author: MR. COMMISSIONER CALLAWAY

text:
    CLARK, Respondent, v. AMERICAN DEVELOPING & MINING COMPANY, Appellant.
    (No. 1,606.)
    (Submitted June 17, 1903.
    Decided July 14, 1903.)

      Mining Property — Sale—Optipnal Contracts — Rescission— Refunding Payments.

    Defendant gave plaintiff an exclusive option on certain mining property and placed Mm in possession. An installment becoming due, plaintiff expressed dissatisfaction, and requested an extension of thirty days on the installment, which was refused, and demand made for adherence to the contract. Defendant insisted on the contract, and indicated no intention of abandoning it. After telegraphic communications relating to the transaction, defendant demanded the deeds which had been placed in escrow; and received from plaintiff possession of the properties, terminating the contract. Plaintiff claimed a return of installments previously paid, on the ground that defendant had abandoned the contract, which contained no provision relative to the retention of installments, and of which time was the essence. Held, that plaintiff was not entitled to a return of the installments, as it did not affirmatively appear, from the contract of sale or in the agreement to rescind, that the purchaser was to have payments made refunded.

      Appeal from, District Court,- Lewis and Clarice County1; H. C. Smith, Judge.

    ActioN by William J\ Clark against tbe American Developing & Mining Company. From a judgment in favor of plaintiff, and an order denying a motion for a new trial, defendant appeals.
    Reversed.

      Mr. F. W. Bacorn, and Messrs. Forbis & Evans, for Appellant.
    Courts will look to the acts of the parties and to the surrounding circumstance's to see which kind of a rescission they have intended. (Hayes v. City of Nashville, 80 Fed. 641; Mayor v. Refrigerating Co., 40 N. EL 171; Winton v. Spring, 18 Cal. 451.)
    The rescission or modification of a contract, being in effect the substitution of one contract for another, requires the same meeting of minds as did the formation of the original contract. (Bishop on Contracts, See. 812 ; Peoples v. McTeer, 14 S. E. 828; St ex v. Roulston, 15 S'. El 826.)
    Time was of the essence of the contract by necessary implication. (Bindley on Mines, Sec. 859.)
    A rescission is not affected by an offer to rescind until the offer is accepted. (Robinson v. Pogue, 86 Ala. 257, 5 So. 685; Fripp v. Fripp, 1 Rice (S. G.) Oh. 84; Picol v. Douglas, 46 Mo. 497; Robinson v. Page, 3 Russ. 114; Murray v. Harvey, 56 N. T. 337; Collins v. Baumgartner, 52 Pa. St. 461; Union Loco. Co. v. Erie Co., 37 N. J. Law, 23; Rodman v. Rodman,
      64 Ind. 65; White v. Corlies, 46 N. T. 467; Raij'sor v. Berkely Co., 2 S. B. 119; McDonald v; Boeing, 43 Micb. 394.)
    If it be true that'the, contract was rescinded, tbe new contract of rescission superseded tbe old contract, and respondent must rely on tbe new contract; be cannot occupy an inconsistent position.' (Bliss on Code Pleading, Sec. 122; Union Loco. Co. v. Brie Co., 37 N. J. Law, 23; Lloyd v. Brewster, 4 Paige, 537; Brown v. Mandeville, 95 N. Y. 237.)
    As a matter of law, even bad tbis been a contract where tbe respondent was bound to buy, as appellant was bound to sell, instead of being, as it was, a mere option, a stipulation inserted to tbe effect tbat on respondent’s default appellant would be entitled to retain tbe payments made, would bave added nothing to tbe contract. (Reddish v. Smith, 38 Pac. 1003; Clock v. Howard & W. Co., 123 Cal. 1; Hansborough ¡v. Peck, 5 Wall. 497.)
    ■ Tbe vendee has no right of action for what be has paid, on the termination of tbe contract in* consequence of bis default: (Clock v. Howardié Wilson Co., 123 Cal. 1; Hansborough.v. Peck, 5 Wall. 497; Lawrence v. Miller, 86 N. Y. 131; Wheeler v. Mather, 56 Ill. 241; Frost v. Frost, 11 Me. 225; Grimes v. Goud (Me.), 10' Atl. 116; Hill v. Grosser, 59 N. H. 513; Ax-ford v. Thomas, 160 Pa. St. 8; Patterson v. Murphy (Neb.), 60 N. W. 1; Nason v. Woodward, 16 La. 216; Thompson v. Kelley, 101 Mass. 291; McManus v. Blackman, 47 Minn. 331; Grant v. Munch (Minn.), 55 N. W. 902; Dukes v. Baugh, (Ga.),'16 S: W. 219; McAlpine v. Reisheneker (Kan.), 42 Pac. 339; Reddish v. Srmth (Wash:), 38 Pao. 1003; Pease v. Baxter (Wash.), 41 Pac. 899; Soper v. Arnold, L. B. 14 App. Cas. 429.)' ■
    Money paid on an option cannot be recovered back. (Steel v. Bond, 32-Minn. 14; Warvelle on Vendors, p1. 832.)

      Messrs. H. G. & S. H. Mclntwre, for Respondent.
    When tbe rescission is bad by mutual consent, or by tbe terms of tbe contract, or in consequence of tbe default of tbe vendor, tbe vendee is entitled to recover whatever he has paid toward the purchase money, unless there is an agreement connected with the rescission which restricts its operation. (2 Warvelle on Vendors (2d Ed.), p. 1081, Sec. 869; 4 Wait’s Actions and Defenses, 501; Cillett v. Maynard, 5 Johns. 85, s. c. 4 Am. Dec. 329 ; Toiuers v. Barrett, 1 T. R. 133; Sheard v. Welburn, 67 Mich. 367; Christy v. Arnold, 36 Pac. Rep. 918; Tice v. Zinsser, 76 N. Y. 549; Cranes v. White, 87 N. Y. 464; Lake Shore & M. It. Co. v. Bicharás, 30 L. R. A. 44-45, and cases therein cited; Lloyd v. David (Ind.), 38 N. E. Rep. 232; Bentley v. Evans (Tex.), 29 S. W. Rep. 497; Utter v. Stuart, 30 Barb. 20; Minah Consol. M. Co. v. Briscoe, Ml Eed. 281: Gay v. Alter, 102 U. S. 79; Andrews v. Hensler, 6'Wall. 254; Bohall v. Diller, 41 Cal. 535; Doughten v. Camden Co. (N. J.), 7 Atl. 480; Brink y. Thomas, 20 Ore. 265; Cleary v. Bol-ger, 24 Pac. Rep. 280; Brew v. Pedlar, 25 Pac. Rep. 749; White v. Buell, 27 Pac. Rep. 19; Phelps v. Brown, 30 Pac. Rep. 774; Merrill v. Merrill, 30 Pac. Rep. 542; .Joyce v. Shaffer, 32 Pac. Rep. 320.)
   MR. COMMISSIONER CALLAWAY

prepared the opinion for the court.

This controversy arose over an option contract executed by the defendant, as party of the first part, to the plaintiff, as party-of the second part, concerning the lease and sale of the Golden Sunlight group of mines. By the terms of the contract, which was dated January 31, 1894, the plaintiff, at his option, was to pay the defendant $500,000 as- the purchase price of the property, in installments falling due at stated intervals; the last one being due October 1, 1896. A payment of $50,000 ■was due April 1, 1895. The plaintiff had the right to make any or all of the payments prior to the stipulated periods. It was provided that the defendant should deposit in escrow with the Montana National Bank deeds for the property, conveying all its right, title and interest therein to John E- Searles and Samuel Thomas, or either of them, as directed by the plaintiff. Paragraphs four and five of the contract read as follows:

“(4) It is expressly understood that in the event of failure by the party of the second part, or by his associates or assigns, to make the payment of any of the installments upon the dates mentioned in this agreement, then and in that event the said deed or deeds, covering all of said mines, mining claims, lands and properties mentioned in said Schedule A, are to be returned to the said party of the first part; and peaceful possession of all of said mines, mining claims, lands and properties shall in that event be surrendered by the party of the second part, or by his associates or assigns, to the said party of the first part, together with all the improvements, appurtenances, machinery, mills and fixtures placed upon said mines, mining claims, lands and properties by the party of the second part, or by his associates or assigns, upon demand being made for such possession by the said party of the first part — it being further understood that, in the event of such failure to pay any of said installments as herein provided, and possession of said properties being demanded by said party of the first part., then and in that event all the said improvements, appurtenances, machinery, mills and fixtures placed upon said property by the said party of the second part, or by his associates and assigns, shall revert to the said party of the first part.
“(5) That upon the payment of $30,000 upon March 10, 1894, as herein' provided, the party of the second part is to have immediate and undisturbed possession of all of said mining claims, lands 'and properties, with privilege to work the said mines, mining claims, lands and properties, to develop the same, and to mine and ship ores, and to receive the proceeds thereof, for the benefit of himself, or his associates or assigns; and the said party of the second part, his associates or assigns, are to receive all the product of said mines, mining claims, lands and properties for their own use, until failure occurs in the payment of any of said installments; providing, however, that the provisions of Section 6 of this agreement shall have first .been complied with. It is further understood that the party of the second part shall have the right to cut and use any trees upon said premises for improvements, or for mining purposes, or for fuel, in the operation of said properties.”

