Case Name: Baltimore & Ohio Railroad Company v. Stankard et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1897-03-30
Citations: 56 Ohio St. 224
Docket Number: 
Parties: Baltimore & Ohio Railroad Company v. Stankard et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 56
Pages: 224–234

Head Matter:
Baltimore & Ohio Railroad Company v. Stankard et al.
Relief department of railway company — Beneficiary feature — Rejection of claim — Rule pi'ohibiting appeal to court, not a bar to action.
One of the rules in the relief department of a railroad company, provided that all claims of beneficiaries should be submitted to the determination of the superintendent, whose decision should be final and conclusive, unless appealed to the- advisory commitee, and in case of such appeal, the decision of the committee, should be final and conclusive upon all parties without exception or appeal: Held, that after the rejection of a valid claim by the advisory committee, the beneficiary could maintain an action in the court for the recovery of the money due thereon, and that such rule is not a bar to the action.
(Decided March 30, 1897.)
Error to the Circuit Court of Erie county.
The action below was brought by John Stankard and Anna Stankard, parents of Michael Stankard, an unmarried man at the time of his death, against the Baltimore & Ohio Railroad Company, for the recovery of sick and death benefits growing out of said Michael’s being an engineer in the transportation department of said company, and a member of the relief feature of the department,- and entitled to the benefits provided by the regulations of said department for a member of Class D.
Michael became sickonthe27th of January, 1890, and continued sick until his death, on the 13th day of November, 1890, and having received no sick benefits during his sickness, his parents were entitled to receive $484.00 sick benefits, and $1,000 death benefits, in case they were entitled to receive anything.
The petition made the proper averments including- performance of all conditions.
The railroad company in its answer set out certain of the rules of the relief department, and denied that Michael was in its employ at the time he became sick, or at the time of his death, and denied that he properly notified the company of his sickness, and also claimed that rule eleven was a complete bar to the action.
The jury returned a verdict in favor of the plaintiff below for the full amount claimed. A motion was made by the railroad company for a new trial, which was overruled, and judgment entered on the verdict, to which proper exceptions were taken. The circuit court affirmed the judgment. Thereupon a petition in error was filed in this court, seeking to reverse both judgments.
J. 11. Collins, and H. L. Peeke, for plaintiff in error.
There was considerable controversy on the trial as to what knowledge Michael Stankard had with reference • to the rules, regulations and by-laws of the Relief Department, and also as to what notice the plaintiffs had with reference to the same. This testimony was all wholly and entirely immaterial.
A person who is a member of a corporation or contracts with it, is conclusively presumed to know the provisions of the charter, rules and regulations, by-laws, etc., of such corporation, 82 "Virginia, 913; 77 Virginia, 91; 103 U. S. 222; 3d. Am. St. R. 128, and notes; Douglass v. Insurance Co., 118 New'York, 484.
As to when the declarations of an agent will bind his principal, Vicksburg & Meridian R. R.y. O'Brien, 119 U. S. S. C. Rep., 99; 1st Greenleaf, Section 113; Packet Co. v. Clough, 20 Wall., 540; Story Agency, Section 134.
With reference to the other question, as to when the knowledge of the agent is the knowledge of the principal, the rule is well settled also.
Officer or ag’ent must have notice in his representative character, or the corporation will not be bound. In other words, as already stated, he must have the notice while acting for his principal, and it must relate to a matter within the .scope of the agency, Bank v. Schaumberg, 38 Mo. 228; Conger v. Chicago, etc., R. R. Co., 24 Wis. 157; S. C., I Am. Rep. 164. The agent must have authority, and it must be his duty, to act upon the subject of the notice, or it will not be binding-. 133 New York, 97.
Mere private, unofficial information or knowledge acquired by an officer of a corporation, casually or by rumor or through channels open alike to all, as to matters upon which such officer is not required to act, is clearly not notice to the corporation if not communicated by such officer to the proper authorities in the institution. United Sicotes Ins. Co. v. Shriver, 3 Md. Gh. 381; Winchester v. Baltimore, etc.,R. R. Co., 4 Md. 231; Bank of Virginia v. Craig, 5 Leigh, 399; Miller v. Illinois Central R. R. Co., 24 Babr. 312; VcondenoerkerY. Vermont Central Railroad Co., 27. Verm. 125; Boston Water Power Co., v. Cray, 6 Met. 131; Fraud practiced upon him or bjr him, will, of course, defeat it. Smith v. Boston Concord <& Montreal Railroad Co., 36 N. H. 458; Mickles v. Thayer, 14 Allen, 114; North Lebconon B. B. Co., v. Mg Or arm, 33 Pennsylvania State, 530.
. The point of divergence between the parties was the alleged incorrectness of this final estimate. But did the parties agree that Mr. Worrell might-adjudicate between them, after he had ceased to be chief engineer? — though doubtless his award would have been final if made during the continuance of his official relation. It is not a question of fitness or unfitness of the arbitrator. The inquiry relates solely to the contract of the parties. In stipulating as they did, that the chief engineer should be the umpire between them, it may well be that it was supposed the engineer would, better than others, understand the merits of any controversy that might arise.
