author: Wilkin, J.

text:
    Ensel v. Lumber Insurance Company of New York et al.

      Fire insurance policy—Time when effective—Question for jury, when—Subject of insurance sufficiently described, when— Failure by insured to mention facts—Constitutes concealment and avoids policy, when—Subrogation clause in policy—In favor of insurer in case of ñre—Construed against'insurer, when—Fee simple ownership clause in policy—-Does not apply to lumber in building, when—Chattel mortgage incumbrance clause—Does not apply, when.

    1. An insurance agent negotiated for the plaintiff, through the underwriters of an insurance company, a policy in that company. A few months later the underwriters notified the agent that the company would cancel the policy. The agent assented for the plaintiff, but said he would take the usual five days to obtain other insurance. Thereupon the underwriters offered to rewrite the insurance in the defendant company. The plaintiff, through the agent, assented, and a new policy was delivered the same day at two o’clock. The fire occurred at six o’clock. Held: The court properly submitted to the jury the question as to the time the contract of insurance went into effect, and the finding of the jury that it went into effect at the time of delivery and was not postponed until five days later, is not contrary to law.

      2. The subject of the insurance was described in these words: “On his interest in the lumber in Wabash Elevator No. 4, while on the premises, situated on Middle Ground near the Maumee river, Toledo. It is understood that the building is in process of demolition and said insurance is to cover above-described lumber while on the premises.”

      Held; This advised 'the underwriters of the nature and extent of his interest as an element of the risk.
    3. Plaintiff’s interest was acquired from the Wabash Railroad Company by written contract, in which he agreed to demolish the building and release the railroad from all damage by fire caused by it. The underwriters thoroughly inspected the risk on the premises before they wrote the policy. They did not inquire for the contract nor ask the plaintiff any questions, and he made no1 statement about it. A clause in the policy avoids it, “if the insured conceals any material fact concerning the insurance or any subject thereof.”

      Held-. It was for the court to say whether his failure to mention the release was a material concealment within the terms of the policy.

      4. Another clause of the policy provided that: “If the company shall claim the fire was caused by the act or neglect of any person or corporation, the company shall be subrogated to all • right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to the company by the insured.”
    ' Held; A stipulation such as the latter can only be used to work a forfeiture strictissimi juris. That clause being inserted by the insurer for the protection of the insurer is to be construed most strongly against the insurer and -in favor of the insured. In view of the facts disclosed in this case, the court could not by way of purely legal construction give the stipulation the effect which the defendant claimed for it and void the policy.
    5. Another clause avoids the policy, “if the subject of the insurance be a building on ground not owned by the assured in fee simple.” The building was upon the ground described in the policy, but the fee simple title to the land was not in the plaintiff. Held; The property insured was not part of the real estate but lumber in a building in process of demolition.. Therefore this clause of the policy has no application to this case.
    6. It also provided that: “If the subject of the insurance be or become incumbered by a chattel mortgage the policy shall be void.” There was a railroad mortgage by the Wabash company undischarged at the time it sold the lumber in the building to the plaintiff. That mortgage contained the usual proviso tha.t the railroad company might dispose of equipment and material, replacing the same with new, and the company was doing that thing.

      Held: The mortgage lien upon this lumber was discharged. For this and other reasons this defense was properly excluded.
    (No. 13194
    Decided June 27, 1913.)
    Error to the Circuit Court of Lucas, county.
    The plaintiff held a policy of insurance in The Teutonia Fire Insurance Company for $1,000 upon his interest in a frame building known as Wabash Elevator No. 4, in Toledo. By contract in writing he had purchased the material and lumber in the building from the Wabash Railroad Company for $2,000 and agreed to demolish the building. There was a stipulation in the contract that the railroad company was released from all liability on account of fire, from negligence or otherwise, while the building was being demolished. The plaintiff obtained the insurance from a Mr. Smith, an insurance agent, who negotiated the policy through The Welles-Bowen Company, agents of the Teutonia company.
    Before writing the policy, Mr. Bowen of that firm, with Mr. Smith, made a thorough inspection of the risk. About six months later, on June 24, 1910, Mr. Welles of that firm notified Smith that the Teutonia company wished to cancel the policy, and he offered to rewrite the insurance in the defendant company. Smith communicated with the plaintiff Ensel by telephone, who assented to the change and said he would return the Teutonia policy.
    Thereupon Smith told Welles to rewrite • the insurance in the Lumber Insurance Company, which he did and delivered the new policy to Smith about two o’clock the same day. Proper entries of the transaction were made in The Welles-Bowen Company’s books and the defendant company was notified of the issuance of the policy. About one-fourth of the building was reduced to lumber by that date; and at six o’clock the.building took fire and was consumed.
    Attached to the face of the policy of the Lumber Insurance Company was a typewritten memorandum, called a “rider,” as follows: •

