author: Donahue, J.

text:
    The Hocking Valley Railway Co. v. The Toledo Terminal Railroad Co. et al.

      Corporations — Railroads — Stockholders in terminal company — Agreement to prorate profits and losses — Later contract with railroads purchasing stock — Stipulation against assuming prior losses — Distribution of surplus earnings — To reimburse for prior deficits — Rights of new stockholding companies — Construction and validity of contracts.

    1. Where all the stockholders of a corporation join in a contract for the sale of a portion of the stock held by each of them, which contract provides that the purchasers of the stock “are in no way to assume or pay the whole or any part of any unearned interest heretofore due,” which unearned interest had then and there been paid and discharged by the corporation with funds contributed by the stockholders in pursuance of a former written agreement among themselves, the application of the subsequent surplus earnings of the corporation to the payment of interest or principal of certificates of indebtedness, issued to the stockholders for money contributed by them to pay such unearned interest, from time to time prior to the date of the contract, is in direct violation not only of the spirit but of the letter of the contract.
    2. Where such contract further provides that all the earnings of the corporation over and above its current operating expenses, taxes, etc., shall be credited to a fund for the payment of the interest on its bonded indebtedness, unless by unanimous vote of the directors of the corporation the same or any part thereof shall be applied towards additions, improvements, betterments, etc., the surplus earnings cannot be diverted from such fund to the repayment of money contributed by the stockholders to pay such unearned interest coming due prior to the date of the contract, or to the payment of interest on certificates of indebtedness issued to evidence such contributions.
    3. While stockholders of a corporation cannot by any agreement among themselves prejudice the rights of the corporation, creditors, or other stockholders, or divest the board of directors of authority to manage and control corporate affairs, yet, where all the stockholders, as an inducement to the purchase of a part of the stock held by each of them, enter into a contract, which in terms provides that the purchasers of stock from such stockholders “are in no way to assume or pay the whole or any part of any unearned interest heretofore due,” which unearned interest was theretofore paid by the corporation with money contributed by its stockholders in proportion to the amount of. stock held by each, the corporation cannot be used by the contracting parties as an instrument or excuse to avoid the terms of such contract or defeat performance of'the same.
    (No. 15867
    Decided December 10, 1918.)
    Error to the Court of Appeals of Lucas county.
    Prior to January 14, 1914, the entire capital stock of The Toledo Terminal Railroad Company was owned by seven railroad companies entering Toledo, Ohio.
    On the date above named, and for many years prior thereto, this company had an outstanding bonded indebtedness amounting to $4,000,000, bearing interest at 41 per cent, per annum, payable annually, secured by mortgage held by The Columbia-Knickerbocker Trust Co. of New York as trustees.
    On the 4th day of December, 1907, these seven companies entered into a contract in writing, which contained among others the following provisions:
    “Any deficit arising from the conduct of the business by the New Company shall be borne from time to time by the seven companies in proportion to the amount of stock held by each'; each party to contribute from month to month its proportion of such deficit on request of the proper officer of the New Company.”
    In pursuance of this agreement the seven proprietary companies advanced prior to January 14, 1914, various sums necessary to pay the unearned interest on the bonded indebtedness of The Terminal Railroad Company, which sums amounted in the aggregate to $1,035,000. At the time these advances were made The Terminal Railroad Company issued its interest-bearing certificates of indebtedness to the seven companies in proportion to the amounts advanced by each.
    On the 14th day of January, 1914, The Hocking Valley Railway Company and The Toledo & Ohio Central Railway Company entered into a contract in writing with the seven railroad companies owning all of the stock of The Toledo Terminal Railroad Company, by the terms of which these companies transferred and assigned to The Hocking Valley Railway Company and The Toledo & Ohio Central Railway Company a part of the stock held by each of the original proprietors, the contract reciting that:
    “The consideration for the transfer of stock as herein provided to The Hocking Valley Railway Company and The Toledo & Ohio Central Railway Company is the assumption by each of said companies, separately, to-wit, the Hocking Valley Railway Company and The Toledo and Ohio Central Railway Company, of their' proportion or share of the liability for deficiency in interest charges and working expenses accruing only on and after January 1, 1914, in the operation of The Toledo Terminal Railroad Company.”
    The further agreement was written into this contract:

      “It is now understood and agreed, severally and mutually between the parties hereto, that the said The Hocking Valley Railway Company and The Toledo and Ohio Central Railroad Company are in no way to assume or pay the whole or any part of any unearned interest heretofore due; but that on and after the first day of January, 1914, each of said parties hereto severally and separately assumes and agrees to pay its proportion of any deficiency in working expenses or interest charges based on the separate ownership of the capital stock of said The Toledo Terminal Railroad Company.’”
    Article III of this agreement reads as follows:
    “All earnings of said The Toledo Terminal Railroad Company, over and above current operating expenses, taxes, etc., shall be credited to a fund for payment of the interest upon said bonded indebtedness of The Toledo Terminal Railroad Company, unless by the unanimous vote of the directors of the said The Toledo Terminal Railroad Company the sum, or any part thereof, shall be applied towards additions, improvements, betterments, etc.
    “Any deficit arising or growing out of the conduct of the business of The Toledo Terminal Railroad Company shall be borne from time to time, separately, by the said nine (9) companies herein named, in proportion to the amount of stock held by each; each party hereto shall contribute from month to month its proportion of such deficit on request of the proper officer of the said The Toledo Terminal Railroad Company.”
    The earnings of The Toledo Terminal Railroad Company for the years 1914 and 1915 were not sufficient to pay interest for these years on its current bonded indebtedness, after the payment of operating expenses, taxes, etc., and the nine railroad companies then owning all its capital stock contributed ratably to the payment of these deficits, the plaintiff in error, The Hocking Valley Railway Company, paying $14,520 in the year 1914 and $14,520 in the year 1915.
    During the year 1916 the Toledo Terminal Railroad Company earned a substantial profit over and above its operating expenses and current interest charges on its bonded debt. On the 3d day of October, 1916, the directors of The Toledo Terminal Railroad Company adopted the following resolution:
    "Resolved, That it is our interpretation of Article III of the Agreement of January 1 [14], 1914, between the Per.e Marquette Railroad and eight other railroads, that all surplus remaining after paying current interest on bonded debt, shall be distributed:
    "1. As interest upon the notes representing advances made by proprietor lines.
    "2. To reimburse proprietor lines for advances made, this reimbursement to be made in proportion to the total amounts advanced by each proprietor line. It is understood that this will not interfere with the appropriation of any part of said surplus for additions, improvements, betterments, etc., by unanimous consent of the Board, as provided for in said Article III. This disposition of surplus shall continue until all proprietor lines have been reimbursed for all sums advanced.”

      This action was brought by The Hocking Valley Railway Company to enjoin the directors and officers of The Toledo Terminal Railroad Company from applying its net earnings for 1916 to the repayment of advances made by the seven proprietor railroad companies for unearned interest due on or before January 1, 1914, on the bonded indebtedness of The Toledo Terminal Railroad Company.

      Messrs. Wilson & Rector, for plaintiff in error.

      Mr. S. H. West; Mr. Julian H. Tyler; Messrs. Potter & Carroll; Messrs. Parker, Shields & Brown and Mr. Morison R. Waite, for defendants in error.
   Donahue, J.

The pleadings in this action present no material issue of fact. The defendants admit the execution of the contract attached to plaintiff’s amended petition, and the rights of the parties depend upon a correct construction of that entire contract, and not of any one part thereof.

It provides that “the consideration for the transfer of stock as herein provided to The Hocking Valley Railway Company and The Toledo and Ohio Central Railway Company is the assumption by each of said companies, separately, towit, The Hocking Valley Railway Company and The Toledo and Ohio Central Railway Company, of their proportion or share of the liability for deficiency in interest charges and working expenses accruing only on and after January 1, 1914, in the operation of The Toledo Terminal Railroad Company.”

This language is so plain as to require no construction. As a rule it is considered sufficient in a contract of this character to recite the consideration to be paid for the property purchased; but these contracting parties caused to be written into this contract a further stipulation, specifying considerations that the purchasing companies would f not be required to pay. That provision is found in Article II, and reads as follows: “It is now understood and agreed, severally, and mutually between the parties hereto, that the said The Hocking Valley Railway Company and The Toledo and Ohio Central Railroad Company are in no way to assume or pay the whole or any part of any unearned interest heretofore due.” That language is. equally clear and unequivocal and undoubtedly was written into this contract for .the express purpose of protecting the purchasing companies from repayment to the seven original proprietary companies of any part of the money contributed by the original companies under the contract of December 4, 1907, to pay unearned interest on the bonded indebtedness of The Toledo Terminal Railroad Company prior to the time that plaintiff in error and The Toledo & Ohio Central Railway Company were interested in the operation of the terminal company. The contract of December 4, 1907, did not provide for the loan of money by the proprietary companies to the terminal company. On the contrary, it provided that “any deficit arising from the conduct of the business by the New Company shall be borne from time to time by the seven companies in proportion to the amount of stock held by each.”

The issuing of interest-bearing certificates of indebtedness to evidence the amount contributed by the proprietary companies to meet this deficit was evidently an afterthought. However that may be, if these certificates in fact represent a bona fide indebtedness of the terminal company, the debt evidenced thereby is due and owing to the seven proprietary companies who have entered into a contract which in no uncertain terms provides that The Hocking Valley Railway Company and The Toledo & Ohio Central Railway Company shall not assume or pay all or any part thereof.

