author: By McNAMEE, J: HURD, J.

text:
    LUMBERMAN’S MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. F. Z. CIKRA, INC., Defendant-Appellant.
    Ohio Appeals, Eighth District, Cuyahoga County.
    No. 21627.
    Decided April 10, 1950.
    Klein & Diehm, Cleveland, for plaintiff-appellee.
    McKeehan, Merrick, Arter & Stewart, Cleveland, for defendant-appellant.
   OPINION

By McNAMEE, J:

This appeal of defendant appellant challenges the correctness of the judgment of the Common Pleas Court awarding damages to plaintiff in the sum of $2,000.00 and rests upon the claim that pursuant to the terms of a purported limitation of liability clause in the bailment contract plaintiff is entitled to judgment not to exceed $100.00.

This action was brought by plaintiff as subrogee of Olive L. Trebing, its assured, to recover the value of a fur coat that was lost or stolen while in the possession of defendant.

The salient facts are: — In the Spring of 1945, Olive L. Trebing had her mink coat remodeled extensively by defendant at a cost to her of more than $600.00. On completion of this work Mrs. Trebing stored the coat with defendant for the summer. In the early Winter of 1945, she obtained the coat from defendant. For several years Mrs. Trebing had carried insurance on her coat with Lumberman’s Mutual Insurance Company. At the time of its withdrawal from storage in 1945, she requested defendant to re-appraise the coat for insurance purposes. This was done and defendant placed a value thereon of $2,000.00 for which amount Mrs. Trebing reinsured the coat with plaintiff. Thereafter Mrs. Trebing complained to defendant about the fit of the coat around the shoulders. Defendant agreed to make the necessary alterations but suggested that this work be deferred until the coat was brought in for storage the following Spring.

On March 27, 1946, Mrs. Trebing delivered her coat to defendant for the purpose of obtaining the desired alterations and to arrange for its storage until the late Fall or early Winter of that year. On this occasion or a few days later H. J. Cikra made certain preliminary adjustments to the coat by means of pins and then discussed the matter of storage with Mrs. Trebing. Knowing that Mrs. Trebing had insured the coat for $2,000.00 with plaintiff, Cikra suggested that she avoid further insurance expense and place a minimum valuation of $100.00 on the coat for storage purposes at a cost of $2.00. To this Mrs. Trebing agreed. A few days thereafter defendant mailed to Mrs. Trebing a storage receipt which contained a brief description of the coat and specified the owner’s valuation at $100.00. In addition the following pertinent terms were embodied in the receipt:

“FUR STORAGE RECEIPT AGAINST FIRE, MOTH AND ALL OTHER LOSS OR DAMAGE
(except Action of Time)
Subject to the following terms and conditions:
1. The liability for loss or damage shall in no event exceed the valuations specified. * *

At the time of the delivery of the coat to defendant in 1946, the work room located on the second floor of defendant’s establishment, was being redecorated. This necessitated a delay in the performance of the work of altering the coat. During this period of delay the coat was placed in one of the vaults maintained by defendant in the basement of the store. When the redecoration of the work room was completed the coat was taken from the vault in the basement to the second floor and the alterations made. The coat was then placed upon a dumb waiter connecting the work room ■on the second floor with the storage vault in the basement. It was not seen thereafter by any responsible person connected with defendant company.

In November, 1946, Mrs. Trebing requested the withdrawal of her coat from storage. Being unable immediately to find the coat, defendant requested and obtained additional' time to search all of its storage vaults. However, all efforts to find the coat were fruitless. Thereafter Mrs. Trebing notified plaintiff of her loss. On January 31, 1947, plaintiff paid her claim of $2,000.00 in full and took a subrogation receipt in exchange. As subrogee plaintiff then instituted suit against defendant to recover the sum of $2,000.00 paid its insured.

Plaintiff’s claims are three folds: (a) that defendant converted the coat; (b) that the coat was never placed in storage thereby rendering the limitation of liability clause inapplicable and (c) that there were two separate contracts between the assured and the defendant — one for alteration of the coat— and a separate contract for storage.

Asserting that the coat was lost through defendant’s negligence while performing the contract for alteration, plaintiff contends that by reason thereof, the limitation of liability ■clause in the bailment contract had no application. This latter view was adopted by the trial judge who entered judgment for plaintiff for the full amount of the loss.

The plaintiff did not make out a case of conversion by the defendant. It is a fair inference from the evidence that the coat probably was stolen by an employee or business visitor of the defendant, but there is a complete absence of evidence tending to show defendant’s involvement in any wilful wrongdoing or any conduct on its part amounting to a conversion of the property. In adopting the view that the limitation of liability had no application for the reason that the coat was lost during the performance of a separate contract for its alteration, the trial court relied upon dicta in the opinion of this court in Aetna Casualty and Surety Company v. Higbee Company, 80 Oh Ap 437. It was held in that case that the terms of the contract limiting liability did not apply because of the bailee’s conversion in delivering the coat to a third person without the express' or implied consent of the bailor. There was no express holding that two separate contracts were executed. Upon this subject the court expressed the view that there was evidence tending to establish a subsequent and separate contract for repairs.

In considering the effect of such separate contract, the court said:

“It seems, therefore, if it be established that the contract for repairs was separate and distinct from the storage contract, that the limitation of liability had no application to such contract for repairs.”

The foregoing statement must be considered in the light of the following language appearing in the concluding portion of the opinion:

“On the other hand, if the right to accomplish the cleaning of the fur coat by a subcontractor was within the terms of the contract, then such provision as to limitation of liability would apply.”

In the instant case, there was a bailment contemplating that defendant would alter the fit of the coat while it was in its possession as bailee. “Whether a bailment for which the bailee is paid involves the performance of work upon the chattel or merely storage of it the fundamental principles are the same unless the bailment is to an innkeeper or common carrier.” Williston on Contracts, Vol. 4, Page 29-21, Sec. 1045.

Whether there were two separate contracts, it is unnecessary to inquire. If there were, the evidence is clear that the contract for alterations had been completed and the coat placed upon the dumb waiter for réturn to storage in the basement whence it had been withdrawn. It is to be remembered that the storage charges were fixed at the minimum fee of $2.00 and the valuation specified as being $100.00 for the reason that the bailor was fully protected against loss by the insurance which she carried on the coat. She was as fully protected against loss while the coat was being altered in the work shop of defendant as when it was in one of defendant’s storage vaults. It does violence to the agreement of the parties to suppose that in these circumstances they intended the limitation of liability clause to be effective if loss of the coat occurred while it was in one part of the bailee’s store, but that such limitation was not to be applicable if the loss occurred in another part of the bailee’s premises. Appellee contends that the finding of the trial court that the loss of the coat occurred while the contract for its- alteration was being performed, cannot be disturbed because of the absence of any assignment of error that this finding is against the weight of the evidence. This argument is without merit. There is a complete lack of evidence to support such finding. As noted above, the coat was last seen after the alteration was completed. It was then on the dumb waiter and on its way to storage. Precisely when it was lost, or how, are matters solely within the realm of conjecture. The controlling fact is that the defendant breached its bailment contract by failing to deliver the coat upon demand or to submit any satisfactory explanation for such failure.

It is a fair inference from all the evidence that the coat was lost through the negligence of defendant. The crucial question to be determined is whether the limitation of liability clause in the bailment contract is efficacious to limit the bailee’s liability for its own negligence to the specified valuation of $100.00. Whether a bailee may limit his liability for negligence is a subject upon which courts have expressed a variety of divergent and conflicting views. However, the authorities are uniform in holding that the common law duties of a bailee may be modified by special contract. There is no disagreement on the proposition that by special contract the common law duty to exercise ordinary care may be enlarged, to impose upon the bailee the obligation of an insurer. This is the rule in Ohio, 5 O. Jur. 113, Sec. 21; Triangle Film Co. v. Saks, 7 Oh Ap 458; Savin v. Butler, 111 Oh St 695. See also, 6 Am. Jur. 276, Sec. 181.

But, where it is sought by special contract to limit the liability of a bailee for loss occasioned by his negligence to an amount less than the true value of the bailed property, the courts scrutinized the transaction with a critical eye to determine whether such an agreement contravenes public policy.

