text:
    The Kanawha & Michigan Railway Co. v. The Public Utilities Commission of Ohio.

      Railroads—Trackage agreement — Connection of disconnected portions of railroad — By lease of uniting road — Grantee no right to take local business, when — Limitation of duties to public — Grantee cannot be required to furnish cars, when — Prohibited contracts—Section 8983, General Code, inapplicable, when — Public utilities commission.

    1. Where, under a trackage agreement between two railroad companies the object of which as expressed in the agreement is to enable one of the companies to connect disconnected portions of its railroad, to form a continuous line and to operate trains to and from points on its own road, the other company grants the right to use in connection with it a part of the railroad owned and operated by it, “including the main tracks, sidings, passenger and freight stations, Y’s, inclines and other appurtenances and terminal and station facilities connected therewith,” and in the agreement it is provided that the grantee company shall have no right to take any business from or to any station upon the railroad of the owning company for any point reached by that company or its connections, the grantee company has no right to the use of a switch track built by the owning company on its right of way and connecting its main track with the mine tracks of a coal company, which switch track was not built for the general use of the railroad companies but for the convenience of the coal company. 2. The rights acquired by the grantee company under such an agreement are contract rights subject to the limitations and restrictions contained in the agreement and the duties of such company to the public are not the general duties of a common carrier operating upon its own road.
    3. Such railroad company cannot be required to furnish cars to a coal company whose mine is located on the part of the railroad over which the railroad company is operating under the trackage agreement, if in the rendition of such service there would be a violation of a restriction contained in the agreement.
    4. Section 8983, General Code, does not apply where one railroad company, under an agreement the object of which is to enable it to connect disconnected portions of its railroad and to form a continuous line to and from points on its railroad, is operating on the railroad of another railroad company and by the terms of such agreement the owning company does not attempt to narrow its own obligations to the public or relieve itself of any duties imposed upon it by law.
    (No. 15462
    Decided May 29, 1917.)
    Error to the Public Utilities Commission.
    The Hocking Domestic Coal Company is a corporation engaged in mining, producing and shipping coal. It filed a complaint with the Public Utilities'Commission of Ohio, in which it alleged that its Mine No. 5 was located on the lines of The Kanawha & Michigan Railway Company, that that Railway Company was discriminating against it and in favor of other shippers of coal whose mines were similarly located, and that said Railway Company refused to furnish it with cars for shipment of coal from its mine to Ohio points, while other shippers of coal in the near vicinity whose mines were similarly located were furnished their full desired quota of cars. Complainant charged further discrimination on the part of the Railway Company in favor of other shippers of coal whose mines were similarly located in that shipping facilities by means of a switch and switching connection were furnished them while the Railway Company refused to furnish complainant with a switch and switch connection, although a request and offer to comply with all the requirements required of coal shippers requesting such shipping facilities had been made. The prayer of the complaint was that after due hearing and investigation The Kanawha & Michigan Railway Company be ordered to cease and desist from .the violations therein complained of, and for such other and further order as the Commission might deem necessary.
    The Kanawha & Michigan Railway Company answered the complaint and admitted that it did not furnish cars for the use of the complainant, but as an excuse therefor averred that complainant’s Mine No. 5 was located along the line of The Hocking Valley Railway Company, over which it, The Kanawha & Michigan Railway Company, had only the right to operate its trains and to take business from points designated in a contract dated July 24, 1886, and supplemented January 3, 1900, which said contract and supplement did not give it the right to accept business from complainant’s Mine No. 5. It denied that it furnished cars for shippers of coal whose mines were located as was complainant’s Mine No. 5. It admitted that application had been made by complainant for the connection of the switching track leading south from Hobson yards with the private tracks of complainant, and it averred that said application was denied because it, The Kanawha & Michigan Railway Company, had no right, under the terms of the contracts before referred to, to make such connection. It denied that it furnished shipping facilities to any other mines located as was complainant’s Mine No. 5, along the line of The Hocking Valley Railway Company, and reached and served by private switches from the line of The Hocking Valley Railway Company.
    The .matter was submitted to the Commission on the pleadings and the evidence, and on May 10, 1916, there was a finding that complainant was entitled to and should receive from The Kanawha & Michigan Railway Company cars for the loading and transporting of its product and that the failure and refusal of the Railway Company to furnish such service was an unjust discrimination by it against complainant and in favor of other shippers located upon its line. The Commission ordered The Kanawha & Michigan Railway Company to cease and desist from this discrimination arid to furnish complainant cars for the loading and transporting of complainant’s product, upon such terms and under such regulations as were adopted by the Railway Company for the furnishing of cars to other shippers of like product upon its line of railroad. An application for a rehearing was allowed and, after a rehearing, on November 16, 1916, the order of May 10, 1916, was ratified and affirmed, the order to become effective after December 16, 1916. An application for a rehearing was filed December 4, 1916, and on December 6, 1916, the same was denied. A petition in error was thereupon filed in this court in which plaintiff in error asks that the order of the Commission be reversed. There are also filed in this court a transcript of the journal entries, original papers, and a certified transcript of all evidence adduced upon the hearing before the Commission,

      Mr. W. N. King, for plaintiff in error.

      Mr. Joseph McGhee, attorney general, and Mr. C. A. Radcliffe, for defendant in error.

      Mr. Challen B. Ellis; Mr. Edgar Ervin and Mr. Wade H. Ellis, for The Hocking Domestic Coal Company.
   Newman, J.

Plaintiff in error owns its right of way and tracks from Gauley Bridge, W. Va., to Kanauga, Ohio, and from Hobson, Ohio, to Corning, Ohio. Between Kanauga and Hobson, a distance of approximately 10 miles, it uses the tracks of The Hocking Valley Railway Company, under a trackage agreement entered into by and between the predecessors of these two companies. Under this agreement, it uses also the tracks of The Hocking Valley Railway Company from Hobson to Pomeroy, Ohio, and from Kanauga to °Gallipolis, Ohio, and from Armitage, Ohio, to Athens, Ohio. Mine No. 5 of The Hocking Domestic Coal Company is located on the line of The Hocking Valley Railway Company a short distance south from Hobson. The Coal Company owns mine tracks located on its own land and these tracks have a switch connection with the main track of The Hocking Valley Railway Company over the latter’s right of way. Plaintiff in error, The Kanawha & Michigan Railway Company, has a yard at Hobson and has a drill track, approximately 3000 feet in length, extending from this yard southerly, built on the right of way of The Hocking Valley Railway Company, with a crossover connection with the main track of The Hocking Valley Railway Company a short distance south from Hobson. The greater portion of this drill track was built a number of years ago, and in 1912 an extension of about 880 feet was made to it on the south end by permission of The Hocking Valley Railway Company. It does not appear that any portion of this drill track was constructed on the right of way of The Hocking Valley Railway Company by reason of any provision contained in the trackage agreement under which plaintiff in error is operating between Kanauga and Hobson. This drill track is used by plaintiff in error for the purpose of switching cars in and out of its yard at Hobson. It extends to within about 25 feet of the mine tracks of The Hocking Domestic Coal Company, and while it has no physical connection with these tracks such a connection is reasonably practicable. Other mines are located along the railroad track between Gallipolis and Pomeroy, but it is admitted that plaintiff in error is not serving any of these mines.

Under the order made by the Public Utilities Commission plaintiff in error would be required to furnish cars to the Coal Company over the switch connecting the main track of The Hocking Valley Railway Company and the mine tracks, or by means of a switch connection which it would have to build between its drill track, on the right of way of The Hocking Valley Railway Company, and the mine tracks. It is the contention of plaintiff in error that it is precluded from rendering this service on account of the limitations and restrictions contained in the trackage agreement.