The resolution of the board of directors of October 3, 1916, purports to construe Article III of the contract of January 14, 1914. It entirely overlooks the fact that a contract must be construed as a whole.

Article III contains no reference to the deficits arising prior to the date of that contract, nor was it necessary that it should do so. The agreement in relation to these deficits is fully covered in Articles I and II. There is no conflict between these separate provisions of the contract, and therefore Article III cannot be construed so as to defeat the express and emphatic provisions of Articles I and II. But this resolution does not correctly construe the provisions of Article III, even if it stood alone. That article Specifically provides that all earnings of the terminal company, over and above operating expenses, taxes, etc., shall be credited to a fund for payment of the interest upon the bonded indebtedness of The Toledo Terminal Railroad Company, unless by unanimous, vote of the directors of The Toledo Terminal Railroad Company the same or any part thereof shall be applied towards additions, improvements, betterments, etc.

The operation of this company for the years 1914 and 1915 resulted in a deficit, and the parties to this contract contributed to the payment of such deficit in proportion to the amount, of stock held by each. The operation of the terminal company for 1916 resulted, for the first time in its history, in the earning of a surplus over and above the current operating expenses, interest on the bonded indebtedness, and taxes, and this resolution in defiance of the terms of Article III, providing that the same should be credited to a fund for the payment of the interest on its bonded indebtedness, undertakes to appropriate this surplus to the payment of the certificates of indebtedness issued by the terminal company to the seven original proprietary companies for funds contributed by them to pay unearned interest falling due prior to January 1, 1914.

If this were permitted to be done, and the operation of the terminal company in the succeeding year should result in a deficit, this plaintiff in error and The Toledo & Ohio Central Railway Company would be compelled to contribute in proportion to the stock owned by them to the payment of such deficit, notwithstanding the evident purpose of Article III was to create a fund to meet such interest charges in any subsequent year that the earnings of the terminal company were not sufficient for that purpose. Should this fund now be diverted to the payment of unearned interest falling due prior to January 1, 1914, and contribution be required to pay deficits in later years, it would hardly be contended that the plaintiff in error and The Toledo & Ohio Central Railway Company would not be paying indirectly, if not directly, a part of the deficit accruing prior to January 1, 1914.

Regardless, however, of the provision in Article III that the surplus earnings shall be credited to a fund for the payment of the interest upon bonded indebtedness, the application of these funds to the payment of unearned interest falling due prior to January 1, 1914, would be in direct violation of the terms, intent, and purpose of this contract.

While the legal title to all corporate property is vested in the corporation, nevertheless, it holds this title in trust for its stockholders and creditors. Every stockholder has a property interest in the corporate property. Every dollar expended from its treasury for which the corporation receives no equivalent in service, income, product, or material, not only reduces the value of its stock, but decreases the amount of the dividends the stockholders will receive in the due course of the company’s business; for it is the purpose and intent of its organization that all earnings not required in the corporate business will at proper times be distributed in dividends to the stockholders. In fact, the purpose of its being is to earn a profit for its stockholders. It is of course evident that if the surplus earnings of this corporation are applied to the payment of its debts, for which this plaintiff and The Toledo & Ohio Central Railway Company are not liable, the practical effect would be to compel them to pay a part of this debt through the instrumentality of the corporation. These companies might just as well be required to pay a part of the interest accruing prior to January 1, 1914, out of the dividends actually declared and paid to them, as to permit the corporation to pay these debts out of its surplus earnings, that otherwise would be distributed in dividends, if not retained for corporate purposes. The result, so far as they are concerned, would be the same.

It is insisted, however, that this contract between the stockholders cannot deprive The Toledo Terminal Railroad Company of its corporate powers to appropriate its surplus earnings to the payment of its debts. That proposition is true in the abstract, but it is evident that the terminal company is but a creature of these nine corporations, having no other stockholders than the parties to this contract, who absolutely control its operations.

Aside from that, this contract is made with the creditors who are seeking to appropriate these surplus earnings to the payment of their claims, so that this case does not involve any question arising between the terminal company and its creditors or stockholders other than those who were parties to this contract.

The board of directors of the terminal company recognized this contract as a contract of all the real owners of the corporate property, and therefore undertook to carry it into effect. To this end the board of directors passed this resolution purporting to construe Article III. The answer of The Toledo Terminal Railroad Company admits that unless restrained by order of court it proposes to and will carry this contract into effect, according to the interpretation of its meaning and terms as declared in the resolution of October 3, 1916. If the corporation is attempting in good faith to give effect to Article III of this contract, there is no good reason why it should be unwilling to observe the plain and positive provisions of Articles I and II, expressed in language too clear to require construction.

This contract in no way conflicts with the rights of the corporation itself. It is in no sense prejudicial to the rights of the general creditors, and all the stockholders having signed this contract, they are in no position to object to any of its terms.

The original seven proprietors of the terminal company are the only ones who could benefit by a repudiation of the contract. By reason of holding the majority of the stock, these seven companies are in control of its board of directors and managing officers. They cannot use this corporation as an instrument to avoid or defeat the manifest purpose and intent of their own contract, defining the rights and liabilities of those who under the terms and conditions written therein purchased stock directly from the individual stockholders party thereto.

The judgment of the court of appeals is reversed, and, there being no material issue of fact joined by the pleadings, judgment is entered for the plaintiff in error in accordance with the prayer of its petition.

Judgment reversed, and judgment for plaintiff in error.

Nichols, C. J., Jones, Matthias and Johnson, JJ-, concur.


source: Caselaw Access Project

author: By the Court.

license: Public Domain

text:
    The Euclid Arcade Building Co. v. The H. A. Stahl Co.

      Judgment — Authority to enter at conclusion of plaintiff’s evidence — Where case tried to court, without jury,

    (No. 15950
    Decided December 10, 1918.)
    Error to the Court of Appeals of Cuyahoga county.

      Messrs. M. B. & H. H. Johnson, for plaintiff in error.

      Messrs. Gage, Day, Wilkin, Wachner & Marvin, for defendant in error.
   By the Court.

This action originated in the municipal court of Cleveland, wherein the Stahl Company brought suit against the Building Company for commissions claimed to be due for providing a tenant for defendant’s building. In that action the defendant joined issue on the material facts pleaded by the plaintiff as a ground for recovery. The case was tried to the court. The journal entry of the municipal court shows the following: “trial proceeded with, and, at the close of plaintiff’s evidence, defendant moved the Court for a finding in its favor, which motion is heard and granted, and the Court therefore finds for the defendant, to which ruling the .plaintiff excepts.”

This entry was followed by a judgment in favor of the defendant. Thereupon plaintiff filed a motion for a new trial, in which there was no assignment that the judgment rendered was against the weight of the evidence. Error was prosecuted to the court of common pleas, which reversed the judgment of the municipal court for the sole reason that there was “error in granting defendant’s motion to make finding for defendant and enter judgment for defendant on its findings; no other error appearing in the record.” This latter judgment was affirmed by the court of appeals.

While the record does not disclose the exact reason why the court of common pleas and the court of appeals reversed the municipal court, it is claimed by counsel for plaintiff in error, and not denied by the other side, that these courts held that if there was a scintilla of evidence or a prima facie case made in the municipal court it was obligatory upon that court to deny judgment in favor of the defendant, even though a preponderance of the evidence was against the plaintiff at the time it rested its case. Indeed, this principle has been sustained by some of the courts of this country upon the theory that such motion made by defendant is in fact tantamount to a nonsuit, wherein the motion of the defendant at the close of plaintiff’s evidence presents. solely a question of law. This principle, however, has been denied in other jurisdictions, and we concur in the latter view. The former adopts the same principle applied to a case tried by jury wherein the jury is essentially a trier of fact. In such case, where some material evidence has been offered in support of the plaintiff’s claim, even though counterbalanced by the testimony of the defendant, the issuable facts should be submitted to a jury. But why should the rule apply to the trial court which has assumed the province of a jury in the trial of issuable facts ? Unquestionably, the defendant had the right at the close of the plaintiff’s evidence to rest its case and submit it upon the facts proven. We see no reason why, at the close of plaintiff’s case, if the evidence of the plaintiff preponderates in favor of the defendant, the case should proceed further, incurring useless expense and for an unavailing purpose unless the defendant were unfortunate enough to offer testimony that would bolster up his opponent’s case.

The trial of a law case to the court without the intervention of a jury is tantamount to the trial of a chancery case. If the plaintiff at the close of his- case has offered no evidence upon a material fact required to be proved, or has offered evidence of such a character as to overwhelm any prima facie case made by him, common sense would require that at the instance of the defendant the litigation should be then terminated. There is no presumption that later in the trial the defendant would offer more substantial evidence in the plaintiff’s favor than plaintiff himself offered.

The judgments of the court of common pleas and of the court of appeals are reversed, and that of the municipal court affirmed.

Judgments reversed.

Nichols, C. J., Wanamaker, Newman, Jones, Matthias, Johnson and Donahue, JJ., concur.


author: Johnson, J.,

text:
    The Village of Belle Center et al. v. The Board of Trustees of Roundhead Township et al.

      Inheritance tax — Distribution to local subdivision — Testator dies in one county — Real estate located in another county — Tax originates, where — Sale of realty to pay legacies.

