author: Johnson, J.

text:
    German American Insurance Company v. McBee et al.

      Building totally destroyed — Except foundation — Settlement of loss by insurers — Section 3643, Revised Statutes — Insurance of cellar not prohibited — By Section 3691, Revised Statutes — Cellar must be insured for specific sum — Section 3643, Revised Statutes, may apply — In case of more than one policy.

    1. Where a building or structure, is totally destroyed except the foundation walls, the fact that the description in an insurance policy, covering the property, includes the foundation, does not prevent the application of Section 3643, Revised Statutes, in the settlement of the loss.
    2. Section 3691, Revised Statutes, does not prohibit the insurance of the cellar and foundation walls under a building or structure, but does provide, that such walls shall not be included or considered a part of the “building or structure” in settling losses, and where the building or structure is also insured in the same policy, the cellar and foundation walls must be insured for a specific sum, and described separately, from the building or structure.
    3. Where a building or structure is totally destroyed by fire, the fact that there is more than one policy of insurance on the property, does not prevent the application of Section 3643, Revised Statutes, in the settlement of the loss.
    (No. 12086 —
    Decided December 12, 1911.)
    Error to the Circuit Court of Hamilton county.
    A policy of insurance was issued by plaintiff in error November 30, 1906, on the dwelling house, smoke house, chicken house and coal house of defendants in error for sums aggregating $2,080. Suit was brought in the common pleas court of Hamilton county to recover on the policy for the total loss of the buildings by fire. The petition averred that the plaintiffs below had complied with all the terms and conditions of the policy.
    There were three defenses in the answer, the first of which was substantially a denial of the total loss of the buildings, and that the foundation of the dwelling house was only slightly damaged.
    The second defense alleged that the foundation of the dwelling was slightly damaged, but not destroyed, and sets out various provisions of the policy for ascertaining the loss by appraisement in the event of disagreement between the parties; that there was disagreement as to the amount of the loss and that the company demanded an appraisement which the plaintiff refused. The purpose of this defense was that even if it should appear that there had been a total destruction of the property except the foundation under the dwelling, nevertheless the company would be entitled to an appraisement for the reason that the foundation is insurable, although by statute it is made no part of the building, and' that therefore, the valued policy law, Section 3643, Revised Statutes, would not apply.
    The third defense sets out certain provisions of the policy as to concealments and misrepresentations, and avers that plaintiffs did conceal certain matters referred to when the policy was issued, which if they had not concealed would have- precluded the issuance of the policy. An amendment was filed to the second defense which is, in • substance, that the policy sued on contained a provision that the company should not be liable under the policy for a greater part of any loss on the property than the amount thereby insured should bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers; that at the time of the loss the plaintiffs had other insurance on the dwelling house in the sum of $2,000, and that the cash value of the dwelling at the time of the fire did not exceed $2,000.
    A reply was filed which in effect denied generally the defenses set out in the answer.
    A demurrer was filed and sustained to the amendment to the second defense of the answer.
    On the trial of the case in the common pleas court the jury. returned a verdict for the full amount of the policy as for a total destruction of the property insured. Judgment was entered on this verdict and the circuit court on error affirmed this judgment. Error is now prosecuted here to reverse the judgments of the courts below. Exceptions were reserved to the admission and to the rejection of evidence and to the refusal of the court to give certain charges requested by the com-' pany, and to the charge of the court which will be noticed in the opinion.

      Mr. J. W. Mooney, for plaintiff in error.
    This court has had occasion to define what constitutes a total loss to a building • or structure under Section 3643, Revised Statutes, in the case of Insurance Co. v. Drackett, 63 Ohio St., 41.
    The record in the case at bar shows that the loss and damage to the property has never been ascertained by appraisement as provided by the provisions of the policy. In fact, it is conceded that the plaintiff in error demanded of the defendants in error that the loss and damage be ascertained by appraisement under the provisions of the policy, and that the defendants in error refused to ascertain the loss and damage by appraisement.
    This made the appraisal provisions of the policy, if the plaintiff in error was entitled to an appraisement, a condition precedent, and the defendants in error could not recover without complying with the provisions of the policy, or showing a legal excuse therefor. Graham v. Ins. Co., 75 Ohio St., 374; Insurance Co. v. Carnahan, 63 Ohio St., 258.
    We contend that the valued policy law (Section 3643, Revised Statutes) applies only where the policy of insurance covers a building or structure. Where the policy covers a building or structure and other property in a gross or blanket sum, the valued policy law does not apply, and where there has been a disagreement as to the amount of loss an appraisement must be had. Section 3643, Revised Statutes, applies only to building or structure.

      Section 3691, Revised Statutes, expressly provides that the cellar and foundation walls shall not be included or considered a part of the building or structure in settling losses.
    The question as to whether or not the valued policy law (Section 3643) applies, where a gross sum is written upon a structure and other property not a part of the structure, has never been passed upon in this state to our knowledge. But this question has been before the supreme court of Minnesota in the case of Ohage v. Ins. Co., 82 Minn., 426.
    The valued policy law of the state of Minnesota is the same as the Ohio statute. The description of the insured property in Ohage v. Ins. Co. is identical with the description contained in the policy of insurance herein involved.
    To support the construction of Section 3643, Revised Statutes, here contended for by the plaintiff in error, we call the court’s attention to the case of Coffin Co. v. Ins. Co., 8 Dec. R., 422.

      Mr. loseph T. Harrison, for defendants in error.
    If the construction is given to Section 3643 that counsel for plaintiff in error contends for, it would nullify the plain wording of the Howland law, Sections 3643 and 3644, Revised Statutes (now Sections 9583 and 9586b, General Code), and hold for naught all the decisions of the supreme court of Ohio on the subject of a .total loss. It does not aid the present inquiry to cite law which applies to a case of partial loss — this was a case of total loss. If this section is read in connection with Section 3691, and that construction is correct, that it applies only to a “building or structure” (whatever that may mean) and not to the foundation, then there would have been no use in the legislature adding that part of Section 3691, which says, “anything in the application or policy to the contrary notwithstanding.”
    No case of total loss can be found where an appraisement was required as a condition precedent to bringing suit, because, if there was such a case, it would involve an absurdity, viz., to appraise something that would not exist — also to attempt to fix the loss at a particular amount, when Section 3643 says the amount to be paid is the amount named in the policy. The statute excludes consideration of the foundation in the settlement of a loss, no matter what is in the policy, and therefore the foundation walls could not be considered, and there would be no error in excluding such testimony. If the law, therefore, makes it the duty of the agent who places the insurance, to fix a value upon the property, and he does so, and the company receives a premium for the same, it makes the value named in the policy the sum payable in case of total loss.
    The construction of Section 3643, Revised Statutes, will be found in the following citations: Insurance Co. v. Leslie, 47 Ohio St., 409; Insurance Co. v. Hull, 51 Ohio St., 270; Moody v. Ins. Co., 52 Ohio St., 12; Webster v. Ins. Co., 53 Ohio St., 558; Sun Fire Office v. Clark, 53 Ohio St., 414; Insurance Co. v. Drackett, 63 Ohio St., 41;
      Insurance Co. v. Russell, 65 Ohio St., 230; Insurance Co. v. Werner, 76 Ohio St., 542.
    The ITowland law which is the statutory rule in Ohio is stated and explained in Insurance Co. v. Russell, 65 Ohio St., 230; Moody v. Ins. Co., 52 Ohio St., 12; Sun Fire Office v. Clark, 53 Ohio St., 414; Insurance Co. v. Kukral, 7 C. C., 356, 51 Ohio St., 609; Insurance Co. v. Bowersox, 5 C. C., 444, 51 Ohio St., 567; Insurance Co. v. Hock, 8 C. C., 341, 56 Ohio St., 735.
    The statute cannot be regarded as conferring upon the insured a mere personal privilege which may be waived by agreement. It molds the obligation of the contract into conformity with its provisions and establishés the rule and measure of the insurer’s liability. Insurance Co. v. Fish Co., 14 C. C., 160, 61 Ohio St., 643; Insurance Co. v. Bowersox, 5 C. C., 444, 51 Ohio St., 567; Insurance Co. v. Leslie, 47 Ohio St., 409.
   Johnson, J.