On July 24, 1886, the predecessor of plaintiff in error, its successors and assigns, were given the right for 99 years from August 1, 1886, renewable forever, to the use in common with the predecessor of The Hocking Valley Railway Company of that part of the railroad of the predecessor of The Hocking Valley Railway Company from the city of Gallipolis to and into the city of Pomeroy and from a point about one mile west of the city of Athens to said city of Athens, “including the main tracks, sidings, passenger and freight stations, Y’s, inclines and other appurtenances and terminal and station facilities connected therewith.” In paragraph 2 of section 1 of this agreement its object is stated in the following language: “The object of this grant and lease is to enable the party of the second part [the predecessor of plaintiff in error] to make a continuous line of railway between the portion of its railroad in Ohio and the portion in West Virginia, and also enable it to operate its trains between Gallipolis and points on its own lines, and between Pomeroy and points on its own line.” In the same paragraph the following restriction is placed upon the predecessor of plaintiff in error in the use of the road between the points named: “And the party of the second part shall have no right to take any business from or to any station upon the line of the railway of the first party [the predecessor of The Hocking Valley Railway Company], except Athens, for any point reached by the railroad of the said first party or its connections.”

In 1890 disputes and differences arose between the parties to the agreement as to the meaning of certain of its provisions. It was claimed that the predecessor of plaintiff in error was violating certain provisions, including the one contained in paragraph 2 which is copied above. The matter was submitted to two arbitrators under a clause in the agreement providing for such submission, and the arbitrators placed upon the agreement the construction contended for by the predecessor of The Hocking Valley Railway Company and made certain findings favorable to that company. It seems that notwithstanding these findings the violations continued and an injunction proceeding was brought in the court of common pleas of Meigs county, Ohio. The case was appealed to the circuit court, and that court, upon a hearing of the matter, stated in writing its conclusions of fact, among which was the following: “Second. The purpose and meaning of the agreement of July 24, 1886, was, and its legal construction is that, by it, the plaintiff [the predecessor of The Hocking Valley Railway Company] grants to the defendant [the predecessor of The Kanawha. & Michigan Railway Company] the right to the common use of the plaintiff’s main line of railroad as then constructed and operated between the cities of Pomeroy and Gallipolis, and all sidings and switches, that were then in use along said lines, for the general purposes of the road, and all that might thereafter be constructed by the plaintiff for the purpose of moving trains and for the common use of the companies, in view of the settlement of the country, or the requirements of their business.

“It does not include or grant the use of private switches and sidings constructed before or after it was entered into, not for the convenience of the two roads, but for the convenience of shippers.”

In the decree of the court “private switch” was defined to be a switch built for the use of the individual industry carried on at that point and not to be used foy other or general railroad business.

The predecessor of plaintiff in error was perpetually enjoined from taking freight and passengers from the cities of Pomeroy and Gallipolis and from the stations and places intermediate between those two cities and from making use of any of the switches or extensions of the predecessor of The Hocking Valley Railway Company between the cities of Pomeroy and Gallipolis, except such switches and sidings as were in. existence on the 24th day of July, 1886, and were constructed and intended for joint railroad purposes, and switches and sidings of that class which might have been since constructed by the predecessor of The Hocking Valley Railway Company.

Immediately following this order of the court there is found in the decree this language: “This branch of the decree being intended to deprive defendant corporation [the predecessor of plaintiff in error] of any or all right to make use of the private switches or extensions constructed by the plaintiff corporation not for railroad purposes but for the use of shippers accommodated by such switches and sidings.” A petition in error was filed in this court by the predecessor of plaintiff in error and the judgment of the circuit court was affirmed.

We think the circuit court was correct in the construction placed by it upon the limitations and restrictions contained in the agreement. We adopt this construction as controlling in dealing with the question presented here.

Counsel for The Hocking Domestic Coal Company state that the switch connection between the mine tracks of the Coal Company and the main track of The Hocking Valley Railway Company is a “private switch” upon private property and privately owned in the fullest sense those words can have in the railroad business and as they are generally understood — as distinguished from a “private switch,” also so-called, constructed by a railroad company as a railroad-owned switch. Their contention is, then, that this being the character of the switch or sidetrack in question it might well be assumed that the two railroad companies, neither of them owning it, could not dispose of such track by any contract between them — could not sell it or lease it or license the use of it to anyone. In other words, they claim that the use of this switch between the main track of The Hocking Valley Railway Company and the mine track of the Coal Company is not and could not have been intended to be restricted by this agreement. It is unnecessary to consider this claim, as the statement of counsel as to the ownership, location and control of the switch connection is not supported by the record. This switch connection on the right of way of The Hocking Valley Railway Company was constructed by that Railway Company and is owned by it. This appears from the testimony of the secretary and treasurer of The Hocking Domestic Coal Company, who testified that the switch in question was put in by The Hocking Valley Railway Company and that that company maintains it back to and off its right of way.

It seems clear to us, then, that this connection between the main track of The Hocking Valley Railway Company and the mine track comes squarely within the class of “private switches” which was not included in the grant made to the predecessor of plaintiff in error.

The Public Utilities Commission took the position that under the provisions of a supplemental agreement entered into between the predecessor of The Hocking Valley Railway Company and plaintiff in error, the latter has now the right to accept freight and passengers to and from all points on said “leased line,” and inferentially held that this private switch was a part of the. leased line. The supplemental agreement is as follows:

“By the terms of a certain contract or lease entered into on the 24th day of July, 1886, between The Columbus, Hocking Valley & Toledo Railway Company, the predecessor of The Hocking Valley Railway Company, and The Kanawha & Ohio Railway Company, predecessor of The Kanawha & Michigan Railway Company, the parties of this supplemental agreement are using jointly the track of The Hocking Valley Company extending from the City of Gallipolis through and into the City of Pomeroy, and including the track between Middleport Junction and Middleport, together with other tracks more specifically described in the contract or lease herein referred to, and to which reference is hereby made.

“By the terms of said lease, it is provided that the lessee company, now The Kanawha & Michigan Railway Company, shall have no right to take any business from or to any station upon the line of the leased road, except Athens, for any point reached by the railroad of the second party herein or its connections.

“It is now mutually agreed between the parties hereto, that that part of said original contract or lease hereinabove referred to, and the prohibition therein contained, are hereby waived by the party of the second part and the effect of said provision is suspended as hereinafter provided, and the party of the first part is, during the time of such suspension, to have the right to take freight and passengers to and from all points on said leased line without any restrictions whatever, and such acts on the part of the party of the first part shall not be deemed or taken in any manner as a violation of the injunction heretofore granted by the Circuit Court of Meigs County in an-action therein pending wherein The Columbus, Hocking Valley & Toledo Railway Company was plaintiff, and The Kanawha & Michigan Railway Company was defendant.

“It is expressly understood and agreed, however, that the party of the second part reserves the right at any time, after the expiration of thirty days’- written notice to the party of the first part, to cancel and annul this contract, and thereupon all rights granted hereunder shall cease, and thereafter the party of the first part shall be required to observe the terms and conditions of said contract or lease of July 24th, 1886, and of the order made by said Court, in the same manner and to the same extent as if this contract had not been made.”

Plaintiff in error, as we have seen, had been enjoined from taking freight and passengers from the cities of Pomeroy and Gallipolis and from stations and places intermediate between those two cities. As we read this supplemental agreement, it simply removes the traffic restriction as to business on the line of the leased road. It does not grant to plaintiff in error additional facilities for operating its road. The facilities which it had the right to use were defined by the circuit court. It was specifically pointed out in the decree of that court that the agreement did not include or grant the use of private switches and sidings constructed before or after it was entered into, not for the convenience of the two roads, but for the convenience of shippers.

Our holding is that plaintiff in error under the limitations and restrictions contained in the track-age agreement has no right to the use of the switch connection with the mine tracks of The Hocking Domestic Coal Company, nor has it any authority to use the right of way of The Hocking Valley Railway Company in making a connection between its drill track and the mine tracks of the Coal Company.

But it is urged by counsel that even though plaintiff in error is prevented by the restrictions and limitations in the trackage agreement from rendering the service which the Coal Company is seeking, yet such an agreement is against public policy and void.