      “E. L. Ensel. $1,000 on his interest in the lumber in Wabash Elevator No. 4, and, or while on the premises situated on Middle Ground near Maumee River, Toledo, Lucas County, Ohio. It is understood and agreed that the building is in process of demolition and said insurance is to cover above described lumber while on the above described premises, within 1,000* ft. of building.”
    The printed policy contained the following clauses:
    1. “This entire policy shall be void if the insured has concealed or misrepresented in writing or otherwise, any material fact or circumstance concerning this insurance, or the subject thereof.”
    2. “This entire policy unless otherwise provided by agreement, endorsed hereon or added hereto, shall be void * * * if the subject of insurance be a building on ground not owned by the insured in fee simple; or if the subject of the insurance be personal property and be or become incumbered by a chattel mortgage.”
    3. “If this company shall claim that the fire was caused by the act or neglect of any person or corporation, private or municipal, this company shall, on payment of the loss, be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment.”
    The record discloses that the Wabash company and other companies operated steam railroads in the immediate vicinity of the elevator; that the cause of the fire was unknown; that Ensel had never shown his contract with the Wabash Railroad Company and that no one had ■ ever asked him for it.' •
    The loss was. much more than the insurance. Proofs of loss were filed with the company, which declined to pay, and this suit was commenced. '
    The defendant sets up four defenses: First, a general denial; second, the building was on ground not owned by the plaintiff; third, part of the property was encumbered by a mortgage given by the Wabash railroad to The Bowling Green Trust Company; fourth, the subrogation clause; that plaintiff by his contract with the Wabash company released that company, which fact he had not disclosed to defendant.
    Plaintiff in reply admitted the provisions of the policy; that the building was not on ground owned in fee simple; but alleged defendant knew that fact and waived that provision and the provision in regard to chattel mortgage, by the rider; and that defendant had full opportunity to know all of the provisions of the contract with the Wabash railroad; and denied any concealment of a material fact.
    At the close of plaintiff’s case, defendant • made a motion for a directed verdict, which was re-; newed at the close of all the testimony and was overruled. Thereupon the defendant requested that the case go to the jury on all the issues, which was refused. The court submitted the first defense, holding the others were not separate defenses. The jury returned a verdict for the plaintiff; a motion for new trial • was ■ overruled, and judgment entered. Defendant prosecuted error. The circuit court found the com•mon pleas should have directed a verdict for defendant, and entered judgment accordingly. The plaintiff now prosecutes error to this court.

      Mr. Ralph S. Holbrook and Mr. Claude R. Banker, for plaintiff in error.

      Messrs. Brown, Hahn, Sanger & Froelich and Messrs. King, Tracy, Chapman & Welles, for defendants in error.
   Wilkin, J.

The counsel for defendant lay down four propositions to support the judgment of the circuit court: 1. The policy never went into effect. 2. The minds of the parties never met upon the subject-matter of the contract of insurance. 3. Part of the property was personalty encumbered by a chattel mortgage, contrary to the provisions of the policy. 4. Part was a building situate on ground not owned in fee simple, contrary to the provisions of the policy.

The evidential facts connected with the negotiation of the insurance are not in dispute. But there is a dispute about the ultimate facts which may be deduced from the proven facts: 1. Are they mere inferences which the judgé may draw? 2. Are they legal presumptions which the law makes? 3. What conclusion of law arises from the ultimate facts thus determined?

As is usual in insurance cases, we are confronted with a mass of diverse decisions and doctrines. We would have to write a treatise if we attempted to untangle the confusion and conflict of law .presented in the briefs. We have not the time, if we had the inclination, to attempt to harmonize the cases. We shall dispose of this case upon its own intrinsic facts and the legal principles which we deem safe guides to its solution. To that end we shall consider the defendant’s four propositions briefly. . v .

First. Did the policy not go into effect? This is based on the fact that when Welles notified Smith that the Teutonia company would cancel ¡its policy, Smith answered that he would accept-.the notice and take the usual five days to obtain other insurance. If the colloquy had ended there, the Teutonia policy would have been current when the fire occurred some hours later. But the dialogue continued. Welles: “I can rewrite the policy in the Hudson’s Underwriters” (Lumber Insurance Company). Smith, after consulting Ensel: “Go ahead, rewrite the policy and deliver it this afternoon.” That was done, and the fire occurred four hours later. Counsel for defendant say: “They wished to substitute one policy for another, but intended the new policy should come into force four days later.” We think otherwise; the exchange was complete when the new policy was delivered that afternoon at 2 o’clock. The jury so found by their verdict, and the circuit court erred if it meant to reverse that finding.

Second. Did the minds of the parties meet upon the subject-matter of the insurance? Counsel for defendant sajf the subject-matter is the risk of loss by fire which the underwriter agrees to take. He quotes Richards on Insurance, page 118: “And if, at the time of closing the contract, the one party has knowledge of facts material to the risk which, with or without design, he fails to disclose to the other party, then the parties 'are not contracting with reference to the same chance. There is no meeting 'of' the minds upon the same essential •subject-matter of their contract.” The author supports that text by an extract from Lord Mansfield's ‘.decision in the leading case of Carter v. Boehm, 3 Burr., 1905: “The special facts upon which the contingent chance is to be computed lie -most commonly in the knowledge of the insured only. The underwriter trusts to his representations, and proceeds upon confidence that he does not keep back any circumstance. in his knowledge to mislead the underwriter into a belief .that the circumstance does not exist, and induce him to estimate the risk as if it [the circumstance] did •not exist.' The keeping, back such circumstance is a fraud, and therefore the policy is void.”

The circumstance alleged to have been withheld is thé clause in Ensel’s bill of sale from the Wabash company releasing the company “from all •liability on account of fire to said elevator while being wrecked.” Was this release a material element of the risk about which the- parties were negotiating when. they arranged to exchange the Teutonia for the Hudson’s Underwriters policy? If it became material at all, it did so only as a feature, not of the risk but of the contract; for if it became an element of the contract of indemnity it did so not as affecting the risk but only as affecting the contract of subrogation. That is to say, the policy contained two contracts: One to indemnify Ensel for loss by fire, the other to subrogate the company to any right he might have against anybody else to recover for the same loss by fire “from negligence or otherwise.”

Now, it is not contended by the defendant that these obligations were reciprocal in the sense that the breach of the latter discharged the former, nor that Ensel actually agreed to confer upon the defendant the right of subrogation. The defendant’s claim is quite different from either of these. It is that there being a subrogation clause in the printed stipulations, the plaintiff assented to it when he or his agent accepted the policy,, because the law presumes that he read it.

The next step in the argument is, that the láw presumes, when he thus adopted .that clause, he represented that he still had all rights of recovery from everybody who should by negligence or otherwise set fire to the building.

