author: By KLOEB, District Judge.

text:
    GULF OIL CORPORATION, Plaintiff, v. EISENHOUR, Exr. et, Defendants.
    United States District Court, N. D. of Ohio, W. D.
    Civ No. 7720.
    Decided January 17, 1958.

      R. N. Torbet, Zachman, Boxell Bebout & Torbet, Toledo, David W. Stephens, Jesse P. Luton, Jr., Fort Worth, Texas, for plaintiff.
    Charles J. Cole, Henry W. Seney, Eastman, Stichter & Smith, James J. Robison, Robert B. Gosline, Toledo, Hubert E. Hartmann, Detroit, Mich., James A. Rees, Cleveland, for defendants. /
   OPINION

By KLOEB, District Judge.

Under date of February 13, 1957, plaintiff filed its complaint for interpleader, in which it named some twenty-one churches, schools, hospitals and other institutions of a charitable or religious nature and six attorneys at law, who represent these institutions, as parties defendant. For our purposes, these defendants, their interests being in common, shall hereinafter be referred to as “Charities.” The complaint also named the executors and trustees of the estate of Arthur S. Hiekok, deceased, the widow and children of the deceased and Hiekok and Reynolds, Inc., of Toledo, Ohio, as parties defendant. Their interests appearing to ’ be in common in this litigation, they are hereinafter referred to as “Fiduciaries.”

Plaintiff brings its action under the provisions of Section 1335 of Title 28 of the United States Code Annotated and claims jurisdiction on the ground of diversity of citizenship.

The complaint alleges that Arthur S. Hiekok died in Lucas County, Ohio, on June 30, 1945, and that his last will and testament was duly admitted to probate in the Probate Court of Lucas County, Ohio, on or about July 9, 1945; that said will was also admitted to probate by the County Court of Eastland County, Texas, and ancillary letters testamentary were issued to the same executors that qualified in Ohio; that, under the last will and testament of the testator, certain property was devised and bequeathed to Walter G. Kirkbride, Carl F. Eisenhour and Clarence H. Hiekok as trustees for a period of twenty years after the death of the decedent, and that the remainder, after the expiration of the twenty-year period, was to be divided into five funds which were to be distributed among the defendant “Charities”; that “Fiduciaries” on the one hand and “Charities” on the other hand are adverse claimants to the proceeds attributable to a certain royalty interest in lands covered by an oil and gas lease, in which royalty interest the deceased at the time of his death held an undivided interest by virtue of being a member of a partnership organized, doing business and registered in and under the laws of the State of Texas under the name of Hiekok and Reynolds; that plaintiff is the owner and holder of an oil and gas lease executed by Mrs. C. A. Goldsmith and Charley M. Goldsmith and wife (hereinafter referred to as the “Goldsmith Property”), and that it is engaged in the production of oil and gas from the lands covered by'said lease; that on or about September 7, 1956, plaintiff received by mail a copy of a notice of Lis Pendens given by defendant “Charities” and that said notice of Lis Pendens is filed in the records of the County Clerk, Ector County, Texas; that by reason of said notice plaintiff, on September 10, 1956, suspended the payments covering the royalty interest in the “Goldsmith Property,” effective August 1, 1956; that, on January 24, 1957, plaintiff was served with a summons and petition in cause No. 182601 in the Court of Common Pleas of Lucas County, Ohio, in which Carl F. Eisenhour, Clarence H. Hickok and The Toledo Trust Company, sole surviving executors of the estate of Arthur S. Hickok, deceased, are plaintiffs and plaintiff herein is defendant, and in this action the plaintiffs therein allege that they are entitled to the royalty from the “Goldsmith Property”; that, on January 24, 1957, plaintiff was served with a summons in a similar action filed in the Common Pleas Court of Lucas County, Ohio, in which Carl F. Eisenhour and Clarence H. Hickok, sole surviving trustees under the last will and testament of Arthur S. Hickok, are plaintiffs and plaintiff herein is defendant, and that this suit also involves a claim of ownership to the royalty from the “Goldsmith Property”; that, on January 24, 1957, plaintiff was served with a summons in a suit in Lucas County, Ohio, in which Daisy S. Hickok is plaintiff and plaintiff herein is defendant, in which suit the “Goldsmith Property” is again at issue; that, plaintiff being in doubt as to which of said defendants are entitled to payment of the money which has accrued to this royalty interest since August 1, 1956, and which may hereafter accrue to said royalty interest, and plaintiff has been and may be subjected to vexatious and multitudinous suits and be further subjected to multiple payments in the event all of the defendants should prevail upon their claims against plaintiff, plaintiff prays that each of the defendants be restrained from instituting any action or actions against plaintiff for the recovery of the proceeds from the royalty interest in the “Goldsmith Property”; that the accruals from the Goldsmith royalties have been paid into the Registry of this court and will continue to be so paid pending the outcome of this suit and, further, plaintiff demands that the defendants herein be required to interplead and settle between themselves their rights to the proceeds attributable to the Goldsmith royalty interest.

A motion for preliminary injunction and an order requiring defendants to interplead accompanied plaintiff’s complaint, together with a brief in support of the motion, and an order restraining defendants and requiring defendants to interplead, which order was on the same day, February 13, approved by the court and filed.

In due course, answers were filed by the defendants and, under date of March 28, 1957, the court, on motion of the “Fiduciary” defendants, approved an order restraining “Charities” from instituting any action against the moving defendants or from prosecuting any action or actions against the moving defendants affecting the Goldsmith royalty interest in Ector County., Texas.

On April 24, 1957, “Charities” moved to stay the proceedings and to dissolve the restraining order issued against them and, in this motion, they move the court as follows:

“1. For an order staying further proceedings in this cause pending decisions by the Texas Courts in the actions or proceedings now pending in the State of Texas for the reasons:
“(a) That an action is now, and for many years has been, pending in the District Court of Eastland County, Texas, a court of general jurisdiction, which court has sole and exclusive jurisdiction in the premises and had acquired jurisdiction of the subject matter and of the parties, and of all issues presented by the pleadings herein prior to the filing of this suit.
“(b) That the administration of the Texas estate of Arthur S. Hickok, deceased, is now, .and for many years has been, pending in the County Court of Eastland County, Texas, a court of probate, which court has sole and exclusive jurisdiction of the administration of said estate in Texas.
“(c) That this court lacks jurisdiction over the subject matter of the claims made in the answers and the prayers for relief demanded in the answers of defendants Carl F. Eisenhour, et al.
“2. For an order dissolving the restraining order entered March 28, 1957, on the motion of defendants Carl F. Eisenhour, et al., restraining defendant' “Charities” and their attorneys, LeRoy E. Eastman, et al., from prosecuting the suits or proceedings now pending in the Courts of the State of Texas; said restraining order ought to be dissolved so that the exclusive jurisdiction of said Texas Courts will not be further interfered with and said Texas suits may proceed to an orderly determination.”

In due course, briefs were filed in support of and in opposition to the “Charities’ ” motion to stay the proceedings and to dissolve the restraining order in effect against them, and these briefs were accompanied by affidavits. Under date of November 22, 1957, “Fiduciaries” filed their several motions for summary judgment and accompanied these motions with an affidavit and briefs in support thereof, and defendant “Charities” filed a memorandum in opposition to these motions.

On December 2, 1957, defendant “Charities” filed a motion to stay proceedings on the motions for summary judgment and a brief in support thereof. Defendant “Fiduciaries” filed a memorandum in opposition thereto. We come now to consideration of “Charities’ ” motion to stay proceedings and dissolve the restraining order of March 28, 1957.

