author: Matthias, J.'

text:
    Thomas v. Kalbfus, Receiver.

      Corporations — Stock subscriptions — Statute of limitations — Action for installments — Or by receiver for assessment — Bequest by stockholder — Liability of legatee.

    1. A subscription to the capital stock of a corporation is made with reference to the statute then in force and the provisions thereof as to time and manner of payment become a part of the contract. Ordinarily a cause of action for installments of such stock subscription payable upon call by the board of directors does not accrue until the time fixed by the board of directors for payment thereof.
    2. But where the board of directors made no assessment or call for the payment of subscriptions to the common stock of a corporation, and a receiver of the company was appointed by the court, and subsequently a master commissioner — who reported that none of the common stock was paid for though all was validly issued, and that it was necessary that each subscriber pay 49.41 per cent, of the par value of his respective subscription in order to pay the debts of the company, which report the court approved and directed institution of action by the receiver to recover such portion of said stock subscription — the cause of action did not accrue upon such unpaid stock subscription, except as to the 10' per cent, required by the statute to be paid when the subscription was made, until such finding and order of the court.
    8. Where pursuant lo and within one year after such finding and order of court made May 10, 1915, an action was brought against .the residuary legatee of a subscriber for the common stock of said company — and it there appeared that said stock subscriber died July 4, 1910.; that his executors were appointed and qualified July 18, 1910; that a receiver of said company was appointed October 21, 1911; that the final account of the executors of said stock subscriber was filed and said estate closed January 2, 1912; and that such residuary legatee received from said estate property of value in excess of the portion of the unpaid stock subscription sought to be recovered — recovery may not be defeated upon the ground that the claim was not presented to and suit brought against the executors of said estate, or that suit was not brought against said legatee within one year after the appointment of such receiver.
    (No. 15572
    —Decided February 5, 1918.)
    Error to the Court of Appeals of Montgomery county.
    The defendant in error in this court was plaintiff in the trial court. His petition averred, in sub-, stance, his appointment as receiver of The Dayton Iron Store Company by the common pleas court of Montgomery county, which court, upon representation being made that subscriptions to the common stock of said company were unpaid, appointed a special master to investigate and report; that on October 3, 1914, said master reported that none of said common stock was paid for, though all was validly issued; that there was a balance of unpaid debts of said company amounting to $12,352.03; that Allen E. Thomas had subscribed for 25 shares of the common stock of said company of the par value of $100 each, and that in order to pay the balance of the debts of the company it was necessary that each subscriber for common stock pay 49.41 per cent, of the par value of his subscription; that said report was in all respects confirmed on January 12, 1915; that said Allen E. Thomas died July 4, 1910, his will was probated July 14, 1910, and on July 18, 1910, his executors qualified; that the defendant was the residuary legatee under said will, and that the value of the property received by her was greatly in excess "of the sum sought to be recovered in said action; that she received from said executors said 25 shares issued to Allen E. Thomas and gave to them her receipt therefor; that the final account of such executors was settled January 2, 1912; that all of the property of said company reduced to money was sufficient to pay dividends of but 60 per cent, on the allowed claims ; that this action was instituted upon the instruction of said court after notice of such instruction given to the stockholders; and that plaintiff so notified said stockholders, including the defendant, and the defendant refused to pay her ratable share of the sum required, $1,234.23. Judgment was prayed for that amount.
    The answer of the defendant below, plaintiff in error here, consisted of four defenses. The first defense, after admitting the death of Allen E. Thomas, the probation of his will, the qualification of his executors, the settlement of his estate, and that defendant is his residuary legatee, substantially as averred in the petition, further admits that “the final account of said executors shows that she receipted for said stock.” Then “for want of information this defendant denies each and every other allegation in said petition contained.”
    By her second defense, the defendant says, that, although by the general receipt given by her as residuary legatee she did acknowledge receipt of said 25 shares of common stock, she refused to accept said stock, and neither received nor accepted it, and that the same continued to be and remain in the possession of the executors and has never been in her possession.
    For a third defense, the defendant avers that on October 21, 1911, Charles W. Haas was appointed receiver of The Dayton Iron Store Company and proceeded to reduce the assets of said company to money and distribute the proceeds to creditors; that no claim was ever presented by such receiver to the executors of said estate; and that if any claim existed against said executors, or the defendant as residuary legatee, the same is barred by the statute of limitations.
    As a fourth defense the defendant avers that no notice was given the stockholders in the proceeding for the appointment of a master, nor of any investigation or hearing by him.
    A demurrer was filed to each defense. The demurrer to the first defense was considered by the trial court as a motion to strike that defense from the answer, on the ground that it was a sham pleading, not filed in good faith, and intended only for delay. Upon hearing, the trial court ordered that defense stricken from the answer, and sustained the demurrer to the second, third and fourth defenses, and thereafter rendered judgment for plaintiff on the pleadings. The judgment of the common pleas court was affirmed by the court of appeals, and error is now prosecuted to this court to reverse that judgment.

      Messrs. Davisson & Davisson, for plaintiff in error.

      Messrs. McMahon & McMahon, for defendant in error.
   Matthias, J.'

The record discloses that the demurrer to the first defense of the answer was treated in the, trial court as a motion to strike out that defense on the ground that it constituted a sham pleading, a pleading not filed in good faith, and intended only for delay; and upon hearing it was sustained.

The evidence adduced upon that hearing was not incorporated in the bill of exceptions and consequently was not presented to the court of appeals. That court, recognizing the presumption of the legality of the proceedings in the trial court, and assuming in the absence of any record covering that branch of the case that the finding was justified by the evidence adduced, refused to review the finding and judgment in so far as it affected the first defense of the answer.

The authority of the trial court to order a sham pleading stricken from the files has been recognized by this court and such procedure approved in the case of White v. Calhoun et al.} 83 Ohio St., 401. No record having been presented disclosing the evidence submitted to the trial court touching that question, the court of appeals very properly assumed that the evidence was such as to warrant the finding made by the trial court and to support its judgment.

The liability sought to be enforced in this action is a liability for unpaid subscription to the capital stock of The Dayton Iron Store Company. The facts disclosed by the pleadings, essential to a consideration of the questions of law presented, may be briefly stated as follows:

Allen E. Thomas subscribed for 25 shares of the common stock of The Dayton Iron Store Company of the par value of $100 each, no part of which was paid. He died July 4, 1910; his executors were appointed and qualified July 18, 1910; a receiver of The Dayton Iron Store Company was appointed October 21, 1911; the final account of the executors of the estate of Allen E. Thomas was filed and said estate closed January 2, 1912, and the defendant as residuary legatee under the will of said Allen E. Thomas received property of value greatly in excess of the amount which is now claimed and sought to be recovered upon the unpaid stock subscription of said Allen E. Thomas.

Upon representations made to the court by the receiver theretofore appointed, that subscriptions to the common stock of the company were unpaid, a special master.was appointed, and, pursuant to the order of the court appointing him, such master on October 3, 1914, reported that none of the common stock was paid for, though all was validly issued; that there was a balance of unpaid debts of said company of $12,352.03; that Allen E. Thomas had subscribed for 25 shares of common stock of said company of the par value of $100 each; and that in order to pay the balance of debts remaining after having reduced to money the property of the company and distributed the same it was necessary that each subscriber of said common stock pay 49.41 per cent, of the par value of his respective subscription. The court on January 12, 1915, approved and confirmed said report in all respects and directed the receiver to institute actions to recover such portion of each stock subscription not paid by May 10, 1915. This action was instituted May 15, 1915.

