author: Jones, J.

text:
    Taylor v. Brown et al.

      Actions — Legal or equitable — Determined by issues and relief— Fraud and deceit — Effect of fiduciary relation — Jury trial proper — Purchase and sale of land — False and fraudulent representations — Accounting or to recover payments — Partnership or joint venture — Action for damages lies, when — Rescission of contract — Equity decree foreclosed by law action, when— Joint or several action — Demurrer for misjoinder ties, when— Evidence — Secret commissions — Good faith and knowledge of fraud.

    1. Whether an action is equitable or legal, and therefore triable to a jury, is determined by the issues presented and relief required at the time of the trial.
    2. Where recovery is sought against a fiduciary for fraud and deceit, in which a specific amount is claimed, and where no accounting is asked or required, the fact that the defendant occupies a fiduciary relation does not stamp the action as equitable ; and in such case, if' no other remedy cognizable in equity is asked and needed to give full and adequate relief, the action is legal and not equitable, is for money only and triable to a jury.
    3. Where the controlling issue in a case is whether the seller, in promoting a joint venture or partnership, was guilty of fraud and deceit in the sale of land to his associates, and where the amounts fraudulently obtained are specific and no accounting or equitable relief is necessary, an action for damages maybe sustained, whether the transaction be a joint venture or a partnership.
    4. In such an action, if the plaintiff has tendered and made full restitution to the defendant, who is thereby placed in statu quo, no judicial rescission is necessary; but the defrauded plaintiff may informally rescind and bring his action for damages, as for money had and received.
    5. Where the seller, in such a case, obtained and retains the legal title in his own name, the repudiation and rescission of the contract, prior to or at the time of suit, and the bringing of the action for damages forecloses any equities plaintiffs may have had therein, and there is no necessity for an equitable decree to that effect.

      6. In such an action, although similai- false representations were made by defendant to his several, associates and related to the same transaction, where the plaintiff associates seek to recover the several payments made by each on the faith of. such representations, the action is not joint but several; and a demurrer for misjoinder of parties plaintiff should be sustained when such facts appear upon' the face of the pleading.
    7. Where the action is for recovery of payments made under such representations, and the testimony discloses secret commissions obtained by the seller which should have been disclosed to the buyer, and the purchaser has elected to rescind and sue for such payments, such testimony may be competent, not as a basis of recovery for the commissions so obtained, but as reflecting on defendant’s good faith and his knowledge of the falsity of the representations made.
    (No. 14700
    Decided June 17, 1915.)
    Error to the Court of Appeals of Cuyahoga county.
    In the court of common pleas the plaintiffs, Patrick J. Brown, James W. Roberts, Paul S. Schmidt, Otis B. Shatto, Orvis J. Shatto and Eugene F. Craig, filed a petition alleging, in substance, that about the month of January, 1910, the defendant, John W. Taylor, represented to them that he had a contract for the purchase of about thirty acres of land located upon Long Island, in the state of New York; that he was desirous of selling a two-thirds interest in said tract and of retaining about a one-third interest; that he solicited the plaintiffs to purchase interests in the property; that the plaintiffs were unfamiliar with the real estate business and values of land in the vicinity and relied entirely upon the statements and representations made to them by the defendant Taylor.

      The petition contains a large number of representations made to the plaintiffs by said defendant, as to the character and value of the land, which were alleged to be false, among which was a representation that the shares of plaintiffs would cost no more in proportion than the interest of the defendant Taylor; that it was agreed between the parties that a cash payment of $50,000 was to be paid to defendant, prorated among the parties according to their respective holdings; that on the 21st day of February, 1910, Taylor executed to the respective purchasers a separate written agreement, signed by Taylor alone, reciting the fact that Taylor, having purchased the property for $150,-000 and taken a deed thereto in fee simple in his own name, and having sold an undivided definite share to each plaintiff and received payments thereon, it was mutually agreed that said Taylor should hold their several interests in trust for the sole use of each separate plaintiff, and reserved the power in himself to sell the premises as he might think best, such sale to be for the interest and benefit of each separate plaintiff as his interest might appear. The petition alleges that under this arrangement, relying upon such false statements and representations, the plaintiff Patrick J. Brown purchased ten one-hundred-and-fiftieths, James W. Roberts seven one-hundred-and-fiftieths, Paul S. Schmidt and the two Shattos each fifteen one-hundred-and-fiftieths and Eugene F. Craig three one-hundred-and-fiftieths; that it was agreed between the parties that the land should be kept and held undivided and in common, as an investment, until such time as it could be satisfactorily sold at a profit, or until they should improve the same and sell in lots at retail; that the plaintiffs paid the cash payment of $50,000, prorated according to their respective shares; that Taylor also demanded that plaintiffs pay further sums, in addition to what had been previously paid, in order to meet current taxes and interest due on mortgages upon the property; that the statements and representations made by Taylor were false and made for the purpose of deceiving plaintiffs; that the written agreement became and was of no effect between the parties, and that the defendant Taylor had repudiated his obligation to plaintiffs under the contract, whereby a right of rescission had accrued to the plaintiffs. The petition further alleges that the mortgages upon the land, in the sum of $75,000, were due, that the defendant Taylor had tendered a conveyance of their respective interests in the property to them and that they each tendered the conveyances back and demanded the. return of the moneys paid.
    The original prayer of the petition prayed for an accounting and determination of the amount to which they are respectively entitled, that the contract be rescinded and that Taylor be ordered to repay to each of them such sums as may be found due, and for general relief.
    The defendant Taylor demurred to the petition generally and for misjoinder of parties, which the court overruled. On April 16, 1913, Taylor moved that the plaintiffs be required separately to state and number the causes of action set forth in the petition. This motion was granted, but the pleading was not reformed.
    On May 31, 1913, there was journalized the following entry: “Upon their application, plaintiffs’ petition in order to embrace but one cause of action, to-wit, for return of payments, is allowed to be and is hereby amended by striking from the prayer, the words, ‘for an accounting and determination of the amounts to which they are respectively entitled.’ ”
    Thereupon the defendant Taylor again attacked the petition as amended, by a motion to separately state and number the causes of action, which motion was overruled. He again demurred generally to the petition as amended, and also for misjoinder of parties, plaintiff and defendant, which was also overruled by the court. Thereupon the defendant Taylor answered, admitting the purchase and sale of the property substantially in the amounts charged; admitting the execution and delivery of the written agreement to the plaintiffs, and denying generally the remaining allegations contained in the petition.
    By way of cross-petition he alleged and claimed damages for breach of the contract of purchase by plaintiffs. A reply was filed joining issues on the cross-petition, and the case was tried to the court over the objections of the defendant Taylor, who insisted upon a jury trial. The bill shows that before and after the statement of the case, a trial by jury was demanded by counsel for Taylor, which was refused, and the case was tried by the court, who rendered judgment in favor of the plaintiffs for the separate amounts paid by each to the defendant Taylor, and ordered the partnership agreement rescinded, the partnership dissolved and that Taylor’s legal title be relieved of any and all trusts in favor of the plaintiffs. This judgment was affirmed by the court of appeals and error is now prosecuted to this court.

      Messrs. Westenhaver, Boyd & Brooks; Messrs. Goulder, White & Garry and Mr. Luther Day, for plaintiff in error.

      Messrs. Perry & Hitchcock and Messrs. Henry, Fauver, McGraw & Thomsen, for defendants in error.
   Jones, J.

The chief reliance of plaintiff in error is that, under the pleadings as recast, he was entitled to a jury trial, and furthermore that each plaintiff should be relegated to a separate action. The record discloses uncertainty upon the part of the court as to the first contention, but it finally held that the action was not triable by jury, evidently on the theory that the relief sought would require the rescission of a partnership agreement and dissolution of the trusts cast upon Taylor as the holder of the legal title.

The mere fact that the defendant occupies the relation of trustee does not in itself invoke the jurisdiction of the equitable side of the court. This relation must be such in each particular case as may require the application of those principles and relief cognizable only in equity, and such as disclose not only the fiduciary and confidential relation reposed, but which go to show that an accounting is necessary for a full relief. If such an accounting is unnecessary, if the issues involved, as here, relate to definite and specific sums paid and received, and where the entire controversy rests upon the issue whether such were paid under representations that were false and fraudulent, then, under our statute, such actions are triable by jury unless otherwise controlled by those principles which permit the ascertainment of damages by the court, where the principal relief sought is equitable. Such are cases where the recovery may depend upon correction for fraud or mistake tainting the transaction, where damages follow cancellation or reformation, or where rescission is sought as the principal relief, as distinguished from those cases where damages are asked on the law side of the court after rescission by the plaintiff.

Applying those well-known principles to the case presented by the pleadings and journal entry, was the defendant entitled to have his case submitted to a jury by virtue of Section 11379, General Code, which gives him a jury trial if the action was one for money only ? Froni an inspection of the decree made, it appears the trial court conceived that the principal relief was equitable and ordered a dissolution of the partnership and the rescission of the agreement, and decreed that the legal title of Taylor be relieved of the trusts imposed. In other respects it gave judgment, substantially as asked, for the definite, specific amounts asked by each plaintiff. Prior to the trial the court required the causes of action to be separated, but this was not done; but on the eve of trial the court permitted the prayer to be amended so as to embrace “a single cause of action for the return of payments made.” This is shown by the entry permitting the plaintiffs to amend their petition.

