Case ID: ohio_11/html/0428-01.html
Source: Caselaw Access Project
Author: {"author": "Birchard, J. Lane, C. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Morris Seely v. The State of Ohio.
    
      A special act, authorizing the complainant to file a bill, as in chancery, against the state, and requiring the cause “ to be decided upon principles of justice and good faith,” will be construed as intending to relieve the complainant from all technical objections that might arise in a proceeding according to the hnown usages of law and chancery, and as conferring power upon the court to examine the claim in the spirit of liberality, which would be proper for the general assembly to exercise.
    Anticipated profits, or speculations in real estate, can not be recovered as damages on a breach of a contract.
    .Actual expenditures, under the contract, can be recovered.
    This is a petition in the nature of a bill in chancery against the State of Ohio, under a special act of the general assembly, passed March 12, 1839, 37 Ohio L. 220, which provided: “That Morris Seely, of the county of Montgomery, be *and ho is hereby authorized and empowered to institute, commence, and prosecute an amicable suit, by filing his petition in the nature of a chancery proceeding in the court of common pleas, within and for the county of Montgomery, at any time alter tlie passage of this act, against the State of Ohio, for the recovery of any and all such damages which he may have sustained by reason of the non-performance upon the part of the state of any contract entered into by her duly authorized agents with the said Morris Seely, which suit in chancery, so commenced, shall be investigated tmd decided by said court upon the principles of justice and good faith, and upon the final hearing of the cause, upon the principles aforesaid, the court shall render such decree as, in their opinion, the principles of justice and good faith demand.”
    There was in the act a proviso: “That nothing in this act contained shall be so construed as to recognize the existence of any contract between the State of Ohio, or her duly authorized agents, and the said Morris Seely, on which said Seely should be entitled to recover damages.”
    In January, 1829, Morris Seely made a proposition to the board of canal commissioners to “ sell to the State of Ohio any quantity of land, not exceeding ten acres, at such price as the board of canal commissioners, or the acting canal commissioners, should consider a fair price, at such point or points as he or they should deem the most eligible for the control of such water power, or he would lease the water privileges at $400 a year for the first ten years, and subject to a reappraisement perpetually.
    
      “ Your immediate attention to this proposition will be gratifying to me, inasmuch as it would enable me, in case we should agree, to facilitate the excavation of a basin, and, I would beg leave to add, advance the great interests of the state generally, and those of the town of Dayton in particular.”
    To this proposition the following reply was made:
    “Office of the Canal Commissioners, Columbus, January 15, 1839. The proposition of Morris Seely to convey to the state, for the use of the canal fund, one or more acres of ground, or *out-lots number three or seventeen, in the town of Dayton, for the purpose of selling or leasing, on said ground, the water which passes from the feeder into the canal below'was considered; whereupon, it was resolved, that the board will purchase of said Seely one or two acres of ground, at the rate of $500 per acre, to bo selected by the acting commissioner, provided the title is made free from incumbrances, and the said Seely, or others interested shall make a cut from the canal, and upon the same level, up to a convenient point for the use of the water upon said Seely’s ground for the free flow of the tail-race water into the canal.” To which reply is added, “I concur in opinion with the board of canal commissioners in relation to the purchase of the lot or lots mentioned in the within agreement, and my assent to the contract is hereby given. February 20, 1829. A. Trimble.”
    Two and a half acres of land were selected, a conveyance made to the state, and the purchase money paid.
    Seely went on to construct the race, and, with a view to speculation, made along the line of the race large purchases of land, which was laid out in town lots.
    In November, 1829, the race being in a great measure completed, the commissioners, at the request of Seely, advertised a sale of water power. The sale was enjoined, upon petition in chancery, against Mieajah T. Williams, canal commissioner, by Coopor’s heirs, which injunction continued in force until dissolved by the court in bank. Cooper v. Williams, 4 Ohio, 255.
    In the meantime Seely had become insolvent, and made an assignment to the commissioner of insolvents. The race was left uncompleted, the work abandoned, and the speculation failed At the session of the legislature in 1838, ’34, Seely petitioned for relief, and $5,000 were granted to, and accepted by him from the state.
    In March, 1839, Seely being a member of the general assembly, the special act authorizing him to file a petition against the state was passed.
    -Hinder this act, a petition was filed, setting forth the transactions between Seely and the board of canal commissioners, alleging that ho had been induced, by representations of the board or some members thereof, to sell his land to the state, and to undertake the construction of the race or canal, in which he had actually expended nine or ten thousand dollars; that he had also, in consequence of said representations, made large purchases of real estate, with a view to sale for profit, and from which, if the work had been completed, and the water power sold Out by the state, as contemplated, he would have realized many thousand dollars profit.
    That, in consequence of the injunction and unnecessary delay, he had been involved in pecuniary embarrassments, and had suffered great losses, and the state having abandoned the original design of selling out the water, as contemplated, he had been deprived of all his anticipated profits, etc., etc. Compensation was claimed for the work and expenditures on the race, for the value of the land occupied by the race, which was now abandoned, and for the loss of anticipated speculations on lands and town lots. The cause had been referred to a master, and much testimony taken on the part of Seely, in respect to the value of the work, and of the land occupied by the race, and of the probable speculations, which, on certain contingencies, Seely might have realized.
    And, from the master’s report, two estimates were presented.
    The first claiming to recover for—
    “ The loss only sustained by the increased value of the lots, not being realized by Seely:
    “The loss of profits on 60 lots, on plat 4, bought of Brabham, and sold by Seely, on July 23, 1829, and interest, -------$ 8,104 66
    “To damages by loss of increased value on 188 lots, 29,727 50 “ Loss of increased value of one-third of 321, on plats
    3, 5, and 6, - - - - - - - - 13,910 00
    $51,742 16;
    