The right to maintain this suit against the defendant to recover from her the amount due on the unpaid stock subscription of Allen E. Thomas, or any part thereof, is challenged chiefly upon the ground that the action is barred by virtue of the provisions of Section 10746, General Code, which are as follows:

“No executor or administrator, shall be held to answer to the suit of any creditor of the deceased unless it be commenced within eighteen months from the time of his giving bond except as hereinafter provided. A creditor whose cause of action accrues after the expiration of eighteen months from the time the executor or administrator gave bond according to law, and before such estate is fully administered, may begin-and prosecute such action within six months after the accruing of such cause, and before the estate is fully administered. No cause of action against an executor or administrator shall be barred, by lapse of time, until the expiration of six months from the time it accrues.”

The contention of the defendant that action against her is barred by the provisions of this section rests upon the theory that the cause of action accrued upon the appointment of the receiver of The Dayton Iron Store Company, October 21,1911; that it was incumbent upon him to present the claim for the amount due upon such stock subscription to the executors and institute action to recover the same from them within the period limited by the provisions of the section above quoted; and that the claim not having been sued upon within such time no action could thereafter be maintained against the executors or against this defendant.

The amendment of Section 3, Article XIII of the State Constitution, was in effect at the time of the incorporation of The Dayton Iron Store Company, and therefore no stockholder was “individually liable otherwise than for the unpaid stock owned by him or her.” It is only -that liability which is sought to be enforced in this action, and it arises from the subscription of Allen E. Thomas for the stock of said corporation. That subscription was made with reference to the statute then in force, and its terms became a part of the contract. Under the provisions of Section 8632, General Code, 10 per cent, of the amount subscribed for capital stock was due at the time of making such subscription, and the remainder of the amount subscribed was required to be paid in such installments •at the times and places and to such persons as the directors required.

As said by the court in the case of Hood v. McNaughton, 54 N. J. L., 425: “The subscription to the stock and the acceptance of a certificate for the shares constitute a contract between the subscriber and the company by which the subscriber engages to pay the remaining installments on demand by "the corporation.”

It is now well settled in this state, that the liability for unpaid stock subscription arises from the,.contract .between the subscriber for .stock and the corporation. (Bauman v. Kiskadden, Trustee, 94 Ohio St., 130.) It was held in the case of Warner v. Callender, 20 Ohio St., 190, that action to recover upon unpaid written stock subscription is not barred until fifteen years after call was made for the same. And in the opinion in the case of Bauman v. Riskadden, supra, it is stated at page 138: “If a stockholder owe an unpaid amount upon his subscription for stock, then this amount constitutes an asset of the corporation which may be enforced under the provisions of our statutes by the directors after call.” It clearly appears, therefore, that 10 per cent, of the amount subscribed for stock was due at the time the subscription was made. A right of action then accrued for such 10 per cent., and the claim to that extent is barred by the statute. That fact is unimportant in this case for the reason that the remaining 90 per cent, was subject to call, and only 49.41 per cent, is demanded in this action. The remaining 90 per cent, of the amount subscribed became due and payable only at such time and in such installments as determined and required by the board of directors. It is clear that had the affairs of the corporation continued under the control of its board of directors it would have been necessary that a call be made for the amount required to be paid upon stock subscription before an action could be maintained to recover the same, and that the defense now interposed would, under those circumstances, be unavailable in a suit to recover after call duly made by the board of directors, for the reason that a-claim for unpaid stock subscription against a stockholder or against the estate of a deceased stockholder would not become absolute until call therefor was made by the board of directors.

In the case of the The Great Western Telegraph Co. v. Gray, 122 Ill., 630, the court held that “Where a contract of subscription to the capital stock of a corporation provides for payments in installments, as from time to time ordered by the board of directors, no cause of action will accrue until an installment is assessed and ordered to be paid.”

A similar view was expressed by. this court in the case of The Mansfield, Coldzvater & Lake Michigan Rd. Co. v. Hall, 26 Ohio St., 310. It was there held, in construing provisions similar to those contained in Section 8632, General Code, that, in a suit to recover unpaid installments of stock, an allegation that the board of directors required subscriptions to its stock to be paid in installments of a certain amount, at a certain time and place, was material to the right of recovery.

To the same import and effect is the holding of the court in the case of Kilbreath v. Gaylord, Admr., 34 Ohio St., 305.

In the case of the Lake Phalen Land & Improvement Co. v. Lindeke et al., 66 Minn., 209, it appeared that a subscriber for stock, which was to “be paid in when called for by its board of directors,” died intestate before a call was made, and that after his estate was administered and the residue distributed to the heirs and next of kin by decree of the probate court, and the administrator discharged, the hoard of directors made an assessment upon the. stock and required that a specified portion of the amounts subscribed be paid. It was there held that such assessment or call was a condition precedent to a recovery of the amount so called or assessed; that the claim for the same, before such call, was a contingent claim, which could not be proved in the probate court, and that an action would lie for the-amount thereof against the distributees, to the extent -of assets received by them.

Under a state of facts somewhat similar, appearing in the case of South Milwaukee Co. v. Murphy et al. 112 Wis., 614, it was held that a debt, so long as it is wholly unknown whether there will ever be an absolute liability to discharge it, is a mere contingent claim, and that a subscription liability to pay for stock in a corporation is of that character. In that case the court further held that there was no way whereby, in advance of a call regularly made, the liability upon the subscription contract could have been valued and extinguished by payment, or of determining whether any payment whatever would be required, and, consequently, that the claim was only contingent and would not be affected by statutes of limitation while such character continued to exist, and, where it did not become absolute until after the expiration of the time limited for filing claims in administration proceedings, an action would lie against the legatees or next of kin of the deceased stock subscriber to recover the value of assets received by them or sufficient thereof to satisfy such claim.

In the case at bar no call was made by the board of directors for the unpaid stock subscriptions, nor for the payment of any part thereof. There was no ascertainment of the amount required to be paid on such unpaid stock subscriptions until the action of the court approving the finding and report of the master commissioner. Prior to that time the claim was only contingent and the amount which might be required, if any, was indefinite and uncertain. It does not appear that it was theretofore either ascertained or ascertainable. It was a liability of the estate of Allen E. Thomas, but, under the terms of the contract, due only at the times and iñ the installments specified by call of the board of directors. As we have seen no call was made nor was any action taken equivalent thereto until the finding and order of the court January 12, 1915.

The authorities are not in accord, but the rule adopted and followed in many jurisdictions is that until an account has been taken and an order of the court made in the nature of a call upon the shareholders the receiver cannot maintain an action against them, and such rule has been applied particularly where the total amount due from the shareholders will, if collected, be much more than sufficient to pay the ■ corporate debt; and either an assessment by the directors of the necessary amount, or an order of a court of equity as a substitute for such assessment, is necessary as a preliminary to a right to sue a shareholder at law for the unpaid balance of his stock subscription. 7 Ruling Case Law, Sections 371 and 401; 10 Cyc., 732, and 4 Thompson on Corporations (2 ed.), Section 3886, and cases cited.

In the case of Great Western Telegraph Co. v. Gray, supra, it appeared that a party in 1868 subscribed to the capital stock of a corporation, to be paid for in such installments as might from time to time be ordered, and on assessments or call paid 40 per cent, of the par value of his stock. The directors failed to make any order for the payment of the balance and a court of equity at the suit of creditors in 1886 made an order of assessment or call for payment on the subscription. The court held that the limitation as to the unpaid subscription did not commence to run before such order of the court in 1886.

