent was secured by duress and undue influence of the defendant, Louis J. Duemer, at a time when the decedent was in poor health and lacked mental ■capacity to understand the nature, extent, and meaning of such instrument.

For a third cause of action, the plaintiffs charge that by reason of the acts of the defendants they’ have been deprived of the rent of the premises involved.

This petition was verified only by the next friend of Walter Corlliss Duemer.

In the answer and cross-petition of the defendants, Louis J. Duemer and his wife Carrie S. Duemer, the death of the decedent, the probate of the will, the survival of his widow, .and the plaintiffs as his sons and heirs-at-law, the execution of the agreement, are admitted, accompanied by a general denial of other allegations in the petition.

For their first cause of action of their cross-petition, defendants Louis J. Duemer and his wife allege the execution of an agreement by the decedent, a copy of which is attached to the answer and cross-petition and made part thereof.

This agreement has been fully quoted in the syllabus and will not be here repeated.

It is further alleged that the defendants have been ready, willing, and able to perform their part of the agreement ever since the death of the decedent, and are now so ready, able, and willing to perform and that their demands for performance have been refused.

For a second cause of action, the defendants further allege that decedent and the defendant Louis J. Duemer were partners doing business as the Louis Duemer Pattern Works and Louis Duemer & Sons; that on the 23rd of December, 1939 such partnership was voluntarily dissolved, that by the terms of the dissolution agreement the defendant Louis J. Duemer •continued to operate that department of the former partnership known as Louis Duemer Pattern Works and Walter A. Duemer continued to operate that department of the former partnership known as the Louis Duemer & Sons engaged in making furnaces, and that by virtue of such agreement the defendant Louis J. Duemer “was to have the exclusive right to occupy the north and south second floors and the north first floor of the building located on the premises described in the petition, and that Walter A. Duemer was to have the exclusive use of and occupy the south first floor and the east part of the first and second floors of such building and the frame warehouse connected therewith, that the plaintiffs and the decedent’s wife have ever since the date of decedent’s death occupied the premises so allocated to Walter A. Duemer. Prayer is made for an amount equivalent, to the rent of such last described premises.

A demurrer of the plaintiffs was sustained to this second cause of action, but the defendants filed no amended cross-petition. The Court reversed the demurrer against the plaintiffs’ third cause of action in its search of the record for the first defective pleading. This cause of action was for recovery of rent. The demurrer was upon the sole ground that no cause of action was stated in the cross-petition of the defendants Louis J. Duemer and his wife. A demurrer to a cross-petition does not search the record.

No amended petition was filed.

The plaintiffs filed “an answer to cross-petition” of the cross-petition of the - defendants Louis J. Duemer and wife. This also was verified only by the next friend of Walter Corlliss Duemer. In such pleading, the plaintiffs admit that the only consideration for the agreement executed by decedent was a similar instrument described in the cross-petition of Louis J. Duemer and wife.

It is again further alleged that the consideration of $1,000.00 is grossly inadequate. Otherwise, such pleading is a general denial of the allegations of the cross-petition of Louis J. Duemer and wife.

An answer and cross-petition was filed by the testamentary trustee, in which the essential facts involved were admitted and prayer was made for partition if the court found the agreement of the decedent with the defendant Louis J. Duemer was ineffective.

The plaintiffs began the trial and introduced certain evidence and thereupon made a motion for judgment upon the pleadings.

The trial court granted this motion and entered judgment in which it was found that notwithstanding the agreement of the decedent with his brother, title to one-half (%) of the premises vested in the testamentary trustee and the other half was at all times vested in Louis J. Duemer, and that the title of the entire property should be mutually quieted against any claims arising by virtue of the agreements executed by decedent and his brother the defendant, Louis J. Duemer. The court decreed dismissal of the cross-petition of Louis J. Duemer and his wife, granted the prayer of the plaintiffs, cancelled the contract involved, and granted partition.

An application, which was in effect a motion for new trial was filed.

This action was commenced in November, 1945.

Sec. 11575 GC, was amended re-defining a new trial October 11, 1945. So that such new trial applied to issues of law as well as of fact, since a new trial was no longer limited alone to issues of fact.

The motion was, therefore, properly and duly filed and the motion to dismiss the appeal, because the notice of appeal, though filed within twenty days from the overruling of such motion for new trial, was not filed within twenty days from the decree of the court, is overruled.

Other procedural defects apparent from the foregoing recital are passed, as consideration of the problems presented by the final action of the trial court are now considered.

It is apparent from the decree of the trial court in this chancery action, which seeks cancellation of a contract and partition, that it considered the contracts involved so far as they affected the rights of the parties after death testamentary in character and unenforceable, because lacking the statutory requirements for testamentary disposition of a decedent’s estate.

In so concluding the trial court was in error, as is evident from the overwhelming weight of authority hereinafter noted.

Liability based upon mutual covenants or promises has been recognized at common law, even when such promises were oral ever since Slade’s Cases in 1603 (4 Coke 92 b. 76 Eng. Reprint 1074) and long before that date, when such obligations were contained in contracts under seal.

There can not be the slightest doubt that the parties to these agreements entered into binding contracts, in which the obligations incurred were made absolutely irrevocable after execution of the instruments.

Only one contingency stipulated presents a situation where the execution of the obligation of one party may necessarily fall upon his personal representatives or heirs. Such being the case, such obligations take precedence pro tanto over the bequest and devise to the testamentary trustee, and it would appear from certain of the allegations, supra, that this is recognized by the widow of decedent and the decedent’s testamentary trustee.

The language of the contracts applicable to the contingency of death has no effect except to postpone final execution of the irrevocable obligation assumed by the decedent until after his death. That such provision is not testamentary in character and is found in many enforceable contracts other than partnership contracts, where it is also recognized as binding upon the personal representatives and heirs, is also apparent from the authorities hereinafter noted.

As to the amount of the consideration to be paid by the surviving party to the contract, this is incidental and inconsequential from the standpoint of consideration which in this case was the complementary obligation assumed by the other party in executing a mutual, identical contract. The pleadings show that such is the understanding of the parties to this action. The contracting parties agreed upon the sum to be paid and their agreement on this point as all others was irrevocable, and binding from the time the contracts were executed.

As to the objection that the contract calls for a warranty deed, it is a rule that the language used in a contract shall be construed, if possible, so as to give effect to the intention of the parties and that from the terms of the contract the court must assume as nearly as possible the position of the parties. Evidence aliunde is not here permitted, nor is the same necessary to ascertain such intention. It is apparent obviously that the reference to a warranty deed applies only to the decedent and his wife and to the alternative contingency —the cessation of the business of the decedent before death. In any event if this were not apparent the surviving party may waive such.

In Section 40, Wills, 57 Am. Jur., p. 67, 68, it is stated:

“The undertaking of a party to a contract is made in consideration of something to be paid or done by or on behalf of the other party, so that the obligation to do and the right to require performance are reciprocal. A will, on the other hand, is simply a statement of a purpose or wish of the maker as it exists at the time. As often as his purpose or wish changes, he may change the expression of it. The binding force of a contract comes from the aggregatio mentium of the parties. The binding force of a will comes from the fact that it is the last expressed purpose of the testator in regard to the disposition of his property after his own death. A contract creates a present, enforceable, and binding right over which the promisor has no control without the consent of the promisee, while a testamentary disposition operates prospectively and is wholly ambulatory until the testator’s death. Although contracts and wills are so unlike, that they may be- and sometimes are combined so as to give a testamentary character to what purports to be a contract, or to convert what purports to be a will into an irrevocable agreement. It affords no insurmountable objection to the testamentary character of an instrument that it contains provisions of a contractual nature. Thus, a writing reciting that it is executed and founded on a designated consideration may be upheld as a will.

“The dominant purpose of the maker of an instrument as manifested therein controls in determining whether the instrument is a contract or a will. Whether any given writing is a will or a contract must be determined by the character of its contents, rather than from its title or any formal words with which it may begin or conclude, but words which do not change the legal effect of the instrument may, nevertheless, be significant by revealing the intention with which it was made. The rule is that if the obligation prescribed by an instrument in the form of a written contract is revocable and the vesting of an interest or title thereunder is postponed until the death of the obligor, the instrument is testamentary in character and ineffective unless executed in the manner prescribed by statute for the execution of wills. On the other hand, a contract does not take on a testamentary character merely because its performance is postponed until after the death of the maker and devolves upon his representatives. The Statute of Wills does not prevent an owner of property from .stipulating by contract for the disposition of his property at the time of his death. The fact that the performance of :a contract for the direct benefit of a third person expressly designated, is postponed until the death of the promisee does not affect the third person’s rights. An unconditional promise to pay, made to mature at or after the death of the promisor, is none the less a present, valid, and binding promise because .at the time or in the same instrument he expresses his purpose or makes the further promise, to make testamentary provision for meeting and discharging his promise to pay.”