    1. Where real estate has passed in the manner described in Section 5331, General Code, and has thereby become liable to the inheritance or succession tax therein provided for, the tax originates in the city, village or township in which the real estate is located; and by the provisions of Section 9, Article XII of the Constitution, fifty per cent, of the tax is required to be returned to such city, village or township.
    2. Where real estate is directed to be sold and the proceeds applied to the payment of certain legacies which are liable to the succession or inheritance tax by the provisions of Section 5331, General Code, the tax originates in the city, village or township in which the realty is located, and by the provisions of Section 9, Article XII of the Constitution, fifty per cent, of the tax is payable to such city, village or township.
    (No. 15859
    Decided December 10, 1918.)

      Error to the Court of Appeals of Logan county.
    The facts are stated in the opinion.

      Messrs. Briggs & Stewart and Mr. Lewis F. Hale, prosecuting attorney of Logan county, for plaintiffs in error.

      Mr. Donald F. Melhorn, prosecuting attorney of Hardin county, for defendants in error.
   Johnson, J.,

Joseph G. McConnell, a resident of the Village of Belle Center, in Logan county, died there in 1915. He left a will, which was admitted to probate by the probate court of Logan county. The will was executed at his home in the village, and his executors have continuously resided in Logan county since his death.

By the terms of his will he directed that certain real estate in the townships of Roundhead and McDonald, in Hardin county, Ohio, should be sold by his executors, and legacies which entirely consumed the proceeds were directed to be paid. These legacies were subj'ect to the inheritance tax. The testator acquired the real estate by purchase, prior to the execution of his will. The executors sold the real estate, made distribution of the proceeds thereof in accordance with the terms of the will, and have paid into the county treasury of Logan county the amount of the inheritance or succession tax. The trustees of McDonald and Roundhead townships in Hardin county claimed the portion of the tax which the statute provides should be returned to the city, village or township in which the inheritance tax originates. The probate court directed that, the proportion named of the tax should be paid to the village of Belle Center. This order was affirmed by the court of common pleas and reversed by the court of appeals.

The solution of the question presented depends on the construction of Sections 7 and 9, Article XII of the Constitution, as amended in September, 1912, and Section 5331, General Code, passed pursuant to that amendment. The sections, of the constitution referred to are as follows:

Section 7, Article XII: “Laws may be passed providing for the taxation of the right to receive, or to succeed to, estates, and such taxation may be uniform or it may be so graduated as to tax at a higher rate the right to receive, or to succeed to, estates of larger value than to estates of smaller value. Such tax may also be levied at different rates upon collateral and direct inheritances, and a portion of each estate not exceeding twenty thousand dollars may be exempt from such taxation.”

Section 9, Article XII: “Not less than fifty per centum of the income and inheritance taxes that may be collected by the state shall be returned to the city, village or township in which said income and inheritance tax originate.”

The pertinent portions of Section 5331, General Code, read: “All property within the jurisdiction of this, state, and any interests therein, whether belonging to inhabitants of this state or not, and whether tangible or intangible, which pass by will or by the intestate laws of this state, * * * other than to or for the use of the father, mother, husband, wife, lineal descendant or adopted child, shall be liable to a tax of five per cent, of its value above the sum of five hundred dollars. Fifty per cent of such tax shall be for the use of the state; and fifty per cent of such tax shall go to the city, village or township in which said tax originates. * * * Such taxes shall become due and payable immediately upon the death of the decedent and shall at once become a lien upon the property, and be and remain a lien until paid.”

The contention of the plaintiff in error in substance is that the tax originated in the village of Belle Center because it was the testator’s home when he died, and when he made his will; and that it has since been the home of his widow, the executrix.

It is also contended that the direction in the will requiring the executors to sell the land and distribute the proceeds in equity stamped the land with the character of personalty, and fixed the situs for the purposes of the inheritance tax at the domicile of the testator and his widow, who was the sole executrix at that time.

It will be observed that the provision of the statute defining what shall be subject to the inheritance tax reads, “All property within the jurisdiction of this state, and any interests therein, whether belonging to inhabitants of this state or not,” and that the Constitution, Section 9, Article XII, provides that not less than fifty per centum of the inheritance tax shall be returned to the city, village or township in which said inheritance tax orig- mates. It is a reasonable presumption that if it had been the intention of the framers of this provision that fifty per centum should go to the city, village or township in which the decedent resided, words obviously apt and conclusive in the statement of that intention would have been used. The section would have contained the simple, plain language that fifty per centum of the inheritance tax shall be returned to the city, village or township in which the decedent resided. No such language was used. The language which was used, “the city, village or township in which said income and inheritance tax originates,” when taken in connection with the provision in Section 7 of the amendment, “Laws may be passed providing for the taxation of the right to receive, or to succeed to, estates,” demonstrates that the framers of the amendment regarded the estate as the thing from which the tax would originate. The right to succeed to the estate is the thing that is taxed. Pursuant to this grant of authority, the legislature, in Section 5331, General Code, above quoted from, enacts that “All property within the jurisdiction of this state, and any interests therein, whether belonging to inhabitants of this state or not,” shall be liable to the tax. The property of a nonresident of Ohio which is within the jurisdiction of this state is by express provision made subject to the tax.

No one would contend, if a decedent owner lived and died in a city, village or township of another state, that the “inheritance tax originates” in such other state and city and that it would be payable there. But if we conclude that in such a case the tax is payable where the land is located, no reason is apparent that a different rule should apply when the decedent resided in a locality in this state other than that in which the land is situated. It frequently happens that the decedent and his devisees or heirs all reside in other states. Nor does the fact, that in this case the will provides that the executors shall sell the Hardin county land and pay the legacies out of the proceeds, change the locality in which the inheritance tax originated. Conceding that lands directed by will to be sold and converted into money are treated in equity as personal estate, still the land which is so treated in equity as personalty is the source, the origin, from which the tax comes. Moreover it must be noted that where land is directed to be sold and proceeds paid to certain designated beneficiaries, they may elect to take the land itself and prevent a sale, if all are capable of electing. (40 Cyc., 1999, and Holt et al. v. Lamb et al., 17 Ohio St., 374.) That is, the beneficiaries have succeeded to rights concerning the land itself. The statute provides that the tax shall become due and payable immediately on the death of the decedent and be a lien upon the property until paid.

We are convinced that the construction we have indicated effectuates the intention of the framers of the provisions in question.

For these reasons the judgment of the court of appeals will be affirmed.

Judgment affirmed.

Wanamaker, Newman, Jones and Matthias, JJ-, concur.


text:
    Industrial Commission of Ohio v. Evans, Judge.

      Civil service — Removals — Appeal to state commission — Disagreement as to decision — Operates as affirmance, when — Jurisdiction of courts — Injunction.

    (No. 16037
    Decided December 10, 1918.)
    In Prohibition.

      Mr. Joseph McGhee, attorney general, and Mr. L. D. Johnson, for relator.

      Mr. Smith Bennett; Mr. Eugene Carlin and Mr. C. E. Nixon, for defendant.
   By the Court.

Except as provided by Section 486-17a, General Code, relating to the removal of a chief of police or chief of the fire department of a municipality, the courts of this state have no jurisdiction to review, affirm, reverse, or modify the order of removal of an officer, employe, or subordinate in the classified service of the state, made and entered by the appointing power, where it acts within the scope of its authority, and the order of removal is predicated upon one or more of the causes named in the statute.

Prior to the passage of the civil service act, the person removed by the appointing power, acting within the scope of its authority, had no remedy whatever. Under the civil service act, the only remedy afforded him is by appeal to the civil service commission.

There being but two members of the state civil service commission, both members must concur in an order disaffirming or modifying the order of removal entered by the officer or board having the power to make the same.

Where the members of the civil service commission fail to concur in such order, the order appealed from will stand as a final order in the removal proceedings.

Where one member of the civil service commission refuses to join in a judgment disaffirming the order of removal, the situation presented is analogous to the situation presented in the, court of appeals where one member of that court refuses to join in a reversal of the judgment on the weight of the evidence.

Under the provisions of the constitution of this state, the two concurring judges cannot enter a judgment of reversal on the ground that the judgment under review is against the weight of the evidence, nor does the language of the constitution in terms provide that a judgment of affirmance should be entered, although the inference naturally follows. that where under the law and the constitution of this state the judgment cannot be reversed, a judgment of affirmance should be entered, even though two of the three members of the court of appeals dissent therefrom; and that is the course followed by the courts of appeals of this state. In any event, however, the judgment sought to be reversed in such action must stand as the final judgment in the cause, unless' reversed by the court of appeals for other reasons.

The failure of the civil service commission to affirm, disaffirm or modify the order of removal, does not vest jurisdiction in the courts of this state to hear and determine the correctness of such order, or to control by injunction or other mandatory writ the discretion of the appointing authority, where that authority has acted within the scope of its statutory powers.

The demurrer to the petition is overruled, and the respondent not desiring to plead further judgment is entered in accordance with the prayer of the petition.

Writ allowed.

Nichols, C. J., Wanamaker, Newman, Jones, Matthias, Johnson and Donahue, JJ., concur.


author: Nichols, C. J.

text:
    Johnston, Admr. d. b. n., v. Schwenck, Admr.

      Executors and administrators — Resignation—Section 10627, General Code — Validity of appointment of successor — Abandonment or termination of trust — Effect of filing final account— Appeal to common pleas court — Proceedings to remove administrator— Section 11206, General Code.

