Case Name: Bader et al., v. Extension of the LowerRiver Road Co. et al.
Court: Ohio Circuit Court
Jurisdiction: Ohio
Decision Date: 1901-01
Citations: 12 Ohio Cir. Dec. 319
Docket Number: 
Parties: Bader et al., v. Extension of the LowerRiver Road Co. et al.
Judges: Swing, Giffen and Jelke, JJ.
Reporter: Ohio Circuit Decisions
Volume: 12
Pages: 319–326

Head Matter:
TOLL ROADS.
[Hamilton Circuit Court,
January Term, 1901.]
Swing, Giffen and Jelke, JJ.
Bader et al., v. Extension of the LowerRiver Road Co. et al.
1. Act 54 O. L., 268 — Bondholders of Lower River Road.
The special act of April 15, 1857, 54 O. L., 268, authorizing the commissioners of Hamilton county to surrender the Lower River Road and the extension thereof to its bondholders, and providing that they may become incorporated according to the act of 1852, relating to plank road and turnpike companies, does not require, as an essential element in the provisions for the surrender, control and maintenance thereof, that the bondholders become an incorporated company; nor is such contract with the provision eliminated in contravention of law.
2. Bondholders Recognized as Corporation De Facto.
The fact that the special act of March 22, 1850, placed the extension of the Lower Ri\erRoad in the hands of the commissioners of Hamilton county and adopted the provision of the Carthage Road Act authorizing such commissioners to employ or appoint agents to make repairs and collect tolls thereon, and the fact that the bondholders of the road were unincorporated at the time the surrender of the road to them, as authorized by the supplementary act of April 15, 1857, 54 O. L., 268, make them agents or trustees of the commissioners and it is immaterial whether they be recognized even as a corporation de facto. But the Carthage Road Act and the 'act of March 22, 1850, authorizing the operation of the road by such agents as the commissioners should deem proper, having been recognized as constitutional, after an attempt to form a corporation under the act of 1857, 54 O. L., 262, the bondholders should, after the vesting of rights, be recognized as at least a corporation de facto.
8. Act 54 O. L., 262, is Supplementary.
The act of April 15, 1857, 54 O. L-, 262, in surrendering the extension of the Lower River Road to its bondholders, and providing for its operation, is supplementary or enabling in its operation to the original act of March 22, 1850, and the commissioners in turning it over to its bondholders make them the r agents to operate and control the road and limit this management to a certain class of agents, the bondholders, instead of agents generally as authorized by the previous acts.
4. Constitutional Under Rule of Stare Decisis.
Where the commissioners were authorized, under the constitutional act of 1850, to employ such agents as they might deem proper to operate and control the road, the act of 1857, which seeks in a limited sense to do the same thing and is merely supplementary, or enabling, in its operation, to the original act of 1850, should also be held constitutional under the rule in Cincinnati v. Taft, 63 Ohio St., 141, that court will follow former decisions as to validity of supplementary acts although, standing alone, the act of 1857 might now be held unconstitutional.
■5. Fixing Boundary and Surrender of Bonds.
The contract of surrender authorized by the act of April 15, 1857, does not vest any property right in the bondholders that would authorize them to deal with the land constituting the turnpike. Therefore, where, in the adjust ment of the boundary line between the road and a railroad company running parallel therewith, they, as owners of the land, surrender two feet of the turnpike in consideration of which $4,600 of bonds issued by the county is surrendered by the railroad company, the bondholders will be considered as agents of the county commissioners and such bonds be considered as can-celled. An attempt to reissue $1,000 of such bonds subsequently to their surrender would be unavailing.
6. Tolls — Contract with Village to Exempt Residents.
A contract between the bondholders and a village whereby the latter was to pay an annual rental of $600 in consideration of which the residents of the village are exempt from paying toll upon any part of the'turnpike within the village, amounted simply to the collection of toll for that part of the road in a way different from the ordinary way and is not in violation of the contract between the bondholders and commissioners.
7. Keeping Road in Sufficient Repair.
Under the contract surrendering the road to the bondholders they are required to keep the road in reasonably good repair, but no high standard is laid down. Therefore, where the bondholders being limited by the amount of the toll, and bound not only to keep it in repair, but to pay the interest on the bonds, the expenditure of the greater part of the tolls in the repair of the road and salary of the secretary and treasurer is keeping it in as reasonably good repair as could be expected under the circumstances of the case.