      *The second, claiming for “loss sustained by the complainant by costs of excavating lands for right of way, depreciation of value of lots, abating the $5,000 paid by the state, with interest; also, the actual sale money of the Brabham lots, abating the depreciation of $50 on each lot subdivided, sixty in number. '
    “ To balance of cost of excavation, with interest, after
    deducting the $5,000 appropriated, with interest, $8,308 34 “ To the amount of sales of lots got of Brabham, 60 in number, with interest from the day Seely sold, on July 23, 1829, to May, 1842, - - - 8,104 66
    “To value of land occupied by highway and canal,
    8 75-100 acres, at $200 per acre, with interest, 3,062 50 “ To loss occasioned by the depreciation of all the lots, 17,750 00
    $37,225 50
    “Deduct depreciation on 60 of Brabham’s lots, $50
    per lot, -------- 3,000 00
    “.Amount of decree under this calculation, - - $34,225 50”
    An answer was put in, on the part of the state, in which it was insisted that no other contract was made by the state or its agents, with Seely, than for the purchase of the two and a half acres of land, for which it was admitted he was paid at the time. That the digging of the race, and the purchase of lands, and laying out town lots, was his own act, in view of anticipated profits, for the failure of which the state was in no way accountable. That even supposing such contract had been made, the completion of the race by Seely, was a condition precedent, which was never complied with. That had such contract existed, and wore there no default by him, ho had received from the state $5,000, in full satisfaction and discharge of all claims. And, finally, that having made an assignment to the commissioner of insolvents, %fter the [506 alleged breach on the part of thie state, whatever interest he had passed to the commissioner for the benefit of his creditors, so that in no possible view could Seely have any right to recover.
    P. P. Lowe, Odlin & Schenck, and Thomas Corwin, for Seely.
    J. Crane, D. Peck, and E. M. Stanton, for tho state.
   Birchard, J.

This proceeding is had under a private act of the general assembly, which authorizes complainant to sue for any damages sustained by reason of the non-performance of any contract entered into with him by the duly authorized agent of the state, and requires the court “to decide the controversy upon the principles of justice and good faith.”

The first difficulty which we meet in the investigation of this case, arises upon a construction of the special act conferring jurisdiction. Are we required to be governed by the known rules of law and equity as applied between man and man, or by the principles of a more enlarged rule of moral right, untrammeled by technical rules?

This is made a question. If the object was to leave us to determine the merits agreeably to the well-recognized rules of chancery and law, it maybe presumed that no specific directions would have been found in the act, or, at least, that words would have been used of a definite and certain legal import. Instead of which we are directed to observe no other guide than justice and good faith. Cases daily arise between individuals, in which strict morality imposes higher obligations upon a party than could be enforced in chancei’y. In some of them the obligation of good faith, as the words are usually understood by mankind, would require performance. As if one were to make a naked agreement to aid another, which would lead to a great expenditure of money in expectation of that aid, and after the expense incurred, the promise should be violated. This would give no right of action in any court, *yet no moralist would pretend that good faith had not been broken.

Whatever may have been the motive of the general assembly in conferring this jurisdiction upon us — whether it was done for the sole purpose of bringing into exercise the facilities provided for courts in collecting facts, or for any other purpose — it seems to us that we are made arbiters by the act, between the state and a fellow-citizen, by a jurisdiction specially conferred, to be exercised sui generis, and that it is our duty to be governed by those liberal principles which should be the guide of a committee of either house of the general assembly. Under these views of the power conferred upon us and of our duty, we feel untrammeled by the technicalities of the law and at liberty to adjust this controversy upon as liberal principles as could the general assembly, had the duty not been delegated to us. Guided by these rules, the first inquiry is, did any of the duly authorized agents of the state enter into a contract with complainant, which has not been kept and performed in good faith, whereby he has sustained damage? There was a contract for the sale of two acres of land. The land was conveyed pursuant to it. The object of the complainant in vending this property was to secure the flow of the surplus water of the canal through complainant’s adjoining land; and it was understood, between him and the agent of the state, that-he should construct a tail-race at his own expense, looking to the enhanced value of the lands, to be caused by the flow of water, for his remuneration. The essence of the agreement, and the inducement held out by the state, although not embraced in the deed, was that the surplus water, to the amount of two thousand cubic feet per minute, should be turned into this channel; and, aside from technical rules, we ought to treat this engagement as a part of the contract. Seely had a right to expect the surplus-water would be turned in that direction. It was, in part, the consideration which induced him to make the sale, and the sole consideration for expending money in purchasing and dedicating the ground occupied by the basin and race, and in excavating the same.