    1. The receiving of the resignation of an executor or administrator by the probate court appointing such officer, and the filing of the document by the judge thereof, followed by the appointment of a successor, is a sufficient compliance with the requirements of Section 10627, General Code, and the new appointment so made is in all respects a valid one.
    2. The filing of an account in the probate court by an executor or administrator, denominated “Final Account,” does not operate to terminate the trust, as long as there remain assets under his jurisdiction subject to the payment of valid debts of the decedent, and the failure of the fiduciary to proceed with the administration of the trust, while under some circumstances may justify a removal of the officer, does not constitute, ipso facto, an abandonment of the trust.
    3. A proceeding filed in the probate court to remove an administrator de bonis non for the reason that his predecessor was still rightfully in office is appealable under favor of Section 11206, General Code.
    (No. 15915
    Decided November 26, 1918.)
    Error to the Court of Appeals of Crawford county.
    The facts are stated in the opinion.

      Mr. R. V. Sears and Mr. J. W. McCarron, for plaintiff in error.

      Mr. TV. J. Schzvenck and Mr. Charles F. Schaher, for defendant in error.
   Nichols, C. J.

John Bauer died testate in October, 1883.

His widow, Anna Catherine Bauer, was appointed executrix of his will.

On February 28, 1885, she filed a partial account.

This account, showing a balance due her of $3,-688, was confirmed.

December 17, 1890, she resigned.

The resignation was in writing and in the same document she recommended the appointment of R. W. Johnston as her successor.

The resignation and recommendation were duly filed by the probate judge of Crawford county.

There is no record to be found of the formal acceptance of this resignation.

December 30, 1890, such probate court issued its letters in due form to R. W. Johnston as administrator d. b. n. with will annexed, who duly qualified.

The new officer proceeded with the administration, and in due course sold eighty acres of land and made application of proceeds to the payment of debts,

On April 11, 1914, R. W. Johnston filed an account, designated “Final Account.”

This account was confirmed, there being, however, no formal discharge of the administrator by the court.

The records of the probate court do not show nor is it claimed that Johnston ever filed any written resignation of this trust, nor do they show that he was removed therefrom.

The widow was devised a life estate in all the real estate of the testator. She died intestate in July 1916, never having divested herself of this estate.

Charles F. Schaber was appointed administrator of her estate and took immediate steps to enforce payment of the balance found due her as executrix of her husband’s estate.

On November 17, 1916, W. J. Schwenck was appointed as administrator d. b. n. with will annexed of John Bauer, such appointment having been made without the written waiver or consent of any of the heirs at law or devisees of John Bauer, although quite a number of them were residents of Crawford county; nor is there any claim that notice of the application for appointment was served on these heirs and devisees.

There remain unsold, of the real estate of John Bauer, about 243 acres of land in Crawford county, being an asset under the control of the administrator, if the debts now asserted are found to be genuine.

The debts claimed to be still due from the John Bauer estate are in dispute and are in fact in litigation.

It was further agreed, as shown by the record, that R. W. Johnston’ administrator, would testify, that at the time he filed his so-called final account, he then was, and has been at all times since, ready to proceed with any duties that might devolve on him as such administrator.

No testimony was offered to dispute this state of facts.

We learn from the record that Johnston, administrator, on December 7, 1916, filed an application, duly verified, seeking the removal of Schwenck, administrator.

Johnston alleges in this application that he had neither resigned his trust nor been removed therefrom, and that he is still the duly appointed administrator and duly authorized by law to proceed with the duties of the office; that claims to a large amount have been recently asserted against the estate, which it is charged are illegal; and that he is now ready to defend the estate against such claims and to protect and conserve the estate.

It is further alleged that , in certain proceedings in partition pending in common pleas court of Crawford county Schwenck, administrator, has filed cross-petition, wherein he asserts the validity of the alleged debts and asks for a sale of the real estate in order to pay them.

.Such application was heard in the probate' court and the motion to remove Schwenck was overruled, the court holding that from the facts hereinbefore set forth Johnston’s conduct was such as to constitute in law and fact an abandonment of the trust.

The cause was thereupon appealed to the court of common pleas, where it was heard on stipulation of the parties as to the facts, the finding on the issues thus joined being in favor of Schwenck and against Johnston, administrator.

In due course the cause reached the court of appeals, the entry in which court shows that the judgment of the court of common pleas was affirmed on the ground that substantial justice had been done.

We have no official information as to the ground of affirmation, but we do learn, both from briefs and oral statements of counsel for both parties, that it was the holding of the court of appeals that the appointment of Johnston in 1890 was invalid for the reason that there was no record evidence in the probate court of the acceptance of the resignation of Anna Catherine Bauer, the original fiduciary.

On application of Johnston, administrator, the case was admitted to this court for review.

There are three legal questions involved in this case:

1. Do the undisputed facts of the case establish in law an abandonment of the trust by Johnston, administrator?

2. Is it a prerequisite, before the probate court has jurisdiction to appoint a successor in office, to an executrix who has tendered her resignation, that such court shall formally accept the resignation?

3. Is a proceeding to remove an administrator, or to revoke letters of administration, appealable under the code ?

The probate court based its decision on the finding of the court that the conduct of Johnston with respect to the office amounted to an abandonment of the trust.

We are wholly unable to find anything in the facts, hereinbefore fully set forth, to justify any such conclusion. It is true that Johnston filed what was termed his final account, a great many years ago, and in the meantime made no move in the direction of exercising the functions of the office.

This conduct is to be considered in the light of the facts and circumstances surrounding the estate. If there was any creditor whos.e claim remained unsatisfied, it was the widow, to whom therq was a balance due of $3,688, as shown by her final account. She occupied the dual relation of creditor and life tenant.

In order to satisfy her claim, it would be necessary to sell the property, of which, all through these intervening years, she had the beneficial enjoyment.

There is a dispute as to the validity of the debt, it being claimed to have been extinguished by agreement of the parties. But, conceding its validity, the failure of the administrator to proceed, it is to be fairly presumed, was with her full acquiescence, if not at her absolute direction.

This situation presents the very best of reasons why the administration should have been suspended until the death of the widow. She alone could complain of delay, and, as we have demonstrated, she was being benefited rather than harmed.

It is the universal holding that the authority of an executor or administrator to represent the estate continues until the estate is fully settled, unless he is removed, dies or resigns, and that the filing of what purports to be a final account does not extinguish the trust. Indeed, in the case of Weyer et al. v. Watt, Exr., 48 Ohio St., 545, it was held that an order by the court, directing that the administrator be discharged, made at the time of the filing of a final account, does not terminate his authority if assets of the estate remain unadministered.

In the case at bar, the real estate, so far as it may have been necessary to pay any valid indebtedness, was all the while, technically at least, an asset in the hands of the administrator.

The second question in the case is that suggested by the court of appeals in its affirmance of the judgment of the common pleas.

Is it necessary, upon the filing by the executor, of an estate of a resignation of the trust, with a recommendation that a particular person be appointed as successor, for the court, before acquiring jurisdiction to appoint such successor, to accept the resignation by formal entry of such fact upon its journal?

Counsel for Schwenck, administrator, contend that such necessity exists under the law, and cite the case of Reiter v. State, ex rel., 51 Ohio St., 74, and Section 10627, General Code, in support of their contention.

We are of the contrary opinion, and hold that the filing of the resignation of the executor, followed by the issuing of letters of administration d. b. n. with will annexed to another, is to be considered an acceptance by the court of such resignation.

A consideration of the case of Reiter v. State, supra, instead of establishing the necessity of formal acceptance, when carefully analyzed, really decides such acceptance not indispensable to the authority to fill a vacancy.

Especially is this true when the Reiter case is considered in connection with Section 10627, General Code.

It is held in the first proposition of the syllabus in the Reiter case: “By the rules of the common law, a resignation of an office does not take effect, so as to create a vacancy, until such resignation is accepted by the proper authority; but the common law in this regard is not in force in this state, to its full extent, and here a resignation without acceptance creates a vacancy, to the extent at least, of giving jurisdiction to appoint or elect a successor, unless otherwise provided by statute.”

Accepting this syllabus as the accepted law of the state, let us examine the statute on the subject of the resignation of an administrator, and the filling of the vacant trust by the probate court, and determine whether it is “otherwise provided by statute.”

Let it be understood that this exception, if it does exist, and has been provided for by statute, must, like all exceptions to every general rule, be made clearly to appear.

Section 10627 reads: “The court issuing letters testamentary or appointing an administrator, if it deems fit, upon good cause shown, may receive the resignation of such executor or administrator, and appoint an administrator in his place.”

In the first place, let it be noted that the language employed is not that the court may or must accept the resignation, but simply that it may “receive” it, “if it deems fit.”

That the court, in the case under consideration, did receive the resignation, so far at least as filing with his official signature the document purporting to be such, is an admitted fact, and the original paper, with proper file marks, is to be found in the archives of the court.

To take a thing is to “receive” it. Ordinarily, if some further action is to be had by the recipient, the use of the expression “accept” would be expected, and an investigation of the statutes respectively relating to the resignation of guardians, trustees and commissioner of insolvents, discloses, the fact that the term “may accept the resignation” is employed. In this connection we refer to Sections 11035, 11147 and 10938, General Code.

Of course, there is a sense in which the terms, “receive” and “accept” are synonymous., and when it is seen by the terms of the statute under consideration that the judge of the probate court is vested with some discretion, in that it is said that he may receive it, “if he deems fit” and upon good cause being shown, it may with some force of reason be urged that some further action is implied.