It is conceded that plaintiffs Delow refused to enter upon an appraisement to fix the amount of the loss, claiming that there was a total loss, and that under Section 3643, Revised Statutes, they were entitled to the full amount of the policy. The courts below sustained this view. The insurance company insists that this was erroneous for two reasons:

1st. That as the policy covered the foundation of the dwelling house as well as the rest of the structure, and as the foundation was not totally destroyed the statute does not apply and the company was entitled to an appraisement.

2nd. There being more than one policy covering the property, it is claimed that the valued policy law, Section 3643, Revised Statutes, does not apply.

A number of special charges embodying these propositions, were requested by plaintiff in error, and refused bjr the trial court, and the questions were also preserved by the tender of testimony on the trial which was rejected.

As to the first proposition it is contended, substantially, that Section 3643, Revised Statutes, applies only where the policy covers a “building or structure,” and that if the foundation is a part of the “building or structure” and is not totally destroyed, then there has been no total loss within the meaning of that section; and on the other hand, that if the foundation is not to be considered as part of the “building or structure,” then the policy has covered something in addition thereto, and that, therefore, the statute does not apply.

Section 3691, Revised Statutes, is as follows: “The cellar and foundation walls shall not be included or considered as part of the building or structure in settling losses, anything in the application or policy to the contrary notwithstanding.”

It is urged by counsel for plaintiff in error that this section does not preclude the company from insuring the foundation, if the parties agree that it shall be done. Doubtless this is true, but such agreement must be separately and sufficiently indicated in the contract itself.

In the policy issued in this case, the description is, “the two story shingle roof brick building and additions thereto attached, including foundations,” etc. That is to say, the policy specifically provides that the “building” insured shall include the foundation. It negatives the idea or the desire for insurance on the foundation separately from, or in addition to the building or structure, referred to in the statute. The section of the statutes above quoted provides that the foundation shall not be “included” as part of the “building or structure” in settling losses, anything in application or policy to the contrary notwithstanding. The manifest purpose of the statute was to prevent entirely the incorporation of the foundation in the description of the building and to prevent the insurance company from using such a description, as a means to avoid the operation of the statute, in cases otherwise applicable, and thus secure a result wholly contrary to its spirit.

In the only case cited by plaintiff in error in support of its view, Ohage v. Union Ins. Co., 82 Minn., 430, it does not appear from the report of the case whether Minnesota has a statute similar to the Ohio statute, Section 3691, Revised Statutes, büt the court remark at page 430: “It is difficult to see what advantage could result from such arbitration, unless it were to make a point upon the technical construction of a portion of the statute for the benefit of the insurance company, and thus allow the statement in the description including the foundation to become a trap for the unwary, against the spirit of the statute, whose purpose was to discourage that object.”

The principal and most important question in this case, is that presented by the second of the propositions asserted by plaintiff in error, as above stated. Where more than one policy is issued on a building or structure totally destroyed, does the valued policy law, Section 3643, Revised Statutes, control? That section as in force when the policy was issued reads as follows: “Any person, company, or association, hereafter insuring any building or structure against loss or damage by fire or lightning, by a renewal of a policy heretofore issued, or otherwise, shall cause such building or structure to be examined by an agent of the insurer, and a full description thereof to be made, and the insurable value thereof to be fixed by such agent; in the absence of any change increasing the risk without the consent of the insurers, and also of intentional fraud on the part of the insured, in case of total loss, the whole amount mentioned in the policy or renewal upon which the insurers receive a premium shall be paid, and in case of a partial loss the full amount of the partial loss shall be paid; and in case there are two or more policies upon the property, each policy shall contribute to the payment of the whole or the partial loss in proportion to the amount of insurance mentioned in each policy; but in no case shall the insurer be required to pay more than the amount mentioned in its policy.” This court has been called on to consider the above section, known as the valued policy, or Howland law, many times. There has not been constant unanimity in its construction, or application, and in Insurance Co. v. Werner, 76 Ohio St., 551, some of the earlier cases were overruled. But it has not been questioned in any case, that the statute enters into, and becomes part of every fire insurance contract, and supersedes and annuls all terms in any such contract, which differ from its provisions. Insurance Co. v. Leslie, 47 Ohio St., 409; Insurance Co. v. Russell, 65 Ohio St., 255; Insurance Co. v. Drackett, 63 Ohio St., 41, and 19 Cyc., 659.

It is contended that the last clause, of the section indicates that the legislature intended that where there is more than one policy on the property the statute shall not apply.

That clause provides, where there are two or more, policies, each shall contribute to the “whole or the partial loss” in proportion to the amount named in each policy. It is urged, that the necessary implication from the use of the words “shall contribute to the whole or partial loss in proportion” etc., is, that there must first be an ascertainment of the amount of the “whole or partial loss,” and that as the contract prescribes the method of ascertaining this amount, that method must be followed. The first clause of the section requires any company insuring, to cause the building to be examined by an agent of the “insurer,” and the insurable value fixed. The second clause enacts that in the absence of change increasing risk without consent of the “insurers,” in case of total loss the whole amount named in the policy on which the “insurers” receive premiums shall be paid, and if the loss is partial the full amount of the partial loss shall be paid. Then the third clause, and that in case there are two or more policies, each shall contribute to the payment of the whole or partial loss, in proportion to the amount of each policy. Taken as a whole the section requires that the examination must first be made and the insurable value fixed in the manner stated, and manifestly contemplates, not only that more than one “insurer” may insure the same property, but that the different “insurers” might insure in different amounts. Then after requiring that in case of total loss the whole amount mentioned on which the “insurers” receive a premium shall be paid, it is provided that in case there are two or more policies each shall contribute in proportion, etc.

We think the clear meaning- is that where the loss is partial the amount shall be ascertained and paid in the proportions named, and where it is total, the proportion of each, is the amount mentioned in its policy.

There is nothing in the statute, from which the inference can be fairly drawn, that the legislature intended that the law should be abrogated where more than one policy had been issued. If such had been the intention it is natural to assume that a simple provision would have been added, that the law should not apply where there was more than one policy on the property. Whereas, the clause that actually was added, as a final provision, is, that in no case shall the insurer be “required to pay more than the amount mentioned in its policy.” To hold otherwise would enable insurers to habitually avoid the statute by arranging that some part of their insurance shall be carried by others.

It is a matter of common knowledge that usually the insurance risk on the better “buildings and structures” is carried by more than one com-pa-ny. That is doubtless a wise and safe course and one to be commended, but it suggests no reason why the precautions and procedure of this statute should not be followed.

We are more firmly convinced of the correctness of these views by a consideration of this law as originally passed, in comparison with it, as embodied in the Revised Statutes.

The original statute was passed March 5, 1879, and is found in Yol. 76, page 26, Ohio Laws. The third clause (being the one under consideration here) reads: “In case there are two or more policies upon the property each policy shall contribute to the payment of the whole of the partial loss in proportion to the amount of insurance mentioned in each policy. In the revision of 1880, the phrase “Whole of the partial loss” appears as “whole or the partial loss.” That is, the word “of” was in some manner changed to “or” in the revision.

There would of course be no room for discussion as to the meaning of the law as originally passed.

Under well settled rules of construction “Where the general statutes of the state are revised and consolidated, there is a strong presumption, that the same construction which the statute had before revision, should be applied to the enactment in the revised form, although the language may have been changed.”

In such case the court is only warranted in holding the construction to be changed when the intent of the legislature to make such change is clear and manifest. State, ex rel., v. Commis sioners, 36 Ohio St., 326; Heck v. State, 44 Ohio St., 536; State, ex rel., v. Stockley, 45 Ohio St., 308. We do not think there is disclosed such intention in this instance, when the statute is viewed as a whole and having in mind the object which is attempted to be accomplished. It is very-apparent that the law is founded on what the general assembly regarded as considerations of sound public policy, the purpose being to require the insurance company to make a full examination of the property, and itself fix the insurable value, and thus avoid over-insurance and improper risks, to prevent disputes as to the amount to be recovered in event of total loss, and to protect the insured, as far as possible, against unreasonable defenses.

These are surely proper and worthy purposes, and while we might be inclined to doubt the efficiency, and the policy of the enactment, by which they are sought to be accomplished, .yet that is a matter within the legislative power, which when exercised must be judicially enforced.

We find no error in the record .and the judgments of the courts below are affirmed.

Judgments affirmed.

Spear, C. J., Price and Donahue, JJ., concur.


source: Caselaw Access Project

author: Price, J.

license: Public Domain

text:
    The Baltimore & Ohio Railroad Co. v. Nobil.