It is not claimed that the service rendered by The Hocking Valley Railway Company to The Hocking Domestic Coal Company, or any of the shippers on the portion of its line which it has leased, is rendered less prompt or less efficient on account of any provision contained in the track-age agreement. No complaint is made that a less number of trains is operated or that a less number or cars is being furnished by The Hocking Valley Railway Company on account of the use of its facilities by plaintiff in error, or that The Hocking Valley Railway Company is attempting to narrow its obligations, or relieve itself of any of the duties imposed upon it as a common carrier. The object of the agreement was to connect the disconnected portions of the railroad of plaintiff in error and to make a continuous line between that portion in Ohio and that portion in West Virginia. We know of no statute which would require The Hocking Valley Railway Company to grant the use of its facilities for that purpose. When it granted the use of its tracks and sidings between Gallipolis and Pomeroy, it did so voluntarily, subject, however, to certain limitations and restrictions. It is not likely that a trackage arrangement would have been consented to without those limitations and restrictions, and it may be that in the absence of such an arrangement plaintiff in error would be unable to connect the disconnected portions of its railroad, as the business between the two points named may not be sufficient to warrant the building of a connecting line. No doubt the failure of plaintiff in error to have a continuous line of railroad would be to the disadvantage of the patrons on its own line and of the public generally. As was said in Alford v. C., R. I. & P. Ry. Co., 3 I. C. C. R., 519, 533: “Running arrangements like the one in question, and with like restrictions, exist in many other parts of the country, and are of great service in transportation. In some instances in large cities several companies run their trains over the tracks of one company for through business, but take no local business from the company that gives the privilege. It has never been shown that this practice injures any one, or that it is not in the public interest. It certainly saves a large expenditure for parallel lines and for terminal rights in cities. A decision adjudging such arrangements unlawful could only demoralize transportation to a large extent and prove prejudicial to carriers as well as to the public.”

We see no valid legal objection to this agreement. Similar agreements have met the approval of the supreme court of the United States in a number of cases, among which are Union Pacific Ry. Co. v. C., R. I. & P. Ry. Co., 163 U. S., 564, and Chicago, R. I. & P. Ry. Co. v. Denver & R. G. Ry. Co., 143 U. S., 596.

While the instant case was pending in this court, the Interstate Commerce Commission dismissed a complaint filed by The Hocking Domestic Coal Company against plaintiff in error here, in which the Coal Company was asking the commission for an order to require plaintiff in error to serve its mine as an initial carrier and furnish cars for the movement of the output of the mine to interstate destinations and to place the cars for loading over the switch track connecting the mine track of the Coal Company with the main track of The Hocking Valley Railway Company. The agreement under consideration here was before the Interstate Commerce Commission and it was held that plaintiff in error might, under the restraint of this agreement, lawfully decline to serve the Coal Company.

In that proceeding, as in this case, the contention was made that the reservation of The Hocking Valley ■ Railway Company to itself of the exclusive use of the private switch tracks was void as against public policy. The Interstate Commerce Commission in disposing of that contention used this language: “It is, of course, the well-settled law that a railroad may not render itself incapable of performing its duties to the public or absolve itself from those obligations without the consent of the state. It will serve no useful purpose, however, to enter upon any discussion of the cases. It will suffice to say that the authorities clearly establish the doctrine that an owning and operating railroad may give trackage rights to another carrier over a part of its line, where such a. grant does not impair the performance of its own duties to the public as a common carrier, and, in the absence of a controlling statute, that the owning carrier may, by the terms of the agreement, prohibit the grantee from exercising its functions as a common carrier with respect to traffic upon the line of track so granted. Such provisions do not impair the common carrier obligations of the grantee on its own line, and the grant may indeed enlarge the ability of the grantee carrier to serve patrons on its own line. The general principles will be found stated at some length in Union Pacific Ry. Co. v. Chicago, etc., Ry. Co., 163 U. S., 564, 593, 594, 595. Speaking of a similar limitation in Alford v. C., R. I. & P. Ry. Co., 3 I. C. C, 519, 531, this Commission said that the rights of the lessee with respect to the leased line 'are not the general rights of a common carrier upon its own road, but are limited and qualified by the agreement. They are simple contract rights which the law does not and can not enlarge.’ ” (44 I. C. C. R., 400.)

But it is urged, finally, and it was so held by the Public Utilities Commission, that there is a statute in Ohio which controls the situation before us, Section 8983, General Code, reading as follows: "A company whose road forms part of a line of railway between points common to another line, shall not contract or agree with any person, or other railroad company or companies, having a road or line of roads, or forming a part of a line of roads, between the same points, not to carry freight or passengers to or from such common points, nor shall it refuse to receive or carry freight or passengers brought to it to be so carried.”

The Public Utilities Commission says that the duty of a,common carrier operating a line of railroad in common with another is defined in this section and that the agreement upon which, plaintiff in error relies is thereby rendered void. We do not think that this statute has any application to the situation presented here. As we view it, it contemplates the existence of two actual lines of railroad between points common to each other — parallel lines, so-called. The owners of such lines are prohibited from contracting or agreeing not to carry freight or passengers to or from such common points. Plaintiff in error owns no right of way or tracks between Hobson and Kanauga. It has no line, in the sense that term is used in the statute. It is only by reason of the trackage agreement that it operates at all between those points. We do not think that such an agreement was intended to be disturbed by the statute we have quoted.

For the reasons we have given, The Hocking Domestic Coal Company is not entitled to the relief it sought. The order of the Commission is therefore reversed and the complaint dismissed.

Order reversed and complaint dismissed.

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


source: Caselaw Access Project

author: Donahue, J.

license: Public Domain

text:
    The Renner Brewing Company v. Rolland.

      Constitutional law — Registration of bottles, etc. — Section 13169 et seq., General Code — Injunction — Writ available although acts punishable as crime.

    1. Sections 13169, 13169-1, 13169-2 and 13169-3, General Code, are a valid and constitutional exercise of the police power vested in the general assembly of the state.
    2. Where the averments of a petition would, if proven, entitle the plaintiff to an injunction, a writ will not be refused merely because the acts sought to be enjoined are punishable under the criminal statutes of this state.
    (No. 15448
    Decided May 15, 1917.)
    Error to the Court of Appeals of Mahoning county.
    On the 21st day of June, 1916, The Renner Brewing Company, a corporation, filed in the common pleas- court of Mahoning county a petition praying that Henry W. Rolland be perpetually enjoined from gathering, purchasing, trafficking in, selling, or otherwise taking possession of and disposing of bottles owned and used by the plaintiff in the operation of its business.
    The petition averred among other things that the plaintiff is engaged in the manufacturing, bottling, and selling of beer, using in the delivery of same a large number of bottles; that its name and trademark are blown and embossed upon each and every bottle used by it; and that on the 18th day of January, A. D. 1916, it duly registered and filed in the office of the secretary of state in the city of Columbus, Ohio, and on the 19th day of January, A. D. 1916, it duly registered and filed in the office of the clerk of courts of Mahoning county, Ohio, and beginning on the' 19th day of January, A. D. 1916, it duly advertised for three consecutive weeks in the Youngstown Vindicator, as provided by law, a description óf these bottles and the trademark blown upon them.
    It is further averred that the defendant unlawfully gathers, purchases, traffics in and otherwise takes possession of a large number of these bottles, the property of plaintiff, and that at the time of ■the filing of this suit defendant had in his possession 250 cases of bottles belonging to plaintiff; that he has four wagons which are daily gathering bottles of plaintiff throughout the city of Youngstown, Ohio, and surrounding villages and towns, and that he sells and otherwise disposes of same to the various breweries of Youngstown and elsewhere at the highest prices obtainable therefor; that defendant threatens to and will, unless restrained by the court, continue to gather, purchase, traffic in and take possession of bottles belonging to plaintiff, and will sell and otherwise dispose of the same; that plaintiff has suffered and will continue to suffer great and irreparable damages; that it has no adequate remedy at law; and that it will be put to a multiplicity of suits in order to recover this property from defendant unless defendant be restrained by the court.
    To this petition defendant filed a demurrer, which demurrer was sustained by the court of common pleas.

      Upon appeal, the court of appeals of Mahoning county also sustained the demurrer to the petition, for the reason “that Sections 13169, 131.69-1, 13169-2, 13169-3, of the General Code are unconstitutional and on the further ground that.the injunction asked for therein is to prevent the commission of a criminal offense.”
    This proceeding in error is brought to reverse the judgment of the court of appeals sustaining the demurrer to the petition.

      Mr. E. H. Moore and Mr. S. M. Strain, for plaintiff in error.

      Mr. David G. Jenkins and Mr. Harrington Simpson, for defendant in error.
   Donahue, J.

