author: Minshall, J.

text:
    Andres v. Morgan, Trustee.

      Members of a partnership — Form a corporation to continue business— Partnership property transferred to corporation — Debts of partnership become debts of corporation — -Member of firm assumes debt of partnership — Does not discharge firm debt — Changes in stockholders of incorporation do not affect liability-to creditors — Corporation liability as surety on note.

    x. The members of a partnership, engaged in the milling business, agreed among themselves to incorporate for the purpose of continuing the business as a corporation. The corporation was formed and each according to the agreement transferred his interest in the firm property to the corporation, receiving therefore an aliquot part of the capital stock equal to that held by him in the firm; all of the property of the firm being in this way transferred to the corporation: Held, that thedebts of the partnership became the debts of the corporation and it is liable therefor.
    2. In the case above stated, a member of the firm, in contemplation of the proposed change, agreed to assume and pay a debt of the firm to one of its creditors, in discharge of a debt of his to the firm. The creditor of the firm had no knowledge of this and never assented to it: Held, that this did not constitute a novation, nor, in any way, affect his rights as a creditor against the corporation.
    3. Changes in the stockholders of a corporation in no way affect its liability to its creditors. The stockholders of a corporation may wholly change, and the rights and liabilities of the corporation remain the same.
    4. Where the managing agent of a corporation executes a note in its name to secure a debt on which it is primarily liable to the creditor, but on which, as between it and a third person, signing the note, it is surety, the company is liable thereon, though no express authority had been given the agent to so execute the note.
    (Decided March 6, 1900.)
    Error to the Circuit Court of Jackson County.
    The suit below was brought by the plaintiff against the defendant, assignee of the Franklin Milling Company, an insolvent corporation, to compel the allowance of a claim held by him against the Company. The claim was for the amount due on a promissory note of $1,000 made January 1, 1896, due six months after date with interest, signed as follows:
    “Rufus Peters.
    Franklin Milling Company, “Per J. A. Long.”
    It was presented to the assignee and rejected. The gist of the answer is, that it is the note of Peters, and the name of the Company was signed thereto by Long, who was its general manager, without authority, and that there is no consideration for the note as to it.
    The plaintiff had judgment in the common pleas and the assignee appealed. It was there tried to the court, and, on request, it found and stated its conclusions of fact and law separately, and rendered judgment thereon for the defendant. The plaintiff in error claims that the conclusions of law are erroneous, and asks the reversal of The judgment and for judgment in his favor on the findings of fact. The findings of fact and law are as follows:
    “1. That for many years prior to April 9th, 1889, a partnership, known as the “Franklin Mill Company,” existed, composed of Rufus Peters who owned a one-fourth interest, Henry Hunsinger, who owned a one-fourth interest, Rufus Hunsinger, who owned a one-eighth interest, Thomas P. Sutherland, who owned a one-eighth interest, and Jacob A. Long, who owned one-eighth. The other one-eighth interest having been acquired by the partnership and owned by it.
    2. That on April 9th, 1889, a corporation composed of the members of the partnership was organiezd under the name of the “Franklin Milling Company,” in which each partner took stock in proportion to the interest he had owned in the partnership, with the addition of M. L. Sternberger, who not having been a member of the partnership subscribed for the one-eighth that had been owned in common by the members of the partnership amounting to $5,000.00.
    The interest in the partnership of each subscriber of stock was turned over to said corporation in payment for the stock subscribed.
    3. At the date of the organization of the corporation, the partnership conveyed all of its property, both real and personal to the corporation, including a “Flouring Mill,” “Woolen Factory,” two houses and lots adjoining the same and two lots in the city of Wellston, Ohio; that said corporation was formed for the purpose of continuing the business in which the partnership had before that time been engaged.
    4. The stock subscribed by M. L. Sternberger was held by him one year when he elected to and did surrender the same to the corporation which after-wards held the same as company property until the assignment was made.