      Motion for judgment notwithstanding verdict — Pleadings and not record — To be considered, when.

    In disposing of a motion for judgement notwithstanding the verdict of a jury, the trial court is confined to a consideration of the statements in the pleadings, and the record outside of the statements in the pleadings should not be considered in deciding such motion. McCoy et al. v. Jones et al., 61 Ohio St., 119, approved and followed.
    (No. 12028 —
    Decided December 12, 1911.)
    Error to the Circuit Court of Summit county.
    On the 9th day of January, 1908, the defendant in error commenced an action against the plaintiff in error, in the court of common pleas of Summit county, and in an amended petition subsequently filed, alleged that “on the 9th day of March, 1907, the said railroad company was a common carrier of goods for hire, from the city of Portsmouth, Ohio, to the city of Akron, Ohio, and that on said date, in consideration of the freight charges fixed by the defendant and which have been paid by plaintiff to defendant, defendant agreed to carry safely for plaintiff, from Portsmouth, Ohio, and to deliver to plaintiff at the city of Akron, Ohio, and the plaintiff then and there delivered to defendant for that purpose forty cases of shoes, of the value of $1,583.86.”
    A copy of the agreement was attached to the petition as an exhibit.
    The petition amended further alleges that, “defendant did not safely carry and deliver said goods, but failed so to do, and permitted thirty-eight cases of said shoes to become water soaked while in the possession of defendant for transportation as aforesaid, whereby said thirty-eight cases of shoes were wholly lost to plaintiff to his damage in the sum of $1,554.46, with interest,” etc., for which amount judgment is prayed.
    The railroad company, in an amended answer, admits its corporate capacity, and that it was a common carrier at the time and as alleged by the plaintiff. The answer proceeds to set out the important clauses in the bill of lading on which the shoes were shipped, among which are the following: “No carrier or party in possession of all or any of the property herein described, shall be liable for any loss thereof or damage thereto, by causes beyond its control; or by floods or by fire, or by quarantine, or by riots, strikes, or stoppage of labor; or by leakage, breakage, chafing, loss in weight, changes in weather, heat, frost, wet or decay; or from any cause if it bé necessary or is usual to carry such property upon open cars.”
    Another provision made in the bill is, that the carrier is not bound to carry the property by any particular train, or in time for any particular market; “or otherwise than with as reasonable despatch as its general business will permit.”
    The company admits that it received the forty cases of shoes for transportation, as alleged, and thirty-eight cases were, to some extent, damaged by becoming wet with water after delivery to the defendant.

      The company avers that the damage or loss, if any, resulting to said cases of shoes, “was wholly due to floods and causes beyond defendant’s control, floods, high water, inability to move rapidly, make up and run trains, and by unprecedented rain storms and high water, an act of Providence which defendant could not foresee, and against which it could not protect said property; that it handled and carried said goods with as reasonable despatch as its general business would permit, and was in no manner guilty of negligence with respect thereto, while the same were in its possession and control, and fully performed all the terms and conditions of said contract,” etc.
    The reply to the amended answer admits that the bill of lading contained the clauses copied therein, and that the contract for carriage is as alleged by defendant, and denies all allegations not admitted.
    On the issues thus made up, supplemented by some slight amendments, the cause came on to be heard to a jury, at the September term, 1908. The plaintiff introduced his evidence and rested. Thereupon the railroad company introduced its evidence and rested. At the close of all the evidence, the company moved the court to direct a verdict in its favor. This was overruled and the company excepted. The plaintiff submitted certain instructions, some of which were given by the court. Some of the requests of defendant were given, and others refused. The case was' argued by counsel and the court charged the jury thereafter. The jury returned a verdict finding for the plaintiff in the sum of $700. This verdict was filed on the 5th day of November, 1908.
    On the same day, the company filed a motion for judgment notwithstanding the verdict, on the following grounds; “that on the undisputed facts appearing of record, and notwithstanding said verdict, the plaintiff is not entitled to recover, and defendant is entitled to have judgment rendered in its favor.
    “As a matter of law, the jury should have returned a verdict for the defendant.
    “Under the law, as given to the jury by the court, and the undisputed facts appearing of record, the plaintiff, as a matter of law, was not entitled to recover and the defendant was.”
    On the next day, November 6, 1908, the company filed its motion for new trial, assigning ten grounds for the same, among others, that the court erred in admitting and also in excluding evidence; erred in giving instructions requested by plaintiff and erred in refusing to charge as requested by defendant, and erred in the general charge; also that verdict is contrary to law and not supported by any evidence; verdict not supported by sufficient evidence.
    Each of these motions remained pending until the January term, 1909, when the following action was taken by the court, as shown by the record:
    “January 18th, 1909. January Term. This cause coming on to be heard upon the motion of the defendant filed herein for judgment upon the undisputed facts of record, notwithstanding the verdict of the jury in favor of the plaintiff, and also the motion of said defendant to set aside and vacate the verdict of the jury and for a new trial and were argued by counsel and submitted to the court, and the court being fully advised in the premises, finds that the court erred in refusing to grant the motions of the defendant to direct the jury to return a verdict in favor of the defendant; and the court further finds that the plaintiff is not entitled to recover in this action; that defendant is entitled to judgment in its favor.
    “It is therefore accordingly considered, ordered and adjudged by the court that the said motion for judgment be and the same hereby is sustained ; that the plaintiff’s petition be and the same hereby is dismissed at his costs * * *.
    “It is further ordered that the motion for a new trial be and the same hereby is overruled, to which order and judgment in favor of the defendant and against the plaintiff, the plaintiff here and now excepts.”
    The plaintiff prosecuted error in the circuit court and specially assigned as error the sustaining of the motion of the defendant in error for judgment notwithstanding the verdict. The circuit court sustained this assignment, and for that error reversed the judgment of the court of common pleas and remanded the case.
    The railroad company brings error in this court to reverse the judgment of the circuit court.

      Messrs. Allen, Waters, Young & Andress, for plaintiff in error.

      Messrs. Grant, Sieber & Mather and Messrs. Otis, Beery & Otis, for defendant in error.
   Price, J.

The foregoing statement is a ’ history of a controversy which seems to have troubled and perhaps confused the trial court. The course of procedure adopted to. reach a final judgment was, in some respects heroic, but we fear that it is tainted with serious error.

The issues joined were clearly made up so that important questions of fact were in dispute by the pleadings, and it has not been suggested in brief or oral argument, that the defendant company was entitled to judgment on the pleadings. Both parties produced the evidence to the jury, and when it was closed the defendant moved for an instructed verdict which was denied. Counsel and the trial court recognized that there were disputed facts in the case for consideration of the jury; — counsel by formulating written charges to be -given supposed to bear on the line of controversy. The plaintiff desired instructions to the effect that it was incumbent on the defendant to show that the injury to the goods is within the terms of exemption contained in the bill of lading; that it resulted from causes beyond its control, and further that proper care, and skill were exercised by defendant to prevent such loss or injury; that defendant was free of negligence contributing to the loss. On behalf of the railroad company, the court was requested to and did charge on the subject of unprecedented floods, the act of God seen therein, and the jury were charged as to how the facts should appear to make out that special defense.

And in the general charge the court said: “whether in this case such ordinary and reasonable care were not used by the defendant and whether the loss, if any, resulted therefrom are questions for you to determine from all the facts and circumstances proved in the trial.” In the ample charge the jury were instructed how to apply the evidence of the parties. All these steps taken by counsel and recognized by the court, indicate that material facts were in dispute.

Under these instructions the jury found for the plaintiff below and assessed damages. On the day verdict was returned the railroad company moved for judgment non obstante veredicto, and the next day filed a motion for new trial. All this occurred during the September term, 1908. Silence seemed to prevail until the 18th day of January, 1909, when the above motions were taken up and the court'being obsessed of its plenary powers, sustained the motion for judgment and overruled the motion for new trial, and thus the plaintiff below was sent out of court with a judgment for costs on his head.

The court found it had erred in not granting the motion for a directed verdict, but recognized that it was without power to reverse that decision, and it was not reversed. The motion for new trial furnished another legal opportunity to pass on all the facts disputed and undisputed, where sound discretion may be exercised, but that was overruled.

