author: Williams, J.

text:
    The Northwestern Ohio Natural Gas Company v. The City of Tiffin, et al.

      Leases of natural gas and oil lands to be recorded — Rights of subsequent purchasers with notice prevail against unrecorded lease, when — Section 4-lllia Revised Statutes — Law of contracts.
    1. A lease or license to operate upon land for natural gas or petroleum, until filed for record as required by section 4112a, of the Revised Statutes, is without any effect, either at law or in equity, as against a subsequent lessee, or licensee, or other third person acquiring an interest in or lien on the land, although he took with notice of such prior unrecorded lease or license, unless the person claiming thereunder was, at the time, in the actual possession of the land.
    2. Such a lease or license granted for a specified term of years, and as much longer as oil or gas is produced or found in paying quantities on the land, expires at the end of the specified term, unless within that time oil or gas is obtained from the land in the designated quantities,
    3. Where it is sought to establish an implied contract from extraneous facts and circumstances and have a reformation of a written instrument in conformity therewith, such relief, if attainable in any case, shou] d only follow clear and convincing proof that the party against whom it is sought had full knowledge of all the material facts from which it is claimed the implied contract arose.
    (Decided January 17, 1899.)
    Error to the Circuit Court of Hancock county.
    On the fourteenth day of October, 1895, The Northwestern Ohio Natural Gas Company brought suit in the court of common pleas of Hancock county, against the City of Tiffin, its Gas Trustees, and Alvin Shoup, to enjoin the city and its officers from entering upon, and removing natural gas from, certain premises on which the plaintiff-claims it had a prior lease; and to have a correction made in the description contained in the lease The petition avers that:

      “The plaintiff is and has been during all of the times hereinafter mentioned a corporation, organized and existing under the laws of the state of Ohio, for the purpose of leasing and owning gas territory, drilling for oil and gas and transporting and selling the same. That the defendant, the City of Tiffin, is a municipal corporation, organized under the laws of the state of Ohio, and is and was during the times hereinafter stated, a city of the fourth grade and second class. That the defendants, Robert V. Clark, Amos Greenleaf and Thomas F. Whalen are the duly appointed, qualified and acting trustees of the Natural Gas Department of . said city of Tiffin. The plaintiff further says that on or about the tenth day of June, 1886, one John A. Taylor, who was then the owner and in possession of the premises hereinafter described, executed and delivered to one William Duke, Jr., his certain written instrument duly signed, witnessed and acknowledged, by which the said Taylor granted and demised unto the said William Duke, Jr., his heirs or assigns, for the purpose and the exclusive right of drilling and operating for petroleum and gas all that certain tract of land situated in Cass township, Hancock county and state of Ohio, described as follows, to-wit: The south half [■£•] of the west one-half [i] of the southwest quarter [J] of section number two [2] and three-fourths [¶] of the north half [i] of the southeast quarter [£] of section number three in said Cass township, containing one hundred [100] acres, together with the right of using sufficient water therefrom necessary to the operation thereof, the right of way over said premises, the right to lay pipes to convey oil or gas and the ris'ht to remove any machinery or fixtures placed on said premises by said Duke or his assigns. Under the terms of said agreement said right was to continue for and during the term of five years from said date or as much longer as oil or gas should be produced or found in paying- quantities thereon. In consideration of said grant and demise the said Duke agreed to give or pay to the party of the first part the full one-eighth [!] part of all petroleum produced or found on said premises, and should gas be found in sufficient quantities to justify said Duke or his assigns in marketing- the same, the consideration in full to the said Taylor, instead of the petroleum royalty, should be one hundred dollars ($100.0(J) per annum for the gas from each well so long as it should be sold therefrom. It was further agreed therein that the said Duke should comlete a well on the above described premises within nine months from the date thereof, and in case of failure to complete such well within such time, the said Duke or his assigns agreed to pay to the said Taylor for such delay a yearly rental of fifty cents per acre on said premises from the time of completing such well as above specified until such well should be completed. The plaintiff further says that by a mutual mistake of said Taylor and said Duke and through the mistake of the scrivener who wrote said instrument, the last described tract above mentioned was described therein as three-quarters [¶] of the north half [-¡-] of the northeast quarter [i], instead of the southeast quarter [ij, which latter is the correct description of the only property in said section three then owned by said Taylor, and was the property intended to be named by the parties in said instrument. Said instrument was duly entered for record with the recorder of said county at 9:30 A. M., April 27, 1887, and recorded in voi. 5, page 389 of the records of leases of said county.
    The plaintiff further says that on or about the —— day of----, 188 — , the said William Duke duly sold, transferred and assigned to this plaintiff all of the right, title and interest of said Duke in and to said instrument of writing and the rights and privileges conveyed thereby, which said assignment was in writing and has been duly entered for record upon the records of leases of said county.
    The plaintiff further says that on the fifteenth day of May, 1891, the said John A. Taylor, by an agreement in writing, on said date entered into with this plaintiff and in consideration of the sum of one hundred and fifty dollars ($150) then paid by plaintiff to said John A. Taylor, agreed and consented to the extension of all the terms and conditions of the lease aforesaid for a period of two years from June 10, 1891, or until June 10, 1893, and that on the fifth day of April, 1893, the said John A. Taylor, being still the owner of said premises, by an instrument in writing, entered into with this plaintiff, and in consideration of the sum of one hundred and fifty dollars ($150) then paid by this plaintiff to said Taylor, and the further agreement to pay one hundred and fifty dollars ($150) each year in advance, agreed to extend and did extend the terms and conditions of said lease from June 10, 1893, to June 10, 1894, and from year to year thereafter so long as said one hundred and fifty dollars ($150) should be paid, until a well should be drilled, and the further agreement to pay the sum of one hundred and fifty dollars ($150) for each gas well which might be found on said premises and from which gas should be sold, instead of the sum of one hundred dollars ($100) as provided in said original lease. A copy of said original lease and of the two subsequent agreements herein referred to are hereby attached and made part hereof, marked exhibits “A,” “B” and “C.” The plaintiff says that said plaintiff and its said assignor, William Duke, have duly kept and performed all of the conditions of said contracts or either of them on the part of said Duke or this plaintiff to be performed. The plaintiff further says that on the-day of —, and prior to the twenty-fourth day of May, 1894, the defendants, John J. Ullery and Alvin Shoup, became the owners, as plaintiff is informed and believes, of the premises herein described, having full knowledge of the rig-hts of this plaintiff in said premises and of the error which had been made by the scrivener in the writing of the original lease, and that on the twenty-fourth day of May, 1894, this plaintiff paid to said defendants, Ullery and Shoup, the sum of one hundred and fifty dollars ($150) as in full for the rental on said lease from June 10, 1894, to June 10, 1895, and on both of the pieces of property therein described, which said sum was accepted by said defendants, Shoup and Ullery, and their joint receipt therefor was made to this plaintiff. Plaintiff further says that on or about the twenty-fourth day of May, 1895, the plaintiff completed and drilled in a gas well on said premises which produced gas in paying quantities, and that on the seventeenth day of June, 1895, the said well was connected with the general line of said plaintiff, and thereafter said gas was and still is marketed from said well. The plaintiff further says that on the fifteenth day of July, 1895, this plaintiff tendered to said defendants, Shoup and Ullery, the sum of one hundred and fifty dollars ($150) in lawful money of the United States as payment for the well rental so as aforesaid drilled by plaintiff on said premises, but the same was then refused by said defendants. The plaintiff further says that this plaintiff was prior to the attempted entry of any of the defendants herein, and is now in the actual possession of the premises as hereinbefore described, and being the premises actually intended to be conveyed by said original instrument of lease, and that all of the defendants herein have for a long time known of the interest so held by this plaintiff m said premises, and did so know all of the facts herein alleged long prior to the time when they attempted to acquire any interest or rights therein. The plaintiff further says that the defendant, The City of Tiffin, together with the defendants, the Trustees of the Natural Gas Department of the said City of Tiffin, and the defendant Henry O’Brien, have entered upon said premises wrongfully and unlawfully, and have commenced to drill for natural gas on said premises, and unless restrained by order of this court will drill for, produce and carry away the natural gas on said premises owned by said plaintiff, to the great and irreparable injury of this plaintiff in the premises, and that plaintiff is without remedy at law in the premises. Wherefore plaintiff prays that said original instrument of lease may be reformed and corrected and made to conform to the actual intention of the parties executing' the same by correcting the description therein; that the defendants, The City of Tiffin, Robert V. Clark, Amos Green-leaf and Thomas F. Whalen, as trustees of the Natural Gas Department of said city, and Henry O’Brien, together with the agents' and*servants of each of them, may each and all be restrained by the order of this court from entering upon said premises, either individually or by their servants or agents, and from drilling- for, producing or carryingaway natural gas on said premises, or in any manner trespassing upon or interfering with the rights of said plaintiff as aforesaid, and that upon final hearing of this cause that such restraining- order be made perpetual, and for all proper relief.”
    The case is fully presented by the findings of fact made by the circuit court, where the cause was tried on appeal, upon the issues joined between the parties. Those findings, and the conclusions of that court on the law of the case, are as follows:
    ‘‘First — The plaintiff is a corporation duly organized and existing under the laws of the state of Ohio for the purpose of leasing- and owning gas territory, drilling for oil and gas, and transporting the same.
    Second — The City of Tiffin . is a municipal corporation and is and was a city of the fourth grade of the second class, and the defendants, Clark, Greenleaf and Whalen, are the duly appointed, qualified and acting trustees of the Natural Gas Department of said City of Tiffin.
    Third — That on or about the tenth day of June, 1886, one John A. Taylor, being then the owner of the property and which was all the property that said Taylor owned in said sections 2 and 3, executed and delivered the lease alleged in the petition, a true copy of which is attached to the petition. Said lease was entered for record with the recorder of Hancock county on the twenty-seventh day of April, 1887, at 9:30 A. M., arid duly recorded in lease record, volume 5, page 389 of said county.