In Agricultural Insurance Company v. Constantine, 144 Oh St 275-283, the Supreme Court, declared invalid printed conditions on a parking ticket that were broad enough to exculpate the bailee -for any wanton or wilful misconduct of the bailee, his agents or servants and cited with approval the general rule stated in 6 Am. Jur. 270, Sec. 176 as follows:

“It is now apparently well settled that, a bailee for hire cannot, by contract, exempt himself from liability for his own negligence or that of his agents or servants (Franklin v. Southern Pacific Co., 203 Cal., 680, 265 P., 936, 59 A. L. R., 118; Hotels Statler Co., Inc., v. Safier, 103 Oh St, 638, 134 N. E. 460, 22 A. L. R., 1190; Scott Auto & Supply Co. v. McQueen, 111 Okla., 107, 226 F., 372, 34 A. L. R. 162; Simms v. Sullivan, 100 Ore. 487, 198 F., 240, 15 A. L. R., 678; Sporsem v. First National Bank of Poulsbo, 133 Wash., 199, 233 P., 641, 40 A. L. R., 854). Contracts limiting liability for negligence in bailments for hire in the course of a general dealing with the public are generally regarded as against public policy. Union Pacific Rd. Co., v. Burke, 255 U. S., 317, 65 L. Ed., 656, 41 S. Ct., 283; England v. Lyon Fireproof Storage Co., 94 Cal. App., 562, 271 P., 532, Denver Union Terminal Ry. Co. v. Culliman, supra.”

It is to be noted that the foregoing rule against limitation of liability for negligence is confined to those “bailments for hire in the course of a general dealing with the public.” Ordinarily, such bailments involve those whose principal business is that of bailees and who deal with the public on a uniform basis as evidenced by conditions printed on tokens, receipts or signs posted in places of business. Included in this category are owners of parcel check rooms, parking lot operators, garage men and public warehouse men. See 175 A. L. R. 111-112. it is considered that between these professional bailees and those who deal with them there exists a disparity of bargaining power that tends to compel acceptance by the bailor of the terms stipulated by the bailee. The necessity of being required to deal with such a bailee, or not at all, is a factor frequently determinative of the lack of equality of bargaining power between the bailor and bailee.

Bailment contracts with professional bailees of the class herein above noted are affected with a public interest and there is full warrant for a judicial inquiry whether public policy is violated by the terms and stipulations thereof. Contracts are deemed to be contrary to public policy because of their “mischievous tendency as regards the public.” In 9 O. Jur. 347, Sec. 132, it is declared — “To be against public policy a contract must contravene public right or the public welfare.” But, where the storage of goods is merely incidental or auxiliary to the principal business of bailees, considerations of public policy do not apply. Ordinarily, in contracts with this latter class of • bailees, equality of bargaining power exists and bailors may act, free of the pressures of compulsion of necessity. Where the parties stand on equal footing and no public interest is effected, the validity of bailment contracts is to be determined by those considerations that apply in all private contracts between individuals or corporations. This is the basis of the rule that permits an ordinary non-professional bailee to limit his liability for negligence provided the terms of the contract are fully understood and freely consented to by the bailor.

The dictum in Hotels Statler v. Safier, 103 Oh St 638-646, is not in conflict with this rule. In that case the court said:

“Ordinarily in bailments the parties may diminish the liability of the bailee by special contract, provided the contract is not in violation of law or of public policy and does not relieve the bailee of negligence. (6 Corpus Juris, 1112.)”

A fair construction of the foregoing statement warrants the conclusion that the court merely stated the rule that prohibits a special contract exempting the bailee from the duty of exercising ordinary care. Confirmation of the correctness of this view is implicit in the language of the opinion immediately following that above quoted where the court said:

“But in the instant case no such special contract was made, and in the absence of a special agreement the law of bailments fixes the degree of the bailee’s liability.”

In the Statler Hotel case the liability of the bailee rested upon its failure to exercise due care. Accordingly the statement in the court’s opinion that “in the absence of a special agreement” damages were to be determined by the law of bailments, implies fairly that if a special contract limiting liability had been made it would have been given effect.

Excluding those cases in which questions of notice and consent are involved, there is no case in this state to which our 'attention has been directed that has not upheld the validity of terms in a bailment contract limiting the liability of the bailee to a specified amount. See Pickering v. Warehouse Co., 114 Oh St 76; Laurens v. Jenney, 77 Oh Ap 291.

In other cases where courts refused to give effect to terms of a contract limiting the liability of a bailee because the evidence disclosed that the loss was due to the bailee’s conversion there is nevertheless a clearly implied recognition of the validity of the terms of a special contract limiting liability for loss occasioned by negligence of the bailee. See Higbee Co. v. Casualty Co., 80 Oh Ap 437; Conkle v. G. K. Scott Co., 147 Oh St 487.

The first paragraph of the syllabus of the Pickering case reads:

“Terms and conditions in a warehouse receipt and contract, which limit the responsibility of the warehouseman for any article or package listed on such receipt while in such warehouse or being carted to or from the same by it to the sum of $25.00, unless the value thereof is made known at the time of storing, noted on such- receipt, and the payment of a higher storage rate therefor, do not constitute an exemption from liability for want of due care, but constitute a reasonable and enforceable method of fixing a due proportion between the amount for which the warehouseman becomes responsible and the charges collected by him, and for protecting the warehouseman against extravagant valuations in case of loss.”

In the Pickering case the warehouseman had no knowledge of the true value of the goods at the time the bailment contract was executed. In that respect the Pickering case is distinguishable on the facts from the case here under review where the bailee at the time of the storage of the coat had knowledge of its true value. There is authority in other jurisdictions holding such knowledge to be an invalidating factor of bailment contracts that limit the liability of the bailees to an amount less than the true value of the property. See Wilson v. Crown Transfer & Storage Co., 201 Cal. 701-258 Pac. 596; England v. Lyon Fireproof Storage, 94 Cal. App. 562. But, these cases involve bailments with professional and public bailees.

It is sometimes asserted that the limitation of a bailee’s liability for a loss to an amount less than the true value of the property is an inducement to carelessness on the part of the bailee and that such a limitation tends to weaken the bailee’s sense of obligation to perform the common law duty to exercise ordinary care. Such considerations are not without merit particularly in those cases affected with a public interest. However, in private contracts of ordinary bailment, such considerations are more than counter-balanced by the competitive pressures of business which militate against the violation of duties imposed by law for the protection of the bailor’s property.

The matter is persuasively stated in 86 U. of P. Law Review 777, as follows:

“Liability, resulting in money damages, is certainly not the only deterrent to negligence on the part of bailees. A more important factor encouraging due care on the part of bailees will be found in the pressure of daily competitive business. It seems unlikely that contemporary business men would take advantage of the immunity clause by careless treatment of their customers’ property. Moreover, whatever tendency to harm the public lurks in the recesses of such provisions must be balanced against a strong public attitude favoring freedom of contract.”

In the case under review, the parties to the bailment contract had a full and complete understanding of the precise terms thereof. The terms of the contract were fair — the storage charge of $2.00 was fairly proportional to the specified valuation and no public interest was involved. In these circumstances it would be an unwarranted and officious interference with the principle of “freedom of contract” to hold the limitation of liability clause invalid. Courts have no right to make contracts for the parties, neither do they have the right to invalidate agreements fairly and openly arrived at unless they violate positive law or contravene the established and plainly recognizable principles of public policy.

For the foregoing reasons the judgment of the Common Pleas Court is modified and final judgment rendered for plaintiff against defendant in the sum of $100.00. As thus modified, the judgment is affirmed.

SKEEL, PJ, concurs.

HURD, J, dissents.

HURD, J.

dissents.