We are not so far convinced of the unlimited powers of a trial court, that we can, after what had become a part of the record,, sanction a judgment upon what was alleged to be “undisputed facts.” Such a view trenches upon the solemn rulings of the court both preceding and concurrent, and we find no justification in practice or code for such a judgment. In fact the law condemns it.

There are somewhat well established unwritten rules of practice as to minor details of a trial, but they must conform to and not override the written code, for in it is found the general course of procedure at and throughout a trial, and the disposition of the rights of the parties until final judgment. This, the legislature in adopting the code, regarded as the better guarantee of an orderly and fair trial.

To this end we have Section 5327, Revised Statutes, to-wit: “When the verdict is special, or when there is a special finding on particular questions of fact, or when the case is reserved, the court shall order what judgment shall be entered.” The preceding section defines the duty of the clerk as to entering a judgment on a verdict and when the same shall be entered with respect to the filing of a motion for new trial.

Next we have Section 5328, Revised Statutes, which, as we think, controls the present case: “When, upon the statements in the pleadings, one party is entitled by law to judgment in his favor, judgment shall be so rendered by the court, although a verdict has been found against such party.” It may happen that for lack of a test of the pleadings by demurrer or otherwise, the correct view of the statements in the pleadings may not have been taken by the trial court, or its attention challenged thereto whereas after the conflict to a jury is over, and all the light of the trial is reflected upon the pleadings, it becomes apparent that the verdict rendered has no foundation in the statements of the pleadings; or, that they demand that the judgment should go to the other party. In such case the court may render the proper judgment. The kind of judgment rendered by the trial court in this case has been considered by this court in at least two cases.

Challen v. Cincinnati, 40 Ohio St., 113, was a case for damages caused by change of street grade. There was a verdict for the plaintiffs against the city and it moved for a new trial, to which plaintiffs consented. The city then withdrew said motion and filed another, calling it a motion “in arrest of judgment and for judgment for the defendant on the pleadings.” The court entered upon the journal, against the objection and exception of the plaintiffs, the words: “it appearing to the court that by the admission of plaintiffs upon the trial they were not the owners of the premises at the time the work was done,” etc., and taking that entry with the pleadings, sustained the city’s motion and dismissed the action at plaintiffs’ costs. The district court affirmed the judgment, but when considered by this court it was held: “An admission made during the jury trial not incorporated into the pleadings, was only a part of the evidence, and has no place in the record except in a bill of exceptions. Hence, the statement of the journal must be disregarded. On such a motion the court could only look at the pleadings.” In the instant case the trial court wholly ignored the pleadings and acted on what the entry calls “undisputed facts appearing of record.”

If a confession or admission at a trial and in open court relating to such an important matter as ownership of the lots alleged to have been damaged, cannot be considered in connection with a motion for judgment on the pleadings, much less is a court authorized to wholly ignore the pleadings and render a judgment directly in the face of a jury verdict. A similar question came to this court in McCoy et al., Trustees, v. Jones et al., 61 Ohio St., 119. The suit in common pleas was on a promissory note payable to a lodge one day after date, and signed “Thomas Jones— J. Frock.” Payments of interest had been made. Jones made default and Frock filed an answer setting up that he was merely surety on the note and that without his knowledge or consent there had been an extension of time of payment. Other contracts of extension were pleaded in the answer. The issues were tried to a jury and a verdict returned against Frock for the amount due on the note. He filed a motion for a new trial, which, as was done in our case, was overruled, and he also filed a motion in arrest of judgment, of which the following is a part: “and moves the court, upon the statements 'in the pleadings and record herein, to arrest judgment on the verdict in this action against said Jeremiah Frock in favor of the plaintiffs, as by the same be is in law entitled to judgment against said plaintiffs * *

The trial court overruled the motion. On error the circuit court reversed the judgment of the common pleas and directed it to sustain the motion, whereupon the case came to this court on error respecting the above motion and perhaps another question of practice.

The holding of this court is clearly stated in the second paragraph of the syllabus, to-wit: “Courts are confined to a consideration of the statements in the pleadings in disposing of a motion for judgment notwithstanding the verdict, under Section 5328, Revised Statutes. The record outside of the statements in the pleadings should not be considered in disposing of such motion.” What the court say on pages 129-30 is very appropriate here, as the reasons for the ruling made plain.

In the case at bar, the above positive rule was violated, because the trial court went outside of the pleadings and rendered judgment on what the entry calls “undisputed facts.” It is unnecessary to pursue this subject further, in the light of the foregoing adjudications of the question.

The circuit court decided correctly in reversing the judgment of the court of common pleas, and the judgment of reversal is affirmed, and cause remanded to the court of common pleas for other and further proceedings according to law.

Judgment affirmed.

Spear, C. J., Johnson and Donahue, JJ., concur.

Davis and Shauck, JJ., dissent.


author: Shauck, J.

text:
    Miller et al., Executors, v. Kyle et al.

      Stipulations in promissory notes — For attorney’s fees, void, whenI —Negotiability of note not destroyed — Sections 8106 and 8107, General Code.

    1. It is the settled law of this state that stipulations incorporated in promissory notes for the payment of attorney fees, if the principal and interest be not paid at maturity, are contrary to public policy and void.
    2. Sections 8106 and 8107 of the General Code do not give validity to such stipulations but provide only that they shall not destroy the negotiable character of instruments in which they are incorporated.
    (No. 12356 —
    Decided December 12, 1911.)
    Error to the Circuit Court of Franklin county.
    The plaintiffs in error were plaintiffs in the court of common pleas. Their suit was upon a note and mortgage for $15,000, for which sum with interest judgment was awarded them. In both the note and the mortgage there was a stipulation for the payment of attorney fees if the maker should default in the payment of the principal sum. The court though finding the default, and further finding that $550 would be a reasonable fee for the services of counsel for the plaintiffs toward the collection of the debt, refused to render judgment in any amount on account of such services. On petition in error the circuit court affirmed the judgment of the court of common pleas.

      Messrs. Crum, Raymund & Hedges, for plaintiffs in error.

      The determination of the questions before the court requires the consideration of the statute commonly known as -the Negotiable Instruments Code, see Bates’ Annotated Statutes, Chapter 2, and a construction of parts of Sections 3171, 3171a and possibly 3178c, Revised Statutes (Sections 8106 and 8300, General Code).
    The legal principles to be applied to the construction of the negotiable instruments code seem to us to be elementary. Our only excuse for calling the attention of this court to a few of the authorities is the- fact that the lower courts seem to have misconstrued, or ignored, some of the fundamental principles of construction. Probasco v. Raine, 50 Ohio St., 378; In re Will of Hathaway, 4 Ohio St., 385; Hough v. Mfg. Co., 66 Ohio St., 436; Johnson v. Life Assn. Co., 125 S. W. Rep., 1075; Senior v. Ratterman, 44 Ohio St., 674; Bridge Co. v. Bowman, 41 Ohio St., 52; Insurance Co. v. Talbot, 113 Ind., 373, 3 Am. St. Rep., 655; Redell v. Moores, 63 Neb., 219, 93 Am. St. Rep., 431; In re McCreight, 6 O. N. P., 480; 23 Am. & Eng. Ency. Law (1 ed.), 311: Pancoast v. Ruffin, 1 Ohio (pt. 2), 385; Harris v. State, 57 Ohio St., 94; Grocery Co. v. Armstrong, 8 O. C. C., 492; Sutherland on Statutory Construction (2 ed.), Secs. 254, 270, 271; Bartlett v. King, 12 Mass., 545.
    If a revision of the law of itself and without express words, operates to repeal former inconsistent statutes, it follows that such revision must render ineffective judicial decisions based upon or construing such repealed statutes.