See, also: Section 302, Contracts, Am. Jur., p. 857; Section 7, Contracts, 9 Ohio Jur., p. 266; Section 312, Partnership, Am. Jur., p. 347. Incidentally, it does not appear why partners should be able to avoid the Statute of Wills by inter vivos contracts, and others not.

See, also: Section 271, Contracts, C. J. S., p. 653, Note 78.

In 1 A. L. R. (2d), at page 1171, there appears the case of Howe’s Estate. 31 Cal. (2d) 395, fully reported. It is an excellent case supporting the conclusions herein reached. At page 1178 of the same volume is found an exhaustive annotation of this case, in which are gathered the decisions of the courts upon every phase of this question. Any detailed consideration of these supporting cases would amount to an wholly unwarranted and unnecessary extension of this opinion. Reference to the fully detailed consideration of such cases will develop ample support also for the conclusions here reached.

On page 1184 of the annotations it is stated:

“Upon examining the cases as a whole, it becomes evident, that, as a general principle, supported by the marked weight, of authority, a provision in an otherwise sufficient contractual instrument, fixing the time for payment or performance at, or at a prescribed time after, the death of the party promising such payment or performance, ordinarily does not impair the-instrument’s validity as a contract. General support for this-proposition is derived from the following cases:”

It will be noted that on page 1187, the following Ohio-cases are cited:

“Ohio Wesleyan Female College v. Higgins (1864) 16 Oh St, 20. See also Judy v. Louderman (1891) 48 Oh St, 562, 29 N. E. 181, and Hooker v. Wittenberg College (1873) 13 Ohio Dec Reprint 946, 2 Cin Super 353.”

Reference to these cases will show that the Ohio rule is; in line with the weight of authority.

The plaintiffs rely somewhat upon the case of Needles v. Needles, 7 Oh St, 432. An examination of this case will show that the decision is grounded on want of consideration. The alleged consideration for the post mortem execution being-executed gifts to the promisor. See, page 1212, 1 A. L. R. (2d) for comment on this case. On page 1210 (2d) the ‘“opposing view”, led by New Jersey, is considered, and the New Jersey-case, University v. Conover, 115 N. J. L. 468, cited by the plaintiffs is noted as being in the minority column. See page 1218,. where the case of Knoll v. Hart, 308 Pa. 223, is considered. As to this type of cases it is stated:

“As heretofore indicated (sections 13 and 14, supra), there-is more difference of opinion upon the present general subject where instruments relating to property are concerned than exists as to instruments merely calling for post mortempayment of money. The line of division between testament and contract is not so definitely agreed upon where-title to property is at stake.

“Clearly, however, the factors of revocability and ineffectiveness prior to the maker’s death will serve to fix an instrument’s character as testamentary rather than contractual,, whether it relates to money or property rights. So it has-been stated that the rule is that if the obligation prescribed'. by an instrument in the form of a written contract is revocable .and the vesting of an interest or title thereunder is postponed until the death of the obligor, the instrument is testamentary in character and ineffective unless executed in the manner prescribed by statute for the execution of wills.”

Taking up the citations of the plaintiffs in support of their position, not hereinbefore considered, reliance is placed upon the case of University v. Conover, 115 N. J. L. 468, supra. Aside from the fact that the facts in this case are radically .different from those in the case at bar, the holding is in conflict with College v. Higgins, 16 Oh St, 20. It will be noted .also that the New Jersey case is included in the minority column. (1 A. L. R. (2d) pp. 1188, 1204, 1206, 1210, 1218.)

Knoll v. Hart, 308 Pa. St., 223, supra. If actually an opinion in the minority column is distinguishable upon the basis of past consideration and similar in that respect to Needles v. Needles, 7 Oh St 432. The position of the Pennsylvania Courts is shown in Specht’s Estate, 268 Pa. 384. See, 1 A. L. R. (2d) 1253.

Lloyd Estate, 256 Mich. 305.

In this case an ordinary bill of sale was proffered as a will and held not to be such.

In Ireland v. Lester, 298 Mich. 154, quoted from hereinafter, mutual contracts similar in many respects to the instruments here under cohsideration were held to be contractual and not testamentary.

Hydrich v. Hydrich, 142 S. C. 531, recognizes the general rule and is found in the majority column (1 A. L. R. (2d) p. 1199). An examination of this case will show the promise was tentative and based upon a past consideration falling within the scope of the case of Needles v. Needles, 7 Oh St, 432. See, 1 A. L. R. (2d) p. 1223.

Herren v. Herren, 152 Okla. 281. This case involved a deed, transfer of title to take effect upon death of grantor. No consideration was mentioned for such deed. The decision was by a divided court. Oklahoma is in the majority column, as will appear from the case of Bank v. Lee, 192 Okla. 9, in which a mother, for a valuable consideration, endorsed an order to .her executors to pay a note payable to her son. Held, contractual and not testamentary. Such was the case in Judy v. Louderman, 48 Oh St, 562. See, Comment, 1 A. L. R. (2d) 1225, 1230.

Gillespie v. Gillespie, 289 S. W. 579, cited also by plaintiffs, involved a deed to a wife at request of a husband followed by deed from husband to wife, in which use of property was retained for life. Held, that title passed to wife, although possession retained by husband during life. This case seems to support the majority rule, and that Missouri is in that column is shown by Green v. Whitney, 271 Mo. 636, 1 A. L. R. (2d) p. 1198.

Cohen v. Klein, 209 Cal. 421, involves the construction of -a. deed containing a provision postponing possession until death of grantor and held testamentary in character. The court, notes the case of Montgomery v. Reeves, 167 Ga. 623, contra. The case of Howe’s Estate, 31 Cal. (2d) 395, the principal case-upon which the A. L. R. Annotation is predicated shows California in the majority column. 1 A. L. R. (2d) 1171.

Jennings v. Jennings, 173 Ga. 428, is directly in line with. the majority rule. It was held therein that a deed postponing possession until death of grantor valid and not testamentary. See, 1 A. L. R. (2d) 1185, 1197, 1201. Note also,. Comment of Court in Cohen v. Klein, supra, 209 Cal. 421.

Osgood v. McKee, 343 Ill. 470, is in line with the majority rule, and, contrary to some authorities noted, holds a deed, valid, where delivered to a third person, although the deed was not to be delivered to grantee until grantor’s death. See,. 1 A. L. R. (2d) 1185, 1192, 1197.

Purcell v. Baskett, 121 Kan. 678, involved a deed which provided that it was void until the death of grantor. That Kansas-is in line with the majority rule will be seen from the cases, noted. 1 A. L. R. (2d) 1185, 1188, 1198, 1208. See, in particular, Webster v. Camp, 107 Kan. 235, noted 1 A. L. R. (2d) on p. 1189.

Ferrara v. Russo, 40 R. I. 533, seems to be in the minority-column. See, Comment, 1 A. L. R. (2d) p. 1210.

As opposed to these cases are the long line of cases collected in the A. L. R. notes. Two of these cases seem worthy of special comment. In Ireland v. Lester, 298 Mich. 154, the Court, holds:

“1. A bilateral contract consisting of mutual promises to-sell or buy, to be determined in the future by an event sure to occur, is not terminated by the death of either party unless the contract is personal in nature.

“2. The fact that the death of one of the parties is to-determine the time of performance does not of itself make the agreement testamentary for it is as proper to set death as a date for performance as any other time that could be stipulated.

“3. An instrument that is testamentary in character operates only upon and by reason of the death of the maker, and, until: then, it has no effect or force, the ambulatory quality being a characteristic of wills.

“4. A valid contract does not fall into the testamentary class simply because it is performable after the death of one of the parties.