It would seem to be unnecessary to recite in detail all of the facts and the events that transpired from the- date the testator executed his will on February 10, 1945 down to the present day. The assets of the estate located in the State of Texas at the date of the death of testator, June 30, 1945, are in question, and particularly do “Fiduciaries” in this action seek a determination by this court that they are the owners of the “Goldsmith Property.” In the case of Toledo Society for Crippled Children v. Hickok, 152 Tex., 578, 261 S. W., 692, 43 A. L. R. (2d), 553, dated October 7, 1953, the Supreme Court of Texas, in its opinion by Mr. Justice Garwood, recites a very comprehensive statement of facts and of the history of the estate as it pertained particularly to the assets of the estate located in the State of Texas. In addition thereto, we shall recite only pertinent facts that may aid in an understanding of the situation presented to this court at this time.

Immediately after the death of testator, the will was probated in the Probate Court of Lucas County, Ohio, and the executors were appointed and qualified. About the same time, a copy of the will was filed for probate in the County Court of Eastland County, Texas, and the same executors qualified in Ohio were appointed and qualified in the ancillary administration undertaken in Texas. In brief, the will provided for a trust fund to be comprised of substantially all of the assets of the estate, the income from which should be paid to the widow and two children for a period of twenty years and that then the corpus should be divided into five parts and distributed to “Charities.”

In due course, on August 27, 1946, the executors in Ohio filed a petition for construction of the will, asking the determination of a number of questions, and particularly the applicability of §10504-5 GC (§2107.06 R. C.), to the claim of “Charities” under the will, testator having died within one year, to wit, four months and twenty days after the execution thereof.

On January 5, 1948, “Charities” filed a petition in the District Court in Eastland County, Texas asking for a construction of the will as it applied to the Texas assets of the estate and for an accounting. The State of Texas does not have a statute comparable to §10504-5 GC (§2107.06 R. C.).

On August 11, 1948, an opinion was rendered by the Probate Court of Lucas County, Ohio, on the petition for construction of the will. Therein, the court determined a number of questions and particularly the applicability of the General Code section in question and concluded that the statute would preclude defendant “Charities” from taking under the will. On page 8 of the opinion, which is found in the opinion of the Ohio Court of Appeals for the Sixth District, the court said the following:

“Coming now to consider the provisions of the will as they relate to the property of the decedent in Texas and New Mexico. The evidence establishes the fact that the oil leasehold interests and royalty interests are considered by the laws of Texas to be real estate.
“It is contended on behalf of the executors and trustees that the doctrine of equitable conversion applies and that those interests are to be considered as personalty.”

The court then analyzes the question of “equitable conversion” and continues as follows on page 9:

“The opinion of this court as to the equitable conversion, however, can not be a controlling judgment. The courts of Texas will determine the effect of the will as it relates to real estate located in that state. The true rule is concisely stated in Vol. 4, Page on Wills, Sec. 1633, page 688, as follows:
“ ‘The state within whose boundaries a tract of realty is situated has exclusive jurisdiction to create, terminate, etc. all the rights which exist in such realty, no matter where the owners of the different rights may be domiciled.’
“The United States Supreme Court in De Vaughn v. Hutchinson, 165 U. S., 566 [17 S. Ct., 461, 41 L. Ed., 827], say:
“ ‘It is a principle firmly established that under the law of the state in which the land is situated we must look for the rules which govern its design, alienation, and transfer, and for the effect and construction of wills and its other conveyances.’ ”

On appeal, the Court of Appeals of Lucas County, Ohio, on July 11, 1949, adopted as the opinion of that court the opinion of the Probate Court and.ordered that “the same judgment will be entered herein as was entered in that court.”

On April 25, 1951, the Supreme Court, Kirkbride v. Hickok, 155 Oh St 293, 44 O. O. 297, 98 N. E. (2d), 815, rendered its opinion on appeal from the Court of Appeals for Lucas County, Ohio, and confined its decision to the question raised over the applicability of the General Code section heretofore quoted. The court did not attempt to analyze the question of the devolution of the assets of the estate located in Texas. It concluded by affirming the judgment of the Court of Appeals.

For a period of ten years, and beginning January 5, 1948, when defendant “Charities” filed their petition in the District Court of East-land County, Texas, for a construction of the will and for an accounting, the litigation over the assets that testator died seized of in the State of Texas has continued almost without interruption, save for a truce covering a period of time awaiting the decision of the Ohio Supreme Court rendered in April of 1951.

The inventory of the assets located in Ohio listed property of almost $5,000,000 value and consisting of moneys, credits, stocks, bonds and various parcels of Ohio real estate. The undivided one-half interest in the partnership of Hickok and Reynolds comprised Texas real estate, mineral interests, oil and gas leases, and similar assets connected with the oil industry. These assets were not included in the inventory of the Texas estate and have not been inventoried or accounted for in Texas. The value of this partnership interest is considerable and it includes in particular the “Goldsmith Property” interests which alone are of great value.

The Supreme Court of Texas concluded that the testator’s will was valid in Texas; that the Texas assets were “land”; that the Ohio courts did not attempt to exercise jurisdiction over the Texas real estate; that it, the Texas Court, had exclusive jurisdiction of the Texas real estate; that the defendant “Charities” have a vested remainder in all of the Texas real estate subject to the twenty-year trust, and that the doctrine of equitable conversion does nót apply to these assets in the State of Texas.

The court remanded the case to the District Court of Eastland County, Texas, and thereafter defendant “Charities” pressed for and are pressing for an accounting under a Special Master appointed by the court.

It appears to be the position of defendant “Fiduciaries”:

First, that the language of Section 2361 of Title 28 of the United States Code Annotated is mandatory and that the court here must hear and determine the issue of the ownership of the Texas assets and particularly the “Goldsmith Property.”

Section 2361 provides in part:

“In any civil action of interpleader or in the nature of interpleader under Section 1335 of this title, a district court may issue its process for all claimants and enter its order restraining them from instituting or prosecuting any proceeding in any State or United States court affecting the property, * * * involved in the interpleader action until further order of the court. * * *
“Such district court shall hear and determine the case, and may discharge the plaintiff from further liability, make the injunction permanent, and make all appropriate orders to enforce its judgment.”

Second, defendant “Fiduciaries” take the position that the jurisdiction of this court is based upon diversity of citizenship and, therefore, requires that this court act in this case and determine the issues as an Ohio Court: that it is, therefore, bound by the decisions of the courts of Ohio and particularly by 155 Oh St 293, 44 O. O. 297, 98 N. E. (2d), 815.

Third, defendant “Fiduciaries” contend that the Supreme Court of Ohio decision is res adjudicata insofar as it has any application to the “Goldsmith Property” and that “Charities,” therefore, seek to re-litigate in Texas a matter that is res adjudicata.

Let us analyze positions one and two. We are not convinced that under the wording of the statute it is mandatory for this court to determine the issue of the ownership of the “Goldsmith Property.” We do not believe that plaintiff, through the selection of this forum to protect it from multitudinous suits, is in a position to ask or demand that this court determine the issue between “Charities” and “Fiduciaries” if, in so doing, it is necessary to violate fundamental rights of one of the parties and run counter to established principles of law.

In the case of Sanders v. Armour Fertilizer Works, 292 U. S., 190, at page 200, 54 S. Ct., 677, at page 680, 78 L. Ed., 1206, we find the following:

“ ‘We do not think the filing of the federal interpleader and the payment thereunder of the money into the District Court in Texas operated to bring it under the dominion of Texas law. The applicant for inter-pleader often has a choice of forum, and he cannot at his will subject the rights of the contesting claimants to one set of laws rather than another. The purpose of the interpleader statute was to give the stakeholder protection, but in nowise to change the rights of the claimants by its operation. The interpleader is a suit in equity, and equitable principles and procedure are the same throughout the federal jurisdiction. The court is to weigh the right or title of each claimant under the law of the state in which it arose, and determine which according to equity is the better. The decision should be the same whether the inter-pleader is filed in Illinois or in Texas. No one’s rights are intended to be altered by paying the fund into the court, which as an impartial neutral is to determine them.’ ([5 Cir.]; 63 F. (2d), 902, 906.)”