In the case of The State of Ohio v. Schmuck, 77 Ohio St., 438, this court held that Sections 4364-42, 4364-43, 4364-44 and 4364-45, Revised Statutes, were in conflict with Sections 1, 14 and 19 of Article I of the Constitution of Ohio. These sections of the Revised Statutes related to the same subject-matter now covered by Sections 13169, 13169-1, 13169-2 and 13169-3, General Code, passed March 24, 1915, 106 Ohio Laws, 108.

The general assembly of Ohio in enacting these sections of the General Code now under consideration in this case, guided by the decision of this court in the case of The State of Ohio v. Schmuck, supra, undertook to eliminate all the provisions in the old law in conflict with Sections 1, 14 and 19 of Article I of the Constitution of Ohio.

These sections of the General Code as they now read contain no provision for the issuing of a warrant to search premises and seize property, nor requiring the written consent of the owner, or any other provision that would hinder the sale of the property described in these sections, as other personal property is bought and sold in the ordinary course of business; nor do these sections contain any provision that the use or possession of this property without the written consent of the owner shall be prima facie evidence that such use or such possession is unlawful.

These objectionable features were all contained in the original act, and they were the only provisions of that act discussed by the court in The State of Ohio v. Schmuck, supra. Therefore, the conclusion reached in that case can have no application to the case now under consideration, further than the fact that in that case the court found no constitutional objection to any of the provisions of the original act except the ones specifically referred to in the opinion.

However that may be, there is nothing in these sections of the General Code that prohibits acquiring, possessing, and protecting property, or that violates the right of anyone to be secure in his person, house, papers and possessions against unreasonable search and seizure; nor is there anything that authorizes the taking of private property from its owner for any purpose whatever.

It is contended, however, that these sections of the General Code are in conflict with Section 26 of Article II of the Constitution, Undoubtedly these sections are laws of a general nature, but it is equally clear that they have uniform operation throughout the state upon every person brought within the relation and circumstances therein provided for, and in every locality where the condition exists. Assur v. Cincinnati, 88 Ohio St., 181; State, ex rel., v. Miller, 87 Ohio St., 12; State, ex rel., v. Creamer, Treas., 85 Ohio St., 349; Miller v. Crawford, 70 Ohio St., 207; State, ex rel., v. Spellmire, 67 Ohio St., 77, and Cincinnati v. Steinkamp, Trustee, 54 Ohio St., 284.

It is the settled law of this state that the general assembly in the exercise of the police power of the state has the right to make a classification based upon a sound, substantial reason, and before a court will interfere with this power and prerogative of the general assembly it must clearly appear that there is no valid reason for such classification. Bloomfield v. State, 86 Ohio St., 253, and Marmet v. State, 45 Ohio St., 63.

Ordinarily, personal property can be kept in the possession and under the control of its owner. He is in position to safeguard his property and can easily identify it should it wrongfully or unlawfully be taken from his possession; but not so with the property described in Section 13169 et seq., General Code. The use to which such property is put absolutely requires that it must pass from the possession of its owner into the temporary possession of the purchaser of the product marketed in such bottles, siphons, and other containers, and having once passed from the possession of the owner into the hands of a large number of customers he would have no means of protecting his property or identifying it from other articles of like kind, unless his name or other mark or device were branded, stamped, engraved, etched, blown, or otherwise produced upon the same. Not only this, but a confusion of this character of property would result in endless litigation, the cost of which would make the remedy more burdensome than the wrong.

The practical application of these statutes to this character of business and this character of property cannot injure any honest individual who recognizes and respects the rights of property, but, on the contrary, it will interfere only with the business of those, who, regardless of the property rights of others, take advantage of the extraordinary opportunity offered by the necessities of such business to appropriate this class of property to themselves.

These statutes are by no means an isolated example of legislative recognition of the fact that certain character of property and certain kinds of business demand legislation peculiar to the needs of such business or property. The statutes relating to junk dealers are particularly in line with the statutes under consideration, yet these statutes were held to be a necessary, reasonable and constitutional exercise of the police power. Phillips v. State of Ohio, 77 Ohio St., 214. This case was decided at the same term of court in which the case of The State of Ohio v. Schmuck, supra, was decided.

In the opinion in the case of Phillips v. State it is said, at page 217:

“The general power of the legislature to determine what is necessary for the protection of the public interests being clear, judicial inquiry is necessarily limited to determining whether a particular regulation is reasonable, impartial and within the limitations of the constitution. The legislature is the judge of the mischief and the remedy, and of what shall be state policy, subject to the restrictions just mentioned.”

The opinion further calls attention to the peculiar nature of the business and the necessity of special laws and restrictions in reference thereto.

In the case of Wessell v. Timberlake, 95 Ohio St., 21, recently decided by this court, it was held that chattel loans on mortgage security or otherwise, the rate of interest on such loans, and the ways and means of assigning wages, are proper subjects for the exercise of the police power by the general assembly of the state.

A statute discriminating between persons selling products of their own raising, and those selling purchased products, has been held constitutional. Brown v. Toledo, 83 Ohio St., 491, affirming Toledo v. Brown, 22 O. C. D., 357.

Statutes regulating trades and professions, peddlers, ferrymen, tavern-keepers, the price of grinding corn, child labor, the sale of intoxicating liquors, the giving away of food without charge in places where intoxicating liquors are sold, and many others of a similar nature, relating to some particular business or some particular class of property, have also been held constitutional by this court.

Perhaps one of the earliest recognitions of the need of legislation peculiar to certain classes of property is found in the statutes relating to horse-stealing. The statutes defining theft or larceny of property provide that whoever steals anything of value is guilty of larceny, and if the value of the thing stolen is $35 or more he shall be imprisoned in the penitentiary not less than one year, nor more than seven years.

The terms of this statute would include a horse as well as any other kind of property, for a horse is “a thing of value;” but in the pioneer days, when means of travel and communication between different parts of the country were slow and burdensome, a horse was a favorite subject of larceny, because it could easily be ridden or driven out of the locality in which it was stolen into distant parts, and the possibilities of overtaking the thief or recovering the property were much less than where other forms of property had been stolen. Therefore, a statute was passed making horse-stealing a separate crime, and imposing, not only upon the horse-thief but upon anyone who knowingly concealed him, a punishment of not less than one year, nor more than fifteen years. In other words, a person guilty of stealing property worth $1000 in money can not be sent to the penitentiary for more than seven years, yet one who steals a horse worth $100 may be sent to the penitentiary for fifteen years; yet no one doubts that the owner of the horse is entitled to this additional protection to his property over the protection afforded to other classes of property, because the horse is not only easy to steal, particularly when in distant pastures, but also because the horse itself will furnish the means of transporting the thief and the stolen property to great distances from the locality of the crime.

Statutes have also been passed punishing other than under the general larceny statute the stealing of a will, the stealing of illuminating gas, or the making of a device for such purpose, the stealing of timber unlawfully cut, the carrying away of timber having a trademark, and, in later days, the legislature has recognized the need of legislation peculiar to motor vehicles, which have also become a favorite subject of larceny for the same reasons that, in earlier days at least, made horse-stealing so prevalent. All this legislation, peculiar to different kinds and character of property, has been sustained by this court because the reason and necessity for the same are apparent.

The statutes under consideration by this court in the case of State v. Schmuck, supra, were far more vulnerable to attack on the ground that they were repugnant to Section 26 of Article II of the Constitution than the sections of the General Code now under consideration, yet this court did not find those statutes in conflict with that section but in ‘conflict with Sections 1, 14, and 19 of Article I of the Constitution only.

These sections not only protect the owner of the property but also protect the public from fraud and imposition. The provisions in this act making it unlawful to refill the containers so marked or branded, with intent to sell such contents, prevents the marketing of a spurious or inferior article as the genuine, and is an assurance to each purchaser that he is buying the goods of the manufacturer or dealer whose name or trademark is blown into or branded upon the containers.

It is further contended that injunction is not the proper remedy to compel obedience to the penal laws of the state. That of course is true, but the fact that wrongful interference with another’s property may constitute a penal offense is no reason for refusing a writ, if the plaintiff for other reasons is entitled to the same.