    5. At the time of the reorganization, April 9th, 1889, the partnership was indebted in the sum of about $20,000, among its creditors of which was the plaintiff, Eliza Burk, Ger shorn David, James Hatton and others.
    A short time previous to organization of the corporation an assessment was made among the members of the firm of $1,000.00 to the share of one-eighth, aggregating $7,000.00, to be applied upon the indebtedness. The balance of the indebtedness was over and above this $7,000.00 was carried by the corporation and renewed from year to year, and a large portion of it comprised the indebtedness at the time of the assignment.
    At the time of the assignment of the $7,000.00 upon the members of the partnership, Rufus Peters, who owned one-fourth interest in the partnership, was assessed the sum of $2,000. „ He not having the money to pay his part of the assessment agreed, with the other members of the partnership to assume the payment of the debt to the plaintiff amounting to $2,000.00, and that subsequent to the reorganization, plaintiff sent his note to the Iron Bank of Jackson, Ohio, for payment of principal and interest, and that the interest was paid annually and portions of the principal by said corporation which immediately charged such payments to said Rufus Peters and deducted the same from his salary due him from said corporation; that said payments reduced the plaintiff’s claim to the sum of $1,000.00, which was evidenced by a promissory note payable to the order of the plaintiff, bearing the signatures of Rufus Peters and the “Franklin Milling Company,” which upon the payment of accruing interest was renewed from time to time in the same form until the execution of the note set forth in the petition which, last named note remains unpaid.
    7. That Thomas P. Sutherland was president of the corporation for a portion of the time that the renewals of the indebtedness to the plaintiff were being made, and J. A. Long was the secretary thereof, and that said Sutherland was the financial agent and manager of said corporation at all times till his death, which occurred in March, 1896, that said renewals were made by J. A. Long as secretary of said corporation at the request and order of said Sutherland down to and including the note in suit, but that no resolution of the board of directors of said corporation or by-laws of the same in any way authorized the signing of commercial paper of any kind or character by the officers or agents of said corporation.
    8. That the notes as renewed from time to time were sent by plaintiff to Thomas P. Sutherland who was president of the Iron Bank of Jackson for collection of the interest and for such portions of the principal as were paid thereon, and said Sutherland paid the interest thereon acting for the corporation, the “Franklin Milling Company,” together with the sums by which the principal was reduced, and sent to the plaintiff from time to time renewals for the amount still due said plaintiff, Said renewals being signed as heretofore found, and charged such amounts upon the books of the corporation against the salary of Rufus Peters.
    9. At the time, or shortly after the organization of the corporation, J. Fhls Evans became a member of the corporation, having purchased a portion of the stock of Rufus Peters, for which he paid the sum of $500.00, he still owing the said Peters the sum of $500.00 thereon at the time of the assignment.
    10. That the liabilities of the partnership were treated by the corporation as debts of the corporation and in renewing the partnership liabilities the corporation treated them in the same way as liabilities of the corporation made after the incorporation; and that the transactions of Sutherland with the plaintiff in causing the notes to be renewed, were well known to all the stockholders of the corporation save M. L. Sternberger.
    The renewal notes having been signed by the partnership name during the time he was a subscriber to the stock of the corpration. The plaintiff, Jacob S. Andres had not been for twenty years in the county of Jackson, nor did he have any knowledge whatever of the incorporation of the “Franklin Milling Company,” nor of any of the contracts, agreements or arrangements by .and between the partnership and the corporation or of any of the agreements or contracts by and between any of the members of the partnership or corporation, nor of the fact that said Peters had agreed to assume or pay his said claim, nor did the plaintiff give credit to the corporation, but looked to the firm for his loan. And the court coming now to state its conclusions of law from the facts so found and above set forth, it is considered by the court:

      1. That said corporation had no authority to sign said note, and that the signing thereof in the way and manner set forth in the finding of facts was “ultra vires.”
    2. That said note is not the liability of said corporation.