The third step is, that there was another stipulation preceding the subrogation clause, viz: “This policy shall be void if the insured has concealed or misrepresented in writing or otherwise any material fact or circumstance concerning this insurance or the subject thereof;” therefore he deceived the insurance company, because he did not, between the delivery of the policy to Smith at 2 o’clock and the fire at 6 o’clock, reveal to the company that he had released his right of recovery for negligent fife by the Wabash company. All-the while it is conceded Ensel did not see the policy nor know of these stipulations, and he was asked no questions, and made no statements about anything.

Here we have a presumption upon a presumption, one of which cannot be true without the other is presumed- to be true, from which to deduce the conclusion of deception—a conclusion deceptive. surely enough. Formal logic may not be of much value as a constructive science, but it has legitimate use for criticism; it will expose error and puncture a fine fallacy. Let us syllogize defendant’s'argument:'

Whoever knows and does not speak, lies.

The law assumes that E. knew and that E. did speak.

Therefore E. lied.

But this lame conclusion would not avail defendant, if it were sound. The defendant must proceed .further. For, let us note, the defense stated in the answer is not what defendant’s counsel misconstrues it to be in the argument. It seeks to avoid the contract for fraud. The defense is deceit, not want of mutuality. He must show not only that the represented fact was not true, but that the presumed misrepresentation was made for the purpose of deceiving the defendant; and that the defendant relied upon the representation as true. Does the law presume thát Ensel did what he did not in fact, and then presume that what he did not in fact he did for an evil purpose? Are we to have a third presumption, grounded upon the second, which was grounded on the first? This argument on presumptions is strained and artificial and does not win our confidence.

• And still ■ this defense would not be complete. The insurance company was not deceived if its agent Bowen made a thorough inspection of the risk and inquired how much interest Ensel had in this building. Did he see the Wabash company’s copy of the contract with Ensel when he went down to the elevator to investigate the risk? The nature and extent of Ensel’s interest was determined by that contract, and “his interest” was, by the very language of the “rider,” a very material element of the risk. If Ensel’s interest was the perfect and complete ownership of the structure which he was to demolish, then he had all the right of recovery from the Wabash company or anybody who caused its destruction by negligent fire or otherwise.- If the company’s agents did not examine this phase of the risk, can the company complain now ?

Counsel for the company allow no presumption that the company knew what it might have known; and justly, we think, because it is a question of construction and inference, whether he affirmed the fact by silence, or whether under all the circumstances the company was under duty to inquire. But counsel also concede no ground for inference. We think there was ground for inference, and that the trial judge properly decided the question. If the circuit court ruled the question otherwise, it must have done so because there was no evidence that the company assumed the risk upon its own knowledge; ignoring the clear, uncontroverted testimony that Bowen “made a thorough inspection of the risk in detail.”

On this question of knowledge, we are cited to the cqse of Nelson v. Continental Insurance Co., 182 Fed. Rep., 783. That company had issued to Nelson a policy against fire to his “five-story building, situate Nos. 138-142 E-S of North Market St.” The policy had a “rider,” to-wit: “this insurance also covers the assured’s one-half interest .in the south wall of the four-story * . building, situate Nos. 144-146 North Market St.” The court said: “The rider indicates that the insurer had knowledge that the south wall of the Pilcher building was a party-wall, outside of and beyond the limits of the premises generally described in the policy, which were the assured’s ‘five-story * * * building, situate Nos. 438-142 E-S of North Market street * * *,’ while the rider extends the protection of the insurance to the assured’s interest in the south wall of the building described as ‘situate Nos. 144-146 North Market .St." * * *.’ Under these circumstances defendant must be presumed to have had knowledge of plaintiff’s interest in the subject of the insurance, and to have issued its policy with such knowledge.”

Counsel for defendant here criticise the case, but- reluctantly admit that the federal court rightly raised the presumption under the circumstances of that case. Counsel can hardly consistently contend that the trial court went wrong in drawing an inference of the same sort under the circumstances of the case at bar.

Furthermore, there may be a question whether, in the light of all the circumstances, the stipulation as to the subrogation was in fact violated. It runs in the future. “If this company shall claim that the- fire was caused by the act or neglect of •any person or corporation * * * this company shall be subrogated- to all right of recovery by the insured '* * * and such right shall be assigned to.'this' company.” That the -Wabash company caused the. fire, does not appear. If tha,t fact shall subsequently appear, the defendant may assert it in an action for breach of this covenant. “Sufficient unto the day is the evil thereof.”

This stipulation is used in this action to work a forfeiture. The law abhors a forfeiture, and will countenance it only strictissimi juris. Besides, the stipulation, being written in the policy by the insurer for the protection of the insurer, is to be interpreted most strongly against the insurer. Here the insurer seeks to construe it as implying, nay, ■as importing by presumption of law, a representation that the insured had a right of recovery against the Wabash company. The representation can hardly be imported into the document by strict construction. The most the defendant could claim is a mere inference that the plaintiff represented that he had the right to sue the Wabash company if that company should negligently or otherwise set fire to the property, and that he so represented falsely and purposely.- That was an inference for the trial judge, if he found the facts would justify it. The judge did not so find. We 'think he was right; he properly construed the contract.

Third. The property was incumbered by an undischarged mortgage upon the Wabash railroad. What we have said supra about notice of and inquiry into the extent of his interest, applies to this defense. Insurance is often written, “upon the assured’s interest as his interest may appear.” The “rider” is not materially different in effect. .It was notice that his ownership of the- building was not perfect, absolute ownership.

The mortgage does not appear in the record, but we glean that there was the usual proviso that the railroad company might dispose of equipment and material, replacing the same with new. For aught that appears this is what the railroad company was doing. If , so, the lien upon this lumber was discharged. This defense is not valid.

Fourth. The elevator was situate on ground not owned by the plaintiff in fee. The property insured was not the building, but the lumber contemplated as personalty, though part of a structure “in process of demolition.” The property was upon the land where it was described to be.. The fact that the fee simple title to the land was not in the owner of the personalty insured, is not material.