      The authorities we have cited seem to us to establish the following propositions: first, the legislature has the right and power to declare what is public policy, and the courts have no right or power to nullify a statute on the ground that it is against natural justice or public policy; second, the language used in a statute must receive its usual and ordinary meaning, and courts have no power to restrict or enlarge its operation beyond the expressed meaning; third, where the words of a statute are clear and .unequivocal the courts will not under pretense of construction vary from the meaning of the words of the statute; fourth, in construing a statute effect must be given to every part; fifth, in construing a statute the courts will look to contemporaneous history; sixth, the courts will look to the title of an act as an aid in determining the purpose and intent of the legislature; seventh, a statute intended by the legislature to be a complete revision or code of the law upon any subject-matter will change any prior law or laws even without direct reference to such prior laws.
    Prior to the adoption of the negotiable instruments code each state had its own law of negotiable instruments made partly by statutory and partly by judicial determination. In no two states of the Union was the law of negotiable instruments exactly the same on all points.
    The law as enforced in the various jurisdictions probably varied more than in any other respect in the decisions in regard to provisions in promissory notes by which the maker obligated himself, upon default in payment at maturity, to pay exchange, costs of collection, or attorneys’ fees expended by the holder in enforcing payment.
    The confusion in the authorities is discussed in an elaborate note to the case of Kittermaster v. Brossard, 55 Am. St. Rep., 438.
    It cannot be doubted, in the light of the existing conditions, with which the law will presume the legislature was familiar, that the purpose and intent of the legislature was to enact a code which should be uniform with the laws of other states upon the same subject.
    But we have additional and, it seems to us conclusive, proof of the legislative intent in the title of the act, “An act to establish a law uniform with the laws of other states on negotiable instruments.” 95 O. L., 162.
    The negotiable instruments code and its effect upon the prior decisions has been considered and discussed in the case of Savings Bank Co. v. Pottery Co., 5 O. N. P., N. S., 73.
    The supreme court of Ohio, upon the same line of reasoning, arrived at the same conclusion in Rockfield v. Bank, 77 Ohio St., 311.
    This court has again applied the same principle of construction to the negotiable instruments act in the case of Richards v. Bank, 81 Ohio St., 348.
    Before the adoption of the code a stipulation in a note that the maker upon default will pay costs and attorney fees in collection was held by Ohio courts to be against public policy and therefore void. The plain words of the statute has changed the law and rendered such a stipulation valid. Bank v. Lumber Co., 102 Pac. Rep., 685; Mackintosh v. Gibbs, 74 Atl. Rep., 709; Bradley v. Hey-

      burn, 106 Pac. Rep., 171; Gibbs v. Guaraglia, 67 Atl. Rep., 81; Wirt v. Stubblefield, 17 App. Cas. D. C., 283; Richards v. Bank, 81 Ohio St., 348.
    The great majority of the decisions in which the application of the negotiable instruments law or code have been discussed have, it is true, arisen upon questions other than the attorneys’ fee clause. But in all these cases the courts have followed the course we ask the court to follow here, that is, that the law must be taken to mean what the words of the act say; and that where the act, as so construed, differs from the law as formerly declared, the act must be construed as changing the law. Gibbs v. Guaraglia, 67 Atl. Rep., 81; Baumeister v. Kuntz, 53 Fla., 340; Toole v. Crafts, 193 Mass., 110; McLean v. Bryer, 24 R. I., 599; Klar v. Kostiuk, 119 N. Y. Supp., 684.
    The question before the court here' has been decided in at least two courts of last resort and in each the negotiable instruments act has been held to have changed the law and rendered the attorneys’ fees clause in promissory notes valid although held invalid prior to the act. Bank v. Miller, 120 N. W. Rep., 820; McCornick v. Swem, 102 Pac. Rep., 626.

      Messrs. Vorys, Sater, Seymour & Pease and Mr. Fred C. Rector, for defendants.
    This action is based upon the provision which is contained in the note, and which is also contained in the mortgage, which recites that the signer of the note and mortgage will pay the costs of collection and an attorney’s fee in case payment shall not be made at maturity.

      The policy of the state of Ohio from the beginning has been that such a provision in a note or mortgage is against public policy, and void. This policy was first announced in 1841, in the case of State v. Taylor, 10 Ohio, 378. Whatever was the reasoning which may be argued pro and con upon this question, the policy of the state of Ohio then and there became well settled. This doctrine is reaffirmed in the case of Shelton v. Gill, 11 Ohio, 417; again in the case of Martin v. Bank, 13 Ohio, 250. So well settled did this
    doctrine become that it remained uniformly unchallenged until 1893, when we find the case of Leavans v. Bank, 50 Ohio St., 591, where the parties specifically agreed in the mortgage that if the same was foreclosed, the court should fix the reasonable fee for the attorneys. So well settled Avas this doctrine deemed by the court that the case is disposed of by an opinion of one sentence, that such a provision “is against public policy and void.”
    By Section 3171a the intention is to specifically state what is a sum certain. It is provided that the sum payable is a sum certain, even though it, to-wit, the sum, is to be paid with costs of collection or an attorney’s fee. We cannot conceive that the legislature intended to go further than this. That is to say, that it simply declared such a note to be negotiable, notwithstanding the presence of that clause, leaving to the state to determine for itself whether or not that particular part of the note would be enforced.
    It has been the universal custom of the banks and merchants of the state of Ohio to use such notes, and we fail to find a single case where the court has held the presence of such a clause to affect the negotiability of the note. So far as Ohio, therefore, is concerned, this Section 3171a, like nearly all the rest of that code, is simply declaratory of the law as it already existed. .In other words, as we conceive this statute, it simply was intended to provide that the provisions in a note for costs of collection or attorneys’ fees, does not impair the negotiability of the instrument.
   Shauck, J.

Whether the courts below erred in adjudging that the plaintiffs were not entitled to recover the fees of their counsel on the stipulation of the maker to be liable therefor, if default should be made in payment of the principal and interest, is the only question presented by the record.

In this state it has been firmly established, and long and consistently maintained, that such contracts for the payment of counsel fees upon default in payment of a debt will not be enforced. In State for the Use of the Commissioners v. Taylor et al., 10 Ohio, 378, that conclusion was reached, and it was said that the enforcement of such contracts would result in evasions of the usury laws. The same conclusion was reached in. Shelton et al. v. Gill et al., 11 Ohio, 417; in Martin v. The Trustees, 13 Ohio, 250, and in Leavans v. Bank, 50 Ohio St., 591. In all of these cases the contracts were denounced as contrary to public policy. The conclusion is well sustained by the obvious tendency of such contracts to encourage suits.

Counsel for the plaintiffs admit the authority of these cases and their effect to establish the common law rule of this state as contrary to the view upon which they insist, but they assert that that rule has now been abrogated by Sections 8106 and 8107 of the General Code, which were enacted as Sections 3171 and 3171a of an act entitled “An act to establish a law uniform with the laws of other states on negotiable instruments,” passed April 17, 1902, volume 95 O. L., 162. The former of these sections prescribes the requisites for a negotiable instrument, among which requisites is, that the instrument “must contain an unconditional promise or order to pay a sum certain in money.” . The latter relates to the required certainty, and it provides that “the sum payable is a sum certain within the meaning of this chapter, although it is to be paid * * * 5. With costs of collection or an attorney’s fee in case payment shall not be made at maturity.” These sections will be at once recognized as a part of the negotiable instruments act recently enacted with but slight differences in many of the states. Counsel for the plaintiff assert with confidence, and no one seems to doubt, that the general assembly may by legislative enactment change the common law policy of the state with respect to a subject of the character of this. Proceeding with the contention that the legislature of this state has exercised that power by enacting the sections referred to, they call attention to the wide diversity of decisions in the different states respecting the validity of such stipulations for the payment' of attorney fees, and suggest that if there had been no intention to change the law of this state upon that subject the fiffh paragraph of Section 8107 would have been omitted. A diversity of decision to which that paragraph has obvious reference was not with respect to the validity of stipulations for the payment of attorney fees, but whether the insertion of such a stipulation in an instrument destroyed its negotiable character. One writer on the subject of the act says: “The courts in the various states have been nearly evenly divided on the question of the negotiability of instruments with such provisions.” Sell-over, pp. 59-60. We are not advised that any court of this state has ever been called upon to determine that question. But whether by the common law of the state, a stipulation for the payment of attorney fees destroyed the negotiable character of an instrument in which it was incorporated, or whether that question was undetermined, there was, in either case, an important purpose to be accomplished by the fifth paragraph of the section without assuming that it was intended to give validity to stipulations which were previously invalid. To preserve the negotiable character of an instrument notwithstanding the incorporation of a stipulation for the payment' of attorney fees .the language of the section is entirely appropriate. It contains no language indicative of an intention to change the rule of the common law with respect to the validity of the stipulation.