      J. M. McGillwray, for plaintiff in error.
    The one fact controlling in this case, which must be ever kept in mind, but which must have been overlooked by the circuit court, is, that when the corporation received the partnership assets — stepped into its shoes, as it were — the partnership was indebted to plaintiff in the sum of f>2,000.00, evidenced by its outstanding promissory note.
    Consent is a necessary element in a contract of novation. Bouv. Law Diet.; Tit. Novation; 16 Am. & Eng. Enc. Law, 867; Wood v. Pugh, 7 Ohio, pt. 2, 156; Bacon v. Daniels, 37 Ohio St., 279. And a novation is never presumed. 16 Am. & Eng. Enc. Law, 868.
    Therefore, when the corporation took the place of the partnership and assumed' its debts, it assumed that of the plaintiff, for the very simple reason that the contract with Peters did not make it his debt, as between plaintiff and the partnership. '
    There can be no difference between a lack of value in an interest in a partnership turned over to a corporation in payment for some of its capital stock because of an overestimate of partnership property and that one of the partners who subscribed for stock was indebted to or for the corporation in such sum as to materially reduce the value of his interest. Gates, Admr., v. The Tippecanoe Stone Co., 57 Ohio St., 60, this does not conflict with Bank v. Trebein, 59 Ohio St., 316.
    The contract of a corporation is presumed to be intra vires until the contrary is made to appear. Bank v. Flour Co., 41 Ohio St., 557; Express Co. v. The R. R. Co., 99 U. S., 101.
    And this, being a trading corporation, was possessed of general authority to execute notes. Hays v. Cas Light Co., 29 Ohio St., 330; Burt v. Rattle, 31 Ohio St., 116.
    And this includes mill companies. Smith v. The Eureka Mill Co., 6 Cal., 1.
    And it is not necessary that express authority should have been given. Bank v. Gas Light Co., 159 Mass., 506.
    . There is no finding that the corporation did not assume and agree to pay plaintiff’s claim; that it was excepted from the debts of the partnership outstanding at the date of the reorganization; that any contract or arrangement was made between the partnership and corporation in any way affecting it, unless in the general agreement of assumption, and inasmuch as the fact of transferring individual or partnership property raises a strong inference of assumption of debts, the failure to find against the assumption leaves the inference stand. Savings Co. v. Saw Co., 104 Mo., 425.
    Our contention is that the doctrine of ultra vires and estoppel cannot apply; but if, as found by the circuit court, the corporation lacked authority to make the note, our answer is, the matter of making a note is within the corporate power. Hays v. The Gas Light Co., 29 Ohio St., 330; Burt v. Rattle, 31 Ohio St., 116.
    And then the rule is — The doctrine of estoppel applies to a trading corporation the same as a neutral person in all transactions within its co-operate authority. Bank v. Flour Co., 41 Ohio St., 552.
    The acts of the corporation in paying interest on plaintiff’s note for seven years and in reducing the principal from two to one thousand dollars, was a full and complete ratification of the acts of Sutherland and Long in making the notes and carrying the debt. Taylor on Corporations, Sections 269-272; Supervisors v. Schenck, 72 U. S., 772; Cace Mnfg. Co. v. Soxman, 138 U. S., 431.

      T. A. Jones, for defendant in error.
    There was no connection whatever between the plaintiff and the corporation. His original loan was to the partnership; he did not even know of the existence of the corporation; between plaintiff and the corporation there was no transaction whereby the shadow of a consideration existed. In the language of the finding of facts the plaintiff did not “give credit to the corporation, but looked to the firm for his loan.” Bank v. Flour Co., supra; Park Bank v. German-American M. W. & S. Co., 116 N. Y., 281; Fox v.Rural Home Co., 90 Hun., 635; Bank v. Wells, 79 N. Y., 498; Davis v. Railway Co., 131 Mass., 258; Morowitz Corp., Sec. 232.
   Minshall, J.

