Lichter v. Land Title Guarantee & Trust Co.

77 Ohio Law. Abs. 335
Court of Common Pleas of Ohio, Franklin County, Civil Division·Decided November 14, 1955·No. No. 188523·Published·Cited by 2 cases

Opinion

[337]*337OPINION

By LEACH, J.

HEARD ON MOTION OF PLAINTIFF FOR LEAVE TO FILE AMENDED PETITION.

In our decision of July 6th, 1955, we sustained the several demurrers of the several defendants and ordered that the petition be dismissed at the costs of the plaintiff, expressing the opinion that from the very nature of the issues here involved, it would be impossible to file an amended petition on behalf of this defendant in the capacities in which he sues which would state a cause of action.

On July 25, 1955, plaintiff filed a motion for leave to amend the first cause of action set forth in his amended petition by adding certain language to paragraph 16-a thereof.

16-a of the petition now on file reads as follows:

“a. Sec. 5537.12 R. C. (formerly §1213 GC) limits the restrictions which said trust agreement may place upon the individual right of action by Turnpike bondholders to those which are customary in trust agreements or trust indentures securing bonds or debentures of corporations.”

The language sought to be added to paragraph 16-a is as follows:

“Trust agreements or trust indentures securing bonds or debentures of corporations customarily restrict the individual right of action by bondholders only regarding suits for the foreclosure of the indenture in question, or for actions upon or in respect to the indenture or for actions which affect, disturb or prejudice the lien of the indenture in question. Such trust agreements do not customarily restrict bondholders from the enforcement of ordinary equitable rights under the common law to protect the trust res equitably and ratably for the benefit of all bondholders. To the extent that said Section 807 purports to restrict the rights of Turnpike bondholders to ‘enforce any right . . . under . . . the laws of Ohio’ it is more restrictive than such customary indentures.”

Memorandum in support of such motion has been filed by the plaintiff and briefs in opposition thereto have been filed by all defendants. An oral hearing at which all parties were represented by counsel also was held on August 15, 1955.

In our decision of July 6, 1955, at page 12, with reference to paragraph 16-a, we stated that such paragraph contained no allegation of fact which could be construed as indicating that the trust agreement in any way violated the provisions of §5537.12 R. C. Plaintiff asserts that the proposed amendment would contain such an allegation of fact.

All parties are in agreement as to the fact that after a demurrer is sustained to a petition an amended petition cannot be filed as a matter of right, that leave to file such an amended petition must be sought and that the matter is one resting in the sound discretion :.f the Court.

Sec. 2309.60 R. C., provides as follows:

“If a demurrer is sustained, the adverse party may amend if the defect thus can be remedied, with or without costs as the court directs.

Thus the issue presented to the Court at this time is whether the [338]*338proposed amendment would remedy the defect in the petition now on file. Stated another way, would a petition so amended be subject to the same demurrers sustained in our decision of July 6, 1955, as to the petition now on file? If so, it would follow that the “defect” is not “remedied” within the purview of the language of §2309.60 R. C., and that such leave to file an amended petition should be denied.

Defendants contend that the proposed new language is no different in legal effect than language contained in the original petition stating that “The provisions of said section 807 of said Trust Agreement are greatly more restrictive than is so customary,” language ordered stricken by another Branch of this Court as being a conclusion of law.

This brings us to a consideration of the language of §5537.12 R. C. This statute provides that in the discretion of the Turnpike Commission any bonds may be secured by a trust agreement between the Commission and a corporated trustee and further provides:

“Any such trust agreement may set forth the rights and remedies of the bondholders and of the trustee, and may restrict the individual right of action by bondholders as is customary in trust agreements or trust indentures securing bonds or debentures of corporations. Such trust agreement may contain such other provisions as the commissipn deems reasonable and proper for the security of the bondholders.”

In all of the briefs filed prior to our July 6, 1955 decision it seemed to have been assumed that this language would permit the Turnpike Commission to restrict the individual right of action of bondholders only to the extent that as a factual matter private corporations “customarily” have adopted the same type of restriction. We are now confronted with the specific question as to whether this is the correct interpretation of §5537.12 R. C.

It must be remembered that this is a separate and distinct issue from the question of whether a corporation may lawfully adopt such a restriction on the right of an individual bondholder to sue. This separate issue in effect has been presented by the language of paragraph 16-b of the petition, asserting that such an agreement “tends to deprive a Court of Equity of its ordinary, necessary and proper jurisdiction,” and is “therefore in violation of law.” This separate contention was discussed and rejected at page 12 et seq. of our prior decision.

Thus plaintiff in effect contends that even though a private corporation might lawfully adopt a restriction similar to that adopted by the Turnpike Commission, if as a matter of fact from an evidentiary standpoint, private corporations do not “customarily” adopt similar restrictions, the Turnpike Commission is without authority under §5537.12 R. C., to adopt such. After careful consideration we do not agree that this is the correct interpretation of §5537.12 R. C.

I'- will be noted that the statutory language does not state that the Commission may restrict the individual right of action by bondholders “to the extent that .such” is customary in trust agreements of corporations. It merely states that the Commission may restrict the individual right of action by bondholders as is customary in trust agreements of corporations. From a careful reading of the entire language of the section, we believe that the language “as is customary in trust agreements * * * of [339]*339corporations” is merely language of description and not of limitation.

Even if we assume, however, that such language is language of limitation, we are presented with the question of what is meant by “customary.” Does it mean “customary” in the factual sense of the total number of corporations in existence (in Ohio, in the United States, or in the world) which have adopted such restrictions? If so, it would appear that the parties and the Court would be presented with an insurmountable problem from the standpoint of evidence. In a matter of the over-all importance of the Turnpike Act, we cannot conclude that the General Assembly had any such intention.

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Lichter v. Land Title Guarantee & Trust Co., 77 Ohio Law. Abs. 335 (Ohio Super. Ct. 1955).

77 Ohio Law. Abs. 335 (Lichter v. Land Title Guarantee & Trust Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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