*For three years the state was enjoined from complying with the agreement on her part, and when the injunction was dissolved, justice and good faith required that the surplus water should have received the direction originally designed. But for some probable or sufficient cause it was deemed to be for the-public interest to do otherwise. No legal contract was violated in so doing, and yet justice and good faith to Seely were disregarded, for he was left with a useless piece of canal on hand, and all hope» and means of realizing the costs and expenses of constructing it were destroyed, save that which he is now pursuing.

We believe that compensation should be made to him. That is, if we were acting as legislators we would support, by our votes, a bill passed upon these principles.

Claims have been presented to the amount of from $30,000 to-$50,000, for the losses sustained in the depreciation of real estate, purchased with a view to speculation, and now rendered of little value, owing to the diversion of the water of the canal, contrary to the understanding of the parties. These items of the master’s report must be rejected. It is possible that profits to this amount might have been realized by the complainant if the state had fulfilled the engagement of the canal commissioner. This, however,, could have only happened by sales of property at an increased price beyond the purchase money, acquired by purchases made subsequently to the date of the contract entered into with the state. It would be injustice to the state to hold the complainant entitled to anticipated profits of this nature. In fact, he had no such profit, and can not, therefore, with strict propriety, be considered as. having sustained a damage in losing what he did not possess. If this is correct reasoning, the only claim which he can sustain is, for constructing the race through which the waters of the canal were to pass, between the points of leaving and being returned to the main channel, and the value of the land dedicated 1,0 the state and destroyed. All else was a matter of private speculation, with which it seems the state *had nothing to do. These are the only items- of the report which should not be wholly rejected.

The report embraces all the expenditures made by the complainant in excavating the race, grading streets, etc., prior to his insolvency. How great a proportion was for work upon the race itself, does not appear, nor does the testimony and report furnish us with the means of determining. It must be returned to the county, with directions to the master to take further testimony, and report in accordance with these principles.

It remains to dispose of an objection to complainant’s right to prosecute this petition, since his assignment to the commissioner of insolvents. In the views which we have taken of the case, the act under which we have jurisdiction in this matter confers all the right that complainant has to anything that may bo decreed in his favor. At law, or in equity, he had no interest which could pass to a commissioner of insolvents. Ho had not so performed as to acquire such legal right, even if the state could be sued as a natural person ; consequently the interest in this claim is conferred by the bill, and is a grant to him, subsequent to the assignment, based upon his moral, as contradistinguished from his legal rights.

Lane, C. J.,

dissenting. I can not bring my mind to concur with the views of my brethren in this case.

When the legislature committed the interests of Seely to our hands, to be determined by the principles of justice and good faith, I do not understand that they have given us any other rules than those which always guide the conscience of the chancellor. I eertainiy can not infer that the state intended to exercise a spirit of reckless generosity at a season when it is unable to meet its hon-est debts.

I can not attach to this contract any terms except those which the parties have written. Seely offered to sell the state any quantity of land not exceeding ten acres, at $500 an acre. The state accepted two acres if Seely would construct a tail-race. This is •all. The state took as owner *in fee, without obligation to use it in any particular manner. That it should be so used, Seely trusted, not to the stipulations of the contract, but to the interests •of the purchaser. His schemes of improvement, his plans of action, his efforts to make his land the seat of business, were motivos which led him to make the offer, but matters in which the state incurred no obligation. His hopes and expectations were not created by the agents of the state, nor does anything they have done impose upon it the obligation to indemnify him for his failure or disappointment.

But, admitting the state was bound to transmit water from the •canal, on Seely’s land, I do not perceive how Seely has placed himself in a position to claim this duty. The race which Seely should prepare has never been completed; the means of performance which Seely should provide, have never yet been rendered possible.

Admitting the obligation, and the failure of the state to comply with it, it seems to me Seely has already received the amplest compensation for all losses he sustained from this failure, by the $5,000 which have been already paid. But, even if he has not, the acceptance of that sum on a claim he preferred, is to be taken as a satisfaction of that claim.

But, passing over all other difficulties, and conceding the liability to make this compensation, it belongs to Ms creditors, and should be distributed to them through the commissioner of insolvents, to whom he has assigned his effects, but who is not a party to this bill.

It is with the most profound respect for the opinion of my brethren, I feel constrained, for these reasons, to record my dissent.