Kunkle v. Beck.

ants say that before the execution of the plaintiff's deed, and while the plaintiff and defendants were negotiating about the sale of the farm they informed the plaintiff that they had conveyed such right of way to the said gas company, and that the plaintiff had knowledge of the fact that a pipe line had been laid across said land. That the physical evidence of the fact was visible to the plaintiff, and that while said negotiations were in progress plaintiff inquired of them what consideration they had received for conveying said right of way, and when informed of the amount asked to have the same deducted from the purchase price of the farm, which was agreed to by defendants, and the sale comsummated in accordance with such agreement. In a third defense the defendants aver that such right of way is not an incumbrance in any way affecting the title to the property, but is merely an easement affecting its physical condition. and that the plaintiff having knowledge thereof is estopped from claiming the same to be an incumbrance.

Plaintiff demurred to the answer and the common pleas court overruled the demurrer, and the plaintiff not pleading further judgment was entered against him on the pleadings. Error is prosecuted in this court and the only question is whether the common pleas court erred in so holding.

In our judgment the common pleas court erred in overruling the demurrer. The matter set forth in the second defense is a parol arrangement between the parties made before the execution of the deed, which is clearly in contravention of the terms of the deed itself. While this matter, if properly pleaded, might constitute a good cause of action to reform the deed, it is no defense in an action on the covenant against the incumbrances, and parol evidence would not be admissible to prove such an understanding. Long v. Moler, 5 Ohio St. 271.

As to the matter set forth in the third defense, a question much more difficult of solution is presented. It is urged with much ability that the incumbrance, being open, notorious and visible is not such an incumbrance as affects the title, but only affects the physical condition of the land, and that the plaintiff having knowledge of its existence at the time of the purchase of

Summit County Appeals.

the farm can not now be heard to complain that it is a damage to him. Many authorities are cited upon this proposition, and there seems to be respectable holdings that where the right of way is a public highway, or a railroad which was known to the parties at the time of the conveyance that its existence furnishes. no basis for an action for breach of the covenant against incumbrances. Kutz v. McCune, 22 Wis. 628 [99 Am. Dec. 85]; Memmert v. McKeon, 112 Pa. St. 315 [4 Atl. Rep. 542; 30 L. R. A. (N. S.) 833].

But where the right of way is a private one existing solely for the benefit of a private person or corporation, we think the decided weight of authority is to the effect that such incumbrance constitutes a breach of the covenant.

In Long v. Moler, supra, above cited, it is held that incumbrances known to the parties at the time of the conveyance are not presumed to be excluded from the operation of the covenant. The correct rule, as we think, is clearly stated in Huyck v. Andrews, 113 N. Y. 81 [20 N. E. Rep. 581; 3 L. R. A. 789; 10 Am. St. Rep. 432]. In this case it was held that the right to maintain a mill dam constituted a breach of a covenant against incumbrances, though the easement was perfectly visible to the grantee, and was known by him at the time he purchased the premises.

"There is no distinction in this respect between incumbrances which affect the title, and those simply affecting the physical condition of the land."

In this case the cases of Kutz v. McCune, 22 Wis. 628, and Memmert v. McKeen, supra, both of which are cited and much relied upon by counsel for the defendant in error, are disapproved. On page 90 it is said respecting these cases:

"They open to litigation upon parol evidence in every action for the breach of the covenant against incumbrances, caused by the existence of an easement, the question whether the grantee knew of its existence; and in every such case the protection of written covenants can be absolutely taken away by disputed oral evidence. We think the safer rule is to hold that the covenants in a deed protect the grantee against every adverse right,

Kunkle v. Beck.

interest or dominion over the land, and that he may rely upon them for his security. If open, visible and notorious easements are to be excepted from the operation of covenants, it should be the duty of the grantor to except them."

And our own Supreme Court in Long v. Moler, supra, seem to be of the same opinion. On page 274 it is said:

"The coverant embraces in terms all incumbrances whatsoever and expects none whatsoever. The parties may have had an understanding resting in parol to the effect that the taxes of the current year were to be excepted from the operation of this covenant. But this we can not know; for parol evidence is inadmissible to contradict or vary the plain provisions of the deed. The application of the rule may possibly, in this case, work injustice to the defendant. If so, we can only regret it; for the rule itself, being a salutary one, must be maintained."