What is meant by “if he deems fit” or upon good cause being shown, in such circumstances as these, is hot easily understood.

It occurs to us that if one who has been acting as administrator or executor concludes that he does not desire to continue longer in that capacity, whether the cause inducing his decision be good or bad, or whether it be without reason at all, the court could not force him to remain in office against his will.

It is supposable that if such officer had been unfaithful to his trust, the court might prefer to remove him rather than permit him to resign, although his own liability for breach of trust, or that of his bondsmen, could not be affected by the manner in which his connection with the trust was terminated.

We are not inclined, however, to decide this question on a mere technicality, or mere nicety as to shade of meaning of terms, although, if we did do so, it would be only opposing technicality to technicality; for surely the questioning of the validity of the appointment of an administrator twenty years after his induction into office and after he had faithfully discharged important duties in connection with the trust would be pushing formality and technicality beyond all just limits, particularly when the sole basis of the attack was that the court making the appointment had failed to enter on its journal an acceptance of the resignation of the predecessor in office.

. It would be dismal surrender to mere form, and a patent sacrifice of the substance of things, to so hold, especially when we consider that the administrator, then appointed without objection of either creditor, heir or devisee, performed the functions of his office, selling real estate, paying debts and rendering proper account of his administration.

We have facts of a most substantial nature that impel us to hold the appointment of Johnston to be valid; for the court, receiving the resignation of the executrix, acted on it and treated it as a completed transaction in that immediately after receiving the same it proceeded to fill the vacancy by the ’ appointment of Johnston, to whom it issued letters of authority under the seal of the court.

We are of the opinion that if an acceptance of the resignation of the executrix is a condition precedent to the power of making the new appointment, then the. action of the court in receiving the resignation and thereafter appointing a successor is in law tantamount to an acceptance thereof.

With reference to the third question we hold that a proceeding of the character here under consideration is appealable from the probate court, feeling that the cause is well within the spirit of Section 11206, General Code.

The judgment of the court of appeals is accordingly reversed and the cause is remanded to the probate court of Crawford county with directions to proceed in accordance with the finding of this court.

Judgment reversed and cause remanded.

Wanamaker, Newman, Jones, Matthias, Johnson and Donahue, JJ., concur.


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    The City of Washington v. The Public Utilities Commission.

      Municipal corporations —Authority to fix electric light and power rates — Ordinance terms not accepted by utility — Different rate charged consumers — Schedule filed with public utilities commission — Jurisdiction to determine whether ordinance terms indefinite — Sections 614-44, 3982, 3983, 9193 and 93^1, General Code, construed.

    (No. 15958
    Decided December 10, 1918.)
    Error to the Public Utilities Commission.

      Mr. Troy T. Junk, city solicitor; Mr. John Logan and Messrs. Gregg, Patton & Patton, for plaintiff in error.

      Mr. Joseph McGhee, attorney general; Mr. C. A. Radcliffe and Messrs. Post & Reid, for defendant in error.
   By the Court.

The plaintiff in error brings this proceeding to reverse an order of the defendant in error which permitted The Washington Gas & Electric Company of the city of Washington to file a certain schedule of rates to be charged the inhabitants of the city for electric current. The company holds a franchise granted by the council of the city to occupy the streets thereof, which empowers it to place poles and conduits and string wires in order to distribute electric current for light, heat and power purposes. The company is the only company, association or person now, or at any time, engaged in the city in producing and distributing electric current for public or private consumption, or having a franchise in the streets, ways and public places therefor.

On April 3, 1916, the council of the city passed an ordinance to regulate the price which may be charged for electric light to private consumers of electricity for light and power, and therein fixed rates which the gas and electric company and its successors and assigns were permitted to charge for the period of ten years from May 10, 1916.

The company has never filed its written acceptance of the ordinance with any officer of the municipality.

On June 1, 1916, the company presented to consumers of its current, bills which contained a reference to the new electric rates established by the city council, and on the back thereof there was an epitome of the rates to be charged. The company claimed that the ordinance was invalid because it was indefinite and uncertain, and because it attempted to fix rates for power purposes, whereas, as claimed by the company, it was only authorized to fix rates for light purposes.

Entertaining the view that the city had not prescribed rates by a valid ordinance the company proffered to the public . utilities commission a schedule of rates fixed by it and requested permission to file the same, which was granted.

By the provisions of Section 3982, General Code, the city was empowered to regulate, from time to time, the price which companies may charge for electric light, for lighting or fuel purposes; and by the provisions of Section 3983, General Code, if the city fixed such price for a period not exceeding ten years, and the company had filed its written acceptance, this action would have constituted an agreement between the parties for the period named. But it was held in The State, ex rel., v. Ironton Gas Company, 37 Ohio St., 45, that if the ordinance fixing the price for the specified period is not accepted in accordance with the statute “the power of the council to regulate the price is as ample as if the ordinance contained no such provision.”

In its analysis of the ordinance the commission concluded that its terms were too indefinite, and stated: “The commission has repeatedly rejected proffered schedules for far less inaccuracies than these, and required the utilities to reconstruct and reprint them, setting forth clearly what they meant.”

The infirmity in this position is that the commission is without power to prescribe the form which shall be followed by legislative bodies authorized by law to legislate upon specific subjects. The commission is a board of special and limited jurisdiction and has no power to exercise any jurisdiction beyond that expressly conferred by statute. The City of Cincinnati v. The Public Utilities Commission, 96 Ohio St., 270.

The commission is given specific authority to prescribe forms to be followed by public utilities by Section 614-16. If the company felt that the ordinance of the city, which prescribed the rates to be observed by it, was indefinite, or invalid for any other reason, it could have attacked the validity in a court of competent jurisdiction; or, if it did not desire for any reason to follow that procedure, it could have appealed the matter to the public utilities commission under the provisions of Section 614-44 et seq. It would have then been the duty of the commission to have considered the complaint of the company and to have fixed a reasonable rate.

In so far as the contention that the terms of the ordinance were too indefinite is concerned, we think it is sufficient to say that the course of dealing between the parties, disclosed by the agreed statement of facts, shows that there was not such ambiguity in. the terms as to present any substantial difficulty in their performance. The terminology, including the abbreviations used, seems to have been entirely understood by all interested parties.

As to the matter of fixing the price of current for power purposes, Section 3982 should be read in connection with related sections pari materia. Sections 9195 and 9321 contain provisions with reference to the right of companies, organized as this company was, to manufacture and supply electricity for light, heat and power purposes and sell the same with the consent of a municipality; and Section 3983 contains the provisions “If council fixes the price at which it shall require a company to furnish electricity or either natural or artificial gas to the citizens, or public buildings or for the purpose of lighting the streets, alleys, avenues, wharves, landing places, public grounds or other places or for other purposes." From all of these provisions we think it clear that it was the intention of the legislature to confer upon the council the authority to make regulations such as were made in this case.

We think it clear that the ordinance passed by the city, April 3, 1916, was sufficiently definite and certain in its terms to prescribe valid rates for the purposes named in the ordinance.

As above stated, it is admitted that the company never accepted the ordinance in writing, and we think that none of the things done by the company amounted to a ratification of the ordinance as claimed by the city. That being so there was no contract between tlie parties. Therefore, the regulatory ordinance was effective under the rules stated in State, ex rel., v. Ironton Gas Co., supra.

In this situation, as already shown, the company could have appealed to the commission from the rate fixed by the ordinance, and the commission under Section 614-44 et seq. could have proceeded to fix a reasonable rate. In this case the company did not do this, but elected to disregard the ordinance on the ground that it was not sufficient in its terms to impose any duty on the company.

The contention of counsel for the company that any citizen or company may disregard a law which it regards as invalid and leave the matter to be subsequently decided by the courts is undoubtedly sound. But in this case the company took the chances of the ordinance being found by a competent tribunal to be so indefinite and uncertain as to be incapable of enforcement, instead of appealing to the commission under the statutes named.

There being a valid ordinance in force at the time that the company proffered its schedule, the commission was without authority to order it filed as a legal schedule of rates to be observed by interested parties.

The order of the commission will be reversed.

Order reversed.

Nichols, C. J., Wanamaker, Matthias, Johnson and Donahue, JJ., concur.

Jones, J., not participating.


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    The Mutual Electric Co. v. The Village of Pomeroy.

      Statutory construction — Special provisions as exceptions to general provisions — Municipal corporations — Contracts with public utilities — Competitive bids not required, when — Section 4221, General Code, construed.

    1. In the construction of statutes, it is the duty of the court, where possible, to reconcile and give effect to every act of the general assembly, and to this end the special provisions of a section relating to a particular subject-matter, although apparently in conflict with the general provisions of another section, must, nevertheless, be read as an exception thereto.
    2, Section 4221, General Code, has no application whatever to a contract between a municipality and a public utility, where the council of a municipality has the power to fix and regulate the price to be charged by such public utility. This section applies only to contracts in relation to service, material, or supplies, where the bidders have the right to name the price for which they are willing to perform or to furnish the same.
    (No. 15820
    Decided December 17, 1918.)