It is suggested that the general assembly must be presumed to know the common law of the state, and that every section of a statute should be regarded as evincing an intention to . change it. That would indeed be a novel rule of interpretation, and in the days of the codifier it would reach resiilts most confounding. Its impracticability' as a rule of interpretation will at once appear if an attempt be made to apply it to the act of which these two sections form a part. That act has been in force in this state for more than nine years, and to the present' time our attention has been called to but one respect in which- it changes the common law of' the state upon the subject of negotiable instruments. Quite different from the rule suggested is the rule which the wisdom of generations has established: That statutes in derogation of the common law shall not by construction receive a meaning beyond that of the terms which they employ. Certainly this does not mean that such statutes are to be construed in a spirit of hostility, but in its application to the present case it cannot mean less than that the legislative act, which contains language appropriate. only to saving the negotiable character of instruments which contain stipulations for the payment of attorney fees, should not be construed to impart validity to' such stipulations notwithstanding an established rule of the common law to the contrary. It seems to be conclusive of this subject that if, seeking uniformity upon a subject not suggested by the terms of the statute, we should adopt the view urged by counsel for the plaintiffs, the desired result would not be attained, for in some of the states there has been added to the clause which constitutes the fifth paragraph of Section 8107 in our statute, the express provision that it shall not be so construed as to give validity to stipulations for the payment of attorney fees.

Judgment affirmed.

Spear, C. J., Price, Johnson and Donahue, JJ., concur.


author: Davis, J.

text:
    The Hallet & Davis Piano Company v. The Starr Piano Company.

      Sale of specific goods — Passing of title presumed without delivery —Presumption does not arise against creditors —Or innocent purchasers from vendor — Transaction not completed in four months — Contract may be rescinded.

    1. Between the parties to a sale of specific goods, especially where the price has been paid, a presumption arises that the title has passed, without a delivery of the goods.
    2. Such a presumption does not ordinarily arise as against creditors or innocent purchasers from the vendor; but as to such third parties there must be not only a formal delivery to the vendee claiming the goods, but there must be an actual and visible change of possession.
    3. Where a commercial transaction, which should ordinarily be completed promptly, is not completed within four months and neither party -has done anything within that time to complete the same, either party may treat the contract as rescinded.
    (No. 12829 —
    Decided December 12, 1911.)

      Error to the Circuit Court of Cuyahoga county.
    Facts stated in the opinion.

      Mr. H. W. Bell and Mr. Wm. Howell, for plaintiff in error.
    The delivery or tender by the seller of goods sold is a condition precedent to his right to sue for the price of the goods, or damages for its non-payment. Diem v. Koblitz, 49 Ohio St., 41; Elevator Co. v. Bank, 23 Ohio St., 311; Hodgson v. Barrett, 33 Ohio St., 63.
    A mere transfer of title to enable the transferee to sell and deal with the property for the benefit of the owner, confers no right as against the owner and those claiming under him. Deardorff v. Fullington, Dayt., 96; 12 Michie’s Ohio Digest, 56.
    Until it was shown that the offer of Miss English to buy the new piano was acted upon, and an indebtedness accrued in favor of The Starr Piano Company, there was no consideration whatever for her transfer of the Harvard piano, and she had a perfect right to treat it and deal with it, as if nothing whatever had been done. Pomeroy et al. v. Will, 5 Dec. Re., 34; Ammon v. Linnekin, 1 Iddings, 37; Edwards v. Glancy et al., 1 C. C., 453; Schaeffer v. Macqueen, 12 Dec. Re., 728; Pike v. Bank, 1 N. P., 205.
    The two parties met, they proposed terms of a bargain and sale, they then separated, and, so far as the record shows, ■ never did anything further in pursuance of that arrangement. That this conduct amounts to an abandonment is clear.

      For a case pointing out the distinction between a sale and a payment, see Brockway v. Jewell, 52 Ohio St., 187.

      Mr. Sterling Parks and Mr. W. H. McMorris, for defendant in error.
    If language can conclusively express intention, then no more decisive and unequivocal words could have been used by Blanche English than she employed in the written instrument, executed by her transferring ownership of her Harvard piano to The Starr Piano Company. She says: “I hereby transfer my full right of ownership of one Plarvard piano No. -, which I claim to be free from any incumbrance, to The Starr Piano Company,” etc.
    Delivery is not essential to pass title at common law, neither is it essential under the Ohio law. 1 Parsons on Contracts (9 ed.), 562; Chitty on Contracts (15 ed.), 405; 2 Mechem on Sales, Sec. 980; Parker v. Davis, 13 C. C., 631; Bissell v. Balcom, 39 N. Y., 279; Roland v. Gundy, 5 Ohio 202; Hooben v. Bidwell, 16 Ohio, 510.
   Davis, J.

The defendant in error entered into an agreement with one Blanche English for the sale and purchase of a piano. The memorandum of the agreement, which was signed by Miss English, did not state when or where the piano was to be delivered, nor when or how payment should be made, except “$.......... allowed for Harvard piano.” At the same time the purchaser gave to the defendant in error a paper transferring her full right to ownership of one Harvard piano, “with the understanding that said Harvard piano is to be sold by the said Starr Piano Company and full amount received by them to be placed to my credit as part payment on one Starr Piano, which I am this day ordering from said Starr Piano Company.” The agreement was entered into at Canton, Ohio, but the Harvard piano was at the house of a person in -Alliance, Ohio. There was some talk between the parties about a written order for delivery of the Harvard piano to the defendant in error, but in the language of the salesman of the defendant in error, “that part of the order was never completed. It was taken for granted that everything was satisfactory. She told me she would notify these people of the transaction and that we could get the piano when we liked.” The piano which was agreed to be sold by the defendant in error, was never delivered to the purchaser nor tendered to her, nor did the defendant ever take possession of the Harvard piano or sell it and credit the proceeds on the purchase money for the other piano. More than four months after the defendant in error and Miss English entered into this agreement, the plaintiff in error, without knowledge of the preceding facts, sold to her a piano and agreed to receive, and did thereupon take into its possession, the Harvard piano as part payment on the piano then sold to her. Within a short time thereafter the defendant in error brought suit against the plaintiff in error, before a justice of the peace, claiming to be the owner of and entitled to the possession of the Harvard piano and charging the plaintiff in error with unlawfully converting the same to its own use, and prayed for a judgment. On appeal the court of common pleas gave judgment for the defendant in error, and the circuit court affirmed the judgment of the court of common pleas.

The question here is, whether the transaction between the defendant in error and Blanche English was a completed sale, so as to invest the defendant in error with the title to the Harvard piano.

The words, “I hereby transfer my full right of ownership of one Harvard piano * * * to The Starr Piano Company,” would not be conclusive of the title in the defendant in error even if they were unqualified; because their effect must be determined by the intention of the parties as disclosed by a consideration of all the facts and circumstances of the transaction. But this language is distinctly narrowed by that which follows, that is: “with the understanding that said Harvard piano is to be sold by the said Starr Piano Company and full amount received by them to be placed to my credit as part payment on one Starr piano, which I am this day ordering from the said Starr Piano Company.” Two things clearly appear from this document when it is all read together; first, the Starr Piano Company was not invested with an absolute title to the Harvard piano, but with only a special interest for the purpose of sale and the credit of the proceeds as part payment on the purchase of a Starr piano; and, second, that the transfer. of the Plarvard piano was only an incident in the principal transaction which was the agreement for sale and purchase of a Starr piano. If in such an agreement there is no mention of the terms of payment, the presumption is that it is a cash sale and that delivery of the goods and the payment of the price are to be simultaneous. If, therefore, the Harvard piano, in this case, was in fact turned over to the defendant in error as part payment for the Starr piano, in expectation that the latter would be delivered; which was never done nor offered to be done, the title claimed and possession by the defendant in error would be null and void as obtained without consideration. That conclusion is a corollary to the propositions decided in Wabash Elevator Co. v. First Nat. Bank, 23 Ohio St., 311; Hodgson v. Barrett, 33 Ohio St., 63.

It may be conceded that as between the parties where there has been a sale of specific goods, and especially where the price has been paid, the title will pass without a delivery of the goods. This, ¡ however, is only a presumption and it does not¡ ordinarily obtain as against creditors and innocent-1 purchasers from the vendor. As to such third parties, it is the general holding that there must be not only a delivery to the vendee claiming the goods, but there must be an actual and visible!' change of possession. 35 Cyc., 304.

Tested by this rule the defendant in error has no standing in court. It is not claimed that the defendant in error ever had actual possession of the piano in dispute, nor that there was ever any actual or visible change of possession until the plaintiff in error took possession of the piano and removed it to their warerooms at Cleveland, nor does it appear that the plaintiff in error had any previous notice of the transactions upon which the defendant in error claims title.