Counsel for defendants in error now admit that no accounting was necessary and that none was prayed for, and the pleadings disclose that such is the case. The plaintiffs sought only to recover the payments made to the defendant on account of fraudulent representations made by him. The action, therefore, is one for money only, unless the plaintiffs have invoked other equitable relief which a court of equity might and should grant.

It is insisted that equitable jurisdiction becomes necessary for the reason that a partnership relation subsisted between the parties which should be dissolved, and that the contract between them should be rescinded and the legal title of Taylor decreed to be free of any equities plaintiffs might have in the land.

The principle that plaintiff may not seek his relief in equity if he has a full and adequate remedy at law, is well established in Ohio and elsewhere. Why relief could not have been both full and adequate on the law side of the court in this case is not easily discernible. The plaintiffs sought to recover their entire damages for definite and ascertained amounts paid by each to the defendant. These payments were not denied by the defendant. The only controlling issue between them was whether each paid the purchase money for the land sold them under the circumstances of fraud alleged in the petition. There was no equitable relief necessary as a predicate to the recovery. Since Taylor held the legal title to the property there was no necessity for a decree holding it free from any equities, for the decision in the law action foreclosed any equities plaintiffs might have thereto and also terminated their contractual obligations. Furthermore, the plaintiffs disclaimed all interest therein by bringing the action and by tendering back to Taylor the deeds for their respective interests which he had theretofore tendered to them.

The claim is made here, on the one hand, that the transaction was merely a joint venture whereby the interests acquired were those of tenants in common, and, on the other hand, that the transaction disclosed a partnership contract, and as such required some form of equitable relief. There is considerable confusion in the various jurisdictions whether a purchase of land, by moieties, with a view to sale and profit, is sufficient to constitute a partnership, and especially where the purchase only has been accomplished and where there are no further acts done thereunder.. The cases of Yeoman v. Lasley, 40 Ohio St., 190, and Hulett v. Fairbanks, 40 Ohio St., 233, decided by the commission at the same term, apparently hold that a partnership exists. But this view is not sustained by other courts. See Clark v. Sidway, 142 U. S., 682, 690, and Gottschalk v. Smith, 156 Ill., 377. But it is immaterial in this form of action whether the transaction was a partnership or a joint venture. Even if it be conceded that there was a partnership the gravamen of the action did not arise out of the partnership relation. It arose not subsequent to the partnership contract, if such there was, but arose in the formation of the contract, at a time when no fiduciary relation existed. It was based on deceit in obtaining the purchase money to pay for the partnership corpus. The suit was not based on a partnership relationship, but sought to avoid the contract, in its incipiency, because of fraud. This is clearly an exception to the rule that suits between partners must be brought in equity. This, in addition to the fact stated that no accounting was demanded or needed from the defendant in any fiduciary capacity, stamped the case as an action at law. Cook v. Canny, 96 Mich., 398; Gottschalk v. Smith, supra; Clark v. Sidway, supra; Hurley v. Walton, 63 Ill., 260. This view is also supported, in principle, by Neil v. Greenleaf, 26 Ohio St., 567.

The defendant in error relies upon the case of Winstanley v. Gleyre, 146 Ill., 27, a case very similar to the one at bar. But in that case the partnership relation was recognized as subsisting, and the jurisdiction in equity was acquired by a bill which sought to sell the balance of the partnership lands and to cancel a deed which one of the partners had fraudulently made. An accounting was also sought. The later Illinois case of Gottschalk v. Smith, supra, is more applicable here and is clearly distinguishable from the former.

' It is said in the brief of counsel for defendants in error that the trial court relied upon Heckscher v. Edenborn, 203 N. Y., 210, and American Shipbuilding Co. v. Commonwealth Steamship Co., 215 Fed. Rep., 301, and that the appellate court affirmed that judgment on the authority of Richards v. Todd, 127 Mass., 167, and Perry v. Hale, 143 Mass., 540. The first case named supports the theory that an action at law can be maintained in a case of this character, and that the action may be based on a rescission made by plaintiffs; and the other cases are readily distinguishable from the instant case.

In the case of American S. Co. v. Steamship Co., supra, it was held that the remedy at law was inadequate for the reason that the accounting could not be had in a law action. The accounting in that case involved a determination of net earnings of the steamship for a period of six years, including an accounting for its use and a depreciation of the vessel for that length of time. In the case of Richards v. Todd, supra, the plaintiff sought to set aside a fraudulent award of settlement, and the court held that the equitable jurisdiction of the court having been properly invoked, it obtained jurisdiction for all purposes so as to settle all controversies in a single action. This case is analogous to that of Bank v. Jahn, 85 Ohio St., 406, where this court held that equity obtained jurisdiction in that case for correction of mistakes which had been carried into the accounts from time to time, but it was only for the purpose of correcting such mistake that the court held that it was not an action at law.

In the case of Perry v. Hale, supra, the form of the action was not involved, but it was an action at law and it was there held that, assuming there was a partnership, one of the partners could not hold all of the others for the torts of a single partner, the court remarking, on page 542: “His remedy, if upon the facts he is entitled to any, is by action of tort against the person or persons who practiced the fraud upon him.”

Although the trial court held the case as one lodged in equity and decreed a rescission of the contract, this was neither necessary nor required to give adequate relief to the plaintiff. The petition alleged that Taylor had repudiated the agreement. The action of the plaintiffs in repudiating the contract and seeking to recover the moneys paid thereunder was in effect a rescission of the contract on their part. The plaintiffs must be held to have either affirmed or rescinded the contract. The obligations and remedies arising through their status are entirely different. French v. Millard, 2 Ohio St., 45; King v. Wise, 43 Cal., 629; Cheney v. Dickinson, 172 Fed. Rep., 109; Wilson v. New U. S. Cattle-Ranch Co., 73 Fed. Rep., 994.

It developed on the trial that in addition to the purchase money received from plaintiffs, Taylor received about $15,000 as secret commissions in making the sale. Were the plaintiffs affirming the contract this sum might be recovered. Not so, however, if they elected to rescind. The damages in such case are the amount of the loss resulting from the defendant’s tort and would not include commissions alleged to have been secured. Plaintiffs have nothing in their hands which requires restitution, and a recovery on the basis of a rescission would restore the parties to the status quo, and would thus make them whole. In fact, it now develops that Taylor’s counsel claim that plaintiffs should recover only their aliquot parts of the commission, wrongfully received. As heretofore stated, this could be done only where the plaintiffs were affirming and not rescinding the contract. The theory of the trial court that it was necessary to obtain equitable jurisdiction in order to decree a formal judicial rescission was entirely erroneous. Rescission may obtain in equity where there is no adequate remedy at law, but in other cases the party aggrieved may himself rescind and recover damages. This action proceeds upon the theory that the plaintiffs have rescinded, and the authorities are uniform that in a case like the present, where the remedy at law is adequate and full, it may be had without a judicial rescission. 24 Am. & Eng. Ency. Law (2 ed.), 614; 1 Pomeroy’s Eq. Jur. (3 ed.), Section 110; Gould v. Cayuga County Natl. Bank, 86 N. Y., 75, 84, and Getty v. Devlin, 54 N. Y., 403, 415.

Taylor, the defendant below, demurred to the original petition, and also filed his amended demurrer to the petition as amended, alleging that there was a misjoinder of parties plaintiff.

Section 11254, General Code, provides that “All ' persons having an interest in the subject of the action, and in obtaining the relief demanded, may be joined as plaintiffs except as otherwise provided.”

Neither of the plaintiffs in this action had any interest in the “subject of the action” of the other. The action being one at law,'the subject of the action in each case was the particular damages that each plaintiff had suffered because of the tortious act of the defendant. It is possible that some of the plaintiffs might be able to establish their case and the others lose. The gist of the action was deceit, and the testimony offered to support the case of one of the plaintiffs might not legally affect the case of another. The jury must determine whether each plaintiff relied upon the false representations made to him individually, or whether reliance was had upon investigations independent of the representations made, if such are proven. Baker v. Jewell, 6 Mass., 460. It is difficult to perceive how, in such a case, the parties could be joined.

In Bartges v. O’Neil et al., 13 Ohio St., 72, on page 77, Sutliff, C. J., said: “For it is obvious, that inasmuch as the action is commenced in the names of the two, the judgment must be rendered in favor of both or neither.” This principle is supported by the case of Masters v. Freeman et al., 17 Ohio St., 323, where the learned judge, on page 326, said: “A cause of action in favor of each, or either of two plaintiffs, is no cause of action in favor of both.”

The case of Getty v. Devlin, supra, is peculiarly like the case at bar. It was impossible for the plaintiffs in that case to rescind informally because of their inability to make proper restitution; but it was held that if tender and restitution could be made, the contract could be rescinded and a remedy at law maintained, but in such case Judge Earl says, on page 415, that “each one of the plaintiffs could at once, after the tender, have sued in an action at law to recover the amount of money paid by him. A joint action by all the plaintiffs would not have been proper.”