We believe that the underlying purpose of plaintiff in instituting this suit was to protect itself and we believe that we can afford that protection without the necessity of clashing head-on with set principles of law.

The Texas Courts assumed jurisdiction over the assets of this estate located in the State of Texas immediately after the death of testator. The will was admitted to probate and ancillary administration undertaken. A petition for the construction of the will followed and the decision of the District Court in Eastland County, Texas, was appealed to the Court of Appeals, 252 S. W. (2d), 739, and from thence to the Supreme Court of Texas, 152 Tex., 578, 261 S. W. (2d), 692, 43 A. L. R. (2d), 553. All defendants were parties thereto. The Supreme Court of Texas concluded that it was not the intention nor the purpose of the Supreme Court of Ohio to exercise jurisdiction over the property in Texas and hence took the position that the decision of the Supreme Court of Ohio in connection with §10504-5 GC, was not res adjudicata as to the Texas Courts. With this we agree. The Supreme Court of Texas concluded that the assets of the estate in the State of Texas were immovables, were within its jurisdiction and subject thereto, and that defendant “Charities” had a vested right in the corpus of the estate in Texas at the expiration of the trust period. The Texas Court further concluded that the doctrine of equitable conversion, on which defendant “Fiduciaries” rely, does not apply to these assets in the State of Texas. We are not disposed to disagree with the conclusions of the Texas Court. We feel that we could not disagree if we desired to do so, first, because the law of a state in which the land is situated controls and governs its transmission by will (Clarke v. Clarke, 178 U. S., 186, 20 S. Ct., 873, 44 L. Ed., 1028), and, second, because the Texas Courts took jurisdiction ten years ago and we are, therefore, precluded from encroaching upon their prerogatives. In the case of Baltimore & O. R. Co. v. Wabash R. Co., 7 Cir., 119 F., 678, at page 679, we find the following:

“It is settled that, when a state court and a court of the United States may each take jurisdiction of a matter, the tribunal whose jurisdiction first attaches holds it, to the exclusion of the other, until its duty is fully performed, and the jurisdiction involved is exhausted. Harkrader v. Wadley, 172 U. S., 148, 19 S. Ct., 119, 43 L. Ed., 399; Farmers’ Loan & Trust Co. of New York v. Lake Street El. R. Co., 177 U. S., 51, 20 S. Ct., 564, 44 L. Ed., 667. We have followed this rule, declaring ‘that the court which first obtains possession of the res or of the controversy, by priority in the service of its process, acquires exclusive jurisdiction for all the purposes of a complete adjudication.’ Clark v. 505,000 Feet of Lumber [7 Cir.], 65 F., 236, 12 C. C. A., 628, 24 U. S. App., 509, 517. The rule is not only one of comity, to prevent unseemly conflicts between courts whose jurisdiction embraces the same subject and persons, but between state courts and those of the United States it is something more. ‘It is a principle of right and law, and therefore of necessity. It leaves nothing to discretion or mere convenience.’ Covell v. Heyman, 111 U. S., 176, 4 S. Ct., 355, 28 L. Ed., 390. The rule is not limited to cases where property has actually been seized under judicial process before a second suit is instituted in another court, but it applies as' well where suits are brought to enforce liens against specific property, to marshal assets, administer trusts, or liquidate insolvent estates, and in all suits of a like nature. Farmers’ Loan & Trust Co. of New York v. Lake Street El. R. Co., supra; Merritt v. American Steel-Barge Co. [8 Cir.,], 79 F. 228, 24 C. C. A., 530, 49 U. S. App., 85. * * *”

In the case of Princess Lida of Thurn and Taxis v. Thompson, 305 U. S., 456, at page 466, 59 S. Ct., 275, at page 280, 83 L. Ed., 285, we find the following:

“* * * for it is settled that where the judgment sought is strictly in personam, both the state court and the federal court, having concurrent jurisdiction, may proceed with the litigation at least until judgment is obtained in one of them which may be set up as res judicata in the other. On the other hand, if the two suits are in rem, or quasi in rem, so that the court, or its officer, has possession or must have control of the property which is the subject of the litigation in order to proceed with the cause and grant the relief sought the jurisdiction of the one court must yield to that of the other. We have said that the principle applicable to both federal and state courts that the court first assuming jurisdiction over property may maintain and exercise that jurisdiction to the exclusion of the other, is not restricted to cases where property has been actually seized under judicial process before a second suit is instituted, but applies as well where suits áre brought to marshal assets, administer trusts, or liquidate estates, and in suits of a similar nature, where, to give effect to its jurisdiction, the court must control the property. The doctrine is necessary to the harmonious cooperation of federal and state tribunals. * * *”

We believe that we have no right or authority to interfere with the conclusion of the Texas litigation or to attempt to usurp the jurisdiction of the Texas Courts over the assets within its jurisdiction.

We turn to the third position of defendant “Fiduciaries” that the decision of the Supreme Court of Ohio is res adjudicata insofar as it has any application to the “Goldsmith Property,” and that the “Charities,” therefore, seek to re-litigate in Texas a matter that is res adjudicata.

We do not believe that the Supreme Court of Ohio in its opinion in 155 Oh St 293, 44 O. O. 297, 98 N. E. (2d), 815 attempted to or intended to apply the provisions of §10504-5 GC (§2107.06 R. C.) to the assets of the estate in Texas. The Supreme Court of Texas so concluded and with this we agree. The history of the Ohio litigation leads us to conclude that the Ohio Courts, including the Probate Court, the Court of Appeals for Lucas County, and the Supreme Court of Ohio, had and kept under consideration only the assets within the State of Ohio. The heretofore quoted portion of the opinion of the Probate Court so limits it in its conclusions. The Court of Appeals adopted the opinion of the Probate Court. The only question undertaken to be solved by the Supreme Court of Ohio was the question of the applicability of the General Code section and nowhere does it appear that the question of the Texas assets and their devolution was presented to the Supreme Court or considered by it. If the Supreme Court of Ohio had elected to consider the question of the Texas properties it would have found itself squarely confronted with Clarke v. Clarke, supra.

The motion of defendant “Charities” to stay proceedings and to dissolve the restraining order issued against it is sustained in its entirety. It follows that the motion of defendant “Charities” to stay proceedings on motions for summary judgment is sustained.

Rule 52 of the Federal Rules of Civil Procedure, 28 U. S. C. A. provides in part as follows:

“Findings by the Court
“(a) Effect. In all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment; and in granting or refusing interlocutory injunctions the court shall similarly set forth the findings of fact and conclusions of law which constitute the grounds of its action. * *

We are, in effect, refusing an injunction and, therefore, in the interest of caution, we suggest to defendant “Charities” that findings of fact and conclusions of law, drawn in accordance with this opinion, be prepared and filed within fifteen (15) days. Defendant “Fiduciaries” may file their exceptions or suggested additions thereto within ten (10) days thereafter.


source: Caselaw Access Project

author: By McCABE, J.

license: Public Domain

text:
    COREY, Plaintiff, v. NATIONAL BANK OF TOLEDO et, Defendants.
    Common Pleas Court, Lucas County.
    No. 183284.
    Decided July 12, 1958.
   OPINION

By McCABE, J.

This is an action for the construction of the Will of Elias J. Corey, deceased, brought by the widow, Nahella Corey, against the defendants, The National Bank of Toledo, formerly Commerce National Bank of Toledo, Executor and Trustee named under the Will, and the deceased’s children, Roger E. Corey, Esa E. Corey and Matile Michel. All parties were duly before the Court and represented by counsel. The pleadings consist of the plaintiff’s petition and the answers of the defendants. Trial was held on June 25, 1958, at which time testimony was taken and oral arguments of counsel heard. Counsel for the plaintiff and counsel for the defendants Roger E. Corey, Esa E. Corey and Matile Michel presented trial briefs and, with leave of Court, counsel for plaintiff also filed a reply brief.