We have already intimated that this could not be regarded as a completed sale passing the title to the Harvard piano so long as anything in the contemplation of the parties remained to be done to complete the sale. This was, in effect, the holding of this court in Bonham v. Hamilton, 66 Ohio St., 82; and see Benjamin on Sales as quoted in that opinion. The Harvard piano could not be regarded as part payment for a Starr piano which was never delivered nor tendered to the purchaser; and before the sale and purchase which was negotiated could be complete, the defendant in error must take possession of the Harvard piano and sell it and credit the proceeds as payment pro tanto for the Starr piano and the latter be delivered. This was clearly the intention of the parties. To hold otherwise would be to hold that the defendant in error could obtain a clear and lawful title to the property without any consideration passing.

Regarding the case from another point of view, it is equally obvious that the plaintiff in error must prevail. There was no time mentioned for performance. The law would so construe the contract that it should be performed in a reasonable time. (This was a commercial transaction which 'should ordinarily be completed with considerable promptness. When more than four months had elapsed and neither party had done anything to to complete the transaction Blanche English had the right to treat the contract as rescinded and to enter into the deal with the plaintiff in error. “Mutual delinquency gives rise to the presumption of mutual assent to a rescission. See Parsons, Contracts, 667 et seq., and 16 Ohio St., 454.” Per Brinkerhoff, J., in Mowry v. Kirk & Cheever, 19 Ohio St., 375, 383; Lewis v. White, 16 Ohio St., 444, 454.

The judgment of the circuit court and that of the court of common pleas are

Reversed and judgment for plaintiff in error.

Spear, C. J., Shauck, Price, Johnson and Donahue, JJ., concur.


author: Spear, C. J.

text:
    McHenry v. The Old Citizens National Bank of Zanesville.

      Payor gives check, covering loan, to payee — On false representations of latter — That he was one who owned certain land— On which he gives payee alleged security mortgage — Though in fact he was not the owner of said land — Payee identified at bank — As the one to whom payor gave check — Check cashed by bank — Payor cannot recover from bank — Where one of two innocent persons — Must suffer by fraud of third — He who created means of the wrong must be liable.

    1. The rule that where one of two innocent persons must suffer by the fraud of a third person, he who first trusted such third person, and placed in his hands the means which enabled him to commit the wrong, must bear the loss, applies to a case where one gives a bank check to a person to whom he has loaned money and taken to secure the same a mortgage on land represented by such person as owned by him and believed by the drawer of the check to be so owned, though in fact not owned by him, and the bank, relying upon the same means of identification of the payee of the check as was relied upon by the drawer, and with no reason to suspect the bona Mes of the transaction, pays the check to the identical person to whom the drawer intended to and did deliver it, although not to the person who in fact owned the land attempted to be mortgaged.
    2. One W. accompanied a stranger to the office of M., and introduced him as G. T., who wanted to procure a loan of money. M. had been acquainted with W. for some time, having had business transactions with him. The stranger asked to borrow three thousand dollars, and represented himself as the owner of a farm near Otsego, Ohio, on which he would give a mortgage to secure the loan. M., having examined the county records as to the title to the land, and having found it standing in the name given as that of the person so introduced, and clear of incumbrance, caused notes and a mortgage to be drawn, which being executed by the stranger under the name of G. T., were delivered to M. Thereupon M., without taking further means of identifying the stranger, or to learn whether he was in fact the person of that name who owned the land, delivered to him a check on a nearby bank where M. had deposits subject to check. The check was, the next day after its date, presented by the stranger, the one to whom it had been given by M., indorsed by that person and by W., to the bank and by it paid to such person, the bank having no ground of suspicion as to the bona Mes of the transaction, and relying upon the identification by W. The person who thus figured in the transaction as G. T., and received the money on the check, was not in fact the owner of the land, but ar. impostor.
    Held: That, although M. was mistaken and deceived in the transaction, yet inasmuch as the person he dealt with was the person intended by him as the payee of the check and the identical person to whom the bank paid it, he cannot recover his loss from the bank.
    (No. 12141 —
    Decided December 12, 1911.)
    Error to the Circuit Court of Muskingum county.

      A suit was commenced December 24, 1907, in the court of common pleas of Muskingum, by James McHenry, (plaintiff in error), against The Old Citizens National Bank, (defendant in error), based upon the claim of an alleged wrongful payment of a check drawn by the plaintiff, on November 2, 1904, on the defendant Bank, to the order of one George Thresh, for the sum of two thousand, eight hundred and fifty dollars. Issues having been made by answer and reply, the cause was tried to a jury. At the conclusion of the introduction of the evidence the defendant moved the court to instruct the jury to return a verdict for the defendant, and the plaintiff moved the court to instruct the jury to return a verdict for the plaintiff. Thereupon the court overruled the plaintiff’s motion and sustained that of the defendant. A verdict was thereupon rendered for defendant, and judgment entered thereon. This judgment was affirmed by the circuit court, and the plaintiff now asks a reversal of both judgments, and a final judgment in his favor. Facts are stated in the opinion.

      ’Mr. John J. Adams and Messrs. McHenry & Ribble, for plaintiff in error.
    We claim the law to be that a bank is bound by a severe rule in paying the check of a depositor. It must follow his order with the utmost strictness. 2 Bolles Modern Law of Banking, 712; Telegraph Co. v. Bank, 17 Colo. App., 229, 68 Pac. Rep., 115; Harmon, Recr., v. Bank, 153 Mich., 73, 116 N. W. Rep., 617, 17 L. R. A., N. S., 514; Beattie v. Bank, 174 Ill., 571, 43 L. R. A., 654, 66 Am. St. Rep., 318, 51 N. E. Rep., 602; Tolman v. Bank, 22 R. I., 462, 52 L. R. A., 877, 84 Am. St. Rep., 850, 48 Atl. Rep., 480.
    But we claim that this matter has been decided by our own supreme court in the cases of Dodge v. Bank, 20 Ohio St., 234; Dodge v. Bank, 30 Ohio St., 1; Armstrong v. Bank, 46 Ohio St., 512.

      Mr. C. T. Marshall and Mr. F. A. Durban, for defendant in error.
    The party who had dealings with McHenry would undoubtedly be guilty of obtaining property by false pretenses in representing to him that he owned land in the vicinity of Otsego, but having once procured McPIenry’s check by such means, no forgery would be committed by endorsing the check received in this manner. Forbes & King v. Espy, Heidelbach & Co., 21 Ohio St., 474; Bank v. Bank, 56 Neb., 149, 76 N. W. Rep., 430; Land Title & Trust Co. v. Bank, 196 Pa. St., 230, 50 L. R. A., 75; Maloney v. Clark & Co., 6 Kans., 82; Meyer v. Bank, 27 Ind. App., 354, 61 N. E. Rep., 596; Robertson v. Coleman, 141 Mass., 231, 4 N. E. Rep., 619; Smith v. Bank, 6 La. An., 610; Metzger v. Bank, 119 Ind., 359, 21 N. E. Rep., 973; Bank v. Bank, 7 Ind. App., 322, 52 Am. St. Rep., 450; States v. Bank, 17 Pa. Supr. Ct., 256; Samuel v. Cheney, 135 Mass., 278, 46 Am. Rep., 467; Edmunds v. Transportation Co., 135 Mass., 283; United States v. Bank, 45 Fed. Rep., 163.
    Many of these cases go much farther than this, however, and hold that even when the drawer did not meet his impostor face to face, but the fraud was practiced by mail, the drawer must nevertheless bear the loss. States v. Bank, 17 Pa. Supr. Ct., 256; Samuel v. Cheney, 135 Mass., 278; Metzger v. Bank, 119 Ind., 359; Maloney v. Clark & Co., 6 Kans., 82; Bank v. Shotwell, 35 Kans., 360.
   Spear, C. J.