      Said lease is in the words and figures following: This agreement made and entered into this tenth day of June, A. D. 1886, by and between John A. Taylor, of Cass township, of the county of Hancock and state of Ohio, of the first part, and William Duke, Jr., of Wells ville, New York, of the second part, witnesseth: That the said party of the first part, for the consideration of the covenants and agreements hereinafter mentioned has granted, demised and let unto the party of the second part, his heirs and assigns, for the purpose and the exclusive right of drilling and operating for petroleum and gas, all that certain tract of land situated in Cass township, Hancock county and state of Ohio, bounded and described as follows, to-wit: The south half of the west half of the southwest quarter, section No. 2, and [¶] three-fourths of the north half of the northeast quarter, section No. three [3], Cass township, Hancock county, Ohio, containing one hundred acres, be the same more or less, together with the right of using sufiicient water therefrom necessary to the operation thereof, excepting- from wells now located, except by consent of first party, the right of way over said premises, the right to lay pipes to convey oil or gas, and the right to remove any machinery or fixtures placed on said premises by the party of the second part. The party of the second part, his heirs or assigns, to have and to hold the said premises for and during the term of five years from the date hereof and as much longer as oil and gas is produced or found in paying quantities thereon. In consideration of said grant and demise, the said party of the second part agrees to give or pay to said party of the first part, the full equal one-eighth part of all the petroleum produced or found on the said premises, and deliver the same, free of expense,into tanks or pipe lines to the credit of the first party and should gas be found in sufficient quantities to justify the party of the second part in marketing the same, the consideration in full to the party of the first part instead of the petroleum royalty shall be one hundred dollars per annum for the gas from each well so long as it shall be sold' therefrom. It is further agreed that the party of the second part shall complete a well on the above described premises within nine months from the date hereof, and in case of failure to complete such well within such time the said party of the second part agrees to pay to the said party of the first part for such delay a yearly rental of fifty cents per acre on the premises herein leased from the time of completing such well as above specified until such well shall be completed. The said yearly rental, amounting to fifty dollars, shall be deposited to the credit of the party of the first part in the First National Bank of Findlay, Ohio, or be paid direct to the said party. And a failure to complete such well, or to make such deposit or payment • as above mentioned shall render this lease null and void and to remain without effect between the parties hereto. Above named payment to be made by the first day of March in each year. The party of the second part to furnish all the gas necessary for domestic use, including not to exceed five hundred feet of one inch pipe to convey the gas from the well to the dwelling, free of charge. It is understood between the parties to this agreement that all conditions between the parties hereto shall extend to their heirs, executors and assigns. In witness whereof, we the said parties of the first and second parts hereunto set our hands and seals the day and year first above written.
    John A. Taylor, [Seal.]
    Sophia A. Taylor, [Seal.]
    ¥m. Duke, Jr. [Seal.]
    Witness: I. L. Andress, W. S. Richard.
    State of Ohio, county of Wood, ss.:
    Be it remembered, that on this fifteenth day of January, A. D. 1887, before me, the subscriber, a notary public in and for said county, personally came John A. Taylor and Sophia Taylor, his wife, and acknowledged the signing of the foregoing instrument to be their act and deed for the uses and purposes therein expressed, and the said Sophia A. Taylor wife of the said John A. Taylor, being examined by me separate and apart from her said husband, and the contents of sáid instrument being by me made known and explained to her as the statute directs, did declare that she did voluntarily sign and acknowledge the same, and that she is still satisfied therewith as her act and deed.
    In witness whereof, I have hereunto set my hand and affixed by official seal.
    [Seal.] W. S. Richard,
    , Notary Public.
    State of Ohio, county of Hancock, ss.:
    On this twentieth day of January, A. D. 1887, before me, a notary public in and for said county, personally appeared said #W. Duke, Jr., above named, and acknowledged that he did sign and seal the foregoing-instrument, and that the same is his free act and deed for the use anti purposes therein named.
    [Seal.] J ames A. Bope,
    Notary Public.

      Fourth — That by a mutual mistake of the parties thereto the second tract described in said lease was erroneously described as three-quarters of the north half of the northeast quarter of section three [3] instead of being described by its correct description as three-quarters of the north half of the southeast quarter of said section three [3] and being the same lands thereafter conveyed by said Taylor to defendant Shoupe, and defendant, Shoupe, had no notice, knowledge or information of said mistake.
    Fifth — That after the execution of said lease the same was duty transferred to, and now is and was at the beginning of this action, and for several years prior thereto had been the property of the plaintiff herein.
    Sixth — That on May 15, 1891, said John A. Taylor, at the request of plaintiff, made and delivered to it the certain paper writing referred to in the petition, of which the following is a copy:
    May 15, 1891.
    In consideration of the sum of one hundred and fifty dollars to me paid by the Northwestern Ohio Natural Gas Company, and the further agreement to pay me the same sum on or before June 10, 1892, I consent to the extension of all the terms and conditions of the within lease for two years from June 10, 1891, or until June 10, 1893.
    . John A. Taylor.
    Witness: L. C. Beatty.
    This paper writing was made on the back of the original lease, but was never filed for record or recorded in the lease records of said county or elsewhere and defendant Shoupe had no actual notice, knowledge or information thereof.

      Seventh--That on April 5, 1893, said Taylor still being the owner of said premises, at the request of plaintiff signed and delivered to it a certain other paper writing of which the following is a copy:
    In consideration of the sum of one hundred and fifty dollars to me in hand paid by the Northwestern' Ohio- Natural Gas Company, and the further agreement to pay one hundred and fifty dollars each year in advance, I do agree to extend the terms and conditions of this within lease from June 10, 1893, to June 10, 1894, and from year to year so long as the one hundred and fifty dollars shall be paid and when well is drilled to draw one hundred and fifty dollars.
    April 5, 1893. John A. Taylor.
    Witness, J. C. Noble.
    Said paper writing was made on the original lease but was never filed for record or recorded in the record of leases of, said Hancock county, or elsewhere, and defendant Shoupe had no actual knowledge, notice or information thereof.
    Eighth — That about April 5, 1893, the date of the last named paper writing, plaintiff paid said Taylor one hundred and fifty dollars, the rental for the ensuing year to June 10, 1894.
    Ninth — That prior to May 24, 1894, and on or about the thirty-first day of March, 1894, said John A. Taylor conveyed the first tract of forty acres described in said lease to the defendant John J. Ullery, and conveyed the second tract of sixty acres intended by the parties to be described in said lease to the defendant Alvin Shoupe. That during the negotiations between said Taylor and said Alvin Shoupe for the purchase of said sixty acres said Taylor informed said Alvin Shoupe that there was a lease upon said lands, and that the same would expire in about one year from the time of the making of said deed; that in the warranty clause of said deed from said Taylor to said Shoupe is written the following words: “Except against gas lease held by the Northwestern Ohio Natural Gas Company, including the pipe line right-of-way.”
    That the consideration for said conveyance from Taylor to Shoupe was the sum of forty-two hundred dollars; that said deed was duly entered for record on the twenty-first day of June, 1895.
    Tenth — That on the twenty-fourth day of May, 1894, the plaintiff, The Northwestern Ohio Natural Gas Company paid to the defendants, Alvin Shoupe and J. J. Ullery, the sum of one hundred and fifty dollars in full for rental on the lease described in the petition from June 10, 1894, to June 10, 1895, a copy of the receipt made and delivered thereof is as follows:
    v 3-6-93-1000. . Voucher No. 2.
    John A. Taylor. May 24, 1894.
    Received of the Northwestern Ohio Natural Gas Co. one hundred and fifty dollars, in full for rental on lease No. 194 from June 10-94 to June 10-95, 100 acres, situate in south i of west i of southwest i section 2 and i of northeast í sections 2-3, Hancock county, Cass township, Ohio.
    $150.00 A. L. Shoupe.
    J. J. .Ullery.
    Defendant Shoupe received and accepted said payment under the impression and belief that the lease still existed but would expire in one year, or about March, 1895.
    Eleventh — That on or about May 24, 1895, and prior to June 10,1895, plaintiff completed the drilling of the well upon the forty acres so sold and conveyed hy Taylor to said Ullery, and being part of the premises described in the petition, but without the knowledge, consent or procurement of defendant, Shoupe; that said well produced gas in paying quantities, and was connected with the distributing line of the plaintiff on June 17, 1895, and thereafter the gas therefrom was and still is connected from said well.
    Twelfth- — That on or about the fourteenth day of February, 1896, as shown by the journal of the court of common pleas of Hancock county, Ohio, at the trial of this cause in said court the plaintiff tendered in open c'ourt to said J. J. Ullery and Alvin Shoupe the sum of $150, the gas rental due on said gas well drilled on the hundred acres described in said lease for the year beginning June 10, 1895, and ending June 10, 1896.
    Thirteenth — That at the trial of this case in this court on June 4, 1896, said plaintiff tendered in open court to said J. J. Ullery and said Alvin Shoupe the sum of $150 as gas rental for said gas well drilled on said hundred acres described in said lease for the year beginning June 10, 1896, and ending June 10, 1897.
    Fourteenth — At and long before the time said Shoupe purchased said sixty [60] acres from Taylor, plaintiff had constructed and was maintaining over and across said sixty acres a pipe line for the transportation and distribution of gas from lands and leases other than the said 60 acres of the defendants and had no connection with defendant’s land for the purpose of transporting gas therefrom.
    Fifteenth- — That when said gas well was drilled on said 40 acres so sold to Ullery, being part of the premises described in the petition, plaintiff connected said well with the main distributing line running across the lands of Shoupe.
    Sixteenth- — That long before the sale of Taylor to Shoupe, plaintiff had connected the residence of said Taylor upon said 60 acres with its said gas line and said Taylor used the gas therefrom in his residence; when said Shoupe purchased and entered into possession of said 60 acres he found the dwelling connected with the main line and continued to use said gas without objection and plaintiff never disconnected said line from the house or demanded payment for the use of such gas.
    Seventeenth — The defendant Shoupe in March, 1894, when he purchased the said 60 acres of Taylor, entered into full, sole, exclusive and adverse possession, occupancy and ownership of said lands and thence hitherto has been and now is m such full, sole and exclusive and adverse possession, occupancy and ownership. When Shoupe so purchased, plaintiff was not in possession of said land, or any part of the same, and never had taken or entered upon any possession, occupancy of said sixty acres, or any part thereof, and had never attempted or offered to drill any well, or taken any steps in that behalf, and Shoupe had no notice, knowledge or information of any right or claim, made by plaintiff, except the information conveyed by Taylor that their lease would expire in one year. That the lands adjoining said sixty acres have been and now are operated for gas and large quantities are taken therefrom. That plaintiff has failed, neglected and refused to enter upon or drill any well or wells upon said sixty acres. That about April, 1895, and after the expiration of the lease,
    ted by Taylor to Shoupe when he so purchased said sixty acres, that said lease would expire, defendant Shoupe executed to the city of Tiffin a gas and oil lease and contract for and upon said lands, granting to the city of Tiffin the sole and exclusive right to enter upon and drill for and develope gas or oil, and in pursuance thereof the said city of Tiffin did in fact enter upon said land and commence the construction of the necessary derricks and machinery and commenced to drill upon said lands until enjoined by the plaintiff in this proceeding, and that the city of Tiffin unless restrained by the order of the court will proceed and drill all wells necessary for the full development of said lands and procuring of the gas thereunder and the transportation thereof to the city of Tiffin for public and private use and consumption.
    Upon consideration whereof and being fully advised in the premises, and from the facts so found, the court as its conclusion of law find that the equity of this case is with the said defendants and against the said plaintiff; that defendant, Shoupe, purchased and paid for said lands in good faith without notice or knowledge of any mistake in the description of said lands, and without any notice, knowledge or information of any extension of said original lease, and that there was no lease thereon other than as stated by said Taylor, and that plaintiff was not entitled to a reformation of said lease as against said Shoupe.”
    The circuit court thereupon dismissed the plaintiff’s petition, and rendered judgment in favor of the defendants for costs; and to reverse that judgment error is prosecuted in this court.

      Doyle & Leiois and Burlcet <& Bwket, for plaintiff in error.

      W e claim that Shoupe had actual knowledge of a subsisting lease to the company, that this and other knowledge came to him through Taylor and imposed on him tbe duty to inquire, which, had he done, he could readily have obtained full knowledge of the company’s rights, and that he is therefore charged with notice of everything claimed by the plaintiff in error. 16 Am.- and Eng. Ency. of Law, pp. 789-795; and 2 Devlin on Deeds, section 727.
    One who has a knowledge of facts which would lead a fair and prudent man, using ordinary caution, to make further inquiry, is charged with notice of the facts which such inquiry would have disclosed. Actual notice may be inferred from circumstances. Knapp v. Bailey, 79 Me., 195; Drey v. Doyle, 99 Mo., 459; Gibson v. Winslow, 46 Pa. St., 380; s. c. 84 Am. Dec., 552, 555, and note 556.
    This has long been the rule in Ohio. Reeder v. Barr, 4 Ohio, 446; Bonner v. Ware, 10 Ohio, 465.
    Bringing the principle “closer home,” we call the court’s attention to the following cases, in all of which it was held that a grantee was charged with notice of the instruments excepted in the deed. W e have been unable to find any cases where the contrary was held. Morrison v. Morrison, 38 Iowa, 73; Ross v. Worthington, 11 Minn., 323; Buchanan v. Balkum, 60 N. H., 406; White v. Kibby, 42 Ill., 510; Brown v. Eastman, 16 N. H., 588; Kerr v. Kitchen, 17 Pa. St., 433; Building Ass'n v. Parsons, 17 Atlantic Rep., 834; Baker v. Mather, 25 Mich., 51.
    Here there has been no failure to comply with the statute.- The lease and transfer being of record, we say the principle contended for must be applied, and Shoupe held charged with notice of the existence of the lease, together with its terms and conditions.
    The city of Tiffin, applying the same principle, had constructive notice of whatever lease the company had. 16 Am. and Eng. Ency. of Law, 792, and cases cited; Doren v. Robinson, 16 N. J. Eq., 256.

      ELmry P. Black, city solicitor, for city of Tiffin, defendant in error.

      J. A. c& E. V. Bope, for Shoupe, defendant in error.
    It is very clear that plaintiff in error founds its entire hope of success in securing’ a reversal of the judgment of the circuit court upon the assumption that the common law as to notice, unmodified by statute or the interpretations of such statutes by the Supreme Court, prevails undisturbed in Ohio. But does it? Manifestly the legislature of this state may modify the common law by means of the enactment of statutes that are in conformity to the constitution of the state. No one will dispute this proposition.
    The statute, or at least one of the statutes that control this case, is section 4134 of the Revised Statutes of Ohio. Section 4112<* of the Revised Statutes also bears strongly on this case.
    No one can doubt that Shoupe, under the definition of our Supreme Court of the term purchaser as used in section 4134, is a purchaser of the sixty acre tract, and a bona fide purchaser. No one claims otherwise. Shoupe’s deed was duly entered for record June 21,1895. He took possession of the sixty acres on or about the first day of April, 1894.
    There can be no doubt as to his being completely under the protection of the statute, unless he had knowledge of the lease of the plaintiff in error. Morris v. Daniels, 35 Ohio St., 406; Varwig v. Railroad Co., 54 Ohio St., 455.
    The only knowledge that Shoupe had at the time of his purchase pertaining to these unrecorded extensions was that the plaintiff in error had a lease on his sixty acres, but that such lease would expire on the tenth day of June, 1895. To the extent of this knowledge, we must concede he was bound. But the test is the absence of knowledge, not the absence of that which might induce inquiry. Knowledge that the lease of the plaintiff in error extended further than June 10, 1895, was absent from the mind of Shoupe when he made his purchase of the sixty acres, March 31, 1894.
    There is no evidence that Shoupe acted in bad faith. On the other hand, there is evidence that Shcupe did act in the best of faith, and the circuit court so found. He inquired of his grantor, Taylor, whether he had a copy of the lease that he might verify Taylor’s statements with reference to the lease of the plaintiff in error.
    He exhausted all the means of information that were readily at hand, for the plaintiff in error had negligently refused him information at the source where he might expect to find it — the county recorder’s office.
    We do not doubt that the doctrine contained in the cases of Reeder v. Barr, 4 Ohio, 446, and Bonner v. Ware, 10 Ohio, 465, is good law.
    It is not out of harmony with the cases of Morris v. Daniels and Varwig v. Railroad Company cited above, and so the Supreme Court understood, for the two former cases are not referred to in the two latter.

      The case of Bell and Wife v. Duncan et al., 11 Ohio, 192, shows that the construction we have adopted concerning the cases of Reeder v. Barr, and Bonner v. Ware is correct. 46 N. Y. Rep., 384.
   Williams, J.

The ultimate relief sought by the plaintiff, in the action below, was an injunction against the city of Tiffin, preventing it from taking natural gas from the premises in question. The reformation of the lease under which the plaintiff claimed the exclusive right to the gas, was but a preliminary step in the establishment-of the plaintiff’s right to the injunction, and unimportant except in aid of that remedy. This inquiry, therefore, is directed primarily to the ascertainment of the rights of the city under the lease obtained by it from Shoupe, rather than to those of the plaintiff against Shoupe, although the former are to some extent, but not entirely, dependent on the latter. It appears from the finding of facts, that when Shoupe purchased the land and received his conveyance from Taylor, the lease made by the latter to Duke and by him assigned to the plaintiff was, together with the assignment, on record in the proper office; and it was excepted from the covenants in the deed; but the term of years for which the lease was made had been allowed to expire without any effort to develope oil or gas, and no person was in possession of the land claiming under the lease or under any extension of it, nor was any agreement for such extension on record. This was also the condition of affairs when the city of Tiffin obtained its lease from Shoupe, who was then in the exclusive occupancy of the land ; and the receipt given by Shoupe to the plaintiff for rent, which it is claimed amounted to an extension of the lease, was not on record, nor possession held under it. The city upon receiving its lease immediately entered into the actual possession of the land and has since continued in possession.

One question arising on these facts, and probably the most important one, relates to the construction and effect of the act of April 11, 1888 [85 O. L., 179] supplemental to section 4112, and now section 4112a, of the Revised Statutes. It provides: “That all leases and licenses, and assignments thereof or of any interest therein, heretofore executed, given or made, for, upon or concerning any lands or tenements in this state, whereby any right is given or granted to operate, or to sink or drill wells thereon for natural gas and petroleum or either, or pertaining thereto, shall be recorded in the lease record in the office of the recorder of the proper county by the first day of September, 1888, and all such leases, licenses and assignments hereafter executed, given or made, shall be filed for record as aforesaid, forthwith and recorded in said lease record, without delay, and shall not be removed until recorded, and no such lease or license hereafter executed or given, unless the person-claiming thereunder is in actual and open possession, shall have any force or validity until the same is filed for record as aforesaid, except as between the parties thereto, nor shall any such lease or license heretofore executed or given and not recorded by the first day of September, 1888, have any force or validity thereafter until filed for record, except as between the parties thereto, and as to persons claiming thereunder and in actual and open possession.”

This statute, it will be observed, applies to all oil and gas leases and licenses, including those entered into prior, as well as subsequent, to the first day of September, 1888, makes special provision with respect to their registration, and prescribes the consequences of omission to have them recorded as required. It is a settled rule of construction, that special statutory provisions for particular cases operate as exceptions to general provisions which might otherwise include the • particular eases, and such cases are governed by the special provisions. Under that rule this statute takes leases and licenses to which it is applicable out of the operation of sections 4112, and 4134, Revised Statutes, and itself furnishes the rule governing the registry of such instruments, and the effect upon their validity of the failure of registration. In this last respect the declared effect is not essentially different from that resulting from the omission to place on record real estate mortgages. The language of the statute regulating the registry of such mortgages is: “All mortgages, executed agreeably to the provisions of this chapter, shall be recorded in the office of the recorder of the county in which the mortgaged premises are situated, and shall take effect .from the time the same are delivered to the recorder of the proper county for record.” Revised Statutes, section 4133. Since the enactment of that statute it has uniformly been held, and in many eases, that until the mortgage is properly deposited for record, it is without effect, either at law or in equity, as against a third. person who acquires an interest in or lien on the property, although he acquired it with knowledge of the existence of the mortgage. This result arises from the language of the statute requiring such instruments to be recorded, and dedaring that they shall take effect from the time they are delivered for record; the object of the statute being, it is held, to avoid all questions of notice other than that to be obtained from an examination of the record.

The statute we have here under consideration is not less positive in its requirement that oil and gas leases and licenses shall be recorded as therein provided, and is even more explicit in its declaration that until properly filed for record they shall be without any force or effect except as between the parties to them, unless the person claiming thereunder is in the actual and open possession of the lands. Without such record or possession all leases or licenses within the purview of the statute are nugatory and ineffectual for any purpose, both at law and in equity, against a subsequent lessee or other third person dealing with the land, notwithstanding he had at the time actual notice of the prior unrecorded instrument. The only notice to third persons that can be of any avail is, under this statute, the notice afforded by the proper lease record, or actual possession of the land. Shoupe having the exclusive possession of the land in controversy when the city of Tiffin obtained its lease from him, the estate and interest which the lease purported to grant vested in the city, unless some superior right of the plaintiffs then appeared of record; and there was none, if that cannot be claimed for the original lease made by Taylor to Duke and assigned to the plaintiff. That lease was dated June 10, 1886, and, by its terms, was to continue for the period of five years, “and as much longer as oil or gas is produced or found in paying quantities thereon;” and to ascertain the capacity of the land in that respect the lessee was required to complete a well on it within nine months from the date of the lease, or, on failure to do so within that time, to pay an annual rental until the well should be completed. Upon payment of the rental his right to complete the well continued for the specified term of five years, but no longer; and if within that time oil or gas was produced in paying quantities, then the lease was to continue as long- as the product should prove profitable; but if neither of those articles was so produced within the specified time the lease was at an end. This is the construction which the parties themselves have put upon the lease, and is, no doubt, the correct one; otherwise the subsequent agreements for its extension were unnecessary. , There having been no possession taken under the lease, nor effort made to develope its producing qualities as contemplated within the required time, an examination of the record, while it would have discovered the existence of the lease, would also have disclosed that it had expired and ceased to be a subsisting burden on the land. The agreements between plaintiff and Taylor for the extension of the lease were, in effect, new leases; and their record, or possession under them, was necessary to give them any validity whatever except as between the parties to them. And, such record or possession was also necessary with respect to the receipt given to the plaintiff by Shoupe after he became the owner of the premises, if that is to be regarded as an agreement by him to extend the terms and conditions of the original lease. As neither of these instruments was of record, nor anyone claiming- under either in possession of the land when the city of Tiffin took its lease from Shoupe, and as the original lease had then expired, there was no obstacle arising from either, in the way of the city then obtaining- a valid lease from Shoupe, superior to the claim asserted here by the plaintiff. Such a Lease the city appears to have obtained, and it cannot be deprived of its enjoyment at the suit of the plaintiff.

We are also of opinion that the plaintiff is not entitled to the reformation sought of the original lease, as against Shoupe. When he bought the land, it was not included in that lease; and while its exception from the covenants in his deed was sufficient to apprise him of the alleged mistake in the description, the record disclosed that the lease had ceased to be a subsisting incumbrance or claim against the land at the time of his purchase; so' that, he might then buy with safety sq far as that lease was concerned. And, as neither of the agreements for an extension of the lease had been placed on record nor possession taken under either, he took his title discharged of any claim that might be founded on them. Furthermore, it is established by the finding of facts that at the time of his purchase, Shoupe had no knowledge of either of the agreements of extension, and that he paid full value for the land. It is well settled that a purchaser for value is not affected by an unrecorded instrument unless he has actual notice of its existence; circumstances that should put him on inquiry is not enough. Morris v. Daniels, 35 Ohio St., 406; Varwig v. Railroad Co., 54 Ohio St., 455. So that, independent of the effect of section 4112a, the title acquired by Shoupe was not subject to any outstanding claim then existing in favor of the plaintiff; and, if there is any ground for the reformation sought it must be found in the receipt given to the plaintiff by him after he became the owner of the land. That receipt, it is contended, amounts to an agreement for the continued obligatory force of the original lease, according to all of its terms and conditions, upon the land intended to be included in it. But the same alleged mistake in the description of the land is made in the receipt itself, and to give it the effect claimed for it, its reformation should precede that of the lease.

The receipt is materially different from the two papers signed by Taylor; the latter contain an express consent or agreement to extend all the terms and conditions of the original lease for the periods therein mentioned, while the former contains no stipulation of that kind, but is a receipt simply for a specified sum of money for a year’s rent. The misunderstanding of the parties with respect to this receipt is not inexplicable. The plaintiff, having in mind the former agreements of Taylor extending the lease upon like payments, may very well have intended and understood Shoupe’s receipt to have the same effect; but Shoupe, having no knowledge of those agreements, and relying upon the information obtained from Taylor that the only lease made by him had but one year to run, might just as properly have understood and intended the receipt to be for that year’s rent and to have no other effect. The circuit court so found, and we see no reason for disturbing that finding. This mutual misunderstanding would be sufficient to preclude a reformation of the instrument, for that would result in making a contract, upon the terms of which the minds of the parties never met. The receipt contains no express agreement, nor is it claimed there was any, even verbal, between Shoupe and the plaintiff concerning the lease. It is sought, therefore, to establish an implied contract for the extension, from extraneous facts and circumstances, and have a reformation in conformity therewith. If such relief is attainable in any case, it should only follow clear and convincing proof that the party against whom it is sought was possessed of full knowledge of all the facts necessary to the creation of the contract.

Judgment affirmed.


source: Caselaw Access Project

author: Shauck, J.

license: Public Domain

text:
    Kerr v. City of Bellefontaine et al.

      Purchase or erection of gas works by municipal corporations— Powers and duties of trustees of gas works — Provisions of sections 2486 and 2489 Revised Statutes — Trustees cannot charge municipality with general liability — Claim upon funds accrued from operation of such works — Allegations of petition — Pleadings — Municipal law.

    1. An averment in a petition that an account for articles sold, which are the subject of the action, was presented to the defendants and by them admitted to be correct, should on motion be stricken from the petition in obedience to the rule that evidence should not be pleaded.
    2. The provisions of sections 2486 et seq. Revised Statutes, relating to the erection or purchase and management of gas works by municipalities, do not vest in the trustees of such works authority to charge the municipality with a general liability on account of machinery or appliances purchased by them for such works.
    3. By the provisions of section 2489 Revised Statutes, money derived from the operation of such works under the management of trustees constitutes a distinct fund which they have authority to control independently of the council.
    4. A petition alleging a sale and delivery by plaintiff to such trustees of machinery and appliances for the use of such works and the non-payment of the purchase price therefor, though not alleging facts sufficient to entitle him to recover a judgment at law against the municipality, does allege a cause of action for the equitable appropriation of so much of the funds which have accrued or may accrue from the operation of the works as may be necessary to satisfy his just demand.
    (Decided January 17, 1899.)

      Error to the Circuit Court of Logan county.
    The plaintiffs action' in the common pleas court was against the city of Bellefontaine and the trustees of its gas works. His petition is as follows: .
    1. On and for more than ten years next prior to the twelfth day of June, 1892, the defendant, the village of Bellefontaine, which since the commencement of this suit has been advanced to the grade of a city and is now the city of Bellefontaine, was, and it still is the owner of gas works, erected by said, the village of Bellefontaine, under the provisions of section number 2486 of the Revised Statutes of Ohio, which gas works have, during all said time and down to the present date, been managed, conducted and controlled by a board of trustees as provided in sections numbers 2487, 2488 and 2489 of the Revised Statutes of Ohio, and at the date of the commencement of this suit, Sidney Nichols, Joseph P. Hunter, George W. Bartholomew, William Lane and John Gauss were the duly elected and qualified and acting trustees of said gas works.
    2. On or about the---day of June, 1892, the said gas trustees of Bellefontaine, for the defendant, the village of Bellefontaine, purchased from one Joseph Askins,' who then delivered the same, certain purifying boxes for use in the gas works of Bellefontaine, which were of the value of $1,040.00, one-half of which value and price, to-wit: $520.00 and one-half of the freight charge thereon, to-wit: $7.80, to-wit: a total sum of $527.80, the said defendant, the village of Bellefontaine, by its said gas trustees, then and there agreed to pay to said Askins.
    3L On or about the second day of June, 1892, the said defendant, the village of Bellefontaine, through, its said gas trustees, by contract in writing, purchased from said Joseph Askins, one condenser, valve, 10-inch pipe and connections, which the said Askins then delivered, and, at the request of said gas trustees, put in place in the gas works of said village, for which the said defendant, the village of Bellefontaine, by and through its said trustees of gas works, then and there agreed to pay said Askins the sum of $1,507.00.
    4. On said second day of June, 1892, the defendant, the village of Bellefontaine, through and by its agents, the said trustees of gas works, purchased from said Joseph Askins, and employed him to place in position in said gas works of Bellefontaine, the following goods and material, which, with the skill and labor of placing the same in position were of the following values, to-wit: .
    4 10-ineh valves at $35.00 each.............................$140.00
    3 10-inch tees at $16.80............................................. 50.40
    6 10-inch ells at $10.00................................................ 60.00
    15 10-inch sci'ew flanges at $2.72......................... 40.80
    204 f bolts at .05 each.................................................. 10.20
    18 10-inch threads at $1.50........................................ 27.00
    [Erroneously carried into account hereinafter mentioned as..................................................... 37.00]
    6 10-inch cuts at $1.25............................................... 7.50
    The said Joseph Askins then and there delivered all said goods and material and placed the same, and the said defendant, the village of Bellefontaine by its said trustees of gas works then and there agreed to pay him. said sum of $345.90, the aggregate thereof for the same.
    5. On or about the second day of June, 1892, the said defendant, the village of Bellefontaine, by its said trustees of gas works, employed the said Joseph Askins to, and he then and there did furnish, and set, and adjust a new meter, which wad of the value of $25.00 which the said defendant, the village of Bellefontaine, by its said trustees of gas works, then and there promised and agreed to pay to said Askins.
    6. On or about the second day of June, 1892, the said defendant, the village of Bellefontaine, by its said trustees of gas works, employed the said Joseph Askins, to furnish the means and materials including a 10-inch outlet, and to furnish the skill and labor, in connecting, the governor with the mains of said gas works, all of which the said Askins then and there did, and the same was of the value of $50.00 and the said defendant, the village of Bellefontaine, by its said trustees of gas works, then and there agreed to pay the same to said Askins.
    7. On the fifth day of July, 1892, the defendant, the village of Bellefontaine, b3r its said trustees of gas works, purchased from said Joseph Askins, who then delivered to said defendant, the village of Bellefontaine, for use in said gas works, the following materials which were of the values following, to-wit:
    21 5-12 ft. 10-inch pipe at $4.75, less 65 per cent, $35.61, and 64 1-3 ft. 10-inch pipe at $4.75, less 65 per cent, $106.96.
    And the said defendant, the village of Bellefontaine, by its said trustees of gas works, then and there promised and agreed to pay said sums for the same to the said Askins.
    8. On or about the twent3'--third-day of August, 1892, said J oseph Askins rendered an account to said defendant, the village of Bellefontaine, by delivering the same to said trustees of the gas works, of all of the foregoing- items of materials and labor, •which were then and there computed to amount to $2,598.27, but by correction of the extending thereof is in fact $2,588.27. Copy of said account is hereto attached marked “Exhibit A.”
    9. On the twenty-third day of August, 1892, the said account, above mentioned, copy of which is hereto attached marked “Exhibit A,” was duly rendered to the defendant, the village of Bellefontaine, and to said trustees of gas works, and the same was then and there settled and agreed to and the same then and there became an account stated between said Joseph Askins and the said defendant, the village of Bellefontaine, now said city of Bellefontaine, and it was then and there settled, agreed and determined that the surd of $2,598.27 was then due to said Askins from the defendant, the village of Bellefontaine, and the same then and there and thereby became an account stated.
    10. Plaintiff as a further cause of action says that about the first of November, 1892, by contract in writing, the defendant, the village of .Bellefontaine, through its said trustees of gas works, employed the said Joseph Askins to furnish for and place in said gas works of Bellefontaine, one gas generator for the sum and price of $500.00 which was then and there done and performed by said Joseph Askins.
    11. Plaintiff says that all said materials, skill and labor, were so furnished and performed by said Joseph Askins, to and for said defendant, the village of Bellefontaine, under contract with said trustees of gas works, for the use and maintenance of said gas works, and the same have all been had and used by said defendant, the village of Bellefontaine, ever since said dates, respectively, and no part of said aggregate sum of $3,088.27 has ever been paid except as hereinafter stated.
    13. Before the commencement of this suit, to-wit: On the fifth day of August, 1893, said Joseph Askins, for value received sold, and assigned to plaintiff, in writing, all his said claims hereinabove set out against the defendant, the village of Bellefontaine, now said city of Bellefontaine, and the same is now the property of said plaintiff, except that the same was assigned subject to the payment by plaintiff out of the same
    To The Buchanan Bridge Company of...............$60.00
    To George W. Emerson of............................................. 20.00
    To Howenstine & Huston of....................................100.00
    And such other and further sum to Howenstine & Huston as would be their reasonable charges and fees for collecting said claim.
    14. Upon said indebtedness, the said defendant, the village of Bellefontaine, paid to said Joseph Askins upon the items for purifying boxes set out in the second paragraph of this pleading, the sum of...................................................................................................$450.00
    And further paid upon said whole claim
    July 1, 1892 [or July 5]...................:...........................$200.00
    July 22, [or July 5]............................................................. 500.00
    July 22, 1892............................'.......................................... 24.75
    Aug. 26, 1892, to Buchanan Bridge Co........... 25.00
    Oct. 26, 1892, to Haekenger on order.............. 4.00
    Oct. 26, 1892, to Ear hart on order.................... 6.00
    Dec. 1, 1892, to Buchanan Bridge Co................ 35.00
    May 8, 1894, to B. M. Allen....................................... 100.00
    June 5, 1894, to Hamilton............................................ 86.93
    Total...........................................................................$1,431.68
    Said items of $25 and $35 paid to the Buchanan Bridge Co., aggregating $60.00, constitute 'the amount of $60.00 reserved m said assignment, for the benefit of said The Buchanan Bridge Co.
    The gross amount of said claim of plaintiff against the defendant, the village of Bellefontaine, now the city of Bellefontaine, is $3,088.27 upon which has been paid said aggregate sum of $1,431.68 and no other or further payment has been made thereon, and there is due and remaining unpaid to this plaintiff, which he claims from the defendant, the village of Bellefontaine, now the city of Bellefontaine, the sum of sixteen hundred and fifty-six and 59-100 [$1,656.59] dollars, which plaintiff claims with interest on $1,156.59 thereof, from August 23, 1892, and on $500.00 thereof, from November 1, 1892, and for the same he asks judgment against said defendant, the village of Bellefontaine, now said city of Bellefontaine.
    A motion by the city to strike from the petition the averment numbered nine was sustained. Thereafter a general demurrer was interposed by the city and sustained by the court and the petition was dismissed. To the rulings on the motion and the demurrer plaintiff excepted. The circuit court affirmed the judgment of the court of common pleas. The reversal of both judgments is sought here for alleged errors in sustaining the motion and the demurrer.
    How.enstine, Huston & Miller, for plaintiff in error.
    The question is, “Had the gas trustees of the c.ty power to make contracts for the repair and improvement of said gas works, and to bind the city to the performance thereof?” It follows that if the gas trustees had such power or authority, they had power to state an account or an amount to be paid.

      Section 6, article 13, of the Constitution of Ohio, of 1851, authorizes the general assembly to provide for the organization of cities and incorporated villages by general laws.
    Section 1 of the Schedule provides that all the laws then in force not inconsistent with the new Constitution shall remain in force until amended or repealed.
    Section 1538 of the Revised Statutes, provides that existing municipal corporations, and those hereafter created, shall be governed by the provisions of Title XII of the Revised Statutes.
    Section 1678 of the Revised Statutes provides that the council shall have the management and control of the finances and property of the corporation, except as may be otherwise provided. A similar provision in section 1693 restricts the power to contract to the city council. • “But this section shall not be construed to * * * impair the power to contract whenever elsewhere given in this title, namely, Title XII.
    Section 2486 provides that such gas works shall be placed under the control of a board called trustees of gas works, who shall manage the gas works and supply the corporation and citizens thereof with gas.
    This power to construct, manage, conduct and control the gas works, to purchase material, employ laborers andhnanufacture and sell gas, and by implication the duty enjoined upon, and the duty assumed by the trustees, to furnish gas to the citizens who desire it, carries with it the power to make any modifications, changes, or repairs deemed necessary by the trustees of gas works. See section 2489.

      Corporations can be bound, without note or deed, by implication from corporate acts. Like natural persons, they may ratify any act which they can perform, and contract by parol as well as under seal. Bank of Columbia v. Paterson, 7 Cranch, 299; School District v. Wood, 13 Mass., 199; Town of Athens v. Thomas, 82 Ill., 259; Paret v. City of Bayonne, 39 N. J. L., 559; Moss v. Averell, 10 N. Y., 454; Blunt v. Walker, 11 Wis., 334.
    A corporation has the power to make any such contracts as further the purpose of incorporation if the same is not prohibited by its charter or some statute binding upon it. In general, an express authority to make a given kind of contract is not indispensable to the exercise thereof, provided they are not foreign to the corporate purposes. Booth v. Robinson, 55 Md., 419; Wayland University v. Bowman, 56 Wis., 657; C & M. R. R. Co. v. Himrod Furnace Co., 37 Ohio St., 321; Detroit v. Mutual Gas Co., 43 Mich., 594.
    Therefore, the contracts alleged in the third amended petition are and must be covered by the powers granted in section 2489.

      Clarke v. Columbus, 23 Bulletin, 289, holds that section 2702, known as the Burn’s Law, does not apply to a contract for lighting the city.
    Section 1693, as it now stands, was enacted on February 27, 1880, and section 2489 is subsequent to and inconsistent with said 1693, and if for no other reason 2489 must be read as an exception to 1693. Cincinnati v. Holmes, 56 Ohio St., 104.
    If 2702 applies at all, it must apply in its entirety.
    Then no purchase, though the most trivial, can be made by said trustees without first procuring a certificate from the city clerk. And the city clerk, elected by tbe council, can use his own pleasure about issuing said certificate.
    Such a construction would cause more evil than it could remedy, and would not be in harmony with the general rules for interpretation of statutes. Bishop’s Written Laws, section 92, 1 Ohio, 480; Wright, 233.
    7. Municipal Powers are statutory, and classed as follows:
    [a.] Powers granted in express words by charter or general statute under which it is incorporated.
    [b.] Powers necessarily, or fairly implied in, or incident to the powers thus expressly granted.
    [e.] Powers essential to declared purposes of the corporation, not simply convenient, but indispensable. Dillon, 4 ed., section 89; 15 Am. & Eng. Enc. of Law, 1041.
    Under above subdivisions [b] and [c] we claim again that the gas trustees have the power to hire labor and pay the necessary running- expenses of the plant; and, further, that they have the power to make needed improvements and repairs without said certificate being filed, and an enabling ordinance passed, since this would be but exercising an incidental or indispensable power to the powers granted to the gas trustees in section 2489, and, moreover, section 2702 was never intended to apply to the running expenses of a gas plant, nor does it. Lima Gas Co. v. Lima, 4 C. C., 22; 2 Circ. Dec., 396; Cincinnati v. Cameron, 33 Ohio St., 336; Le Grand v. M. M. Ass’n, 80 N. Y., 638.
    A corporation may ratify unauthorized acts of its agents, and this may be inferred from acquiescence merely. Hoyt v. Thompson, 19 N. Y., 207; Pixley v. Western Pacific R. R., 33 Cal., 191; I Dillon, section 463; Supervisors v. Schenck, 5 Wall., 782.
    When an indebtedness for such improvements and repairs is incurred, the gas trustees, as agents of the city having incurred said indebtedness, the city is estopped from alleging a mere irregularity to avoid the contract. Moore v. Moore, 73 N. Y., 238; Moran v. Commissioners, 2 Black, 722; Turner v. Curzer, 70 Iowa, 204; Bissell v. City of Jeffersonville, 24 How., 287; Knox County v. Aspinwall, 21 How., 539.
    A municipal corporation is estopped the same as an individual. County of Randolph v. Post, 93 U. S., 502; Searcy v. Yarnell, 47 Ark., 269; Am. Dig. ’90, p. 2656; I Dillon, sections 459, 460; II Kent Commentaries, 291.
    Money paid for corporate property where no title passed can be recovered. Then, why cannot property obtained by a city under a void contract be recovered, on a quantum meruit? II Dillon, section 936-938; Dill v. Wanham, 48 Mass., 438; Nelson v. Mayor, 63 N. Y., 535.
    Where a city causes work to be more expensive by slight changes in work or materials, it is liable for such extra compensation. Cincinnati v. Cameron, 33 Ohio St., 336; Messenger v. Buffalo, 21 N. Y., 196; Fleming v. Suspension Bridge, 92 N. Y., 368; Nat. Tube Works v. Chamberlain [Dak.], 37 N. W., 761; [Am. Dig. ’88, p. 937, section 106]; Maguire v. Rapid City [Dak.], 43 N. W., 706; [Am. Dig. ’89, p. 2645, section 189]; Merrill R. R. & Light Co. v. Merrill, 80 Wis., 358.
    No corporation can have the benefits of a contract and repudiate its obligations accruing thereunder. State v. VanHorn, 7 Ohio St., 327; Goshen Township v. Shoemaker, 12 Ohio St., 624; Shoemaker v.
      Goshen Township, 14 Ohio St., 569; State v. Mitchell, 31 Ohio St., 592.
    It seems to be the well-established rule that where a contract has been executed and fully performed on the part either of the corporation or of the other contracting party neither will be heard to object that the contract and such performance were not within the legitimate powers of the corporations. Bank v. Chillicothe, 7 Ohio, 412; Hays v. Galion Gas & Light Co., 29 Ohio St., 330; Larwell v. Hanover Savings Fund Society, 40 Ohio St., 274; Whitney Arms Co. v. Barlow, 63 N. Y., 62; Atlantic State Bank v. Savery, 82 N. Y., 307; Gold Mining Co. v. Nat. Bank, 96 U. S., 640; II Kent Comm., 291; Argenti v. San Francisco, 16 Cal., 255; Mahre v. Chicago, 38 Ill., 266; Dillon on Municipal Corporations, sections 384 and 750; Messenger v. Buffalo, 21 N. Y., 196.
    When the contract has been executed and all its • stipulations fully performed, the corporation having received the benefit, then it is bound to render an equivalent therefore. Pixley v. R. R., 33 Cal., 183; Fister v. Trustees, 15 Barb., 323; San Francisco Gas Co. v. San Francisco, 9 Cal., 453.
    To all laws there is a spirit as well as a letter, and their construction must stand with reason and right. What is intended to work justice and prevent fraud must not be made the means to work injustice and nourish fraud. Cincinnati v. Cameron, 33 Ohio St., 364; Matthews v. Caldwell, II Disney, 279; United States v. Kirby et al., 7 Wall., 482.
    The principle that a corporation is under an obligation to give value received for accepted benefits has been held to apply to counties in Ohio, and the same principle of liability will apply to municipal corporations. Wilder v. Comm'rs, 41 Ohio St., 601; Comm’rs v. R. R. Co., 37 Ohio St., 205; Cook Co. v. Hannes, 108 Ill., 151; Harrison Co. Comm’rs v. Bryne, 67 Ind., 21; S. & C., 250, 53 O. L., 155; Revised Statutes, section 878.

      West <& West and William W. Biddle, for defendants in error.
    It will not be seriously contended that under sections 2486 and 2487 it was intended to vest in any board or authority, other than the council, the power to erect or purchase gas works, or to build them, according to plans or specifications, other than as prescribed by the council. The council alone is authorized to erect or purchase, and when so done, it may appoint a provisional board of trustees, to execute its will, under its directions, until their successors shall be chosen by popular election. In either of these sections is a power, independent of the council, either given or intended to be' given, to said provisional board, to erect, purchase or manage the works. This will become more apparent when we reach Revised Statutes 2489.
    Revised Statutes 2488, merely provides for and prescribed the manner of electing a regular board of trustees to succeed those provisionally appointed. Considered alone, section 2484 might seem to vest in the gas board independent power to erect or purchase gas works or grounds therefor, and do many other things. But statutes in pari materia must be read and construed together. Reading and construing this section in connection with Revised Statutes 2486 and 2487, holding the board of trustees to have such independent power, is in conflict with and repugnant to the provisions of said two sections, and the absolute powers vested in the council. It would recognize in the board and in the council each a separate and independent power to do the same thing, which the legislature did not intend. One must be subordinated to the power and control of the other, else we shall have two independent municipal authorities clothed with power to erect separate and distinct gas works, or an unlimited number of gas works for that matter, in the same village. This cannot have been intended, and the repugnancy must be reconciled which can only be done by subordinating the gas board.
    Plaintiff assumes that the board of gas trustees is the agent for the municipality, within the scope of its powers, as fully as is the council, and might bind its principal, within its powers, absolutely. In support of this, he cites Cincinnati v. Cameron, 33 Ohio St., 336, which arose in 1866, prior to the enactment of Revised Statutes 2702 some ten years. To the extent that it furnishes any analogy to the present contention, it sustains the position of the defendant in error.
    The principle recognized in the case controls here, and does not exclude the gas board from the restrictive operation of 2702.
    • Plaintiff pleads ratification, and cites sundry authorities to sustain him, which arose out of the dealings of private or trading corporations, except one or two, and the actors in which were not restrained by prohibitory statute or anything other than the doctrine of ultyra vires. We cite I Dillon on Corp., 457.
    The municipal code is the chartered authority of municipal corporations in Ohio, and every provision thereof must be observed by its officers and boards, to bind the corporation. 2 Beach on Contracts, section 1453; Miller v. Ammon, 145 U. S., 421.
    The rule is that a contract made void by positive statute cannot be validated by ratification, and the consideration thereof cannot be made a ground of recovery on any plea whatever. Revised Statutes, 1693, 2702, in express and positive terms, declare that all contracts entered into by the council or any board or officer of a municipal corporation, contrary to or in violation of these sections, or either of them, shall be absolutely void, as against the municipality.
    Plaintiff further claims, that the gas trustees, having incurred the indebtedness for certain improvements the village is estopped fi'om alleging a mere irregularity to avoid it. To this, sundry authorities are cited, none, so far as we can discover, under statutes like Revised Statutes, 1693 and 2702. It is not the village, but these statutes, which avoid the contract in controversy, and the village cannot validate or vitalize them against their denunciation. If the doctrine of estoppel can override such statutes, it is in vain that municipalities endeavor to restrain the excesses of their officers and agents. Those dealing with the corporation have no cause of complaint. They are bound to know the requirements of public statutes, and to inquire whether the municipal officers, with whom they deal, have complied therewith and by such compliance are authorized to contract.
   Shauck, J.

The provisions of the code afford no reason for the numbering of the several averments of the petition which relate to the same cause of action. Whether there are different causes of action which should have been separately stated and numbered we need not consider, no motion to require it having been made. The common pleas court did not err in sustaining the motion to strike from the petition the averment numbered nine. The admission of the defendants that the account presented to them of the articles sold and delivered was correct did not foreclose inquiry as to its correctness. The remaining averments of the petition fully tender the issues upon which the plaintiff’s right to recover for the several items of his claim would be determined. The admission alleged was, at most, but part of the evidence by which the plaintiff would maintain the issues on his part, and the averment is within the rule that evidence should not be pleaded.

The demurrer calls in question the authority of the trustees of the gas works to make valid contracts for machinery, apppliances and supplies deemed necessary to the operation of the works. Their authority, as well as that of the municipal council over the subject matter, is found in Chapter 3, Division 8 and Title XII of the Revised Statutes. Section 2486 provides that the council of any city or village shall have power to erect gas works, or to purchase such works already erected. Section 2487 provides that when such works have been purchased, erected or authorized the city council “shall create and appoint a board of trustees * * * which shall construct said works according to plans and specifications to be furnished by the council and shall manage such works when they shall have been constructed or purchased.”

Section 2489, which defines the powers and duties of the trustees with more particularity, provides that “the board may construct gas works, extend gas pipes, manufacture and sell gas and coke, collect gas bills and other moneys, due for gas, coke or other material sold by it * * * ; and to carry into effect the provisions of this section said trustees may also purchase material, employ laborers, appoint officers, purchase or lease the necessary real estate and erect buildings thereon * * * * and all money collected for gas works purposes shall be deposited weekly, by the collectors thereof, with .the treasurer of the corporation * * * ; and all money so deposited shall be kept as a separate and distinct fund, subject to the ordey of the board; and all moneys levied or assessed by the corporation for the purpose of paying for public lighting shall be by the council paid and turned over to such trustees and be by them disbursed the sanie as if it had been received from private individuals * * * .”

These sections are found in the same chapter of the Revised Statutes and they relate to the saíne subject matter. They should be construed together so that, if it is possible, apparently repugnant provisions may be brought into harmony. Reading the sections with that object in view it appears to be quite clear that the authority to contract which was conferred upon the trustees by section 2489 is not in conflict with, but in subordination to, the authority for that purpose which section 2486 confers upon the council. The trustees are not vested with authoritv to levy taxes or assessments upon the property of the citizens of the municipality, nor to accomplish that purpose indirectly by the creation of general obligations against it. Their authority to erect works is limited to cases where it may be accomplished by the use of funds raised by the council and authorized to be devoted to that purpose as contemplated by section 2487, or. those funds which are realized from the operation of gas works under section 2489. This limitation upon the authority of the trustees is clearly indicated by the provision that “the council * * * shall have power whenever it may be deemed expedient and for the public good, to erect gas works at the expense of the corporation, ” etc.

But while the trustees are denied the power to erect the gas works “at the expense of the corporation,” the terms of section 2489 vest them with the absolute control of the moneys arising from the operation of the works without any revisory authority in the council. It is for this purpose that moneys so arising are required to be kept as a distinct fund. There is no limitation or restriction to the provision that said fund “shall be subject to the control of the board,” nor is there any other provision of the statute inconsistent with the general terms in which the control of the fund so arising from the operation of the gas works is vested in the trustees. It follows that while the trustees are without authority to enter into a contract effectual to create a general liability of the municipality, they have power to contract with ref" erence to that particular fund for the purchase of such machinery, material and supplies as may be necessary to the operation of the works.

Nor are the trustees in the exercise of this authority restricted by the provisions of section 2702 of the Revised Statutes that “No contract, agreement or other obligation, involving the expenditure of money shall be entered into, nor shall any ordinance, resolution or order for the appropriation or expenditure of money be passed by the city council or by any board or officer of a municipal corporation, unless the auditor of the corporation, and if there is no auditor, the clerk thereof, shall first certify that the money required for the contract, agreement or other obligation, or to pay the appropriation or expenditure, is in the treasury to the credit of the fund from which it is to be drawn, and not appropriated for any other purpose * * Not only was this requirement of the statute designed to place a restriction upon the increase of municipal indebtedness but its terms are inapplicable to a contract of this character. The requirement is that the certificate must show that the money required for the contract is in the treasury to the credit of the fund and not appropriated for any other purpose. The fund from which the plaintiff is entitled to satisfaction of his demand is not raised by taxation. It is derived from the operation of the gas works and made subject to the order of the board whose authority is so limited that they can make valid contracts only for appliances and supplies for the gas works to which the fund is devoted. The fund can be appropriated to no other purpose, and the trustees can contract for no other purpose.

It follows that although the petition does not allege facts which show the general legal liability of the city, it does state a cause of action in equity for the appropriation of so much of the fund which has accrued, or may accrue, from the operation of the gas works as may be necessary to satisfy the plaintiff’s demand.

Judgment of the common pleas and circuit courts reversed.