8. Salary of Officers.
The manual labor and cost of material is not the whole expense of keeping such road in repair, but a reasonable salary may be allowed for a secretary and treasurer, whose duties require him to superintend the repairs thereof, and keep account of the receipts and expenditures. While $600 a year under ' ordinary circumstances would not be extravagant, under the circumstances of this case one-half of such amount may be approved, it not being expected that any of the officers of such company should be allowed any considerable salary for the management of the road.
John R. Sayler, Oliver B. /ones, county solicitor, and Chas. Evans, for plaintiffs.
Peck, Shaffer & Peck and Aaron A. Ferris, for defendants, cited:
Plaintiffs are estopped to assert that the extension of the Lower River Road Co. is incorporated under an unconstitutional act, having dealt with them as a corporation and recognized them as such : Winget v. Building Assn., 21 N. E. Rep., 12 [128 Ills., 67]; McCarthy v. Lavasche, 89 Ills., 270, 275 [31 Am. Rep., 83]; Dows v. Napon, 91 Ills., 44; Building Assn. v. Chamberlain, 56 N. W. Rep., 896 [4 S. Dakota, 271]; Freeland v. Insurance Co., 94 Pa., St., 504; Wienman v. Railroad Co., 12 Atl. Rep., 288 [118 Pa. St., 192]; St. Louis v. Shields, 67 Mo., 247 ; American Homestead Co. v. Linigan, 15 So. Rep., 369 [46 La. An., 1118]; Bashford Co. v. Agua Filia Copper Co., 35 Pac., 983; Pape v. Bank, 20 Kansas, 440 [27 Am. Rep., 183]; Smith v. Sheely, 79 U. S. [12 Wall.], 358.
The same rule prevails as to municipal and quasi municipal corporations : Stewart v. Kalamazoo, 30 Mich., 71; People v. Maynard, 15 Mich., 463; Clark v. Board of Education, 44 Ohio St., 595 [9 N. E. Rep., 790].
The plea nul tiel corporation is not good as against an action to recover a penalty under a municipal ordinance: 1 Dillon, Municipal Corp., Sec. 48-a.
The doctrine as to de facto corporations and estoppel to deny corporate existence are not the same, and the one is not dependent upon the other. See the foregoing authorities; also Society Perun v. Cleveland, 43 Ohio St., 481, 490,494 [3 N. E. Rep., 357]: Williams v. Kokomo B. A., 89 Ind., 339. 1
Persons who have acted or induced action under an unconstitutional statute are estopped to set up its invalidity: State v. Mitchell, 31 Ohio St., 592.
Whether a special charter granted by the general assembly under our constitution may now be amended by special act, see State v. Neff, 52 Ohio St., 375 [40 N. E. Rep., 720]; Cincinnati v. Taft, 63 Ohio St., 141; Hixson v. Burson case, 54 Ohio St., 470 [43 N. E. Rep., 1000]; State v. Commissioners, 35 Ohio St., 467.
Subsequent decision cannot take away vested rights : Gelpecke v. Dubuque, 68 U. S. [1 Wall.], 175; Havemeyer v. Iowa Co., 70 U. S. [3 Wall., 294]; Douglass v. Pike Co., 101 U. S., 677, 687 ; Louisiana v. Pilsbury, 105 U. S., 278, 295; Chestnut v. Shane, 16 Ohio, 599.
As to the agreement between the company and the village of Riverside it was both a valid and a desirable arrangement: Secs. 2644, 3492, Rev. Stat. ; see also Hollingsworth v. State, 29 Ohio St., 552.
Not the sort of a turnpike mentioned in Sec. 34 under discussion in the case of the Dower River Road Co. v. Riverside, 25 Ohio St., 658.
Not only a de facto but a de jure corporation : Society Perun v. Cleveland, 43 Ohio St., 481 [3 N. E. Rep., 357] ; Atkinson v. Railroad Co., 15 Ohio St., 21.
Act of 1857 was not a law of a general nature: Foster v. Commissioners, 9 Ohio St., 540; State v. Covington, 29 Ohio St., 102.
Under the American law a trustee is entitled not only to his expenses but to reasonable compensation. Bispham’s Eq. (3 Ed.), Sec. 144; Andrews v. Andrews’ Admr., 7 Ohio St., 143, 151; Chapman v. Loveland, 11 Ohio St., 214; Morris v. Harris, 19 Ohio St., 15; Ingham v. Dindemann, 37 Ohio St., 218; Mannix, Assignee, v. Purcell, 46 Ohio St., 102; Perry on Trusts, Secs. 906, 913.
The matter of expenses is largely a subject of discretion and courts will not interfere with a reasonable discretion: Perry on Trusts, Sec. 511; Eldridge v. Head, 106 Mass., 582; Pulpress v. African Church, 48 Pa. St., 204.