      Error to the Court of Appeals of Meigs county.
    On the 1st day of March, 1915, The Mutual Electric Light Company was operating an electric light plant in the village of Pomeroy, Ohio.
    On the date above mentioned the village council of the incorporated village of Pomeroy passed an ordinance fixing the rate or price that The Mutual Electric Light Company might charge for lighting by electricity the streets, alleys, and public buildings and. grounds, for a period not exceeding ten years.
    On the 10th day of March, 1915, The Mutual Electric Light Company accepted the terms of this ordinance in writing, and thereupon and thereafter furnished to the village of Pomeroy electric current for street lighting and other purposes named in the ordinance. The village of Pomeroy used this electric current for the purposes mentioned, but failed and refused to pay therefor the rates named in the ordinance; or any other amount.
    On the 15th day of October, 1915, The Mutual Electric Company, successor of The Mutual Electric Light Company, filed its petition in the common pleas court of Meigs county to recover the amount due for the current furnished in March, April, May, June, July, August, September and October, 1915, for which months separate and several bills had been rendered to the village of Pomeroy, but payment whereof had been refused.
    The village for answer to the plaintiff’s petition admitted the facts stated therein, and averred that The Pomeroy & Middleport Electric Company at the time of the passage of above contractual ordinance had a franchise from the village of Pomeroy to operate an electric plant therein for public and private lighting, and then was and ever since has been fully equipped to furnish electric current for the lighting of streets, avenues, alleys, public buildings, and other public places of the village of Pomeroy; that the village of Pomeroy entirely failed and neglected to advertise for bids for such contract for public lighting; and that no opportunity was given to The Pomeroy & Middleport Electric Company, or to any other company or person except The Mutual Electric Light Company, to bid for or secure a contract to furnish electric current.
    The plaintiff for reply to this answer admitted that The Pomeroy & Middleport Electric Company had and has an office and principal place of doing business in the village of Pomeroy, Ohio, and that the village of Pomeroy did not advertise for bids for the contractual ordinance entered into on March 1, 1915; and denied each and every other allegation contained in the, answer.
    The common pleas court found upon the issue joined for the defendant, and entered judgment accordingly. This judgment was affirmed by the court of appeals.

      Messrs. Harrison & Allread and Mr. Edgar Ervin, for plaintiff in error.'

      Mr. H. C. Fish; Mr. Richard C. Stoll; Mr. M. S. ¡Vebster and Mr. D. Curtis Reed, for defendant in error.
   Donahue, J.

The right of the plaintiff in error to recover upon the causes of action contained in its petition depends upon the validity of the ordinance passed by the council of the village of Pomeroy on the first day of March, 1915.

It is insisted that this ordinance is invalid because the village entirely failed and neglected to advertise for bids for public lighting pursuant to the provisions of Section 4221, General Code. If this section of the General Code applies to this ordinance, then it is necessarily void, and the plaintiff in error cannot recover.

In determining this question it is profitable at least to investigate the history of this legislation. Section 198 of the Municipal Code (96 O. L., 20, 83), passed October 22, 1902, provided that all contracts made by the council of any village shall be executed in the name of the village and signed on behalf of the village by the mayor, and clerk, and shall be made subject to the provisions of Sections 143 and 144 of the same act.

Sections 143 and 144 of the Municipal Code of 1902 conferred authority upon the directors of public service of a city to make contracts, purchase supplies or material, or provide labor for any work under the supervision of their department, not involving more than $500; and no contracts involving an expenditure in excess of that amount could be entered into by the directors of public service unless the same were authorized by ordinance of council, and in such case it was made the duty of the directors of public service to advertise and award the contract to the lowest and best bidder.

Section 198 was evidently written into this Municipal Code to take the place of Section 1690 of the Revised Statutes, which section was repealed by the Municipal Code act. That section related exclusively to services performed and supplies furnished for the corporation, and provided that as far as practicable such service should be performed and furnished in pursuance of contract to be authorized by the council, through some proper officer or department of the corporation, except as otherwise provided.

The Codifying Commission wrote into Section 4221, General Code, all the provisions contained in Section 198 of the Municipal Code, except that portion thereof providing that contracts made under authority of that section “shall be made subject to the provisions of sections 143 and 144 of this act, so far as the same are applicable,” and in lieu thereof wrote into Section 4221, General Code, the parts of Sections 143 and 144 of the Municipal Code that it deemed applicable to villages.

It is therefore important in the construction of this language, written into Section 4221, General Code, by the Codifying Commission, to consider the same in connection with the statute in which it was originally written by the general assembly. (Ebersole v. Schiller, Admr., 50 Ohio St., 701.)

It is the settled rule of construction in this state, that, where the entire legislation affecting a particular subject-matter has undergone revision, the revised sections will be construed the same as the original sections, unless the language of the revision evidences an intention to change the meaning and intent of the original act. State v. Vanderbilt, 37 Ohio St., 590, 640; State, ex rel., v. Commissioners of Shelby County, 36 Ohio St., 326; State v. Jackson, Id., 281; Williams v. State, 35 Ohio St, 175; Reed v. Evans, 17 Ohio, 128, 134; City of Ironion v. Wiehle, 78 Ohio St., 41, 44, and Stevenson v. State, 70 Ohio St., 11, 15.

This ordinance does not involve the expenditure of any fixed amount, either more or less than $500. It contains no stipulation as to the amount of electric light the village will be required to- use in any month or any year. On the contrary, it merely provides that the village shall pay from month to month for the electric current that may be used to light the streets, alleys and public places, at the rate fixed by the ordinance. The plaintiff in error cannot charge more than this -ordinance rate, and having filed with the village clerk its acceptance in writing the village council cannot for a period of ten years require it to furnish electric light for less.

True, in the course of ten years the village will undoubtedly expend more than $500 for electric light, but that might be equally true of labor or material covered by a contract involving less than $500. While contracts for labor and material, the immediate use of which is in contemplation by the municipality, cannot be separated into several contracts in order to escape the provisions of Section 4221, General Code, neither is it necessary when such contracts are made to take into consideration the possible needs of the municipality for like services and material for the next ten years to come. By a parity of reasoning, it would, appear equally unnecessary in a contract of this character to calculate the aggregate expenditures of the municipality for lighting its streets and alleys for ten years from and after the date of the ordinance. That could not be done if the electric light company had not filed an acceptance in writing, for the council in such event would have had the right to change the rate at will. The only effect of this acceptance in writing is to prevent the council from changing the rates for the next ten years. The ordinance in fact creates no liability. It merely fixes the rate to be paid from month to month for whatever current the municipality may use in lighting its streets and public places.

However that may be, there is a substantial difference between a contract for the furnishing of electric current, gas, or water, for a term of years, and a contract for the purchase of material to be delivered in gross, and a fixed amount paid therefor when delivered. Courts have had occasion to distinguish between such contracts, and it is unnecessary at this time to review these decisions. The rule, however, is well stated in 1 Dillon Municipal Corporations (5 ed.), 361, and discussed and applied by this court in the case of Logan Nat. Gas & Fuel Co. v. Chillicothe, 65 Ohio St., 186. It is also recognized by the general assembly of Ohio in the enactment of Section 3809, General Code.

This distinction must be borne in mind in determining the issue in this case.

If Section 4221, General Code, applies to contracts of this character, then it applies to contracts for electric light made by every village in the state of Ohio, regardless of whether it has one or more electric light companies. As a matter of common knowledge the great majority of villages, in this state have but one source of supply. This of course must have been within the contemplation of the general assembly when it enacted this law. Advertisement, where there is but one source of supply, would be a foolish and absurd performance; and yet, if it must be done where there is more than one company, it must be done in every village of the state, though it have but a single company. The fact that in this particular village, and perhaps a few others, there may be two or more companies of this character, certainly would not induce the legislature to impose such a useless burden on the great majority of villages of the state not so fortunately situated.

If, however, there were doubt as. to the applicability or non-applicability of Section 4221, General Code, to the contract in question, that doubt is entirely removed by the special provisions in relation to gas, water, and electricity, found in Sections 3982, 3983 and 614-44, General Code.

Section 4221, General Code, contains general provisions relating to contracts to which the village is a party. The language is broad enough to comprehend within its terms all contracts; but it is also a settled rule of construction in this state that special provisions of one section, relating to a particular subject-matter, although apparently in conflict with the general provisions of another section, must, nevertheless, be read as an exception thereto.

Section 3982 vests the council of a municipality in which electric lighting companies are established, or into which their wires, are conducted, with authority to regulate from time to time the price which such companies may charge for electric light for public or private consumption. This is a grant of legislative authority, and involves the exercise of the police power of the state.

The ordinance in question, while it purports to be contractual in its nature, is clearly an exercise of the legislative power conferred upon the council of a municipality by Section 3982, General Code.

Section 3983, General Code, provides that when the council of a municipality has fixed a price at which it will require a company to furnish electric light for public or private consumption, for a period not exceeding ten years, and the company or person so to furnish such electricity files a written acceptance in the office of the auditor or clerk of the corporation, the council shall not require such company to furnish electricity at a less price during the ten years covered by the ordinance. After the council of the village of Pomeroy had by this ordinance fixed the price that The Mutual Electric Light Company might charge for electric light furnished for public consumption, that company in pursuance of the provisions of Section 3983, General Code, filed with the village clerk its acceptance in writing.

It is therefore clear that both the village of Pomeroy and The Mutual Electric Light Company intended to act, and believed they were acting, under authority of these last two sections of the General Code.

It may be true that Section 3982, General Code, contemplates a general ordinance fixing prices to be charged by all electric lighting companies operating within the municipality, and that Sections 3809 and 3994, General Code, contemplate a later ordinance contracting with one of these companies at the price fixed by the rate ordinance. Yet there is no apparent reason why the village council cannot exercise its authority under these sections in the one ordinance. From the investigation we have been able to make it appears that this latter method is the one adopted by the majority of the villages of this state.