If under the circumstances presented by the instant case a right of action for the recovery of unpaid stock subscription accrued only upon the order of the court, heretofore referred to, a suit against the executors of said estate to recover the unpaid subscription of Allen E. Thomas was precluded by force of the provisions of Section 10746, General Code. The eighteen months period during which such suit could be brought had expired and said estate had been fully administered. The defendant as residuary legatee received property of value far in excess of the claim asserted by the receiver. Had this claim been enforceable prior to the final settlement of said estate, it would have been paid out of the assets of the estate before distribution, and the amount thereafter received by the defendant would have been diminished to that extent. The claim having become absolute and enforceable subséquent to the settlement of the estate and subsequent to the expiration of time fixed by-statute within which actions may be brought against executors, we perceive no valid reason why suit may not be maintained against the defendant by virtue of the provisions of Sections 10876 and 10877, General Code, if commenced within one year after the time when the right of action accrued, as required by the provisions of Section 10878, General Code. That requirement was complied with in this case.

There is no virtue in the defense that neither the defendant, nor the executors, nor stockholders individually, were made parties to or notified of the proceeding in the receivership case. Swing, Trustee, v. Rose, 75 Ohio St., 355.

The court in making the order upon which this suit is predicated did only what it would have been the duty of the board of directors to do had the affairs of the company continued under its supervision and control. (7 Ruling Case Law, Section 366.) Upon this point the language used by the court in the case of Great Western Telegraph Co. v. Gray, supra, is so terse and so apt that we adopt it:

“Defendant’s promise was to pay as the directors, from time to time, might order. The directors, who were defendant’s agents, having neglected to make order for payment, a court of equity, in their place, as before said, might make the order. The court here did make such order, and thereupon, or at least after demand made, defendant’s legal liability upon his contract was complete to pay the remaining amount of his stock subscription. There was then a perfect cause of action against him. His liability was to pay the entire remaining unpaid amount of sixty per cent, of his subscription, — at least to the extent needed to pay the debts of the corporation. Assessing him with only his ratable part thereof (thirty-five per cent.) was, in mitigation of his legal liability, doing him an equity, and affording no just cause of complaint. In order for the board of directors to have made a valid order for payment, it would not be contended, we presume, that defendant should have been before the board. No more, we conceive, was it necessary that defendant should have been before the court, when it, in place of the directors, made the call or order of assessment.”

The defendant could interpose any defense in this suit which Allen E. Thomas could have asserted, but no defense has been interposed which can defeat the claim for the portion of such unpaid stock subscription which is sought to be recovered in this action. The judgment is therefore affirmed.

Judgment affirmed.

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


source: Caselaw Access Project

author: Nichols, C. J.

license: Public Domain

text:
    Roma v. The Industrial Commission of Ohio.

      Workmen’s compensation — Award denied claimant — Appeal to common pleas court — Award by jury — Periodical payment — Jurisdiction of industrial commission — Limitation for appeal —Notice to claimant.

    1. In cases arising by way of appeal from the decision of the Industrial Commission denying the right of a claimant to participate in the state insurance fund, a jury is without power to return a verdict fixing compensation to be paid in lump sum.
    2. The jury in such cases sits as an appellate Board of Awards, and in fixing the amount of compensation it is governed, as to amount of compensation and time and manner of payment, by the provisions of Sections 1465-78, 1465-79, 1465-80, 1465-81, 1465-82, 1465-83, 1465-84 and 1465-85, General Code. The award must provide for periodical payments.
    3. Any such award, from which error has not been prosecuted,, is to be certified by the trial court to the Industrial Commission, and thereafter is to be treated in all respects as if originally rendered by such commission.
    4. Such award is subject to the provisions of Section 1465-86, in respect to the continuing jurisdiction of the Board of Awards, and is subject to such modification and change as in the opinion of the board may be justified.
    5. Such award is also subject to the provisions of Section 1465-87, and such board may in cases of special circumstance, and when the same is deemed advisable, and not otherwise, commute the periodical benefits found to be due the claimant by the jury to one or more lump sum payments.
    6. The thirty-day period granted to employes within which they may appeal to the court of common pleas, in cases where their claims for participation in the state insurance fund have been denied by the Industrial Commission, as provided by Section 1465-90, General Code, does not begin to run against 'such claimant until he has received actual notice of the rejection of his claim.
    (No. 15587
    —Decided February 19, 1918.)

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

      Mr. David G. Jenkins and Mr. John Ruffalo, for plaintiff in error.

      Mr. Joseph McGhee, attorney general; Mr. Jared P. Huxley, prosecuting attorney; Mr. H. Stanley McCall and Messrs. Tolies, Hogsett, Ginn & Morley, for defendant in error.
   Nichols, C. J.

The plaintiff in error, an employe of The East Ohio Gas Company, suffered certain injuries in May, 1914, on which he bases his right to participate in the state insurance fund.

The company was operating under the provisions of Section 22 of the Workmen’s Compensation Act, whereby it had elected to pay compensation direct to its employes. It denied any liability to compensate the injured employe.

The employe thereupon filed with State Liability Board of Awards his claim for compensation. The board held that the claimant was not entitled to participate in the fund, for the reason that the injuries were not received in the course of his employment. Thereupon appeal was had to the common pleas court of Mahoning county, in which court recovery was had in the gross sum of two thousand dollars.

The court of appeal's reversed the judgment of the court of common pleas on the ground that Section 43 of the Workmen’s Compensation Act did not provide for an appeal by claimants who were employes of employers electing to pay compensation directly.

This question has been decided otherwise by this court in the case of Reinholz, Gdn., v. The Industrial Commission of Ohio, 96 Ohio St., 457, the holding there being that the right of appeal existed in favor of all employes; and unless other prejudicial errors are disclosed by the record in the case now under consideration the judgment of the court of appeals would necessarily be reversed.

The defendant in error claims that there are other errors apparent on the record, which are of such a character as to require a reversal of the court of common pleas and therefore an affirmance of the judgment of the court of appeals, and it has asked this court to review these several assignments of error and render its judgment thereupon.

The first ground relied upon is that the appeal, from the order of the Industrial Commission denying the claimant compensation was not filed in the court of common pleas of Mahoning county within 30 days after the notice of the final action of such commission. If this is true, then the appeal was filed too late, and no recovery can be had, for it is expressly provided in Section 43 of the Workmen’s Compensation Act that the appeal must be filed within 30 days from the date of the notice of the action of the board in disallowing compensation.

The record shows that the commission denied compensation on the 15th of March, 1916, and notice was thereupon sent by the board, addressed to the plaintiff in error, in care of his attorney of record; Patrick M. Fusco, Youngstown, Ohio.

The appeal was filed on the 7th of June, 1916.

The appellant says in his petition that he did not receive notice of the rejection of his claim until the 9th of May, 1916. If he be correct, then the appeal was within thirty days.

It is to be at.once admitted that, ordinarily, in a pending judicial proceeding, notice to an attorney of record is notice to his client. This is necessarily so, otherwise the orderly and effective administration of justice would be thwarted, and by carelessness or collusion unseemly and unjust delays would be judicially sanctioned. In fact, the rule is even stronger than just stated; for, as given in 29 Cyc., 1118, the general rule is that in all pending judicial proceedings, wherein the party has an attorney, notice must be given to that attorney as agent and not to the party himself.