“7. Under contract between partners whereby upon death of either during continuance of contract, decedent’s interest in partnership business should be sold to survivor at an agreed sum and partners stated when contract was signed that the widow of the first decedent was to receive the full consideration and no change was made in contract before one of them died, leaving issue by former wife in addition to widow, deceased’s widow could enforce it as a third party beneficiary as her rights vested thereunder upon its execution.”

In Ga Nun v. Palmer, 216 N. Y. 603, Judge Cardozo states at page 609:

“The first clause, it is said, is part of a contract; the second, part of an informal will. The first, it is said, gives rise to an irrevocable obligation; the second is the expression of a transitory purpose, which may be canceled over night. We find no warrant for this dismemberment of the contract. On the one side we have the plaintiff’s promise to care for Miss Sands during life; on the other we have the promise of the reward for the service. There is nothing to show that one part of this reward was to be irrevocable, and that another was to be revocable. Each promise in its entirety is the consideration for the other. It makes no difference in such circumstances that part of the reward is payable after death. The character of the promise is not changed by the time fixed for its performance (Hegeman v. Moon, 131 N. Y. 462; Carnwright v. Gray, 127 N. Y. 92; Robb v. Washington & Jefferson College, 185 N. Y. 485). It makes no difference that the reward may seem to be extravagant in amount. Unless there is fraud or undue influence, the inadequacy of the consideration does not destroy the obligation of the contract (Earl v. Peck, 64 N. Y. 596; Matter of Bradbury, 105 App. Div. 250, 255). It makes no difference that the contract is for the payment of a specific fund, to be found in a specific place. If the promisor has made away with the fund, she must answer for the breach by the payment of an equal sum as damages (N. Y. News Publishing Co. v. Nat. Steamship Co., 148 N. Y. 39; Simmon v. Etgen, 213 N. Y. 589). The canon of construction which prefers the meaning that will sustain rather than one that will defeat an instrument, reinforces these conclusions. Treat the promise as testamentary, and it is not effective for any purpose; there is no suggestion that the writing was executed with the formalities requisite for wills. Treat it as contractual, and it is precisely adapted to the attainment of the end in view. In flne we discover in this writing all the elements of a valid contract, and we are not at liberty, for the purpose of destroying its validity, to construe it as anything else.”

It would appear, therefore, that the motion of the plaintiffs for judgment on the pleadings should have been overruled.

The judgment of the trial court is reversed, and the case is remanded to the Court of Common Pleas of Butler County for further proceedings according to law.

ROSS, PJ, HILDEBRANT & MATTHEWS, JJ, concur in syllabus, opinion & judgment.


author: By MATTHEWS, J.: ROSS, PJ.:

text:
    PHILLIP METROPOLITAN COLORED METHODIST EPISCOPAL CHURCH, Appellant, v. GENERAL CASUALTY CO. OF AMERICA, Appellee.
    Ohio Appeals, First District, Hamilton County.
    No. 7080.
    Decided May 2, 1949.

      Wm. A. McClain, Berry, McClain & White, Cincinnati, for appellant.
    James G. Headley, Headley, Taft & Headley., Cincinnati, for appellee.
   OPINION

By MATTHEWS, J.:

The Municipal Court sustained the general demurrer of the General Casualty Company to the amended bill of particulars and the plaintiff not desiring to plead further, the court entered judgment of dismissal at plaintiff’s costs in favor of the General Casualty Company. This appeal is from that judgment.

The sole issue raised by the appeal is whether a cause of action against General Casualty Company is alleged in the amended bill of particulars.

It is alleged in the amended bill of particulars that the General Casualty Company is, and was at all times mentioned in the amended bill of particulars, a corporation engaged in the bonding and surety business; and that its co-defendant Wahn-Evans Company is, and was at all such times a corporation authorized to and engaged in the business of a real estate broker, under a broker’s license issued by the State of Ohio.

The amended bill of particulars purports to state two causes of action. The first relates to the conduct of Wahn-Evans & Company as a real estate broker in a transaction between the plaintiff and the First English Lutheran Evangelical Church. The second cause of action purports to allege a cause of action against General Casualty Company as surety upon the real estate broker’s bond of Wahn-Evans & Company given in accordance with the requirements of §§6373-25 to 6373-51 both inclusive, of GC. However, as the allegations of the first cause of action are expressly incorporated into the second cause of action, it is necessary to consider all the allegations of the amended bill of particulars. The General Casualty Company recognized that it was necessary to consider all the allegations by directing its demurrer to the entire amended bill of particulars.

From the amended bill of particulars we learn that the plaintiff owned real estate located at 643 Carlisle Avenue in the City of Cincinnati, and desired at purchase real estate located at 1208 Race Street in that City, owned by the First English Lutheran Evangelical Church. On August 13th, 1947, the plaintiff employed Wahn-Evans & Company to act as a real estate agent in purchasing the 1208 Race Street property and of advising it in the financing of the purchase. In due time, Walin-Evans & Company reported to the plaintiff that the Race Street property could be purchased for $50,000.00, and that it could sell the plaintiff’s property at 643 Carlisle Avenue for $20,000.00 and could arrange for financing the balance of $30,000.00 necessary to complete the purchase, that thereupon the plaintiff made a written offer to purchase the real estate at 1208 Race Street for $50,000.00, and deposited $1,000.00 with Wahn-Evans & Company as earnest money to bind the bargain, .and that this offer was accepted by the First English Lutheran Evangelical Church. It also appears that Wahn-Evans & Company was unable to arrange for the financing of the purchase by this plaintiff, but represented to the plaintiff that if given an additional 90 days it could do so, and that if this extensión was given and it failed to arrange for the financing within that time “then it would return to plaintiff at the direction of the seller the plaintiff’s binder money in the amount of $1,000.00,” and that thereupon the plaintiff entered into a new contract, a copy of which was attached to the amended bill of particulars and incorporated therein. It is also alleged that Wahn-Evans & Company failed again in its efforts to finance the purchase and, as a result, the seller rescinded the contract .and notified Wahn-Evans & Company of such rescission and directed it to return to the plaintiff the $1,000.00 deposited with it as earnest money which Wahn-Evans & Company, after repeatedly promising to do, finally failed and refused to do, although demand had been made therefor by the plaintiff.

The prayer was for judgment against both defendants for .$1,000.00 with interest from the date of the rescission of the contract by the seller and its direction to Wahn-Evans & Company to return the $1,000.00 deposit to the plaintiff.

It is contended that the facts alleged do not show a breach of the statutory bond upon which the General Casualty Com;pany is surety and that, therefore, the demurrer to the amended bill of particulars was properly sustained. In passing upon the validity of this contention, we must give full effect to the relevant statutes (§§6373-25 to 6373-51 GO and treat those statutes as though they were fully set forth in the bond .signed by General Casualty Company and in the amended bill of particulars filed by the plaintiff.

Before, however, considering the legal effect of the allegations of the amended bill of particulars, it would be well to make some reference to the terms of the contract, a copy of which is attached to and incorporated in the amended bill of particulars. It is in the form of an offer by the plaintiff to pay $50,000.00 for the 1208 Race Street real estate, $1,000.00 of which was payable in cash accompanying the offer in the .following manner:

“I/we hereby deposit One Thousand -Dollars ($1,000.00) as above provided with Wahn-Evans & Company as agent for the seller, to apply on the purchase price which is to be retained by the agent until the terms of this contract have been complied with. Said payment to be refunded if offer is not. accepted or if title to said Real Estate is not as above set. forth.”

Appended- to this offer was an acceptance including an agreement to pay Wahn-Evans & Company the prescribed, commission and authorizing it “When this transaction is completed, to apply the above payment in your hands in connection therewith toward the payment of such commission.” And following that acceptance there was this receipt signed by Wahn-Evans & Company: “We hereby acknowledge receipt-of One Thousand Dollars ($1,000.00) payment as provided above.”

It will thus be seen that both by the facts alleged in the-amended bill of particulars and also by the terms of the written contract itself Wahn-Evans & Company held this deposit of $1,000.00 in trust not only for the seller, but also, for the buyer-plaintiff under certain circumstances. It will also be observed that Wahn-Evans & Company was also under contractual obligation to the plaintiff to arrange for the financing of this purchase, and was also the plaintiff’s broker, authorized to sell its Carlisle Avenue property for $20,000.00, and that as between the plaintiff and Wahn-Evans & Company the purchase of the Race Street property by the plaintiff was conditional upon the ability of Wahn-Evans & Company to sell the Carlisle Avenue property and arrange for tlm financing of the residue. Under such circumstances, it could not be seriously argued that Wahn-Evans & Company in accepting the deposit of $1,000.00 was not acting as a real estate broker in a transaction involving the transfer of real estate titles.