Paragraph 6 provided that plaintiff should “diligently take the usual steps toward patenting such of said mining claims as are now unpatented,” and should also expend from the net proceeds received from the shipments of ores between March 10, 1894, and October 1, 1894, the sum of $40,000 in the erection of reduction works and the necessary equipment for conducting mining on said property.

Plaintiff was to have the use of all mining machinery and appliances then on the property, which were to be transferred as a part thereof.

In pursuance of this contract the plaintiff entered into possession of the premises and property on March 10, 1894, and continued in possession until April 2, 1895. At plaintiff’s direction, defendant executed and placed in escrow deeds to the property mentioned in the contract, by the terms of which deeds the property was conveyed to John E. Searles. Subsequent to the execution of the contract Searles acquired an interest in. it from the plaintiff, and the principal part of the money required to make the improvements spoken of and the payments mentioned below was advanced by him. While plaintiff was in possession of the premises he mined and extracted therefrom ores of the aggregate value of $83,110.27, the net proceeds of which were invested in the property, for the purpose of developing and improving the same, and in the cost of mining and extracting said ores. The defendant did not admit that such expenditures were wisely incurred, or that the mines were operated to the best advantage. Plaintiff made the first four payments provided for in the contract, amounting to $165,000. On March 28, 1895, the condition of the mine being disappointing to plaintiff, he applied to defendant for thirty days’ grace in which to make the payment due April 1st following. March 29th the trustees of defendant held a meeting, at which it was resolved tbat they “do not accept tlie modification ashed, and that the agreement of January 31, 1894, with W, J. Clark, for sale of the Golden Sunlight groups to John E. Searles, be adhered to.”

The following telegraphic messages were then sent and received on the dates indicated therein:

“New York, March 31, 1895. To Bernard MacDonald, care. American Developing & Mining Co., Butte, Montana: My principal dissatisfied Avith recent reports from the mine; but, if thirty days’ extension granted, he Avill go out and investigate personally, and I hope to persuade him to go on. AnsAver, care-Ballou, 10 Wall Street. Wm. Clark.”
“Butte, Mont., March 31, 1895. ■ Wm. J. Clark, Care Bal-lou, 10 Wall Street, New York: Default, restore property to company, and we will treat honorably Avith your principal. Bernard MacDonald, Pres’t.”
“New York, April 1, 1895. To Bernard MacDonald, Care American Developing & Mining Company, Butte, Mont.: Principal refuses to go to Montana unless extension granted. You stand AAÚth me. Think we can carry this through. You AA'ill find us honorable. AnsAver. Wm. J. Clark.”
“Butte, Mont.,- April 1, 1895. To Wm. J, Clark, Care Geo. W. Ballou, 10 Wall Street, NeAv York: Company cannot grant your request. Your principal is hereby assured of honorable treatment if default is made. Bernard MacDonald, Pres’t.”
“Butte, Mont., April 1, 1895. To John E. Searles, 117 Wall Street, New York: Replying to Clark’s telegraphic solicitation foi* thirty days’ grace on April payment, Ave Avircd him that Avould not be granted; but, if default was made, A\-e Avould"deal honorably Avith his principal. Reassuring you on this point, and that the'property is one of the most valuable in Montana, Ave ask you to investigate mines and past management, promising you equitable treatment in case you then desire reconstruction: Bernard MacDonald, Pres’t.”

■The plaintiff had cognizance of the telegram to Searles. It Avas never answered. All of the messages sent by defendant ■were received in New York City on tbe same days they were dated and prior to tbe close of business by tbe bankers of that city on tbe respective days when received. No further or other communications were bad between tbe plaintiff and defendant after April 2, 1895, as shown by tbe record.

Searles was able to pay tbe sum of $50,000 on April 1, 1895, but neither he nor plaintiff ever made tbe payment due on that day. April 2, 1895, the defendant demanded and received from tbe Montana National Bank tbe deeds which bad theretofore been placed in escrow, and on tbe same day demanded and received from the plaintiff possession of tbe properties therein described, thereby terminating tbe contract.

May 19, 1896, William J. Clark, tbe plaintiff, began this suit, claiming that tbe defendant had rescinded and abandoned tbe contract to which tbe plaintiff consented; but, notwithstanding such rescission and abandonment, tbe defendant bad failed and refused to repay him, tbe sum of $165,000 theretofore paid on tbe contract. Plaintiff prayed judgment against defendant for that sum, together with interest thereon at tbe rate of 10 per cent, per annum from April 2, 1895,. and for costs of suit.

Defendant answered, denying that it bad rescinded or abandoned the contract, but admitted that it refused to repay tbe sum of $165,000, or any part thereof. Then followed this allegation in the answer: “And defendant says that tbe plaintiff failed and refused, and still fails and refuses, to pay to it tbe sum of $50,000, which by tbe terms of the contract in tbe complaint set forth became due and payable on April 1, 1895, and failed and refused, and still fails and refuses, to pay to tbe defendant any sum of money whatsoever; that on tbe 1st day of April, 1895, defendant was, ever since has been, and now is ready, able and willing to proceed with tbe aforesaid contract, upon tbe payment by tbe plaintiff to it of the sums in tbe said contract specified-to be paid by tbe plaintiff to the defendant.”

All of tbe foregoing appears from tbe pleadings and statement of facts agreed to by tbe parties, upon which tbe trial was bad. The court rendered judgment for tbe plaintiff in accord-anee witli tbe prayer of the complaint. Defendant moved for a new trial, which was denied. From such judgment, and the order denying the motion for a new trial, defendant prosecutes this appeal.

Rescission is the unmaking of a contract, requiring the same concurrence of wills, as that which made it, and nothing short of this will suffice. (Bishop on Cbntracts, Sec. 812; Robinson v. Pogue, 86 Ala. 257, 5 South. 685.) There is a wide difference between the rescission of a contract and its mere termination or cancellation. (Winton v. Spring, 18 Cal. 452; Weil v. Jones, 53 Cal. 46.) “It is well settled that a technical rescission of the contract has the legal effect of entitling each of the parties to be restored to the condition in which he was before the contract was made, so far as that is possible, and that no rights accrue to either by force of the terms of the contract. But, besides technical rescission, there is a mode of abandoning a contract as a live and enforceable obligation which still entitles the party declaring its abandonment to look to the contract to determine the compensation he may be entitled to under its terms for the breach which gave him the right of abandonment.” (Hayes v. City of Nashville, 80 Fed. 641.) “Such an abandonment is not technically a rescission of the contract, but is merely an acceptance of the situation which the wrong-doing of the other party has brought about” (Anvil Mining Co. v. Humble, 153 U. S. 540, 14 Sup. Ct. 876, 38 L. Ed. 814.)

Did the parties intend to rescind the contract, so as to place each other m statu quo\? In determining whether such a rescission has taken place, courts look, not only to the language of the parties, but to all the circumstances, including the effect of a complete rescission upon the rights of those concerned, and the probability or improbability of their having desired to effect such a result. (Hayes v. City of Nashville, 80 Fed. 641, 26 C. C. A. 59.) We have seen that the plaintiff asked for thirty days’ grace on March 28th in which to make the payment due three days later; that the defendant refused the request, demanding adherence to the contract; and that plaintiff then sent the telegram of March 31st, saying his principal was dissatisfied with the reports from the mines, but, if thirty days’ extension be granted, his principal wonld “go out and investigate personally,” and plaintiff hoped “to persuade him to go on.” This was tantamount to saying that, if the thirty days’ extension he not granted, the payment would not be made. Then followed the telegram in which defendant said, “Default, restore property to company, and we will treat honorably with your principal.”

It was-quite natural for the defendant, in case the plaintiff abandoned the contract, to desire an immediate and peaceable possession of the premises. Common experience has taught that, while the peaceable possession of leased premises is promised to the lessor, it often happens that he has to resort to legal process in order to repossess himself of the property, and finds that after default has been made, and before he regains possession, much valuable property in the mkture of fixtures has disappeared. /

There was no promise of honorable treatment held out to plaintiff in the telegram just quoted. The promise of honorable treatment was to his principal. The defendant must have assumed that the plaintiff would be unable to proceed, and assurance was made that, in case plaintiff made default and restored the property, defendant would deal honorably with Searles, the man to whom the deeds were made, and who- had furnished the principal part of the money. The language of the telegram excluded plaintiff from consideration. Plaintiff evidently so read it, for he replied: “Principal refuses to go to Montana. You stand with me. Think we can carry this through. You will find us honorable.” The defendant remained obdurate. It said: “Company cannot grant your request. Your principal is hereby assured of honorable treatment if default is made.” And, concluding the correspondence, observe the telegram sent to Searles, telling him the company would not grant any further time-in which to make the payment due April 1st, assuring him of honorable treatment, of the value of: tbe property, asking bim to investigate tbe mines and past management, and promising bim equitable treatment in case be desired a “reconstruction.” Tbe inducements, if any were beld out, were to Searles, and none whatever were made to plaintiff. He was excluded in no uncertain terms. Tbe suggestion that Searles investigate tbe past management of tbe mines was by no means flattering to plaintiff. As to wbetber Searles ever did desire a “reconstruction,” tbe record is silent. So far as we are able to tell, the defendant may bave accorded to bim the honorable, treatment promised. He may be well satisfied. He is not a party to this suit, and there is no showing that Clark is acting in bis behalf, or has succeeded to bis rights in the premises.