A strict application of this rule would undoubtedly defeat the right of the plaintiff in error to recovér, but in view of the peculiar circumstances which the record discloses, and the feeling which abides within this court that the remedies provided in the Workmen’s Compensation Act for the benefit of injured parties should be construed and interpreted with the utmost liberality, we are constrained to hold that the appeal was filed in time.

It appears that at or about the time the Industrial Commission rejected the claim of Roma for compensation his attorney had a disagreement with him, and thereupon notified him that he had withdrawn from the case.

The evidence is quite conflicting and unsatisfactory. It is claimed by the plaintiff in error that when his attorney withdrew from the case he was not notified that final action by way of rejection had been had, and that soon afterward he employed other counsel to prosecute his claim for compensation. The attorney, on the other hand, is by no means positive that he told the client that the claim had 'been disallowed, but contents himself by saying that he is pretty confident that he did so notify him, planting himself more on the fact that it was his duty to so notify him rather than upon any independent recollection of the fact.

The plaintiff in error was a foreigner, only fairly acquainted with the English language, and entirely unfamiliar with judicial proceedings, and his conduct thereafter was entirely inconsistent with the view that he had knowledge of the rejection of the claim before the 9th of May, 1916, and wholly consistent with his belief that the claim was still pending before the Industrial Commission.

The jury may be said to have settled this phase of the controversy; for, in answer to an interrogatory submitted to it by the court as to when the plaintiff, Mike Roma, received notice of the final action of the Industrial Commission denying him the right to participate in the state insurance fund, its answer was: “May 9, 1916.” As there was some evidence supporting the answer to this interrogatory, this court feels bound by it.

Since, however, it is clearly shown by the record that the Industrial Commission did send notice of its final action to the plaintiff in error’s attorney of record, we are here presented the question for decision: Does the fact that the state did properly notify such attorney of its final action charge the plaintiff in err«or with notice although it was not communicated to him by his attorney?

To defeat the right of this claimant under these circumstances otherwise than on the merits of the controversy would be entirely out of accord with the principles and objects sought to be attained by the. Workmen’s Compensation Act.

A consideration of this act clearly shows that it was the purpose and object of the act to obviate the necessity of claimants dealing with the board through agents, representatives or attorneys, and we do not feel that it is a harsh rule to require the board in the event of the rejection of a claim for compensation to see to it that claimant receives actual notice thereof.

It is not to be overlooked that the claimant denied to himself the right he may have had, if any, to prosecute his claim in the courts of the state, but voluntarily submitted to the decision of the Board of Awards, and we feel that if he be defeated by a technicality, although a proper and just one, it would be quite out of harmony with the underlying objects the general assembly had in view in enacting the law.

The state of Ohio by the very terms of the law. becomes in fact the representative, if not the champion, of the claimant, to the extent of seeing that exact justice is done him, and it is quite manifestly the intention of the law that the ordinary rules of procedure, although wise and fair in the abstract, must give way, if, in adhering to them, any conclusion even savoring of injustice would result.

Section 1465-91 provides that “Such board [the Board of Awards] shall not be bound by the usual common law or statutory rules of evidence or by any technical or formal rules of procedure, other than as herein provided, but may make the investigation in such manner as in its judgment is best calculated to ascertain the substantial rights of the parties and to carry out justly the spirit of this act.”

It is the conception of this court that the section of the law just quoted is, in a sense, binding on the courts that may review these investigations. Whenever it may be made to appear that by a strict adherence to technical rules the substantial rights of the party are in jeopardy, it is the plain duty of the courts as well as the board to disregard such rules.

It is not to be understood that this section countenances the making a farce or mockery of a judicial proceeding. For instance, it would not justify the admission of hearsay evidence, nor would it, to use an illustration that might have been furnished by the instant case, countenance the filing of an appeal by the claimant 30 days after he had received actual notice of the disallowance of his claim.

Actual notice did not reach the plaintiff until the 9th of May. Therefore, having filed his appeal on the 7th of June next ensuing, he is within the law.

The second point relied on by the state for a reversal of the common pleas and an affirmance of the court of appeals is that the former court erred in charging the jury that a verdict might be awarded in a lump sum. The state contends that the jury hearing cases of this character on appeal sits as an appellate Board of Awards and can render no judgment or award different from the award that would have been made by the Industrial Commission had it found that the plaintiff in error was entitled to compensation.

An examination of the Workmen’s Compensation Act clearly shows that in this respect the contention of the state is sound.

The court charged the jury as follows: “You may, gentlemen of the jury, make it [the compensation] a lump sum payment, if you wish, but not to exceed $3,750.” This was erroneous, as it granted the jury a power expressly denied it by the law.

Section 1465-90, General Code, provides: “And if they [the jury] determine the right in his [the claimant’s] favor, shall fix his compensation within the limits under the rules prescribed in this act; and any final judgment so obtained shall be paid by the state liability board of awards out of the state insurance fund in the same manner as such awards are paid by such board.”

The primary duty of the jury under the statute is to determine first the right of the claimant to recover, and, if it is found that such claimant is entitled to participate in the fund, it then becomes its duty to make an award, not in any lump or gross sum, but just as the Board of Awards would have done had such board found in favor of the claimant.

The jury has the same discretion as to duration of time the award shall run as the Board of Awards possesses, but it cannot make allowance of any sum in excess of the statutory limitations.

In the instant case, the injured party was receiving $12 per week. The amount of the judgment would indicate that the jury did not regard the claimant as one suffering a permanent total disability, but rather placed him under the provisions of Section 1465-80, in the class suffering injuries resulting in partial disability.

So far as the extent of the injuries of the claimant are evidenced by the record, the jury would have been justified in awarding him compensation at the rate of $8 per week for a period of 250 weeks, which, in the aggregate, although differing in time and manner of payment, would be equivalent in amount to the lump sum verdict of $2,000.

We find the error, therefore, not to be prejudicial.

Any other holding of this court would make a favored class of claimants denied compensation by the board. When their cause was submitted to a jury, they would be permitted to recover not only larger amounts than those whose right to recover was clear, but would also receive the award in a gross sum. While we would not be understood to intimate that the claimants, whose claim for compensation has been denied by the tribunal created by the law to pass on all claims of this character in the first instance, should be placed in a less favored class, we must be certain to see that such claimants are not put in a more highly favored class.

Such is manifestly'not the intent of the law.

We further hold that judgments rendered by courts of common pleas in favor of claimants who have appealed from adverse holdings of the Board of Awards are subject to the provisions of Sections 1465-86 and 1465-87, General Code.

Section 1465-86 provides that “The powers and jurisdiction of the board over each case shall be continuing, and it may from time to time make such modification or change with respect to former findings or orders with respect thereto, as, in its opinion may be justified.’

The jury in appeal cases of this character sits as an appellate Bo.ard of Awards. When it has rendered its finding, if approved by the trial judge and error be not prosecuted, it is the duty of the court to certify the finding and award to the Industrial Commission, and thereafter such proceedings should be had as if the commission itself had made the award.

Section 1465-87 provides: “The board, under special circumstances, and when the same is deemed advisable, may commute periodical benefits to one or more lump sum payments.”

This is the function of the Board of Awards, and not of the court, and applies equally to claims for compensation by injured parties and to claims for compensation by dependents of such as may have suffered death by injury.

It is to be observed that the matter of commutation is wholly within the discretion of the Board of Awards and is to be granted only in instances of special circumstance.