The error of counsel throughout this case, lies in a confusion of terms. They mistake inference for presumption—a slip too often unconsciously made by judges as well as lawyers. A presumption is a rule which the law makes upon a given state of facts; an inference is a conclusion which, by means of data founded upon common experience, natural reason draws from facts which are proven.

A presumption of law may be prima facie only— that is, a hypothesis which will admit of proof to the contrary; or it may be absolute—that is, a postulate which, for reasons of legal policy, the law will not permit to be contradicted. The latter may be a mere fiction, assumed to be true, although the known fact may be the very opposite.

It is the latter sort which we are urged to adopt in this case. There may be cases, having somewhat similar features, where judgment upon presumptions may be legitimate. This is not one of them.

Judgment of the circuit court reversed, and that of the common pleas affirmed.

Shauck, C. ]., Johnson, Donahue, Wanamaker and Newman, JJ., concur.


source: Caselaw Access Project

author: Donahue, J.

license: Public Domain

text:
    The City of Cincinnati et al. v. The Louisville & Nashville Railroad Company.

      Appropriation of public property for easement—Section 6420, Revised Statutes, applies to proceedings under Section 3283a, Revised Statutes (99 O. L., ¡90)—Board of directors of railroad —Has primary discretion to determine necessity therefor—But court has final authority to determine necessity for appropriation.

    1. Section 6420, Revised Statutes, is a part of title II, chapter 8, part 3, Revised Statutes, applicable to proceedings brought under favor of Section 3283a to appropriate an easement over public ground lying within the limits of any municipality and dedicated to the public for use as a public ground, common, landing, wharf, or any other public purpose, excepting streets, avenues, alleys or public roads.
    2. Section 6420, Revised Statutes, authorizes the court in which such proceeding is properly brought to hear and determine the questions of the existence of the corporation, its right to make the appropriation, its inability to agree with the owner and the necessity for the appropriation, before proceeding to impanel a jury to assess compensation.
    3. The board of directors of any domestic or foreign corporation owning or operating a railroad wholly or partly within the state of Ohio has primary discretion to determine the necessity for'the appropriation contemplated under the provisions of Section 3283a, Revised .Statutes, but under the provisions of Section 642Ú, Revised Statutes, the court in which such proceeding is properly brought has the final authority to hear and judicially determine the existence of the corporation, its right to make the appropriation, its inability to agree with the owner and the necessity for the appropriation and power to determine whether the proposed appropriation will be an abuse of its corporate ■power or destructive of the public purpose to which the land is already devoted. (Wheeling & Lake Erie Rd. Co. v. Toledo Ry. & Term. Co., 72 Ohio St., 368, followed and approved.)
    (No. 13887
    Decided June 27, 1913.)
    Error to the Circuit Court of Hamilton county.
    On the 21st day of January, 1910, The Louisville & Nashville Railroad Company filed a petition in the court of insolvency of Hamilton county asking that a jury be impaneled to make an inquiry and assessment óf the compensation for an easement sought to be appropriated by it in certain lands situated in the city of Cincinnati dedicated to public use. This land'was dedicated by the original proprietors of the town of Cincinnati. A plat was filed and recorded laying off the. proposed town of Cincinnati into lots abutting on streets running in general parallel with and at right angles to the Ohio river. A space extending from the east boundaries of the proposed town to the west line of Main street and from the north side of Front street to the river was not subdivided into lots.
    Sometime after this plat was filed and recorded Joel Williams purchased of the original proprietors their easement and interest in the town, subdivided this open space into lots which he' undertook to sell and also erected a building on a part of these premises. The town of Cincinnati brought a suit against him to quiet its title to this open space as a public common and in that case the coürt held that this land had been dedicated to the town of Cincinnati as a common for the uses and purposes of the inhabitants of Cincinnati forever, but did reserve to Joel Williams and his heirs the exclusive right of a ferry opposite said premises and also a landing place for the purposes of such ferry; also reserving to the said Williams and his heirs the use of a brick house erected by him on said premises, together with a portion of the land for a term of eight years next after the first day of April following the date of such decree; and entered a judgment in said cause enjoining the said Williams from erecting any further buildings, fences, or nuisances upon any part of the premises, and ordering and adjudging that the town of Cincinnati stand seized of said premises in fee simple to the use of the inhabitants of said town for a common forever. That judgment is still in full force and effect.
    To this proceeding to appropriate an easement across these premises the city of Cincinnati, The. Covington & Cincinnati Bridge Company, and the ■heirs of Joel Williams were made party defendants.
    On the preliminary hearing in the court of insolvency, that court found that plaintiff is a corporation duly organized under the laws of the state of Kentucky and that it owns and operates a railroad partly within the state of Ohio; that the board of directors of the plaintiff coriipany, by resolution duly passed, declared it necessary to make the appropriation sought to be made, and that plaintiff duly submitted to the council of the city of Cincinnati general plans of the structure proposed to be built on and over the property sought to be appropriated; that the council of the city of Cincinnati agreed upon the manner, terms and conditions upon which said property might be used and occupied by plaintiff and approved the plans by ordinance duly passed; that plaintiff within sixty days after the passage of said ordinance filed its written acceptance thereof; that the plaintiff had been unable to agree with the owners as to the compensation to be paid them severally for their interests in the land sought to be appropriated ; and further found that the plaintiff is without right to make the appropriation and that there is no necessity for the appropriation sought to be made, and thereupon dismissed plaintiff’s petition at its costs.
    Error was prosecuted in the common pleas court of Hamilton county and that court affirmed the judgment of the court of insolvency. The circuit court of Hamilton county, however, reversed the judgment of the court of insolvency and the judgment of the common pleas court affirming the same and remanded the cause to the court of insolvency for further hearing and trial according to law, and this proceeding in error is now prosecuted to reverse the judgment of the circuit court.
    Some years before the filing of this petition in the court of insolvency to appropriate an easement in this property, the city council of the city of Cincinnati passed an ordinance agreeing upon the manner, terms and conditions upon which The Louisville & Nashville Railroad Company might use, occupy and cross over, along and upon the streets, alleys and public grounds of the city of Cincinnati for the purpose of constructing, maintaining and operating the extension of its steam railroad. Immediately after the passage of this ordinance, the city solicitor of Cincinnati brought an action to enjoin the railroad company from using and occupying this property under the provisions and terms of said ordinance; and this court affirmed a judgment in that case granting a perpetual injunction against The Louisville & Nashville Railroad Company.
    Following that decision of this court, the general assembly of Ohio passed a law amending Sec-, tion 3283, Revised Statutes of Ohio, and supplementing the same by Section 3283a. Section 3283 is now Sections 8763, 8764, 8765 and 8766 of the General Code. Section 3283a is now Sections 8767, 8768 and 8769 of the General Code. Subsequent to the amendment of Section 3283 and the enactment of Section 3283a, and in pursuance of the authority granted by these sections, The Louisville & Nashville Railroad Company began this proceeding in the court of insolvency.
    Shortly after filing the petition in this case, an injunction proceeding was brought to restrain the railroad company from the construction of its viaduct and from further prosecuting its action to appropriate an easement in this property, upon the theory that these acts are unconstitutional.

      The common pleas court, however, held the act constitutional and the ordinance passed by the city of Cincinnati thereunder a valid ordinance, and that judgment was affirmed by the circuit court, and the judgment of the circuit court was affirmed by this court (82 Ohio St., 466). Error was then prosecuted by the city in that case to the supreme court of the United States, and that court affirmed the judgment of the state courts (City of Cincinnati v. Louisville & Nashville R. R. Co., 223 U. S., 390).

      Mr. Alfred Bettman, city solicitor; Mr. Albert Bettinger; Mr. Walter Schmitt and Messrs. Hosea & Knight, for plaintiffs in.error.

      Mr. Ellis G. Kinkead; Mr. H. Kenneth Rogers; Mr. H. L. Stone and Mr. J. B. Foraker, for defendant in error.
   Donahue, J.

The principal question arising in this case involves the construction of Section 3283a, Revised Statutes of Ohio (99 O. L., 590). This court, in a former action between the City of Cincinnati and The Louisville & Nashville Railroad Company, 82 Ohio St., 466, held this section constitutional. It provides, among other things, that proceedings to appropriate an easement to use and occupy for an elevated track any portion of any public ground lying within the limits of a municipality and dedicated to the public for use as a public ground, common, landing or wharf, or for any other public purposes excepting streets, avenues, alleys or public roads, shall be conducted ■in the manner provided in title II,- chapter 8, part ■ 3, of the Revised Statutes, so far as the same may be applicable thereto.

Chapter 8, part 3, title II, relates to' the appropriation of private property by corporations. Section 6420 is one of the sections of this chapter, and reads as follows: “On the day. named in any summons first served, or publication first completed, the probate judge shall hear and determine!' the questions of the existence of the corporation,] •its right to make the appropriation, its inability to! agree with the owner, and the necessity for the* appropriation. Upon these questions the burden of proof shall be upon the corporation, and any interested person shall be heard.”

In pursuance to the provisions of Section 6420, this case came on to be heard in the insolvency court upon these four preliminary questions, and that court found that the plaintiff is a corporation, that it is unable to agree with the owner, that it had no right to make the appropriation, that there is no necessity for the appropriation, and dismissed the plaintiff’s petition.

The common pleas court affirmed this judgment. The circuit court reversed this judgment of affirmance and also the judgment of the court of insolvency, upon the theory that that court had no. authority to determine the necessity for the appropriation or the right to appropriate.

It is insisted on the part of the. defendant in error in support of the judgment of the circuit court, that Section 3283a, Revised Statutes, authorizes the board of directors of any domestic or' foreign corporation owning or operating a railroad wholly or partly within the state of Ohio to determine the necessity- of such appropriation, that its judgment in that respect is final, that the court in appropriation proceedings under Section 3283a has no right or authority to hear and determine these questions, and that the necessity for the appropriation is solely within the discretion of the board of directors of the railroad company.

The language of this statute upon which counsel for defendant in error rely, is as follows: “If it be necessary in the judgment of the board of directors of any domestic or foreign corporation owning or operating a railroad wholly or partly within the State of Ohio to use and occupy for an elevated track any portion of any public ground * * * such company may appropriate an easement over so much of such ground as may be •necessary for such purpose.”

This language is not different from the language •found in original Section 3283, Revised Statutes, which was before this court in Village of Rockport v. C. C. C. & St. L. Ry. Co., 85 Ohio St., 73.

That section provided among other things: “and ■it be necessary in the judgment of the directors of such company to use and occupy such road, street, alley, way or ground, such company may appropriate so much of the same as may be necessary for the purposes of its road, .in the manner and upon the same terms as is provided for the appropriation of the property of individuals.”

As already stated, title II, chapter 8, part 3, of the Révised' Statutes, provides for the appropriation ' of' the property of individuals, so that the .statutes'in this, respect are identical.. They are also alike in the fact that the board.: of ^directors of the railroad company:.must first determine the necessity of the appropriation-: before ■ the. commencement of the proceedings to. appropriate.

It may also be observed in-passing,. .That the language used in the original Section 3283, Rervised Statutes, is now used in the General- Code. The presumption is that the- codifiers-did -not;.intend to change the meaning of this statute^ and we do not think that they have changed the-meaning by substituting the words, “in .the. níánner. ahd upon the same terms as is provided: for .the . appropriation of the property of individuals,” (Section 8767, General Code), for the words, '.“title. II, chapter 8, part 3, of the Revised Statutes”- (Section 3283a, Revised Statutes). .

In the case of Rockport v. Railroad Co., supra, the court of insolvency of Cuyahoga county heard these preliminary questions and determined among other things that “such appropriation Is not necessary for the purposes of the plaintiff’s railroad,” and- thereupon dismissed plaintiff’s: petition-. - The common pleas court affirmed the judgmént of .the court of insolvency. The circuit court, reversed .the judgment of the court of insolvency and .the judgment of the court of common pleas ¡ affirming' the same, and this court reversed the judgment of the circuit court and affirmed the judgment, of the court of insolvency.

The effect óf the judgment in that case-is that the following language, found in Section 3283, Revised Statutes, “and it be necessary in the judgment of the directors of such company to use and occupy such road,”.: did ' not confer ;upon.' the railroad company fiüal authority, to determine that question, but rather that under the provisions of this section a corporation has primary discretion in determining the necessity for the appropriation, but that under .the provisions of Section 6420, Revised Statutes;- the probate judge is expressly given jurisdiction to hear and determine this question, as well as the other questions mentioned in that section. To the same effect is W. & L. E. Rd. Co. v. Toledo Ry. & Term. Co., 72 Ohio St., 368; P. C. C. & St. L. Ry. Co. v. City of Greenville, 69 Ohio St., 487.

We are content with the conclusions reached by .this court in the cases above cited. We do not believe that the legislature intended to make the board of directors of a railroad corporation a court of last.resort to determine the necessity of the appropriation of property already dedicated to a public use. If it had so intended, it would certainly have provided some. means or method by which persons interested might be heard before their •rights are forever foreclosed by the judgment of "the board of directors of a private corporation, and •probably would have provided for an appeal or error proceeding. When the legislature declared that the proceedings to appropriate must be in conformity to the appropriation proceedings provided in chapter 8, part 3 of title II, so far as the same may be applicable, it certainly had in mind 'the provisions of Section 6420 of that chapter, and there is- no apparent reason why the provisions of that section are not applicable to this proceeding.

: In this case, as in the Rockport case,.the prop'erty -sought to be'.appropriated for the. elevated tracks of The Louisville & Nashville Company is property already dedicated to-a public use, and before it can be appropriated to another public use which will materially interfere with the original use or be partly destructive of that use, it should be made to appear clearly that the same is necessary, and not destructive of the public use to which-the land is already devoted, otherwise great injustice might be done to existing rights- of the public without any real necessity therefor. As for instance, in this case it is claimed by counsel for plaintiff in error that the real purpose of the railroad company is to cripple, hinder and prevent river traffic, to the end that it may increase its own freight and passenger receipts, and that those in management of this company’s affairs have shown an unfriendly disposition toward river navigation. Without in any way determining that this charge is true, the fact that it might be true, if not in this case, then in some other similar case, would show the absolute absurdity of committing to an unfriendly board of directors of a competing line of travel and transportation final authority to-determine its own needs, to the destruction of a rival interest.

If the construction of this section contended for by counsel for The Louisville & Nashville Railroad-Company were to obtain, then the section is clearly unconstitutional. Section 16 of Article I of our constitution provides that: “All courts shall be open, and every person, for an injury done him in his land, goods, person, or reputation, shall have remedy by due course of law, and shall have justice administered without denial or delay.”

• If a -question of- such vital'importance to the citizens, of a municipality is to' be adjudicated finally by the board of directors of a private corporation without any notice to persons or municipalities interested and without even a right of such persons or municipalities to appear before the board' of directors, then not only the spirit but the letter of this provision of the constitution is violated, for' in.this way a most' important public use may be entirely destroyed at- the mere whim and caprice of the board- of directors of a private corporation without any actual nécessity therefor. It is theréfore evident that this court, when it affirmed the judgment of the circuit court of Hamilton county holding this law constitutional, did not believe it subject tó ¿ny such construction as here contended for, otherwise it must have held the law to be in violation of Section 16 of the Bill of Rights.

A consideration of the principles underlying the right sought to be asserted here could lead to no other conclusion. Eminent domain is the right of the sovereign to' appropriate private property for public use upon paying to the owner a just compensation therefor to be ascertained according the methods provided by law. In this state this ' right of eminent domain ' is vested in the state' government, but the state may exercise this right Through the medium of corporate bodies to whom; it delegates the power to exercise it, but this right can be delegated only for public purposes, private property cannot be taken for private use. without thé consent of the owner. This appropriation is" sought for • public purposes only, otherwise there is no fight to appropriate. Thé property, however, is already devoted to a public purpose. In 1789, when the town of Cincinnati was platted, the original proprietors dedicated this land as a common for the use and benefit of the town, forever reserving only the right to a ferry. In the dedication of this land to public use the proprietors had a right to designate the use' to which it should be applied. It is now sought to subject this land to another public use which may interfere with or even be partly destructive of the use to which it was originally dedicated. It is clear that this can be done under the provisions of Section 3283a, Revised Statutes, but it is equally clear that it was not the intention or purpose of the legislature to give any larger rights or greater powers to the company seeking such appropriation than is given in other cases. It is the settled policy of this state to protect from unnecessary interference or destruction a public use already acquired in property, and- we do not think that the legislature in enacting Section 3283a, Revised Statutes, intended to relax this rule or to abandon this wise public policy.

This court, in the case of L. & N. Rd. Co. v. City of Cincinnati, 76 Ohio St., 481, held that the city could grant no rights in this property to the railroad company, and further held that it was not even in the power of the legislature, unless in the exercise of the right of eminent domain, to authorize property dedicated to a public use for a specific purpose to be used for a purpose inconsistent with that to which it was dedicated. The effect of this holding is that without the aid of Section 3283a, the Louisville & Nashville railroad could not appropriate any easement in this land inconsistent with the use to which it was originally dedicated. To hold that the legislature in delegating this extraordinary power to private corporations also conferred authority upon these corporations to finally determine the existence of primary facts essentially prerequisite to the right to appropriate at all, would be in effect to hold that the legislature had abused the power and authority conferred upon it by the constitution of the state.

It is, however, the settled rule of construction in this state that all statutes granting to corporations the right of eminent domain, which is an attribute of sovereignty itself, must be strictly construed. Currier v. Marietta & Cincinnati Rd. Co., 11 Ohio St., 228; Atkinson v. M. & C. Rd. Co., 15 Ohio St., 21; Platt v. Pennsylvania Co., 43 Ohio St., 228; Ravenna v. Pennsylvania Co., 45 Ohio St., 118.

We have reached the conclusion that Section 6420, Revised Statutes, applies to proceedings to appropriate brought under favor of Section 3283a, Revised Statutes, and that the judge or court hearing said cause has the right and authority to determine every preliminary question incident to the exercise of the right of eminent domain.

Counsel have urged other assignments of error upon our attention, but the view we have taken of this question disposes of the case, and because of the fact that the other questions are peculiar to this case only and not of general importance, we have not considered it necessary to pass upon them at this time.

The judgment of the circuit court is reversed, and the judgment of the court of insolvency of Hamilton county and that of the court of common pleas affirming the same are affirmed.

Reversed.

• Shauck, C. J., Johnson, Wanamaker, Newman and Wilkin, JJ., concur.


author: By the Court.

text:
    Ames et al. v. McCaughey, Receiver, et al.

      Incorporators of corporation for profit—Liable for deficiency of ten per cent, of capital stock, when—Section 3244, Revised Statutes —Liability for debts created prior to incorporation.

      A corporation for profit was duly created and organized under the laws of Ohio in 1906, and became indebted for personal property purchased for use in its proposed business.. No part of the capital stock was paid into the treasury of the company.

      Held: Under Section 3244, Revised Statutes, which was then in force, the incorporators are liable to the creditors of the company to the amount of any deficiency in the actual payment of ten per cent, of the authorized capital stock. (Hessler v. The' Cleveland Punch & Shear Works Co. et al., 61 Ohio St., 621, approved and followed.)
    (No. 13136
    Decided May 13, 1913.)
    Error to the Circuit Court of Knox county.
    The facts are stated in the opinion.

      Messrs. Weight '■& Moore and Mr. H. C. Devin, for plaintiffs in error.

      Mr. John D. Snyder; Mr. Hiram Van Campen and Mr. D. B. Grubb, for defendant in error.
   By the Court.

The Findlay Foundry & Machine Company recovered a judgment for $2,037.34 against The Vernonview Glass Company at the May term, 1908, of the Knox common pleas. Subsequently William D. McCaughey was appointed and qualified as receiver of the Foundry & Machine Company, and, in December, 1908, brought suit against the Glass Company as an insolvent corporation and all of its stockholders who were discovered, among whom were the five original incorporators, tb enforce payment of the amount remaining unpaid on his judgment, the suit, being brought in behalf of the receiver and all other creditors. Judgment was rendered for. plaintiff in the common pleas. On appeal to the circuit court a like judgment was rendered. This proceeding is brought to reverse the judgment of the circuit court.

The circuit court made a finding of facts from which it appears that the Glass Company was duly incorporated under the laws of Ohio, with an authorized capital stock of $65,000, and that the defendants named were incorporators thereof; that four of the defendants had each subscribed for $50, being one share of the capital stock; that no part of the subscriptions were paid, and that the Glass Company was insolvent. No part of the capital stock was ever paid into the treasury of the company. The court found that the incorporators were liable as guarantors to the plaintiff, who was the sole creditor of the Glass Company, for as much of his claim, interest and costs as should not'be paid by the Glass Company and the stockholders, and entered judgment accordingly.

It is contended by the plaintiffs in error that in the. original suit against the Glass Company jurisdiction was not obtained of that company, it being claimed that service was made on one Edgar Berry as the duly elected president of the company* whereas it was claimed that, in fact, no president had been elected. As to this, it is sufficient to say that it appears from the record that the service on the Glass Company was not attacked or questioned in the original action in any manner. On the contrary, that company filed an answer in which it admitted that it was a corporation duly organized under the laws of Ohio, and proceeded to set up matters of defense to the action. This was a general appearance by the defendant, and amounted to a waiver of service.

It is also insisted that the circuit court erred in entering judgment against the incorporators, because it is claimed that no certificate of the subscription of ten per cent, of the capital stock of The Vernonview Glass Company was ever signed by the incorporators and filed with the secretary of state. As already stated, the court found in the original case, and also in the subsequent equity case, that The Vernonview Glass Company was a corporation- duly created and organized under the laws of Ohio, and that it became indebted as such to the Foundry & Machine Company in the amount stated. In such circumstances the presumption is that the organization was made in accordance with legal requirements.

But it is contended by plaintiffs in error that this finding and judgment can create no presumption that anything more was done than was neces•sary to legally organize the company. That is, that under Section 8633, General Code, ten per cent, of the capital stock was subscribed, of which portion, ten per cent., or $650, was payable at the time of the subscription, and that under Section 8634, General Code, the liability of the incorporators is for the amount of any deficiency in the payment of ten per cent, on the stock subscribed, and, therefore, could not exceed $650. \

However that may be, in a case in which the question is presented, it cannot avail plaintiffs here. The statute, as it stood at the time of the occurrence of the transactions involved in this proceeding, was included in Section 3244, Revised Statutes, and provided that as soon as ten per cent, of the capital stock was subscribed, the subscribers to the articles of incorporation, or a majority of them, should so certify in writing to the secretary of state, and also contained the provision: “The incorporators of the company shallf be liable to any person affected thereby to the! amount'of any deficiency in the actual payment of j said ten per cent, at the time of so certifying.” j In Hessler v. Cleveland Punch & Shear Works Co., 61 Ohio St., 621, it was held that the liability of the incorporators under Section 3244, Revised Statutes, is for the amount of any deficiency in the actual payment of ten per cent, of the authorized capital stock of the corporation at the time, of their certifying as therein provided, and not merely one-tenth of that amount. In the opinion it is stated that the incorporators are, in effect, made guarantors of the corporation to that amount. The duty of the incorporators, as to the filing of the certificates and their liability with respect thereto, is, in addition to the personal liability of .each stockholder, to pay for the stock subscribed ■by him..

The constitution confers upon the legislature authority to provide means to secure the creditors of a corporation. Such provisions are necessary to insure good faith and to secure, protection to .persons dealing with such organizations.

The judgment of the court below will be affirmed. ■ -

Judgment affirmed.

Johnson, Donahue, Wanamaker, Newman and Wilkin, JJ., concur.


text:
    The State, ex rel. Schreiber, City Solicitor, v. Milroy, Prosecuting Attorney.

      \Section id, Article II, Constitution—Laws providing for tax levies not subject to referendum—Does not apply to act amending Sections 5649-2 and 5Ó49~3b, General Code—Relative to limitation of tax rate and reorganization ■ of budget commissions—Such . enactment not effective for ninety days, when—Constitutional law.

    An act to amend Sections 5649-2 and 5649-36 and repeal Section 5649-3, General Code, relative to the limitation of a tax rate, passed April 16, 1913, approved May 6, 1913, and filed in the office of the secretary of state May 9, 1913, is not a law providing for tax levies within the meaning of those words, as used . . . in. Section 1 d of Article II of the Constitution, and the same cannot go into effect until ninety days after it was filed in the office of the secretary of state:
    (No. 14210
    Decided June 27, 1913.)

      In Quo Warranto.
    . Mr. Cornell Schreiber, city solicitor, and Mr. Alonzo G. Duer, assistant city solicitor, - for relator.
    ■ Mr. Charles M. Milroy, prosecuting attorney; Mr. Timothy S. Hogan, attorney general; Mr. Clarence D. Laylin; Mr. Thomas L. Pogue, prosecuting attorney, and Mr. John V. Campbell and Mr. Charles A. Groom, assistant prosecuting attorneys, for respondent.
   By the Court.

- This is a proceeding in quo warranto brought in this court by Cornell Schreiber, as city solicitor of the city of Toledo, against Charles M. Milroy, as prosecuting attorney of Lucas county.

, It is alleged in the petition that the budget commission of Lucas county met on the first Monday in June, 1913, and there were present the mayor of the city of Toledo, the county auditor and the prosecuting attorney of. Lucas county and the relator herein, Cornell Schreiber, city solicitor of the city of Toledo; that Schreiber, as such solicitor, demanded that he be recognized as a member of the board of budget commissioners, which fight was denied, and it is alleged further that the prosecuting attorney, defendant herein, was illegally recognized as a member of said commission ; that he has no right to act as such, but has usurped, intruded into and unlawfully holds and exercises said office. The relator asks that defendant be ousted and excluded therefrom, and that he, the relator, be inducted into said office.

The relator claims the right and title to the office in question under and by virtue of the provisions of an act of the general assembly, passed in April, 1913, approved by the governor May 6, 1913, and filed in the office of the secretary of state May 9, 1913.

This act amends and repeals certain sections of an act known as the “Smith One Per Cent Law.” It repeals Section 5649-3 and amends Sections 5649-2 and 5649-36.

Section 5649-36, as amended by this act, provides that the budget commission of each' county shall consist of three members—the county auditor, the mayor of the largest municipality in the county, and, in counties in which the amount of taxable property in the cities and villages thereof exceeds the amount of taxable property of territory outside of the cities and villages, the third member shall be the city solicitor of the largest municipality in the county.

Defendant denies the right of the relator to act as a member of the board of budget commissioners for the reason that the act in question is not, at present, in effect. In support of his contention, he calls attention to the provisions of Article II of the Constitution. This article provides for the initiative and referendum, and contains the provision that no law passed by the. general assembly shall go into effect until ninety days after it shall have been filed by the governor in the office of the secretary of state, except as provided in said article.

' Section Id of Article II is as follows: “Laws providing for tax levies, appropriations for the current expenses of the state government and ■state institutions, and emergency laws necessary .for the immediate preservation, of. the publiq peace, health or safety, shall go into immediate effect. Such emergency laws upon a yea and nay vote must receive the vote of two-thirds of all the members elected to each branch of the general assembly, and the reasons for such necessity shall be set forth in one section of the law, which section shall be passed only upon a yea and nay vote, upon a separate roll call thereon: The laws mentioned in this section shall not be subject to the referendum.”

The relator contends that the act under which he is claiming title to the office is one providing for tax levies, and comes within' the’ exceptions mentioned in Section Id, supra.

Sections 5649-2 and 5649-3& comprise the act which the relator designates as “a law providing for tax levies.” This act, by Section 5649-2, imposes a limitation upon the aggregate amount of all taxes that may be levied, and the other section in said act creates the budget commission.

The general assembly did not, in this act, impose a tax, stating distinctly the object of the same, nor did it fix the amount or the percentage of value to be levied, nor did it designate persons or property against whom a levy was to be made. It merely imposed certain limitations and created an agency. The act cannot be said to be one “providing for tax levies,” within the meaning of those words as used in Section Id of Article II of the Constitution. It is, therefore, clearly subject to the referendum and cannot become effectr ■ ive until ninety days after it was filed in the office of the secretary of state.

The validity of this act is challenged. It is unnecessary to consider this in determining the rights of the relator in this case as in no event could he claim title to the office in question until ninety days after May 9, 1913.

Writ refused.

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