That question, however, is not now important. The village predicated its defense to this action solely on the ground that it did not advertise as required by Section 4221, General Code. It clearly appears from the provisions of Sections 3982 and 614-44, General Code, that the general assembly-intended to, and did, confer, absolutely, authority upon the council of a municipality to regulate from time to time the price that electric lighting companies, natural or artificial gas companies, gas light or coke companies, or companies for supplying water for public or private consumption, might charge for electric light or for gas for lighting, or fuel purposes, or for water for public or private consumption, furnished by such companies to the citizens, public grounds and buildings, streets, alleys, lanes, avenues, wharves or landing places, or for fire protection; and this authority is limited only by the right of referendum, the right to appeal to the Utilities Commission, and by Sections 3983 and 614-44, General Code, which provide that where any such company files an acceptance of the rates in writing in the office of the auditor or clerk of the corporation the council shall not require such company to furnish its product at a less price during the ten-year period.

In the legislation creating and defining the power of the Utilities Commission of Ohio, the general assembly explicitly preserves to municipalities the power to fix rates under Sections 3982 and 3983, General Code, and also under Section 3644, General Code, relating to steam or hot water companies supplying power or heat to the municipality or its inhabitants.

Section 614-44, General Code, while preserving these sections, confers upon municipalities the same power and authority to fix rates, subject only to review by the Utilities Commission, when complaint is filed with it as provided in that section; not only that, but it refers to these contracts as contracts “entered into under the provisions of Sections 3644, 3982 and 3983 of the General Code.”

Section 614-14, General Code, which provides that “No public utility shall directly or indirectly, or by any special rate, rebate, drawback or other device or method, charge, demand, collect or receive from any person, firm, or corporation, a greater or less compensation for any service's rendered, or to be rendered, except as provided in this act,” must undoubtedly be read not only with Section 614-44, General Code, but also in connection with Section 3982, General Code, for that section is brought into the general rate-fixing plan and evidently made a part thereof by the provisions of Section 614-44, General Code.

If Section 4221, General Code, applies to a contract of this nature, the municipality would be required not only to advertise but to enter into a contract with the lowest and best bidder; although the price named in the lowest and best bid might be very much in excess of the price fixed by council.

Such a construction would render the provisions of Sections 3982, 614-44 and 614-47, General Code, absurd and meaningless, and enable public utilities to charge and collect whatever price they might choose to bid for the furnishing of electric light or other commodity to a municipality, in defiance not only of the ordinance fixing the rate but also of the express terms of these sections requiring such utilities to charge and collect no more and no less than the legal rate named in the ordinance.

On the other hand, if such ordinance is the valid exercise of police power by the legislative authority of a municipality, then there could be no purpose in advertising for bids; for in such case all bids must conform to the rate fixed in the ordinance.

From these considerations it is clear that Section 4221, General Code, applies only to contracts covering service, supplies, or such other things upon which the bidder has the right to fix the price for furnishing same. It can have no application whatever to contracts with public utilities named in Sections 3982 and 3644, General Code, where the council of the municipality has the power and authority to fix the price of the service to be rendered or the commodity to be furnished.

The judgment of the court is'reversed, and, there being no material issue of fact joined by the pleadings, judgment is entered for plaintiff in error in accordance with the prayer of its petition.

Judgment reversed, and judgment for plaintiff in error.

Nichols, C. J., Newman, Jones and Matthias, JJ. concur.


author: Jones, J.

text:
    Modern Woodmen of America v. Myers.

      Insurance — Fraternal and beneficiary — Change of beneficiaries — Compliance with constitution and by-laws — Illinois member designates Ohio resident — Construction of foreign court controls, when — Defense to action in Ohio.

    1. When a resident of a foreign state becomes a member of a fraternal and beneficiary society organized under the laws of such state, and there enters into a contract of insurance, with a requirement for performance there in conformity with the society’s constitution and by-laws adopted under sanction of the laws of the state, in 'determining the rights and obligation of the society and its members, recourse should be had to the significance and effect of its by-laws as construed by the courts of such state. ■
    2. The by-laws of such society contained a clause that “No change in the designation of beneficiary or beneficiaries shall be effective until the old certificate shall have been delivered to the head clerk and a new certificate issued during the lifetime of the member” and that any attempt by a member to change beneficiaries otherwise than by a strict compliance with the provisions of the by-laws relating to change of beneficiaries, should “be absolutely null and void.” An answer, alleging in substance that courts of such foreign state (in this case, Illinois), construing such by-laws, have held that such attempted change of beneficiaries as therein disclosed is ineffective unless a new certificate has been issued during the lifetime of the member, states a good defense.
    (No. 16057
    Decided December 17, 1918.)
    Error to the Court of Appeals of Hancock county.
    Defendant in error, Van R. Myers, brought an action in the common pleas court of Hancock county, Ohio, for the sum of $1500. His petition recited that plaintiff in error was a fraternal benefit society, incorporated under the laws of the state of Illinois, having its principal office in that state, and doing business in the state of Ohio; that on July 21, 1899, the society issued to one Henry Myers, one of the members of a subordinate branch at Decatur, Illinois, a benefit certificate for the sum of $3000, payable in the event of his death to hi's wife, May M. Myers; that his wife died May 4, 1914; that on October 5, 1914, Henry Myers became a resident of Hancock county, Ohio; that after the issuance of said certificate the same was either lost or destroyed, prior to Februarjr 23, 1915, and on that date, being still a member of the camp and desiring to obtain a new certificate and to designate other beneficiaries, Henry Myers made an application in writing, on a form prepared and furnished by the head clerk of the society; and that in this application for a new and substitute certificate, in lieu of the one lost or destroyed, Henry Myers designated the following' beneficiaries to be named in such, new certificate: the defendant in error, Van R. Myers, a brother, to receive $1500; his son, John R. Myers, of Decatur, Illinois, the sum of $1000; and his sister, Jane Nicely, of Findlay, Ohio, the sum of $500. The petition further recited that the application and waiver of all claims under the original certificate were in form and substance as required by the by-laws of the company, duly signed and attested, and with a fee of fifty cents were enclosed in a stamped envelope addressed to the clerk of the camp at Decatur, Illinois, which envelope was deposited in the United States mail at Mt. Blanchard, Ohio, on February 23, 1915; that the society neglected to issue the new certificate to Henry Myers, who died on the 28th day of February, 1915. Defendant in error asked judgment for the sum of $1500, the amount designated in the application for the substitute certificate.
    In its fourth affirmative defense to the petition the society pleaded that it was a corporation organized under the laws of the state of Illinois, with its principal office in that state; that the application for the original certificate was made by Henry Myers, and the certificate issued and delivered to him, in that state,' while a resident thereof; that the contract of insurance was composed of the application, the benefit certificate and the by-laws of the defendant; and that the waiver of the lost certificate was received in the mail of the defendant on February 26, 1915. The defense also set forth a provision of its by-laws with reference to the change of beneficiaries, as follows: “No change in the designation of beneficiary or beneficiaries, shall be effective until the old certificate shall have been delivered to the head clerk and a new certificate issued during the lifetime of the member and until such time the old certificate shall remain in force. * * * Any attempt by a member to change the payee of the benefits of his benefit certificate by will or other testamentary document, contract, agreement, assignment or otherwise than by strict compliance with the provisions of this section relating to change of beneficiary shall be absolutely null and void.” The defendant also alleged in its defense that Myers died before the defendant in the due course of business could issue a new certificate to him; that the original benefit certificate issued by it was in force and was payable to the legal heirs of Henry Myers in the event of the death of his wife; and that Van R. Myers was not a legal heir. The fourth defense also contained the following allegation: “That the contract between the said Henry Myers and this defendant is governed by the laws of the state of Illinois; that the right of said plaintiff to recover in this action is governed by the laws of the state of Illinois; that according to the law of the state of Illinois, the request of the said Henry Myers to this defendant for a change in beneficiaries in his benefit certificate was not effective and was not consummated unless a new benefit certificate were issued by this defendant to the said Henry Myers during the latter’s lifetime, and in accordance with the by-laws of this defendant; that the law of the state of Illinois in this connection is set forth in the case of Hodalski vs. Hodalski, decided by the appellate court of the state of Illinois in April, 1913, and reported in Vol. 181, 111. App., page 158, in which case the law of the state of Illinois is announced as follows:” etc. The opinion of the court in the case of Hodalski v. Hodalski was set forth in said defense in haec verba.

    In the trial court plaintiff demurred to this, defense, and the court sustained him. This action was followed by trial, wherein the plaintiff recovered a judgment for the amount asked, and the court of appeals affirmed the judgment. Thereupon plaintiff in error prosecuted error to this court.

      Mr. Truman Plant z; Mr. Geo. G. Perrin and Messrs. Vorys, Sater, Seymour & Pease, for plaintiff in error.

      Mr. Jacob Line and Mr. C. B. Dwiggins, for defendant in error.
   Jones, J.