It is apparent that Clark was merely Searles’ agent, and as such agent be has no right to recover bis principal’s money. No communications between plaintiff and defendant appear after April 2d. No further action by plaintiff appears until May 19, 1896, when be commenced this suit. "We are forced to tbe conclusion that under no phase of tbe case was any inducement held" out to plaintiff, nor can we see, from anything in tbe record, any intention on part of defendant to rescind tbe contract. On tbe contrary, it stood upon tbe contract,' insisted upon it, and tbe only inducement beld out, if any there was, was tbe assurance of honorable treatment to Searles, and a “reconstruction” of tbe contract, should be desire it; and with this., as we bave seen, plaintiff has in no way connected himself.

This view is strengthened when we examine tbe nature of the contract. Tbe parties were dealing with property subject to “sudden, frequent and great fluctuations in value.” (Waterman v. Banks, 144 U. S. 394, 12 Sup. Ct. 646, 36 L. Ed. 478.) They entered into’a. contract respecting its working and sale. The defendant, gave the plaintiff tbe exclusive right to purchase within tbe time limited in tbe contract,, and placed bim in possession, giving bim tbe use of its mining machinery, the right to cut and use its timber, and to work the mines and extract tlie ores tberefrom as he should see fit. It took the risk of having its property ruined by unskillful work, and deprived of its most valuable ore bodies. When the mining property was leased, its showing of values was so great that plaintiff was willing to agree to $500,000 as its purchase price. In the vicissitudes of mining this showing might have disappeared before the plaintiff had made the second payment, and he could have exercised his election to abandon the property at once. For these risks the defendant exacted certain payments. Without doubt these payments were required in the nature of an indemnity or of compensation.

The plaintiff on his part entered upon a mining venture— an enterprise fraught with hazard, but holding out the promise of rich returns. He took the risk of losing his investment, but presumably it was his expectation to extract from the mine more than sufficient to pay its price, and it was entirely within the realm of probability that he would uncover ore bodies worth millions with his first few months of operation. In this event ho could hold defendant to its bargain. It could not repudiate the contract, as the plaintiff could. The plaintiff could enforce the specific performance of the contract by complying with its terms, but the defendant could not. Practically it had fulfilled all the conditions imposed upon it. Deeds conveying title to the property were in the bank.

The contract was unilateral, and by its express terms time was of its essence. “There is a decided distinction between an option to purchase, which may be exercised or not by the prospective purchaser, and an absolute contract of sale, wherein one of the parties agrees to sell and the other to buy certain property, the sale to be completed within an agreed time. In the latter case, of course, the mere lapse of time, with the contract unperformed, does not entitle either party to refuse to complete it, and therefore time is not of the essence of the contract. But where the contract is merely an option, generally without consideration, and especially as applied to mining property, of course, as pointed out in the last preceding sections, time is of its essence, and tbe prospective purchaser must act promptly within the time specified, or his right to purchase is gone.” (Snyder on Mines, Sec. 1378. And see Lindley on Mines, Sec. 839; Settle v. Winters, 2 Idaho, 215, 10 Pac. 216; Pomeroy on Contracts, Sec. 387; Pry on Specific Performance, 3d Ed., See. 1052.)

Whether partial payments made under absolute contracts of sale can be recovered by the prospective vendee upon a rescission of the contract is a question upon which the authorities are somewhat divided; but as to option contracts generally the rule is thus stated in Warvelle on Vendors, Sec. 824: “An option of purchase rests on different grounds, and is governed by different rules, from those which obtain in case of bilateral contracts. Where the time for acceptance is not limited, it must, if given for a consideration, remain open for a reasonable time, to be determined by all the circumstances of the case; but if the option reserved is to purchase at any time before a certain day for a certain sum, to be paid on demand for deed, time is of the essence of the contract, and equity cannot relieve after the time, nor require the repayment of money paid to secure the option.” And we think that because of the peculiar conditions surrounding contracts for the sale of mining property, where the contract is unilateral, or in the nature of an option, providing for partial payments upon the purchase price at stated times, it is the manifest intention of the parties that the vendor shall retain all payments made, unless it is directly specified to the contrary ; and although the contract be mutually rescinded, unless it affirmatively appears from the contract of sale, or in the agreement to rescind, that the vendee is to have the payments made by him refunded, he cannot recover them.

In this case plaintiff contends that, as there is no provision in the contract authorizing defendant to retain the payments, it may not do so. In addition to what we have said above, we quote the following from Reddish v. Smith, 10 Wash. 178, 38 Pac. 1003, 45 Am. St. Rep. 781, in which a similar argument was made: “We do not think this is a legitimate construction of tbe contract. While it is true that the courts will not supply language to create a forfeiture, where the forfeiture is not specially provided for by the parties themselves, yet it seems to us that it was the clear, unequivocal intention of the parties to this contract, as expressed by the contract, that the payments made by the appellants should be forfeited, in case the respondents elected so to do, upon the nonperformance of the contract by the appellants. The option of forfeiture is for the benefit of 'the vendor; but it would be difficult to conceive what benefit would accrue to the vendor in a case of this kind, if he were not allowed the benefit of the payments which had been made.” And in Lawrence v. Miller, 86 N. Y. 131, it is said: “The plaintiff in the action before us sues for the whole amount of the money paid by the vendee. The defendant came by it rightfully, in pursuance of a contract lawfully made, between competent parties. He has made no breach of that contract. He has failed in no duty to the vendee. Wherefore, then, should he give up that which was rightfully his own ? When and whereby did it cease to be his, and to be due to the vendee ? If the contract had been kept by both parties, the money paid would still be his of right.”

Another insuperable obstacle appears in the way of plaintiff’s recovery. Hnder the general rule, following the rescission of a contract for the sale of real estate, the parties must be placed practically in siatu qua. How can the defendant be placed in statu quo if the $165,000 be returned to plaintiff? The ore bodies which were in place in the mine when the plaintiff took possession have been exhausted to' the extent' of $83,110.27. Whether the plaintiff’s working benefited the mine in any particular is not disclosed by the record. It is not necessary to discuss this subject further.

We are therefore of the opinion that the judgment and order should be reversed, and the cause remanded for a new trial.

Per Curiam. — Por the reasons given in the foregoing opinion, the judgment and order are reversed, and the cause is remanded for a new trial.


source: Caselaw Access Project

author: Pee Cueiak.

license: Public Domain

text:
    SNELL, Respondent, v. WELCH et al., Appellants.
    (No. 1,935.)
    (Submitted June 23, 1903.
    Decided July 14, 1903.)

      Fictitious Appeal — Dismissal.
    where, after the service of an order, made in a suit, restraining defendants from awarding any contracts under a legislative Act, defendants awarded contracts in a manner satisfactory to plaintiff in the suit, the appeal by defendants from the order will be dismissed.

      Appeal from District Court/Lewis and Clarke County; J. M. Clements, Judge.

    Suit by Cbas. H. Snell against W. W. Welch and others, members of the textbook commission of Montana. Erom an order restraining defendants from proceeding under an Act of the legislature, defendants appeal.
    Appeal dismissed.

      Mr. James Donovan, Attorney General, for Appellants. ■

      Mr. Robert B. Smith, Mr. Fdward Horsley, and Mr. E. A. Carleton> for Respondent.
   Pee Cueiak.

This cause is before the court upon the appeal of the defendants from an order enjoining them “from, proceeding or acting under a certain Act of the Eighth Legislative Assembly of the State of Montana, to-wit, Senate Bill No. 84, entitled ‘An Act to create a state textbook commission for the purpose of'adopting and maintaining a uniform series of textbooks for the public schools of Montana; to regulate the price of same; define the duties and powers of said commission and appropriating a sum of money named therein for the expenses of said commission,’ approved March 1, 1903 (Chapter 122, Laws of 1903) ; or from receiving any bid or bids, or letting any contract or contracts, for the furnishing of public school textbooks under said Act, unless they shall receive, consider, and treat any and all bids which may be offered for the furnishing of said textbooks, or from awarding any contract or contracts therefor, irrespective of whether the bidder or bidders attach to said books the union label or not.” The Act referred to is entitled as stated in the above order, and provides, among other things, that “all textbooks shall bear the union label.”

It is certain from statements made by counsel for appellants and respondents, respectively, to this court, during the argument, that the defendants, after service of the injunction order, - at the time and .place prescribed in the Act, met for the purpose of letting all necessary contracts for the awarding of which the meeting was held under the law, and did let the same; the letting of all-being done in the way and manner satisfactory to both appellants and respondent, and then adjourned. There is nothing in this case now for us to decide. It has been disposed of by the parties themselves pending the appeal. If the defendants (appellants here) desired to have the courts consider and decide the questions involved in the case, they might have adjourned from day to day without action, until the cause —which had been advanced upon the calendar upon their motion and set for hearing — had been decided. This they did not do. They have acted, and presumably they have obeyed the order of the lower court.

We are to decide questions arising and undetermined in a case pending, and we may “not tender advice upon matters not in litigation.” (State ex rel. Begeman v. Napton, 10 Mont. 369, 25 Pac. 1045.) The appeal is dismissed.