The motion of each party for an instructed verdict necessarily involved a concession that, as the case then stood, there remained but a question of law to be determined by the court upon a consideration of the controlling facts shown by the record, with the legitimate inferences to be drawn therefrom, and the application thereto of the proper rules of law. As this court does not weigh the evidence the question here is whether or not, upon any rational view of the case, the judgment is supported by evidence. But two witnesses were called, the plaintiff himself and one George Thresh, who gave his name as George Thresh, Sr., and his residence as near Otsego which is in Muskingum county. It is shown that the plaintiff was, November 2, 1904, a practicing lawyer in Muskingum county, having an office in the city of Zanesville. In the forenoon of that day there came to the plaintiff’s office two men, one was J. B. Wilson, and the other a stranger to plaintiff, but introduced by Wilson as George Thresh. These men made it known that the stranger wished to borrow, on note and mortgage, the sum of three thousand dollars. It was represented to plaintiff that the stranger was the owner of a farm of some three hundred acres near Otsego, .and would place a-mortgage on that property to secure the loan. The loan desired was to be for five years at six per cent, interest, payable annually, but the plaintiff explained to the two men that the money, though in his name in bank, was not actually his but belonged to a client, and the loan would have to be at the rate of seven per centum in fact though appearing to be at six per centum on the face of the papers, the discount of the one per cent, to be taken out in advance, and that was assented to. The county map was consulted and the borrower pointed out the land where it is marked in the name of George Thresh. The two men then left the office and the plaintiff went to the court house to examine the records respecting the title to the land, and then made such examination. He found the title in the name of George Thresh and free of incumbrances. In the afternoon the two men again appeared at the office, the borrower coming first and Wilson a little later, but before the papers were executed. Notes for three thousand dollars in the aggregate, and a mortgage on the Otsego land to secure them, were then drawn and duly executed by the stranger, represented as an unmarried man, and delivered by him to the plaintiff. Thereupon the plaintiff gave the stranger a check for the amount he was to receive, a copy of which check, as it now appears, follows:

“Zanesville, Ohio, November 2, 1904. “The Old Citizens National Bank, United States Depositary.

“Pay to the order of George Thresh $2,850 (twenty-eight hundred fifty dollars).

“J. M. McHenry, Attorney.”

Stamped on face: “Paid November 3, 1904. The Old Citizens National Bank, Zanesville, Ohio.”

Endorsed on back: “George Thresh, J. B. Wilson.”

The check given the borrower was in fact paid by the Bank November 3, 1904.

During the entire transaction of November 2, 1904, including the act of delivering the check to the stranger, plaintiff believed he was the George Thresh living at Otsego and the owner of the farm, relying entirely on the introduction by Wilson, and taking no other means of ascertaining the stranger’s identity. Plaintiff had known Wilson for some time, and had had business transactions with him.

As matter of fact the stranger was not George Thresh, of Otsego; that George Thresh, as has already been indicated, was known as George Thresh, Sr., and so wrote his name, He was not at the office of plaintiff, or at the Bank, nor did he have any agency in the transaction at the time, or knowledge of it until several years later. In short the stranger perpetrated a swindle, and got the money by falsely representing himself to be another person, and to be the owner of the farm.

The plaintiff testified that when he gave the man the check he believed him to be George Thresh, the owner of the real estate; that he expected him to go to the Bank and be identified as George Thresh, and get the money, adding that he “expected the Bank to do what he considered their duty, to pay the man named in the check, George Thresh, $2,850; whether that was the man or not, I didn’t pay any attention to it.” And again, to a question whether there was any doubt in his mind that the man would go right to the Bank with the check, answered: “I didn’t think anything about that.” And, to a further question as to his intention, answered: “I intended to give him the check and he could do with the check as he pleased.”

It is sought to charge the Bank with having paid the check as on a forged indorsement, and in this connection it is averred “that said unknown person to whom said check was delivered was not the said George Thresh whom the plaintiff then and there believed him to be.” But there is no evidence in support of the charge in the petition that the name George Thresh on the back of the check was forged, and, for all that appears, that man’s name may have been George Thresh. Reduced to its last analysis the situation is that the Bank paid the money which the check called for to the identical person whom the plaintiff expected would receive the money on it, though not to the George Thresh to whom the plaintiff supposed he was giving the check. The plaintiff’s ground of right to recover is based, not upon a charge that the Bank failed to pay to one named George Thresh, but because it didn’t pay to a particular George Thresh who was the owner of the land. .True, the plaintiff testified that he expected the man to go to the Bank and be identified as George Thresh and get the money. But, this can hardly mean that he expected the holder of the check to be identified at the Bank as the owner, of the farm on which the mortgage: had been attempted..'to. be placed' in face of the fact that the Bank was a total stranger to the transaction of the loan and mortgage, and knew nothing whatever about the land. Surely such a supposition would be so manifestly absurd as not to justify serious consideration.

The fact of the payment of the check to the wrong man did not come to the knowledge of the plaintiff for three years after the date of the check. He then tendered to the Bank the check and demanded payment of the amount, which was refused.

No direct evidence was given respecting the transaction of payment, but the petition avers that the check was presented to the Bank by the unknown person and the money paid by the Bank to him, and the legitimate inference to be drawn from the indorsements on the check is that Wilson identified the man holding the check as George Thresh since the legal effect of a second indorser’s contract is to guarantee the genuineness of the earlier indorsement. The Bank, therefore, is presumed, under the well known methods of business, to have relied upon such identification, and, in so doing was at least fully as vigilant as was the drawer of the check who relied upon precisely the same source of identification.

It is averred and not denied that the Bank did not ask the plaintiff if the bearer was the rightful payee of the check, but this fact loses importance in the light of the testimony, for had such inquiry been made, the answer, consonant with the declarations of the plaintiff on the witness stand, would 'have undoubtedly been in the affirmative. It is. inconceivable that the plaintiff would then have questioned the right of the bearer of the check to receive payment of it.

The kernel of the whole trouble lay in the false representation of the stranger that he was the owner of the farm, and the ready acceptance by the plaintiff of the truth of that representation. All other incidents connected with the loan center about those two facts, and with neither of those facts did the Bank have the slightest connection. The inference seems irresistible that if the Bank was guilty of any negligence whatever in paying the check the plaintiff was guilty of greater negligence in issuing it, and thus giving a stranger opportunity to perpetrate a fraud on an innocent drawee.

The discussion by the learned counsel has taken a wide range. We do not, however, consider that it is necessary for us to take space with extended discussion or citation of authorities respecting the question of the general duty and liabilities of banks in dealing with the checks of their depositors. The question simply is whether, under the circumstances shown by the record in this case, the drawer of the check ought to prevail as against the Bank. Ought the Bank to be held liable as for a negligent payment on a forged indorsement? We think not, and the refusal may be placed upon two grounds. One that, there being no proof that the name of the person who received payment of the check was not George Thresh, there is no evidence of a forgery in any legal sense; and another, that under the well established rule (Selser v. Brock, 3 Ohio St., 302; Ogden v. Ogden, 4 Ohio St., 182; Bigelow v. Comegys, 5 Ohio St., 256; Resor v. O. & M. Rd. Co., 17 Ohio St., 139; Ramsey v. Jones, 41 Ohio St., 685), that where one of two innocent persons must suffer loss by the fraud or misconduct of a third person, he who first reposes the confidence and commits the first oversight, must bear the loss, the plaintiff is estopped by his own lack of caution to now demand payment of the amount of the check by the Bank. The principle is of wide application, and is illustrated in many cases relating to the illegal possession of personal property by a wrong-doer fraudulently personating the real owner, and thus clothing himself with indicia of ownership. A number of these cases are referred to by counsel for defendant in error and will be found cited in the Reporter’s notes.

It is important to note that the case at bar is to be distinguished from many in the books where the bank was sued by the payee of a check wrongfully paid to one personating the payee and forging his signature. Of such cases is that of Dodge v. Bank, 20 Ohio St., 234, and 30 Ohio St., 1. It is to be noted also that a clause of the opinion in the last cited report indicates that had the defendant shown that the person to whom the check was delivered by the drawer was in fact the person whom the drawer intended to designate as Frederick B. Dodge, a different question would have been presented, and it is a fair inference, considering the entire report of the case, that if the suit had been brought by the drawer instead of the payee, the opinion of the court upon the question of liability might have been different. Nor do we think that the case of Armstrong v. Bank, 46 Ohio St., 512, much relied upon by plaintiffs counsel, sustains their contention. The facts were essentially different, there being no negligence shown on the part of the drawer of the check.

We find no error in the judgment of the circuit court affirming that of the common pleas, and the same will be

Affirmed.

Davis, Shauck, Price and Johnson, JJ., concur. Donahue, J., not participating.