The facts have been established by the pleadings and have not been the subject of dispute for the reason that they are provable by incontrovertible documentary evidence to which all parties have had access. The deceased died a resident of Lucas County, Ohio, on May 15, 1956, leaving plaintiff and defendants Roger E. Corey, Esa E. Corey and Matile Michel his sole heirs at law. The deceased’s Last Will and Testament was identified by the witness Willis Ludeman, Chief Deputy Clerk of the Probate Court of Lucas County, Ohio, and admitted in evidence marked “Exhibit A.”

The question presented is whether or not the rights of the plaintiff to the income and to appoint the corpus of the trust established by Item IX A of the Will are subject to being defeated by the happening of any of the events set forth in Item X of the Will. I have concluded that the plaintiff’s rights as a beneficiary of Trust A are not subject to being defeated upon the happening of any of the events set forth in Item X because such conclusion is required by (1) the express words of the Will, (2) the intention of the testator as expressed in the dispositive provisions of the Will and (3) the law of Ohio with respect to spendthrift trusts.

The Trust established by Item IX A and Item X are as follows:

" 'A' "
“The Trustee shall set aside and hold, in a separate trust, Trust A, assets equal in value to one-half (%) of the value of my adjusted gross estate as determined for Federal estate tax purposes, less the aggregate value of marital deductions, if any, allowed for Federal estate tax purposes by reason of property or interests therein (including insurance proceeds) passing or which have passed to my wife otherwise than under this Will. Only such assets, the nature of which qualifies them for the marital deduction, shall be so set aside and held in such separate trust for my wife. The income and principal shall be distributed as follows:
“(a) All the income (which may be more but in no event shall be less than the income determined in accordance with the requirements of the applicable sections of the Internal Revenue Code and the rules and regulations issued pursuant thereto entitling a decedent’s estate to a marital deduction) shall be distributed to my wife annually or at more frequent intervals.
“(b) My said wife shall have the right and power, at any time and from time to time, and in all events, by means of a written instrument signed by her and delivered to the Trustee during her lifetime, or at her death by provision in her will which expressly refers to her power of appointment hereunder, to appoint all or any part of the principal to such one or more person or persons (including herself and/or her estate), in such shares and amounts and in such manner, as she may designate.
“(c) To whatever extent my wife shall fail effectively to appoint such principal, it shall, upon her death, be distributed and paid over to Trust “B,” hereinafter set forth.”
“ITEM X
“If any beneficiary of any trust hereunder shall attempt at any time or times to alienate, sell, transfer, assign, pledge or otherwise encumber the whole or any part of the income and/or principal reserved to such beneficiary, or if any creditor or person having a claim or demand of any sort against any such beneficiary levies an attachment or otherwise attempts to subject the income and/or principal reserved hereunder to such beneficiary to the satisfaction of such beneficiary’s debts or other obligations, then and in that event and from that time forward the absolute right of such beneficiary to the income and/or principal hereunder reserved shall cease and determine and all income and/or principal hereunder reserved for such beneficiary shall thereafter be held or distributed by the Trustee during the remainder of the life of the trust for such beneficiary in all or any of the following ways:
“(a) All or any part of such income may be accumulated; or
“(b) Such part of such income, accumulated income and principal as may be needful or desirable for the education, care, comfort or support of such beneficiary or such beneficiary’s issue, may be paid to or applied to the use of such beneficiary or such beneficiary’s issue, as the Trustee in its absolute and uncontrolled discretion, without being liable to account for the exercise of such discretion, thinks fit.”

Trust A specifically provides that the plaintiff shall be entitled to the income which shall “in no event” be less than a certain amount and that she shall have the power to appoint the corpus “in all events.” The use of the word “event” is significant because in Item X it is provided that if there is an alienation, sale, etc., “then and in that event” the absolute right of the beneficiary shall cease. Thus, by labeling an alienation, sale, etc. an “event” in Item X and by providing in Trust A that no “event” shall defeat the rights of the widow, it becomes clear that the rights of the plaintiff as beneficiary of Trust A are exempted from forfeiture by the operation of Item X. Defendants’ contention that Item X must be applicable to the widow’s rights under Trust A because Item X uses the plural form in referring to “. . . any beneficiary of any trust hereunder . . .” is not well taken for even though all beneficiaries of all trusts created under the Will are referred to by such words, the limitations of Item X are only operative and are only imposed upon a particular beneficiary by the happening of one of the enumerated events, and, as pointed out above, the plaintiff’s rights to the income and to appoint the corpus under Trust A have been specifically exempted from the operation of the limitations .of Item X by the express words of Trust A and Item X. The widow’s rights to the income and to appoint the corpus of Trust A, therefore, are absolute and are not subject to being defeated upon the happening of any of the events set forth in Item X.

The provisions of Trust A created in Item IX of the Will must also prevail over the limitations set forth in Item X, notwithstanding that Item X appears last, for the reason that Trust A is an affirmative dis-positive provision of the Will in which the testator expressed his intention that the plaintiff should be absolutely entitled to the benefit of the assets contained in Trust A; whereas, Item X is a general non-dispositive provision — in this case a typical “spendthrift” provision — that is not to be allowed to defeat the specifically expressed bequest of the testator to the plaintiff by Trust A. The Courts of Ohio have held that where an absolute grant is given under a will, it cannot be detracted from by subsequent doubtful words in a will. In the case of Baker v. Alexander, 24 Oh Ap 117, the Court said at p. 127:

“We reach the unanimous conclusion that, while there may be, and is, some little conflict in the authorities in other jurisdictions, it is, in our own jurisdiction, however, the settled law that, where land is devised in words and language clearly indicating that fee simple is intended to be conveyed, and without words of limitation, the devise cannot be limited by a subsequent doubtful provision placing a limitation thereon.”

To the same effect see §2107.51 K. C.; Goubeaux v. Westerfield, 18 Abs 54; Lincoln v. Columbus Advertising Co., 27 Abs 359; Hamilton v. Stone, 130 C. C. N. S. 556; 41 O. Jur., Wills, Sec. 461. The widow’s rights to the income and to appoint the corpus of Trust A, therefore, are absolute and are not subject to being defeated upon the happening of any of the events set forth in Item X.

Having considered this matter from the standpoint of the interpretation which should be placed upon this Will under the laws of the State of Ohio, I turn now to the question of the effect of spendthrift clauses under the laws of our State.

I find that the most recent decision of the courts of our State interpreting the matter of spendthrift clauses is that of my colleague, Judge Paul W. Alexander, which is found in the case of O’Connor, Jr., plaintiff, v. O’Connor, defendant, and is reported in 75 Abs 420. In this decision Judge Alexander held that the wife and children of the beneficiary of a spendthrift trust were not creditors of the beneficiary and that the liability of such beneficiary is not a debt. Judge Alexander’s opinion has not been reversed by any of the higher courts and it therefore, under those circumstances, stands as the law of Ohio.

If it be the law that the obligation of a husband to provide for the support of his wife and children is not a debt within the meaning of the spendthrift clause contained in a Will, and if the wife and children of such beneficiaries are not to be construed as creditors, certainly the provisions of a spendthrift clause in a Will wherein reference is made to the word “debt” or “creditor” can under no circumstances be held to detract in the slightest from the definite dispositive provisions of a Will in which rights are given to the widow of the deceased as in the case before us.