Upon this question the opinion of Spear, J., in the case of Duncan v. Willis, 51 Ohio St., 433, is. pertinent. In that case the question arose upon a demurrer alleging a defect of parties plaintiff, but the opinion applies as well to that section of the code relating to misjoinder. The defendant had sold diseased hogs to two brothers, falsely representing them to be healthy. The transaction was a single one and the representations were made to both jointly and at the same time. One of the brothers brought an action against the defendant for deceit and fraud, without joining the other. On page 442 of the opinion it is said: “So far as the agreement of the sale, payment of purchase price, and delivery were concerned, it was a joint contract, but the representations, and the agreements of warranty entailed obligations for the performance of several duties to each.” The entire opinion discloses that the “subject of the action,” or the peculiar damages suffered by each separate plaintiff, may be of no consequence to the other, and that there can be no joint interest as to damages accruing from deceit.

The petition in this case discloses that the written agreement entered into by Taylor was made separately with each one of the plaintiffs, and the damages sustained by each must necessarily be the resultant of that agreement and the false and fraudulent representations made in connection therewith, upon which each relied. The action is not joint, but several, and each plaintiff should be relegated to a separate action for damages against the defendant.

The fact has already been adverted to that in the transaction relating to the sale of the property, the defendant Taylor had received about $15,000 from Jackson Brothers Company, either by way of secret commissions or for alleged services rendered. The record discloses that the plaintiffs Brown, Schmidt, Craig and the two Shattos were permitted to testify relating to this transaction, and to the fact that neither of them had any knowledge that Taylor had obtained this sum. To this class of testimony the defendant excepted on the ground that the petition only sought a recovery of the payments made and did not seek to recover any part of this commission. As heretofore stated, were the plaintiffs affirming the contract, then, upon proper pleading, a recovery might be sustained for the commissions received, but the plaintiffs are entirely consistent in proceeding, after rescission, in the endeavor to obtain the return of the moneys paid. The evidence was competent, however, not as a basis for the recovery of such commissions, but as showing scienter upon the part of Taylor. The fact, if such it was, that Taylor was receiving large secret commissions for the sale of this property to the plaintiffs, which he failed to disclose, when it was claimed that they were to enter the scheme upon the same financial basis, was evidence tending to support the allegations of fraud and deceit alleged in the petition, and, in connection with other direct evidence of falsity, would be competent testimony in favor of either plaintiff. U. S. Life Ins. Co. v. Wright, 33 Ohio St., 533.

The trial court erred in refusing the demand for a jury by the defendant Taylor, and also in refusing to sustain the special ground of demurrer that there was a misjoinder of parties plaintiff.

For the reasons stated, the judgment of the trial court and that of the court of appeals affirming the same are reversed, and the case remanded to the common pleas court with instructions to correct the errors here noted, and for further proceedings according to law.

Judgment reversed.

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

Donahue, J., not participating.


source: Caselaw Access Project

author: Newman, J.

license: Public Domain

text:
    Bayes v. The Midland Casualty Co.

      Jurisdiction — Court of appeals — Two judges cannot reverse judgment — On weight of evidence — Section 6, Article IV, Constitution, igi2 — Case submitted to two judges — Assignment of error waived, when.

    1. The court of appeals acquires its jurisdiction directly and solely from the constitution, as amended September 3, 1912. Under the provision of Section 6, Article IV, that 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, two judges of that court are without constitutional authority to reverse a judgment upon that ground and no act or consent of parties can confer such authority.

      2. Where the plaintiff in error in the court of appeals does not avail himself of the right 'to have a whole court, consisting of three judges, review the judgment of which he complains, but submits the cause to two judges of the court, he thereby waives the assignment of error that the verdict or judgment is against the manifest weight of the evidence.
    (No. 14782
    Decided June 17, 1915.)
    Error to the Court of Appeals of Stark county.
    The facts are stated in the opinion.

      Mr. D. F. Reinoehlj for plaintiff in error.

      Messrs. Willison & Willison, for defendant in error.
   Newman, J.

This case was tried to a jury in the court of common pleas of Stark county and a verdict was rendered in favor of the plaintiff, Thomas Bayes. Judgment was entered on the verdict and a petition in error, containing six assignments of error, was filed by The Midland Casualty Company in the court of appeals. The cause was submitted to two judges of that court, and the judgment of the court of common pleas was reversed upon the ground that the verdict of the jury and the judgment of the court were against the manifest weight of the evidence. The following is a copy of the journal entry in the court of appeals:

“This cause came on to be heard upon the petition in error, bill of exceptions, original papers and pleadings, and the transcript of the docket and journal entries from the court of common pleas, and was argued by counsel. Upon consideration whereof by two judges only of said court of appeals sitting and concurring therein, the judgment of the court of common pleas is reversed for the reason that the verdict of the jury and the judgment of the court is against the weight of the evidence; and this cause is remanded to said court of common pleas for a new trial.
“It is therefore ordered that said plaintiff in error recover from the defendant in error its costs herein. It is also ordered that a special mandate be sent to the court of common pleas to carry this judgment into execution.”

Plaintiff in error here is challenging the judgment of the court of appeals. He insists that two judges of that court are without jurisdiction or authority to render a judgment of reversal on the weight of the evidence. Section 6 of Article IV of the Constitution, as amended September 3, 1912, provides that the court of appeals shall consist of three judges. In the same section it is provided: “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.” The court of appeals acquires its jurisdiction directly and solely from the constitution of the state as amended September 3, 1912. It has original jurisdiction in certain matters, appellate jurisdiction in the trial of chancery cases, and 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. Two judges are given power to reverse the judgment of these' inferior courts upon all questions other than the weight of the evidence. But before there can be a reversal upon that ground there must be a concurrence of all the judges of the court of appeals. By “all the judges of the court of appeals” is meant the three judges of that court. We do not think the provision can be interpreted to mean all the judges who hear the case. Therefore, before a judgment of reversal can be valid and binding, there must be a compliance with the constitutional provision.

But it is claimed that when plaintiff in error here entered into the hearing of the case in the court of appeals, without objection or protest, he thereby consented to the submission of the cause to two judges and waived whatever right he may have had to a hearing by three judges, and he cannot now complain. Counsel liken this case to one where parties waive their constitutional right to a trial by jury and submit their case to a court. We do not think the cases are analogous. The legislature has clothed the court of common pleas with jurisdiction and power to hear a cause when there has been a waiver of a trial by jury. Where a party does not demand a jury trial the law authorizes a judge to try the issue. In the present case the parties are attempting to confer a power upon two judges of the court, which in express terms of the constitution is denied them. The constitution, to which alone we must look for the jurisdiction and authority of the court of appeals, denies to two judges authority to reverse a judgment upon the weight of the evidence, and there is nothing the parties may do which will create or confer such authority.

Counsel for defendant in error insist, however, that if it is held that the judgment which the two judges attempted to pronounce is invalid, the case should be remanded to the court of appeals for a rehearing before the whole court. Under the constitutional provision we have been considering, two judges of the court of appeals have power to reverse the judgment upon any ground other than the weight of the evidence. It is to be presumed that all the assignments of the petition in error in the present case were passed upon and all assignments were held to be not well taken, except the one expressly stated in the entry as the basis of the judgment of reversal. Weaver v. The Columbus, Shawnee & Hocking Ry. Co., 76 Ohio St., 164. It is to be presumed also that when defendant in error here, the plaintiff in error in the court of appeals, presented its case to two judges it did so with knowledge that two judges could not reverse the judgment of the court of common pleas on the weight of the evidence — that they were powerless to do so. Defendant in error had the right, as has every plaintiff in error in a court of appeals, to have the whole court, consisting of three judges, pass upon the assignments of error in its petition. If plaintiff in error below did not avail himself of this right and saw fit to submit the judgment of the court of common pleas to two judges for review, knowing that in their power to reverse they were limited to questions other than the weight of the evidence, it must be held to have waived that assignment of error. It is suggested, however, that to hold that defendant in error here waived that assignment of error, when, as a matter of fact, it urged it and was successful in its contention so far as the action of the two judges was concerned, would be illogical. We do not think so. The legal effect of the submission of its cause to two judges was a waiver of that assignment of error, and it is too late now to ask for a rehearing on that question. The two judges of the court of appeals having found all the other assignments of error not well taken, this court proceeding to render such judgment as should have been rendered in the court of appeals, the judgment of the court of common pleas is affirmed.

Judgment of the court of appeals reversed and that of the court -of common pleas affirmed.

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


author: Nichols, C. J.

text:
    The Industrial Commission of Ohio et al. v. Brown.

      Wokmen’s compensation — Occupational diseases not included — Act of May 31, 1911 (102 O. L., 524; Section 1465-37 et seq., General Code) — Authority conferred by Section 35, Article II, Constitution, 1912 — Not fully exercised by legislature.