No single feature of the law stands out more clearly than the idea of making the compensation for injuries a substitute for the weekly wages of the injured party. In the great mass of cases, the theory of periodical instead of lump sum payment works out in practice to the manifest benefit of the injured one. He has a certain paymaster, and to the extent of two-thirds his former weekly wage is independent of the vicissitudes that frequently embarrass the laborer, owing to lack of employment, loss of time through sickness, and through temporary shutdowns, with which we are so familiar at this particular time.

It is clearly the design of the legislature that lump sum payments are to be the exception and not the rule. There are instances easily to- be contemplated where it would be to the advantage of the claimant to receive the award in gross, but this method is to he understood to be a departure from the usual manner of payment, and the board itself lacks the power to exercise it arbitrarily. It is the plain duty of the board, whose wards the injured employes are, to exercise the greatest care and deliberation in commuting periodical to lump sum payments, and this for the protection of the employe and his family, who, since they are commonly inexperienced in what we call business matters, become too often the easy prey of the cunning and designing element of our society.

The practice and procedure approved in the instant case will apply with equal force to all claimants whose right to participate in the state insurance fund has been denied by the Board of Awards and who have appealed to the court of common pleas, whether their employers be of the class that has elected to pay compensation , directly or of the class that contributes directly to the state insurance fund.

It is the judgment of this court that substantial justice does not require, but would forbid, a reversal of the common pleas court, notwithstanding the error in the charge and in the form of the verdict.

We do direct, however, that a modification of such judgment be entered, and that, instead of requiring the payment of the lump sum of $2,000, it be altered by providing for the payment of the sum of $8 per week for a period of 250 weeks, commencing on the day of the rendition of the judgment in the common pleas court, namely, November 24, 1916.

The judgment of the court of appeals is reversed\ and that of the common pleas is affirmed as modified.

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


author: By the Court.

text:
    The State, ex rel. Snapp, v. Goul et al., Board of Education of Champaign County School District. The State, ex rel. Stevens, v. Goul et al., Etc.

      Schools — Transfer of territory — From centralized district — Sections 4696 and 4727, General Code.

    (Nos. 15708 and 15709
    Decided February 19, 1918.)
    Certified by the Court of Appeals of Champaign county.

      Messrs. Deaton, Bodey & Bodey, for plaintiffs in error.

      Messrs. Johnson & Miller and Mr. H. W. Houston, for defendants in error.
   By the Court.

The board of education of Champaign county refused to transfer a portion of Jackson rural school district and a portion of Mad' River school district from Champaign county school district to Clark county school district as prayed for by 75 per cent, of the electors residing in the portion of each district sought to be transferred, and also refused to transfer another portion of Jackson rural school district to Miami county school district, for which petition was filed the same day, likewise signed by 75 per cent, of the electors residing in the territory sought to be transferred. The territory described in the second petition adjoined that described in the first petition and they together included approximately 13 square miles of the Jackson rural school district.

The court of appeals in each of said cases denied the application for a writ of mandamus requiring the board of education of Champaign county school district to make the transfer of territory prayed for, because of the fact that within three years the schools of Jackson rural school district had been centralized by a.vote of the people by virtue of the provisions of Section 4726, General Code. Pursuant to the action of the electors of that district bonds had been issued, a school-site had been purchased, and a building, centrally located and suitable for the accommodation of the centralized schools of the district, was in process of erection when the petitions for transfer were filed.

In the case of State, ex rel. Brenner et al., v. Board of Education of Franklin County et al., post, 336, an original action in this court, it' was determined that, under the provisions of Section 4696, General Code, as amended 106 Ohio Laws, 397, whenever 75 per cent, of the electors of territory sought to be transferred to another county school district petitioned for such transfer, the county board of education is vested with no discretion in the premises, but is required under the provisions of that section to transfer such territory in accordance with the prayer of the petition filed with it. In that case a peremptory writ of mandamus was issued, as prayed for in the relator’s petition, commanding the county board of education of Franklin county to transfer territory from the village school district of Canal Winchester, Franklin county, to the Fairfield county school district. However, the question of the applicability of the provisions of Section 4696, General Code, to districts wherein the schools have been centralized, was not involved in that case.

The provisions of Section 4727, General Code, that “When the schools of a rural school district have been centralized such centralization shall not be discontinued within three years, and then only by petition and election, as provided in section 4726,” constitute an exception to the provisions of Section 4696, General Code. Otherwise the county board of education would be required upon the petition of 75 per cent, of the electors of a specified portion of a rural school district to transfer such territory to another county, even though such transfer would effect a decentralization of the schools, which is prohibited by the clear and express provisions of Section 4727, General Code.

This court held in the case of Fulks et al. v. Wright, 72 Ohio St., 547, that “When the schools of a township have been centralized, no part of the territory comprised in such centralization is subject to be taken to form a special school district.” Although very material changes have since been made in the laws of the state affecting the organization of school districts, and the power and authority of boards of education somewhat extended and increased, yet no substantial change has been made in the provisions of Section 3927-2, Revised Statutes, under consideration in the case just cited, and it was reenacted as part of the school code, and, as we have seen, is now Section 4727, General Code. The language of Section 4727 and also of Section 4696 is clear and explicit. Force and effect can be given to both sections only by construing the provisions of the former as an exception to the requirements of the latter.

Judgments affirmed.

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


author: Jones, J.

text:
    The Toledo & Ohio Central Railway Co. v. The S. J. Kibler & Brothers Co.

      Railroads — Negligence — ■Act of God — Antecedent delay in shipment— Liability — ■Interstate commerce• — Federal law governs, when.

    1. Where an extraordinary and unprecedented flood has destroyed a consignment of goods in the possession of a bailee for transportation, .an antecedent delay, without other act of negligence, will not render the bailee responsible for the damage caused by such flood. (Daniels et al. v. Ballantine et al., 23 Ohio St., 532.) This rule of liability applies to a common carrier as well as to other bailees, and has been adopted by our Federal tribunals.
    2. Where there has been antecedent delay in shipment, followed by an unprecedented physical event comprising what is known as an “act of God,” if the carrier has failed to exercise due care after discovery of such an event and its impending perils the carrier will be liable, if damage ensues because of such neglect.
    3. In a case of an interstate shipment of goods by a carrier, under a bill of lading issued therefor, the rights and liabilities of the parties are governed by Federal laws and decisions, and should ■ be determined by the state courts in accordance with the principles announced and enforced by the Federal tribunals.
    (No. 15580
    —Decided March 5, 1918.)