It appears from the briefs of counsel that Trust A may not qualify for the so-called estate tax marital deduction if the widow’s rights are subject to the restrictions of Item X. If such is the case, it is to be noted that the foregoing holding is in accord with the abundantly clear intent of the testator that Trust A should qualify for such deduction. The form in which the Will is drawn is replete with references to and provisions drawn in accordance with the Federal estate tax marital deduction law, and nothing could be more clear than that the testator intended Trust A to qualify for such deduction.

It is the holding of this Court that the plaintiff’s rights as a beneficiary of the trust established by Item IX A of the Will of the deceased are absolute and are not restricted or subject to the conditions set forth in Item X of the Will. The National Bank of Toledo, as Executor and Trustee named under the will, is ordered to administer the estate and the trust established by Item IX A of the Will in conformity with this decision.

A journal entry may be drawn accordingly. Exceptions are to be allowed to the defendants.


author: By GRIFFITH, J.

text:
    SCOTT, Plaintiff-Appellee, v. BULL et, Defendants-Appellants.
    Ohio Appeals, Seventh District, Carroll County.
    No. 330.
    Decided March 10, 1958.
    Bowers & Bowers, New Philadelphia, for plaintiff-appellee.
    A. L. Limbach, New Philadelphia, for defendants-appellants.
   OPINION

By GRIFFITH, J.

Sylvia T. Beitler and W. C. Beitler owned a farm on which was standing timber. On December 28, 1953, Russell Scott, by oral contract, purchased the standing timber for $550.00. On December 17, 1954, the Beitlers sold the farm to Claude E. Bull and Margaret M. Bull by warranty deed, which deed contains the following provision:—

“Also, excepting and reserving the timber sold to one Bussell Scott, but if said timber is not cut according to the agreement between said Russell Scott and the Grantors herein, then the same shall pass to the Grantees, their heirs and assigns.” (Deed dated December 17, 1954.)

Before conveying the farm to the Bulls the Beitlers entered into an oral agreement with Scott that the timber should be removed before January 1, 1956. After the Bulls moved onto the farm, Scott attempted to enter upon the premises to remove' the timber, but Bulls refused to permit the same. The defendants claim that they were in possession of the farm on which the standing timber was located on December 17, 1954, and claimed that the. contract between Scott and the Beitlers is invalid by virtue of the Statute of Frauds in that the subject matter of the contract was real estate, and that the contract was not to be performed within one year, and, for those two reasons, the Statute of Frauds applied rendering the same invalid.

The standing timber has never been removed to the present time, and the lower court issued a mandatory injunction permitting the removal of the same, and it is from that order and judgment that the case is before this Court on appeal on questions of law only.

There are a few facts that clearly dispose of this case. Beitlers have never rescinded the contract nor have they indicated that it is not a binding contract, binding on them. In fact, they ratified the contract by the express reservation in the deed to the Bulls. Title to the standing timber was never conveyed but instead specifically reserved. Title was not to vest in the Bulls unless the timber was not cut according to the agreement between Scott and the Beitlers.

Scott had no agreement with the Bulls. His only agreement was with Beitlers. Bulls did not buy the farm with the standing timber. They bought the farm excepting the standing timber, which timber had theretofore been sold to Russell Scott. It is so stated in Bulls’ deed. They got all that they contracted for and are now seeking to acquire the standing timber in addition thereto.

The contract between Beitlers and Scott provided that the timber should be removed by January 1, 1956. Scott attempted to remove the same within the terms of the oral agreement, and Bulls refused him permission. There clearly was a moral duty on the part of Beitlers to ask performance of the oral contract. They did, in fact, reserve the timber in the deed, and they not only consented to Scott having the timber but excepted the timber from the conveyance, and this court should not impose any obstacle to the completion of that contract.

Only a party to an oral contract can take advantage of the fact that it fails to conform to the requirements of the Statute of Frauds. Lefferson v. Dallas, 20 Oh St 68; Minns v. Morse, 15 Ohio 569. Bulls were not a party to the oral contract.

The Common Pleas Court decided this case in accordance with the law, and we find no errors assigned that are in any wise prejudicial to the rights of the appellants.

Judgment affirmed.

NICHOLS, PJ, concurs.

PHILLIPS, J, dissents.


author: By WATTERS, J.

text:
    LIBERMAN, Plaintiff, v. AKRON (City), Defendant.
    Common Pleas Court, Summit County.
    No. 215375.
    Decided March 3, 1959.
    Feldman & Schneiderman, Akron, for plaintiff.
    Rufus Thompson, Asst. Law Director, for defendant.
   OPINION

By WATTERS, J.

The petition of the plaintiff is filed by virtue of §723.01 R. C. (old §3714 GO, in which she complains of injury upon the so-called devil strip or park strip between the sidewalk on Lawton Street and curb. She claims the City was negligent “in that it maintained said park strip in an improper, dangerous and defective condition; that defendant failed to have curbing on said Lawton Street and maintained the grade on said street at a much lower level than the park strip, creating a danger to persons walking from the park strip to the street; that defendant negligently allowed depressions and holes to exist in the park strip; that defendant negligently allowed the said conditions to exist without any protection, fence, light, or any other safety measure to indicate danger or give notice to pedestrians walking across the park strip or without correcting such hazard.”

In addition the plaintiff in paragraph (5) claimed it constituted a hazard or nuisance and that the City had notice, etc.

The main question is this: Is a municipality liable under §723.01 R. €., for injuries caused by a condition of nuisance in a park strip. (Between curb & sidewalk.)

The statute reads in substance:

“The council shall have the care, supervision and control of public highways, streets, avenues, alleys, sidewalks, public grounds, bridges, aqueducts, and viaducts, within the corporation, and shall cause them to be kept open, in repair, and free from nuisance.” (Emphasis by this court.)

This is a law in derogation of the common law and must be strictly construed, for otherwise the City is protected under the theory of governmental function. See Wooster v. Arbenz, 116 Oh St 281 and 164 Oh St 344, cited below.

As said in 164 Oh St 344, Insurance Company v. Fremont at 347: “The subject matter of the statute on public highways, streets” . . . . “sidewalks,” etc.....“relates specifically to traditional areas used only for the purpose and means of travel.....”

“It is apparent also that the terms ‘street’ and ‘sidewalks’ have the connotation, not of platted street areas, but of areas actually used by the public in travel.” Then follows further noted limitations on the duty of the City, and to the specific areas to which such duty is confined.

The case last cited, 164 Oh St 344, the City, in a .street-widening transaction, through an independent contractor, the roots of a large elm on the park strip were cut in putting in a curbing, and the tree thus weakened fell upon a nearby house, damaging same. The insurance company paid the damage claim, and then sued the City, maintaining the weakened tree as a nuisance on the park strip, under §723.01 R. C.

See Syllabus 1 and 2 of said 164 Oh St 344.

Syllabus (1):

“Except as provided by statute, municipal corporations enjoy immunity or freedom from liability for negligence in the performance or non-performance of their governmental functions.”

Syllabus (2):

“. . , .; and municipalities in improving or repairing streets, for whose condition for travel they are made responsible, are engaged in a governmental function.”

Accordingly, the court held that the City was acting in a governmental capacity in putting in the curbing, etc., which work caused the tree to be weakened. So in the absence of a statute covering the situation creating liability, the City could not be held. The court reversed the court of appeals and affirmed the lower court and ruled against the insurance company. And the court further said:

“In the instant case, this court, applying to the statute in question, a strict construction as is required, concludes that the weakened tree did not constitute a disrepair, defect, or nuisance in the “street” itself, and, as a consequence, the provisions of §3714 GC (now §723.01 R. C.), did not create a liability against the defendant. Likewise, there was no liability outside the statute, because of its governmental immunity.”

In other words, as this court interprets the above, the court is saying the place where the tree was, to-wit, on the park strip, was no part of the street, and the “park strip” is not included under said statute.