    1. Under the provisions of the original workmen’s compensation act, passed May 31, 1911 (102 O. L., 524), a state insurance fund was created from which to provide compensation for death or injury (not wilfully self-inflicted), resulting from accidents to employes of employers both of whom voluntarily contributed to the fund under the conditions named in the act. An injury or death resulting from disease contracted in the course of such employment, known as an occupational disease, is not such as contemplated by the provisions of the act referred to, and cannot be made the basis of a claim for compensation from the insurance fund so provided.
    2. Although Section 35, Article II of the Constitution, as amended in September, 1912, authorizes the legislature to pass laws providing an insurance fund to compensate workmen and their dependents for death, injuries or occupational disease, occasioned in the course of employment, by compulsory' contribution, the general assembly has not yet provided by law for the compensation for injury or death from occupational disease.
    (No. 14831
    Decided June 17, 1915.)
    Error to the Court of Appeals of Hamilton county.
    Facts are stated in opinion.

      Mr. Edward C. Turner, attorney general; Mr. Freeman T. Eagleson, special counsel; Mr. John V. Campbell, prosecuting attorney, and Mr. Charles A. Groom, Mr. Henry G. Hauck and Mr. Louis H.
      Capelle, assistant prosecuting attorneys, for plaintiffs in error.

      Mr. Thomas H. Kelley and Mr. Richard Remke, for defendant in error.
   Nichols, C. J.

The particular question involved in the instant case is whether the words “personal injuries sustained in the course of employment” as used in. the workmen’s compensation law, approved June 15, 1911 (102 O. L., 524), include lead poisoning contracted in course of employment.

The defendant in error was employed in August, 1913, by The Eagle White Lead Co. of Cincinnati, such company being at the time a voluntary contributor to the state insurance fund. While thus employed Brown contracted lead poisoning of so serious a nature that he became sick and disabled from work. He made application for compensation to the state liability board of awards, and its successor, the industrial commission of Ohio, disallowed his claim. In January, 1914, Brown filed in the court of common pleas of Hamilton county his appeal from the decision of such industrial commission, in conformity with the provisions of the law. Trial was had, resulting in a verdict and judgment in favor of Brown, and this judgment was affirmed by the court of appeals of the same county.

Reversal of the judgments is now sought by the state.

The question is one of paramount public importance, not only to the industrial classes but to the state as well. The state has been administering this great trust for nearly four years, and during all that period the construction given the statute under consideration by the ¿dministrative body has been such as to preclude recovery for occupational disease, or any disease for that matter, incurred in the course of employment. For while the disease under consideration was clearly occupational, yet if the claim of Brown to participate in the fund be sustained, it would at once open wide the doors to all claimants who have suffered from disease of any sort which they may have incurred while employed.

The premium rates assessed and collected by the administering board during this period of time have been fixed on a basis of death and injuries by accident solely, to the entire exclusion of injury through disease. It is quite patent that any other construction would necessitate an immediate and striking horizontal elevation of all premium rates and would in all probability prove a serious menace to the law itself.

Administrative interpretation of a given law, while not conclusive, is, if long continued, to be reckoned with most seriously and is not to be disregarded and set aside unless judicial construction makes it imperative so to do. This might be said to be particularly true of laws of the nature and character of the one under consideration. The state has entered on a virgin field, not wholly without chart or compass, it is true, yet without much in the way of experience to light the way. In á large measure Ohio may be said to be the pioneer in working out and reducing to a working basis the theories of workmen’s compensation. No statute enacted in these latter days has had to encounter so fierce and powerful an opposition as this particular class of legislation. The law is yet on trial. It has to justify itself for its maintenance before the bar of public opinion. To seriously cripple it by a construction that could readily be defended from a legal standpoint, and that would at the same time be held to be the more humane interpretation, would in the long run work great injury to the industrial classes as a whole. An injustice would likewise be done to the employers of Ohio, who alone are contributing the millions that go to make up the fund.

Courts will take judicial notice of the events going to make up the history of a state as well as the transactions and objects intimately connected with it. Why, then, should this court, contrary to the general knowledge possessed by the people of Ohio, blind itself to the real situation and content itself with a mere abstract construction of what might be included in the phrase “personal injuries,” realizing all the while that to grant the enlarged construction sought by the defendant in error would put in peril the splendid efforts that have been exerted by the public servants of Ohio, with much travail of soul, to provide compensation with promptness and certainty to the unfortunates killed and wounded in their battle for existence?

This court, with much show of logic and also authority, could construe this phrase as did the courts below. It is no difficult matter to bring within the purview of the words “personal injuries sustained in the course of employment” occupational diseases incurred in course of employment. It can be further conceded that had the legislature, in enacting either the original or the present law, desired to make plain its intention to exclude occupational disease from participation in the fund, the exclusion could readily have been made by adding to the words “personal injuries” the qualifying phrase “by accident.”

As against all this the court feels impelled to follow both the executive and legislative construction of the word “injury” as employed in this act and to limit recovery of compensation to such as may have suffered injury otherwise than through disease, thereby giving to the legislative and executive construction the added force of judicial construction.

The court arrives at the clear legislative construction of the term by a. review of the history of the law in the seventy-ninth and eightieth general assemblies, in connection with the constitutional améndment on the subject of workmen’s compensation. We find that the first expression of the general assembly was had in the act of 1911, at which time there was no specific authority in the organic law for such a measure. Consequently the act was wholly voluntary.

In 1912 the constitutional convention submitted to the people of the state of Ohio what is now Section 35 of Article II, which, so far as it is important to consider in the instant case, provides that “For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational diseases, occasioned in the course of such workmen’s employment, laws may be passed,” etc. This proposition was ratified by the people by a most decisive majority and gave the authority necessary to the legislature for the enactment of the present act. In 1913 the existing compulsory act was passed.

It is to be observed that the constitutional amendment differentiates between injuries and occupational disease. It clearly recognizes three distinct classes for which provision may be made: (1) Injuries resulting in death, (2) nonfatal injuries and (3) occupational diseases; and all are to be limited to such as might be occasioned in due course of employment.

The present law specifically provides for compensation for two of these classes only and significantly omits any provision for compensation for the third class. Were this claim one that had accrued under the new law, the court could only construe the passage in dispute, in the light of the constitution, as wholly excluding any compensation for injury by .disease, whether occupational or otherwise. The legislature would have been within its constitutional rights had it included the third class, and its failure to do so, under the circumstances, makes of it a case of designed omission.

We note that the act now in force, enacted by the legislature after the constitutional authority had been granted, contains the same language in respect to the beneficiaries of the act as was employed in the original law, thereby.clearly demonstrating an intention on the part of both of the assemblies speaking on the subject to give the restricted rather than the enlarged meaning to the phrase “personal injuries * *

If this deduction be not justified, it at least must be necessarily conceded that the eightieth general assembly so construed the language of the seventy-ninth general assembly.

Thus we arrive at the legislative construction. To this may be added the thought that the subject of compensation for occupational disease occupies a distinct field of its own. It is so recognized not only in our constitution but by all humanitarians who have given the matter thoughtful attention. It is a vast subject, worthy of the most careful attention by the lawmaking body, and it was evidently the intention of both the seventy-ninth and eightieth general assemblies that Ohio should eventually enter into the larger , field, as is evidenced by the resolution on the subject of occupational diseases, enacted by both assemblies that legislated on the workmen’s compensation subject.

The victims of modern industrialism springing from disease incident thereto are only less numerous than those arising from pure accident, and. no sound policy can be suggested that should protect the one class and ignore the other, especially when the compensation system becomes firmly established. Until this is done the court will continue to construe the law as it was obviously intended by the legislature that it should be construed.

Authority is not wanting in support of the position taken by the court in this case. It really is not needed, in view of the intention of the legislature of Ohio so definitely manifested, but may be briefly referred to nevertheless. Reference is made to the case of Adams v. Acme White Lead & Color Works, 182 Mich., 157, where the identical question before this court was passed upon by the supreme court of Michigan. • Quotation from the opinion of the court (p. 160) is made to this extent:

“It might be well to keep in mind the conditions sought to be remedied by the diverse workmen’s compensation enactments which have been adopted by several states of the Union and in foreign countries. The paramount object has been for the enactment of what has been claimed to be more just and humane laws to take the place of the common-law remedy for the compensation of workmen for accidental injuries received in the course of their employment, by the taking away and the removal of certain defenses in that class of cases. * * * Manifestly, the terms ‘personal injury’ and ‘personal injuries,’ above mentioned, refer to common-law conditions and liabilities, and do not refer to and include occupational diseases, because an employe had no right of action for injury or death due to occupational diseases at common law, but, generally speaking, only accidents, or, rather, accidental injuries, gave a right of action. We are not able to find a single case where an employe has recovered compensation for an occupational disease at common law. Certainly it can be said that in this state no employer has ever been held liable to the employe for injury from an occupational disease, but only for injuries caused by negligence. It seems to us that the whole scheme of this act negatives any liability of the employer for injury resulting from an occupational disease.”

A brief citation from the opinion of Judge Johnson, in the case of The State, ex rel., v. Creamer, 85 Ohio St., 349, 386, construing the original act, demonstrates that our own supreme court at that time had in mind the belief that the legislature had limited the provisions in the way of awards for industrial disasters to workers for which there had heretofore been a clear remedy at common law. In this opinion the court, through Johnson, J., says of the act: “It provides a plan of compensation for injuries * * * resulting from accidents to employes.”