The petition avers that the defendant has ever since the 16th day of March, 1916, continued to gather, purchase, traffic, and otherwise take possession of the bottles of the plaintiff; that he threatens to and will, unless restrained by the court, continue to gather, purchase, traffic in and take possession of' said bottles, and will sell and otherwise dispose of the same; that the plaintiff has suffered and will continue to suffer great and irreparable damages; that it has no adequate remedy at law; and that it will be put to a multiplicity] of suits in order to recover its property unless de-J fendant be restrained by the court. *

It is clear that these averments are sufficient to authorize the court to grant a perpetual injunction if the allegations are sustained by proof.

The judgment of the court of appeals sustaining the demurrer to the petition is reversed, and the cause is remanded to that court with directions to overrule the same, and for further proceedings according to law.

Judgment reversed.

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


author: Johnson, J.

text:
    The Humboldt Fire Insurance Company v. The R. K. LeBlond Machine Tool Company.

      Fire instirance — Reformation of policy — Misdescription of property insured.

    By the provisions of Section 9586, General Code, a person who solicits insurance and procures the application therefor shall be held to be the agent of the company thereafter issuing a policy on such application, anything in the application or policy to the contrary notwithstanding. If a policy, written by one who is an agent within the meaning of the section referred to, is delivered and accepted, which by mutual mistake of the parties insufficiently describes the place in which the property is located, the court will, when the mistake is shown by clear and convincing proof, reform the policy so as to state the contract actually made.
    (No. 15453
    Decided April 3, 1917.)
    Error to the Court of Appeals of Hamilton county.
    The defendant in error brought suit in the court of common pleas of Hamilton county seeking the reformation of a policy of insurance issued to it by the plaintiff in error. The issues were made on the plaintiff’s amended petition.

      It alleged that the insurance company insured it against loss and damage by fire to the amount of $400 on live patterns, core boxes, flasks and fallow boards, all while contained in the building occupied by the Mowry Car Wheel Works Company, situated at the southeast corner of Eastern avenue and Lewis street, Cincinnati; that said patterns, etc., were located in two buildings, one of frame and one of brick, on the premises occupied by the Car Wheel Company at the time the contract of insurance was written and when destroyed by fire; that the location was well known to the defendant company, or its agent, who was an officer of said Car Wheel Company at the time of the issuing of the policy and up to the time of the fire; that it was the intention of the parties to indemnify for loss by fire while located in both buildings, and that through fraud, mistake or inadvertence, the agent of the defendant company, in describing the location, described it as set out heretofore, when in fact the location should have been written by the agent to cover said patterns all while contained in the buildings on the premises of the Car Wheel Company.
    For a second cause of action it is alleged that the insurance company by said policy agreed to indemnify the plaintiff as above specified, said loss to be paid within sixty days after the loss shall have been ascertained, in accordance with the terms and conditions of the policy, and when satisfactory proofs of the same have been made.
    It is further alleged that at the time of the insurance the plaintiff was the owner of said property; that plaintiff has duly kept, observed and performed all requirements and conditions contained in the policy; that, afterwards, to-wit, on the 19th of December, 1909, said property was destroyed by fire; that the total value of the goods insured was $2,200; and that the defendant has refused to pay the sum of $400 as required by the contract.
    The defendant in its answer admits the issuance of the policy; and admits that at the time the said contract of insurance was entered into certain patterns, core boxes, flasks and fallow boards, the property of the plaintiff, were located and contained in said building on the southeast corner of Eastern avenue and Lewis street, and also in a certain frame building located on the premises of the Mowry Car Wheel Works Company, which said frame building was not, however, located on either Eastern avenue or Lewis street.
    It further admits that at the time of the fire in the petition alleged certain of said patterns were in said locations as aforesaid, and denies every other allegation in the petition.
    For a second defense, defendant avers that the said policy contained the 80 per cent, co-insurance clause usually included in insurance policies; and that the total insurance of the property in the policy described, including the policy sued on, was $1,800.
    Defendant admits that by its contract it agreed to pay a proportionate part of plaintiff’s loss and damage by fire to the property in the policy described, in accordance with the provisions thereof above set forth, while the same was located and contained as in said policy described, and not elsewhere.
    Defendant admits that said policy contained a condition that plaintiff’s loss by fire to said property, while so located and contained, should be payable sixty days after due notice, and denies each and every other allegation of the second cause of action in the third amended petition.
    On the trial in the common pleas court a decree and judgment were entered in favor of the plaintiff.
    On appeal to the court of appeals a decree was entered reforming the policy as prayed for in the petition, and judgment entered for the plaintiff. In its entry the court of appeals includes its findings of fact and conclusions of law.
    From this it appears that the court found that on the premises of the Car Wheel Company was located a two-story brick building abutting Eastern avenue and Lewis street, the ground floor of which was used as an office in front and machine shop and foundry in the rear, and the second story of which was used for storage of patterns used in its business; that twelve feet east of said brick building was a two-story frame building abutting on Centaur street, which was a narrow and little-used street running parallel with Eastern avenue; that the main foundry building of said company was located on the south side of Centaur street and patterns were carried from said brick and frame buildings to said foundry across said Centaur street for daily use in making castings, and then returned to said buildings for storage over night; that plaintiff was a customer of said Car Wheel Company and furnished its patterns to said company for use in making castings for its business; that the patterns which were in active use were known as “live patterns” and were stored in the frame building, while those which were not in such active use were known as “dead patterns” and were stored in the brick building; that at the time of the insurance, and also of the fire, the total value of plaintiff’s patterns was between $2,400 and $2,500, of which, patterns to the value of $2,200 were stored in the frame building, and the remainder in the brick building; that patterns which were in daily use in the foundry had an average value of about $200; and that in the early part of 1909 negotiations were entered into with James Dillaby to obtain insurance for . the plaintiff on its said patterns. The findings set out the details of the negotiation which led up to the issuing of the policy sued on. From this it appears that there were five policies issued, one of which only covered the live patterns in the foundry on Centaur street. The other four contained the clause set out in the petition. That clause contains the word “building” instead of “buildings” and the reformation sought was to have the clause include the latter word.
    The finding of the court of appeals' was that it was the intention of the plaintiff to insure all of its patterns in or upon said premises of the Mowry Company, and that this fact was known to and understood by Dillaby; that Dillaby was the agent of the defendant and the other insurance companies interested, and was acting for them in obtaining the insurance above set out covering the property of plaintiff, and that said insurance was solicited by Dillaby; that the use of the word “building” instead of the word “buildings” in the policies, as hereinabove set out, was through inadvertence or mistake of the parties.
    As its conclusions of law under the foregoing findings, the court found that said Dillaby was the agent of the defendant and solicited the insurance; that plaintiff was entitled to have the policy reformed so that the clause referred to should contain the word “buildings” instead of the word “building;” and that the plaintiff was entitled to recover.
    This proceeding is brought to reverse the judgment of the court of appeals.

      Mr. J. L. Kohl, for plaintiff in error.

      Mr. Joseph W. O’Hara and Messrs. Hoffman, Bode & LeBlond, for defendant in error.
   Johnson, J.

The question for decision by the courts below was whether the plaintiff was entitled to a reformation of the policy so as to substitute the word “buildings” for the word “building” in the description of the place where the property insured was located.

The proceeding is not one for a rescission of the contract, which, if granted, would relieve the parties from its obligations, but is one to reform the contract and to enforce it as reformed. In order to justify a decree for reformation, in case of a mistake, it is necessary that the mistake should' be shown by clear and convincing proof, and shown to be mutual.

The finding of the court of appeals was that Dillaby was the agent of the defendant and the other insurance companies and was acting for them in obtaining the insurance covering the property of the plaintiff; that the insurance was solicited by Dillaby; that it was the intention of the plaintiff to insure all of its patterns in or upon the premises of the Mowry Company; that this fact was known to and understood by Dillaby; and that the use of the word “building” instead of the word “buildings” in the policy was through inadvertence or mistake of the parties.

The things necessary to authorize the reformation of the contract were, therefore, found by the court to exist. The court below weighed the evidence with the benefit of a full knowledge of the situation and the presence of the witnesses, and from an examination of the record we are not able to say that the finding of the court was not sustained by the required degree of proof. On the contrary we find that it is amply justified.

The total value of all of the patterns was between $2400 and $2500, of which those to the value of $2200 were in the frame building and the remainder in the brick building. Those in daily use in the foundry had a value of about $200. The total insurance upon the patterns in the brick and frame buildings- amounted to $1800, to which was added $200 insurance while in use in the foundry. It will be seen that if defendant’s contention is correct, the parties not only intended to contract for $1800 insurance on about $300 worth of patterns in the brick building, but for no insurance whatever on the $2200 worth of patterns in the frame building.