Dismissed.


author: ME. COMMISSIONER POORMAN Me. Justice MilbueN:

text:
    NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Respondent, v. LEWIS AND CLARKE COUNTY, Respondent.
    (No. 1,921.)
    (Submitted June 15, 1903.
    Decided July 15, 1903.)

      Taxation — Insurance Companies — Construction of Act — Constitutionality.

    1. Section 681 of the Civil Code applies to a foreign mutual life insurance company.
    2. Section 681 of the Civil Code applies to domestic, as well as foreign, insurance companies, and therefore complies with Section 11, Article XII, of the State Constitution, which provides that taxes shall be “uniform upon the same class of subjects.”
    3. The legislature has the right to prescribe reasonable terms upon which foreign corporations may do business in the state.
    4. Section 681 of the Civil Code, applying, as it does, only to business transacted within the state, is not objectionable as interfering with interstate commerce.
    5. The franchise right of a foreign company to do business in this state is property, and if it proves valuable, it is a proper subject for taxation within the meaning of Article XII of the State Constitution.
    6 Section 68.1 of the Civil Code was not repealed by implication by Act March 4, 1897 (Session Laws '1897, p. 76), which is a general license law relating to insurance companies, both domestic and foreign, and applying to all classes and kinds of insurance; the fee therein provided for being required to be paid prior to the transaction of any business, and being a fixed sum, varying in amount only at the will of the company as to the amount of premiums it asks permission to collect, and not being diminished by reason of losses paid or expenses incurred.
    7. Section 681 of the 'Civil Code declares that “each and every insurance corporation or company transacting business in this state must be taxed upon the excess of premiums received over losses and ordinary expenses incurred within the state during the year.” It further provides that “insurance companies and corporations are subject to no other taxation under the laws of this state, except taxes on re.al estate and fees imposed by law. Held, that the clause last quoted was unconstitutional, but that the invalidity of this clause did not render unconstitutional nor void the remainder of the section.
    8. when the valid and invalid portions of a legislative enactment are capable of being separated, and the valid part is a complete Act, and not dependent ‘ upon that which is void, the latter alone will be rejected, and the rest sustained, if it is manifest that the void part was not an inducement to the legislature to pass the part which is valid. ,
    9. Courts will not declare an Act of the legislature unconstitutional unless it is clear, beyond a reasonable doubt, that such Act is inhibited by the constitution.
    Mb. Justice Milbtjen dissenting in part.

      Appeal from District 'Court, Lewis and Clarice County; J. M. Clements, Judge.

    Action by the Northwestern Mutual Life Insurance Company against the county of Lewis and Clarke. Judgment for plaintiff. Defendant appeals.
    Modified.

      Mr. James Donovan, Attorney General, for Appellant.
    It is conceded that, the last sentence of Section 681 is unconstitutional, as the conflict of said provision with Section 7, Art. Nil, of the Constitution is apparent; but the contention is made that the remainder of said-- section is separable from the invalid portion, complete in itself, and not affected thereby, and is a subsisting’ and enforceable enactment without reference to the part which is inoperative and void.
    The tax imposed in Section 681 may be considered as a tax upon the privilege accorded corporations of the character mentioned therein- — whether domestic or foreign — to do 'business, in this state; as such it may be said to be a tax upon business, or a franchise tax, considering such privilege as a franchise. (.Southern Building & Loan Association v. Norman, 98 Ky. 294; Cooley on Taxation, 2d Ed., page 886.)
    Under our constitution and statutes a franchise is property (Const Art. XII, Sec. 17; Political Code, Sec. 3680; Subd. 1), and it was incumbent upon the legislature to tax these premiums at the same rate as other property under Section 1, Article XII, Constitution, requiring a “uniform rate of assessment and taxation.” Taxes upon the franchises of companies or corporations have been uniformly upheld. (People v. Equitable Trust Co., 96 N. T. 387; People v. Nome Ins. Co., 92 N. Y. 328; Scottish Union & Nat’l Ins. Co. v. Herriott (Iowa), 80 N. W. 665; Kittanning Coal Co. v. Comm., 79 Pa. St. 100; Germania Life Ins. Co. v. Comm., 85 Pa. St. 513; Ins. Go. of North America v. Comm., 87 Pa. St. 173; Porter v. B. B. I. etc. B. Co., 76 Ill. 561; Conn. Ins. Co. v. Comm., 133 Mass. 161; Western Union Tel. Co. v. Board of Assessment, 80 Ala. 273 ; State v. Board of Assessment, 47 La. Ann. 1498; Mutual Ins. Co. v. Augusta•, 109 Ga. 73; 1 Desty on.Taxation, 228, 372, 375.)
    Treating the tax imposed by Section 681 as a property' tax upon the funds represented by such net premiums, it is valid. (JJ. S. Express Co. v. Ellyson, 28 Iowa, 370'; Hawlceye Ins. Co. v. French (Iowa), 80' N. W. 661; City of Dubuque v. Chicago, D. & M. R. Co., 47 Iowa, 196; Republic Ins. Co. v. Poliak, 75 Ill. 300; Pringhar State Bank v. Bench (Iowa), 64 N. W. 801; Ames v. People, 26 Colo.. 83; Boyd v. Wiggins, 7 Olda. 85; St. Louis, etc. Co. v. Worthen, 7 L. E. A. 374; In re H. B. 0 (Colo.), 21 Pac. 476.)
    There is no merit in the contention that Section 681 is unconstitutional for the reason that it provides for the taxation of the “excess of premiums,” whether the money collected is in or out of the state, on March 1 of each year. (Delaware & H. Canal Co. v. Comm. (Pa.), 1 L. E. A. 232; Western Union Tel. Co. v. Comm., 110' Pa. St. 407; St. Claw v. Cox, 106 IT. S. 350.)
    The legislature may impose a license tax in addition to other taxes. (Constitution, Art. XII, Sec. 1; State v. French, 17 Mont. 54; Scottish Union & Nat’l Ins. Cov. Herrioit (Iowa), 80 N. W. 668; Pembina Consol. S. M. & M. Co. v. Pennsylvania, 125 IJ. S. 181; Cooley on Taxation (1st Eld.), pp. 385, 386; .Cooley .on Taxation (2d Ed.), pp-. 571, 573, and cases cited in notes 1 and 2 on page .573; People v. State Treasurer, 31 Mich. 6; People v. Thurber, 13 Ill. 554.)
    The last sentence of Section 681, though void, in no- manner affects the validity of the remainder of the section. (Ball v. Ridge Copper Co., 118 Mich. 7, 76 N. W. 130; State v. Stuht, 52 Neb. 209, 71 N. W. 941; State v. F. &-M. Co., 59 Neb. 1, 80 N. W. 52; Scott v. Flowers (Neb.), 85 N. W. 857; In re Assessment, etc. (S.-D.), 54 N. W. 818; People v. Creery, 34 Cal. 451; Dwyer v. Parker, 115 Cal. 544; People v. Whyler, 41 Cal. 351; Higgins v. Ricker, 47 Texas, 405; State v. Duluth

      Gas & Water Go., 78 N. W. 1082; Gity of Dubuque v. O. D. & M. B. Go., 47 Iowa, 216.)
    The power of tbe judiciary to declare a statute unconstitutional should never be exerted except where the conflict between it and the constitution is palpable and incapable of reconciliation. (Stockton, etc. Go. v. Stockton, 41 Cal. 147.)
    A reasonable doubt as to the constitutionality of a statute will be resolved in favor of its validity. (University of California v. Bernard, 57 Oal. 612; Young v. Salt Lake Gity (Utah), 67 Pac. 1066.

      Messrs. Toole <& Bach, and Mr. M. S. Gunn, for Respondent.
    The concluding sentence of Section 681 clearly exempts the personal property of insurance companies and corporations from taxation in violation of the provisions of Sections 1 and 7 of Article XII of the Constitution of this state. (Ins. Go. v. French, 80 N. W. 660; State v. Poynter, 81 N. W. 431.)
    The invalidity of the last sentence of said section has the effect of rendering the entire section invalid. (State v. Poyn-ter (Neb.), 81 N. W. 431; Cooley on Const. Lim., 5th Ed., pp. 213, 214; Pollock v. Farmers’ L. & T. Go., 158 U. S. 601-635; Warren v. Mayor, 2 Gray, 84-89; Jones v. Jones, 104 N. Y. 235; Wills v. Austin; 53 Cal. 152-179; Allen v. Louisiana, 103 U. S. 84; Sutherland on Stat. Const., Secs. 176-180.) '
    Appellant’s contention that the section under consideration provides for the taxation of a franchise within the meaning of the term as used in Section 17 of Article XII of the Constitution, and is therefore a property tax, is clearly erroneous. (State v. French, 17 Mont. 54; State v. Minn. T. M. Go., 41 N. IF. 1020; Bx parte Cohn, 13 Nev. 424; Atlanta N. B. & L. A. v. Steicart, 35 S. W. 73; Scottish, etc. Ins. Go. v. Ilerriott, 77 Am. St. Rep. 548; Walker v. Gity of Spring-field, 94 Ill. 364; Thompson on Corporations, Sec. 5560; Boyall v. Virginia, 116 U. S. 572; License Tax Gases, 5 Wall. 462-471; People v. Martin, 60 Cal. 153; State v. Gamp Sing, 18 Mont. 128.)