And again, at page 389 of the same opinion, it is said: “The system which has been followed in this country, of dealing with accidents in industrial pursuits, is wholly unsound. * * * That there has been enormous waste under the present system, and that the action for personal injuries by employe against employer no longer furnishes a real and practical remedy, annoys and harasses both and does not meet the economic and social problem which has resulted from modern industrialism.”

The judgment of the court of appeals will be accordingly reversed, and the cause will be remanded to the court of common pleas with instructions to sustain the demurrer of the state to the petition on appeal of the claimant Brown.

Judgment reversed.

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


author: By the Court.

text:
    Stugard, Admr., v. The Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co.

      Reversals — Cotirt of appeals — Weight of evidence — Divided court— Section 6, Article IV, Constitution, 1912 — Journal entry controls, when — Railroad-crossing accident — Negligence and contributory negligence, jury questions — Motion to direct verdict —Final judgment erroneous, when.

    (No. 14744
    Decided June 17, 1915.)
    Error to the Court of Appeals Hamilton county.
    This was a proceeding brought in the superior court of Cincinnati by George Stugard, as administrator of the estate of John B. Vastine, deceased, to recover damages for the wrongful killing by the defendant of the deceased.
    The petition averred that in April, 1912, while Vastine was driving a wagon loaded with lumber over and across the track of the defendant, upon Erie avenue in the city of Cincinnati at the intersection of said track, through the negligence and carelessness of the defendant and its employes an engine and train of cars were run on said track over said crossing, striking the wagon which decedent was then driving, throwing the wagon and the lumber, with which said wagon was loaded, on to the decedent, throwing him to the ground and inflicting injuries upon him from which he died on the 4th of May following; that the avenue is a much-traveled thoroughfare in the city and that the crossing thereof with the track of the defendant’s road was exceptionally dangerous, all of which was well known to the defendant, but that defendant negligently failed to protect those approaching and using said crossing by watchmen, gates, alarm bell or in any other way; that the view of approaching trains at said crossing was obstructed and defendant negligently caused and permitted cars to be left standing on sidetracks adjacent to said crossing, ■ which obstructed the view of the same and its approaches to defendant’s servants operating engines over said tyack and the view of an approaching train to persons on said highway approaching the crossing; that the engine and train were being negligently run at a high, dangerous and excessive rate of speed when approaching and going over said crossing and without sounding any warning of their approach by bell, whistle or otherwise.
    The answer of the defendant admits that it is a corporation organized and operated as alleged, and denies each and every other allegation in the petition.
    It further alleged that the death of the decedent was caused by his own negligence, in that he negligently failed to observe the approaching train before he approached or went on the track, when, by the exercise of ordinary care, he could have done the same in time to have avoided injury.
    The reply denied any negligence on the part of Vastine.
    There was a verdict by the jury in favor of the plaintiff, upon which judgment was entered by the superior court.

      At the conclusión of the plaintiff's evidence the defendant moved the court to direct a verdict in favor of the defendant, which was overruled. This motion was renewed at the conclusion of all the evidence and was likewise overruled. Thereupon a motion was made to enter judgment in favor of the defendant, notwithstanding the verdict. This was overruled.
    In an error proceeding in the court of appeals that court reversed the judgment of the court below and entered final judgment for the railway company. This proceeding is brought to reverse the judgment of the court of appeals and affirm that of the superior court.

      Mr. T. J. Edmonds; Mr. John E. Shepard and Messrs. Nelson & Hickenloopeiy for plaintiff in error.

      Messrs. Maxwell & Ramsey, for defendant in error.
   By the Court.

It is urged by the plaintiff in error that the judgment of the court of appeals should be reversed because an examination of the record will disclose that the decision of that court, in reversing the judgment of the court below, was based upon the weight of the evidence and was rendered by a divided court, in contravention of the provision in Section 6 of Article IV of the Constitution, as amended in September, 1912, that “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.”

It appears from the record that on June 19 Stugard, administrator, filed a motion for a judgment of affirmance by the court of appeals upon the decision and opinion “heretofore rendered by the majority of this court in this cause and the dissenting opinion of Hon. Oliver B. Jones, copies of which opinions are hereto attached and made part hereof,” and further sets out the constitutional provision referred to.

It also appears from the record that on the following day the court entered its judgment reversing the judgment of the superior court. The pertinent part of the entry is as follows: “Upon consideration whereof the court finds that there was error in the proceedings and judgment of the superior court of Cincinnati in this, to-wit: That the court erred in overruling defendant’s motion made at the conclusion of all of the evidence to direct the jury to return a verdict for the defendant.” There is not included in the court’s entry anything whatever to indicate that its judgment was not concurred in by all the members of the court. So far as the record goes, all three of the judges may have concurred in overruling the motion of Stugard, administrator, for judgment of affirmance. The entry simply shows that the judgment was the judgment of the court of appeals, and the presumption is that it was rendered in accordance with the law and in accordance with the provisions of the constitution. We are not at liberty to find that this was not done from the statement of extraneous facts in a motion filed by one of the parties. In a proper case a party' could preserve his exception to the action of the court by a bill of exceptions, duly authenticated, or could procure the statement of the facts'in the entry of the court, and if the court should refuse such bill or such statement in the entry it could be compelled by mandamus to correct its-record.

It will be observed that the judgment of the court of appeals is based on its finding that the superior court erred in overruling the defendant’s motion, made at the conclusion of all of the evidence, to direct the jury to return a verdict for the defendant. We. think this was error. An examination of the record shows that there was evidence tending to show that the crossing was a much-traveled one and that there was neither gate, crossing bell nor watchman; that the train was moving at a high rate of speed, which the jury might properly have found to be negligent, when considered in connection with the obstructions preventing a clear view of the track and with the cut and curve a comparatively short distance away. There was also evidence tending to show that no whistle that could be heard at the crossing was sounded'.

With reference to the question of contributory negligence, we think it clear that it cannot be said to be undisputed, or to be the necessary conclusion from conceded facts, that the decedent was guilty of contributory negligence. It was undoubtedly the duty of the decedent to look and listen for the train before he attempted to cross, and to do this a sufficient distance from the tracks, so that he could allow the train to pass without peril to himself if it should be coming. Our attention has not been called to any evidence in the record which shows that the decedent did not perform this duty. It might well be argued that, in the light of all the circumstances which are shown by the evidence, the inference could be properly drawn that he did not do so. But it is the function of the jury to draw this inference and to find this ultimate fact.

In Cavey, Admx., v. Iliff et al., 84 Ohio St., 456, the circuit court reversed the judgment of the common pleas court on the ground that it erred in overruling the motion of the defendants, at the conclusion of the evidence, to arrest the case from the jury, and entered final judgment in the case. This court reversed the final judgment and remanded the cause for a new trial. The entry was as fol: lows: “This court, finding from the record that the judgment of the circuit court is in effect an adjudication that the judgment of the court of common pleas is against the weight of the evidence, the judgment of reversal is affirmed. But this court being of opinion that the cause should be submitted to a jury, the final judgment rendered by the circuit court is hereby reversed.”

So in this case, it being disclosed by the record that the judgment of the court of appeals is, in effect, a finding that the judgment of the superior court is against the weight of the evidence, the judgment of the court of appeals rendering final judgment is reversed, its judgment reversing the judgment of the superior court is affirmed, and the cause is remanded to the superior court for further proceedings according to law.

Judgment accordingly.

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


author: Matthias, J.

text:
    Kachelmacher v. Laird et al.

      Contracts — Implied covenants — Oil and gas lease — Written conditions control, when — Forfeiture for delay in drilling — Defeated by payment, and lease continued, when — Deposit in bank payment to lessor, when — Effect of refusal to withdraw same.