I respectfully dissent from the majority opinion because upon a review of the evidence as disclosed by the bill of exceptions, it appears to me that this case turns primarily on a question of fact. The trial court found as indicated by its opinion that these were two separate contracts. I think that this finding is in accord with the evidence and certainly not contrary to the manifest weight of the evidence. As it appears to me there were here two separate contracts in respect of the bailment of the garment in question; one for repairs (Locatio rei operis fociende) and the other for storage only (Locatio rei Custodiae). In respect of the bailment for storage there was a contract limiting liability, while in respect of the bailment for repairs there was no _ such contract. The garment was lost before it ever reached the place of storage, so that the contract limiting liability for negligence has no application. That the limitation of liability related to storage only is indicated by the title of the storage receipt, viz.:

“FUR STORAGE RECEIPT AGAINST FIRE, MOTH AND ALL OTHER LOSS OR DAMAGE (Except Action of Time) ”

On the admission of the defendant as appears in the record, it was not the custom or practice of the defendant to issue a storage policy limiting liability when a garment was delivered for the purpose or repair or alteration, and none was issued covering the repairs or alteration in this case.

It clearly appears from the record that the contract for remodeling had its inception in the Spring of 1945 when defendant company undertook to remodel the coat at a cost to the owner of over six hundred dollars. At that time it was agreed that remodeling had not been done to the satisfaction of the owner and that to complete the job satisfactorily it would be necessary to alter the garment to fit properly around the shoulders. It was then agreed that the coat would be taken out for wear during the winter and returned in the Spring to complete the repairs and for cold storage during the summer season. Accordingly, the coat was brought in during the month of March, 1946 for two purposes: (1) to complete the repair in accordance with the agreement for which payment had already been made; and (2) for cold storage after the repair was completed.

The record shows that at the time of the delivery of the coat to the bailee in 1946, the work room on the second floor of bailee’s place of business was being redecorated and that the coat was temporarily placed in a downstairs vault pending completion of the work of redecorating. It was then that the coat was taken from the vault in the basement to the work shop on the second floor for the purpose of completing the remodeling and repairs of the coat in accordance with the agreement of the parties previously made as indicated hereinabove.

The record further shows that when the repairs were completed the coat was placed on the dumb waiter at the work room level for transport to a different building, namely the Sheriff Street Market House, there to be placed in cold storage. As stated by the trial court, the trail of the coat stopped at this point. Consequently, it was never given a “rod number” and never reached cold storage.

The trial court found that it was in the performance of this contract for remodeling and repairs that the loss of the garment occurred and that, therefore, the contract of limitation of liability for storage had no application.

The evidence indicated that the defendant bailee in connection with its business of selling and repairing fur also engaged in the storage of furs for hire, hence we have here the two classes of bailment hereinbefore described.

In the case of Aetna Casualty & Surety Co. v. Higbee Co. 80 Oh Ap 437, this court had before it a factual situation somewhat analogous to the facts in the instant case. While the syllabus of that case deals primarily with the proposition of conversion, yet the issue of separate contract appears in that case as is shown by the language of Skeel, J, speaking for a unanimous court, commencing at page 445 as follows:

“One other consideration must be given to the facts as applicable to the limitation of liability contained in the storage contract between The Higbee Co. and Mrs. Goldsmith. The storage contract was concluded on May 16, 1944, the coat having been delivered to defendant on May 2, 1944. The contract of storage of May 16, 1944 wherein defendant agreed to store the coat for $2.00 contained the limitation of liability of $100.00 for each article stored. Subsequent to the date of this contract, to-wit, Aug. 30, 1944, for the consideration not to exceed $26.00, The Higbee Company agreed to make certain repairs and to clean the coat, which charge was to be in addition ‘to sales tax and the regular storage charge’. The evidence therefore tends to establish that the contract for repairs was a new contract entered into entirely independent of the contract for storage. It was in the performance of this contract that The Higbee Company delivered the coat to The New Process Fur Cleaning Company from whose possession it was stolen. It seems therefore if it be established that the contract for repairs was separate and distinct from the storage contract, that the limitation of liability had no application to such contract for repairs.”

As stated in this case the trial court found that the contract for repairs was separate and distinct from the storage contract and that the limitation of liability had no application to the contract for repairs. Inasmuch as the trial court also found, very properly it seems to me, under the evidence, that the loss did not occur under the contract or bailment of storage but under the contract for alterations and repairs, I cannot conclude that this finding was contrary to the manifest weight of the evidence. It is therefore my view that the judgment should be affirmed.


source: Caselaw Access Project

author: By McNAMEE, J:

license: Public Domain

text:
    MINNING SR., Plaintiff-Appellee, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant-Appellant.
    Ohio Appeals, First District, Hamilton County.
    No. 7220.
    Decided July 13, 1950.
    Robert G. McIntosh, Cincinnati, for plaintiff-appellee.
    Marble & Vordenberg, Cincinnati, for defendant-appellant..
    (DOYLE, PJ, of Ninth District: McNAMEE, J, HURD, J, of Eighth District, sitting by designation in First District.)
   OPINION

By McNAMEE, J:

In this appeal on questions of law, defendant seeks a reversal of a judgment of the Court of Common Pleas of Hamilton County in the sum of $1,000.00, in favor of the plaintiff, as the alleged beneficiary of a policy of insurance upon the life of his minor son, Wilbur G. Minning.

Five grounds of error are assigned, but a determination whether the judgment is contrary to law will be dispositive of this appeal. From the agreed statement of facts we learn that in July, 1939, upon the application of the plaintiff, the defendant company issued two policies of insurance upon the lives of the plaintiff’s minor sons, namely, Adrian C. Minning Jr., and Wilbur G. Minning. Each policy was in the face amount of $500.00, and provided that upon receipt of proof that the death of the insured occurred as a result, directly and independently of all other causes, of bodily injuries effected solely through external and violent means, the company would pay an additional sum equal to the face amount of each policy.

Plaintiff, Adrian C. Minning Sr., was designated as beneficiary of each policy. Each of the policies reserved to the respective insured (the sons) the right to change' the beneficiary and each policy provided further that upon receipt of written application by the respective insured, accompanied by a surrender of the policy, the company would pay to the insured the cash surrender value of the policy. The premiums on the policies were paid or provided by plaintiff until September, 1946, at which time after paying the premiums to July, 1947, he notified the insurance company and his two sons that he would not thereafter pay any premiums. About this time plaintiff separated from his wife and family and on October 29, 1946, his wife who was the mother of the respective insured, . filed suit for divorce. Sometime later, a decree of divorce was granted to plaintiff’s wife who was awarded custody of the minor children. The court in the divorce decree ordered plaintiff to surrender to his wife “the insurance policies carried on their minor children.” At the time of the divorce decree, Adrian C. Minning Jr. was 19 years of age and Wilbur G. Minning was 18 years of age.

On January 14, 1947, the respective insured, Adrian c. Minning Jr., and Wilbur G. Minning, each made application to the defendant company for the cash surrender value of the policies. On Jan. 28, 1947, the defendant company issued its check for $65.76 in payment of the cash surrender value of the policy on the life of Adrian C. Minning Jr. This check was payble to the order of Adrian C. Minning Jr. and Adrian C. Minning Sr. and was delivered to the son. The check was endorsed by both payees and cashed by the insured, Adrian C. Minning Jr., and in due course was paid by defendant.

On Jan. 29, 1947, defendant issued its check in the sum of $64.72 in payment of the cash surrender value of the policy on the life of Wilbur G. Minning. This check was made payable to the order of the insured and his father Adrian C. Minning Sr. It was delivered to the insured, Wilbur G. Minning who alone endorsed and cashed it. The check was paid by defendant. About two months thereafter, on Mar. 27, 1947, both Adrian C. Minning Jr. and Wilbur G. Minning met death by drowning.

Plaintiff thereafter demanded payment of the insurance as beneficiary of the policies. This demand was refused by defendant on the ground that the policies had been surrendered and cancelled and were not in force at the time of the death of the respective insured. Thereupon, plaintiff as the alleged beneficiary of both policies, instituted suit thereon praying judgment in the sum of $2000.00. A jury was waived and the cause submitted to the trial judge who entered judgment for defendant on the policy that had been surrendered by Adrian C. Minning Jr. No appeal from that judgment was taken by the plaintiff.

On Plaintiff’s claim in respect of the policy issued upon the life of Wilbur G. Minning, the trial court rendered judgment in plaintiff’s favor in the sum of $1000.00, for the apparent reason that the check issued in payment of the cash surrender value of the policy was not endorsed by plaintiff. It is from this judgment that defendant appeals.