      Section 681 is unconstitutional for tbe reason that it provides for tbe taxation of tbe “excess of premiums” whether tbe money is in or out of tbe state on the first Monday of March, whereas there is no authority to tax any other personal property unless the same is within the state at 12 o’clock M. on that day. (Political Code, Secs. 3700, 3701; Board-of Bounty Commissioners v., Wilson (Colo.), 24 Pac. 563; Graham v. Board of County Comrs, 2 Pac. 549; Cooley on Taxation, 2d Ed., pp. 354-355; Ciarle v. Norton, 49 N. T. 243; Overvng v. Foote, 65 N. T. 263; People v. Kohl, 40 C'al. 127; St. Louis v. Ferry Co., 11 Wall 423; People v. Equitable Trust Co., 96 N. Y. 387; Maxwell v. People, 59 N. E. 1101; Pennsylvania v. Standard Oil Co., 101 Pa. St. 119; Ferry Co. v. Pennsylvania, 114 II. S. 196; C’ooley on Taxation, 2d Ed., p. 352; Bailey v. Board of Assessors, 11 So. 93; Met. Life Ins. Co-, v. Mayor, etc., 40 Atl. 573; Village of Howell v. Gordon, 86 N. W. 1042.).
   ME. COMMISSIONER POORMAN

prepared the opinion for the court.

This action was commenced in the district court on the 21st day of May, 1902, by the filing of an agreed case, and was instituted for the purpose of determining the validity of a tax claimed to be due from the plaintiff to the defendant “upon the excess of premiums received over losses and ordinary expenses incurred within the state” during the previous year. The name of the plaintiff expresses the character of business transacted. Judgment was rendered for plaintiff, and from this judgment defendant appeals.

The agreed case complies with the provisions of Section 2050 et seq. of the Code of Civil Procedure, and the record shows that all steps have been taken and all proceedings had necessary t(. present for determination the questions involved in the error assigned. The points of controversy upon which the decision of the supreme court is asked are as follows: (1) Does Section 681 of the Civil Code of the state of Montana apply to foreign mutual life insurance companies ? (2) Is any authority given by said Section 681 to assess taxes against a foreign mutual life insurance company? (3) Has said Section 681 been repealed, or is it still in force ? (4) Is said Section 681 constitutional ?

Section 681 of the Civil Code reads as follows: “Each and exery insurance corporation or company transacting business in this state must be taxed upon the excess of premiums received over losses and ordinary expenses incurred within the state during the year previous to the year of listing in the county where the agent conducts the business, properly proportioned by the corporation or company at the same rate that all other personal property is taxed, and the agent shall render the list, and be personally liable for the tax; and if he refuse to. render the list or to make affidavit that the same is correct, to the best of his knowledge and belief, the amount may be assessed according to the best knowledge and discretion of the assessor. Insurance companies and corporations are subject to no other taxation under the laws of this state, except taxes on real estate and the fees imposed by law.”

1. Does this provision apply to foreign life insurance companies? This section is a part of Chapter I, Title IV, Part IV, Division I, of the'Civil Code, and is entitled “Stock and Mutual Insurance Corporations.” The agreed case contains the statement that the respondent was doing the business of a foreign mutual life insurance company. Sections 650 to 668, both inclusive, of this chapter, provide for the formation and regulation of domestic mutual insurance companies. Sections 669 to 680, inclusive, apply to foreign insurance companies and societies. Section 681, as will be seen, applies to “each and every insurance corporation or company transacting business in this state.” The conclusion must be that it was the intention of the legislature to extend the provisions of this latter section to insurance companies doing business of the character specified in'the agreed case.

2 and 3. Section 1 of Article XII of tbe-State Constitution reads: “Tbe necessaray revenue for tbe support' and maintenance of tbe state shall be provided by tbe legislative assembly, wbicb shall levy a uniform rate of assessment and taxation, and shall prescribe such regulations, as shall secure a just valuation for taxation of all property, except that specially provided for in this article. Tbe legislative assembly may also impose a license tax, both upon persons and upon corporations doing business in tbe state.” Two schemes or systems of taxation are recognized by this section — a property tax and a license tax. Authority is also- given by this section for the coexistence of both of these systems of taxation with reference to the same person or corporation. The two systems are not mutually dependent. Each is independent of the other, and the existence of one is not a bar to the imposition of the other. Nor is it necessary that the license system should be employed only as a police supervision or regulation. The constitution confers upon the legislature the authority to employ both systems of taxation in the exercise of its duty to provide “the necessary revenue for the support and maintenance of the state.” No limitation is placed upon the purposes for which the license system may be employed, and it may be- resorted to for the purposes of revenue, or for the purposes of regulation, or for both of such purposes, in the discretion and wisdom of the legislative will. (State v. Camp Sing, 18 Mont. 128, 44 Pac. 516, 32 L. R. A. 635, 56 Am. St. Rep. 551; State ex rel. Sam Toi v. French, 17 Mont. 54, 41 Pac. 1078, 30 L. R. A. 415.) The justice of the license system of taxation for any other purposes than those of police supervision and regulation has many times been called in question, but this is a matter for legislative determination.

Section 7 of this Article of the Constitution provides that “all corporations in this state; or doing business therein, shall be subject to taxation * * *■ on real and personal property owned or used by them.” Section, 11 of the same Article provides that taxes shall be “uniform upon the same class of subjects.” Section II of tbe same Article reads: “The word ‘property’ as used in this Article is hereby declared to include moneys, credits, bonds, stocks, franchises and all matters and things (real, personal and mixed) capable of private ownership, but this shall not be construed so as to authorize the taxation of the stocks of any company or corporation when the property of such company or corporation represented by such stocks is within the state and has been taxed.” This latter section, in its definition of that which may be made subject to taxation, is sufficiently comprehensive to include all matters and things, visible and invisible, tangible and intangible, corporeal and incorporeal, capable of private ownership.

The provisions of the section of the statute under consideration apply indiscriminately to “each and every insurance corporation or company transacting business in this state.” This includes domestic, as well as foreign, insurance companies. The law is therefore “uniform upon the same class of subjects.” The legislature- has the right to prescribe reasonable terms upon which foreign corporations may do business in this state. (Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 351; Southern B. & L. Association v. Norman, 98 Ky. 294, 32 S. W. 952; Scottish U. & N. Ins. Co. v. Herriott, 109 Iowa, 606, 80 N. W. 665, 77 Am. St. Rep. 548.) The character, kind and amount of business done by the company, as well as the situs of its tangible property, may be considered in applying the various systems of taxation.

The franchise of a corporation is granted by the jurisdiction where the company is incorporated, and its situs is in the state or country of its origin; but before the company can do business in this state it must comply'with the terms of the statute relating thereto, and upon such compliance a certificate of authority is issued to it. It then stands, -under this law, on the same footing with domestic companies, and is subject to the same taxation on the same class of property. This certificate of authority issued to a foreign insurance company confers upon such - company a privilege or right not possessed or en■joyed by'citizens generally, and not conferred upon it by its original franchise. Tbis right or privilege so conferred is in that sense a franchise, and by it the company is authorized to establish, conduct, and maintain an insurance business, the value of which is ascertained in the manner prescribed by statute; that is, “the excess of premiums over losses and ordinary expenses incurred.” It applies only to business transacted within the state, and is not objectionable as interfering with interstate commerce. “ 'Business done within this state’ cannot be made to mean business done between that state and other states.” (Pacific Express Co. v. Seibert, 142 U. S. 339, 12 Sup. Ct. 250, 35 L. Ed. 1035.) The situs of the business done is therefore» within the state. Though the' company may transact a large business, yet the expenses and losses may equal or exceed the amount received. In that event the company pays no taxes. The method adopted by the statute of ascertaining the value of the privilege or right granted to the company is eminently a fair one, for the reason that it seeks to make only the net proceeds or profits the measure of value; and the taxes imposed by this statute are not a fixed or arbitrary amount, but are determined at the same rate that all other personal property is taxed.

Judge Cooley, in considering the subject of taxing business and privileges, says: “And what is true of property is true of privileges and occupations also; the state may tax all, or it may select for taxation certain classes.” (Cooley on taxation, 2d. E!d., page 570.) Further on he says: “Taxes, which are most customary are: (1) 0:n the privilege of carrying on the business. (2) On the amount of business done. (3) On the gross profits of the business. (4) On the net profits or profits divided. * * * It has been seen that it is no conclusive objection to any such tax that it duplicates the burden to the person who pays it. To tax a merchant upon his stock as property, and also upon his gross sales, may seem burdensome; but it is not unconstitutional, when the people have not seen fit expressly to forbid it. The two tases are not identical, and, though it may operate unjustly in individual cases to impose both, such will not be a necessary result.” (Cooley on Taxation, 2d Ed., page 571.) Again we find this language: “But licensé and tax do not necessarily go together; a license may be required when no tax is imposed, and an unconditional license does not exempt the licensee from being taxed upon the privilege it gives him. In this particular all valuable privileges stand upon the same footing; they are all liable to taxation at the will of the state, unless the state has bargained to exempt them. As is said in one case : ‘There is a clear distinction recognized between a license granted or required as ■ a condition precedent before a certain thing can be done, and a tax assessed on the business which that license may authorize one to engage in.’ * "" * The privilege obtained by the license inay therefore be taxed in consideration of the property value it possesses.” (Cooley on Taxation, 2d Ed., page 573.)