A completed trust without reservation of the power of revocation can only be revoked by consent of all the cestuis: 1 Perry, Sec. 104 (5 ed).
Where the trust has been communicated by the trustees to the creditors, the power to revoke is thereby taken away, and if improvements have been made the creditors can hold the property until reimbursed. Perry, Secs. 593, 594; Acton v. Woodgate, 2 Myl. & K., 495.
An assignment for creditors cannot be revoked where the property has vested in the trustee and any of the trusts have been performed: Perry, Sec. 593; 6 Humph., 313; Gaylord.v. Cramer, 12 Dec. (Re.), 188 [1 Handy, 369].
A trustee will be held to account only for good faith and common prudence: Perry, Sec. 914.
• A power coupled with an interest or where it constitutes part of a. security cannot be revoked: 1 Sudgden on Powers, star, pp. 162, 463; ¶ Kent, 644; Knapp v. Alvord, 10 Paige Ch., 205.
The power to revoke must be reserved in the deed or instrument creating the trust: 4 Kent, 336, 337. -
Rescission of a contract is based upon either fraud or mistake or both. This is the basis of proceedings for rescission; Bispham, Secs. 81, 239.
In a proceeding to rescind a contract the parties must be put in statu quo\ Mass. Life Ins. Co. v. Eshelman, 30 Ohio St., 647; Bispham, Sec. 239; Yeoman v. Rasley, 40 Ohio St., 190; State ex rel. v. Mitchell, 31 Ohio St., 592, 610; as to the Lower River Road Co. v. Riverside, 25 Ohio St., 658.
John R. Sayler, for Bryson D. Mayhew, a taxpayer, cited:
Power of commissioners to build the road and issue bonds: Act of March 22,1850 (48 O. E. R., 692) 46 O. E E., 67.
Standard of a macadamized road : Sec. 8 of the act of 1848; act of April 15, 1857 (54 O. L., 268); act of February 25, 1859 (56 O. E. 261). Act of 1857 unconstitutional: Hixson v. Burson, 54 Ohio St., 470 [43 N. E. Rep., 1000] ; State ex rel. v. Davis, 55 Ohio St., 15 [44 N. E. Rep., 511]; Hixson v. Burson, supra, the court went to the extent of overruling the second syllabus of the State ex rel. v. Commissioners, 35 Ohio St., 458; State v. Covington, 20 Ohio St., 102.
If the act of 1857 is unconstitutional and the contract of surrender is, therefore, ultra vires of the county commissioners, the county commissioners, are not estopped from asserting their rights to the control of the road. Yeoman v. Easley, 40 Ohio St., 190.
This surrender contemplated a pledge of the road: Rower River Road Co. v. Riverside, 25 Ohio St., 658, on page 666.
The funds of the road have been diverted: 2 Perry on Trusts, Sec. 904; 2 Rewin on Trusts, Sec. 1; 2 Beach on Trusts, Sec. 735; 2 Beach on Trusts, Sec. 736 (page 1691); Imboden v. Hunter, 23 Ark., 622, 628, 629 [79 Am. Dec., 1161; Gilbert v. Sutliff, 3 Ohio St., 129, 149; Cameron v. Francisco, 26 Ohio St., 190, 194; Schouler’s Bailments & Carriers, Secs. 212, 214, 215; 18 Am. & Eng. Enc. Raw, p. 658; Morris v. Harris, 19 Ohio St., 15.
Not a corporation de facto : Society Perun v. Cleveland, 43 Ohio St., 481, 495 [3 N. E. Rep., 357]; 1 Thompson on Corporations, 505.
Appeal.

Opinion:
.Giefen, J.
These cases, State ex rel. Mayhew v. Lower River Road Co., Extension of Lower River Road Co., and Bader et al. v. Rower River Road Co., have been consolidated, and proceed under the title of the latter case, and are now in this court on appeal.
The object sought in the cases is to enjoin the Eower River Road Company from collecting the tolls upon the road now operated by them and to compel the county commissioners to again take possession of the road and operate it according to law.
Perhaps it would be well to give the history of the road. The road was, by .special act- in 1850, placed in the hands of the county commissioners, under the act to provide for the extension of the Rower River Road in Delhi and Miami townships, Hamilton county, Ohio. And in this act some of the provisions of the Carthage road law are embodied. Subsequently, in 1857, as amended in 1859, the commissioners were empowered to surrender the road to the bondholders, the road having been improved by the county commissioners by the issuance of bonds which were to be paid only by the tolls collected from the road.