Another case which throws some light on the question before us is 85 Oh St 1, Barnesville v. Ward (1911).

In this case the City was actively maintaining the park strip and had beautified the same by planting grass seed and flowers upon said strip, and in order to protect said flowers it had actively placed stakes and wires as barriers around the stakes to prevent people from crossing over the same.

The accident, however, apparently happened during the winter time, as plaintiff claimed he was coming along the sidewalk and noticed a large pile of snow on the sidewalk ahead. So he decided to cross to the other side of the Street. It was dark, and as he stepped from the sidewalk toward the park strip, his foot caught in that side of the wire nearest to and parallel to the sidewalk which had been allowed to become stretched or sagged, so that his foot caught in said wire and he was thrown and injured and sued the Village of Barnesville.

Here the City had taken active control over the said strip or park strip by placing flowers, etc., therein, and to protect them had actively placed the wire barrier to prevent pedestrians from crossing said strip. As I understand it also the plaintiff tripped as stated on- the wire paralleling and along the outside or street side of the sidewalk. It became practically an obstruction against free use of the sidewalk.

It is significant that the Supreme Court in the 164 Oh St 344 (supra) no where even mentions the case 85 Oh St 1.

Then following this case we have Hubler v. City of Dayton, where in 26 Abs 679 (Appellate, 1938), Montgomery County basing its decision entirely, as I see it, on 85 Oh St 1 (supra) decided as follows:

“The strip between the sidewalk and the curb, ordinarily called the tree lawn, is a part of the highway which the City is under the statutory duty of keeping open, in repair and free from nuisance as against the usual mode of travel.”

The court on page 680 fully discusses and finds (85 Oh St 1) that the Supreme Court therein found that the so-called tree lawn or park strip was part of the highway as per the 1st syllabus above, although they say it is not in the syllabi of 85 Oh St 1.

It is significant also that the Supreme Court, in 164 Oh St 344, does not discuss or cite Hubler v. Dayton, 26 Abs 679, now under discussion.

Syllabus (2) of 85 Oh St 1, indicates that the trees, grass, and flowers in the park strip and the barrier or wire placed around them to protect them are not obstructions or nuisances within the meaning of old §3714 GC. So apparently the Supreme Court there thought and held that the statute was not applicable to the facts at all.

Nowhere in the syllabus does the court hold that the lawn strip' comes under §3714 GC.

Then in the 3rd syllabus, the court says the City is liable if it actively sets up such a dangerous situation as the facts show was done.

Other courts in the opinion of this court have misinterpreted this case.

In Richter v. The City of Columbus, 66 Abs 179 (Franklin Court of Appeals 1952, 116 N. E. 2nd 313), cited by plaintiff’s counsel, the syllabi and facts show the cement box over which the plaintiff fell and received injuries was placed upon the sidewalk near the curb by the City to cover certain exposed wires. There was no lawn strip or tree lawn, but all was sidewalk and open to pedestrian travel. There is no question that old §3714 GC, now §723.01 R. C., applies to sidewalks.

It is true that in this case the court cited with approval Hubler v. City of Dayton, 85 Oh St 1, both supra, which in my opinion only applied incidentally.

The court also cites 120 Oh St 127, City of Hamilton v. Dilley, in which the facts show that the City had constructed a raised platform in the street.

The only reason that the court cited 85 Oh St 1, the Village of Barnesville case, was for the reason that in the Village case, as in the Richter case, the municipality had actively created a nuisance in the former by putting wires along the sidewalk and lawn strip, and in the latter the City had actively placed the obstruction over the exposed wires in the sidewalk.

For the reasons stated above, the court sustains the demurrer, with exceptions to the plaintiff.


author: By DAVIES, J.:

text:
    NEFF, Estate of, In re.
    Probate Court, Hamilton County.
    No. 210005.
    Decided March 26, 1958.
    William Saxbe, Atty. Geni., S. Noel Melvin, Asst. Atty. Geni., Columbus, for The Tax Commissioner of Ohio.
    Paxton & Seasongood, Cincinnati, for exceptor.
   OPINION

By DAVIES, J.:

The Central Trust Company, as executor of the estate of Edith Sterret Neff, who died testate on June 20, 1957, excepted to an order of the Probate Court which levied an Ohio inheritance tax in the amount of $2843.73 upon a succession of $38,671.60 to the Seventh Presbyterian Church of Cincinnati, claiming that §5731.09 R. C., was amended on May 31, 1957, to provide for exemptions of successions to or for the use of established religious organizations within Ohio, that such amendment to the inheritance tax law is included in the classification of “laws providing for tax levies” within the meaning of Section Id, Article II, Ohio Constitution, which “go into immediate effect,” and that the succession to said church is exempt from an Ohio inheritance tax.

Amended §5731.09 R. C., which was passed by the Legislature on May 17, 1957, signed by the Governor on May 31, 1957, and filed in the office of the Secretary of State on May 31, 1957, provides, in part, that “the succession to any property passing to or for the use of---any established religious organization, within this state,---or any established religious organization within any state of the United States, which does not impose an inheritance, estate, or transfer tax on property given, devised, or bequeathed by a resident thereof to - - - any established religious organization, within this state, - - - shall not be subject to §5731.02 R. C.”

Sec. 5731.02 R. C., provides for the levying of an inheritance tax upon successions to property passing under the conditions therein set forth.

Section Id, Article II, Ohio Constitution, reads as follows:

“Laws providing for tax levies, appropriations for the current expenses of the state government and state institutions, and emergency laws necessary for the immediate preservation of the public peace, health or safety, shall go into immediate effect. Such emergency laws upon a yea and nay vote must receive the vote of two-thirds of all the members elected to each branch of the general assembly, and the reasons for such necessity shall be set forth in one section of the law, which section shall be passed only upon a yea and nay vote, upon a separate roll call thereon. The laws mentioned in this section shall not be subject to the referendum.”

The Court must determine if amended §5731.09 R. C., became effective on May 31, 1957, when signed by the Governor and filed in the office of the Secretary of State, or ninety days later, on August 30, 1957. In the former event the succession would not be, and in the latter event it would be, subject to an Ohio inheritance tax.

In The State, ex rel. Schreiber v. Milroy, 88 Oh St 301, the Court considered a case involving quo warranto brought by Cornell Schreiber, as City Solicitor of Toledo, against Charles M. Milroy, as Prosecuting Attorney of Lucas County. Schreiber, as such solicitor, demanded that he be recognized as a member of the Board of Budget Commissioners, claiming the right and title to the office in question by virtue of an act of the General Assembly passed in April, 1913, approved by the Governor on May 6, 1913, and filed in the office of the Secretary of State on May 9, 1913. Sec. 5649-3b GC, as amended by this act, provided that the Budget Commission of each county should consist of three members, the County Auditor, the Mayor of the largest municipality in the county, and, in counties in which the amount of taxable property in the cities and villages thereof exceeds the amount of taxable property of territory outside of the cities and villages, the third member should be the City Solicitor of the largest municipality in the county. The question arose as to whether the relator, as Solicitor of Toledo, was entitled to the office in question on May 9, 1913, or ninety days thereafter. The relátor contended that the act under which he claimed title to the office was one providing for tax levies, and came within the exceptions of Section Id, Article II, Ohio Constitution, which provided that laws providing for tax levies shall not be subject to the referendum. The Supreme Court held that the General Assembly did not, in the act in question, impose a tax, stating distinctly the object of the same, nor did it fix the amount or the percentage of value to be levied, nor did it designate persons or property against whom a levy was to be made. The act, the Court said, “merely imposed certain limitations and created an agency,---and cannot be said to be one ‘providing for tax levies,1 within the meaning of those words as used in Section Id, Article II, Ohio Constitution.” The Court concluded that the act was clearly subject to the referendum and could not become effective until ninety days after it was filed in the office of the Secretary of State.