Although the record is silent as to the reasons that impelled the trial court to hold for the defendant on one policy and for plaintiff on the other, it is fairly to be inferred that the trial judge was of the opinion that plaintiff had a vested interest in the policies and that the same could not be surrendered and cancelled without his consent. Presumably the trial court found evidence of such consent in the endorsement by plaintiff of the check issued in payment of the cash surrender value of the one policy, and a lack of such consent in the absence of plaintiff’s endorsement on the other check.

It is urged by plaintiff in support of the trial court’s judgment in his favor that he had a vested interest in the policy issued upon the life of his son, Wilbur G. Minning, and that the attempt of the latter to cancel the policy without plaintiff’s consent was ineffective. We cannot concur in this view.

The policy was a contract between the defendant company and the insured, Wilbur G. Minning. By its express terms there was reserved to the insured the right to change the beneficiary. It is the settled law of this state that where a policy of life insurance reserves to the insured the privilege ■of changing the beneficiary, no vested right is acquired by a designated beneficiary prior to the death of the insured.

Oetting v. Sparks, 109 Oh St 94; Baxter v. Old City National Bank, 46 Oh Ap 533.

The first paragraph of the syllabus of Katz v. Ohio National Bank, 127 Oh St 531, reads:

"‘Under life policy reserving to insured privilege of changing. beneficiary, named beneficiary takes expectancy during insured’s life which becomes vested only upon insured’s death.”

See also: Atkinson v. Metropolitan Life Ins. Co. 114 Oh St 109.

Also, by the terms of the policy the insured possessed the right to surrender the same, and obtain the cash surrender value thereof. The exercise of this right was not conditioned upon the consent or acquiescence of the plaintiff, or upon any other condition except compliance by the insured with the procedural requirements of a written application and a surrender of the policy. Except for these requirements, the right of the insured to obtain the cash surrender value was absolute. The right under a life insurance policy to surrender policy, and receive its cash surrender value, is an option to the insured to accept a continuing offer on the part of the insurer and, when exercised, fixes the rights of the parties without further action on the part of the insurer.

Gram v. Mutual Life Insurance Company of New York 86 New York Supp. (2d) 372; Pacific States Insurance Co. v. Brice 67 Fed. (2d) 710; Northwestern Mutual Life Ins. Co. v. Joseph 103 S. W. 317; U. S. v. Garland 122 Fed. (2d) 118.

In Lipman v. Equitable Life Assurance Society, 58 Fed. (2d) 15-18, the court said:

“Since the insured had the option to surrender her policy and take the cash surrender value on October 10th, there can be no question but that the rights of the parties became fixed and insured became entitled to the cash surrender value and nothing more, when she exercised the option. It was not necessary that the defendant do anything. There was a meeting of the minds of the parties when insured accepted the continuing offer of the Company evidenced by the option. Pequot Mfg. Co. v. Equitable Life Assurance Society, 253 N. Y. 116; 170 N. E. 514; McCormick v. Traveler’s Ins. Co. 215 Mo. App. 258; Ingram Johnson v. Century Ins. Co. 1909. Ct. of Sessions cases, 5th Series, Scotland, p. 1032.”

Although Wilbur G. Minning was but eighteen years of age no question is or can be raised successfully that he was incompetent by reason of his minority to enter into a binding contract for the surrender of the policy.

Sec. 9392-1 GC provides that minors of the age of fifteen years and over shall not, by reason of their minority, be incompetent to contract for insurance on their lives,

“or for the surrender of such insurance, or to give a valid discharge for any benefit accruing or for money payable under the contract, or to contract for the payment of a policy loan.”

It is apparent that in applying for the policy in 1939 plaintiff was acting for and on behalf of his sons. . In procuring the insurance and paying the premiums thereon from July 1939 to September, 1946, plaintiff was undoubtedly motivated by a natural parental concern for his son’s welfare. Plaintiff recognized that he had no vested interest in the policy by reason of his status as a revocable beneficiary thereof. This is evidenced by his conduct in September, 1946, when upon separation from his family he indicated his purpose of refusing further to bear the burden of maintaining his son’s life insurance in force. Plaintiff was without power to surrender the policy and obtain the cash value thereof. The contract of the company was with the son. The son alone possessed the right to surrender the policy for its cash surrender value. Plaintiff’s possession of the policy and his payment of the premiums to July, 1947, invested him with no rights in addition to his mere expectancy as a revocable beneficiary. He was divested of possession of the policy by the decree of divorce.

The insured upon obtaining possession of the policy was then in a position to and did exercise his option to obtain its cash surrender value. Upon the exercise of this option by insured, the contract of insurance was cancelled and there was created the relationship of debtor and creditor between the insurer and the insured, for the amount of the cash surrender value of the policy.

That the check of the company was made payable to both the plaintiff and the insured is of no importance, nor is it material that the check was endorsed only by the insured. The inclusion of plaintiff’s name as one of the payees of the check conferred no right upon him, and by its waiver of his endorsement the company incurred no liability to plaintiff.

For the reasons hereinabove set forth the judgment of the Court of Common Pleas is reversed and final judgment is rendered for the defendant appellant herein. Exceptions noted.

DOYLE, PJ, HURD, J, concur.


text:
    ARMOUR & CO., Appellant, v. GLANDER, Appellee.
    Board of Tax Appeals.
    No. 16296.
    Decided January 17, 1950.
    Dargusch, Caren, Greek & King by John M. Caren, Columbus, for appellant.
    Herbert S. Duffy, Atty. Genl., W. H. Annat, Asst. Atty. Genl., Columbus, for appellee.
   OPINION

This is an appeal from a final order of the Tax Commissioner made on June 6, 1949, wherein an application for review and redetermination of a previous order made on May 12, 1949, was denied and the former order was permitted to stand unmodified. The cause now comes on for further and final consideration upon the Commissioner’s transcript, the notice of appeal, the transcript of the evidence adduced at a hearing had before the Board and an attorney examiner on October 7, 1949, oral arguments and brief of counsel. The appeal concerns the validity of a tax assessment against appellant for the year 1946 as a freight line company under the provisions of §§5416, 5463 and 5468 GC, which tax the proportion of the capital stock of a freight line company represented by its transitory rolling stock owned and used in Ohio.

It is maintained that the Tax Commissioner erred in his order or orders complained of, and that his finding presents three questions of law. Each query, with its accompanying operative facts, will be separately stated and considered. The facts are found within the Commissioner’s order, the transcript, a stipulation between counsel and record made. They are not in dispute.

First: Is a meat packing company “engaged in the business of operating cars for the transportation of freight” when it owns and uses refrigerator cars exclusively for making inter-company shipments of its own perishable products and for making deliveries of its products to customers?

Appellant is an Illinois corporation with its principal place, of business located in Chicago. It purchases, slaughters and sells at wholesale and delivers its products to purchasers. It has 34 packing plants located strategically to sources of supply. It maintains 251 refrigerator warehouses located near consuming centers, five of which are located in Ohio. Its products are shipped in refrigerator cars from its packing houses to its branch houses and customers. It also makes distribution from its packing plants and branch houses to customers directly by refrigerated motor trucks. During the years 1912 to 1934 Armour built or acquired 4,635 refrigerator cars at a cost of $8,983,184.32 which it owned and possessed on April 30, 1946, and which had a book value of $1,130,383.54 on said date. This book value was produced by deduction from cost price of claimed depreciation and destroyed cars. Its rolling stock was never leased or loaned to any other enterprise, but was used solely in the distribution of its own products. Armour’s investment in refrigerator cars on April 30, 1946, represented less than % of 1% of its total assets. Its total capital on May 1, 1946, as shown by its balance sheet, was $324,794,254.00. Armour and Company within itself maintains a division that is called Armour Car Lines which operates that branch of its business. It owns or owned considerable property, both real and personal, in Ohio in 1946 upon which it paid all taxes levied and assessed. This did not include, however, its refrigerator railroad cars. It had paid its franchise tax and was authorized to do business in Ohio. During 1946 its cars operated within and over and across the state. It made report of its rolling stock in 1946 as a freight line company.