      Certified by the Court of Appeals of Crawford county.
    In the common pleas court the Kibler company brought an action against the railway company, alleging that on the 20th day of March, 1913, plaintiff delivered to the railway company, as a common carrier, at Columbus, Ohio, 56 barrels of tallow, consigned and billed to plaintiff at Milwaukee, Wis. In its petition the plaintiff alleged that the defendant wrongfully and negligently failed to carry, transport and deliver the tallow to a connecting carrier, whereby it was wholly lost to the plaintiff.
    The railway company answered, alleging that the shipment was made under a certain contract or bill of lading which contained the following condition: “No carrier or party in possession of any of the property herein described shall be liable for any loss thereof or damage thereto or delay caused by the act of God,”'' etc. The railway company alleged in its answer that the damage “was caused by the act of God, to-wit, the unprecedented flood of March, 1913.”
    By way of reply plaintiff alleged that the destruction of the property was caused by the negligence of the defendant in delaying to ship the goods for a period of 5 days after delivery for shipment, and in permitting the goods to remain in a place exposed to danger from flood; and that by reason of such negligence and delay the goods were destroyed.
    The following facts in the case are substantially without dispute. An unprecedented flood occurred during the time in controversy. The defendant owned and operated a railroad extending from Columbus, Ohio, to Toledo, Ohio, a distance of 132 miles, passing through the cities of Kenton and Findlay. The progress of the flood extended southward along the line of the defendant. Between 10 and 11 o’clock on the night of March 23, 1913, the water had washed out part of the tracks immediately south of Findlay. On the night of the 24th of March the tracks at Kenton, south of Findlay, 60 miles north of Columbus, were flooded. Proceeding southward the flood by 10 a. m., March 25 th, had reached Columbus, washed out the levees, and destroyed the goods in controversy. The tallow shipment was delivered to the defendant at Columbus during the day of March 20, 1913, and was not taken from its yards at that point before its destruction. The shipment was to have been delivered to a connecting carrier at a point on the defendant’s railroad south of Toledo. The last freight train departing near the flood period, going northward and reaching Toledo on defendant’s road, left Columbus at 10:35 a. m. on March 23d. Another leaving at 10 p. m. on that day proceeded no farther than Kenton, because of the flood.
    In the trial court a jury was waived and the case submitted to the court on the pleadings and evidence. The trial court rendered judgment in favor of the plaintiff. This judgment was affirmed in the court of appeals by a divided court, and the case certified to this court by the court of appeals because its judgment was in conflict with a judgment pronounced upon the same question by the court of appeals of Cuyahoga county in the case of The Erie Rd. Co. v. Kohler, 26 C. C., N. S., 337. Error is prosecuted to reverse the judgment of the court of appeals.

      Messrs. Doyle, Lewis, Lewis & Emery and Mr. Charles Gallinger, for plaintiff in error.

      Mr. R. V. Sears, for defendant in error.
   Jones, J.

This action was tried to the court which heard the facts and rendered judgment for the plaintiff below. Since the record contains neither findings of fact nor conclusions of law it is difficult to determine exactly upon what feature of the case the trial court came to its conclusion. The shipment in question was an interstate shipment, made in pursuance of a bill of lading containing the exemption from liability heretofore noted. From the facts disclosed the court could have readily found that if reasonable care had been used the tallow might have been shipped and reached a point beyond the danger zone of the flood. Whether the judgment of the trial court was based upon that feature of the case, as a contributing cause to the damage, or was reached because of the facts hereafter disclosed in this opinion, is not clear.

The chief, and practically the only, legal contention presented by counsel upon both sides is as follows: Assuming that the flood was an unprecedented one amounting to an act of God, does the prior negligence of the carrier in merely delaying the shipment, without other acts of negligence, entail liability upon the carrier, notwithstanding the exemption stipulated for in the bill of lading? It is now urged, as one of the reasons for affirmance, that since the trial court could have well found that if due care and diligence had been used the shipment would have reached a place of safety before the advent of the flood, the carrier is not relieved from liability, but its negligence in delaying shipment becomes a contributing and proximate cause of the injury. It is undoubtedly true that there is a divergence of legal view among the various jurisdictions of this country as to the principle that should be applied. The one view is that if there had been antecedent negligence in the shipment of goods after its consignment, an extraordinary and unprecedented flood amounting to a vis major would not relieve the carrier from liability; the other view attributes injury to an unavoidable disaster, which could not have been reasonably anticipated by human agency, and, in case of mere delay without other acts of negligence, applies the principle of nonliability upon the part of the carrier, under the maxim, "causa próxima non remota spectatur.” Under this latter view the courts hold the delay to be the remote, and the act of God the proximate, cause of injury. This doctrine has been announced in the following cases, which have been frequently cited in the state and federal courts supporting it: Morrison v. Davis & Co., 20 Pa. St., 171; Denny v. N. Y. Central Rd. Co., 13 Gray, 481, and Daniels et al. v. Ballantine et al., 23 Ohio St., 532.

In cases of this character it is immaterial whether the action sounds in contract or tort. Both at common law and by virtue of the stipulation in the bill of lading the carrier becomes immune from liability if the damage results from an unanticipated and unprecedented physical force. In either case the gravamen of the action is negligence. If the event proves to be so extraordinary as not to be anticipated by the exercise of human care and skill it is difficult to see upon what principle any bailee can be held. As stated in the opinion in Daniels et al. v. Ballantine et al., supra, the responsibility of the defendant “does not extend to consequences which can not he regarded as the natural results of his conduct, and which, on that account, could not, by ordinary forecast, be anticipated.” An attempt has been made to distinguish that case and to deny the application of the rule to common carriers by reason of the fact that a higher contractual duty rests upon them than upon an ordinary bailee. This distinction did not appear to carry weight with the judge delivering the opinion in the Ballantine case. Neither did it appeal to either of the courts deciding the cases of Morrison v. Davis & Co. and Denny v. N. Y. Central Rd. Co., supra. And it is difficult to perceive wherein the difference in principle obtains, since recovery must be based not upon the degree of contractual duty cast upon the bailee, but upon the tortious act of the defendant.

The federal courts have adopted the principle announced in the cases cited. Where there appears to be no act of negligence upon the part of the carrier other than mere delay in transportation it has been uniformly held by the federal courts that such extraordinary and unprecedented events as disclosed by this record become the proximate, and the delay the remote, cause of the injury; and the state decisions heretofore referred to are cited with approval. Memphis & C. Rd. Co. v. Reeves, 10 Wall., 177; St. Louis, I. M. & S. Ry. Co. v. Commercial Union Ins. Co., 139 U. S., 223, and Empire State Cattle Co. v. Atchison, T. & S. F. Ry. Co., 135 Fed. Rep., 135, affirmed 210 U. S., 1.

Whatever may be the view of the state courts in applying their local laws and decisions, since this was an interstate shipment, under a bill of lading, the rights and liabilities of the carrier are governed by federal laws and decisions. All questions relating to the liability of parties, under bills of lading for interstate shipment, issued in compliance with the Carmack amendment to the Flepburn Commerce Act, must be determined in accordance with the principles announced and enforced by the federal tribunals. This requirement is necessary in order to prevent adoption by the various state courts of divergent rules of liability arising from alleged violations of agreements for interstate shipments. Southern Ry. Co. v. Prescott, 240 U. S., 632; Cin., N. O. & T. P. Ry. Co. v. Rankin, 241 U. S., 319; N. Y. C. & H. R. Rd. Co. v. Beaham, 242 U. S., 148, and St. Louis, I. Mt. & So. Ry. Co. v. Starbird, 243 U. S., 592-596.

The second proposition of the syllabus in the case of Cin., N. O. & T. P. Ry. Co. v. Rankin, supra, is as follows: “Rights and liabilities of parties to an interstate shipment by rail depend upon Acts of Congress, the bill of lading, and common-law principles as accepted and applied in. Federal tribunals.”

The supreme court of the state of Minnesota, which had theretofore refused to follow the Ohio rule, felt itself constrained to accept the federal rule in interstate shipments because of the federal authorities last cited. (Northwestern Consol. Milling Co. v. Chicago, B. & Q. Rd. Co., 135 Minn., 363.) See also the cases of Continental Paper Bag Co. v. Maine Cent. Rd. Co., 115 Me., 449, and Barnet v. N. Y. C. & H. R. Rd. Co., 222 N. Y., 195.