    1. There can be no implied covenants in a contract in relation to any matter that is specifically covered by the written terms of the contract itself.
    2. There being an express condition written in an oil and gas lease as to the right of the lessor to declare forfeiture thereof for delay in drilling the first well, no covenant authorizing forfeiture for such delay can be implied in direct opposition to the plain provisions of the written contract.
    3. Where a lease of land for ten years for oil or gas purposes provides that the lease shall be void if no well is drilled within four months from the date thereof unless the lessee shall pay the lessor the sum of fifty dollars for each and every year that the drilling of such well is delayed, payment of such sum by the lessee to the lessor, according to the terms and provisions of the lease, prevents forfeiture and continues the lease in force during the year for which such payment is made.
    4. If such lease specifically provides that the amount to be paid for delay in drilling may be paid by the lessee to a bank named in the lease to the credit of the lessor, and payment is made in accordance with the terms of the lease, the lessor cannot avoid the effect of such payment by refusing to withdraw the sum from the bank to which it was paid by his direction. When so paid said fund became the property of the lessor and can be lawfully paid to no one except upon his order.
    (No. 14538
    Decided July 2, 1915.)
    Error to the Court of Appeals of Perry county.
    The defendants in error, on the 14th day of April, 1910, executed and delivered to one S. S. Smith an oil and gas lease on their premises, consisting of about eight-tenths of an acre of land, which lease was, on May 10, 1910, assigned to the plaintiff in error. On March 4, 1911, the defendants in error filed their petition in the common pleas court of Perry county and sought an order requiring the plaintiff in error “to drill and develop plaintiff’s said land; or that said lease may be cancelled and ordered surrendered up.”
    Upon hearing on-appeal, in the court of appeals of Perry county, the conclusions of law were favorable to the lessors, the defendants in error, and decree was entered as prayed, upon the following finding of facts:
    “1. On the fourteenth day of April, 1910, and ever since that date, the plaintiffs were the owners in fee simple of a tract of land in section 30, township 14, range 1-5, Coal township, Perry county, Ohio, containing approximately eight-tenths (8/10) of an acre of land.
    “2. That on the fourteenth day of April, 1910, the plaintiffs executed and delivered to one S. S. Smith an oil and gas lease on said real estate, a copy of which lease was attached to the petition and marked ‘Exhibit A.’
    “3. That on the third day of May, 1910, said Smith made a written assignment of said lease to the defendant, N. L. C. Kachelmacher.
    “4. That by the terms of said lease the plaintiffs granted to said Smith all the oil and gas in and under said tract of land and also said tract of land for the purpose of operating thereon for oil and gas; said grant to be for the term of ten (10) years from the date thereof and as much longer as oil or gas was found in paying quantities, not exceeding in the whole the term of twenty (20) years from the date thereof, the lessee yielding and paying to the lessors one-eighth (1/8) part or share of all the oil produced and saved from the premises, delivered into pipe lines to the lessors’ credit and at the rate of two hundred dollars ($200.00) per year for each gas well when utilized off the premises and free use of gas for one dwelling house now on said premises, if found in paying quantities, lessors making their own connections for such gas at the well at their own risk and expense.
    “5. That said lease contained the following provision :
    “ ‘Provided, however, that if a well be not completed on said premises within four months from the date hereof, unavoidable accidents excepted, then this lease and agreement shall be and become null and void unless the lessee, within each and every year after the expiration of the time above mentioned for the completion of a well, elects to and does pay the sum of fifty dollars ($50.00) until a well is completed thereon; if the lessee elects to pay, the same may be paid direct to the lessors or may be deposited to their credit at The Miners & Merchants Bank, Nelsonville, - Ohio.’
    “6. No well has been drilled by the defendant or by anyone else on said land so leased by the defendant.

      “7. The defendant, in each of the years 1910, 1911, 1912 and 1913, deposited to the credit of the plaintiffs in The Miners & Merchants Bank of Nelsonville, Ohio, the sum of fifty dollars ($50.00), said respective sums being the payments provided for in said lease under the paragraph set forth in special finding No. 5, and notified the plaintiffs of such deposits, but plaintiffs did not draw these deposits.
    “8. At the time the plaintiffs made the lease on the land described in the petition to S. S. Smith on April 14, 1910, no oil wells had been drilled in what is now known as the New Straitsville field in which plaintiffs’ lands were located and that territory was what was known as ‘wild cat’ territory.
    “At that time the first well in the field now known as Lawson well No. 1 was in process of drilling on the Lawson tract and distant about eighty-six and one-half (86¿) feet from plaintiff’s land.
    “9. An oil well in the the vicinity of plaintiffs’ land must be drilled from 3000 to 3200 feet in depth and costs approximately ten thousand dollars ($10,-000.00),
    “10. At the time plaintiffs made the lease on the land in question to S. S. Smith, the territory in which plaintiffs’ land was located and the territory 'now known as the New Straitsville field was ‘wild cat’ territory and except one well known as the Bessie well which was distant about 3000 to 4000 feet from plaintiffs’ land, there were no wells in what is now known as the New Straitsville field; there were no wells north, south or east of plaintiffs’ land and excepting the Bessie well distant 3000 to 4000 feet to the west, the nearest well to the west was two miles distant.
    “11. At the time plaintiffs made their lease to Smith the customary rental paid landowners in that territory for time that would elapse until wells were drilled, ranged from twenty-five cents to one dollar an acre a year.
    “12. The territory in which plaintiffs’ land is situated is what is known as the spotted field and dry holes are often found between and near to good producing wells.
    “13. Considering the character and cost of the wells in that field, the nature and uncertainty of the sands and formations, reasonably conservative drilling would contemplate that one well should be drilled to approximately each fifteen to twenty .acres of land.
    “14. After plaintiffs made the lease in question to the defendant Smith the Lawson well No. 1 located eighty-six and one-half (86J) feet east of plaintiffs’ land and Lawson well No. 2, located 438¿ feet east of plaintiffs land were both drilled in and were producing wells. The Moody well located on an acre of land carved out of the Lawson tract and which well was two hundred (200) feet east of plaintiffs’ land and two hundred (200) feet distant from Lawson well No. 1, proved a dry hole. On the Wion tract of 105 acres, immediately west of the plaintiff’s land, five wells were drilled. The first one being completed about December, 1910, the second in August, 1911, the third in February, 1912, the fourth in February, 1913, the fifth in July, 1913.
    “Wion well No. 1 was distant about 152 feet from the Laird land; started out with a production of ten barrels a day which gradually decreased until the well was abandoned. Wion well No. 2 started off at 110 barrels a day, then dropped to about 80 barrels for a month or six weeks and then gradually decreased to about eight barrels per day. This well was located 650 feet west of Wion well No. 1.
    “Wion well No. 3 was 550 feet west and a little south of No. 2 and 1350 feet from the Laird line. This well started off at 60 barrels and the production was steadily reduced.
    “Wion No. 4 startéd off at approximately 40 to 45 barrels per day and the production steadily reduced. Wion No. 5 started off with a production of 75 barrels a day and in less than thirty days had dropped off to one-half that production.
    “In the last week of February and the first week of March, 1913, the four Wion wells, No. 1, 2, 3 and 4, were gauged every day for two weeks and showed an aggregate production of 26 barrels per day or 6J barrels per well per day.
    “The Cheetham well, 175 feet north from plaintiffs’ line, was a producing well.
    “On the Lawson tract of about 45 acres (including the one acre of Moody land sold out.of it) there were six wells drilled, of which one was absolutely dry, another was almost dry and the other four were more or less producing wells.'
    “15. Distant 175 feet north of the Laird land the Cheetham well was drilled in and started off with a production of about 35 barrels per day and was exhausted and abandoned within a year and a half.
    “16. The wells on the Lawson tract were owned and operated by the Continental Oil Company of which the defendant is a stockholder and officer. The defendant had no interest in any other wells in the vicinity of plaintiffs’ land.”
    Plaintiff in error now seeks a reversal of the judgment of the court of appeals.

      Mr. C. A. Donahue and Messrs. Booth, Keating, Peters & Pomerene, for plaintiff in error.

      Mr. J. B. Powell, for defendant in error.
   Matthias, J.

Although the lessors, the defendants in error, charge fraudulent conduct upon the part of plaintiff in error, Kachelmacher, the assignee of said lease, it is apparent that the case involves only the construction of the contract entered into between the parties. It is to be observed that the court of appeals does not include in the findings of fact any finding of fraud or of fraudulent conduct by-the plaintiff in error, and the conclusions of law are that there was an implied obligation upon the part of the lessee to drill one or more wells upon said premises, and that he should be required to comply with such implied covenant or suffer a cancellation of the lease.

Fraud upon the part of plaintiff in error is not shown 'by the finding of facts nor disclosed by the record, nor does it appear that any inequity has been suffered by the defendants in error. It .is disclosed by the finding of facts that the drilling of each well in that vicinity cost about $10,000, that many "dry holes” were drilled, and that those which at any time were sufficiently productive to be regarded as paying wells very rapidly decreased in production. It is further shown that each well drained from fifteen to twenty acres, and hence, that if a well were drilled upon this tract, assuming it should be productive, it would draw only about five per cent, of its production from the premises of the defendants in error.

It is obvious that when the conditions and developments in that vicinity, shown by the record, are considered, the rentals actually paid the lessors are undoubtedly equal to, if not greater than, the royalty upon the value of the oil that would actually be produced from their own land, in the event a well were drilled thereon.

The defendants in error rely, with considerable confidence, upon the case of Coffinberry v. The Sun Oil Co., 68 Ohio St., 488, and Kleppner v. Lemon, 176 Pa. St., 502, but there is a very vital distinction between the leases involved, which a comparison will disclose. In the Coffinberry lease there was an express agreement to complete a well within a year, and a further agreement for additional drilling if the first well should be a paying well. The Kleppner lease likewise contained an express agreement that a well should be drilled' within a stipulated time. The decision in that case, however, rested upon a finding of fraud. In each of those cases the first or experimental well had been drilled, resulting in the production of oil in paying quantities, and action was brought to require a compliance with the further express covenant to continue drilling until the premises should be fully developed. Such was the express agreement in the Coffinberry lease, and there was no provision whatever for the payment of any sum as rental or otherwise in lieu of drilling. It was for failure and refusal to comply with such express covenant contained in the lease that cancellation was awarded.

In the lease in this case there is an express stipulation for the payment of rental in lieu of drilling, and the option is thus given the lessee to drill or pay rental in accordance with the terms of the contract. Surely the clause making such provision, which is set out in full in the finding of facts, cannot be otherwise construed or interpreted. The rights of the parties must be determined from their own contract. Under the clearly expressed terms of the lease, if the lessee does not drill he may still continue the lease in force by payment of the stipulated rental. Such matter being covered by the express terms of the written contract, no implication can arise in relation thereto inconsistent with, or in opposition to, such plain provision of the written contract. An implied covenant can arise only when there is no expression on the subject.