The following cases also, we think, support the view we have taken in this case: Ladd v. Noyes, 137 Mass. 151; McGowen v. Myers, 60 Iowa. 256 [14 N. W. Rep. 788]; Teague v. Whaley, 20 Ind. App. 26 [50 N. E. Rep. 41]; Myers v. Munson, 65 Iowa 423 [21 N. W. Rep. 759].

We are satisfied that the rule contended for that open, notorious and visible incumbrances are excepted from the operation of covenants against incumbrances finds no support in the Ohio decisions. It is urged that the right of way granted to the gas company is in the nature of a public easement, but we are unable to accept this view. Whatever the rule may be with regard to highways, we do not think that this pipe line can be regarded in the same category with roads and highways. Its construction was a private enterprise, and the fact that the public are interested in procuring the product which it transports does not make it any the less so.

Judgment of the common pleas court is reversed and the cause remanded with instructions to sustain the demurrer. Pollock and Norris, JJ., concur.

Franklin County Circuit.

APPEAL-ERROR.

[Franklin (2nd) Circuit Court, July 30, 1912.]

Dustin, Allread and Ferneding, JJ.

CHARLES C. HIGGINS V. TURNEY & JONES, Co., ET AL.

1. Dismissal on Appeal and Affirmance on Error to Judgment on Demurrer to the Facts not Ground for Extension of Time for New Action.

Dismissal on appeal and affirmance on error in the court of appeals of an action that failed in the common pleas upon the merits-demurrer to the facts-does not work an extension of a years time within which to institute a new action under Sec. 11233 G. C.

DUSTIN, J.

The point suggested by counsel for plaintiff in error that his action is within time under Sec. 11233 G. C., because brought within a year after a dismissal "otherwise than upon its merits" by the circuit court, on appeal, is not, in our view, well taken.

The case of Cummings v. Dougherty, 1 Dec. 231 (31 Bull. 140), does not, we think, state the law.

If a plaintiff wins in the trial court but the judgment is reversed in the upper court, he has a year after reversal in which to bring a new action; or, if he fails in the trial court otherwise than upon the merits, he has the same right.

In the case at bar Jones failed in the trial court upon the merits, viz., upon a demurrer to the facts. By taking an appeal he took the chances of losing by limitation of time. The dismissal of the appeal and the affirmance on error did not, we think work an extension.

Judgment affirmed.

Allread and Ferneding, JJ., concur.

Bank v. McDonald.

BANKS AND BANKING-FRAUDULENT REPRESENTA

TIONS.

[Hamilton (1st) Court of Appeals, December 15, 1913.]

Swing, Jones and Jones, JJ.

SECOND NAT. BANK V. GEORGE E. MCDONALD.

1. Mere Exaggeration of Dividends of Stock not Fraudulent Representation if Truth Easily Ascertainable.

A defense of fraudulent representation will not lie to an action by a bank for recovery on a note, executed for a certificate of a new issue of stock, the representations consisting of statements by the cashier that the bank had a large surplus and was paying 12 per cent dividends, which was a fact; that the dividends would pay the interest on the note which, though not true, was easily ascertained by a simple mathematical calculation; and that the dividends probably would be increased which did not happen.

2. Inadequate Defenses to Note for Bank Stock Sued on.

A defense to an action by a bank on a note, given for a cer tificate of new stock issued, that such increase of stock was invalid does not lie, it appearing that it was duly authorized by the comptroller of the currency, or that the transaction was ultra vires, because the note was a mere loan to the bank for which it accepted its own stock as collateral, or that there was no consideration for the loan because the stock was not delivered but was held as collateral, possession being obtainable at any time by paying the note.

ERROR.

Jelke, Clark & Forchheimer and Peck, Shaffer & Peck, for plaintiff in error.

Hackett, Yeatman & Harris, for defendant in error. JONES, O. B., J.

This was an action on a promissory note for $2,750 given by defendant to plaintiff dated February 1, 1912, payable on demand. This note was given in renewal of a note for the same amount dated January 16, 1909.

The plaintiff, a national bank whose $500,000, by virtue of the federal statutes steps to increase its capital to $1,000,000.

capital stock was took the necessary The defendant be