Upon these facts appellant asserts that it was not engaged in the business of operating cars within the ordinary meaning of the language found in §5416 GC. It is said that its principal business and concern is the slaughtering of livestock and selling its packing house products at wholesale. It says that inter-company shipments and delivery to customers is but a fragmentary part of its packing business and that its refrigerator cars are mere tools of its trade and not subdivisions of its business. As a matter of precedent it relies almost entirely upon the reasoning and conclusion found in Southern Express Co. v. R. M. Rose Co., 124 Ga. 581. It, in substance, urges that it is one of three like enterprises (The Pullman Company and Wilson and Company), the latter of which owns and operates refrigerator cars in and across Ohio for its convenience and profit and which do not come within the scope, purpose, meaning and intent of the General Code sections under consideration. If this be true, then their migratory rolling stock (refrigerator cars) is not subject to this imposed tax in Ohio, but is tax exempt by reason of legislative omission. An examination of the Georgia case discloses that nothing said therein is responsive to the issue herein presented. Whatever is said in that case concerns the right, by ordinance, of a chartered city to ordain that delivery of liquor by a common carrier is a separate business subject to a license tax.

Sec. 5416 GC provides, in part, in paragraphs 1 and 6 thereof, that:

“Any person or persons, firm or firms, co-partnership or voluntary association, joint stock association, company or corporation, wherever organized or incorporated:
“When engaged in the business of operating cars for the transportation of freight, whether such freight is owned by such company, or any other person or company, over any railway line or lines in whole or in part within this state, such line or lines not being owned, leased or operated by such company, whether such cars be termed box, flat, coal, or tank, stock, gondola, furniture or refrigerator cars, or by any other name, is a freight line company;” (Emphasis ours.)

Just because appellant owns its cars and carries its own freight as an adjunct of its principal business, it insists that it is not a freight line company amenable to the property tax upon its cars during their sojourn in Ohio. Ownership of car is not made the test. “Operating cars” is the term employed.

One may operate his own cars as well as those belonging to another. Ownership of the freight carried is made immaterial. Is the fact that Armour’s freight line or refrigerator car business is but Vz of 1% of its invested capital so fragmentary as to be inconsequential? If so, what percentage is the line of demarcation? As the question presented is a law question, the latter query cannot be answered by resort to the measuring stick known as the length of the chancellor’s foot. What the statute says must bring forth the answer. It makes no percentage or degree of a company’s activity in freight line business the test, but prescribes that all so engaged are freight line companies whether large or small. Some steel companies own and operate coal mines. Can it be that they are engaged only in steel production just because they may be pleased to say that their principal business is steel, not coal? Appellant is a 324 million dollar company, and even if it has but 2 million of its capital structure invested in refrigerator cars, that in itself, even in these times, is far from being an inconsiderable business. An organization may engage in numerous undertakings as is done by Standard Oil, DuPonts and Atlantic and Pacific, the latter of which the Federal Government would now disintegrate. The Farm Bureau sells insurance. Is it not in the insurance business just because its principal business is along other lines? Armour persists in its refrigerator car business. It must be advantageous and profitable in the accomplishment of its major purpose. It undoubtedly gives it an advantage over its competitors like Swift and Cudahay, who do not engage in refrigerator car ownership. We find no merit in appellant’s first contention. It is, in its refrigerator car operation, a freight line company under the Ohio statutes.

The Board of Tax Appeals feels that questions two and three, as made by appellant, ought to be jointly considered. They will be so treated. If the second query be answered in the negative, the third is automatically answered.

•• Second: “If so (engaged in the business of operating cars for the transportation of freight), may the Tax Commissioner arbitrarily fix the number of cars owned and used in Ohio by rule of thumb (car mileage) when he has full and complete information as to the daily average number of cars in the state?”

Third: “May the Tax Commissioner lawfully certify to the Auditor of State for taxation, the value of cars owned and used in Ohio in lieu of certifying the amount and value of the proportion of the capital stock of the taxpayer represented by cars owned and used in the state?”

This Board has encountered considerable difficulty in determining the manner in which this phase of the controversy may be lucidly explained. It finds no other course than the one which is pursued, and to that end many nonoperative facts will be disregarded. Among other things, it is stated, in the order appealed from, that:

“On July 8, 1946, the applicant filed with the Tax Commissioner the statement required of freight line companies by §5462 GC. The Tax Commissioner determined that the amount and value of the proportion of the capital stock of Armour and Company representing capital and property owned and used in Ohio during the year ending April 30, 1946, was $176,912.00.”

This report, found within the Commissioner’s transcript, states that the total car miles of its cars everywhere was 143,263,720 miles, and of this figure 13,053,764 was the total mileage made by its cars in Ohio during the tax period. It reported that it owned 4684 cars from which 43 wrecked or junker cars were deducted, leaving a balance of 4641 refrigerator cars in its fleet. It also reported that 1372 of its cars were idle cars outside of Ohio that never entered the State during the tax year. The Tax Commissioner determined that appellant’s entire fleet had a depreciated net worth of $1,952,339.07. To these figures the Commissioner applied the “car mileage” formula for ascertainment of taxable value of transitory property within a fixed determinable situs in accordance with the generally accepted practice in Ohio and elsewhere. This method or formula is worked out by dividing the total car mileage of 13,053,764 by the total car mileage everywhere of 143,263,720, which produced the figure of .091117025, which multiplied by the fleet’s total net worth, of $1,941,393.07, produced the certified taxable figure of $176,-912.00 for the tax year 1946. It will be perceived that this computation disregarded the taxpayer’s report of 1372 cars that never entered Ohio during the taxing period. If these 1372 cars never entered Ohio during the taxing period they are not taxable in Ohio. This is in accordance with the prior holding of the Board of Tax Appeals made in American Refrigerator Transit Company v. Glander, (Affirmed 153 Oh St 191) No. 15047 under date of 6/28/’49, and Union Tank Car Company v. Glander, No. 15041 under date of 7/13/’49. The taxpayer applied for a rehearing and redetermination, which the Tax Commissioner allowed.

Upon rehearing appellant produced evidence, found within the transcript and record, which establishes certain facts that are found by the Commissioner to be true and were by him carried into the final order now complained of. It was found that during the tax year Armour owned 4,635 refrigerator cars and that they had a book value of $1,130,383.54: that a daily average of 351 cars were in repair shops outside of Ohio; that a daily 'average of 196 were at Armour’s packing plants outside of Ohio; that a daily average of 1147 cars were at Armour’s packing plants outside of Ohio being loaded or waiting to be loaded, and that a daily average of 150 cars were at branch houses, unloading points or ports of export outside of Ohio being unloaded or awaiting unloading. These four figures produce a total of 1844 average number of cars that were daily outside of Ohio. The Commissioner further found that a daily average of 5.4 cars were at Armour’s packing plant in Columbus, Ohio, being loaded or unloaded or awaiting unloading; and that a daily average of 10.6 cars were so engaged at all other Ohio points; and that all other Armour cars in Ohio, during the tax year, were traveling through the State en route from points outside of Ohio to points in Ohio, or from points in Ohio to points outside of Ohio, or to and from points outside of Ohio; that Armour’s cars traveled a total of 143,263,720 miles, of which 13,053,764 miles were traveled in Ohio; and that the average rate of travel of Armour cars in Ohio during the tax year was 462.24 miles per car per day. The facts found and herein enumerated are evidenced by Armour and railroad officials and are in no way contradicted. At no place in this final entry is the total net worth figure of $1,941,593.00 to be found. The order concludes with an affirmance of the certification of a taxable value of $176,912.00 as made in the first instance.