However this does not dispose of the case. Although it' does not clearly appear, the trial court may have based its judgment upon a finding that the defendant carrier was derelict in its duty after it obtained knowledge of the violent and unprecedented character of the flood. An inspection of the reply discloses that plaintiff claimed not only that the company was negligent in delaying the shipment for a period of five days, but that it was also negligent in allowing the goods to remain in a place where they were exposed "to danger from the flood. While the carrier cannot be held to anticipate the flood in question, still the duty is cast upon it to use reasonable skill and diligence in the care of property entrusted to it, after discovery of its unusual peril. The amount of care to be exercised, of course, depends upon the attending circumstances and the danger to which the property is exposed. While the carrier js not held liable for an adventitious delay, it may be held responsible for damage if proper care was not used. This principle is fully upheld in the cases cited. (Morrison v. Davis & Co. and Denny v. N. Y. Central Rd. Co., supra.) The same principle is also sustained by the federal courts. (Clark et al. v. Barnwell et al., 12 How., 272; Cau v. Texas & P. Ry. Co., 194 U. S., 427, and New Orleans & N. E. Rd. Co. v. National Rice Milling Co., 234 U. S., 80.) The latter case decides that if the judgment was based upon facts disclosing negligent conduct upon the part of the carrier in not properly safeguarding the property entrusted to it under a bill of lading for interstate carriage, after discovery of the unprecedented character of the flood and its impending dangers, the carrier cannot claim immunity under its asserted federal rights. Nor would the judgment be incompatible with the Minnesota case, supra, since the court in that case expressly stated in the closing paragraph of its opinion that there was no evidence that it was feasible or even possible to move the goods -to a place of safety or otherwise protect them after anticipated danger.

The record in the instant case discloses that the flood was an unprecedented one, extending along the line of the defendant’s road in a southerly direction. On the night of the 23d of March it appeared in the vicinity of Findlay, Ohio; on the following night it had reached Kenton; and on the morning of March 25th it had reached the city of Columbus and the local yards of the defendant at that point. It appears that there was no effort made to clear the Columbus yards at any time between the 23d and 25th of that month. The superintendent of the railway company, who had general supervision over transportation and train service, on cross-examination testified as follows:

“Q. 11. Now, I understand you to say, that the last freight train leaving for the north left Columbus about 10:00 o’clock P. M. of the 23rd? A. The last train left the yard about 10:35 A. M. of the 23rd and the last through freight train that left the yard left 10:00 P. M. of the 23rd. That was the last at Columbus.
“Q. 12. There were various points north of Columbus where your track would sufficiently elevated above the flood ? A. Yes.
“Q. 13. And you had sidings at those places? A. Yes.
“Q. 14. So that if anything there destined for northern shipment had been taken out any time between the 20th and 25th, it could have found a safe place of refuge along your line at various points, couldn’t it? A. Probably.
“Q. 15. You had sufficient yard capacity there to take care of your business, didn’t you? A. Yes, relatively speaking.”

From this and other testimony appearing in this record we may well conclude that the courts below may have based their judgment upon proof that the carrier company did not exercise that degree of care which it should have exercised after it obtained full knowledge of the flood conditions.

The record, including the exhibits, shows sufficient compliance with the terms of the bill of lading requiring written notice of loss to the carrier. .... .....

For the reasons stated the judgments of the courts below are affirmed.

Judgments affirmed.

Newman, Matthias and Johnson, JJ., concur.


author: Wanamaker, J.

text:
    The State, ex rel. Smith, Pros. Atty., v. Maharry.

      Constitutional law — Bureau of inspection and supervision of public offices — Statutes liberally construed — Public officers or private persons — Disbursements — Public property or money — Public trusts.

    1. All public property and public moneys, whether in the custody of public officers or otherwise, constitute a public trust fund, and all persons, public or private, are charged by law with the knowledge of that fact. Said trust fund can 'be disbursed only by clear authority of law.
    2. Sections 274, 284 and 286 et seq., General Code, creating the bureau of inspection and supervision of public offices, defining its powers, and providing for the short form of pleading, are constitutional statutes.
    3. Said sections are remedial statutes, and, therefore, should be liberally construed and applied to effect their clear and controlling purpose.
    4. These statutes are comprehensive enough to warrant actions against either public officers, former public officers or private persons.
    (No. 15653
    Decided March 5, 1918.)
    Error to the Court of Appeals of Muskingum county.
    Facts are stated in opinion.

      Mr. Joseph McGhee, attorney general; Mr. L. D. Johnson and Mr. Perry Smith, prosecuting attorney, for plaintiff in error.

      Mr. A. A. George, for defendant in error.
   Wanamaker, J.

The prosecuting attorney of Muskingum county, Ohio, brought an action before a justice of the peace of that county, against W. A. Maharry,.a contractor, alleging that said contractor had constructed a bridge for the county and had received $18.30 in excess of the amount due him. The action was brought in the short form provided for by Section 286 and succeeding sections of the General Code, which are a part of the chapter governing the bureau of public accounting.

The petition or bill of particulars before the justice of the peace was in the short form provided for in Section 286-1, the pertinent part of which reads as follows:

“The civil actions provided for in section 286 of the General Code may be entertained, heard and determined by any 'Court having jurisdiction of the amount involved * * *. In any such action it shall be sufficient for the plaintiff to allege in the petition so much of the report of the bureau of inspection and supervision of public offices as relates to the claim against the defendant therein and that the amounts claimed against the defendant are unpaid, and it shall not be necessary in such petition separately to state and number any separate causes of action, the findings of such report, upon whatever claims or circumstances based, being considered for that purpose as constituting a single cause of action; nor shall the plaintiff be required to set forth in the petition any other or further matter relating to such claims. A certified copy of any portion thereof, shall constitute prima facie evidence of the truth of the allegations of the petition.”

The defendant in error claims:

1. That the statute is unconstitutional in so far as it makes the certified copy of the bureau of public accounting prima facie evidence of the truth of the allegations of the petition.

2. That, if it be constitutional, it applies only to a public officer, or one who claimed the money or property as a public officer, and that it has no application against contractors or other persons dealing generally with the public.

3. That the petition was insufficient even under the statute in that (a) the action was not brought in the name of some political subdivision, that is, in this case, in the name of Muskingum county, and (b) that the petition did not set out facts sufficient to constitute a cause of action, especially in this, fo-wit, that the petition did not state the number of cubic yards as to which an overcharge was made.

In the hearing before the court of appeals the court held the statute to be constitutional, but that it did not contemplate or include actions against others than public officers; in short, that no action under this statute could be brought against contractors or other private persons or corporations.

The presumption of constitutionality in favor of these provisions of the statute in question is reenforced by the fact that legislatures in the exercise of their power touching legal procedure have enacted again and again that certain facts or findings shall constitute a prima facie case, or shall be prima, facie evidence of certain controversial facts, and such statutes, especially where they pertain only to civil matters, have been uniformly upheld by the courts as constitutional. In the case of Hammond v. State, 78 Ohio St., 15, where the Valentine antitrust law was under consideration, this court held certain provisions of Section 4427-6, Revised Statutes, by which it was enacted that “The character of the trust or combination alleged may be established by proof of its general reputation as such,” to be unconstitutional.

The judge rendering the opinion in the case conceded “that within proper constitutional limits, the legislature has the general power to prescribe rules of evidence and methods of proof — to determine what may or may not be competent evidence in a particular case —and, with certain qualifications, has perhaps the power to enact and prescribe that in criminal prosecutions certain facts, when duly established, shall be held to be presumptive or prima facie evidence of guilt.”