The nature of, the business transacted by an insurance company does not require it to have any tangible property within the state on the first Monday in March of each year, when property becomes liable for taxation. Tet its business is here; it owns or possesses the privilege pf doing that business within this state; and under the provisions of Section 681, supra, the business transacted must result in a profit to the company before taxes can be levied. If the privilege granted, which has the force and effect of a franchise, and is therefore property under the constitution, proves to be valuable, it is a proper subject for taxation within the meaning of Article XII of the State Constitution. Whether this is regarded as a tax upon the value of the franchise right of the company to do business in this state, measured by the net income, or as a tax on the business established and done, regarded as property separate from the money received as premiums, the value of which is measured by the same standard, is immaterial. The tax remains the same.

The Act of March 4, 1897 (Sess. Laws 1897, p. 76), is a general license law, relating to insurance companies, both domestic and foreign, and applies to all classes and kinds of insurance. The fee therein required must be paid prior to the transaction of any business. It is a fixed sum, varying in amount only at tbe will of tbe company as to the amount of premiums it asks permission to1 collect, is not diminished by reason of losses paid or expenses incurred, and a violation of the Act is punishable by fine and imprisonment. This Act does not in express terms repeal Section 681, or that part of said section under which this tax is levied, and it is so dissimilar in its requirements that no rppeal by implication can be inferred. These considerations lead to the conclusion that the legislature of the state has an undoubted right to provide for the assessment and taxation of insurance companies as provided in Section 681 of the Civil Code, and that that part of said section relating to such assessment is not repealed by any subsequent enactment.

As supporting or discussing the general views herein expressed, we cite the following authorities: Cooley on Taxation, 2d Ed., 570 et seq.; Southern Building & Loan Association v. Norman, 98 Ky. 294, 32 S. W. 952; Scottish U. & N. Insurance Co. v. Harriott, 109 Iowa, 606, 80 N. W. 665, 17 Am. St. Pep. 548; Porter et al. v. Rock Island, etc. Railroad Co., 76 Ill. 561; People v. Equitable Trust Co., 96 N. Y. 387; People v. Home Insurance Co., 92 N. Y. 328; Western Union Tel. Co. v. State Board of Assessment, 80 Ala. 273, 60 Am. Rep. 99; U. S. Express Co. v. Ellyson et al., 28 Iowa, 370; Insurance Co. of North America v. Commonwealth, 87 Pa. 173, 30 Am. Rep. 352; Kittanning Coal Co. v. Commonwealth, 79 Pa. 100; Connecticut Mutual Life Ins. Co. v. Commonwealth, 133 Mass. 161.

4. It is next contended that Section 681 is in conflict with the state Constitution, and is therefore void. In investigating the history of the law for the discovery, if possible, by both intrinsic and extrinsic evidence, the intent of the legislature in enacting this section, we find that the section is practically the 'same as the first half of Section 37 of the Act of 1883 (Sess. Laws 1883, p. 83), and is incorporated in tbe Compiled Statutes of 1887 as Section 600, Fifth Division. The Act of 1883 was amended in 1885 (Sess. Laws 1885, p. 87), and was repealed in 1887 by Council Bill. No. 33, approved March 10, 1887; the section enacted in lieu of Section 37 being Section 1676, Fifth Division, Compiled Statutes of 1887. At the extraordinary session of 1887 all of “G. B. No. 33” was repealed by Blouse Bill No. 2, approved September 14, ,1887. (Extr. Sess. Laws 1887, p. 82.) “C. B. No. 33,” although entirely repealed by the Act of September 14, 1887, is included in the Compiled Statutes of 1887 as Sections 1665 to 1789, both inclusive. Section 681, supra, was not an existing law at the time of the adoption of the Code, within the meaning of Section 4653 of the Civil Code, and was not law until made so by the adoption of the Codes in 1895. It must therefore be construed as an original Act of the legislature of that year.

Section 7 of Article XII of the Constitution provides, among other things, that “the power to tax corporations or corporate property shall never be relinquished or suspended.” The evident meaning of this constitutional provision is that the property of corporations shall bear its equal share of the burdens of taxation, and that the provisions of Section 1 of this Article of the Constitution, that the legislature “shall prescribe such regulations as shall secure a just valuation for taxation of all property,” applies to artificial as. well as to natural persons. Said Section 681, after providing for the taxation of insurance companies on the excess of premiums over losses and expenses, contains another sentence which reads : “Insurance companies and corporations are subject to no other taxation under the laws of this state, except taxes on real estate and the fees imposed by law.” Under this latter provision an insurance company may be the owner of a vast amount of personal property situated within this state, on which it cannot be taxed, because the same cannot be classified under the head of “excess premiums,” whether the term “excess premiums” means surplus money or the value of the company’s franchise or business regarded as property. -This part of the section is so> directly in contravention of the provisions of tbe Constitution above qrioted that further comment is unnecessary. Such statutes have been held void under similar constitutional provisions in the following cases: State ex rel. Cornell v. Poynter, 59 Neb. 417, 81 N. W. 431; Hawkeye Ins. Co. v. French, 109 Iowa, 585, 80 N. W. 660; People v. McCreery, 34 Cal. 432; People v. Whyler, 41 Cal. 351.

The remaining part of this section is not invalid, as conflicting with the organic law, unless made so by the unconstitutionality of the clause above considered. The effect of the conclusion reached with reference to the exemption clause of this section, upon the section as a whole, and the chapter of which it is a part, remains to be considered. “When the valid and invalid portions of the legislative enactment are capable of being separated, and the valid part is a complete act, and not dependent upon, that which is void, the latter alone will-be-rejected, and the rest sustained, if it is manifest that the void part was not an inducement to the legislature to pass the part which is valid; but if it is manifest, from an inspection of the law itself, that the invalid portion formed an inducement to its passage, the entire act will fall.” This rule of construction has been so- long recognized and so universally applied that it is now regarded as elementary law. (State ex rel. Cornell v. Poynter, 59 Neb. 417, 81 N. W. 431; Warren v. Mayor, etc. of Charlestown, 2 Gray, 84; Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601, 15 Sup. Ct. 912, 39 L. Ed. 1108.) In the application of this rule, however, the court must take into--consideration the various provisions of the organic law of the land where the statute is sought to be enforced.

The Constitution prescribes the duties of the various coordinate departments of the state government. Each department is supreme within its proper sphere, and is subordinate only to the provisions- of the organic act, which the people have adopted as the fundamental law, and the laws enacted in pursuance thereof. To the legislative department is delegated the duty of providing the necessary revenue for the support of the state; and it is provided that the legislature shall provide this revenue, shall levy a uniform rate of taxation, shall prescribe such regulations as shall secure a just valuation of all property unless otherwise provided (Section 1, Art. Nil, Const), that the-power to tax corporations and corporate property shall never be relinquished or suspended (Section 7, Art. Nil), and taxes shall be' uniform upon the same class of subjects (Section 11, Art. Nil). These provisions of the Constitution are mandatory. (Section 29, Art. III.) It was the plain duty of the legislature to provide for the assessment and taxation of all the property of corporations situated within this state, as the word “property” is defined by the Constitution itself. (Section 17, Art. NIL)

The first part of this section (681) is a complete enactment within itself, without reference to the second part, and does not depend for its validity upon the second part, unless that was the inducement or compensation for the enactment of the first part of- the section. In the enactment of the first part of this section the legislature provided for the taxation of a certain class of property, and provided a method of ascertaining its value. This was in accordance with constitutional provisions. In the last part of the section the legislautre exempted certain other property from taxation. This was in contravention of constitutional provisions. Can this disregard of the Constitution in the one instance be a sufficient inducement and compensation to render invalid and unconstitutional the obedience to the Constitution in the other instance ? Can a duty properly performed and completed with reference to one class of property be invalidated by a disregard of duty with reference to another class of property belonging to the same individual ? If the matter of taxation were solely one of legislative discretion, not controlled as to duty of action and uniformity of levy and assessment by constitutional provisions, an exemption of one class or item of property might have the effect of an “inducement” or “compensation” for the taxation of another class or item, without wliieb “inducement” or “compensation” tlie law would not bave been enacted at all. But here tbe fundamental law of the state commands action as to all property. The legislative inducement to this action is the constitutional command requiring it, and the necessity of providing a revenue for the support, and maintenance of the state. The legislative compensation is duty performed and the protection and support of the state. The consent of the taxpayer is not necessary to the validity of a revenue law. The inducement or compensation which actuates him to pay the tax does not rest upon the exemption of a part of his property from taxation.. That which induces the individual to pay taxes is not only his sense of duty, but the further fact that the law compels him to pay it. His compensation is the protection he receives from the state, which the tax he pays helps to support.