Even if there be such implied covenant, as contended by counsel for the lessors, it cannot be made the ground of forfeiture. Under the express terms of this lease the right to declare a forfeiture arises upon the failure of the lessee to drill or pay rental, and, hence, forfeiture can be enforced only if the lessee neither drills nor pays the stipulated rental in accordance with the terms of the lease. Such cause of forfeiture being expressly mentioned, none other can be implied.

The facts disclosed by the record and appearing in the finding of facts of the court of appeals, indicate the reasons which probably moved the parties to agree upon the terms of this lease. That territory was what is called “wildcat” territory, being then undeveloped. The premises of the lessors consisted of less than an acre, while one well drains oil from fifteen to twenty acres. It must be concluded that the parties did not contemplate that more than one well should be drilled upon these premises, and, hence, the contract in reference to the drilling of this one well covers the whole subject-matter comprehended by this lease. The customary rental in that territory, at the time this lease was executed, was from twenty-five cents to one dollar an acre a year. It is fair to assume that the extraordinarily high rental stipulated, $50 a year, was agreed upon by the parties in lieu of an express covenant to drill and a clause requiring forfeiture for failure to do so, and that the lessors considered they would be amply remunerated by payment of the agreed rental.

This lease, by its terms, requires a forfeiture unless a well is drilled within four months or rental paid within each and every year. The lessee did not drill, but did elect to and did pay the agreed rental. This court has heretofore held that under the provisions of a lease similar in terms to that now under consideration, the lessee has an option to complete wells or pay rental to keep the lease alive, and that under such terms the lessee may retain the lease by paying the stipulated rental, or may elect to permit the lease to lapse. Brown et al. v. Fowler et al., 65 Ohio St., 507; Van Etten et al. v. Kelly, 66 Ohio St., 605.

One of the terms of this lease is that the rental, “if the lessee elects to pay, the same may be paid direct to the lessors or may be deposited to their credit at The Miners and Merchants Bank, Nelson-ville, Ohio.” It appears from the finding of facts that payment of rental for the years 1910,' 1911, 1912 and 1913 was made by deposit with said bank in accordance with the terms of said contract. Although'the lease expressly provides for delay in drilling from year to year upon the terms stated, the record shows that the petition seeking cancellation was filed within a year after the execution of the lease and after payment of the rental for the first year had been made in the precise manner agreed- upon. Said payments having been made in strict accordance with the express terms of the contract, this was equivalent to payment to the lessors themselves. There was no agreement that such sum should be deposited with the bank named, to be paid to lessors upon some condition that might develop, but under the terms of the contract payment, when made and accepted by the bank, was complete, and passed said sums of money effectually to the lessors and entirely beyond the authority and control of the lessee. Such fund became the property of the lessors, and they cannot, therefore, avoid the effect of such payment by refusing to withdraw the fund from the bank to which it was paid by their direction, it not appearing that any contrary instructions were given the bank by the lessors at any time. Such payment of rental, in accordance with the terms of the lease, serves to keep it in force during the year for which the rental was paid, and within that time an action for the cancellation of the lease could not be maintained.

The judgment of the court of appeals is reversed for error to the prejudice of the plaintiffs in error in its conclusions of law from the facts found. Judgment is entered for plaintiff in error. ■

Judgment reversed.

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


author: Jones, J. Donahue, J.,

text:
    The Ashley Tri-County Mutual Telephone Co. v. The New Ashley Telephone Co. The Farmers Mutual Telephone Co. v. The Morrow County Telephone Co.

      Public utilities — Certificate of necessity required — Section 614-52, General Code, applies — To competing telephone companies— Organised not for profit — Mutual companies.

    Section 614-52, General Code, applies to the telephone companies defined in previous sections of the code, whether such companies are organized for profit or not, where the entrance of the second company substantially affects the public convenience. In such case a certificate must be secured to the effect that the exercise of the right or franchise is proper and necessary for the public convenience.
    (Nos. 14652 and 14766
    Decided July 2, 1915.)
    Error to the Court of Appeals of Delaware county.
    Error to the Court' of Appeals of Morrow county.
    The defendant in error, The New Ashley Telephone Company, was a corporation with a plant installed in the village of Ashley, Delaware county, Ohio, furnishing telephonic service under a franchise granted by the village council, and owning the equipments and lines established in that village.
    The plaintiff in error, The Ashley Tri-County Mutual Telephone Company, was also á corporation, incorporated not for profit, and engaged in like telephonic business, though mutual in character. Having obtained a franchise authorizing its installation and operation in the village, it was about to install its plant in competition with that of the defendant in error. The plan adopted by the mutual company was to furnish telephonic service to those stockholders who wished to become members and who purchased their own ’phones and used them for communication among themselves. No long-distance communication or service was contemplated, nor were tolls or rentals to be collected as such. While the erection and maintenance of the plant by the mutual company were contemplated, the record does not clearly disclose how the funds were to become available for such construction and maintenance, It is admitted that a certificate of public necessity has not been secured from the public service commission of Ohio to the effect that the franchise to be exercised was proper or necessary for the public convenience. These facts appear affirmatively, either as admitted by the answer or by answers to interrogatories attached thereto.
    The action originated in the court of common pleas, where an injunction was sought restraining the mutual company from the construction and operation of its plant in the village of Ashley. The case was submitted on the pleadings and a permanent injunction was ordered. The court of appeals of Delaware county affirmed that judgment, and the mutual company now prosecutes error to this court.
    The salient and controlling facts in the Morrow county case are similar to those in the Delaware county case. In the former, the established company was much larger than the Delaware company and it had installed and in use in Morrow county 2,348 telephones and 451 miles of pole lines, 570 of these telephones being connected with the Cardington exchange in said county. This company had made application to the Cardington council for a franchise for its poles, lines and plant in that vil-' lage. A restraining order having been granted in the trial court, the' mutual company applied to the court of appeals of Morrow county, where the case was heard upon the pleadings and evidence, and' the appellate court stated separately its conclusions of fact and law and enjoined the mutual company from constructing and operating its lines in Morrow county. Error is likewise prosecuted to this court from that judgment.

      Messrs. Marriott, Freshwater & Wickham, for plaintiff in error, The Ashley Tri-County Mutual Telephone Co.

      Messrs. Overturf, Hough & Jones, for defendant in error, The New Ashley Telephone Co.

      Mr. B. A. Myers; Mr. O. J. Myers and Mr. J. D. Johnson, representing The Celina & Mercer County Telephone Co., for defendant In error.

      Messrs. Badger & Ulrey; Messrs. Harlan & Wood and Mr. O. W. Kennedy, for plaintiff in error, The Farmers Mutual Telephone Co.

      Messrs. Mitchell & Bruce and Mr. J. W. Barry, for defendant in error, The Morrow County Telephone Co.
   Jones, J.

In both cases the plaintiffs in the trial courts were telephone companies that had been established and were in operation, one in the village of Ashley, Delaware county, and the other seeking a franchise in the village of Cardington, and intending to operate in the outlying districts of Morrow county. The mutual company endeavored to invade this established territory, for the purpose of furnishing telephonic service, without securing a certificate of public necessity from the public service commission, relying upon the claim that none was required under Section 614-52, General Code, for the reason that the section applies only to such public utilities as operate their utilities for profit.

The chief and determinative question in this case is: Does a telephone company, operating under the mutual membership plan employed by it, under the stated facts, require a certificate of necessity for the public convenience, before it may exercise the right or franchise of owning and operating a plant for the furnishing of telephonic service in a municipality or locality where there is already in operation a telephone company furnishing adequate service ?

For the proper determination of this question it must be conceded that the invading competitive companies were corporations organized as mutual telephone companies not for profit. These latter companies seek to escape the requirement of the code section, supra, by reliance upon other sections of the code, notably Section 614-1 and subsections immediately following. These sections vest in the public service commission jurisdiction and supervisory powers over the public utilities therein defined. By Section 614-2q, General Code, this jurisdiction was in a general way limited to every utility, corporation, company, etc., except such utilities not operating for profit. They deal with regulation and supervision of public utilities, and do not cover the field of competition which is later specifically applied to telephone companies by Section 614-52, General Code. This section reads as follows:

“No telephone company shall exercise any permit, right, license or franchise that may have been heretofore granted but not actually exercised or that may hereafter be granted to own or operate a plant for the furnishing of any telephone service, thereunder in any municipality or locality, where there is in operation a telephone company furnishing adequate service, unless such telephone company first secures from the commission a certificate after public hearing of all parties interested that the exercising of such license, permit, right or franchise is proper and necessary for the public Convenience.”