We have nothing to do with the prudence of such an arrangement. It is ours to enforce the contract as the par ti es have made it. A par ty litigant may refer to his adversary, if he will, or to any one interested adversely to himself. Such a submission will be enforced: Mattheiv v. Ollerton, 4 Mod. 226; TIunter v. Bennison, Hardres, 43; Kyd on Awards, 72; Monongahela Navigation Company v. Fenlon, 4 WaUs & S. 205\Faunee v. Burke 16 Pa. St. 480 (55 Am. Dec. 519); Easton v. Pennsylvania and Ohio Canal Co., 13 Ohio Reports, 79; Mansfield and San-dusky B. B. Co., v. feeder, 17 Ohio Reports, 385; Ea?iev. Stone Co., 39 Ohio St., 1; Continental Ins. Co.; v. Wilson, 45 Kans.,250; Mwndy v. B. B. Co., .67 Red. 633.
The plaintiffs were not entitled to recover either the sick or the death benefits.
It is a conceded fact that no benefits were ever paid, and it is also á conceded fact that Stankard never notified the official designated by the General Manager to receive reports of disablement. It is also conceded that there was no proper address given, because no report was made.
How can it be possible that with these admitted provisions of the rules and regulations of the company, the plaintiffs had a right to recover?
Phinney <& Merrill, for defendants in error.
We claim that the evidence shows that at the time the employment of Michael Stankard ceased he was disabled by sickness, and that he was entitled to receive benefits for fifty-two weeks, without himself making any application, and the evidence shows that Michael Stankard died before the expiration of fifty-two weeks from the date that his employment ceased by reason of that sickness, and that he was unmarried at the time of his death.
The evidence further shows that at that time it would have been impossible for Michael Stankard to have made the application himself.
The rules show that the timekeeper was the proper one to be notified.
As to the law upon this point: The policy of the law is against forfeitures and for this reason strict compliance with the manner and time of notice is not required if the insurer has had actual notice. These conditions are excused when the insured, •during the time, is in a state of delirium. Manufacturers! Accident Indemnity Co. v. Fletcher, 5 C. C. Rep., 633; Germania Fire Ins. Co. v. Boykin, 12 Wall., 435; Wood on Insurance, 413; Phoenix Ins. Co. v. Picket, 2 Ind. App., 332.
• A by-law of a benefit society providing as to the manner of making proofs of loss, and for an appeal from certain subordinates to certain superior ofifi ce'rs and making the decision of the latter final, is valid, and binding, except as to the part which makes the decision of the appellate tribunal final, and as to that point it is void, and such decision has no bearing to a resort to the courts. Supreme Council, Etc., v. For singer, 125 Ind., 52; Reed v. Insurance Company, 138 Mass., 572; Stephensons. Insurance Company, 54 Maine, 55; Mentz s. Insurance Company, 79 Pa. St., 478; Furnivall s. Combes. 5 Mann & G., 736, and also Insurance Co'mpany s. Morse, 20 Wallace, 445; Whitney s. National Masonic Accident Association of Des Moines, 52 Minn., 378; Kinney s. Baltimore & Ohio Employes Relief Association, 35 W. Va., 385, and cases cited.

Opinion:
Burket, C. J.
The questions as to whether or not Michael Stankard was in the employ of the company a't the commencement, and during- tbe time of his sickness, and at his death, and whether or not the company was properly notified of his sickness, are questions of fact submitted to the jury upon testimony competent in character, meager and unsatisfactory in substance, but from which a jury mig'ht find, as this jury did, in favor of the plaintiff below.
The only matter in the case deemed worthy of report, is as to the validity and scope of rule eleven. The following is a copy of the rule:
"Rule 11. All claims of members of the relief feature, their beneficiaries or other representatives, or of depositors or borrowers of the savings feature, or of pensioners, arising under these regulations, and all questions or controversies of whatsoever character arising in any manner, or between any parties, or persons, in connection with the relief department or the operation thereof, whether as to the construction of lam guage or meaning of the regulations, or as to any writing, decision, instruction or acts in connection therewith, shall be submitted to the determination of the superintendent of the relief department, whose decisions shall be final and conclusive thereof, subject to the right of appeal in writing to the committee directly or through the advisoi'y committee within thirty days after notice to the parties interested in the decision.
' 'When an appeal is taken to the committee, it shall be heard by them without further notice at their next stated meeting, or at such future meeting- or time as they may designate, and shall be determined 1y vote of the majority of a quorum, or of any other number not less than a quorum of the members present, and the decision arrived at . thereon by the committee shall be final and conclusive upon all parties, without exception or appeal."
The claim was presented by the parents to the superintendent of the relief department, who did not allow it, but referred it to the advisory committee, and that committee declined payment of the claim, " because of his failure to report in accordance with the regulations," and so notified plaintiff below.
The reference of the claim to the advisory committee and its action thereon and notice of such action to the parents, was the equivalent, and took the place of an appeal, so that the case stands as if an appeal had been taken and the claim rejected by the advisory committee.
