Case ID: ohio-app_52/html/0548-01.html
Source: Caselaw Access Project
Author: {"author": "Ross, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Peerless Corp. v. Taylor et al.
    (Decided April 23, 1936.)
    
      
      Messrs. Cannon, Spieth, Taggart, Spring & Annat, for plaintiff in error.
    
      Mr. Charles S. Wachner, Mr. Malcolm E. Molner and Messrs. Calfee & Fogg, for defendants in error.
   Ross, P. J.

This is a proceeding in error from the Court of Common Pleas of Cuyahoga county, brought by the Peerless Corporation, which was made a necessary party defendant in a proceeding instituted by George Taylor in a “derivative suit” to set aside fraudulent misapplication of the assets of the corporation. The judgment of the Court of Common Pleas was in favor of the complaining stockholder, and ordered the replacement of the dissipated assets of the corporation. While certain expenses became incident to these advantages inuring to the corporation, the obvious effect of such judgment was in favor of the corporation. In spite of such manifest advantage the corporation has prosecuted error.

The basis for such proceeding is the contention that the service of process upon the corporation was defective and that the court never at any time obtained jurisdiction over its person.

The underlying reason for this position will be more apparent from a consideration of the companion case No. 15068 — the opinion in which is announced concurrently with the opinion of this case.

If the court did not obtain jurisdiction of the person of the corporation a necessary party to an adjudication of the issue involved in the proceeding was absent, and the judgment, upon such ground, would necessarily have to be set aside.

The close affinity of interest between the corporation and the contesting interests in the corporation is therefore made apparent and effective in considering the merits of the claims of the complaining stockholders. The history of this phase of the matters now presented by tbe two proceedings in error, No. 15069, by the Peerless Corporation, and No. 15068, by the defending stockholders, develops that the corporation upon attempted service upon it promptly filed a motion to quash such service. This motion was sustained by the trial court. Upon hearing on error in the Court of Appeáls this decision was reversed. Motion to certify in the Supreme Court was denied, and a motion to dismiss the petition in error was granted. A motion in the United States Supreme Court for certiorari was denied. Upon remand to the Common Pleas Court the motion to quash was overruled, and the corporation answered, reserving in the answer the same objection to jurisdiction over its person.

The question of the correctness of the ruling upon the jurisdiction of the court is now for a second time presented to the Court of Appeals. That such question may still be presented, after answer of the corporation reserving such question, is approved in Ohio Electric Ry. Co. v. U. S. Express Co., 105 Ohio St., 331, 137 N. E., 1. The court, at page 345 of the opinion, says:

“A defendant having made timely objection to the jurisdiction of the court, upon the overruling of such objection is not bound to rely upon his exception thereto at his peril, but may make full defense without waiving such objection.”

In Toledo Rys. & Light Co. v. Hill et ad., Exrs., 244 U. S., 49, 61 L. Ed., 892, 37 S. Ct., 591, the first paragraph of the syllabus is:

“An objection to the jurisdiction of the District Court based on the defendant’s being a corporation not doing business in the state and upon want of representative capacity in the person served, is not waived by answering to the merits after a motion to quash the service is overruled, where the answer reasserts the jurisdictional point also, where the defendant participates in the trial only by reiterating the objection and where the judge presiding treats the ruling on the motion as conclusive because made by an associate.”

In Baldwin v. Iowa State Traveling Men’s Assn., 283 U. S., 522, the court at pages 524-525 says:

“The substantial matter for determination is whether the judgment amounts to res judicata on the question of the jurisdiction of the court which rendered it over the person of the respondent. It is of no moment that the appearance was a special one expressly saving any submission to such jurisdiction. That fact would be important upon appeal from the judgment, and would save the question of the propriety of the court’s decision on the matter even though after the motion had been overruled the respondent had proceeded, subject to a reserved objection and exception, to a trial on the merits. Harkness v. Hyde, 98 U. S., 476; Goldey v. Morning News, 156 U. S., 518; Toledo Rys. & Lt. Co. v. Hill, 244 U. S., 49; Hitchman Coal & Coke Co. v. Mitchell, 245 U. S., 229; Morris & Co. v. Skandinavia Ins. Co., 279 U. S., 405.”

The Supreme Court of Ohio by refusing the motion to certify and dismissing the petition in error held there was no debatable question presented to it requiring the exercise of its jurisdiction. It may be reasonably inferred that there should be no change in its attitude upon the matter being again presented to it, unless the position taken by this court in conforming to the former opinion of the Court of Appeals shall in itself furnish ground for the entertaining of the case.

In Vega, Admr., v. Evans, 128 Ohio St., 535, 191 N. E., 757, the trial court followed the law laid down in Pavilonis v. Valentine, 120 Ohio St., 154, 165 N. E., 730, and in Dowd-Feder, Inc., v. Truesdell, 130 Ohio St., 530, 200 N. E., 762, and its action in so doing was held to constitute prejudicial error by the Supreme Court. In New York Life Ins. Co. v. Hosbrook, 130 Ohio St., 101, 196 N. E., 888, in overruling Gohman v. City of St. Bernard, 111 Ohio St., 726, 146 N. E., 291, it was held to be prejudicial error for the trial court to follow the mandate of the Court of Appeals if in the opinion of the Supreme Court the Court of Appeals in its first' consideration of the case on review was in error.

These decisions of our court of last review in the state have disturbed the complacency formerly entertained by courts in following the law given them by courts to which they are subordinate, and to which they look for guidance. Certainly the doctrine of the law of the case has been modified most materially. How far the rule requiring judicial subordination has been affected it is unnecessary to state. In any event this court concludes that as far as the present litigation is concerned the question of the jurisdiction over the person of the corporation has been finally decided. If such determination is to be disturbed, this court prefers to let it be done otherwise than by its reversal of the specific mandate of another Court of Appeals in this very case. For this reason the question of fact involved in the determination of the issue now presented will not again be reviewed. Considerations of logic, reason and certainty of judicial determination decree that it should be so.

As to the Peerless Corporation, plaintiff in error in this proceeding, the judgment of the Court of Common Pleas of Cuyahoga county in entertaining jurisdiction over its person is affirmed.

Judgment accordingly.

Matthews and Hamilton, JJ., concur.

Ross, P. J., Matthews and Hamilton, JJ., of the First Appellate District, sitting by designation in the Eighth Appellate District.