When the insurance companies issued the policies, solicited by Dillaby, under the circumstances shown in the findings, he must be held to be their agent.

Section 9586, General Code, provides: “A person who solicits insurance and procures the application therefor, shall be held to be the agent of the party, company or association, thereafter issuing a policy upon such application or a renewal thereof, anything in the application or policy to the contrary notwithstanding.”

In the negotiation leading up to the making of the contract the agent had such incidental power as was necessary to carry his authority into effect, and if by the mutual mistake of the agent and the insured the word “building” was used, when the parties intended to use the word “buildings,” the mistake of the agent was the mistake of the company, and, the mistake being mutual, the insured is entitled to have the contract reformed so as to state the truth and conform to the intention of the parties.

In Insurance Co. v. Williams, 39 Ohio St., 584, it is held that if the agent make a mistake in wrongly stating facts which were correctly given him by the insured in preparing the application, the company is bound by and responsible for such mistake. In that case the contract was reformed and the company held to the “correct facts of the application and the actual contract made.”

As to the claim of the plaintiff in error with reference to the 80 per cent, co-insurance clause, the court of appeals also found that the terms of' the policy with reference to this clause were fully complied with by the plaintiff.

The judgment of the court of appeals will be affirmed.

Judgment affirmed.

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


author: By the Court.

text:
    The Ohio Association of Ice Cream Manufacturers v. The Public Utilities Commission of Ohio.

      Public utilities commission — Rates on ice cream shipments and returned containers—Lawfulness and reasonableness of order.

    (No. 15449
    Decided June 26, 1917.)
    Error to the Public Utilities Commission.

      Mr. Harry C. Barnes and Mr. John J. Chester, for plaintiff in error.

      Mr. Joseph McGhee, attorney géneral; Mr. Freeman T. Eagleson and Mr. Branch P. Kerfoot, for defendant in error.
   By the Court.

In 1916, The American Express Company, in connection with The National Express Company, The Adams Express Company, and Wells-Fargo & Company Express, in and. by their certain tariff publications filed with the Public Utilities Commission of Ohio, to become effective July 1, 1916, sought the cancellation of the then existing rates on the shipment of ice cream in the state of Ohio and returned empty containers in intrastate traffic in the state of Ohio, and the establishment of the interstate schedule of rates on these commodities. On June 14, 1916, plaintiff in error, a voluntary association of persons and firms engaged in the wholesale manufacture of ice cream in the state of Ohio, filed a complaint with the Utilities Commission in which it alléged that the proposed new rates of the express companies were largely in excess of the existing rates, and unjust, discriminatory and unreasonable, and would impose an undue burden upon such traffic and necessarily raise the price to the consumer and lessen the production and consumption of a healthful, wholesome and nutritious food product. The prayer of the complaint was that the Commission suspend the operation of the schedules which were to become effective July 1, 1916, and postpone the use and operation of such rates and charges pending a full hearing and investigation concerning the propriety of such rates and charges.

On July 19, 1916, the matter was heard before ■ the Commission upon the original papers and the evidence, and on September 26, 1916, the Commission held that the increased rates and^ charges as proposed in the schedules in said proceeding were just and reasonable and ordered that the orders theretofore entered in said proceeding suspending the operation of the said schedules be vacated and set aside. An application for a rehearing was denied' on October 30, 1916, and plaintiff in error thereupon filed a petition in this court asking that the final order of the Commission be reversed, vacated or modified.

There have been filed in this court a'transcript of the journal entries, the original papers, and a certified transcript of all the evidence adduced in the hearing before the Commission.

We have examined the evidence, consisting of exhibits and the testimony of a number of witnesses, bearing upon the question of the fairness and reasonableness of the rates proposed by the express companies. There is a conflict in the testimony of the witnesses, but we are unable to say upon a consideration of the whole record that the order made by the Commission is unlawful or unreasonable.

Order affirmed.

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


text:
    The Franklin National Bank of Newark, Ohio, v. The City of Newark, Ohio.

      Banks and banking — Profits derived from municipal funds — Unauthorised deposit by city treasurer — Liability of bank.

    (No. 15460
    Decided June 26, 1917.)
    Error to the Court of Appeals of Licking county.

      Messrs. Kibler & Kibler, for plaintiff in error.

      Mr. Ralph Norpell, city solicitor, and Messrs. Jones & Jones, for defendant in error.
   By the Court.

This action was instituted by the city of Newark, which, in its amended petition, alleged that the city treasurer of that city about June 19, 1905, caused to be deposited in The Franklin National Bank of Newark, Ohio, the sum of $75,000 belonging to said city; that such sum of money remained on deposit and under the control of that bank until December 5, 1905, when $15,000 was withdrawn; but that the balance, $60,000, remained in the custody and control of said bank until March 5, 1906.

Plaintiff averred that said bank received and deposited said funds with the other funds belonging to and under its control, and used the same for the purpose of deriving, and did derive, large profits in loaning the same in its banking business; that said deposit was made without the knowledge or consent of the city or its council, and without the consent of the bondsmen of the city treasurer, and was received by the bank with knowledge that said funds were the public funds of the city of Newark. Plaintiff sought an accounting of the profits derived from the use of its funds by said bank.

The defendant by answer admitted the deposit in said bank of the funds of the city, by the city treasurer, in amount and for the period of time set out in the amended petition. As a defense the defendant.averred that at the time said funds were so deposited no depository had been selected or created by the city council for the funds of the city, and that plaintiff had failed to provide the city treasurer with any place to keep the funds of the city and failed to require him to give bond in a sum adequate to protect such funds; that it had become necessary for the treasurer in the discharge of his duty to deposit $300,000 derived from the sale of waterworks bonds, which he did by dividing the same among the several banks of the city; that such disposition of said funds was made upon the order and direction of the plaintiff and upon the understanding and agreement upon the part of plaintiff and defendant that the same should be repaid upon demand and no interest should be paid on said funds or' compensation charged for the safe-keeping of the same; that defendant was ready and willing at all times upon demand to repay said money; and that plaintiff received said money back, and surrendered the certificates issued therefor, in full payment of all obligation assumed by defendant, and is estopped from claiming any interest on said fund or from claiming or receiving any remuneration from the defendant by reason of said transaction, by way of interest on said money or otherwise.

By reply the plaintiff admitted that no depository had been selected by the council of the city of Newark for the city’s funds; also that the deposit in question was part of a fund derived from the sale of waterworks bonds divided among the several banks of the city.

The case was heard in the court of common, pleas upon the issues thus joined and that court held the defendant to account to plaintiff as a trustee of said fund, and determined the amount of profit made by the defendant thereon by crediting the average total deposit of the city with the rate of net profit realized by the bank upon its entire assets during the period said fund was on deposit. That rate of profit was found to be 1 and 49-100 per cent., the amount of profits to be credited to said fund $1,039.83, and judgment was rendered therefor. Upon proceedings in error the court of appeals affirmed that judgment.

It is conceded that had the city treasurer himself realized a profit from the use or disposition of the city' funds he would be under legal obligation to account for such profit, but it is contended that the provision of Section 4294, General Code, wherein it is required that all profits arising from such deposit in banks shall inure to the benefit of the funds, does not lay upon banks receiving such deposits any obligation to account for profits realized by them from the use of such funds.

The issues of fact which may be regarded as material in this case were whether such funds were received upon the condition that no compensation should be paid therefor either as interest or otherwise, and whether such funds were in fact received and at all times held by the bank as a special deposit and no profit realized by the bank from the possession and use thereof. These were disputed questions of fact which were found by the trial court against the contention of the bank, and the record discloses evidence tending to support that finding. Whether supported by the weight of the evidence we do not inquire.

Section 4294, General Code, provides as follows;

“Upon giving bond as required by council, the treasurer may, by and with the consent of his bondsmen, deposit all funds and public moneys of which he has charge in such bank or' banks, situated within the county, which may seem best for the protection of such funds, and such deposit shall be subject at all times to the warrants and orders of the treasurer required by law to be drawn. All profits arising from such deposit or deposits shall inure to the benefit of the funds. Such deposit shall in no wise release the treasurer from liability for any loss which may occur thereby.”