One of the cases chiefly relied upon by respondent is State ex rel. Cornell v. Pointer, 59 Neb. 417, 81 N. W. 431. In this case the Supreme Court of Nebraska had under consideration the constitutionality of an Act of the legislature providing for the organization, incorporation and taxing of insurance companies, and for their admission from other states. Sections 36 and 3Y of the Act were the only ones Avhich provided for the payment of taxes, filing fees, and licenses by the corporations. These sections contained provisions similar to thqt 'found in the exemption clause of Section 681 of our Civil Code; but an examination of this Act of the Nebraska legislature will disclose the fact that its termes are somewhat different from that of the section of the Civil Code now. under consideration. The court, in passing upon the case, says: “Section 36, Chapter 4Y, Session Laws 1899, provides that each domestic insurance company organized under said law shall be taxed upon the excess of premiums over losses and ordinary expenses incurred in the state during the preceding year, in the county where the agent conducts the business, properly apportioned by the company, at the same rate other personalty is taxed, and that the fees and taxes specified in said section shall be in lieu of all fees and taxes, excepting those upon real estate and other taxes provided in the general revenue law; while by Section 87 * * every other state insurance company shall pay certain fees, and in addition two per cent, of their gross premiums, into the state treasury, and that the same ‘shall be in full of all fees and taxes, except taxes on real estate, which may be imposed by any county, municipality or the stated By these two sections all insurance companies are not taxed alike.” The court then holds that 'Sections 36 and 37 are unconstitutional, for the reason that they exempt property from taxation, and for the further reason that they violate the uniformity clause of the Nebraska constitution with reference to taxation. The court further holds that the entire Act of which these sections are a part is void, for the reason “it requires no argument to demonstrate that Chapter 47 of the Laws of 1899 would not have received the approval of the Legislature, had it not contained any pro-provision for the payment of fees and taxes by the insurance companies; and it is equally plain that the same amount of fees and taxes imposed by Sections 36 and 37, and the requirement that the same should be paid into the state treasury, would not have been incorporated into' the law, had the unconstitutional provisions exempting insurance companies from taxation been eliminated from the bill.”

It will be noticed that this Nebraska statute provided in part for the payment of a fixed sum to be levied and paid, without reference to the value of the companies’ business, that it provided for the levy of taxes- which were unequal between the two classes of insurance companies, that it also provided for the filing fees to be paid by the companies and for the payment of license by the companies^ and that the provisions respecting all these various taxes and fees were so united as to constitute an entity; and the court therefore held that the entire sections were void, and that the Act of which they were a part must necessarily be void, for the reason that it was apparent that the legislature did not intend to wholly exempt insurance companies from the payment of taxes. In the section of the law now before us there is no commingling of different systems of taxation, nor is there any fixed or arbitrary amount of taxes named. The uniformity. clause of the Constitution is not violated.

In Slauson et al. v. City of Racine, 13 Wis. 398, certain lands were .annexed' to the city.of Hacine under a provision that they should be exempt from a certain tax; and the court held that this exemption was void,. and that, it appearing that that was the condition on which the lands were annexed to .the city, the entire Act providing for their annexation was void.

The exemption in this case was clearly an inducement to the parties owning the lands to permit them to be brought within a-jurisdiction, and make them subject to ordinances, regulations and bur dens, which they did not bear before.

. In State v. Duluth Gas & Water Co., 76 Minn. 96, 78 N. W. 1032, 57 L. R. A. 63, the court, in considering a statute providing for the listing and assessing for taxation of franchises and other intangible property of certain corporations, held that the provision of the section deducting the total amount of indebtedness of a corporation from the value of its stock was unconstitutional and void, but that the same did not invalidate the remaining part of the Act. The court says, in part: “Again, while it' cannot be denied that the legislature intended the provision for deducting the indebtedness from the value of the capital stock to be a part of the system of listing and assessing the property of these corporations, * * * yet this, provision is -easily separable from other* provisions of this section. What would remain would constitute a complete system of taxation, fully capable of - being executed in accordance with what we think was the apparent legislative intent. The fact that this Void provision is in the same section with other provisions is not important, for the distribution into sections is purely arbitrary. The test is, rather, whether the provisions • are so essentially and inseparably connected and interdependent that the one may not operate without the other, or that it is impossible to suppose that the legislature would have passed the one without the other. There' is no such essential and inseparable connection or 'interpendency in tbis case. The other provisions will operate,' and can be executed, with this invalid provision stricken out. Neither is there anything to justify a court in'holding that the legislature would not have enacted the statute with this obnoxious provision omitted. The evident intention was to reach for taxation the franchises and other intangible property of these corporations and associations as effectually and completely as possible.”

We also cite the following cases where revenue laws have been held valid after the unconstitutional provisions attempting to exempt certain property from taxation were eliminated: People v. McCreery, 34 Cal. 432; People v. Whyler, 41 Cal. 351; City of Dubuque v. C. D. & M. R. Co., 47 Iowa, 216.

It is a fundamental rule that a reasonable doubt as to the constitutionality of a statute will be resolved in favor of its validity, and that the judiciary will not declare an A‘et of the legislature unconstitutional unless it is clear that such Act is inhibited by the fundamental law. (University of California v. Bernard, 57 Cal. 612; Young v. City, 24 Utah, 321, 67 Pac. 1066; Stale ex rel. Cornell v. Poynter, supra; Western Ranches v. Custer County, 28 Mont. 278, 72 Pac. 659.) This section was' incorporated in the general codification of the laws adopted in 1895, and it is reasonable to infer that it did not receive that specific consideration it would have received, had it been a part of a separate bill. Certainly no inference can be entertained that the legislature intended to enact a provision inhibited by the Constitution, nor can it be maintained that an excessive tax has been imposed or levied on one class of property as an inducement for the exemption of another class, for the reason that no such authority is given or recognized by the Constitution, and for the further reason that in this case no excessive tax is imposed or levied. This property is taxed “at the same rate that other personal property is taxed.” The conclusion reached is that the part of Section 681 of the Civil Code providing for a tax “upon the excess of premiums received over losses and ordinary expenses incurred within the state” is not rendered inapplicable to foreign mutual life insurance companies, unconstitutional, nor void, by reason of tbe unconstitutionality of tbat part of tbe same section exempting other property from taxation.

Tbe other queries enumerated in tbe transcript are not discussed in tbe briefs, and are not noticed therein, except to be waived by appellant by reason of tbe decision in Mutual Life Insurance Co. v. Martien, 27 Mont. 437, 71 Pac. 470, decided since tbe commencement of this action.

Tbe county of Lewis and Clarke being made tbe party deu fendant by stipulation, we have assumed, without deciding, tbat it is tbe proper party" against whom tbe action should have been brought.

Under tbe views herein expressed, we are of tbe opinion that, omitting tbe last sentence, Section 681 of tbe Civil Code is constitutional, has not been repealed, and does apply to foreign mutual life insurance companies doing business in this state. But tbe right to enforce the collection of this tax at the time this suit was commenced was dependent on tbe authority conferred by Section 3940 of tbe Political Code; and, as this section has been declared unconstitutional in tbe case above cited, it follows tbat there was no- authority vested in any officer or party in tbe county where tbe suit was instituted to collect this tax at that time, and tbat under tbe agreed case tbe plaintiff was entitled to a judgment in its favor for its costs.

We recommend tbat tbe cause be remanded, with directions to the district court to modify tbe judgment in accordance with tbe views herein expressed, and, when so modified, that it be affirmed.

Per Curiam:. — For tbe reasons given in tbe foregoing opinion, it is ordered that this cause be remanded to tbe district court, with directions to enter judgment in accordance with tbe views therein expressed, and, upon tbe entry of the judgment as modified, the judgment appealed from be affirmed.

Rehearing denied October 9, 1903.

Me. Justice MilbueN:

I concur; but I do- not agree with all that is said as to the intention of the legislature at the time it passed the said Section 681. I am not convinced that the legislature was not induced to put the income tax provided for in said sectioii upon the companies in consideration of their being made “subject to no other taxation under the laws-of this state, except taxes on real estate and the fees imposed by law.” I am in doubt, and I think reasonable, as to whether the unconstitutional sentence was ’the inducement for the taxing of the income; that is, “the excess of premiums received over losses and ordinary expenses,” etc. Having such a doubt, I do not hold the statute unconstitutional. (Young v. Salt Lake City, 24 Utah, 321, 67 Pac. 1066, citing many eases; People ex rel. Robertson v. Van Gaskin, 5 Mont. 352, 6 Pac. 30.)


author: MR. JUSTICE HOLLOWAY,

text:
    LAWRENCE, Respondent, v. WESTLAKE et al., Defendants; ANNA M. WESTLAKE, Appellant.
    (No. 1,631.)
    (Submitted July 13. 1903.
    Decided July 18, 1903.)

      Trial — Instructions — Assuming Disputed Facts — Weight of Evidence — Error—Presumption of Prejudice — Misleading Instructions.

    1 In an action against alleged copartners on an account stated, etc., where the answer oí any one of the defendants denied the existence of any partnership, and also denied that plaintiff ever sold any goods to any copart-nership of which said defendant was a member, and the evidence was in irreconcilable conflict on both issues, an instruction that in such cases as the one at bar, where an action is brought by a third person against a Arm, less strictness of proof is required to show that a certain person was a co-partner than is required in an action by one partner against another, was error for assuming the existence both of a partnership and of a partnership liability.