The facts disclose that the corporation was formed by the incorporation of the members comprising a partnership. The change was from a partnership to a corporation. The latter took all the property of the partnership. This was accomplished by the members of the firm on the formation of the corporation, transferring their respective interests in the partnership to it, and receiving a like interest in the capital stock of the company in consideration of the transfer. The members of the partnership may be said to have simply put on a new coat. The stock seems to have been divided into interests or shares of one-eighth. The members of the. partnership having seven-eighths and holding one-eighth in common; or which is more to the purpose, each one-eighth held by the former members of the firm, represented, in the capital of the company, one-eighth plus one fifty-sixth of the capital stock, since the capital was all owned by those who formed the partnership. On this state of case it is very clear that the corporation was liable for this debt, whether it had expressly assumed the indebtedness of the partnership or not. It is not to be regarded as an ordinary sale of property by one to another. A partnership is a quasi legal entity. It owns property and has liabilities as such. Its creditors have a right to the payment of their claims from the partnership assets in preference to individual creditors, and have in equity a lien on the assets of the firm, that may be worked out through the partners. So that, Avhen the partners transferred all the property of the firm to the company, the partnership was dissolved and the rights of its creditors followed the partners and the property into the corporation, and it was bound to discharge the debts of the partnership, having received the property of the partnership on which it had obtained credit. It could not retain the property and repudiate the liability.

All that the corporation paid for the property transferred to it was the stock issued in exchange — simply a metamorphosis of a partnership into a corporation, without any change of individuals, and unless it assumed the payment of the debts of the firm, there Avas no consideration for the transfer of the property — for the stock AAdthout the property represented nothing and was worth nothing. That a corporation could be formed and, with its capital, purchase a partnership and its business without, being liable for its debts unless expressly assumed, is not doubted; but this is not such a case. This is like the case of Reed Brothers Company v. First National Bank, 46 Nebr., 168, where a partnership, engaged in a general mercantile business, in straitened and failing circumstances, incorporated, and the assets and business of the partnership were transferred to the coi’poration and'appropriated to its object and purpose, the business of the partnership being continued by the corporation, it was held, that the corporation was presumptively liable for the partnership debts. See 2 Cook on Stockholders, Sec. 669, and note 3; Mor. Corp., Sections 791 and 812; Broughton v. Pensacola, 93 U. S., 266-270; Beach on Priv. Corp., Sec. 360.

There was in fact no purchase in this case; it, as shown, was simply a change from doing business in one capacity to that of another — the same persons changed from partners to corporators — and this distinction reconciles many cases on the subject, that might otherwise seem in conflict. Where there is á purchase in fact by a new company from an old one, there is, as before observed, no liability of the new for the debts of the old company, unless assumed as a part of the consideration. But where a mere transformation is had — parties remaining the same, and the property is transferred by the members of the old company transferring their interest in it, for an equal interest in it as property of the new, the transaction does not constitute a sale by the one and a purchase by the other; it is simply a change in the manner and form of carrying on the same business by the same persons; and, brushing aside the fiction of a legal entity, it is seen that no real change has taken ■place, and that in looking to the new formation for payment, the creditor looks to the same persons, possessed of the same property and rights, he contracted with in the first instance; and to construe the transaction as to creditors as a purchase, tends to operate a fraud on their rights. Every purchase implies two distinct persons ■— a buyer and seller. It is a moral impossibility for one person to buy of, or sell to, himself. Modern decisions, as observed by Mr. Taylor (Private Corporations, Sec. 51), are tending to a disregard of the mental conception, that a corporation is an entity separate from its corporators, as in many instance it is simply a “stumbling block” in the way of doing justice between real persons.