It is urged, first, " That the bondholders of said road did not become an incorporated company under the laws of Ohio, and that the provisions of said statute of April 15, 1857, 54 O. R., 268, that the said company should become incorporated as therein provided, and whereby the said company could be compelled to keep said road in repair, were an essential element in the provisions for the surrender of said road, that said provisions as to the incorporation and the obligations to repair which would thereby be enforceable against said company, have tailed, and that the said contract with said provisions eliminated is in contravention of law."
In answer to that, it may be said that the contract does not require that the bondholders be incorporated. The contract made between the county commissioners and those representing the road, who were the bondholders, contained a provision that they may become incorporated according to the act of 1852, 50 O. L-, 274, so far as it relates to plank road and turnpike companies.
It is argued, on the other hand, that the road, while it may not, under these acts, have become a corporation de iure, is a corporation de facto. And there is much force in this contention. For, in deciding the case of the Lower River Road Co. v. Riverside (Vil.), 25 Ohio St., 658, the Supreme Court left that question in doubt, but seem to recognize the fact that the Lower River Road Company was a corporation, and, parenthetically announced that it might be questionable whether, under this species of legislation, they could have become a corporation.
Inasmuch as the contract does not require that they become incorporated, we do not deem it essentia], in this case, to determine whether or not, they are a corporation, even de facto.
That Carthage road act, which is made part, in some respects, of the act of March 22, 1850, pertaining to the Lower River Road, has this provision:
' ' That the said commissioners shall employ or appoint such agents or persons to make repairs of said road and keep the gates and collect tolls at such salaries and on such terms as shall be deemed advisable by said commissioners."
Now, in the case referred to, Lower River Road Co. v. Riverside (Vil.), supra, on page 658, the court has held that the corporation, if it be one, is the agent or trustee of the county commissioners. And, being the agent or trusteee of the county commissioners, they stand in no different relation than that provided before, in the Carthage road act, that the commissioners shall select such agent as it may deem advisable.
The contract, in this case, was made, as I said, with the bondholders. The corporation was formed, if at all, subsequent to the execution of the contract. So that the corporation, or the association representing the bondholders, whichever you may choose to call them, is acting simply as the agent or trustee of the county commissioners, as they were already authorized to do under the Carthage road act and the act of 1850, each of which is admitted to be constitutional. And the act of 1857, may be open to the objection that it pertains to a general subject matter, and, therefore, does not have uniform operation throughout the state.
It may be said, however, in passing, that all of this class to legislation, up to the time of the decision of Hixson v. Burson, 54 Ohio S., 470 [43 N. E. Rep., 1000], had been regarded as constitutional, and had been so held in the case of the State ex rel. Hibbs v. Comrs., 35 Ohio St., 458, and it was only after the decision of Hixson v. Burson that this case was overruled.
So that it might be said that this class of legislation being recognized, at that time, by our Supreme Court as constitutional, an attempt to form a corporation under that law, at that time, should now, rights having vested, be recognized as at least a corporation defacto. But as it will be unnecessary to decide the question in this case, we leave it, as did Judge McIlvaine in Lower River Road Co. v. Riverside (Vil.), supra.
There has been recently another principle announced, in the case of Cincinnati v. Taft, 68 Ohio St., 141, the syllabus of which is as follows:
" An act of the general assembly to authorize a municipality io issue bonds for the construction of a public improvement having been adjudged by this court to be constitutionally valid, and* the bonds having been thereafter sold and the improvement made, thecouit will follow the former decision as to the validity of the supplementary acts relating to the renewal or extension of such bonds."
If we are right in our statement, therefore, that the commissioners were authorized, under the constitutional act of 1850, to employ such agents as they might deem proper, to operate and control the road, that this act of 1857, which seeks, in a limited sense, merely to do the same thing, is supplementary, or enabling, in its operation, to the original act of 1850. It does not seek to do more than that authorized in Carthage road act, but, rather, attempts to limit it to a certain class of agents, rather than to agents generally.
We think, therefore, that, while the case does not come directly under Cincinnati v. Taft, supra, the same principle applies and that the act of 1857, so far as it enables the county commissioners merely to do that which they were authorized to do under the constitutional act, would confer that power, although the act of 1857, standing alone and inde? pendent, would be declared unconstitutional, under the decision in Hixson v. Burson, supra.
The next objection is that the transfer of a portion of the roadway by the extension of the. Rower River Road Company to the Cincinnati & Indiana Railroad Company was in violation of the contract of surrender.