It is the insistence of the defendant in error that under the facts developed by the pleadings and conceded by the demurrer the judgments of the lower courts should be affirmed, since the pleadings, including the fourth affirmative defense, disclose that the insured, before his death, had done all in his power to change the beneficiaries in the manner pointed out by the by-laws of the association, and, furthermore, for the reason that his application for the substitute certificate had been addressed to the clerk of the camp at Decatur, Illinois, and received by him two days before the death of the insured. In support of that insistence, counsel for defendant in error have cited a number of authorities to the effect that when the insured has done all that he was required to do by the by-laws of the society, the court, upon principles of equity, will regard the change of beneficiaries to have been validly effected according to the manifest purpose of the insured. In the list of authorities cited, however, it does not appear that in any of them the fraternal association made the special defense pleaded in this case, viz., that the contract of insurance composed of the application, benefit certificate and by-laws of the defendant, was entered into by the insured, a resident of a foreign state, with a society organized under the laws of that state, and that according to the law of such state, under which the by-laws of the society were construed, the change in the original certificate was not consummated.

In support of its defense the defendant society relied upon the case of Hodalski v. Hodalski et al., 181 Ill. App., 158, wherein it was claimed that the courts of the state of Illinois, upon substantially the same facts disclosed in this record, and in construing the by-laws in question, decided that the acts of the insured were insufficient to consummate a change of beneficiaries.

In the case of Supreme Council of the Royal Arcanum v. Green, 237 U. S., 531, it is held: “The rights of members of a corporation of a fraternal and beneficiary character have their source in the constitution and by-laws of the corporation, and can only be determined by resort thereto, and such constitution and by-laws must necessarily be construed by the law of the State of its incorporation.”

In the case of Heaton v. Eldridge & Higgins, 56 Ohio St., 87, it is held: “Contracts receive their sanction from the law of the place where they are executed and to be performed, and their interpretation is controlled by that law.”

The reason for this principle is at once apparent. It permits a single and unified obligation due from such association to its various members, ascertainable according to the law of the state where the contract is made and is to be consummated, and where the corporation is organized and the contracting parties reside, so that there may be a unified liability only and not diverse liabilities arising from divergent construction of contracts by courts of different jurisdictions. The possibility arising from the fact that courts of various states may have divergent rules for the distribution of funds of this character has led the courts of last resort, as. stated by Chief Justice White in Royal Arcanum v. Green, supra, “to recognize the charter of the corporation and the laws of the State under which it was granted as the test and measure to be applied.”

The question therefore remains whether under the facts conceded by the demurrer the laws of the state of Illinois touching the by-laws of this society relating to the substitution precluded the defendant in error from recovering on the attempted change of certificate. The by-laws of the society, which became part of the insurance contract, provided that there should be no change in the designation of the beneficiary until the old certificate should have been delivered to the head clerk and a new certificate issued during the lifetime of the member, and that any attempt by a member to change his beneficiary otherwise than by a strict compliance with the provisions of that by-law should be absolutely null and void. The by-law having stipulated that the change should not take effect until the new certificate was issued, what is the law of the state of Illinois as declared by the courts of that state in the construction of the by-law involved?

The case of Hodalski v. Hodalski et al., supra, related to a benefit certificate of insurance issued by the Modern Woodmen, and involved the construction of the same by-law, of the same society, pleaded in the fourth affirmative defense in this case. The only dissimilarity of fact between that case and this is that the certificate in the Hodalski case was received by the head clerk after the death of the insured. Counsel for the defendant in error insist that that was the controlling feature that led the Illinois court to uphold the validity of the original certificate. We do not concur in that view, since it is evident that the Illinois court there decided that under the by-law in question no change in the designation of beneficiaries should be effective until the old certificate had been delivered and “a new certificate issued during the lifetime of the memberThe quoted clause was italicized by the Illinois court, and in the opinion, immediately following that clause, the court used the following language: “The contract of insurance regarding the change of beneficiaries was not complied with in the lifetime of the insured, and the court below was right in decreeing that appellees were entitled to this fund under the old certificate.”

It also appears in the fourth affirmative defense that the waiver received from Henry Myers about February 26, 1915, contained a stipulation that the insured agreed that the original certificate should “become and be null and void from the date of the new certificate hereby applied for * * * if such neiv certificate shall be so issued during my lifetime." This clause having been incorporated in the usual forms issued by the society, was no doubt contained in the form used in the Hodalski case and probably influenced that court in its decision.

One of the defenses in this action alleged that John R. Myers, a resident of Illinois, brought an action on the original certificate issued in this case, claiming to be the sole beneficiary thereunder as an heir. That case was appealed from the circuit court of Macon county, Illinois, to the appellate court of the third district of that state, and an opinion was filed by the latter court on April 16, 1917. Although that case was decided after the trial of the Ohio case in the court of common pleas, and was not therefore proffered as the substantive law of Illinois, we have the right to examine this case, since it involves exactly the same facts, for the purpose of elucidation of the Hodalski decision.

The case of John R. Myers v. Modern Woodmen of America, 205 Ill. App., 45, discloses that the plaintiff recovered judgment for the full amount claimed, and from the opinion of Mr. Justice Graves it unqualifiedly appears that, under the by-laws referred to, no attempted change of beneficiary could be effective until a new certificate had been issued, during the lifetime of the member, in which a new beneficiary was named, and that the decision in the case of Hodalski v. Hodalski, supra, was to the same effect.

The judgments of the court of common pleas and the court of appeals are reversed, and the case remanded to the former with instructions to overrule the demurrer to the fourth affirmative defense.

Judgments reversed.

Nichols, C. J., Wanamaker, Matthias, Johnson and Donahue, JJ., concur.


text:
    Edwards et al. v. Myers.

      Constitutional law — Roads — Proceedings to obtain outlet tlvrough lands of another — Sections 6887, 6888 and 6889, General Code (106 O. L.t 583; 107 O. L., 73), unconstitutional — Section 19, Article i, Constitution —Inviolability of private property.

    (No. 15879
    Decided December 17, 1918.)
    Error to the Court of Appeals of Tuscarawas county.

      Mr. E. E. Lindsay, prosecuting attorney, and Messrs. Buchanan, Reed & Russell, for plaintiffs in error.

      Mr. W. B. Stevens, for defendant in error.
   By the Court.

The defendant in error, William E. Myers, brought an action in the court of common pleas of Tuscarawas county to enjoin plaintiffs in error from proceeding to establish or open a lane, or outlet road, from a coal mine on the land of the Edwardses, through and over the land of defendant in error, to a public road. In the answer of plaintiffs in error it was alleged, among other things, that said proposed lane, or outlet road, had been petitioned for by the said Edwardses in due and legal form under and in accordance with the provisions of Sections 6887, 6888 and 6889, General Code. The constitutionally of these sections was challenged by the defendant in error in his reply.

The court of common pleas enjoined plaintiffs in error from proceeding to establish said road. The cause was appealed to the court of appeals and judgment was rendered for defendant in error upon the sole ground that the sections of the General Code under which plaintiffs in error were attempting to proceed were unconstitutional. Plaintiffs in error are here seeking the reversal of that judgment.

Section 6887, General Code, enacted May 17, 1915 (106 Ohio Laws, 582), is as follows:

“Any person, firm or corporation desiring to secure a road, lane or outlet leading from any land owned by said person, firm or corporation, through the lands of another person or persons, to a public highway, may file a petition with the county commissioners describing the road, lane or outlet so desired, and giving the respective names and places of residence of the owner or owners of all the land through which the proposed road, lane or outlet will pass.”

Section 6888, enacted at the same time, relates to the notice which is required to be given by the county commissioners.

Section 6889, General Code, as amended March 20, 1917 (107 Ohio Laws, 73), is as follows:

“'Application for compensation and damages shall be made in writing at any time before the date for hearing, thereon. Any failure to make such application shall be a waiver of all rights thereto by every person interested therein, except minors, or other persons under disability. The commissioners if in their opinion the road, lane or outlet petitioned for is necessary for the use of the petitioner, shall establish such road, lane or outlet; or they may establish a road, lane or outlet for the petitioner with such changes or alterations in the route or course thereof as they may deem necessary for the protection of the rights of other owners, and shall award to each person making such application the amount of compensation and damages which they deem to be just and equitable. Said commissioners shall at the same time award to any minor or other person under disability owning lands through which said road, lane or outlet passes, the amount which in their judgment is due such person for compensation or damages, notwithstanding no application has been made therefor on behalf of such minor or other person under disability. When the petitioner for said road, lane or outlet has paid to the owner or owners of lands through which said road, lane or outlet will pass, the amount found due them for compensation or damages by the county commissioners, he shall have full right and authority to enter upon said premises and open up said road, lane or outlet. If any owner of premises through which said road, lane or outlet passes is. not satisfied with the amount awarded him as compensation or damages by the county commissioners he may appeal to the probate court in the manner provided for in the chapter relating to appeals in road cases.'”

It is to be observed that Section 6889 authorizes the commissioners, if in their opinion the road, lane or outlet petitioned for is necessary for the use of the petitioner, to establish such road. Section 19, Article I of the Constitution, provides that private property shall ever be held inviolate, but subservient to the public welfare; the section, however, authorizing the taking of private property for public use upon compensation therefor being made in money, or first secured by deposit of money. Section 6889, supra, authorizes the taking of private property for private use without the consent of the owner. There is no requirement that there shall be a finding that the property is required for public Use. These sections under consideration are in conflict with the provisions of the constitution to which we have referred and therefore are invalid. The judgment of the court of appeals is affirmed.

Judgment affirmed.

Nichols, C: J., Wanamaker, Newman, Jones, Matthias, Johnson and Donahue, JJ., concur.