In Pullman Company v. Evatt, 144 Oh St, 295, 29 O. O. 445, the court had the Code sections herein in question under review and of which it was said, “A study of the provisions of those sections demonstrates that the tax there imposed is not a franchise tax but a property tax.” To the members of this Board it is beyond question that these sections of the Code were enacted for the evident purpose of taxing migratory property of corporations which temporarily found domicile within the State of Ohio during the course of a tax year, and while therein received protection, as does all other kinds of personal property; and that it might not escape from, but should bear its fair portion of the tax burden. The General Assembly well knew that in the absence of well kept records the number of cars of a freight line company temporarily domiciled within the State would be difficult of ascertainment and incapable of absolute certainty. To afford a means to the ends sought, §5465 GC and predecessor sections were enacted to establish a “track mileage” or other fair and just formula for the purpose of determining the number and value of such cars. It was never the legislative purpose to tax personal property within the State that had its domicile elsewhere because of the well known general rule, which needs no recitation of authorities in support thereof, that personal property is taxable only at its situs. Sec. 5465 GC created an exception to that rule in the formula or methods therein provided that have been approved. of in Pullman Palace Car Co. v. Pennsylvania, 141 U. S. 18, 35 L. Ed. 613, and in the recent case of Ott v. Mississippi Valley Barge Line Co., Vol. 93-No. 8, page 431, L. Ed. advance sheets under date of February 28, 1949.

At this point attention ought to be directed to the case of Floyd v. Light and Heat Co., 111 Oh St 57 (74 & 75), which is authority for two pertinent matters. It was therein held that the State has power to levy a tax upon property found within its borders which is used in interstate commerce and which the State is bound to and does protect while such transitory property is within its borders; and that a state does not have power, as a basis of taxation, to levy taxes upon property beyond the territorial boundaries of the State and that there must be no taxation of property not within the State.

Appellant asserts, from the facts proven and found, that the domicile time of its rolling stock within the State during the tax year 1946 is susceptible of definite ascertainment and that hence it does not come within the provisions of §5465 GC and is exempt from taxation. It has paid its franchise and real property taxes and taxes upon all of its personal property save its rolling stock. All personal property is taxable in Ohio save such as is excepted or exempted by statute. A freight line company’s rolling stock is not so excepted or exempted. Sec. 5465 GC taxes such property. Any formula, be it “daily average,” “track mileage” or “car mileage,” is not a rigid rule, but an elastic provision which permits taxation of property within the State, as is provided in §5468 GC, but recognizes that property which is situated elsewhere may not be taxed. Sec. 5465 GC says that “the commission (now Tax Commissioner) shall ascertain and determine the amount and value of the proportion of the capital stock of * * * freight line * * * companies, representing capital and property of such companies owned and used in this state, and in so determining shall be guided in each case by * * *” a formula. The comma appearing after the word “state” might just as well be a period. We direct particular attention to the word “guided,” which is not synonymous with “governed” or other like words of command. If appellant has proved the situs of all of its cars within and without the State as claimed, as we think it has, then there is no necessity for the use of a formula and ascertainment of the taxable sum is but one of mathematical computation. In so far as appellant is concerned the statute might as well end at the word “state.” Such is the finding of the Board of Tax Appeals. Appellant is not exempt from its proper ascertainable tax.

Appellant’s book value of its fleet at $1,130,383.54, as claimed and found by the Tax Commissioner, is not the equivalent of its total, present net value for taxation, as found by the Tax Commissioner, who ascertained that figure' to be $1,-941,593.37. From the figures before us it is the judgment of the Board of Tax Appeals that appellant’s tax for the year 1946 must be figured in the following way:

Take the total present net value of $1,941,593.37 of appellant’s fleet, as found by the Tax Commissioner, and divide it by 4641 (the number of cars upon which it was computed) and the quotient of $418.35 produced represents the present net value per car for tax purposes, as found by the Commissioner. Next the daily average of appellant’s cars in Ohio is to be established. It was found that 5.4 cars represented the daily average of cars loading or unloading in the Columbus yards. To this add 10.6 cars found to be the daily average of cars loading or unloading at points in Ohio other than Columbus. The result is 16, the daily average of stationary cars in Ohio. Next take the found speed of 462.24 miles per day of appellant’s cars moving in Ohio and multiply this by 365 days in the year. The result obtained is 168,717 miles which one car would travel in a year’s time. The sum of 168,717 miles per car per year divided into 13,053,764 (total Ohio mileage for 1946) produces the figure of 77.37, the daily average of cars in motion. Add to this the 16 stationary cars’ daily average in Ohio, which makes 93.37 the total number of car proportion in Ohio. At $418.35 (present net value per car) times 93.37 (the daily average number of cars) the sum of $39,061.34, which represents the figure that should have been certified to the auditor of state for taxation, is produced instead of the sum of $176,912.00.

The order appealed from is so modified, and affirmed as modified; and the cause is remanded to the Tax Commissioner for further certification.


author: By CARPENTER, J.

text:
    WORSTER, Plaintiff-Appellee, v. VOLUNTEERS OF AMERICA, Defendant-Appellant, VALLEY GREYHOUND LINES, Defendant-Appellee.
    Ohio Appeals, Second District, Franklin County.
    No. 4330.
    Decided November 28, 1949.
    Fogle & Fogle, Marietta, Joseph M. Harter, Columbus, for plaintiff-appellee.
    Warren C. Armstrong, Paul R. Gingher, Columbus, for defendant-appellant.
    MONTGOMERY, PJ, of the Fifth District, and CARPENTER, J, and FESS, J, of the Sixth District, sitting by designation in the Second District.
   OPINION

By CARPENTER, J.

On the afternoon of February 19, 1946, the plaintiff, Laura B. Worster, was riding as a passenger on a bus of the defendant, Valley Greyhound Lines, Inc., being operated by it east from Columbus on the Groveport Pike, a blacktop macadam pavement 20 feet wide. As the bus approached a small curve just east of Groveport, a westbound Ford pickup truck owned by defendant, The Volunteers of America, a New York corporation not for profit, and driven by one of its employes, Charles Root, came across the pavement toward the bus. The bus driver turned it sharply to his right off the pavement onto the berm, but the truck collided head on with the left front of the bus.

The front part of the truck was badly crushed in and the driver and a passenger riding with him were killed. The plaintiff sustained serious injuries. For the resulting damages she brought this action against both The Volunteers of America and the bus company. On trial the jury found for the bus company and against The Volunteers of America, fixing the damages at $5000.00. From the judgment entered thereon, the defendant took this appeal on questions of law.

Various claimed errors are assigned, but two are seriously urged and will be the subject of comment.

One is that the court should have directed a verdict for the defendant for the reason that there was no evidence that the driver of its truck was acting within the course of his employment at the time and place of collision.

The commander of the six posts of the Volunteers' in Ohio, who is also the commander of the Columbus post, testified in defense and on cross-examination said that the Volunteers, among other things, were engaged in the collection of salvage, that on the day of this collision several trucks were so engaged, including this one, but that such collections were only authorized in Columbus and municipalities contiguous to it. That day, driver Charles Root was directed to make such collections on the east side of Columbus, ■ and if he was as far east as Groveport or farther, he was outside of the area of her orders to him. ■

She also admitted that she signed an “Employer’s Report” to the Industrial Commission of Ohio on the death of Charles Root in which she answered the following questions under the hearing “Accident (Time)”:

“9. Accident occurred where? Vz mi. so. of Groveport, Ohio. Franklin County, Ohio.”

and under heading “Accident (Description)”:

“13. Occupation of deceased at time of the injury? Truck driver.
“14. Experience of deceased employe in this type of work during lifetime? 8 yrs.
“15. Name of department or job or product employe was working on and nature of work when the accident occurred? Collecting salvage.
“16. How did accident happen? Head on collision with Valley Greyhound bus.”

In the certificate at the end of this report this witness certified “that the deceased herein named was on the date shown herein an employe of the undersigned.”

The witness further testified that she only intended this as a description of the general character of the employe’s job on that day. This record was relevant as bearing upon the credibility of the witness’ testimony as to her instructions to the driver.

Witnesses for plaintiff, who were at the scene of the collision, testified that on the truck there were cartons containing cast-off clothing.

With this evidence record, the court properly submitted to the jury the question of agency of the driver at the time of the collision, and its finding thereon is sustained.

2. The court charged the jury that the driver of the defendant’s truck was negligent as a matter of law in that he operated it on his left side of the road, and only submitted to the jury the question whether such negligence was the proximate cause of plaintiff’s injuries.

The evidence was that it had been raining that afternoon and that the pavement was wet, some witnesses said “damp.” It is not disputed that as the truck approached the bus around that curve it was in a skid and its driver was trying to get control of it when it went off the road and into the bus. Defense urged that it may have been an unavoidable accident, and a question for the jury as to negligence.