In this case the statute merely provides that “A certified copy o,f any portion thereof [the report of the bureau of public accounting as referred to in the petition] shall constitute prima facie evidence of the truth of the allegations of the petition.” It does not provide that this, the prima facie evidence of the indebtedness of the defendant to the political subdivision in whose behalf suit is brought, shall be a prima facie case against the defendant.

Suppose Muskingum county had refused to pay the claim when it was presented. It would then be incumbent upon the contractor to bring his suit, and he would have the burden of proving his claim and showing by a preponderance of all the evidence in the cause that the county was indebted to him in the amount claimed, or a part thereof, before he could recover. Under this statute he has no greater burden of proof than he would have had had he himself brought the suit. The statute is a most efficient policeman in safeguarding public property and public funds.

We hold the statute to be constitutional.

The more serious question arises as to the scope of the statute. It clearly applies to public officers. Does it likewise afford a remedy against the public generally? This is a remedial statute, that is, it furnishes a remedy, and remedial statutes are to be liberally construed in order to effect their manifest purpose.

What is the paramount purpose of these statutes ? It is to protect and safeguard public property and public moneys. Finally we have come to regard all public property and all public moneys as a public trust. The public officers in temporary custody of such public trusts are the trustees for the public, and all persons undertaking to deal with and participate in such public trust do so at their peril; that is, the rights of the public, as beneficiaries, are paramount to those of any private person or corporation..

Courts have unanimously held that any person who knows, or ought to know, that he is dealing with a trustee of a private trust, deals at his peril, and is put upon inquiry to ascertain if the action of the trustee is proper and legal. If this is the doctrine as to private trusts, with greater force of reason it should be the prevailing doctrine as to public trusts.

The pertinent part of Section 286 is as follows:

“If the report sets forth that any public money has been illegally expended or thát any public money collected has not been accounted for, or that any public property has been converted or misappropriated, within ninety days after the receipt of such certified copy of such report the attorney general or such prosecuting attorney * * * shall cause to be instituted, and each of said officers is hereby authorized and required so to do, civil actions in the proper court.”

It should be noted that the statute covers “any. public money * * * illegally expended * * * or any public property * * * converted or misappropriated.”

When either of these two facts appear, that is (a) illegal expenditure of public money or (&) any public property converted or misappropriated, then there is warrant and authority in law for bringing the action under these statutes.

But it is claimed that such actions can only be brought when the “public money” has been unlawfully paid to some officer, or when the “public property” has been unlawfully misappropriated by some public officer.

These statutes do not place any such limitation upon actions brought under them. They are manifestly in the interest of conserving “public money” and “public property,” and he who wrongfully takes such “public money” or “public property” may be, and should be, sued under these statutes.

Private persons may undertake, and it is common knowledge very often do undertake* to dissipate or misappropriate public money and public property, and these statutes impose upon officers of the law the duty to bring suits to recover the same. But how can such actions be made effective unless suit is brought against the person or persons who wrongfully hold the “public property” or who have wrongfully taken the “public money?”

Manifestly the wrongful acts contemplated by this statute, that is, the wrongful taking of public money or public property, if limited only to public officers, would emasculate and destroy 95 per cent, of the virtue of the statute.

This court does not feel warranted in giving the statute such a narrow and technical construction as would paralyze this important safeguard to the protection of the public trust in more than nine-tenths of the cases arising thereunder.

But it is claimed that Section 2921, General Code, old Section 1277, Revised Statutes, is all sufficient to furnish a remedy by civil action, and that this action should have been begun under favor of that section. We grant that that section is sufficiently comprehensive to warrant the bringing of this action against the contractor, but that section is not exclusive. Evidently the legislature thought it was not sufficient in the line of legal remedies, though it has been in existence nearly half a century.

The statutes pertaining to the creation and powers of the bureau of public accounting are comparatively recent and have already in many cases demonstrated their wisdom and efficiency. Public authorities have their option as to which sections they will utilize in protecting public money and public property.

The phrase “public money,’ as used in these statutes, has been before this court in State, ex rel. Maher, Pros. Atty., v. Baker, 88 Ohio St., 165, in which case this court overruled Loe v. State, ex rel., 82 Ohio St., 73, so far as it undertook to interpret this same phrase “public money.”

The statutes in question are constitutional. The petition did state a cause of action thereunder and the judgment of the court of appeals is, therefore, reversed.

Judgment reversed.

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


text:
    The State of Ohio v. Lehr.

      Criminal law — Abortion — Corroborative evidence — Unnecessary to convict, when.

    (No. 15553
    Decided March 5, 1918.)
    Error to the Court of Appeals of Wayne county.
    The defendant in error, Joseph W. Lehr, was convicted in the court of common pleas of Wayne county, Ohio, at the September term, 1915, upon a charge of having performed an abortion upon one, M. H., on the 23d day of November, 1914.
    Upon trial had, the jury found the said Lehr guilty. The defendant filed his motion for a new trial, alleging the usual errors, which motion was by the court of common pleas overruled. Error was prosecuted to the court of appeals of Wayne county, which court reversed the judgment below on the sole ground “that there was not any evidence offered which corroborated or tended to corroborate the testimony of the accomplice, M. H.”
    The state of Ohio now prosecutes error to this court, after leave granted therefor, to reverse the judgment of the court of appeals.

      Mr. Benton G. Hay, prosecuting attorney, for plaintiff in error.

      Mr. W. E. Weygandt; Mr. H. R. Smith and Mr. John McSweeney, for defendant in error.
   By the Court.

No question of fact is before us. The question of the guilt or innocence of the defendant in error upon the facts of the case was determined by the courts below, and the only question here is a question of law.

The court of appeals in reversing the case had before it the claimed error that the verdict was contrary to the weight of the evidence, but they did not reverse upon that ground. They did, however, reverse on the sole ground “that there was not any evidence offered which corroborated or tended to corroborate the testimony of the accomplice, M. H.”

This brings us to the vital questions in the case:

1. Under the established law of Ohio is any corroborating evidence essential to a verdict of guilty?

2. If so, does the record disclose such corroborative evidence?

One of the earliest and best considered cases definitely declaring the rule of law with reference to the testimony of accomplices is that of Allen v. State, 10 Ohio St., 288. The court at that time was composed of such eminent judges as Brinkerhoff, Scott, Sutliff, Peck and-Gholson, and they all concurred in the syllabus and judgment.

The fifth paragraph of the syllabus reads:

“While it is the duty of the court, in their discretion, to advise the jury not to convict of felony upon the testimony of an accomplice alone, without corroboration, there is no rule of law preventing a jury from convicting upon the uncorroborated testimony of an accomplice.”

This doctrine is cited with approval in State v. Robinson, 83 Ohio St., 136. It is sound and salutary law.

The jury in the instant case were so instructed. They did convict. Under this doctrine it is immaterial as to whether there was or was not corroborating evidence. But the record does disclose corroborating evidence, particularly that of Frank W. Wood, and for aught that we may know there may have been further corroborating evidence in the appearance, manner and conduct of the accused himself upon the witness stand.

The reason assigned by the court for the reversal of the judgment is contrary to what has been the established law of Ohio in criminal procedure for more than a half century.

We find no error in the record to support the judgment of the court of appeals.

The judgment of the court of appeals is, therefore, reversed, and the judgment of the court of ' common pleas affirmed.

Judgment reversed.

Wanamakek, Newman, Jones, Matthias and Johnson, JJ., concur.

Nichols, C. J., dissents from the judgment.