We think it clear from the provisions of this and cognate sections of the General Code that any bank receiving funds of a municipality under the circumstances disclosed by this record, knowing the same to be the funds of the municipality, becomes a trustee and must account to thé municipality for the fund so deposited and all profits arising from such deposit.

Judgment affirmed.

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


author: Nichols, C. J.

text:
    Reinholz, Guardian, v. The Industrial Commission of Ohio.

      Workmen’s compensation — Appeal to common pleas court—Employe of self-insurer — Award denied by industrial commission.

    Under Section 43 of the Workmen’s Compensation Act (Section 1465-90, General Code), the injured employe or the dependents of a killed employe of an employer who has elected to pay compensation directly to his employe, if wholly denied participation in the state insurance fund hy the Industrial Commission, may appeal to the court of common pleas of the county wherein the injury was inflicted.
    (No. 15493
    Decided June 26, 1917.)
    Error to the Court of Appeals of Cuyahoga county.
    The facts are stated in the opinion.

      Messrs. Chapman, Howland, Niman & Younger, for plaintiff in error.

      Mr. Joseph McGhee, attorney general; Mr. William J. Ford; Mr. Samuel Doerfler, prosecuting attorney, and Mr. G. A. Hoivells, assistant prosecuting attorney, for defendant in error.
   Nichols, C. J.

The sole question involved in this case has reference to the right of an injured employe, denied recovery of compensation by the Industrial Commission, to appeal from such decision to the common pleas court, where the employer was one of the class authorized by law to elect to pay compensation direct to the employe injured in the course of his employment.

Both the court of common pleas and court of appeals of Cuyahoga county held that the right to appeal did not exist.

It will be seen at once that if this decision is in accordance with law there is existent a marked discrimination in the law, in favor of the employe of the employer who contributes to the state fund, and against the employe of the employer who elects to pay direct.

The discrimination is a substantial one, and, if the judgment below is to stand, it raises a grave question as to the constitutionality of Section 22 of the Workmen’s Compensation Act, providing for self-insurance and direct payment.

This section was assailed in the case of The State, ex rel. Turner, Attorney General, v. The United States Fidelity & Guaranty Company of Baltimore, Md., ante, 250, the claim being there made that the provisions of Section 22 of the act are unconstitutional, in that there is thereby created an arbitrary, unjust and unlawful discrimination among the several classes of employes, and that there is no provision in the section by which an employe of such employer, who makes application to the board for compensation and is refused, may have any relief whatever, either against the state or against the employer direct.

Indeed it is difficult to see, if this contention is sound, how the provisions of Section 22 could be retained as a part of the Workmen’s Compensation Act.

Employes in exactly similar employments, who are employed in different establishments, one of which pays into the fund and the other paying direct, would have different rights without having any voice in the matter; or, perhaps a more accurate statement would be, that the one class would have certain rights wholly denied to the other class.

The employe of a self-insuring employer would be denied the right of appeal granted to one employed by an employer who contributes to the fund, and this notwithstanding the employe of the self-insuring employer had remained in the employ relying on the fact that the state, through its duly established agency, had taken all the necessary steps to provide for his compensation as fully and completely as it had provided for the compensation of employes of those who paid into the fund. The validity of any such discrimination or classification might well be questioned.

This court, in the case just referred to, refused to sanction the contention made as to the unconstitutionality of Section 22, and upheld it in its entirety; holding that the general assembly, in permitting employers who so elected to carry their own insurance, had safeguarded fully the legal rights of all employes of such employers, and, in case of denial of participation in the fund, had provided the same remedies to the one class as to the other.

If the law had provided a different remedy in the one case from that of the other, the classification thus made, if fair and reasonable, would not have defeated the provision of Section 22. But if, as held in the court of appeals, it provided for an appeal in the one instance and denied it in the other, then serious doubts of its validity at once arise.

This is especially so when it is observed that under the Workmen’s Compensation Act no provision was made, nor is claimed by anyone to have been made, whereby the employe of the self-compensating employer could have a cause of action against such employer direct, in the event of a denial of his claim by the Industrial Commission; the general effect being that, if he could not appeal as against the Industrial Commission, and by submitting his claim for damages to such tribunal foreclosed himself from suing his employer in an original action, he would be wholly without any remedy.

' It is quite clear that the general assembly did not contemplate any such condition of affairs, and, unless the plain language of the statute forbids giving the law a construction differing from that accorded it by the courts now under review, we are confronted with the dilemma, if we affirm the judgments of the lower courts, of making a finding that in effect would be to hold a very important part of the Workmen’s Compensation Act unconstitutional.

A construction working such havoc should be avoided, unless the plain language of the statute forbids any other construction. It is the clear duty of the courts to avoid, if at all possible, the rendering of a judgment in a collateral proceeding that would have the necessary effect of destroying a law by indirection.

In the consideration of the question involved in the instant case the court should not ignore the consequence of its decision; especially since it is all but certain, that if appeal be denied employes of the class of plaintiff in error’s ward, then the law by indirection is held unconstitutional.

We feel that we are bound by the rules of construction applicable were the constitutionality of Section 22 of the act directly assailed. These rules are quite well understood, and it is unnecessary to repeat them here.

Would there be a necessary and obvious inconsistency between the section in question and the constitution? Is there no “fair course of reasoning,” no mode of interpretation, available, by which, without reading foreign matter into the law, the right of appeal may be granted to plaintiff in error ?

Proceeding then with such compass and chart as our guide, we think it not difficult to demonstrate that it was clearly the intention of the general assembly to grant an appeal to the claimant, whether he be of the one class or the other; and that such right was granted.

The pertinent portion of Section 43 of the Workmen’s Compensation Act (Section 1465-90, General Code) is as follows: “The board shall have full power and authority to hear and determine all questions within its jurisdiction, and its decision thereon shall be final. Provided, however, in case the final action of such board denies the right of the claimant to participate at all in such fund on the ground that the injury was self-inflicted or on the ground that the accident did not arise in the course of employment, * * * then the claimant * * * may, by filing his appeal in the common pleas court,” etc.

The contention herein revolves around the proper construction to be given the words “such fund.” The claim made by the state and upheld by the court of appeals is that these words mean the fund created from the full premiums paid by the employers who pay into the fund.

We think that the contention thus made and upheld contemplates too narrow a construction of these words.

The fund with which the Industrial Commission deals is provided for by Section 22 of the act. There are three sources provided in the act from which moneys to satisfy claimants are available:

First. The fund created by the payment of full premiums of employers to the state.

Second. The funds of self-compensating employers, who, by express requirement of Section 22, before authorized to carry their own insurance, in the language of the act itself, “shall pay into the state insurance fund such amount or amounts as are required to be credited to the surplus in paragraph two of section seven hereof [Section 1465-54, General Code]This amount is five per cent, of the full premium.

Attention is called to the fact that the law requires this payment to be made into the state insurance fund, and the contribution so made by the self-compensating employer, although credited to the so-called surplus fund, is in fact made to the state insurance fund.

Third. The bond executed by the self-insuring employer, payable to the state for the benefit of injured and killed employes, which in legal effect is a contribution to the general insurance fund.

The general assembly invested the Industrial Commission with full discretion in the matter of allowing employers to carry their own insurance. The privilege was safeguarded, hedged about, and restricted. The amount of the bond, the financial responsibility of the applicant, the sufficiency of the surety, were all to be determined by the commission. The failure to observe any of the valid orders of the board on the part of the employer would work almost automatically to remove from the employer the privilege of self-compensation.

In the eyes of the law, this bond was substantially the same as cash; and, in theory, at least, constituted a part of the fund available for payment of compensation. And as a matter of general knowledge it has so worked out in practice; fully justifying the theory of the law.

In contemplation of both the statute and constitution there is but one fund, and that is the State Insurance Fund.

The constitutional amendment, Section 35, Article II, provides for the creation of but one-fund. The so-called surplus fund is wholly of statutory creation, .and after all is only a part of the general fund.

It is thus demonstrated that to the extent mentioned this class of employers does contribute to the state insurance fund.