Turning now to the conditions of the bond, we find this set forth in §6373-35 GC, wherein it is provided that “Such bond shall be conditioned upon the faithful performance of all the provisions of this act and shall indemnify any person who may be damaged by a failure on the part of the applicant for a reai estate broker’s license to conduct his business in accordance with the requirements of this act. (Secs. 6373-25 to 6373-51.) Any person claiming to have been damaged by any misrepresentation or fraud on the part of a real estate broker or by reason of the violation of the terms of this act, may maintain an action at. law against the broker — and may join as parties defendant the sureties on the bond herein provided for.”

By §6373-42 GC, it is provided the real estate broker’s license may be revoked where the broker in acting as “a real estate broker or a real estate salesman or in any transaction involving the leasing or sale of an interest in real estate, is guilty of:

“(1) Knowingly making any misrepresentation, or,

“(2) Making any false promises with intent to influence, persuade or induce, or—

“(5) Failure within a reasonable time to account for or to remit any moneys coming into his possession which belongs to others.

“(6) Any other conduct, whether of the same or a different -character than hereinbefore specified which constitutes dishonest conduct.”

All told, there are twenty-four prescribed grounds for the revocation of a real estate broker’s license.

Although the word “may” is used in §6373-42 GC, in conferring power to revoke the license, it is clear that should the board of real estate examiners, upon hearing, find that the agent had committed one of the acts constituting a ground for revocation, it could not do otherwise than pronounce the judgment of revocation, and such revocation would be on the ground that the agent had failed to observe the provisions of the act (§§6373-25 to 6373-51 GC) and such failure to observe the provisions of the act would likewise be a breach of the bond.

In Larson v. Marsh, 153 A. L. R. (- Neb., -, 14 N. W. (2d) 189) 101 at 106, it is said:

“The rule seems to be that where a public officer has been clothed by statute with power to do an act which concerns the public interest or the rights of third persons, the execution of the power may be insisted on as a duty, although the wording of the statute is permissive merely and not peremptory. We are of the opinion therefore that the statute imposes a positive duty upon the Secretary of State to perform the acts required by such statute when conditions exist which make the statute applicable.”

We are of the opinion that the amended bill of particulars shows a violation of the condition of the broker’s bond in two respects: (1) It alleges fraud in representing that the, broker could arrange the financing of the residue of the purchase price. We believe that misrepresentation or fraud as used in §6373-35 GC, must be construed in the light, of §6373-42 GC, to include not only misrepresentation as to-an existing fact, but also promissory misrepresentation made-with intent to influence, persuade, or induce action. (2) We-are of the opinion that the failure to account for or remit, the $1,000.00 constituted a breach of the bond. In this connection it should be observed that according to the allegations of the amended bill of particulars Wahn-Evans & Company repeatedly promised to pay the plaintiff. The amended bill of particulars, therefore, excludes the idea of a bona fide dispute between the broker and the party claiming money due from him.

California has a real estate brokers’ licensing law not unlike the Ohio law. The California law requires a bond conditioned, for faithful performance of duty. Liability on such a bond was considered in the case of Clark v. Patterson and New York, Indemnity Co., 75 A. L. R. (- Cal. -, 300 Pac. 967) 1124 in a case in which the facts bear a strong analogy to the facts, in the case at bar. The syllabus, which we quote, is sufficient to disclose this analogy and the result of the application of the statute to the facts:

“The surety on a bond filed by a real estate broker under-a statute requiring applicants for a broker’s license to file a bond ‘conditioned for the faithful performance by such broker of any undertaking as a licensed real estate broker’, on which any person injured by the failure of the broker ‘to perform his duties’ shall have a right of action, is liable to one who, on agreeing to purchase property offered by the broker, placed money in the broker’s hands to be applied on the purchase price, where through no fault of the purchaser the sale was never consummated, and the broker failed to return the money.”

But it is urged that when the plaintiff paid the $1,000.00 to Wahn-Evans & Company, the title passed to its principal— the owner of the 1208 Race Street property. To reach this, conclusion, it is necessary to ignore the express provision of the terms of the deposit as alleged in the amended bill of particulars. And to hold that this amended bill of particulars does not state a cause of action against Wahn-Evans Ss Company and General Casualty Company, it is necessary to ignore the allegations that it was the failure of WahnEvans & Company to arrange for the financing, as they had. agreed to do, that resulted in the necessary rescission of the contract. However, even though no specific agreement had been entered into by the broker and he had not been the cause of the failure to consummate the sale, he would be under an obligation to return the earnest money. In 8 Am. Jur., 1060 (Sec. 130) it is said:

"If earnest money is paid to a broker, and the contract is broken by the principal, the broker, notwithstanding that he has disclosed his principal, is liable to the other party for the return of the earnest money, unless he has in good faith paid it over to his principal.”

The fact that the broker has a claim against his principal is no justification for his refusal to return the earnest money. Gosslin v. Martin, 56 Ore., 281, 107 Pac. 957.

Appellee’s counsel relies strongly upon the case of Stanson, Inc. v. McDonald, 147 Oh St, 191, and we are advised that the trial court considered that case to require the sustaining of the demurrer. This reliance is not placed upon anything in the syllabus, which, of course, is the law of the case. The argument is based on what we regard as a misinterpretation of statements in the opinion of the court. It is true it is said in the opinion that a broker’s surety may be held only for ex delicto acts of the broker, and that the action before the court was not based on any ex delicto act of the broker, but was an action ex contractu, that is, an action for money had and received, but when the facts of the case and the subsequent statements in the opinion are considered, there is no doubt as to the meaning of the court, and that meaning was that in the absence of misrepresentation or fraud, or a violation of the terms of the act, the surety was not liable, and that if there was misrepresentation or fraud, or a violation of the terms of the act, the surety was liable. This is demonstrated by the fact that the Court analyzed §5373-42 GO, to determine whether it had been violated by the defendant broker. The action was by an unlicensed broker to recover a share of a commission from another broker and the surety upon his bond. Not only did the defendant broker not violate the terms of the act by refusing to pay the unlicensed broker or agent, but if he had complied with the request to split his commission and made payment that would have violated the act. After quoting the pertinent parts of §6373-42 GC, the Court said:

“As §6373-47 GC, supra, forbids the splitting of a real estate commission with other than a licensed real estate broker and as S. D. Stanson, Inc., was not a licensed broker at the time the cause of action arose, we see no violation of §6373-42 GC. It is argued in substance that, under the finding the deal was a continuing proposition, McDonald’s conduct was inequitable. However, conduct cannot be held inequitable which is forbidden by law.”

It is clear that the court reversed the judgment in favor of the unlicensed agent solely because there could be no valid contract under the statute to split a commission with an unlicensed real estate broker or agent. The opinion clearly shows that the phrase “ex delicto” was used as a comprehensive phrase to include misrepresentation and fraud, and violations of the statute. Of course any violation of a statute no matter what the form, is a delict.

That there was no misunderstanding in the Supreme Court on this subject is shown by the ground upoi| which the two dissenting judges placed their dissent. They interpreted the facts to show that at the time the work was done by the plaintiff in the real estate transaction he was licensed, and having found that, then they reached the conclusion that the defendant broker violated §6373-42 GC, in refusing to split the fee and that, therefore, his surety was liable. They also were of the opinion that §6373-48 GC, denying a right of action to a real estate broker, without proof that he was licensed, was enacted solely for the protection of the property owner and not for the protections of brokers inter sese, and for that additional reason, they were of the opinion that the broker and his surety were liable to the unlicensed broker for a share of the commission. If the case was to turn on any arbitrary technical distinction between causes of action ex contractu and causes ex delicto, the minority opinion would have been based on immaterial and irrelevant differences.

For these reasons, the judgment is reversed and the cause remanded for further proceedings according to law.

HILDEBRANT & MATTHEWS, JJ., concur in syllabus, opinion and judgment.

ROSS, PJ.:

(DISSENTING)

This is an appeal on questions of law from a judgment of the Municipal Court of Cincinnati dismissing the defendant the General Casualty Company of America from the action, a demurrer filed by that defendant to the amended bill of particulars having been sustained by the court, and the plaintiff having stated it did not desire to plead further.