The railroad company and the turnpike company became involved in a dispute as to the line dividing their properties; and some of the testimony tends to show that the Rower River Road Company surrendered a strip of ground the entire length of the pike, two feet in width, to the railroad company, in consideration whereof the railroad company surrendered to the turnpike company $4,600 of the bonds issued by the county commissioners, which were payable from the collection of tolls. Mr. Moore, whose testimony is relied upon to this effect, testified that the canal bed, which constituted the right of way of the railroad company, was sixty-three feet in width; and this contract between the railroad company and the turnpike company provides that the line shall be thirty-one and a half feet from the middle line of the old canal; which would be precisely half of that which Mr. Moore says was the actual width of the canal, including the berme bank, tow path and the bed thereof. So that his testimony is not, by- any means, conclusive as showing that there was an actual surrender of two feet of ground to the railroad company'. ' It is true that this contract does not vest any property right in the 'bondholders and they would be unauthorized to deal with the land , constituting the turnpike as their property. But we feel it may be I fairly stated that it was not a surrender of any ground but was an adjustment of the boundary line that was a very beneficial transaction ; and that if the county commissioners claim the benefit of the surrender of the bonds, they would thereby be compelled to accept the other terms ot the contract. And, of course, we shall hold that, having dealt with this property as owner, and representing the county commissioners as agents, and whatever rights they acquired in the bonds would inure to the county commissioners, and such bonds as were received in consideration of the adjustment of this boundary line should be considered as canceled. And although an attempt was made to reissue $1,000 of these bonds subsequently to their surrender to the turnpike company, it would have been unavailing.
Third, that the action of the extension of the Lower River Road Company in making a lease to the village of Riverside of so much of the road as was within the corporate limits of said village, was in violation of the contract of surrender.
This was the contract entered into between the village of Riverside and the company whereby they were to pay an annual rental of $600, and in consideration of that payment, the residents of the village were exempt from paying toll, and the turnpike company was enjoined from collecting toll upon any part of the turnpike within the village, and the $600 was to be applied to the improvement of any portion of the turnpike road.
Were it not for the fact that it might be held that this corporation was not a corporation in fact, Sec. 3492, Rev. Stat., would apply, and which would fully authorize the company to enter into such a contract with the village of Riverside. But, if not a corporation, perhaps that statute would not apply to this case. But we think that 'in doing as they did they made a very beneficial contract, and it amounted simply to the collection of toll for that part of the road, to the extent of $600 per annum, in a way different from the ordinary way of collecting tolls, and it was not in violation of the contract entered into between the commissioners and the bondholders.
The other grounds may be embraced in the one head, that the bondholders have not performed the contract, in that they have not kept the road in good repair.
We do not find, in this contract, or in the,lease upon which it was founded, that any high standard is laid down for the keeping of this road in repair; and that the terms of the contract merely provide that the road shall be kept in reasonably good repair. And, while we will not undertake to analyze the testimony, which is voluminous, we think that, under the circumstances, the bondholders being limited by the amount of the toll, the object of the contract being not only to keep the road in repair and to serve the public in that regard, but to pay the bonds, or at least, the interest thereon, that the turnpike company has kept the road in such reasonable repair as could be expected under the circumstances of the case. The tolls received perhaps averaged $2,200 to $2,300, perhaps $2,400 to $2,600; and the greater part of this has been expended upon the repair of the road, or in paying the salary of the secretary and treasurer. And upon this payment much of the controversy depends. Of course, it was not intended, by the terms of this contract, that the bondholders, or any of the officers of this company to be after-wards formed, should acquire any considerable salary for the management of the road. But the repair of the road could not have been intelligently done without some direction from the officers of the company. The mere placing of the metal upon the road and the ordinary manual labor expended in doing so, was not what would ordinarily result in the repair and maintenance of a good, fair road.
We think, therefore, that at least part of the salary allowed for a secretary and treasurer, when his duties also required him to superintend the repair of the road, was properly expended as a part of the repairs of the road. And the receipts and expenditures could not be accounted for honestly and faithfully without some supervision from one of the officers of the road. The salary allowed for this purpose was $600 a year. We think that, in view of all the circumstances of the case, this was extravagant ; it would not be uuder ordinary circumstances, but under those in this case, we think that one-half of that salary should be approved, and the other half be applied to the payment of the interest upon the bonds.
As to the $4,600 of bonds surrendered to the turnpike company by the railroad company, we think that they should be cancelled as of the date of the transaction between the turnpike company and the railroad company.
We think that the costs should be equally divided between the county commissioners and turnpike company.