In support of this contention, Kohn, Admr., v. B. F. Goodrich Co., 139 Oh St, 141, is cited. In that case the roadway on a bridge was covered with thick ice into which traffic had cut ruts, and defendant’s truck in these ruts skidded to the left and killed the plaintiff’s decedent, a bridgetender. The court charged the statute on the duty of a driver to keep to the right. The defendant requested the court to charge on unavoidable accident and how it might have been such and exculpated the driver. This was refused and the Supreme Court said it was error.

Here the driver was on a wet blacktop pavement, a type we often see posted “Slippery when wet.” That was a condition of known danger to any driver, one calling for care commensurate with the obvious risk to the driver and others on the highway, unless care is used, and when it is, under such ordinary circumstances as were present in this case, accidents like this do not happen. The crushed condition of the front end of the truck was mute evidence of the force with which it hit the bus, and of the speed which generated such force.

It should also be noted that no suggestion was made to the court at any time that this may have been an unavoidable accident, and no request for an instruction on that subject was made.

After the charge, the court invited suggestions from counsel.

Apparently counsel for Volunteers, in a conversation with the court not reported in the record,' suggested in connection with the charge on negligence, further instructions as to proximate cause, which the court gave.

While that counsel took a general exception to the charge, he excepted specially to the charge with respect to the agency of the truck driver. Mention is made of this at the time merely as indicating the state of mind of counsel and the court at that time.

Finding no error prejudicial to defendant, The Volunteers of America, the judgment will be affirmed.

Judgment affirmed.

MONTGOMERY, PJ, FESS, J, concur.


author: By PHILLIPS, PJ.

text:
    CORDOVA, Plaintiff-Appellant, v. YOUNGSTOWN MUNICIPAL RAILWAY COMPANY, Defendant-Appellee.
    Ohio Appeals, Seventh District, Mahoning County.
    No. 3288.
    Decided November 15, 1949.

      Williams & Brown, Youngstown, for plaintiff-appellant.
    Harrington, Huxley & Smith, Youngstown, for defendant-appellee.
   OPINION

By PHILLIPS, PJ.

Plaintiff’s evidence, offered in the trial court in the case we review, disclosed that about 1:10 P. M. on the clear, sunny, 24th day of September, 1947, appellant parked his employer’s beer truck, headed in an easterly direction, on East Federal Street, a duly dedicated and accepted public thoroughfare of Youngstown, Ohio, about two inches from the southerly curb thereof, in front of the “40 Club,” known for street numbering purposes as 371 East Federal Street, for the purpose of delivering beer therein; that he alighted from his truck on the street side of East Federal Street, and walked “six to eight steps” to the rear thereof to assist his helper make such delivery.

Other evidence disclosed that about that time a Plymouth automobile was being operated in a westerly direction on the northerly side - of East Federal Street, about 40 miles an hour, by a man who pleaded guilty to reckless driving and was found guilty of carrying concealed weapons; that at that time such automobile was about opposite the Forty Club; that at that place East Federal Street was 70 feet wide, and dry; that then such automobile was operated in a southwesterly direction over and along East Federal Street into the path of appellee’s passenger bus (allegedly to avoid being struck by another automobile being operated into its path); that such bus was traveling between 20 and 35 miles an hour in an easterly direction on East Federal Street; that when it was about 40 to 45 feet west of the truck it was operated in a southeasterly direction, and skidded 21 feet into collision with the Plymouth automobile and the left front side of appellant’s parked truck, where he was standing, squeezing him between the left front side of his employer’s parked truck and the right front corner of appellee’s bus, which stopped so suddenly as to throw passengers riding therein forward; that as the result of such collision he was caused to sustain injuries for which he commenced the action we review in the court of common pleas to recover damages.

Defendant-appellee’s bus driver testified he was operating appellee’s bus in the direction and on the street plaintiff claims at about 20 miles an hour; that the driver of the Plymouth automobile attempted to “make a ‘U’ turn in front of him” as the result of which the bus he was driving (“well it shoved me or drove me to the right”) collided with the Plymouth automobile; that he saw the Plymouth automobile when it was 50 to 75 feet away, and there was no other traffic between them, and at that speed he could stop appellee’s bus, with its airbrake equipment, in 20 to 25 feet on the pavement, which was dry, and under the conditions which existed then; and denied that appellee’s bus struck the truck of appellant’s employer.

Passengers on appellee’s bus fixed the speed of the bus between 20 and 25 miles an hour; and testified that “this here coupe came down and whaled into us, I didn’t see him at all until it hit us”; that the driver of the Plymouth was trying to make a “U” turn, “make a sweep in the street,” and that the driver of the bus was operating it so “nicely”; that a passenger “hollered ‘look at that car’, and I saw this green car coming toward the bus; well he (the bus operator) tried to avoid hitting this green car so he swerved over to the right, and he scraped along this truck going down East Federal Street, and the truck was parked; the truck was parked and he scraped this bus all the way down.”

Youngstown’s Deputy Traffic Commissioner testified that the driver of appellee’s bus admitted driving its bus at 25 to 28 miles an hour at the time of collision; that there were “scrape marks on the left side of the body of the truck that had a yellow color; that there was a dent in the body of the truck about shoulder high, about a foot in diameter, and about ten inches to the rear of the front of the body of the truck; that there was a patch of yellow coloring on the rear left rear corner of the body, a small patch about a couple inches square.”

The jury returned a verdict for defendant corporation, a public carrier of passengers for hire, upon which the trial judge duly entered judgment; and it is from that judgment that plaintiff appeals to this court on questions of law, and contends that the trial judge erred to his prejudice in his general charge given to the jury after argument, and that the verdict of the jury and the judgment of the trial court entered thereon are against the manifest weight of the evidence.

Appellant’s contributory negligence was not an issue in the case we review. Accordingly we do not concern ourselves with why he was standing where he was when he was allegedly squeezed, nor how he got there, and no further reference to such matters will be made in this opinion.

In his general charge to the jury the trial judge said:—

“No person shall turn a vehicle or trackless trolley from a direct course upon a highway unless and until such person shall have exercised due care to ascertain that such movement can be made with reasonable safety to other users of the highway and then only after giving a clearly audible signal by sounding the horn, if any pedestrian may be affected by such movement.”

After discussing this portion of the general charge of the trial judge at some length in their brief, counsel for plaintiff contend:—

“Therefore, we submit that the Court was in error, in charging that the only duty owed plaintiff under this statute was ‘ordinary care’ and that the incorrect rule given by the court was highly prejudicial. * * *
“Under these circumstances, it seems quite obvious, that the jury, being given an erroneous and incorrect statement of the law the second time, was misled and that plaintiff’s rights were prejudiced.”

Counsel for defendant contends that “the trial court should not have charged the jury on the above statute and we will demonstrate further that in so doing, the defendant and not the plaintiff was greatly prejudiced”; that such charge was “helpful to plaintiff and just as surely hurt the defendant to have the court charge a statute that had no application to the facts, but filed no cross appeal nor cross assignments of error. Accordingly we will not pass upon whether defendant was prejudiced by such charge; and having carefully considered the general charge of the trial judge in its entirety conclude that the plaintiff was not prejudiced by the general charge of the trial judge in the respects urged by him.

We have read the bill of exceptions submitted to us in this case carefully; and after equally carefully considering and weighing the evidence submitted to us for review we can not arrive at the conclusion counsel for plaintiff ask us to reach, namely that the verdict of the jury and judgment of the trial court entered thereon are against the manifest weight of the evidence.

The judgment of the court of common pleas is affirmed.

NICHOLS, J, BUCKLEY, J, concur in judgment.


author: By McCLELLAND, PJ.

text:
    OUTHWAITE, Estate of, In re.
    Probate Court, Franklin County.
    No. 110657.
    Decided September 27, 1949.
    H. Paul Joseph, Columbus, for Anne S. Outhwaite, Executrix.
    Paul M. Ashbaugh, Columbus, for Massachusetts Bonding and Insurance Company.
    For Court of Appeals decision see 57 Abs 238.
   OPINION

By McCLELLAND, PJ.