The essential averments of the amended bill of particulars are that the Casualty Company “is now and was at all times hereinbefore mentioned the surety on the real estate broker’s bond” of its co-defendant, “that said bond was conditioned upon the faithful observance by Wahn-Evans & Company of all provisions of §§6373-25 to 6373-51 inclusive GC, that said surety has been informed of the continued course of misrepresentation, false promises and dishonest dealings of Wahn-Evans & Company, that when the seller rescinded its contract of sale with the plaintiff said Wahn-Evans & Company breached the conditions of its bond by failing to account for or to remit to the plaintiff its binder money in the amount of $1000.00, which plaintiff had deposited with it; that this suit is brought pursuant to §§6373-35 and 6373-42 GC.”

These allegations are contained in the second cause of action of the amended Bill of Particulars, which, by reference, incorporates also the allegations of the first cause of action addressed to the defendant broker.

It appears from these latter allegations that the plaintiff gave the broker $1000.00 as earnest money and part payment of the purchase price of real estate in the sale of which the defendant broker was agent for the seller. This sale was not consummated owing to the failure of the broker to secure satisfactory financing for the plaintiff and the seller ordered the broker to return the $1000.00 earnest money to the plaintiff which he has failed to do after repeated demands by plaintiff.

The plaintiff alleges “the seller rescinded its contract with the plaintiff in writing and at the same time notified the defendant company of its action and instructed the defendant company to return to the plaintiff its binder money in the amount of $1000.00; that plaintiff made immediate demand upon the defendant company to return plaintiff’s binder money; that defendant company promised upon several occasions to return the same; that notwithstanding defendant’s promises as well as repeated demands on the part of the plaintiff said defendant has failed to account for or to remit to plaintiff its binder money and has followed a continued course of misrepresentation, dishonest dealing and false promises.”

The contract of sale is attached to and made part of the amended bill of particulars and contains the following clause:

“I/we hereby accept the above proposition submitted to me/us by you, as my/our agent, and I/we hereby agree to pay you for your services rendered the rate of commission as established by the Cincinnati Real Estate Board, and I/we hereby authorize you, when this transaction is completed, to apply the above payment in your hands in connection therewith toward the payment of such commission.

WITNESS: The First English Evangelical Lutheran

Church By Ralph A. Pott, Atty.

November 4, 1947

I/we hereby acknowledge receipt of One Thousand Dollars ($1,000.00), payment as above provided.

WAHN-EVANS & CO. (Name of Broker)

BY /s/ Wynne A. Evans”

Now this deposit was obviously a payment to the seller The First English Evangelical Lutheran Church through its agent the defendant broker. It belonged to the seller subject to any contract existing with its agent the broker. Any claim for its return by reason of failure to consummate the transaction should be made against the seller. It is alleged that the seller has ordered the broker to return the money to the plaintiff, but this does not allege a contract requiring such performance, so that the plaintiff cannot rest its claim on a contract made for its benefit. It is apparent that the broker may have a claim upon this earnest money, which, although in the custody of the broker, belongs to the seller.

The simple facts alleged are that the plaintiff paid the seller a sum of money through the seller’s agent, which the seller has ordered returned. This order to its broker does not relieve the seller of any obligation it may have to pay the plaintiff.

It is true that one of the derelictions of which a broker may be guilty, permitting revocation of his license, is “Failure within a reasonable time to account for or to remit any moneys coming into his possession which belong to others.” If the seller has a legal right to order its broker agent to make repayment to plaintiff and the broker refuses so to do, the seller might well have the right herein asserted by plaintiff against both the broker and his surety.

No facts have been alleged showing that the specific $1,000.00 is in the broker’s possession, and that it belongs to this plaintiff.

The broker has not failed to account to the plaintiff for anything that belongs to it.

The action involved here by virtue of the demurrer is a cause of action against the surety for misconduct of the broker.

The general conclusions of law found in the allegations in the cause of action against the surety are not supported by any factual allegations bringing the surety within the purview of the statutes. It is merely alleged that the surety “has been informed of the continued course of misrepresentations, false promises, and dishonest dealings” but there is no allegation of the facts sustaining these conclusions connecting this plaintiff with them.

In Stanson, Inc., et al. v. McDonald, et al, 147 Oh St, 191, at page 198 of the opinion it is stated:

“Before recovery may be had against such surety it must be alleged and proved that the party complaining has been damaged by some misrepresentation or fraud on the part of the real estate broker or by reason of the violation of the terms of the act. No such allegation is contained in the amended petition upon which this case was tried. Plainly a broker’s surety may be held only for ex delicto acts of the broker. Here attempt is made to hold the surety as for an ex contractu act of the broker, i. e., for money had and received. Neither of the lower courts found there was any misrepresentation or fraud on the part of McDonald or any violation by him of any term of the act. Neither do we find that there has been any violation of the terms of the act of McDonald to justify holding the bonding company. We are not unmindful of the fact that the State Board of Real Estate Examiners suspended McDonald’s license issued January 1, 1942, the year following the matters herein complained of.

“Sec. 6373-42 GC, provides that the State Board of Real Estate Examiners may suspend or revoke or refuse to renew any license at any time ‘where the licensee, in performing or attempting to perform any act as a real estate broker or real estate salesman or in any transaction involving the leasing or sale of an interest in real estate, is guilty of: * * *

“(5) Failure within a reasonable time to account for or to remit any moneys coming into his possession which belong to others, or

“(6) Any other conduct, whether of the same or a different character than hereinabove specified, which constitutes dishonest dealing.’ ”

It would be an unwarranted extension of liability under such a surety contract as is here involved to permit recovery against the surety in every case where a broker in an endeavor to preserve his just claims refused to obey some order by his principal not warranted by the terms of the contract to which the seller, purchaser, and broker were parties.

The amended bill of particulars does contain allegations that the broker promises to return the money to the plaintiff, thus acknowledging the validity of his principal’s order. The most that could be made of these allegations would be to justify an action for money had and received in favor of the plaintiff, exactly what in Stanson v. McDonald, supra, is held not to bring the surety within the purview of the acts.

It is true the plaintiff makes broad allegations of fraud and misrepresentation, but these are unsupported by factual allegations.

The Supreme Court, it will be noted, quotes the section of the statutes justifying cancellation of the broker’s license and notes also that it was actually cancelled, but still the court does not recognize such provisions as being within' the purview of the bond as applied to facts similar in effect to those herein involved.

Reference is made to the case of Clark v. Patterson, 75 A. L. R. 1124, and to the Annotation thereof, and to 6 A. L. R. page 645.

It may be that certain statutes might incorporate within the penalty of the bond a situation here presented. Evidently, our Supreme Court does not consider this accomplished by the present statutes in Ohio.

I am not unmindful of the cases of Glens Falls Indemnity Co. v. Kirkpatrick, 46 Oh Ap, 23; Glen Falls Indemnity Co. v. Bradfute, 44 Oh Ap, 189; and Sigler v. Massachusetts Bonding & Ins. Co., 71 Oh Ap, 425, all of which were decided without the advantage of the decision in Stanson v. McDonald, 147 Oh St, 191, decided December 4, 1946, which I consider to have overruled the conclusions reached by the Appellate Courts.

It is my conclusion that, giving the amended bill of particulars its fullest and most favorable construction to plaintiff, a cause of action was not stated against the surety and the demurrer was properly sustained and the judgment should he affirmed.


author: By THE COURT.

text:
    PETERS, Plaintiff-Appellant, v. GRANT HOSPITAL, et, Defendants-Appellees.
    Ohio Appeals, Second District, Franklin County.
    No. 4108.
    Decided September 27, 1948.
    Russ Bothwell, Columbus, for plaintiff-appellant.
    Butler, Summer & Hoffman, Columbus, for defendants-appellees.
   OPINION

By THE COURT.

This is a law appeal from an order of the Court of Common Pleas sustaining a motion to quash the service upon one of the defendants.

The record discloses that George E. Peters filed an action against Grant Hospital and E. C. Pohlman alleging among other things that Grant Hospital is a corporation not for profit with its management vested in its board of trustees. Summons was issued for Grant Hospital, an alleged corporation, to be served by and through Hugh A. Baldwin as trustee and agent for said alleged corporation, and the Sheriff of Franklin County in making his return stated: “I served the within named Grant Hospital by serving Dr. Hugh Baldwin, Trustee and Agent for said Hospital, and E. C. Pohlman by personally handing to each of them a true and certified copy of this writ with all the endorsements thereon”.