Section 24 of the act provides -that an employer paying the premiums provided by the act into the fund, or electing directly to compensate his injured employe, shall post in conspicuous places about his place of business notices stating the fact that he has made such payment and has complied with the provisions of said Section 22 and all the rules of the board made in pursuance thereof, and has been authorized directly to compensate such employes or dependents, and that the same,- when so posted, shall constitute sufficient notice to the employe of the fact.

It seems only just and fair to hold that an employe seeing such notice is entitled to rely on the fact that the state has properly secured to him everything which might be due him under the Workmen’s Compensation Act. The employe should not be the one to assume the risk of the inadequacy of the bond required by the board, or of the insolvency of the employer.

The state itself has assumed the responsibility and the duty of attending to that matter. Section 29 of the act provides as follows: “Every employe, or his legal representative in case death results, who makes application for an award, or accepts compensation from an employer who elects, under section 22 of this act, directly to pay such compensation waives his right to exercise his option to institute proceedings in any court, except as provided in section 43 hereof.”

The necessary implication from this language is that employes of employers who pay into the fund, and employes of employers who compensate directly, are upon an equal and exact footing as to zvaiving the “right to exercise * * * option to institute proceedings in any court, except as provided in section 43.” Each would seem to be included in the exception and in the right to appeal.

Such fund, .the fund created by the contributions from all the different sources referred to, including the proportion paid by self-compensating employers, is a fund to be administered by the Industrial Commission to carry out the purposes of the act, and, if an employe of a self-compensating employer applies to the commission, and the commission denies his right to participate at all in such fund, it would seem that Section 43 would give him the right of appeal.

There is nothing in the act indicating a purpose that by applying to the commission such employe is expected to put into final hazard his whole right of recovery.

By the provision of Section 27 the commission is required to institute suit against a self-compensating employer who refuses to pay its award in favor of an injured employe, and by the same section the commission is given authority to compromise such suit.

There is nothing in the act indicating a purpose that the commission has the right to finally and forever shut the door on such employe by refusing his application to participate at all in such fund.

Finally, in the construction of the words, “such fund,” this court is constrained to take the broader view and ascribe to the legislature the intention to permit employes of self-compensating employers to participate in the fund to the extent of their claims duly proven on appeal.

The claim is made by the state that the insurance fund would be endangered by such depletion, and that this broader construction would entitle employes of employers who have not contributed to participate, to the injury of the employes of employers who have paid the full premium into the state fund.

We think this claim wholly unwarranted by the facts and the light gained by the experience of nearly four years’ administration of the fund.

The five per cent, paid into this very fund by the self-compensating employers would easily cover the full payment of all such judgments; and, furthermore, if the claimant maintains his action on appeal, and the state pays him out of the fund, it, the state, has a clear cause of action to recover from such employer or his bondsmen the full amount of such judgment.

The result then is full protection to the employe without ultimate loss to the state.

Section 43 is a general section, and covers all questions in a general provision with full power on the part of the board to hear and determine.

The provision is explicit, that, if the final action of the board denies the right of the claimant to participate at all in such fund, he may appeal.

There is nothing to indicate that a limitation is placed on the word “claimant.” It would seem to cover any employe referred to in Section 22; that is, an employe of an employer who pays in full to the fund as well as of one who compensates directly.

The state has chosen to stand between the employe and every class of employers. It has permitted the employer to give bond, has decided to carry on the suit in its own name when suit is necessary; and, if the state pays, when its board has assumed to find that an employe has no right, and a jury finds differently, only simple justice is done.

Section 43 says any final judgment shall be paid “out of the state insurance fund in the same manner,” etc.

It seems quite clear that the proper holding is to the effect that every provision in the entire law which looks to payment of compensation premiums by employers, whether direct or indirect, constitutes such payment a part of the fund.

The judgment of the court of appeals is therefore reversed.

Judgment reversed.

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


text:
    The City of Fremont v. Keating.

      Municipal corporations — Motor vehicles — Speed mdy be regulated by ordinance, when — Section 6307, General Code, unconstitutional— Section 3, Article XVIII, Constitution, 1912 — Home rule — Right to jury trial—Unaffected by failure to sentence to imprisonment, when.

    1. Section 6307, General Code, is in direct conflict with 'the provisions of Section 3 of Article XVIII of the Constitution of Ohio, authorizing municipalities to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws, and is therefore unconstitutional and void.
    2. Where imprisonment may he imposed as a punishment for the commission of an offense, the accused is entitled to a trial by jury.
    3. In such case, the fact that • imprisonment was not actually included as a part of the punishment imposed by the sentence of the court cannot affect the right of the accused to a jury trial.
    (No. 15428
    Decided July 3, 1917.)
    Error to the Court of Appeals of Sandusky county..
    On the 21st day of July, 1916, an affidavit was filed with George Kinney mayor of the city of Fremont, Ohio, charging Charles Keating with operating an automobile at a speed greater than fifteen miles per hour upon west State street, in the city of Fremont, Ohio, contrary to the ordinance in such case made and provided.
    The cause was tried by the mayor in the city of' Fremont, without the intervention of a jury, but it does not appear that the defendant waived a jury trial.

      The mayor found the defendant guilty as charged in the affidavit, and sentenced him to/'pay a fine of twenty-five dollars ($25.00) and costs of prosecution, and that he be confined in the jail of Sandusky County, Ohio, until paid or otherwise released according to law.”
    The common pleas court reversed the judgment of conviction, and discharged the defendant, which judgment of the common pleas court was affirmed by the court of appeals.
    This error proceeding is now prosecuted in this . court by the city of Fremont, Ohio, to reverse the judgment of the court of appeals affirming the judgment of the common pleas court.

      Mr. H. S. Buckland, city solicitor; Mr. W. J. Meade, prosecuting attorney, and Mr. H. C. DeRan, for plaintiff in error.

      Messrs. Hunt & Gam, for defendant in error.
   Donahue, J.

Section 3 of Article XVIII of the Constitution of Ohio, as amended September 3, 1912, provides among other things that municipalities shall have authority to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws.

Section 126Ó4, General Code, provides that “Whoever operates a motor cycle or motor vehicle at a greater speed than eight miles an hour in the business and closely built-up portions of a municipality or more than fifteen miles an hour in other portions thereof or more than twenty miles an hour outside of a municipality, shall be fined,” etc.

This statute is a police regulation, and, under the section of the constitution above referred- to, the municipality has the right to adopt and enforce within its limits police regulations in regard to the same subject-matter, not in conflict with this statute.

Notwithstanding this right conferred upon municipalities by the constitution of Ohio, Section 6307, General Code, specifically provides that local authorities shall not regulate the speed of motor vehicles by ordinance, by-law, or resolution. It is sufficient to say that the general assembly of Ohio cannot deprive a municipality of its constitutional rights. This section is clearly in violation of Section 3 of Article XVIII of the Constitution of Ohio, and void.

Section 17 of the ordinance under which this prosecution was brought provides that no vehicle shall be operated at a greater speed than eight miles per hour in the business or closely built-up portions of the city, or fifteen miles an hour in any other portion of the city, excepting bicycles, which are provided for under another ordinance.

This .section of the ordinance is not in conflict with the provisions of Section 12604, General Code, and was passed by the council in the exercise of its constitutional authority, and is therefore a valid and subsisting ordinance of the city of Fremont, Ohio.

It is claimed, however, that this ordinance is in conflict with the general law on the same subject-matter, for the reason that it prescribes a different punishment than that prescribed by the statute of the state.

This question is not important in the disposition of this case, for even if it were conceded that a municipality has the authority under the provisions of Section 3 of Article XVIII of the Constitution of Ohio, as amended September 3, 1912, to prescribe a different punishment than provided in the statute covering the same subject-matter, nevertheless this ordinance in question provides that imprisonment may be a part of the penalty. In such case, the accused is entitled to a jury, and it is the right of the defendant to be so tried, regardless of whether the sentence imposes a term of imprisonment or not. Inwood v. State, 42 Ohio St., 186; Thomas v. Village of Ashland, 12 Ohio St., 124, and Simmons v. State, 75 Ohio St., 346, 350, 351.

It does not appear from the record that the defendant waived a jury, and without such a waiver the mayor had no authority to hear or determine the guilt or innocence of the defendant, and for this reason the judgment of the court of appeals is affirmed.

Judgment affirmed.

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