This matter comes before the Court upon the exceptions filed herein by The Massachusetts Bonding and Insurance Company to the first and final account of Anne S. Outhwaite, as Executrix of the will of Charles P. Outhwaite, deceased. The exceptions challenge the correctness and propriety of the payment of $13,500.00 to the Ohio National Bank of Columbus, Ohio, which payment was made by Anne S. Outhwaite, the widow of the decedent, out of her own personal funds. The matter was submitted to the Court upon a Stipulation of Facts signed by the attorney for the Executrix, and Paul M. Ashbaugh, attorney for the Exceptor. The Stipulation of Facts is hereby adopted as the facts upon which this Court will make its decision, and which will be considered a part thereof.

This Court is first impelled to make the observation that the Massachusetts Bonding and Insurance Company is not an interested party in this matter, at the present time, and therefore is not entitled to file exceptions. The Court, however, will consider the exceptions and will also consider the memorandum filed by the attorney for the Exceptor, as a memorandum filed by a friend of the Court.

It is the contention of the Exceptor that Anne S. Outhwaite, in paying the note- to the Ohio National Bank in the amount of $13,500.00 was a volunteer, and, as a result thereof, she is not entitled to be subrogated to the rights of the creditor whose claim was paid.

A most illuminating discussion of the legal question raised by the Exceptor is found in Vol. 4, of the 5th Edition of Pomeroys Equity Jurisprudence, at Section 1211, which reads as follows:

“EQUITABLE ASSIGNMENT BY SUBROGATION. — Under some circumstances, the payment of the amount due on a mortgage when made by certain classes of persons, is held in equity to operate as an assignment of the mortgage. By means of the payment the mortgage is not satisfied and the lien of it destroyed, but equity regards the person making the payment as thereby becoming the owner of the mortgage, at least for some definite purposes, and the mortgage as being kept alive, and the lien thereof as preserved, for his benefit and security. This-equitable result follows, although no actual assignment, written or verbal, accompanied the payment and the securities themselves were not delivered over to the person making payment, and even though a receipt was given speaking of the mortgage debt as being fully paid, and sometimes even though the mortgage itself was actually discharged and satisfied of record. This equitable doctrine, which is a particular application of the broad principle of subrogation, is enforced whenever the person making the payment stands in such relations to the premises or to the other parties that his interests, recognized either by law or equity, can only be fully protected and maintained by regarding the transaction as an assignment to him, and the lien of the mortgage as being kept alive, either wholly or in part, for his security and benefit.”

In the following Section 1212, is a discussion as to benefits of an equitable assignment. The author in that section uses the following language:

“Equity does not admit the doctrine of equitable assignment in favor of every person who pays off a mortgage. Such relations must exist towards the mortgaged premises or with the other parties, that the payment is not a purely voluntary act, but is an equitable necessary or proper means of securing the interests of the one making it from possible loss or injury. The payment must be made by or on behalf of a person who had some interest in the premises, or some claim against other parties, which he is entitled, in equity, to have protected and secured.”

Anne S. Outhwaite, the person who paid this note is not only the Executrix of the will of the decedent, but is also the widow, and either the sole or only devisee or legatee of the decedent. Had the decedent’s estate been entirely solvent, then this property would have passed to the beneficiaries of his will, one of whom was Anne S. Outhwaite. She, therefore, had a direct interest in the property under investigation.

The author, in the same section, uses the following language:

“A mere stranger, therefore, who pays off a mortgage as a purely voluntary act can never be an equitable assignee. Such a stranger, having no interest in the premises and no relations with the parties cannot even compel the mortgagee to accept payment of the amount due on the mortgage. If the mortgagee voluntarily accepts the money, he cannot be compelled to assign the mortgage to the stranger. If the mortgagee consents both to accept the money and to give an assignment, then the transaction becomes an ordinary purchase of the mortgage by the stranger, which can always be affected with the mortgagee’s consent, but never without. In no case, therefore, can the stranger voluntarily paying occupy the position of an equitable assignee, — he can never claim to be subrogated to the rights of the mortgagee.”

The Stipulation of Pacts is entirely silent as to whether or not the mortgagee assigned note and collateral to Anne S. Outhwaite. If there was an explicit assignment, then, of course, there can be no question. If there was not a specific assignment, the circumstances are such, which, in equity, gives rise to an equitable assignment.

Then, in a later paragraph in the same article, the author uses the following language:

“The class of persons coining within this description include the grantee from the mortgagor or any subsequent grantee who has taken the land simply subject to the mortgage; the heir or devisee of the mortgagor: the widow of the mortgagor or of any subsequent owner: * * *”

This Court fully appreciates the fact that a treatise is not of itself an authority, but this Court knows that the statements contained therein are based upon well adjudicated cases to which reference is made in the text from which the Court has quoted.

Not only do we find authority in the above quotations, but we also find a statement contained in 38 O. Jur., 294, under the title of “Subrogation” which sustains also the foregoing proposition. I quote as follows from Section 44:

“Generally, a person, having an interest in an estate, who makes payment of debts due by the decedent’s estate becomes a creditor of the estate and is subrogated to the rights of the creditors or the executor or administrator.”

The author refers to the case of Conger v. Atwood, 28 Oh St page 134. Also the case of Stayner v. Bower, 42 Oh St, page 314; also the case of Glenn v. Eicher, 11 O. C. C. N. S. page 95, also supports the proposition that a wife or widow paying debts of her husband’s estate is entitled to subrogation therefor.

Upon an examination of the subject of Subrogation, contained in Vol 50 American Jurisprudence, at page 699, we find the following language:

“The right of subrogation is not necessarily confined to those who are legally bound to make the payment, but extends as well to persons who pay the debt in self-protection, since they might suffer loss if the obligation is not discharged. In this class are included subsequent encumbrancers paying off a prior encumbrance. The extent or quantity of the subrogee’s interest which is in jeopardy is not material. If he has any palpable interest which will be protected by the extinguishment of the debt, he may pay the debt and be entitled to hold and enforce it just as the creditor could. It would seem that one acting in good faith in making his payment, and under a reasonable belief that it is necessary to his protection, is entitled to subrogation, even though it turns out that he had no interest to protect.”

The statement of the text is amply supported by the decisions of courts of last resort to which reference is therein made. In our opinion the principle set forth in the text hereinbefore quoted amply justifies the position of Mrs. Outhwaite in making the payment which she made and in assuming that she would be subrogated to the rights of the creditor whose claim was paid.

In this case it was the widow of the mortgagor, and also the beneficiary under his will, who paid the mortgage. She had an interest in the property. The Stipulation of Facts also recite that Anne S. Outhwaite, at the time she made this payment, was not aware that the estate was insolvent. It appears that the estate was insolvent. The payment was made on or about the date the note was due. By making such payment she avoided a sale of the property which the bank indeed had a right to make. The collateral might have been sold for less than the face of the note, and, had that been the case, the bank would still have been a creditor of the estate of Mr. Outhwaite. In other words, the creditor was made whole.

As we have heretofore observed, Anne S. Outhwaite was either a legal assignee or an equitable assignee of the note and collateral securing same. Sometime thereafter, Anne S. Outhwaite sold all of that collateral and received dividends thereon up until the time of sale. She realized the sum of $12,349.86. Subsequent thereto, in order to make herself whole, she withdrew from the estate the sum of $1150.14. Had she not paid this note, but permitted the bank to sell the securities, the bank would have had a claim against the estate for the difference between the sale price and the amount due on the note. Inasmuch as the estate was hopelessly insolvent, the bank would have lost the difference between the sale price and the amount due on the note.

When Anne S. Outhwaite received the assignment she became the owner of the note and also of the securities which were deposited for the payment of same. When she sold her securities, which netted her $1154.14, less than the amount which she paid, she then becomes a general creditor of the estate in the amount of $1Í54.14. It is our opinion, therefore, that she preferred herself as a creditor when she paid herself that sum.

The Court therefore, of its own motion, orders that the inventory be corrected, conforming to the facts, and that Anne S. Outhwaite be required to restore the sum of $1154.14 to the estate of the decedent.