Thereafter, E. C. Pohlman, one of the defendants filed a motion to quash the service of summons on Dr. Hugh A. Baldwin, a Trustee and Agent for Grant Hospital, an alleged corporation, in support of the motion Dr. Baldwin filed an affidavit in which he stated: “* * * that he is the person upon whom service of summons was purported to be made herein as trustee and agent of Grant Hospital, but that he is not the trustee, agent or an officer of any corporation bearing ¡the corporate name of Grant Hospital”.

The only question involved herein is whether or not the service on Dr. Hugh A. Baldwin was valid. No counter affidavit has been filed controverting the affidavit of Dr. Baldwin and it therefore must be assumed to be true. Sec. 11288 GC provides:

“A summons against a corporation may be served upon the president, mayor, chairman or president of the board of directors or trustees, or other chief officer; or if its chief officer be not found in the county, upon its cashier, treasurer, secretary, clerk, or managing agent; or, if none of such officers can be found, by a copy left at the office or usual place of business of the corporation with the person having charge thereof. If such corporation is a railroad company, whether foreign or domestic, and whether the charter thereof prescribes the manner and place, or either, of service of process thereon, or, if it be a street railroad company, owning or operating a .street railroad passing through two or more counties, or a transportation company owning or operating an electric traction road located upon either bank of any canal belonging to the state, the summons may be served upon any regular ticket or freight agent of such railroad company or street railroad company or transportation company; or, if there be no such agent, then upon any conductor in charge of any train or car upon such railroad or street railroad, or upon any motorman or other person in charge of any electric traction car, engine or motor upon any such electric traction road, in any county in this state, in which such railroad, street railroad, or electric traction road is located, or through which it passes. But, if the defendant is an incorporated river transportation company, whether organized under the laws of this or another state, the service of a summons may be upon the master, or other chief officer, or any of its steamboats or other craft, or upon any of its authorized ticket or freight agents, at any port where it transacts business.”

In attempting to comply with this section service of summons was had upon Dr. Baldwin as trustee who, as a matter of fact, it not a trustee. Therefore, this section of the Code has not been complied with. Under such circumstances a motion to quash is the proper procedure. See 32 O. Jur., p. 509, Sec. 108. The appellant is contending that the trial court had no right to entertain such a motion filed by a co-defendant, and for the additional reason that the Court passed upon the disputed question of fact which is an issue triable on the facts As we view the proposition, there is no denial of the fact that Dr. Baldwin is not a trustee or agent of the Grant Hospital. Such being true there has been no compliance with §11288 GC, and the motion to quash was properly sustained.

Judgment is affirmed.

WISEMAN, PJ, MILLER and HORNBECK, JJ, concur.


author: By MATTHEWS, J.:

text:
    LUNGARD et, Plaintiffs-Appellees, v. BERTRAM et, Defendants-Appellants.
    Ohio Appeals, First District, Hamilton County.
    No. 7065.
    Decided March 21, 1949.

      Philip J. Kennedy, Cincinnati, for plaintiffs-appellees.
    Robert O. Smith, for defendants-appellants.
   OPINION

By MATTHEWS, J.:

In the petition, the appellees alleged that “an account was stated between the plaintiffs and the defendants and the sum of One Thousand, Four Hundred, Seventy and Twenty-six Hundredths ($1470.26) Dollars was found to be due to the plaintiffs from the defendants as of June 23rd, 1947.” The prayer was for judgment for that sum plus interest.

There were two defendants and they filed separate answers, denying the above-quoted allegations of the petition. An amended answer was filed later by the defendant, Harvey P. Bertram Company, Inc. to which was attached certain interrogatories directed to the plaintiffs. Thereafter, on motion of the plaintiffs, the defendant, Harvey P. Bertram Company, Inc. was dismissed as a party defendant. Thereupon, the other defendant, Harvey P. Bertram, filed a motion to dismiss the action on the ground that as one defendant had been dismissed, the action itself should be dismissed. The Court overruled this motion.

On December 1st, 1949, the action came on for trial upon the pleadings “and the evidence, the intervention of a jury being waived, was submitted to the court” and on the issues joined the Court found in favor of the plaintiffs against Harvey P. Bertram for $1536.41. Two days thereafter, the court entered judgment on that finding. Notice of appeal was filed by Harvey P. Bertram from that judgment.

Notwithstanding the recital in the journal entry that evidence was heard, no bill of exceptions was filed to bring such evidence upon the record. This Court, therefore, must assume that the evidence referred to in the journal was in all respects sufficient to sustain all the essential allegations of the petition.

The claim of the appellant is that the allegations of the petition heretofore quoted shows a joint liability and that the voluntary dismissal of one defendant rendered the petition fatally defective against the remaining defendant.

It is our opinion that the appellant’s claims are unfounded. In the first place, there is no express allegation in the petition that the promise sued upon is joint. The dismissal of Harvey P. Bertram Company, Inc., from the action would seem to require that the allegations of the petition be construed as applicable to the sole remaining defendant. It is not alleged that the account stated was made with certain specifically named persons. The allegation is that it was made with “defendants.” The dismissal of one defendant would seem to require that the language be construed to charge that the account stated was made with the sole remaining defendant. By §10213 GC, it is provided that in the interpretation of the various procedural enactments of “Part Third: Remedial” of the General Code “Words in the plural include the singular, and in the singular include the plural number.” It would seem that pleadings prepared to invoke the remedies provided for in that part of the General Code should have an equally liberal interpretation.

Assuming, however, that the petition avers an account stated with the two original defendants jointly, the only effect of the dismissal of one would be to produce a defect of parties. A motion to dismiss is not the method provided for taking advantage of such defect. The Code provides that if such defect appears upon the face of the petition it is ground for demurrer. (Sec. 11309 GC.) If it does not appear upon the face of the petition, the defect should be raised by answer. (Sec. 11311 GC). And if the defect is not objected to in either way, it is waived. (Id.)

We are fully conscious that the name given to a pleading or motion is not controlling. It is the substance and not the caption that determines the operative effect of a filing under the Code. A motion, so called, may be treated as a demurrer. The impossibility of applying that rule here is that the defendant sought by his motion to accomplish a result not attainable by a demurrer. The sustaining of a demurrer on the ground that there is a defect of parties (or for that matter on any other ground) does not produce a dismissal of the action. It is no more than a finding by the court that the petition is legally insufficient as it stands. The case remains pending and the plaintiff may amend his petition so as to cure the defect. Secs. 11360 GC, et seq. The only limitation on the right to amend is that the cause of action shall not be changed. The cause of action stated in this petition is the failure to perform the obligation created by the account stated. Omitting or dismissing one alleged obligor does not change the cause of action against the remaining obligor for his failure to perform the obligation alleged against him. 31 O. Jur., 944, Section 339; McLaughlin v. Barnes, 18 C. C. 623; and Goldberg v. Jordan, 130 Oh St, 1.

Our conclusion is that the Court did not err in overruling the motion to dismiss. As there is no bill of exceptions, the sufficiency of the evidence introduced at the trial to support the judgment is not'presented.

For these reasons, the judgment is affirmed.

ROSS, PJ, HILDEBRANT & MATTHEWS, JJ, concur in syllabus, opinion & judgment.


author: By MILLER, CJ.

text:
    SCHUCKMAN v. RUBENSTEIN et al.
    United States Circuit Court of Appeals, Sixth Circuit.
    No. 10493.
    Decided December 12, 1947.
    Maurice J. Dix, New York City, Henry A. Rocker, Cleveland, for appellant.

      Arthur L. Dougan, Cleveland, J. Malcolm Strelitz, Marion, Jones, Day, Cockley & Reavis, Cleveland, Strelitz, Dowler & Halberstein, Marion, for appellees.
    Before HICKS, McALLISTER and MILLER, Circuit Judges.
   OPINION

By MILLER, CJ.

The appellant, Lucille Sehuckman, appeals from an order dismissing her complaint by which she sought a judgment requiring the defendants-appellees as directors of the Marion Power Shovel Company to declare dividends on preferred stock owned by her in the appellee-company.