The Attorney General, in Opinion No. 435 (1951), p. 164, in considering an amendment to §6309-2 GC, which related to the distribution of fees collected under §6292 GC, and its related sections, held that, while such section might be considered to be a law relating to tax levies, it is not a law “providing for tax levies,” within the meaning of Section Id, Article II, Ohio Constitution, and that, as amended, it would go into effect at the expiration of ninety days after its filing with the Secretary of State. (See also: Opinion No. 6207, Opinion of Attorney General for 1943, p. 378; Vol. XI — 1950—Ohio State Law Journal, 495, at p. 525.)

In The State, ex rel. Keller v. Forney, et al, 108 Oh St 463, the Court, in considering the meaning of the phrase “laws providing for tax levies,” found in Section Id, Article II, Ohio Constitution, decided that exceptions to the operation of laws, whether statutory or constitutional, should receive strict, but reasonable, construction. The Court held that the language of Section Id, Article II, Ohio Constitution, expressly enumerating certain exceptions to the people’s right of referendum upon acts of the General Assembly, must be construed and applied with reference to this rule, and decided that the express language “laws providing for tax levies,” is limited to an actual self-executing levy of taxes, and is not synonymous with laws “relating” to tax levies, or “pertaining” to tax levies, or “concerning” tax levies, or any agency Or method provided for a tax levy by any local subdivision or authority. The Court (p. 470) stated that “you cannot have a law ‘providing for tax levies,’ except its public purpose be stated; but, in addition thereto, such law must state the property subject to the tax, the rate of tax, the time when such tax is payable, and other elementary essentials of a taxation law.” The Court stated that the Taft Act, which it was considering, complied with none of these essentials, but was simply a new scheme and a new agency created for levying taxes and enlarging the power and rate of levy, so far as they related to the referendum article. The Court concluded that there could be no doubt that the Taft Act was not a law “providing for tax levies” and was subject to the referendum.

When the people of Ohio established their Constitution, they delegated to the State only such powers as were necessary to guarantee the “inalienable rights” of the citizens, and specifically stated that “government is instituted” for the equal protection and benefit of the people in whom “all political power is inherent.” (Section 2, Article I, Ohio Constitution.) The Constitution vests the legislative power of the State in a General Assembly, but in keeping with the doctrine that the people are sovereign, they reserve to themselves (Section 1, Article II, Ohio Constitution), the power to adopt or reject any law, section of any law or any item in any law appropriating money passed by the General Assembly, by initiative and referendum, except as they further provided in Section Id, Article II, Ohio Constitution, that certain laws, including “laws providing for tax levies,” shall go into immediate effect.

The word “provide,” according to Webster’s New International Dictionary, Second Edition, means “to look out for in advance; to procure beforehand; to prepare for the future; to supply what is needed for sustenance or support.”

Under the provisions of §5731.09 E. C., prior to its amendment, successions to property passing to or for the use of established religious organizations, within Ohio, were subject to Ohio inheritance tax levies. While it might be stated that the legislature, in amending §5731.09 E. C., enacted a law “relating to,” “pertaining to,” or “concerning” a tax levy, it did not pass a law “providing for” a tax levy. The amended law excluded designated religious organizations from the obligation or burden of paying Ohio inheritance taxes upon successions to property passing to or for their use. The amendment did not provide for a tax levy. It, in fact, eliminated a tax levy.

For thes.e reasons, the amendment to said §5731.09 E. C., did not “go into immediate effect,” but' became effective on August 30, 1957, ninety days after it was signed by the Governor and filed in the office of the Secretary of State.

Since Edith Sterret Neff died on June 20, 1957, the bequest made in her will to the Seventh Presbyterian Church of Cincinnati is subject to the payment of an Ohio inheritance tax, and the exceptions filed by The Central Trust Company will be overruled.


author: By HUNSICKER, PJ.

text:
    ELLIS, Admx., Plaintiff-Appellant, v. GARWOOD, Defendant-Appellee.
    Ohio Appeals, Eighth District, Cuyahoga County.
    No. 24104.
    Decided June 20, 1957.
    Charles H. Ayres, for plaintiff-appellant.
    McConnell, Blackmore, Cory, Burke & Kundtz, for defendant-appellee.
    (Judges of the Ninth District sitting by designation in the Eighth District.)
   OPINION

By HUNSICKER, PJ.

This is an appeal on questions of law.

Robert Ellis, the appellant’s decedent, was riding in an automobile driven by the appellee, John S. Garwood, in a northerly direction on U. S. Route 21 in Cuyahoga County, Ohio, on December 1, 1954, at about 8:30 o’clock p. m. Mr. Ellis and Mr. Garwood were employed as engineers for the Sperry Gyroscope Co. of New York, and both of them lived in, and were residents of, the state of New York. They were temporarily in Ohio on business for their employer. Mr. Garwood was an engineer section head of his company, and Mr. Ellis was a sales engineer.

The automobile driven by Mr. Garwood had been rented for company purposes while these employees were in Ohio. At the intersection of Rockside Road and U. S. Route 21 in Cuyahoga County, there was a collision with another automobile, and this collision caused the death of Mr. Ellis.

Mrs. Ellis, in her own behalf, and on behalf of the children of Mr. Ellis, applied for and received the workmen’s compensation provided for by the laws of the state of New York. Thereafter, Mrs. Ellis, as administratrix of the estate of Robert Ellis, filed this action for wrongful death in the Common Pleas Court of Cuyahoga County, Ohio, against Mr. Ellis’ fellow-employee, Mr. Garwood.

Counsel for Mr. Garwood, by way of answer to this action, set up as a defense a provision of the workmen’s compensation law of New York, designated “Section 29 (6),” which provided as follows:

“The right to compensation or benefits under this chapter shall be the exclusive remedy to an employee, or in case of death, his dependents, when such employee is injured or killed by the negligence or wrong of another in the same employ.”

Ohio has no such limitation in its statutes.

Mrs. Ellis then filed a demurrer to this defense, and such demurrer was overruled by the trial court. Mrs. Ellis did not desire to plead further, and her petition was dismissed.

It is from the judgment overruling the demurrer and dismissing the petition that an appeal on questions of law is brought to this court.

The sole question before us concerns the right to maintain in Ohio this action for wrongful death when the plaintiff’s decedent and the defendant were fellow employees, resident in New York, but temporarily in Ohio, where the accident and the death occurred, when the New York workmen’s compensation law bars a recovery for death caused by the acts of a fellow-employee where, under that legislative act, benefits have been paid to those entitled thereto.

Shall Ohio apply the rule set out in the New York statute, or shall Ohio apply its own statutory rule, which does not preclude an action for wrongful death to be maintained against co-employee?

In the case of Landrum v. Middaugh, 117 Oh St 608, the court said:

“An employe who has applied for and accepted compensation for an injury received in the course of his employment through the negligent act of his foreman, performed in the regular course of such foreman’s employment while both the employe and his foreman were working for an employer who had complied with the provisions of the Workmen’s Compensation Act, cannot thereafter maintain an action against his foreman to recover damages for his injury.”

Thereafter, in the case of Morrow v. Hume, Admx., 131 Oh St 319, the court said:

“2. When, prior to the effective date of the guest statute (§6308-6, GO, an employee who is riding in an automobile owned and driven by his superior co-employee under the latter’s sole control, is killed through the negligence of the driver in operating the car, while both are engaged in making a trip in the service of the employer, an action for such negligence may be maintained notwithstanding the dependents of the deceased are entitled to and have receivd compensation under the Workmen’s Compensation Law.”

The court, in distinguishing the Landrum v. Middaugh case, supra, said, at page 326:

“* * * it thus appears that the foreman was the alter ego of the employer in the operation of the employer’s machinery.
“In the instant case the defendant was in a different position in that he was operating and controlling his own automobile. The defendant did owe a duty to the decedent and may be held to respond in damages for the wrongful death based on his negligence provided all elements warranting recovery are present.”