But again, the facts found show that the assumption of the debts of the partnership, was a part of the understanding and agreement by which the company was formed: The finding is, that at the date of the “reorganization” the partnership eonveyed all its property, real and personal, to the corporation; and that it was formed for the purpose of continuing the business in which the partners had been engaged; and, “That the liabilities of the partnership were treated by the corporation as debts of the corporation, and in renewing the partnership liabilities the corporation treated them in the same way as liabilities of the corporation made after the incorporation; and that the transactions of Sutherland with the plaintiff in causing the notes to be renewed, were Avell knoAvn to all the stockholders of the corporation save M. L. Sternberger,” whose relation to the corporation will be hereafter noticed. These facts are only consistent with an express understanding that the debts of the partnership were to be assumed and paid by the company. It will help, in understanding the transaction, to note the fact, that the same persons avIio formed the partnership were the incorporators of the company — there were not two real parties in existence, dealing with each other. It was conducted by one set of persons, managing a business for their OAvn profit and convenience; and what more natural in such case, than in passing from a partnership to a corporation they should determine to carry with them their liabilities as well as their property. Nothing could be gained to them by not doing so, and it would be much to their convenience to do so. And, it seems, that this is not disputed as to their creditors in general, but certain facts are found which are supposed to vary this obligation as to the claim of the plaintiff. It is found that at the time of the “reorganization,” the firm owed some $20,000; and that a short time before, the members made an assessment on themselves of $1,000.00 to each one-eighth interest, amounting to $7,000.00, one-eighth not being assessed. The balance of the indebtedness to be ca-rried by the company. At the time of the assessment Bufus Peters, owner of a fourth interest, was assessed $2,000.00. Not being able to pay, he assumed the payment of the debt to the plaintiff, then $2,000.00. It is claimed that this amounted to a novation. But the plaintiff was not consulted, knew nothing of the arrangement, could not have assented, and did not; and therefore there was no novation as to him. His rights remained unaffected. Under this agreement payments were made, and renewals given from time to time, when the amount was reduced to the sum for which the note in suit was given, the renewals having been signed as the note in suit, except during the time Sternberger was a subscriber to stock. When these payments were made by the corporation it immediately charged them to Peters and took credit to itself on his account for salary. This was a very clear recognition by the corporation that it regarded the debt as its own, so far as the plaintiff was concerned. It made the payments and took credit to itself in its account with Peters. This was according to the agreement between it and Peters, but the plaintiff was no party to it and did not know of it. As between Peters and the corporation it was the debt of the former, but as between the plaintiff and the corporation, it was the debt of the latter.

Again, the fact is found that one Sternberger after the company was formed, subscribed for an eighth interest in the capital stock of the company at $5,-000.00. This, we suppose, was the one-eighth the company owned and had not been disposed of. It amounted to no more than an effort to increase the stock to that extent — one-eighth was added in the way of what is commonly called water. This, however, amounted to nothing, as in about a year after-wards, he surrendered the stock. There is no finding that he ever paid for it — the finding is that he subscribed for it. We assume that if the evidence had warranted such a finding, it would have been made; the rule being that when a finding is requested it contains all the facts that the evidence warranted. It is also found that one Evans purchased of Peters a portion of his stock, agreeing to pay $500 for it; but the finding is that he had not paid for it at the time of the assignment. We do not see how any of these findings can in any -way affect the right of the plaintiff to be regarded as a creditor of the corporation. The fact remains that the persons who composed the partnership constituted the stockholders of the company from its organization to the assignment. But suppose it were true that Sternberger became and remained a stockholder of the company, and that Evans acquired and paid for a portion of the stock of Peters, how would this vary the rights of the plaintiff? His rights accrued when the partnership •became a corporation, and cannot be changed by subsequent changes in the stockholders. His rights avail against the company and not the stockholders. The latter may wholly change and the company remain the same as to rights and liabilities.

But it is argued that the act of Long in signing the company’s name was ultra vires. The doctrine ' has no application to this case. We have shown that the debt was the debt of the company; it received all the property of the plaintiff and was morally and legally bound to pay it. