author: Newman, J. Wanamaker, J.,

text:
    The Cleveland Metal Roofing & Ceiling Company v. Gaspard et al.

      Suretyship — Bond securing property owner on building contract— Inability of sureties for labor and material — Furnished contractor subsequent to execution of bond.

    A bond, entered into by a contractor, in which the owner of a building is named as obligee, conditioned for the performance of the terms and conditions of a building contract between the contractor and the obligee, and for the payment of all claims contracted in reference thereto for material and labor furnished in the erection of the building, is for the protection of the owner of the building, and an action on the bond against the sureties thereon cannot be maintained by a company for the payment of claims, against the contractor arising under contracts entered into between such company and the contractor subsequently to the execution of the bond, under which contracts the company thereafter furnished material and labor in the erection of the building, where the bond does not so provide.
    (No. 13497
    — Decided January 13, 1914.)
    Error to the Circuit Court of Cuyahoga county.-
    Plaintiff brought an action in the common pleas court of Cuyahoga county against the defendants, Nick J. (Gaspard, George Meier and Catherine Gaspard, and from the petition it appears that plaintiff, on the 10th day of November, 1909, entered into a contract with said defendant, Nick J. Gaspard, to complete the sheet-metal work and gravel roofing on an apartment building for the F. Zimmerman Realty Company in the city of Cleveland for the sum of $436, and that on or about the l'7th day of May, 1911, plaintiff completed said work in accordance with said contract; that on or about the 28th day of April, 1910, plaintiff entered into a contract with said defendant, Nick J. Gaspard, who was erecting said apartment building, under the terms of which contract plaintiff was to furnish three standard approved tin-clad fire doors for said apartment building for the sum of $70, and that on or about the 17th day of May, 1910, it furnished said doors in accordance with said contract; that on or about the 16th day of May, 1910, it entered into another contract with said defendant, Nick J. Gaspard, who was erecting said apartment building as aforesaid, under the terms of which contract it was to furnish the labor and material for the metal ceilings on the balconies of said building for the sum of $178, and that on or about the 20th day of May, 1910, it completed said work in accordance with said agreement, and it is alleged in the petition that said plaintiff rendered to said defendant, Nick J. Gaspard, bills for the amounts due under said three contracts, amounting in all to $684, no part of which amount has been paid.
    It is alleged in the petition that the defendants, George E. Meier and Catherine Gaspard, are sureties on a bond given by said defendant, Nick J. Gaspard, to the F. Zimmerman Realty Company, the owner of the apartment building, of which bond the following is a copy:
    “Know All Men by These Presents. That N. J. Gaspard, George E. Meier and Catherine Gaspard of the city of Cleveland, county of Cuyahoga and state of Ohio, held and firmly bound unto the F. Zimmerman Realty Co. of Cleveland, Ohio, in the sum of six thousand dollars ($6,000.00) to be paid to the F. Zimmerman Realty Co., its successors or assigns, to which payment, well and truly to be made, we bind ourselves, our heirs, executors and administrators, and every one of them, firmly by these presents.
    “Sealed with our seals, and dated this first day of Sept, in the year of our Lord, one thousand nine hundred and nine.
    “The condition of this obligation is such that whereas the said N. J. Gaspard on the 17th day of Aúg., A. D. 1909, entered into a written agreement with the said F. Zimmerman Realty Co., whereby he contracted to provide all the materials and perform all the work for the erection ..and completion of the carpenter work, wooden framing, frames, sash, doors, finish, flooring, roofing, sheet metal work, marble and mosaic, mantel and tile work, glass and glazing, rough and finished hardware for a three story brick apartment building to be erected on the northeast corner of E. 86th street and Birchdale avenue, Cleveland, O., and to furnish all tools, implements and cartage thereto as shown by drawings and specifications by architect, G. B. Bohm, and whereas said contract further provided as follows:
    “ ‘As a condition of this contract to furnish the owner a satisfactory surety bond as agreed in the sum of six thousand dollars ($6,000.00) to guarantee the completion of the work comprehended in this agreement, and to further guarantee the payment of any claims there may be for the payment of material and labor required in the erection of this building,’ and

      “Whereas, in lieu of a surety bond, it is agreed between the said parties that said N. J. Gaspard may furnish a bond signed by individuals.
    “Now, therefore, if the said N. J. Gaspard shall well and truly perform all the terms and conditions contained in said contract and complete said work as therein provided and pay or cause to be paid all claims contracted in reference thereto for material and labor, then the above obligation to be void; otherwise the same shall remain in full force and virtue in law.
    “N. J. Gaspard,
    “Geo. E. Meier,
    “Catherine Gaspard.
    “Signed, sealed and delivered in presence of F. Zimmerman.”
    It is further alleged in the petition that, by the terms of said bond, the defendants, Georg'e E. Meier and Catherine Gaspard, guaranteed the payment of all claims for material and labor furnished to said defendant, Nick J. Gaspard, in the erection of said building; that the material and labor furnished by plaintiff to defendant, Nick J. Gaspard, were used by him in the erection of said building, and that there is due plaintiff for material and labor so furnished to said defendant, Nick J. Gaspard, in the erection of said building, the sum of $684, for which amount and interest from the 20th day of May, 1910, plaintiff asks judgment against the defendants.
    The defendants, George E. Meier and Catherine Gaspard, demurred to this petition upon the ground that facts sufficient to constitute a cause of action against them, either jointly or severally, were not stated therein. The demurrer was sustained by the common pleas court, and plaintiff not desiring to amend or further plead as to said two defendants, judgment was rendered against it and in favor of said defendants, George E. Meier and Catherine Gaspard, which judgment was affirmed by the circuit court.
    Plaintiff in error has filed a petition in error in this court, asking for a reversal of the judgment of the circuit court.

      Mr. P. C. Hartman, for plaintiff in error.

      Messrs. Pomerene & Karch, for defendants in error.
   Newman, J.

It is to be observed that plaintiff, The Cleveland Metal Roofing & Ceiling Company, is not named in the.bond, under the provisions of which it claims its right of recovery against the defendants, George Meier and Catherine Gaspard, the sureties. The obligee named in the bond is the F. Zimmerman Realty Company. The bond recites the fact that the defendant, Nick J. Gaspard, on the 17th day of August, 1909, entered into a written agreement with the F. Zimmerman Realty Company to provide all the materials and perform all the work for the erection and completion of the carpenter work, wooden framing, frames, sash, doors, finish, flooring, roofing', sheet-metal work, marble and mosaic, mantel and tile work, glass and glazing, rough and finished hardware for the apartment building. A personal bond was, by agreement, accepted in Her of a surety bond. It is conditioned that' the defendant, Nick J. Gaspard, shall well and truly perform all the terms and conditions contained in his agreement with the F. Zimmerman Realty Company and complete said work as therein provided and pay or cause to be paid all claims contracted in reference thereto for material and labor. The bond was executed on the 1st day of September, .1909. The contracts, under which plaintiff performed labor and furnished material for Nick J. Gaspard, were entered into subsequently thereto, namely, on November 10, 1909, April 28, 1910, and May 16, 1910, respectively. There is no allegation in the petition that plaintiff had knowledge of the existence of this bond at the time it entered into the several contracts with Nick J. Gaspard, or at the times it furnished the labor and material thereunder, or that it relied upon the provisions of the bond for the payment of its claims against Nick J. Gaspard. Plaintiff, so far as the petition discloses, at the time the bond was executed, was unknown to the parties .to the instrument and had no claim of any kind against Nick J. Gaspard.

The question presented by the demurrer is whether plaintiff has a right of action against the sureties on the bond. It is urged that, under the settled law of this state that an agreement made on a valid consideration by one person with another, to pay money to a third, is enforcible by the latter in his own name, the right to proceed against the sureties on this bond exists in favor of the plaintiff.

An examination of the Ohio cases in which this rule is announced and approved will disclose the fact that in those cases there was an actual and fixed liability on the part of the promisee to such third person at the time the promise was made by the obligor, and the amount for which the obligation was made was either specified or then ascertainable. In the case of Crumbaugh v. Kugler, 3 Ohio St., 544, the grantor conveyed to the grantees certain lands, part of the consideration being an agreement by the grantees to pay the debts due by the grantor, and the debts were in existence and ascertainable at the time of the transfer. Thompson v. Thompson, 4 Ohio St., 333, was a case where the purchaser of real estate agreed to pay an existing mortgage indebtedness; in Bagaley & Co. v. Waters, 7 Ohio St., 359, where Crumbaugh v. Kugler and Thompson v. Thompson, supra, are approved, the purchaser of real estate agreed to assume and pay certain debts existing at the time.

In the well-known case of Emmitt v. Brophy, 42 Ohio St., 82, the court, in commenting upon the bond there under consideration, refers to the fact that, by its express provisions, Emmitt, the obligor, agreed to “pay off and liquidate all claims and demands, liens and debts, whether in judgment or otherwise, existing against said bridge.” At the time the bond was executed, Brophy and Potter had reduced to judgment their claims against the Scioto Bridge Company, the former owner of the bridge, and caused an execution to be levied on the bridge. This levy was subsisting and in full force at the time the bridge was sold to the commissioners of the county. The bond in question was given to the state of Ohio, as nominal obligee, for the use and benefit of Pike county, by Emmitt, who had owned a controlling interest in the bridge company and who received the entire purchase price of the bridge. “These facts,” the court say, “are strongly suggestive that it entered into the contemplation of the parties to this bond at the ;time of its execution, that this particular lien of the plaintiffs upon the bridge was to be discharged by Emmitt. Its existence was known to them, and they seem to have left nothing to conjecture. Indeed, if Brophy and Potter had been expressly named as the lien holders, it is difficult to see how this would have added to the definiteness of the bond, or made more certain the intention of the parties. This seems to be a conclusive answer to the suggestion that there is a want of privity between the immediate parties to the bond and the plaintiffs, which is chiefly relied upon by Emmitt as a defense.”

Judge Spear, in the well-considered case of C. H. & D. Rd. Co. v. Bank, 54 Ohio St., 60, discusses the rule under which plaintiff here is claiming its right to recover, cites the case of Emmitt v. Brophy, supra, with approval, and refers to the language of the court in that case which we have quoted above. The learned jurist calls attention to the fact that none of the cases announcing the rule carries the doctrine farther than it is carried in the Emmitt case, and then uses this language: “In no one' of them is it held that a right to sue in a stranger can be raised by mere implication. Nowhere is it held that the obligation will attach in favor of future' creditors not named and not known, and as to amounts not specified or then ascertainable, to the extent of giving to such creditors a right of action on the contract.”

We concur in the view thus expressed by Judge Spear, and this limitation or qualification of the rule, we think, precludes a right of recovery in favor of plaintiff against the sureties on the bond here, for, at the time of the execution of the bond, plaintiff was not named or known, and, of course, the amount claimed in his petition to be due could not be specified and was not ascertainable.

The deduction to be drawn from the cases to which we have called attention, and from the great majority of the decisions of the courts of other states which give sanction to the rule under consideration here, is that in order that the third person derive a benefit from the promise of the obligor to another person, it must appear that the contract was made and entered into directly or primarily for the benefit of such third person, and that there was a liability to such third person, on the part of the promisee, at the time of the exe- , cution of the contract. To illustrate, in Emmitt v. Brophy, supra, it was clearly the intention of the parties to the bond that the judgment creditors who held a lien on the bridge were to be directly benefited by the bond. And further there was a liability on the part of the purchasers of the bridge to discharge this judgment lien.

As we view the provisions of the bond under consideration here, the same were primarily for the benefit of the owner of the building. It was a guarantee on the part of the obligors, among other things, of the payment of claims for material and labor required in the erection of the building, and was available to the owner alone upon a showing that it had been required to pay these claims or had suffered loss on account of their ^nonpayment. And, again, it does not appear that there was any liability on the part of the owner to pay any claim for material and labor furnished by plaintiff, or that any liability might arise against it in favor of plaintiff. The bond was conditioned not only for the payment of claims for material and labor, but also for the completion of the work comprehended in the contract between the owner of the building and Nick J. Gaspard. So far as the petition discloses, the owner of the building may have paid to Nick J. Gaspard, prior to the time the contracts between him and plaintiff were entered into, all that was due him under it, the owner’s contract, and, in that event, plaintiff would have no claim against the building or its owner. It is true that, under the lien laws of this state, plaintiff could have asserted a claim to any funds in the hands of the owner due and owing to Nick J. Gaspard, and it might occur to one that the presumption is that plaintiff, with knowledge of the existence of the bond, proceeded upon the theory that it was amply protected thereby and that it was unnecessary to avail itself of the provisions of the lien law. But it must be borne in mind that this is an action against personal sureties on a bond, and there should be a strict interpretation of their obligations. Their liability is limited to the exact letter of the bond, and presumptions cannot be indulged in to’aid plaintiff in enforcing a liability against them.

Recognizing, as we do, the right of a third person to enforce, in his own name, an agreement made by one person with another to pay money to such third person, nevertheless, this rule is subject to the limitations and qualifications we have pointed out, making it inapplicable to the case at bar. We are not disposed to extend the doctrine so as to permit the maintenance of an action by a third person against sureties on a bond, where it does not appear that the bond was entered into directly or primarily for the benefit of such third person, or that there was a fixed or ascertainable liability on the part of the obligee to such third person at the time the bond was executed, or that the services and material were furnished by such third person with knowledge of or reliance on the bond. It does not appear from the petition here ■ — and we are confined to its allegations in passing upon the demurrer — that plaintiff even had knowledge of the existence of the bond when it furnished the labor and material to Nick J. Gaspard, or that it relied thereon. Such matters cannot be read into the petition where the rights of sureties are involved.

To repeat, the bond was for the protection of the owner of the building. To entitle plaintiff to sue on this bond, it is not sufficient that there be a showing that a benefit would have inured to it in the performance of its covenants. The persons who furnished labor or material to Nick J. Gaspard, it is true, were indirectly interested in the performance of the covenants in the bond, but if they can maintain an action against the sureties, then an executory contract, under the terms of which one person agrees with another to advance money to the latter with which to pay his debts, could be enforced by any creditor of the person to whom the promise is made. No one would contend for such a doctrine.

In the case of Vrooman v. Turner, 69 New York, 280, in which case the court reviews a number of New York cases bearing upon the rule being considered here, it was held that a mere stranger cannot claim the benefit of a contract between other parties; to entitle a third person to such benefit there must be either a new consideration or some prior right or claim against one of the contracting parties by which he has a legal interest in the performance of the agreement. In the case at bar, plaintiff, at the time of the execution of the bond, so far as the record discloses, had no right or claim against either of the parties to the bond.

Counsel for plaintiff have cited numerous cases outside of Ohio, which, they insist, support their contention here. In a number of these cases the contracts or bonds under which third persons were claiming are different in form and language from the one here. In other cases the facts disclosed by the record are unlike those presented here. In some it appears that the condition in the bond was inserted for the sole and express purpose of protecting all persons who should do work or furnish material, and that such persons did the work and furnished the material relying upon the provisions of the bond. Cases are cited in which a bond is given to a municipality under a statute for the benefit or security of persons not named as obligees, and where the statute expressly or by implication authorizes such persons to sue upon the bond. These cases are not in point here, and it is unnecessary to make further reference to them.

Our attention is directed to the case of American Surety Co. v. Raeder, Assignee, 15 C. C., 47, affirmed by this court, without opinion, 61 Ohio St., 661. In that case, the bond was given by the contractor to the board of education for the building of a school house, and provided for the payment of all just and legal claims for labor performed and material furnished, and it was expressly provided in the bond that the undertaking should be for the use of any laborer or materialman having a just claim, as well as for the board of education. In that case the main question was whether the bond could be enforced in behalf of the laborers and materialmen. Counsel for the surety company contended that the bond was given solely for the protection of the board of education, and inasmuch as the board was under no legal obligation to pay a claim against the contractor for labor and material furnished, and was in no way indebted to the plaintiff in that case, no cause of action arose on the bond in his favor. The circuit court held that it was quite clear, from an examination of the language of the bond, that the parties intended to give a right of action on the bond for unpaid claims of the class of the plaintiff against the contractor. The absence in the bond here of a provision such as appeared in the bond in that case distinguishes the two cases.

In Buffalo Cement Co. v. McNaughton, 90 Hun., 74 (affirmed on opinion of supreme court, 156 N. Y., 702), the court denied the right of recovery even on a bond with a provision similar to the one in American Surety Co. v. Raeder, Assignee, supra, for the protection of material-men, as it did not appear that they knew of the bond and relied on its provisions when they furnished the material. The court used the following language, which is in point here, and applies with more force for the reason that there is no express provision in the bond giving materialmen the right to bring an action in their own names:

“In some of the states of the Union statutes have been passed giving a cause of action in favor of materialmen in such a case as this. A like provision may be found in certain city charters. But these statutes will be found to contain provisions looking to the protection of the sureties in some instances by a short statute of limitations.
“The plaintiff is not aided by any such provision, either in our city charter or by any statute in our state. If the plaintiff is entitled to recover in this case, the bond being a sealed instrument, it would seem to follow that the twenty years’ statute of limitations applies. If so, it would follow that the plaintiff, or any others who may have furnished material or labor upon the sewer, could at any time during that period maintain actions against the sureties to recover anything due them from the contractor. Such actions might have been brought before the completion of the sewer, and the penalty named in the bond exhausted, and the city thereby deprived of the protection which the bond was intended to give to it.”

For the reasons we have given, plaintiff in error did not, in its petition, state facts entitling it to relief against the sureties on the bond, and the circuit court did not err in affirming-the judgment of the common pleas court on the demurrer to the petition, and the judgment of the circuit court is, therefore, affirmed.

Judgment affirmed.

Shauck, Donahue and Wilkin, JJ., concur.

Nichols, C. J., and Johnson, J., dissent.

Wanamaker, J.,

dissenting. I dissent from the judgment and syllabus of this case. Due respect for the majority opinion as well as for the importance of this case requires that I set forth in some detail my reasons for this dissent.

My contention is that the judgment and syllabus in this case are contrary to the authority of modern precedent, contrary to the authority of reason, contrary to the intention of the parties to the bond, contrary to the progressive jurisprudence and the humanitarian spirit of the times.

The majority opinion concedes the doctrine laid down in The American Surety Company of New York v. Raeder, Assignee, et al., 15 C. C., at page 47, which was affirmed without opinion in 61 Ohio St., 661.

The syllabus of the case reads as follows:

“Where, in a contract with a board of education for the building of a school house, the contractor was required to, and did give a bond for the faithful performance of the contract, providing also that he should pay all just and legal claims for labor performed upon, and for material furnished for the work, and also agreeing that the undertaking should be for the use of any laborer or materialman having a just claim as aforesaid, as well as for the board of education, such obligation so far as laborers and materialmen are concerned is not beyond the powers of the board of education, but is valid, and may be enforced against the sureties on such bond by any laborer or materialman who has a legal claim against such contractor for labor performed or material furnished in the erection of the building.”

The bond in that case, among other provisions,' contains the following:

“The condition of this obligation is such, that, whereas, the said Peter J. Black, did, on the 27th day of May, A. D. 1895, enter into the foregoing agreement with said Board of Education, which said agreement is made a part of this bond, the same as though fully set forth herein, now, if the said Peter J. Black, designated as said party ■ of the second part, in the said foregoing agreement, shall well and truly perform all and singular, the stipulations of said agreement by him to be performed, and shall pay all just and legal claims for labor performed upon, and for materials furnished for the work specified in said agree-' ment, the same shall remain in full force and virtue in law; otherwise, then, this obligation shall be void. We hereby agreeing and consenting that this undertaking shall be for the use of any laborer or materialman having a just claim as aforesaid, as well as for said Board of Education!’

The very able and conclusive opinion in this case, by Judge Hale of the circuit court of Cuyahoga county, might well be sufficient to justify this dissent.

The old doctrine that a third party, stranger to the instrument or contract, might not sue under the contract because of there being no “privity” between him and the other parties to the contract, has long been disregarded.

“In most of the states the English doctrine that where a person makes a promise to another for the benefit of' a third person the' latter cannot maintain an action upon it is not recognized to the full extent, but it is held, subject to the qualification hereafter stated, that the action may be maintained. This is now the prevailing doctrine in the United States. This is sometimes based on general principles of law and sometimes, as in the code states, on the provisions of the code of procedure that every action shall be prosecuted ‘in the name of the real party in interest.’ ” 9 Cyc., 377, et seq.

“By the weight of authority the action cannot be maintained merely because the third person will be incidentally benefited by performance of the contract; but he must be a party to the consideration, or the contract must have been entered into for his benefit, and he must have some legal or equitable interest in its performance. If the person for whose benefit a contract is made has either a legal or equitable interest in the performance of the contract, he need, not necessarily be privy to the consideration.” 9 Cyc., 380.

Some of the states, New York for instance, have adhered very closely to the old English rule and have relaxed it only to a very limited degree, while the central and western states’ decisions, as well as our federal decisions, have repudiated the English doctrine almost entirely.

The majority opinion cites with approval the Ohio cases of Crumbaugh v. Kugler, 3 Ohio St., 544; Thompson, Admx., v. Thompson, 4 Ohio St., 333; Bagaley & Co. v. Waters, 7 Ohio St., 359, as announcing the doctrine that a third party can sue only where there is an existing indebtedness.

It must be conceded on all hands that that is not the law to-day in respect to bonds. Bonds generally relate entirely to the future and in no wise to the past. They are given expressly to guarantee the faithful performance of future personal duties, trust duties and official duties, to provide against future defaults and defalcations. And if this be sound doctrine — that an existing indebtedness had to be the basic predicate of the right of a third party to sue — then all such contracts in futuro would be mere nullities so far as third parties are concerned.

Now there is no more reason in principle why there should be an existing indebtedness to support an action by a third party than in case of the first or second party to a contract. Raeder case, supra.

In line with these old cases is also the case of Emmitt v. Brophy, 42 Ohio St., 82, in which again the existing indebtedness is emphasized as an essential qualification of the bond. This last case is cited with approval in the case of C., H. & D. Rd. Co. v. Bank, 54 Ohio St., 60.

Great emphasis is laid upon this last case by the majority, and Judge Spear’s opinion is specially commended. The syllabus in that case reads as follows:

“An action cannot be maintained against a bank by the holders of a check for refusal to pay it unless the check has been accepted, although there stands to the credit of the drawer on the books of the bank a sum more than sufficient to meet the check.”

This syllabus is absolutely without any relevancy to the case at bar, and I further contend .and maintain that it is not sound doctrine as applied to existing commercial transactions with a modern-day bank, in which all checking accounts are expressly made subject to the payment of all checks issued, not only upon the bank by the depositor in his own favor but issued in favor of third parties, so long as the bank has the funds with which to pay. This agrees with the progressive business spirit of the times. Certainly the owner, holder or payee of the check is the real party in interest, and I cannot believe that such a decision would receive the sanction of this court in the year 1914. Who is the “real party in interest” if not the payee of the check?

Judge Spear,- in that opinion, uses this language: “Nowhere is it held that the obligation will attach in favor of future creditors not named and not known, and as to amounts not specified or then ascertainable, to the extent of giving to such creditors a right of action on the contract.”

And yet this very court in affirming the Raeder case, supra, four years later, repudiated the foregoing doctrine that third parties not named could bring suit and for an amount not then ascertainable.'

Now it must be conceded that the intention of the parties to be determined from what they have said and done shall be the pole-star in interpreting all written instruments, whether simple contracts, checks, bonds, and even statutes and constitutions.- - The majority opinion is strangely silent on the question of what was the intention of the parties to the bond.

The intention in the Raeder case, supra, is manifest from the express terms of the contract, and that, too, without the aid of the last three lines of that bond.' Is the intention of the parties not equally manifest from the terms of the bond in the case at bar?

The part' of the bond pertinent to this inquiry’ is as follows:

“The - condition of this obligation is such that whereas the said N. J. Gaspard on the 17th day of Aug., A. D. 1909, entered into a written agreement' with the said F. Zimmerman Realty Co., whereby-he contracted to provide all the materials and-perform all thé work for the erection and completion of the carpenter work, wooden framing, frames, sash, doors, finish, flooring, roofing, sheet metal work, marble and mosaic, mantel and tile work, glass and glazing, rough and finished hardware for a three-story brick apartment building to be erected on the northeast, corner of E. 86th street and Birchdale avenue, Cleveland, O., and to furnish all tools, implements and cartage thereto as shown by drawings and specifications by architect, G. B. Bohm, and whereas said contract further provided as follows:
“ ‘As a condition of this contract to furnish the owner a satisfactory surety bond as agreed in the sum of six thousand dollars ($6,000.00), to guarantee the completion of the work comprehended in this agreement, and to further guarantee the payment of any claims there may be for the payment of material and labor required in the erection of this building/ and
“Whereas, in lieu of a surety bond, it is agreed between the said parties that said N. J. Gaspard may furnish a bond signed by individuals.
“Now, therefore, if the said N. J. Gaspard shall well and truly perform all the terms and conditions contained in said contract and complete said work as therein provided and pay or cause to be paid all claims contracted in reference thereto for material and labor, then the above obligation to be void; otherwise the same shall remain in full force and virtue in law.”

Now it is admitted that a bond shall be construed strictly, but that strict construction must likewise be a just and reasonable construction, and must accord with the intention of the parties. It is not limited to the letter of the bond as therein written, but what is necessarily implied in the bond is as much a part of it as what is expressly written in the bond.

In the second paragraph of the bond quoted above, suppose we add a parenthesis so that the italicized part will read as follows: “And to further guarantee the payment of any claims there niay be for the payment of material and labor required in the erection of this building (to whomsoever shall furnish such material and labor in accordánce with the contract)”; and the same parenthesis in the last paragraph of the bond quoted, “to pay or cause to be paid all claims con-, tracted in reference thereto for material and labor (to whomsoever shall furnish such material or labor in'accordance with the contract).”

Why are these parenthetical parts not as much a part of the bond as if they were written in the bond? All parties must have so understood it, because it is so obviously and necessarily implied.

' If now they are a part of this bond, how then-is this case distinguishable in principle from the Raeder case, supra, which has been recognized as the law by this court?

Indeed, in order in anywise to justify the construction' placed upon this bond by the majority of this court, something additional needs to be read into the bond, else this language of the bond means nothing, accomplishes nothing, obligates nobody;

The language that must of necessity be read into this bond is substantially this parenthesis: “And to further guarantee the payment of any claims there may be for the payment of material and labor required in the erection of this building (provided the owner of the building has been compelled to make previous payment, or the .materialmen and laboring men have filed mechanics’ liens upon the building, for which the owner would be liable).” So that it turns out that the majority opinion does not adhere to the strict letter of the bond but reads into it something that limits and qualifies the language used, so as to destroy the protection evidently to be fúrnished to the subcontractors, materialmen and laboring men in the erection of the building.

Returning again to the particular bond in this case, it will be noticed that the bond itself expressly mentions “sheet-metal work” What for? Was it not intended thereby to specially guarantee under this bond the payment for all sheet-metal work? And who furnished the sheet-metal work, the owner of the building or the plaintiff subcontractor? Manifestly the payment must be made to the party who furnished the work and material.

Again, the language of the bond in the second paragraph is “[1] to guarantee the completion of the work comprehended in this agreement, and [2] to further guarantee the payment of any claims there may be for the payment of material and labor required..in the erection of this building.”

Now, the syllabus of this case, which seeks to justify the judgment, contains this language: “That the bond * * * is for the protection of the owner of the building, and an action on the bond against the sureties thereon cannot be maintained by a company [subcontractor] for the payment of claims against the contractor,” etc.

Of course, I admit that it is for the protection of the owner of the building, but I deny that it is exclusively for his protection. The language just quoted following [1] shows that it was to guarantee the completion of the contract, and [2] to guarantee the payment of claims for material- and labor required in the erection of this building.

What I claim is that while this is for the protection of the owner primarily, it is also for the protection of all laborers, materialmen and subcontractors secondarily, who have to do with “erection of this building.” The course of reasoning following in the opinion justifies, yes demands, the reading of the word “exclusively” after the word “is,” so that the syllabus would read “is exclusively for the protection of the owner of the building.”

Let us analyze this language of the bond from another angle:

“And to further guarantee the payment” — not to the owner certainly, for on completion of the contract the owner was to pay and not to be paid.
“Of any claims” — claims of whom? Not the owner, because he hadn’t any, but the laborers, subcontractors and materialmen. Again, note the broad, comprehensive scope of the words “any claim,” which would include, of course, accounts, notes, liens, etc.
“There may be for the payment of material and labor” — past or future, which; and for “material and labor” — who furnished it, the owner or third parties ?
“Required in the erection of this building”— this is as broad in scope as words can be.

■After assembling these separate italicized phrases and clauses beginning these several paragraphs, ask yourself the question, If it was not intended to include the claims of subcontractors, laborers and materialmen, pray what was all this language used for anyhow?

The construction of the majority utterly disregards and destroys all these words that appear in two separate paragraphs of the bond in substantially the same style of speech. The old elementary rule of construction that the court shall give effect if possible to all parts of the contract is clearly and radically violated.

Now every owner of a building in contemplation of erection feels at least a moral obligation to have all laborers, materialmen and subcontractors fully paid. He does not take any pleasure in having some one pass his building and sáy: “I put one thousand dollars’ worth of labor or one thousand dollars’ worth of material into that building and it never was paid for.”

Men in this age are trying to get ¿way from the old, narrow, selfish idea of every man for himself, and upon the contrary the individual does feel that he is, in some sense, “his brother’s keeper.” It was the'most natural thing for the owner of this building to undertake to provide by a proper bond that all claims “for material and labor required in the erection of this building” should be paid for under the bond.

The policy of our federal laws in this respect has been ably discussed and determined in Hill v. American Surety Co., 200 U. S., 197, decided January 2, 1906. The syllabus reads as follows:

“The act of August 13, 1894, 28 Stat., 278, was issued, as the title declares, for the protection of persons furnishing materials and labor for the construction of public works, and nothing in the statute, or in the bond therein authorized, limits the right of recovery to those furnishing material' or labor to the contractor directly; but all persons supplying the contractor with labor or materials in the prosecution of the work are to be protected.
“The rule which permits a surety to stand upon his strict legal rights does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract.
“Such statutes are to be liberally interpreted and not to be literally construed so as to defeat the purpose of the legislature.
“Under the circumstances of this case, a materialman, who had complied with the provisions of the statutes as to filing notice, was entitled to recover from the surety company on a bond given under the statute, although the materials were furnished to a subcontractor and not directly to the contractor.”

Judge Day in his opinion uses this language: “The courts of this country have generally given to statutes intending to secure to those furnishing labor and supplies for the construction of buildings a liberal interpretation, with a view of effecting their purpose to require payment to those zvho have contributed by their labor or material to the erection of buildings to be owned and enjoyed by those who profit by the contribution of such labor and materials. * * * And the rule which permits a surety to stand upon his strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances- surrounding the parties.”

If there should be a liberal construction of a statute to effect its purpose, why should there not be at least a fair and reasonable construction of a contract or of a bond with a view of effecting its purpose?

Judge Day goes on in the following language: “Statutes are not to be so literally construed as to defeat the purpose of the legislature. ‘A thing which is within the intention of the makers of the statute, is as much within the statute, as if it were within the letter.’ ”

By the same doctrine, a thing which is clearly implied in the contract must be as much a part of the contract as if it were within the letter or words of the contract, all of which I hold justifies reading into the bond the parenthetical words heretofore referred to.

“The obligation is ho make full payments to all persons supplying it with labor or materials in the prosecution of the work provided for in said contract/ This language, read in the light of the statute, looks to the protection of those who supply the labor or materials provided for in the contract, and not to the particular contract or engagement under which labor or materials were supplied. If the contractor sees fit to let the work to a subcontractor, who employs labor and buys materials which are used to carry out and fulfill the engagement of the original contract to construct a public building, he is thereby supplied with the materials and labor for the fulfillment of his engagement as effectually as he would have been had he directly hired the labor or bought the materials.”

While there is a statute governing this matter in national public work, it is equally the policy in the several states, not merely as to public work but as to private work, and specially where bonds are executed for the faithful performance of such work.

A more recent case by the supreme court of the United States, in which the same judge, Judge Day, rendered the opinion, was decided December 1, 1913, under the title of United States Fidelity & Guaranty Co. v. United States, for the benefit of Bartlett, 231 U. S., 237.

This was a suit on a bond which included this provision, i. e., that the contractor or contractors would “promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract.”

In the contract it was provided that the contractor should be held responsible for and pay all liabilities incurred in the prosecution of the work for labor and material. The contractor, Donavin, executed the bond. There was no existing indebtedness, and Bartlett’s name was not mentioned in the bond. The lower courts held with Bartlett. The supreme court affirmed their judgment.

The New York decisions, of course, support the doctrine announced and defended in the majority opinion, but Iowa, Nebraska, Michigan, Minnesota and some other central and western states, together with the federal decisions, strongly support the doctrine here contended for. And why should we virtually overrule the Raeder case? There is now no occasion for any backward step. Between the strict technical interpretation of the eighteenth century that severely followed the letter that killeth and the liberal progressive interpretation of the twentieth century that follows the spirit and maketh alive, giving wages to labor and payment to subcontractors and -materialmen, I prefer the latter.


source: Caselaw Access Project

author:
Wanamaker, J.
      Donahue, J.,

license: Public Domain

text:
    The State of Ohio v. Cameron et al.

      Criminal law — Conflict of laws with constitutional amendments— Repeals by implication — Jurisdiction of supreme court — Bills of exceptions by attorney general or prosecuting attorney — Sections 13681 to 13684, General Code.

    1. Under the general policy of our law as well as the schedule accompanying the new constitution of 1912, all statutes then in force consistent with such new constitution remain in force, and all repugnant statutes are repealed by implication.
    2. Repeals by implication are not favored, and before a statute is so repealed the repugnancy must be necessary and obvious, and if by any fair course of reasoning the law and constitution can be reconciled the law must stand. (Cass v. Dillon, 2 Ohio St., 608, approved and followed.)
    3. Sections 13681 to 13684, General Code, are neither inconsistent with nor repugnant to the new constitution, and are thereby preserved in full force and virtue as to felony cases, not as conferring jurisdiction but as prescribing a rule of procedure and practice as to certain appellate jurisdiction now conferred by the new constitution.
    (No. 14392
    — Decided January 13, 1914.)
    Motion to Dismiss Bill of Exceptions by the Prosecuting Attorney to the Decision of the Court of Common Pleas of Franklin county. •
    Facts are stated in opinion.

      Mr. Edward C. Turner, prosecuting attorney, for the exceptions.

      Mr. Smith W. Bennett and Mr. O. E. Harrison, against the exceptions.

      Mr. James M. Butler and Mr. J. J. Chester, of counsel, appointed by the court, against the exceptions.
   Wanamaker, J.

Isaac B. Cameron and Cyrus Huling were jointly indicted by the grand jury of Franklin county, Ohio, under favor of Revised Statutes, Section 6841, as in force in the month of May, 1903, for the unlawful conversion of public money belonging to the state of Ohio.

To this indictment the defendants demurred, and were sustained by the court of common pleas. The state thereupon excepted to such ruling and brings •its exceptions to this court for a decision as to the law, under favor of Sections 13681 to 13684, inclusive, General Code.

Upon the filing of such bill of exceptions by the state of Ohio, counsel appointed by the court of common pleas to sustain its judgment upon the demurrer filed a motion to strike said bill of exceptions from the files upon the ground that the supreme court of Ohio is now without jurisdiction in the premises, claiming that, by the adoption of the new constitution, said statutes are by implication repealed.

The sole question, therefore, before this court is whether or not under the new constitution of 1912 the sections of the General Code above referred to, to-wit, 13681 to 13684, inclusive, are still in force, or, upon the contrary, have they been repealed by reason of the fact that they are repugnant to and inconsistent with the new constitution.

The schedule of the constitution of 1912 here applicable reads as follows:

“The several amendments passed and submitted by this convention when adopted at the election shall take effect on the first day of January, 1913, except as otherwise specifically provided by the schedule attached to any of said amendments. All laws then in force, not inconsistent therewith shall continue in force until amended or repealed.”

It is conceded that these statutes in question have not been expressly amended or repealed, but it is claimed that they are impliedly repealed because of inconsistency with the plain provisions of the new constitutional amendment.

It is conceded upon all hands that, under the constitution of 1851', all appellate jurisdiction conferred upon the supreme court had to be conferred by an act of the general assembly of Ohio.

Article IV, Section 2, of the Constitution of 185! reads as follows: “It shall have original jurisdiction in quo warranto, mandamus, habeas corpus and procedendo, and such appellate jurisdiction as may be provided by law.”

It is likewise' admitted on all hands that, under the new constitution, all appellate jurisdiction that the supreme court may exercise is conferred directly by the constitution itself. See Section 2, Article IV, as amended September 3, 1912. Of course, this does not include the revisory jurisdiction of administration boards.

And it must further be conceded that the new constitution confers on the supreme court all and absolute appellate jurisdiction in “cases of felony,” and that the only qualification upon such full and complete appellate jurisdiction under the new constitution “in cases of felony” is in the language “on leave first obtained.”

v Appellate jurisdiction under the new constitution is as comprehensive as any that the legislature might have conferred under the old constitution.

The legislature not having any authority under the new constitution to confer appellate jurisdiction, and it being contended that the statutes in question whose survival is here denied do assume to confer jurisdiction, therefore, it is vigorously-contended that the legislature being without power in this behalf, its acts in this respect become at once null and void by reason of their being inconsistent with and repugnant to the present constitution; and hence that they are effectually repealed by implication.

Questions of this character frequently arose under the constitution of 1851. Judge Thurman, in the old case of Cass v. Dillon, 2 Ohio St., 607, lays down the correct rule for determining what statutes are preserved and what sections fall by reason of changes made in the state constitution. The syllabus of that case, so far as applicable here, is as follows:

“All laws in force when the latter [the new constitution] took effect, and which were not inconsistent with it, would have remained in force without an express provision to that effect; and all inconsistent laws fell simply because they were inconsistent; in other words, all repugnant laws were repealed by implication.

“The rule, that repeals by implication are not favored, is applicable to the inquiry whether any particular enactment has ceased to be in force on account of repugnancy to the new constitution. Ohio, ex rel. Evans, v. Dudley, 1 Ohio St., 437, approved.

“The repugnancy which must cause the law to fall, must be necessary and obvious; if by any fair course of reasoning, the law and the constitution can be reconciled, the law must stand.”

Now it has been determined by this court in a recent case, 87 Ohio St., 313, State of Ohio v. Cox, that the sections in question did “confer appellate jurisdiction upon the supreme court in criminal cases to the extent and for the purposes specified in these sections.” In short, therefore, the court has held in the Cox case, supra, that jurisdiction to determine merely a question of law is proper appellate jurisdiction, though the procedure is largely ex parte, and though the judgment of the supreme court in such cases cannot' in any wise affect the parties below.

Now the sections in question, so far as they assume to confer appellate jurisdiction, confer a power upon this court that is already conferred by the constitution. But does that of itself make those sections inconsistent with or repugnant to the constitution according to the Judge Thurman rule ?

The mere fact that an act of the general assembly covers the identical subject-matter, even in the identical way that the constitution covers it, does not render such an act of the general assembly necessarily inconsistent with or obviously repugnant to the constitution. Upon the contrary, it is absolutely consistent with and conformable to the constitution. It is fairly reconcilable therewith because in phrase and fact it attempts to do the same thing that the constitution has already done.

In short, as a legislative provision, it is a sort of duplicate of the constitutional provision. How two things that are duplicates of each other can be necessarily and obviously repugnant to each other is beyond human reason. While a statutory provision that attempts to do the same thing that a constitutional provision has theretofore done is wholly unnecessary and ineffectual, still it cannot be fairly said, therefore, to be necessarily inconsistent and obviously repugnant to and irreconcilable with the constitution.

If the statute exceeded the power conferred by the constitution, then to the degree of the excess clearly that must fall by reason of repugnance. If, however, the power conferred by the legislature be less than the power conferred by the constitution, so far as the same is conferred it is not unconstitutional, because it is in entire harmony with the constitution. The limitation, however, undertaken by the legislature would in itself fall because there is no such limitation in the constitution.

Now the only limit in the constitution, so far as applicable to this case, is the “leave” or discretion of the supreme court. The majority of the court are clearly persuaded that a wise and sound course requires of this court the continuation of the policy of this state in criminal cases ever since 1867, to review the decisions and judgments of the lower courts for the purpose of determining the questions of law involved. In cases of jeopardy, that is all that could be done. In cases where there has been no jeopardy, that is all that the state may want done.

We are all agreed that the state might have prosecuted an appeal in this case for a reversal of the judgment below, there having been no jeopardy of the defendants; but, because they might have prosecuted error to the entire judgment, that does not necessarily deprive the state of the right to prosecute error as to a part of the judgment on a mere question of law for the purpose of determining the legal rule applicable to any such case in the future. The matter is wholly in the discretion of this court.

If the entire appellate jurisdiction in cases of felony as conferred by the constitution be represented by the circumference of a circle and the appellate jurisdiction provided for in these statutes be represented by some arc of that circumference, then if the state may apply for a reversal, may invoke the entire appellate jurisdiction represented by the entire circumference, they may also invoké any part of that jurisdiction for the purpose merely of determining the rule of law, if this court see fit to grant the “leave.”

Again, it • is urged that these statutes were enacted to apply to all criminal cases, and it being conceded that the supreme court’s appellate jurisdiction in criminal cases is now limited to felonies, that, therefore, the statutes must fail.

Now crimes in Ohio are divided into felonies and misdemeanors. The distinction is clear and well settled. Because the constitution omits criminal appellate jurisdiction in misdemeanors but expressly saves it as to felonies, that will not of itself cause the statutes to fall so far as cases of felonies are concerned. The two classes of cases are readily separable, and the court will have no difficulty in applying the statutes to felonies, though they are no longer applicable to misdemeanors.

A careful reading and .analysis of these sections in question clearly disclose the fact that in none of these sections is there any express grant of appellate jurisdiction. There are no apt or appropriate words directly or indirectly conferring that appellate jurisdiction.

These sections deal entirely with procedural law, setting forth' how the bill of exceptions shall be prepared in the trial court, the notice to be given to the trial judge, the appointment of an attorney by the trial judge to support the decision below, and the further provision that the whole question as to whether or not the same shall be allowed to be filed with the supreme court rests in the leake or discretion of the court.

The only way that these statutes could in any wise confer appellate jurisdiction would be under the rule of “necessary implication.” For it is quite clear that this procedure could have no force and effect unless the jurisdiction were intended to be conferred upon the supreme court.

In effect, however, what the legislature really did was to put the whole question of whether or not the supreme court would entertain jurisdiction in a case like this up to the supreme court itself. If the supreme court thought wise to entertain the jurisdiction it could do it. If it refused its “leave” it might do so. The discretion of the court was full and final.

What the legislature did under the old constitution in leaving it for the supreme court to say to what extent it would entertain appeals of this character, the people have now done by the provisions of the new constitution.

Now all these steps and rules of procedure indicated by these various statutes are obviously within the right of the legislature to enact under either the old constitution or the new constitution.

It is a matter of common knowledge that, though jurisdiction may be conferred upon a court by either a constitutional or statutory enactment, very frequently additional legislation' is necessary to furnish some procedure in order to make the jurisdiction in anywise available or effective. In the absence of statutory legislation in that behalf, the courts upon whom such jurisdiction has been conferred might, no doubt, provide rules of procedure. And if it were necessaiy in order to preserve the sound and wholesome provisions of these statutes, we would not hesitate to adopt these statutes as rules of procedure in order to invoke the appellate jurisdiction in cases of this character. However, we do not think that is necessary, because, under the tests laid down in the Cass v. Dillon case, supra, every particle of the statutes in question save the misdemeanor portion is wholly consistent and reconcilable with the new constitution, even in respect to appellate jurisdiction, so that either as statutes of procedure, if enacted by the legislature, or rules of practice, when adopted by this court, they are essential and indispensable to the exercise of full and complete appellate jurisdiction in cases of felony. No part of these statutes, so far as they apply to felonies, can be omitted from a systematic and orderly course or code of procedure. Every step in the journey from the trial court to the supreme court must be taken substantially agreeable to these provisions of the statutes in order to get a review of the legal questions.

The final test is: Has the legislature under the new constitution the present right to- enact statutes substantially like the statutes in question as a matter of legal procedure? If the legislature has that right, then clearly the statutes survive under the new constitution for the purpose of furnishing a rule of procedure, though not necessary for the purpose of conferring a jurisdiction that is already conferred.

It is urged, however, that the language of the new constitution, “cases of felony,” is not comprehensive enough to include a proceeding of this character. Manifestly constitutional provisions should be liberally and reasonably construed so as to effect the public purpose. A narrow and restricted interpretation that would cut down or destroy such a public purpose ought not to be encouraged or tolerated by our courts. Originally, of course, this was a “case of felony,” but it is urged that the court having sustained the demurrer and the state having elected to proceed not by petition in error but by motion, the adversary character of the original case has been destroyed, so that what was a case has now ceased to be a case.

No profit can come from reviewing the technical definitions that have been applied again and again to the word “case.” They all amount to a tweedledee and tweedledum distinction at the bottom.

The legislature itself refers to the proceeding as a “case.” This appears from Section 13682, General Code, “if the court allows the bill to be filed, the judge shall appoint some competent attorney to argue the case against the prosecuting attorney or attorney-general,” etc.

We believe that a sound and sensible criminal jurisprudence demands the continuation of the established policy of this state, which has been in force under these statutes or similar ones since the year 1867. It may very often occur that the whole case shall turn upon the view the trial judge takes of the law as to some particular phase of the case. It will not only facilitate the trial of criminal cases generally, but also be a great saving of time during the trial in avoiding the taking of evidence where legal questions turn out to be the real pivot of the case. Nobody is injured thereby; the rights of all parties are abundantly preserved, and justice is very measurably safeguarded and often expedited.

The same question of jurisdiction discussed and determined herein arises in State of Ohio v. Baxter, in respect to which the same decision is rendered.

A motion to strike the bill of exceptions from the files is, therefore, overruled.

Motion overruled.

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

Donahue, J.,

dissenting. In the case of the State of Ohio v. Cox, 87 Ohio St., 313, it was held that the sections of the General Code under favor of which the prosecuting attorney of Franklin county has filed this bill of exceptions, conferred upon the supreme court appellate jurisdiction for the purpose and to the extent named therein. The constitution of 1851 was then in force, and that constitution authorized the general (assembly of Ohio to confer appellate jurisdiction upon this court.

The constitution, as amended September 3, 1912, does not confer any such authority upon the general assembly. The schedule to the amendments to the constitution provides that “All laws then in force, not inconsistent therewith shall continue in force until amended or repealed.”

In the absence of such provision in the schedule, the same result would follow. In the case of Cass v. Dillon, 2 Ohio St., 607, it was held by this court that all laws not inconsistent with' an amendment to the constitution would remain in force without any express provision to that effect, and that all inconsistent laws would fall simply because they were inconsistent.

This court now derives all its jurisdiction directly from the constitution itself. The legislature has no power to limit or increase that jurisdiction. Upon that subject the constitution is final. It necessarily follows that any laws existing at the time these amendments to the constitution were adopted, which confer or purport to confer jurisdiction upon this court, are inconsistent with these amendments to the constitution and must fall simply because they are inconsistent.

These sections of the General Code above referred to purport to confer jurisdiction upon the supreme court in all criminal cases, misdemeanors as well as felonies. The amendment to the constitution, however, limits the jurisdiction of the supreme court to felonies only. In this particular, at least, these sections of the General Code are in direct conflict with the constitutional provision on this subject. State v. Mansfield, ante, 20.

These sections purport not only to confer jurisdiction upon this court but they also attempt to limit the jurisdiction so conferred. The constitution, as amended, provides that this court shall have appellate jurisdiction “in cases of felony on leave first obtained.” This means full, and not partial, appellate jurisdiction.

Section 13684, General Code, provides that “The judgment of the court in the case in which the bill was taken shall not be reversed nor affected; but the decision of the supreme court shall determine the law to govern in a similar case.” This means in all criminal cases, whether the defendant has been once in jeopardy or not, and if this section were to be given effect it would limit the appellate jurisdiction in felony cases conferred by the constitution, at least in all cases where the defendant has not been once in jeopardy. There never was any good reason for limiting the appellate jurisdiction of this court to merely declaring the law to govern in a similar case where the accused had not been once in jeopardy. Such a provision tended merely to permit the guilty to escape and was not and is not necessary for the protection of the innocent.

The constitution, as amended, now confers upon this court appellate jurisdiction to review and reverse the judgment in a felony case. It ought to exercise that jurisdiction as in all other cases, and if perchance the defendant has been once in jeopardy, other provisions of the constitution fully protect him from further prosecution, yet even in such case the judgment of this court will have at least as much force and effect as it can have under the statute. This section, purporting to limit the appellate jurisdiction of this court conferred by the constitution in felony cases, is in clear conflict with the constitution itself.

Section 2 of Article IV and Section 6 of Article IV, relating to the appellate jurisdiction of this court and the jurisdiction of the courts of appeals, must be construed together. Section 6 of Article IV, as amended, specifically provides that the courts of appeals shall have appellate jurisdiction “to review, affirm, modify or reverse the judgments of the courts of common pleas, superior courts and other courts of record within the district as may be provided by law, and judgments of the courts of appeals shall he final in all cases, except cases involving questions arising under the constitution of the United States or of this state, cases of felony, cases of which it has original jurisdiction, and cases of public or great general interest in which the supreme court may direct any court of appeals to certify its record to that court. No judgment of a court of common pleas, a superior court or other court of record shall be reversed except by the concurrence of all the judges of the court of appeals on the weight of the evidence and by a majority of such court of appeals upon other questions; and whenever the judges of a court of appeals find that a judgment upon which they have agreed is in conflict with a judgment pronounced upon the same question by any other court of appeals of the state, the judges shall certify the record of the case to the supreme court for review and final determination.”

Section 2 of Article IV confers appellate jurisdiction upon the supreme court in all cases involving questions arising under the constitution of the United States or of this state, in cases of felony on leave first obtained, and in cases which originated in the court of appeals, and further provides that “In cases of public or great general interest the supreme court may, within such limitation of time as may be prescribed by law, direct any court of appeals to certify its record to the supreme court, and may review, and affirm, modify or reverse the judgment of the court of appeals.”

The provision in Section 6 of Article IV, that the courts of appeals shall have appellate jurisdiction to review, affirm, modify or reverse the- judgment of the court of common pleas and other courts inferior to it within its jurisdiction, is too plain to be mistaken, but the further provision that in all cases, except the ones specifically enumerated, the judgment of the court of appeals shall he final, certainly forecloses all controversy on this subject. The plain provisions of Sections 2 and 6 of Article IV of the Constitution confer exclusive appellate jurisdiction in the first instance in all cases upon the courts of appeals to review, affirm, modify or reverse the judgment of courts inferior to it within its jurisdiction, and confer appellate jurisdiction upon this court, in certain cases only, to review and affirm, modify or reverse the judgment of the court of appeals, and incident to this jurisdiction this court would, of course, have the right to affirm, modify or reverse the judgment of the court inferior to the court of appeals, which was the subject of review in that court, or to render the judgment that the court of appeals or the trial court should have rendered. Further than that this court has no appellate jurisdiction.

Any act of the general assembly purporting to take from the court of appeals the appellate jurisdiction conferred by the constitution upon that court to review, affirm, modify or reverse the judgment of the court of common pleas, superior courts or other courts of record within the district, and transfer that jurisdiction to the supreme court, is in clear conflict with these two provision of the constitution and void. For these reasons, I cannot concur in the conclusion reached by .the majority of this court in this case.


author: Johnson, J.

text:
    The Toledo Disposal Company v. The State of Ohio.

      Criminal law — Police power — Prosecution cannot be maintained under one statute — When act done authorized by special statute— Public nuisances — State cannot prosecute garbage disposal company, when.

      1. In the exercise of the police power, the state and municipal authorities may make all such provisions as are reasonable, necessary and appropriate for the protection of the public health and comfort, and when any such provision has a real and substantial relation to that object and does not interfere with the enjoyment of private rights beyond the necessities of the situation, every intendment is to be made in favor of its lawfulness.
    2. No criminal prosecution can be sustained in Ohio except for an act done in violation of a statute or ordinance legally passed; and the courts will not construe that to be a crime punishable under one statute which was done under authority especially granted by another statute.
    3. A public nuisance arises out of the violation of public rights or the doing of unlawful acts; and if the legislature, by a law passed within its legislative power, authorizes an act to be done which, in the absence of the statute, would be a public nuisance, such act ceases to be legally a nuisance so far as the public is concerned.
    4. The state cannot maintain a criminal prosecution against a defendant for conducting a plant and business located, constructed and operated under an express contract with a municipality, made under legislative authority, where the plant is conducted under municipal control and regulation, with care and skill, and in such manner as to produce the least possible annoyance, and where it is all done for the purpose of conserving the health and safety of the public.
    (No. 14019
    — Decided January 13, 1914.)
    Error to the Circuit Court of Lucas county.
    Plaintiff in error was indicted by the grand jury of Lucas under Section 12646, General Code, for maintaining a public nuisance.

      The indictment charged that the defendant corporation did unlawfully and purposely use and maintain a certain building for the purpose of carrying on the business of reducing garbage and manufacturing fertilizer of and from garbage and from the entrails, offal and bones of beasts, etc., which occasioned noisome and offensive smells and which became and were injurious to the health and comfort of the public and of persons residing in said county to the common nuisance of all the people of the state of Ohio there living and abiding.
    On the trial in common pleas defendant was found guilty. The trial court imposed a fine of $300 and ordered the nuisance abated.
    This judgment was affirmed by the circuit court, and these proceedings are brought to reverse the judgments of the courts below.

      Mr. Ben W. Johnson, for plaintiff in error.

      Mr. Holland C. Webster, prosecuting attorney; Mr. Charles M. Milroy, prosecuting attorney, and Mr. George P. Grennhalgh, assistant prosecuting attorney, for defendant in error.
   Johnson, J.

The Toledo Disposal Company is a corporation organized to operate a reduction plant. In 1910 it entered into a contract with the city of Toledo, under specifications ' prepared by the city, for the disposal of its garbáge waste by a process of reduction. Thereupon the company constructed a plant at an expense of about $150,-000. On the trial the company offered evidence showing that the plant was built and equipped with approved machinery, which was made upon modern, sanitary and scientific lines; that the location,. construction and operation were prescribed, supervised and regulated by the city of Toledo and that the plant was operated carefully and skillfully. The director of public service as a witness in the case expressed his approval of the manner in which the work was conducted and his opinion that its conduct did not constitute a nuisance. The contract expressly stipulated that the disposal of the garbage should be under the control of the director of public service.

The contract and the ordinance and resolutions under which it was made, were offered in evidence by defendant and rejected by the trial court, as was also the testimony that the plant was operated with care and skill.

Counsel for defendant in error concede in their brief, for the sake of the argument, that the “plaintiff in error could show that its plant and business were located, constructed and conducted so. as to produce the least possible annoyance.”

The trial court refused the request of defendant to charge the jury that “The defendant was, during the time laid in the indictment, expressly authorized to conduct the business in which it was then engaged. It cannot therefore be prosecuted or punished merely for conducting said business, and if the jury find by a preponderance of the evidence, that the defendant conducted said business at the best available location, by the use of the best available machinery, equipment and appliances, and in a skillful and careful manner, with reference to preventing the escape of odors, and if you find that the conduct of said business created no more odors than were necessarily incident to such conduct of said business, your verdict must be for the defendant.”

The court charged the jury that “if the smells indicated did emanate from this building, and if they .were offensive to the general public, it is immaterial for your consideration how the business was conducted and what kind of machinery was used by defendant in the conduct of its plant.”

The refusal to charge as requested and the quoted part of the general charge given to the jury indicate the views of the courts below on the important matter under consideration.

The contract referred to was made by the city under express legislative authority.

Section 3649, General Code, authorizes municipal corporations to establish, maintain arid regulate plants for the disposal of sewage, garbage and similar refuse matter. Section 3677 provides that municipal corporations shall have special power to appropriate and hold real estate within their corporate limits for many purposes, among which are specified “sewage and garbage disposal plants and farms.” Section 3678 enacts that in the appropriation of property for- any of the purposes named in the preceding section the corporation may when reasonably necessary acquire property outside the limits of the corporation.

Section 3809 authorizes a city to make a contract with any person, firm or company for the collection and disposal of garbage in such corporation. Construing the sections above referred to in pari materia, it is manifest that the legislature intended to provide for the disposal of garbage that should gather and be collected in the corporation, but not to restrict the place of disposal.

The- question is, therefore, clearly presented whether the state can maintain a criminal prosecution against a defendant for conducting a plant and business located, constructed and operated under an express contract with a municipality made under legislative authority, when the plant is conducted under municipal control and regulation, with care and skill, and in such manner as to produce the least possible annoyance, such authority having been given and such contract having been made for the purpose of conserving the health and comfort of the public.

The inception, the creation and the maintenance of'this business was a public undertaking in the interest of the public health and the general welfare. Any benefit that defendant company may have received from the operation of the plant was purely secondary and incidental. The compensation it received from the city, $5,800 per year, was paid as the contract price is paid for any other public work done under legislative authority. Every essential connected with the enterprise that is related to the public health and comfort rested in the control of the city. In addition the contract secured to the city the right at any time after two years, when permitted by law, to take over the plant at a valuation to be determined in a manner inrovided for.

An order which abates the unavoidable incidents of a business when conducted with all possible care and skill, operates to prohibit the business itself, and in this case denies to the city of Toledo the right to avail itself of the provisions of the wholesome and beneficent statutes touching the subject.

Nothing is more firmly established than, that the state and municipal authorities, in the exercise of the police power, may make all such provisions as. may be reasonable, necessary and appropriate for the protection of the public health and comfort.

In California Reduction Co. v. Sanitary Reduction Works, 199 U. S., 306, Justice Harlan says: “This court has said that the possession and enjoyment of all rights are subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, good order and morals of the community.’ ” It is further said: “‘Every intendment is to be made in favor of the lawfulness of the exercise of municipal power making regulations to promote the public health and safety.’ ”

The mode of disposing of garbage and refuse matter is one of the difficult questions involved in municipal sanitation. Its great importance is not doubted. It is true that there has not yet been complete agreement as to the best and most appropriate method for the disposal of garbage and refuse material, but the testimony tendered and rejected shows that the city of Toledo made every effort to proceed on the most modern and scientific plan. The city in the discharge of its duty to safeguard the health of its people pursued the course pointed out by the state. There is no ground to question the good faith of all concerned. The entire enterprise has a “real and substantial relation” to the very proper object for which it was instituted; and under the rule stated every intendment is to be made in favor of its lawfulness. There are no common-law crimes in Ohio. No act can be punished criminally except in pursuance of a statute or ordinance lawfully enacted. Mitchell v. State, 42 Ohio St., 383, and cases there cited.

It would seem to be incontrovertible that the court would not construe that to be a crime punishable under one statute which was done in the exercise of powers specifically granted by another statute. Such a holding would be contrary to established rules of construction. It would in effect attribute to the legislature a disregard of wise public policy.

In Joyce on Nuisances, Section 67, the rule is stated: “It is a general rule that an act which has been authorized by law cannot be a public nuisance, and that the state cannot prosecute as a nuisance that which it has authorized. So, it has been decided that works of internal improvement which have been erected by the state for the benefit of its citizens do not become a public nuisance from the fact that the neighborhood is thereby rendered unhealthy by the obstruction of running water and consequent overflowing of adjoining lands, and that the character of such works is not changed by the fact that they are transferred to a private corporation which is required to maintain the same for the purposes of their creation.” This rule is also declared in Sopher v. State, 169 Ind., 177; Miller v. Webster City, 94 Ia., 162; Stoughton v. State, 5 Wis., 291.

The proposition stated does not involve the conclusion that a person injured specially and in a different way than the public would not be entitled to recover damages in a civil suit, if the work is done in an improper manner or so as to cause unnecessary disturbance or discomfort to such person.

The doctrine is stated in Blanc v. Murray, 36 La. An., 164, as follows: “That which is authorized by the legislature, within the strict scope of its constitutional power, cannot be a public nuisance, but it may be a private nuisance, and the legislative grant is no protection against a private action- for damages resulting therefrom.” The distinction here pointed out is also stated in Baltimore & Potomac Rd. Co. v. Fifth Baptist Church, 108 U. S., 317, and in Bohan v. Port Jervis Gas Light Co., 122 N. Y., 18.

At Section 69 of his work, Joyce says: “It is a general rule that where an act is made lawful by legislative sanction, annoyances in connection therewith must be borne by the individual subject to this qualification that the act must be done without negligence or unnecessary disturbance, by the one doing it, of the rights of others.”

There is a distinction between a case in which the thing complained of is done under a general act of the legislature and one in which it is done under a special law of the state or under a special contract made under sanction of the state, in which the particular thing done and the manner of doing it is defined. In the former case the general law will not justify the doing of the thing in such a way as to produce a nuisance or cause injury, while in the latter it is held that the governmental authority had in view the consequences which were to follow from the doing of the particular thing and that the state cannot sustain a criminal proceeding for the doing of the thing specifically authorized. Stoughton v. State, supra; 29 Cyc., 1198.

A majority of the learned circuit court were of the opinion that the case of Garrett v. State, 49 N. J. Law, 94, declared the principles that rule the case at bar. In that case defendant was indicted for creating a public nuisance in operating a .factory for the manufacture of fertilizers from dead animals and filth, which produced a public nuisance.

The defendant claimed that he had been licensed by the board of health of the county to carry on the business, and that the license was a defense to an indictment for nuisance during its continuance. The trial court refused the request of defendant to so charge, and that ruling was affirmed. The court say: “The, defendants invoke in their behalf a recognized principle that a public nuisance must be occasioned by acts done in violation of law, and that any business or pursuit which is authorized by law cannot be such nuisance. It is not denied that the legislature have the power to make lawful, so far as the public is concerned, a work or business which by the common law would otherwise be. a public nuisance.’’ The court further say: “What he asks-the court to declare to the jury as a legal rule for their guidance is that the license of this board to carry on a particular business is, under any and all circumstances, a protection against an indictment for nuisance growing out of such business. It left no room for the consideration of unnecessary or even reckless injury to the public in the mode of manufacture. This is the plain meaning of this request, and had it been put to the jury as asked, no matter how wilful or extensive the offense to the public may have been, it demanded, in virtue of the licenses, the acquittal of the plaintiffs in error.” The business licensed in the Garrett case was a purely private business for private profit, not in the interest of the public health or for the public welfare.

It at once appears, therefore, that the decision in the Garrett case rests upon a different state of facts entirely from those involved in the case we have in hand, and did not involve the application of the same principles.

In this case the primary object in the establishment of the disposal plant was purely a public object in the interest of the public. This was the sole purpose which called forth the exercise by the legislature of its police power. The concession that the plant and business were located, constructed and conducted so as to produce the least possible annoyance compels the conclusion that in the whole enterprise there has been careful regard for every interest. Under the judgment and order in this case it would doubtless be impossible to operate the plant.

For obvious reasons the legislature has enacted laws to prevent the pollution of streams and this -court .has enforced common-law and statutory rules looking to the same end.

In view of this situation, if the action of the trial court in the rejection of the evidence referred to and in the refusal to charge as requested, as well as in the charge itself, is sustained, it is difficult to see how our cities can avail themselves of the wise and necessary provisions which the state has made to assist in the effort to prevent nuisances and preserve the health of its people.

The judgments of the courts below will be reversed and defendant discharged.

Judgments reversed.

Nichols, C. J., Shauck and Wilkin, JJ., concur.


author: Shauck, J.

text:
    Black v. Albery et al.

      Suretyship — Liability of surety — Assignment of interest by one obligee to co-partners.

    When upon a written contract executed by two or more vendors, co-partners for the future sale and delivery of merchandise, there is endorsed the undertaking of a stranger to become surety for the vendee named in the contract, an action cannot be maintained upon such undertaking by a part of the vendors so named to whom one or more of them had, before acceptance or the time for performance, assigned their interest in the contract and in the property which was its subject thereby causing a dissolution of the co-partnership.
    (No. 13606
    — Decided January 13, 1914.)
    Error to the Circuit Court of Franklin county.

      Walter E. Albery- and Reno P. Sagar brought suit in the court of common pleas against Samuel L. Black and Ned A. Thompson, alleging that on the 26th day of March, 1908, the plaintiffs and one L. B. Condit were partners transacting business at Groveport, Ohio, as the Groveport Creamery Company; that the defendant Thompson was doing business as the Thompson Creamery Company; that upon said day said Albery, Sagar and Condit, as parties of the first part, and said Thompson, as party of the second part, entered into a contract whereby the parties of the first part agreed to furnish to the party of the second part for one year beginning April 1, 1908, the entire output of their creamery, and he agreed to pay for the same at prices named in the contract.
    They further allege full. performance on their part and a failure of Thompson to pay for a large part of the products so delivered to him, annexing to their petition an account of the items so delivered but not paid for. A recovery was sought against Thompson for failure to perform his agreement aforesaid, and against Black as surety for him, Black’s undertaking being endorsed upon the contract between the principal parties, and being in the terms following, to-wit: “For value received I bind myself as surety, for the faithful performance of the above contract by and on the part of said N. A. Thompson.”
    . The petition further alleges that after the making of said contract, but before the first day of April, when it was to become operative, Condit sold and transferred to the plaintiffs his entire interest in the property and .business of the Grove-port Creamery Company. Black demurred generally to the petition and his demurrer was overruled. After issues of fact joined, there was a trial and judgment against both Thompson and Black. Thompson does not here complain of the judgment against him. Black filed a petition in error in the circuit court, his principal assignment of error being the overruling of his demurrer to the petition. The circuit court affirmed the judgment of the court of common pleas.

      Mr. John R. Horst, for plaintiff in error.

      Mr. Chapin B. Beem and Mr. R. S. Swepston, for defendants in error.
   Shauck, J.

The ground upon which Black challenges the validity of the judgment against him is brought into plain view by his demurrer to the petition. It is alleged in the petition that the original contract was executed between Albery, Sagar and Condit, doing business as partners under the name of the Groveport Creamery Company, of the first part, and Thompson of the second part. It was by writing endorsed upon that contract that Black assumed or proposed to assume the liability of surety for. Thompson, and his undertaking was to the parties of the first part therein. It is further alleged that after the making of the contract, but before April 1, when by its terms its execution was to commence and before any credit had been given to Thompson in reliance upon Black’s undertaking' as surety for him, Condit assigned to Albery and Sagar his entire interest in the property and business of the firm, including his interest in the contract. The suit is brought by Albery and Sagar, and their petition not only admits the dissolution of the firm by the assignment of Condit’s interest but counts upon it as dispensing with the necessity for his joining in the action. The essential theory of the case presented by the original plaintiffs, therefore, is that in a contract of suretyship, without the surety’s consent, a substantial change has been effectively made in the parties adversary to him. In view of the ancient character and frequently recurring relation of surety, it is quite natural that in the reported cases are found many elementary principles of the law, relating to the liability of sureties and the cases illustrating and applying them, from which tests of the soundness of, this view may be derived. The rules by which the surety’s liability is determined have regard to the fact that usually he derives no benefit from the transaction and he is bound only because he has agreed to become bound, there being present no fact which would tend to raise an implied obligation. It is required that his undertaking be in writing. Since he is bound only because he has agreed to be bound, it logically results that he is bound only as he has agreed to be bound. From these ánd other like considerations there have been formulated and approved certain suggestive precepts respecting the surety’s obligation: The surety is the favorite of the law; the surety is entitled to stand upon the letter of his obligation; the surety’s defense is complete whenever he may say, “Into this contract I did not enter.” It is a subject of frequent observation that the differences between opposing counsel do not relate to the soundness of legal propositions so much as their applicability to the case under consideration. Many of the propositions made and the authorities cited in the briefs for the defendants in error may be disposed of by excluding from consideration attributes which do not belong to the present case. It is not a case for recovery upon the assignment of a claim which had accrued upon a contract executed before its assignment. It does not concern the meaning of the terms used in a contract of suretyship into which the parties to the suit have confessedly entered. Nor does the case present the considerations which determine the liability of a surety upon a negotiable instrument accepted by the payee, thus having the operation and effect intended by the surety. Nor can Black’s undertaking be likened to a genera! letter of credit.

The reference to letters of credit is, however, appropriate because they have been the foundation of many interesting cases upon the subject of the liability of sureties. Counsel seem to agree that guaranties and letters of credit are special or general. If a letter of the former character is accepted and acted upon by the person to whom it is addressed, the undertaking of the surety is complete. If the acceptance is by another, or by part only of those to whom the letter is addressed, there arises no contractual relation, for it is the right of one who contemplates assuming the obligation of a surety to determine not only for whom, but also to whom he will become bound. If in the present instance Black had addressed a letter of credit to the three parties of the first'part offering to become bound for the payment of a balance which might become due from Thompson, and his letter had been accepted and acted upon by two of them, but not by the third, would there be a contract of suretyship between Black and the two acceptors? In the .courts below it was not perceived, nor is it here, why Black should choose to be bound to the three parties rather than to two of them, but the admonition recurs, the surety is bound only according to the terms of his contract without being answerable to any one for the reasons which induced him to select its terms. Numerous and interesting cases show that the surety may not be held otherwise, even though the obligation upon which it is sought to charge him is not more onerous than that upon which he became bound or offered to become bound.

In Grant v. Naylor, 4 Cranch, 224, a recovery was denied to John and Jeremiah Naylor & Company on a letter of credit addressed by the maker to John and Joseph Naylor & Company,' although it was shown that there was no such house as that addressed. In the opinion the chief justice said: “That the letter was really designed for John and Jeremiah Naylor cannot be doubted, but the principles which require that a promise to pay the debt of another shall be in writing, and which will not permit a written contract tov be explained by parol testimony, originate in a general and wise policy, which this court cannot relax so far as to except from its operation cases within the principles.” A surety upon a promissory note may interpose as a- defense against a holder, who has knowledge of the fact that it was the intention of the parties that it should be discounted by a bank where it wias made payable, that the note after being rejected by that bank was endorsed and put into circulation contrary to the intention of the parties. 'Numerous decisions of this court illustrate the scope and force of the rule that the surety is entitled to stand upon the letter of his undertaking, including his designations of the persons who may become his creditors. Stone v. Vance, 6 Ohio, 246; Taylor v. Wetmore, 10 Ohio, 490; Clinton Bank v. Ayres & Neil, 16 Ohio, 283; Knox County Bank v. Lloyd’s Admrs., 18 Ohio St., 352.

The law is a technical science, and since it is the duty of the courts to administer justice according to the law with reference to which the parties are conclusively presumed to have conducted their transaction, a surety who invokes the protection afforded him by established rules should not be denied that protection upon the ground that his defense is technical. Justice administered according to the peculiar views respecting the natural rights of litigants which may be entertained by persons, who for the time being are engaged in the exercise of judicial functions, would not afford a secure foundation for civil institutions. This case seems clearly to be brought within the principles already stated, and within the decisions cited, by the consideration that in legal effect Black’s formal guarantee endorsed upon the original contract was never accepted or acted upon by the three parties to whom he had offered to become bound, and to whom he would have been bound if they had accepted and acted upon his offer.

These views lead to the approval of Schoonover v. Osborne Brothers, 108 Ia., 453, which differs in no substantial aspect from the present case. The very careful and analytical opinion of Deemer, Judge, in that case collects and classifies many other authorities upon the subject presented and shows that the reasoning upon which the present judgment is sought to be sustained is fallacious.

Judgment reversed and demurrer to the petition sustained.

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