Thus, in a situation such as we have in this case, if both parties were resident in Ohio and working for an Ohio employer, the conclusion in this matter would be relatively simple, since the rule set out in Morrow v. Hume, Admx., supra, has not been overruled or modified by the Ohio Supreme Court.

Does the fact that the parties are domiciled in and resident of tho state of New York so alter the substantive law in Ohio as to require the application of New York law?

It can hardly be seriously argued that a payment made under the Workmen’s Compensation Law of New York is a full and complete satisfaction for the wrongful death of one under the marital status of Robert Ellis, when we consider his earning capacity as an engineer, and his age at the time of death.

If we seek a solution of this problem within the general rules of conflict of laws, we find in 1 Beale, Conflict of Laws, Sec. 7.2, the author saying:

“* * * In this country, as has already been said, all qualifications are determined by the law of- the forum. Examples of qualifications are differences in rules of domicil, * * * and of the place of wrong, and the question whether a certain ride is substantive or procedural.”

And in Restatement of Conflict of Laws, Sec. 7, Comment on Clause (a), it is stated that:

“* * * if there is a difference between the law of the forum and the law of another state as to what * * * rules of law pertain to the substantive rights of the parties and what rules are procedural only, the court at the forum applies its own law to such matters. * * *”

In Young v. Marci, 77 L. Ed. 1158, at p. 1161, the court said:

“Liability for a tort depends on the law of the place of the injury; and (apart from the effect of the full faith and credit clause which is not here involved) agreements made elsewhere cannot curtail the power of a state to impose responsibility for injuries within its borders.”

In 2 Beale, Conflict of Laws, Sec. 378.2 the author says:

“The existence and nature of a cause of action for a tort is governed by the law of the place where the plaintiff’s alleged right to be free from the act or event complained of is alleged to have been violated by a wrongful act or omission. It follows, therefore, that the law of the place of wrong determines whether or not there is a cause of action for the wrong. This is true although both parties are elsewhere domiciled. Thus, where a person driving a car collided with the rear end of a truck standing on the highway on a dark, rainy night, the court held that the place where the collision occurred furnished the rule as to the cause of action.”

See also: Restatement of Conflict of Laws, Sec. 378; Reutenik v. Gibson Packing Co., et al., 231 P. 773; Dorr Cattle Co. v. Des Moines Natl. Bank, 98 N. W. 918; Hall v. Hamel, 138 N. E. 925.

The question herein presented, with reference to the effect of the full faith and credit clause of the Constitution of the United States in this action, has been answered in the case of Carroll, et al., etc., v. Lanza, 349 U. S. 408, 99 L. Ed. 1183, where the court said, at pp. 412 and 413:

“* * * in these personal injury cases the State where the injury occurs need not be a vassal to the home state and allow only that remedy which the home state has marked as the exclusive one. The State of the forum also has interests to serve and to protect. Here Arkansas has opened the courts to negligence suits against prime contractors, refusing to make relief by way of workmen’s compensation the exclusive remedy.”

An examination of the Ohio cases discloses that it has been the consistent policy of this state to allow actions against third persons who have caused the injury or wrongful death, and that an award of workmen’s compensation is not a bar to an action against a third person tort-feasor. Trumbull Cliffs Furnace Co. v. Shachovsky, 111 Oh St 791; George v. City of Youngstown, 139 Oh St 591; Hartford Acc. & Indemnity Co. v. Procter & Gamble Co., 91 Oh Ap 573.

The workmen’s compensation act provides an insurance fund operated by the state for the benefit of injured employees and their dependents, and in that respect it is not an award of damages for a wrong committed by one person upon another. See: Ohio Public Service Co. v. Sharkey, Admr., 117 Oh St 586.

We realize the force of the argument in this case, that Mr. Ellis, when he entered into his contract of employment, accepted the provision of the New York law, which precluded an action such as we have in the instant case; and such argument would be controlling if, by reason of the full faith and credit clause of the Constitution of the United States, we were required to accept this statutory portion of his contract of employment. We have pointed out above, in the Carroll, et al., v. Lanza case, supra, that we are not bound by such provision.

We believe, as shown by Morrow v. Hume, Admx., supra, and by the fact that an award of compensation is in the nature of an insurance benefit, that the public policy in this state is such as to permit this action to be maintained.

We determine that the demurrer filed herein should have been sustained.

The judgment of the trial court will be reversed, and the cause remanded to the Court of Common Pleas for further proceedings.

Judgment reversed and cause remanded.

DOYLE and STEVENS, JJ, concur.


author: By MILLER. J.

text:
    BOARD OF LIQUOR CONTROL, Appellee-Appellant, v. BUCKEYE LAKE HOTEL COMPANY, d. b. a. LAKE BREEZE HOTEL, Appellant-Appellee.
    Ohio Appeals, Tenth District, Franklin County.
    No. 5927.
    Decided October 14, 1958.
    William Saxbe, Atty. Geni., Chester Hummell, Asst. Atty. Geni., Columbus, for appellee-appellant.
    Bruno E. Voltolini, Columbus, for defendant-appellee.
   OPINION

By MILLER. J.

This is a law appeal from a judgment of the Common Pleas Court, finding that the order of the Board of Liquor Control is supported by “reliable, probative and substantial evidence and is in accordance with law,” but the court was of the opinion that the penalty of revocation of appellant’s liquor permits was too severe and, accordingly, ordered the penalty of revocation vacated and then ordered them suspended for a period of sixty days.

The question presented is, whether or not under such circumstances the court erred in the modification of the sentence. This court has clearly expressed itself on the identical question presented in the case of Delmonte Cafe, Inc. v. Department of Liquor Control, 74 Abs 459, saying at page 460:

“The Court having found that the order is supported by reliable, probative and substantial evidence and is in accordance with law had no power under the statute to modify the penalty by reducing it from 45 days to 15 days.”

See also Andrews v. Board of Liquor Control, 164 Oh St 275, and §119.12 R. C. This section provides in part:

“The court may affirm the order of the agency complained of in the appeal'if it finds, upon consideration of the entire record and such additional evidence as the court has admitted, that the order is supported by reliable, probative, and substantial evidence and is in accordance with law. In the absence of such a finding, it may reverse, vacate^ or modify the order or make such other ruling as is supported by reliable, probative, and substantial evidence and is in accordance with law.”

We are of the opinion that this section clearly provides that it is only when the reviewing court does not find that the order is supported by “reliable, probative, and substantial evidence,” that the court has the power to consider vacation, reversal or modification of the order appealed from.

Counsel for the permit holder cites the case of Carpenter v. Sinclair, 78 Abs 74, wherein the penalty was modified by the Court of Appeals under the provisions of §119.12 R. C., but this case is distinguishable on the facts, for here the defendant was charged with four separate violations of §4735.18 R. C., and found guilty on each by the Board of Real Estate Examiners.

Upon appeal to the Court of Common Pleas, the finding and determination of the Board was affirmed; however, upon appeal to the Court of Appeals, the court found that three of the charges were not supported by the degree of proof required under §119.12 R. C. Since only one of the charges was sustained, the court then proceeded to modify the penalty. We are of the opinion that the modification was permissible under the cited section of the Revised Code, and there can be no conflict with our case.

It appears to the members of this court that the penalty is quite severe, but this is a matter resting exclusively with the Board of Liquor Control under the facts presented. Our legislature has defined the instances in which a penalty may be modified, and this appears not to be a case where modification is permissible under the statute.

The judgment will be reversed and the order of the Board of Liquor Control affirmed. The cause is ordered remanded for enforcement of the order.

PETREE, PJ, BRYANT, J, concur.