The complaint, filed on January 3, 1947, states that the plaintiff, a citizen and resident of New York, is the owner of shares of the 7% preferred stock of the Marion Power Shovel Company, an Ohio corporation; that the individual defendants constitute seven out of nine of the directors of the company; that the defendants, Gracely, Grant, Montrose, Rubenstein and Strelitz are citizens and residents of Ohio, the defendant Hewitt is a citizen and resident of New Jersey, the defendant Pell a citizen and resident of Connecticut, and that the two remaining directors, Diefenbach and Terry, who are not made parties-defendant, are citizens and residents of New York. Jurisdiction is claimed through diversity of citizenship and the amount in controversy. It further alleges that there was an authorized issue of 31,000 shares of 7% preferred stock, of which approximately 13,291% shares have been retired under a plan to put into effect by the company’s directors, leaving presently outstanding 17,778% shares; that under the company’s charter provisions the holders of preferred stock are entitled to receive, when and as declared by the Board of Directors, dividends at 7% per annum payable quarterly, which dividends are cumulative; no dividends were paid on the preferred stock from October 1, 1930 to July 1, 1943, when a 1 3/4% dividend was paid; that from October 1, 1943 to the date of filing the action no dividends were paid, and that dividends on the said preferred stock for 64 quarters remain unpaid amounting to $112 per share; that during the periods in which no dividends were declared or paid on the preferred stock the company had surplus profits and earnings available for said dividends, but that said surplus profits and earnings were diverted to the elimination of the company’s obligations prior to the company’s common stock, which was owned or controlled by the individual defendants and the other directors in order to enhance the common stock and put it on a dividend basis, and that the company’s directors of which the defendants constituted a majority, fraudulently, in bad faith, and wrongfully refused to declare and pay dividends on the preferred stock, except on conditions that would benefit the holders of the company’s common stock to the injury of the holders of the preferred stock. The complaint states that no relief was sought against the directors as individuals but that the action was prosecuted on behalf of the appellant and all other preferred shareholders similarly situated against the directors in their capacity as directors of the company for the purpose of compelling the declaration and payment of dividends on the company’s outstanding 7% preferred stock.

The defendants, Graeely, Montrose, Strelitz, and the Company moved to dismiss the action for the reasons (1) there was no diversity of citizenship between plaintiff and defendants, (2) because the complaint failed to state a claim against the defendants, and (3) because the court lacked jurisdiction over the persons of the defendants in an action of this type. In support of this motion they filed the affidavit of M. Virden, the Secretary of the Company, stating that Montrose’s resignation as a director was accepted on January 6, 1947, prior to any knowledge of the affiant of the institution of the suit, and that the vacancy in the board of directors had not been filled; the affidavit of Rubenstein stating that he was and had been for 10 years a resident of Massachusetts; and the affidavit of Grant stating that he was and had been for 10 years a resident of New York. This motion was sustained on grounds 2 and 3 and the court entered the order dismissing the complaint.

Although the District Court based its ruling on the second and third grounds stated in the motion to dismiss, it appears that the ruling should be sustained also on the first ground stated in the motion, namely, lack of diversity of citizenship. The complaint alleged that the defendant Grant was a resident of the state of Ohio, which furnished diversity of citizenship between him and the plaintiff. This allegation was put in issue by the motion to dismiss and the affidavit filed by the defendants-appellees that Grant was a resident of New York. Upon the issue so raised the burden of proof rested upon the appellant, which burden was not met. It was not only incumbent upon the appellant to properly allege the necessary jurisdictional facts but where the jurisdictional issue was raised to also prove their existence in order to maintain the action. McNutt v. General Motors Acceptance Corp., 298 U. S. 178, 56 S. Ct. 780, 80 L. Ed. 1135; Kvos, Inc. v. Associated Press, 299 U. S. 269, 57 S. Ct. 197, 81 L. Ed. 183; Thomson v. Gaskill, 315 U. S. 442; 62 S. Ct. 673, 86 L. Ed. 951. It is well settled that when federal jurisdiction is grounded on diversity of citizenship such diversity of citizenship must exist between all the plaintiffs on the one hand and all the defendants on the other. Indianapolis v. Chase National Bank, 314 U. S., 63, 62. S. Ct. 15, 86 L. Ed. 47. If one of the defendants is an indispensable party to the action, and his joinder in the suit destroys diversity of citizenship, he must nevertheless be joined as a party with the resulting loss of jurisdiction by the trial court. Baltimore & Ohio R. v. Parkersburg, 268 U. S. 35, 45 S. Ct. 382, 69 L. Ed. 834. Even where a defendant, being a citizen of the same state of which one of the plaintiffs is also a citizen, is not an indispensable party, but nevertheless a propery party, his joinder as a defendant by the plaintiff destroys the necessary diversity of citizenship. Although this defect can be remedied in the trial court by permitting the action to be dismissed as to such defendant, such action can not be taken in the Appellate Court, where the case is controlled- by the record made during the trial. Levering & Garrigues Co. v. Morrin, 2 Cir., 61 F. 2d 115; Dollar S. S. Lines v. Merz, 9 Cir., 68 F. 2d 594; International Ladies Garment Workers Union v. Donnelly Garment Co., 8 Cir., 121 F. 2d 561; Alderman v. Elgin, J. E. R. Co., 7 Cir., 125 F. 2d 971. See also Continental Insurance Co. v. Rhoads, 119 U. S. 237, 7 S. Ct. 193, 30 L. Ed. 380; Halsted v. Buster, 119 U. S. 341, 7 S. Ct. 276, 30 L. Ed. 462. Although this rule does not apply when such a defendant is merely a nominal or formal party, in which cases his joinder may be disregarded, yet in the present case Grant was at least a proper party to the action, regardless of whether or not he was an indispensable party. His joinder as a defendant and the failure to at any time dismiss the action as to him destroys the diversity of citizenship necessary to give the District Court jurisdiction.

Considering, however, the other grounds of the motion, a preliminary question arises with respect to how many of the nine directors are before the court in this action. Appellant claims that four of them, namely, Gracely, Strelitz, Ruben-stein and Montrose, are subject to the court’s jurisdiction. Appellees contend that only Graeely and Strelitz are before the court; that Rubenstein is a non-resident who was not served with process and has not entered his appearance; and that Montrose’s resignation as a director before he was served with process eliminated him as a director defendant. We agree with the appellees.

It is clear that Rubenstein is not before the court unless his appearance was entered by the filing of his affidavit by other defendants in support of their motion to dismiss. Rubenstein did not join in the motion. This does not constitute “submission through conduct,” as claimed by appellant within the ruling in Freeman v. Bee Machine Co., 319 U. S. 448, 453, 63 S. Ct. 1146, 1149, 87 L. Ed. 1059. In that case the defendant was personally served in a state court action in Massachusetts and after its removal to the federal court entered a general appearance and filed a counterclaim. Although he then returned to Ohio and was not physically present in Massachusetts, yet he was still before the court in its disposition of an amended complaint filed after he left Massachusetts. The court properly held that having invoked the jurisdiction of the court by filing the counterclaim, he was subject to its jurisdiction for all phases of the suit. The participation in the trial of a case by a nonresident defendant as a witness for another party does not enter his appearance to the action. First Regular Baptist Church v. Allison, 304 Pa. 1, 154 A. 913. See also Brown v. Van Keuren, 340 Ill. 118, 172 N. E. 1; Cahill-Swift Mfg. Co. v. Hayes, 97 Kan. 740, 156 P. 735.