      2. Under Code of Civil Procedure, Section 3890, which requires the judge on all proper occasions to charge the jury “that in civil cases the affirmative ' -of the issue must be proved, and when the evidence is contradictory the decision must be made according to the preponderance of the evidence/’ it was error to charge that, in actions against a firm by a third person,-, less ; strictness of proof was required to show partnership than is required in an action brought by one partner against another, preponderance of the evidence being required in both cases.
    3. Error being apparent, prejudice will be presumed.
    4. An instruction that “a partnership may be shown by the separate admission, acts, declarations, or conduct-of the parties, or by the acts of one, the declarations of another, and the acknowledgment or consent of a third,” standing alone, is liable to mislead. '
    • Appeal from District Court, Silver Boio County; John IAnd-say, Judge.

    ActioN by David Lawrence against Edward Westlake, A. W. Gratton, and Anna M. Westlake. Judgment for plaintiff. Erom an order denying a new trial, defendant Anna M. West-lake appeals.
    ^Reversed.
    STATEMENT OE THE CASE.
    Tbis action was commenced by tbe plaintiff, Lawrence, to recover tbe sum of $397.79 from tbe defendants, A. W. Grat-ton, Edward Westlake and Anna M. Westlake, on an account stated for goods, wares and merchandise sold and delivered to, and for money paid for the use and benefit of, such defendants between May, 1895, and January 1, 1896.
    It is alleged that tbe defendants were copartners, constituting a mining partnership. The complaint then alleges: “That thereafter, on or about the first day of January, 1896, at Butte, Montana, an account was stated between the plaintiff and the said defendants, and upon such statement a balance of three hundred and ninety-seven and 79-100 dollars ($397.79) was found due the plaintiff from tbe said defendants.”
    Tbe defendants Gratton and Edward Westlake made default. Tbe defendant Anna M. Westlake a'nswered, denying that she was ever associated with the defendants Gratton and Edward Westlake, or with either of them, as a copartner, or in working any mine or procuring any goods, or in transacting 'any business mentioned in the complaint. Tbe answer further denies that the plaintiff ever sold any goods to, or paid any money for, or that any account was ever stated with, or any amount ever found due from,- any copartnership of which the answering defendant was a member.
    Upon 'the trial the court gave the following instructions:
    “No. 14. You axe instructed that in such cases as the one at bar, where an action is brought by a third person against a copartnership to enforce a copartnership liability, less strictness of proof is required to show that a certain person was a copart-ner than is required to show partnership in cases brought by one partner against another.”
    “No. 15. You are instructed that a partnership may be shown by the separate admissions, acts, declarations, or conduct of the parties, or by the acts of one, the declarations of another, and the acknowledgment or consent of a third.”
    The jury returned a verdict in favor of the plaintiff for $201.98. From the order denying a new trial, the answering defendant appeals.

      Messrs. McBride & McBride, for Appellant.

      Mr. Bdwm 8. Booth, and Mr. Chas. Cf. Kohl, for Respondent.
   MR. JUSTICE HOLLOWAY,

after stating the case, delivered the opinion of the court.

Instruction No. 14 above is fatally defective.

1. The jury is told that this is an action brought by a third person against a copartnership to enforce a copartnership liability. One of the principal issues raised by the pleadings, and upon which the evidence is in irreconcilable conflict, was whether or not a copartnership- of which the answering defendant was a member had any existence in fact, and, if so-, whether there was any copartnership liability, and, notwithstanding this issue, both questions are determined by the court in its instructions, leaving the jury practically nothing to decide. The court ought not to assume the existence of a disputed state of facts.

In Territory v. Scott, 7 Mont. 407, 17 Pac. 627, this court said: “Where the evidence is clear and conclusive as to the existence of the particular fact, and there is evidence to the contrary, or where facts are admitted, an instruction assuming such facts as true will not work a reversal of the judgment; but if there is the least conflict in the evidence, or if the evidence is in any wise of a doubtful character, such ruling will be held erroneous. Caldwell v. Stephens, 57 Mo. 589-595; Barr v. Armstrong, 56 Mo. 577-588.” The rule is the same in civil as in criminal actions. (Collier v. Fitzpatrick, 19 Mont. 562, 48 Pac. 1103 ; Butte & Boston Mining Co. v. Societe Anonyme Des Mines De Lexington, 23 Mont. 177, 58 Pac. 111, 75 Am. St. Rep. 505.)

2. The Code establishes the law of this state respecting the subjects to which it relates. (Political Code, Sec. 4.) Section 3390, Code of Civil Procedure, among other things, provides: “The jury subject to the control of the court in the cases specified in this Code, are the judges of the effect or value of evidence addressed to them, except when it is. declared to be conclusive. They are, however, to be instructed by the court on all proper occasions: * * (5) That in civil cases the affirmative of the issue, must be proved, a.nd when the evidence is contradictory the decision must be made according to the preponderance of the evidence. * * *”

This section, then, is conclusive upon the quantum of evidence required in all such cases, whether it be an action by a third party against a copartnership, or by one partner against another, and the court was entirely wrong in saying that a different rule applies in one case from that in the other.

In an action by one partner against another, the utmost that can be required of the plaintiff is that he show by a fair preponderance of the evidence that the defendant is a member of the copartnership, and in an action by a third party against a copartnership nothing less will suffice. The rule is the same in either instance, and the instruction given could hardly fail to' mislead the jury to the prejudice of the answering defendant. In any event, error being apparent, prejudice will be presumed. (State v. Mason, 24 Mont. 340, 61 Pac. 861; Parrin v. Montana Central Ry. Co., 22 Mont. 290, 56 Pac. 315.)

As this cause must be reversed, attention is directed to instruction No. 15, supra. While the instruction, if rightfully understood, correctly states a legal principle, yet, standing alone, it is likely to be misunderstood by a jury, and should not bo given without explanation or elucidation. Instruction No. 16, given, repeats one of the errors found in instruction No-. 14.

We do not consider the question as to whether the complaint states a cause of action, or the question as to- whether the evidence is sufficient to show that an account was ever stated. This latter question, though involved in one of the assignments of error, is not presented by appellant in her brief.

The order appealed from is reversed, and the cause remanded with directions to the lower court to grant the answering defendant a new trial. i

Reversed and remanded.


author: MR CHIEF JUSTICE BRANTLY

text:
    DOTY, Appellant, v. McCLUSKY et al., Defendants; GRIFFIN, Intervener and Respondent.
    (No. 1,650.)
    (Submitted July 17, 1903.
    Decided July 20, 1903.)

      Appeal — Insufficient Record — Dismissal.
    On appeal by plaintiff from a judgment for intervener, where neither the order striking out plaintiff’s answer to the complaint in intervention, nor the one refusing him leave to file an answer, nor the one granting intervener’s motion for judgment on the -pleading, was in the record, alleged errors therein could not be reviewed.

      Appeal from District Court, Jefferson, County; M. H. Par-Jeer,-Judge.

    ..ActioN by James H. Doty against James McClusky and others. Daniel Griffin intervened. From a judgment in favor of intervener, plaintiff appeals.
    Dismissed.

      Mr. George F. Cowan, and Mr. T. T. Lyon, for Appellant.

      Mr. C. F. Kelley, and Mr. C. P. Cormolly, for Respondent.
   MR CHIEF JUSTICE BRANTLY

delivered the opinion of the court.

Plaintiff brought this action to compel the defendant Me-. Clusky to execute to him a deed to an undivided one-fourth interest in the Blue Bell quartz lode mining claim, situate in Jefferson county, to supply the place of a prior deed which had been lost before record. The defendants, Madsen, Christopher-son and Deitch, are alleged to be lessees of the plaintiff, and one John T. Murphy the owner of another interest in the claim, and were made parties defendant for the purpose of having them enjoined from paying to Murphy and McClusky royalties upon the ores extracted by them pending final judgment, which it is alleged they were doing when the action was commenced. Murphy is not a party. Griffin was permitted to intervene, and filed his complaint, denying the execution of the deed to plaintiff, and setting up' title in himself to the interest in controversy, under a deed executed and delivered to him by McClusky. The plaintiff has appealed from a judgment in favor of the inter-vener.

The record is very imperfect. The plaintiff relies for a reversal of the judgment upon alleged errors of the court in striking out his answer to the complaint in intervention, and subsequently, and upon an application for that purpose, refusing him leave to file an answer, and rendering judgment in favor of the intervener, after denying plaintiff a trial upon the issues arising upon tbe allegations of bis complaint and tbe denials thereof in tbe complaint of intervention.

If we could look to tbe statements of counsel in oral argument and in tbeir briefs for information as to wbat transpired during tbe proceedings in tbe district court, we should say that tbe judgment is undoubtedly void. The record, however, pre" sents nothing of which this court can take notice. It does not contain copies of tbe orders showing- tbe action taken by tbe district court in respect of any of the matters of which tbe appellant complains. Neither tbe order striking out plaintiff’s answer, nor the one denying him the right to file an answer, nor tbe one sustaining tbe defendant’s motion for judgment on.tbe pleadings, is found in tbe record. This court cannot, therefore, consider them, or undertake to revise tbe action of tbe court thereon. The appeal is therefore dismissed.

Dismissed.