It is claimed by the railroad company, that the decision arrived at by the superintendent if no appeal is taken, or by the committee incase of anappeal, is final and conclusive, and a complete bar to an action for the recovéry of the benefits.
If the superintendent had rejected the claim, and so notified the parents, and they had failed to take an appeal to the advisory committee, it may well be doubted whether they could have sustained an action in court upon the claim, because in such beneficial associations it is held that the claimants must pursue to the full extent, the remedy provided by the rules and regulations before resorting to actions at law. This is for the benefit of both parties, and is reasonable.
The Supreme Council of the Order of Chosen Friends v. Forsinger, 125 Ind.,52.
But in the case at bar the equivalent of an appeal was had, and the advisory committee acted upon and rejected the claim, and then the parents were compelled to either abandon the claim, or resort to an action at law.
Does rule eleven bar such, action? We think not. A long- line of decisions hold that parties can not by contract take away the jurisdiction of the courts in such cases, and that the attempt to do so is void.
Supreme Council of the Order of Chosen Friends v. Forsinger. 125 Inch, 52; Whitney v. National Masonic Accident Association, 52 Minn., 378; Insurance Company v. Morse, 20 Wallace, 445; Stephenson v. Insurance Co., 54 Maine, 55; Mentz v. Insurance Co., 79 Pa. St., 478; Reed v. Insurance Co., 138 Mass., 572.
While courts usually base their decisions upon the ground that parties cannot by contract, in advance oust the courts of their jurisdiction of actions, a more satisfactory ground is, that under our constitution all courts are open, and every per son, for an injury done him in his land, goods, person, or reputation, shall have remedy by due course of law. Art. 1, sec. 16.
Courts are created by virtue of the constitution, and inhere in our body politic as a necessary part of our system of government, and it is not competent for any one, by contract or otherwise, to deprive himself of their protection. The right to appeal to the courts for the redress of wrongs, is one of those rights which is in its nature under our constitution alienable, and cannot be thrown off, or bargained away.
There is a class of contracts which provide that the value of certain property, the amount of loss sustained, the quantity, quality, character and value of work performed on improvements, and the acceptance of a building- by an architect, an'd other like matters, shall be determined by a certain person named in the contract, and his determination shall be final. Such contracts are lawful, and are usually upheld. They do not oust the courts of their jurisdiction over the subject matter, but only provide a safe and speedy manner of fixing definitely some fact which is usually of a complex and difficult nature, and one that it would not be easy to establish by evidence. Such fact when ascertained and fixed by the person, and in the manner provided by the terms of the contract, is conclusive between the parties, in the absence of fraud or manifest mistake; but the parties are at liberty, after so fixing such fact to go into court and litigate such differences as may still exist between them. In such contracts, the person selected to determine the particular fact, becomes the agent of both parties for that purpose, and what is done by such agent is, in legal effect, done by the par ties themselves, and therefore there is no hardship in holding them conclusively hound thereby, in the absence of fraud or mistake. The following- cases are examples of such contracts:
Easton v. Canal Company, 13 Ohio, 81; Railroad Company v. Veeder, 17 Ohio, 385; Mundy v. Railroad Company, 67 Fed. Rep.. 633; Kane v. Stone Company, 39 Ohio St., 1; Railroad, Company v. McGrann 33 Pa. St., 530; 75 Am. Dec., 624; Faunce v. Burke, 16 Pa. St., 469; 55 Am. Dec., 519; Navigation Company v. Fenlon, 4 Watts & Sergeant, 205; Hamilton v. Insurance Co., 136 U. S., 242. See also 33 Central Law Journal, 168.
The following cases also throw some light upon the question involved in this case: Guaranty Co. v. Railroad Co., 139 U. S., 137; Gittings v. Baker, 2 Ohio St., 21; Connor v. Drake, 1 Ohio St., 166; Kill v. Hollister, 1 Wilson, 129.
Such contracts are in their nature only applicable to cases wherein it becomes necessary to fix some facts, leaving the question of law to be settled by the courts upon proper proceeding's. The ultimate question to be determined — the liability or nonliability of the parties — must be left to the courts. The construction of a written contract is a question of law for the court, and a provision in the contract, that the construction of such contract, or the meaning of rules or regulations, shall be finally determined by some designated person, is void, because the court cannot be robbed of its jurisdiction to finally determine such questions. In insurance and other like cases, where the ultimate question is the payment of a certain sum of money, certain facts may be fixed by a person selected for that purpose in the contract, but the ultimate question as to whether the money shall be paid, or not, may be litigated in the courts, and a stipulation to the contrary is void. The fixing of the particular fact by the person or persons named in the contract, and in the manner therein provided, is usually a condition precedent to the bringing of an action on the contract, and the performance of such condition should be averred in' the petition, or some good excuse given for its nonperformance. Viney v Bignold, 27 Central Law Journal, 40.
In the case at bar, the claim having gone through the course provided by rule eleven, and having been rejected, the parents had the right to go into a court of justice and establish their claim; and in the trial, the fact that the claim had been so rejected was not a bar to a recovery. In so far as rule eleven attempts to cut off; the right of action in court, it is null and void.
Judgment affirmed.