The acceptance by the board of Directors of Montrose’s resignation as a director on January 6, 1947 terminated his status as a director. It seems clear as a general rule, in the absence of statutory restrictions or limitations in the by-laws of a corporation, that a director may resign and discontinue his status as a director before the expiration of the term for which he was elected. We are of the opinion that §8623-55 GC providing that the Articles of Incorporation may fix the term of office of directors at not more than three years and until the election and qualification of their successor, and that unless the Articles otherwise provide the directors shall hold office for one year and until their successors are chosen and qualified, subject to the provisions relating to the creation of vacancies, does not change the general rule. The Articles of Incorporation are not shown by the record. Such a provision for continuance in office merely means that directors hold over after the expiration of their original terms in the event that their successors have not been elected or have not qualified; it is not designed to prevent a director from relinquishing his office prior thereto if he in good faith so desires. Briggs v. Spaulding, 141 U. S. 132, 154, 11 S. Ct. 924, 35 L. Ed. 662; Fearing v. Glenn, 2 Cir., 73 F. 116, 119; Western Pattern & Mfg. Co. v. American Metal Shoe Co., 175 Wis. 493, 185 N. W. 535, 20 A. L. R. 264; Bartholomew v. Bentley, 1 Oh St 37, 42; Security Investors Realty Co. v. Superior Court of Los Angeles County, 101 Cal. App. 450, 281 P. 709; DuBois v. Century Cement Products Co., 119 N. J. Eq. 472, 183 A. 188. There are some decisions indicating a .possible contrary view, but upon examination they appear not applicable as they deal with situations where the resignation has not been accepted or where service of process against the corporation is the issue. See Ross v. Western Land & Irrigation Co., D. C. S. D. Iowa, 223 F. 680, S. D. Iowa and Annotation on the subject in 20 A. L. R. 267. There is nothing in the record challenging the good faith of the resignation in question.

If it is necessary that the District Court have jurisdiction over a majority of the nine directors in order to direct the payment of a dividend, it follows that its failure to acquire jurisdiction of more than two of the directors requires that the complaint be dismissed. It is settled that failure of the district court to acquire jurisdiction over indispensable parties to an action deprives the court of jurisdiction to proceed in the manner and render a judgment. Minnesota v. Northern Securities Co., 184 U. S. 199, 235, 22 S. Ct. 308, 46 L. Ed. 499; Jones v. Gould, 6 Cir., 149 F. 153, 159; Brown v. Christman, 75 U. S. App. D. C. 203, 126 F. 2d 625, 631, 632. The application of this rule is not affected by the provisions of §50 of the Judicial Code, §111, Title 28 U. S. C. A. That section applies to proper or necessary parties, but not to indispensable parties. Swan Land & Cattle Co. v. Frank, 148 U. S. 603, 611, 13 S. Ct. 691, 37 L. Ed. 577; Ross v. Texas Co., 2 Cir., 23 F. 2d 171. The issue thus presented is whether or not a majority of the board of directors are indispensable parties to the action. An indispensable party is a person who has an interest in the controversy “of such a nature that a final decree cannot be made without either affecting that interest, or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience.” Minnesota v. Northern Securities Co., supra, 184 U. S. at page 236, 22 S. Ct. at page 322.

The declaration of a dividend is largely a matter of discretion with the board of directors and there will be no interference by the courts with the board’s decision unless this discretion has been wilfully abused or the directors have been guilty of bad faith or a neglect of duty. The court itself can not declare a dividend; its power is limited to a judgment in personam against the members of the board. Johnson v. Lamprecht, 133 Oh St 567, 11 O. O. 297, 15 N. E. 2d 127; Dodge v. Ford Motor Co., 204 Mich. 459, 500, 170 N. W. 668, 3 A. L. R. 413; Kales v. Woodworth, 6 Cir., 32 F. 2d 37, 39. The Ohio Statutes, applicable to the defendant corporation, vest the authority of the corporation to act in its board of directors, provide that a majority of the board shall be necessary to constitute a quorum and the act of a majority present at a meeting at which a quorum is present shall be the act of the board of directors, and prohibit the directors from declaring a dividend except under such circumstances as set out in the statutes. §§8623-38, 8623-55, 8623-58, 8623-123b GC. Jurisdiction over only two of the nine directors in this case made it impossible for the court to render an effective decree. At least three other directors were indispensable parties to the suit. Tower Hill Connellsville Coke Co. v. Piedmont Coal Co., 4 Cir., 33 F 2d 703, 706. The opinion in that case correctly differentiates between a case involving the declaration of a dividend and a case of involving the appointment of a receiver. See Krouse v. Brevard Tannin Co., 4 Cir., 249 F. 538. Directors of a corporation act as members of a board, not as individuals; it is their joint action that becomes the act of the corporation. This requires that the directors meet together at the same place and at the same time with the result that the action of the board is directed to facts and conditions existing and considered at that time. It is contrary to settled principles of corporation law that a dividend can be declared by a corporation through the action of a minority of its board being in favor of and voting for such a dividend at one time and other directors, also constituting a minority, being in favor of and voting for a dividend at an entirely different time. Due to different conditions existing at different times and the necessity of joint consideration of the factors involved and the reasons presented by the different directors both for and against the declaration of a dividend, joint action of a majority of the directors at the same time is a necessary requirement. These fundamental principles answer appellant’s contention that judgment should be rendered in this case against the two directors over whom the court has jurisdiction, and that the execution ,of the judgment be held in abeyance until similar judgments can be obtained later against three other directors in suits filed in other jurisdictions. The indispensable party rule referred to above embodies the idea that all indispensable parties must be joined in one suit, in which one judgment determines the issue involved.

Appellant claims that her complaint also states a cause of action against the corporation alone in seeking a recovery for dividends previously declared in common stock but not paid, and that in such an action the directors are not necessary parties. If the complaint alleges such a cause of action her position is well taken. General Investment Co. v. Lake Shore & M. S. R. Co., 6 Cir., 250 F. 160, 170 through 173, 6 Cir., 269 F. 235, 260 U. S. 261, 43 S. Ct. 106, 67 L. Ed. 244. But we do not find any allegations in the complaint alleging the prior declaration of a dividend which has not been paid. It merely states that the corporation’s charter was amended about April 3, 1946 by increasing the company’s common stock from 100,000 to 400,000 shares, under a plan by which one-half of the outstanding 7% preferred stock was exchanged into common stock and retired. The terms of the charter amendment are not set out; the complaint does not allege that any dividend of common stock was declared or that the exchange of preferred stock for common stock was compulsory. The reasonable inference from all the allegations of the complaint is that the company made an offer of exchange of common stock for preferred stock with unpaid accumulated dividends, which some of the preferred stockholders accepted and which others, including the plaintiff, did not. The complaint specifically prays for the declaration of a dividend; not for the payment of a dividend already declared. The present contention- is obviously an afterthought.

On March 25, 1947, while the motion to dismiss was pending, the appellant filed a motion for leave to file a supplemental complaint, in which it was alleged that the company had called its annual stockholders meeting to be held in Marion, Ohio, on April 7, 1947, for the purpose among others, of effecting a reduction of the company’s capital from $5,-001,186.05 to $3,860,050 by changing the outstanding common shares without par value into common shares with the par value of $10 each; that the proposed reduction would take away $1,151,136.05 capital, which in the event of liquidation or dissolution of the company would safeguard the preferred stock, and would enable the payment of dividends on the common stock to the loss and injury of the preferred stockholders. It prayed that the company be restrained from making the proposed change. The District Court denied the motion at the same time it ordered the original complaint dismissed, of which ruling the appellant also complains. Rule 15(d), Federal Rules of Civil Procedure, 28 U. S. C. A. following section 723c, provides that the court may upon such terms as are just permit a party to serve a supplemental pleading setting forth events which have happened since the date of the pleading sought to be supplemented. See Hillgrove v. Wright Aeronautical Corp., 6 Cir., 146 F. 2d 621. The granting or refusing of leave to file such supplemental pleading rests in the discretion of the trial court, and is not reviewable unless there has been a gross abuse of such discretion. General Investment Co. v. Lake Shore & M. S. R. Co., supra (6 Cir., 250 F. 160, 177, Id., 260 U. S. 261, 282, 283, 43 S. Ct. 106, 67 L. Ed. 244.) The original complaint attempted to proceed against the directors to compel the declaration of a dividend; the supplemental complaint was directed against the corporation to enjoin action on its part, and was made while the motion to dismiss was under submission. We do not believe that the trial judge abused the discretion resting in him when in dismissing the complaint he also denied the motion to file a supplemental complaint alleging a different cause of action against a different defendant. Such a claim can be properly litigated in' a different suit if the appellant so desires.

The order dismissing the. complaint does not expressly state that it is dismissed without prejudice to a later consideration of the issue by a court acquiring jurisdiction, although no doubt that is its effect. In order that it be so understood, the decree will be modified so as to dismiss the complaint without prejudice. Swan Land & Cattle Co. v. Frank, supra, 148 U. S. 603, 612, 13 S. Ct. 691; General Investment Co. v. Lake Shore & M. S. R. Co., supra, 6 Cir., 250 F. 160, 173.

The judgment of the District Court so modified is accordingly affirmed.