By other sections of the code (102 O. L., 549) the general assembly sought to regulate and supervise public utilities, using that term generically, and including within the definition of the term “public utilities” those telephone companies operating such utilities for profit. But by Section 614-52, General Code, the legislature specifically treated telephone companies as public utilities requiring special legislation. Telephone companies were thereby taken from the general scheme of public utility regulation and there was added and applied to this particular utility a statutory mandate not applicable to others. Having in view the public convenience primarily, and the adequacy of telephone service secondarily,„ it protected the public convenience, and, incidentally, the established plant, by a special provision that no telephone company should invade a municipality or locality furnishing adequate service, without a certificate from the commission. And this the statute provides irrespective of whether the company operates for profit or not. The legislature no doubt considered that public policy required special legislation in that particular field when it sought to supervise competition in the interest of public convenience. The language of the section is plain, and we are unable to apply to telephone companies the added words, “operating their utilities for profit.” The unequivocal language of the section does not permit the implication claimed for it, and such a construction is forbidden ,by the maxim, expressum facit cessare taciturn. Any tendency to monopoly may easily be curbed by the state, which retains complete control of the situation. Its public service commission has full power to grant or withhold the certificate, as public necessity may require.

In both of the cases stated the mutual companies are of such character and scope as would stamp them, not only as telephone companies, but companies which might affect the public convenience alluded to in the act. Such being the case, the tribunal provided in the first instance for the determination 'of that fact was the public service commission of the state. We do not hold that private telephone lines,, or that even all mutual lines, shall in all cases require the certificate named. Public convenience is the polestar of the act, and an established and adequate service- in a municipality or locality is the chief factor in its determination, and where, as here, these factors may be disturbed by a new and competitive telephone company, substantially affecting established service, it is necessary that a certificate be obtained, to the effect that the right or franchise is necessary for the public convenience, before such second company can exercise its rights and franchises in such occupied locality.

In each case the judgment of the court of appeals is affirmed.

Judgment affirmed.

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

Donahue, J.,

concurring. I concur in the judgment of affirmance in this case solely for the reason that these mutual telephone companies are claiming the right to erect poles and string wires thereon, over and along the public streets and alleys, under and in pursuance of a grant or franchise to them by the council of the municipalities named in the petition.

Such rights cannot be granted in the streets and alleys of a municipal corporation, except to a public service corporation that is required by the laws of this state to furnish equal service to the public gén'erally.

Injunction is the proper remedy to prevent the exercise of such rights in the public streets and ways by private individuals for private purposes.

On the other hand, I do not believe that a mutual telephone company, organized not for profit, and serving only its stockholders, with the right to reject or accept any stockholder it pleases, can be required to procure a certificate from the public service commission before doing business in any locality, no matter whether a telephone company organized for profit is of is not furnishing adequate service to its subscribers in that locality.

The public service commission of Ohio, as its name indicates, is a commission created for the purpose of controlling and regulating the public utilities of this state.

Section 3 of the act creating that commission (Section 614-2, General Code) specifically enumerates the “person or persons, firm or firms, co-partnership or voluntary association, joint stock association, company or corporation, wherever organized or incorporated,” that come within the control and jurisdiction of the public service commission of Ohio. In this connection the statute defines a telephone company, and the following section of the same.act (Section 614-2a, General Code) specifically exempts from the terms of the statute utilities operated “not for profit;” so that the definition of “a telephone company” as given in Section 3 of the act creating the public service commission, must be read in connection with .the exceptions written in Section 4 of the same act, and so reading the two together, a telephone company, within the meaning of this act creating the public service commission of Ohio and defining its duties and authority, is a “person or persons, firm or firms, co-partnership or voluntary association, joint stock association, company or corporation * * * transmitting to, from, through, or in this state, telephonic messages” for profit. It follows, therefore, that when Section 54 of the same act refers to telephone companies, it means a telephone company as defined by Sections 3 and 4 of the same act; otherwise it would refer only to companies, and not to individuals, firms or partnerships, operating this public utility for profit in this state.


author: Wanamaker, J.

text:
    The State, ex rel. Bailey et al., v. George et al.

      Civil service — Municipal home rule■ — Statutes liberally construed, when — Appointment of commissioners by mayor — Section 486-19, General Code (103 O. L., 708) — Sixty-day limitation— Powers of state commission and mayor — Section 10, Article XV, and Article XVIII, Constitution, 1912.

    1. The plain purpose of the municipal home-rule amendment adopted in September, 1912, is to provide home rule for cities, which obviously includes the selection of its own municipal officers by the people of the municipality or other duly authorized municipal officers.
    2. Statutes passed pursuant to such home-rule amendment should be liberally construed so as to effect the plain purpose of such amendment.
    3. Under Section 486-19, General Code (103 O. L., 708), commonly known as the civil service act, the sixty-day limitation does not terminate the right of the mayor to appoint a municipal civil service commission. The purpose of thereafter conferring the power, upon the state civil service commission is merely to enforce the appointment of such municipal commission, and failure to act upon the part of the state civil service commission leaves the power still in the' hands of the mayor after such sixty-day period.
    (No. 14705
    Decided July 2, 1915.)
    Error to the Court of Appeals of Muskingum county.
    Facts are stated in opinion.

      Mr. Harry C. Pugh, for plaintiffs in error.

      Mr. A. J. Andrezvs and Mr. John C. Bassett, for defendants in error.
   Wanamaker, J.

In September, 1912, the people of Ohio adopted as part of their constitution a civil service amendment, designated as Section 10 of Article XV, as follows:

“Appointments and promotions in the civil service of the state, the several counties, and cities, shall be made according to merit and fitness, to be ascertained, as far as practicable, by competitive examinations. Laws shall be passed providing for the enforcement of this provision.”

Pursuant to such civil service amendment, the general assembly of Ohio passed a civil service act, now known as Section 486-1 et seq., General Code, which, being subject'to the referendum, became a law August 8, 1913. The parts of said act pertinent to the sole question involved in this case are as follows:

“Section 19. The mayor or other chief appointing authority of each city in the state shall appoint three persons, one for a term of two years, one for four years, and one for six years, who shall constitute ' the municipal civil service commission of such city and of the city school district in which such city is located. * * * ' If the appointing authority of any such city fails to appoint a civil service commission or commissioner as provided by law within sixty days after he has the power to so appoint, or after a vacancy exists, the state civil service commission shall* make the appointment, and such appointee shall hold office until the expiration of the term of the appointing authority of such city and until the successor of such appointee is appointed and qualified.”

• This whole case turns on the construction of the latter provision of Section 19 (Section 486-19, General Code), and the query is whether or not the sixty-day limitation is directory or mandatory.

The act of the general assembly, as heretofore noted, became a law August 8,'1913. The sixty-day limitation in Section 19 would expire October 7. The appointment by the mayor was not made until November 17, 1913, at which time he appointed the defendants in error, known as the “George Board.”

In January, 1914, William H. Webster became mayor of Zanesville, and on January 8, as such mayor, attempted to appoint the plaintiffs in error, known as the “Bailey Board,” as civil service commissioners for Zanesville. This situation gives rise to the question heretofore stated.

It must be presumed that the legislature,' in the enactment of this law, had in mind not only the civil service amendment of the Constitution, known as Section 10 of Article XV, but also the home-rule amendment, known as Article XVIII. Therefore, they proceeded to designate the highest elective executive officer of the city as the proper authority to appoint the municipal civil service commission.

In conferring this power, however, it is urged that they intended to confer it for the period of only sixty days, and if not exercised within that time it was lost to the mayor and the municipality; that by force of the statute it passed to the state civil service commission, and that after said sixty days they were the sole and only power authorized to appoint the commission to serve during the remainder of the mayor’s term of office.

We cannot agree with this contention. We believe it was the legislature’s purpose to confer upon the mayor the right and duty to appoint the municipal civil service commission in keeping with the home rule provided for in Article XVIII of the Constitution, as adopted September, 1912. The sixty-day provision was not a limitation as to the power of the mayor, but rather a limitation upon the time within which he should exercise the power or suffer the loss thereof by the-exercise of that power through the state civil service commission. In short, the state civil service commission was made a sort of policeman to see to it that the mayor performed his duty within the sixty-day limitation, and if he failed so to do the state civil service commission then had the option of making the appointment so as to guarantee to the municipality a civil service commission in case the mayor failed or refused to act.

It must be remembered that this was a new law; that the publication of the laws is very often considerably delayed. The public and public officials are often not advised, even in the exercise of reasonable diligence, as to what the laws of the state are until publication thereof has been made. Clearly the state board might have, after said sixty-day period, at once exercised that option and made the appointment. Their authority in that behalf after the expiration of sixty days was not only concurrent with that of the mayor, but paramount thereto. But we see nothing in this act, its letter or its spirit, when interpreted with reference to the home-rule amendment, that calls for a deprivation of municipal appointment at the end of sixty days after he has the power to appoint.

We hold, therefore, that the sixty-day provision in this case was directory only; that it was a permanent power in the mayor, exercisable at any time during his term, unless the state civil service board saw fit to exercise its power of appointment under said act after said sixty-day period. Said state board not having seen fit to exercise such power of appointment, and all the while conferring with the mayor with reference to his exercise of said power, and the mayor having exercised it with the approval of said state board, and said state board further in nowise challenging the mayor’s right in that behalf, we find that the defendants in error were regularly and validly appointed as the municipal civil service commission of the ■ city of Zanesville, and the judgment below is affirmed.

Judgment affirmed.

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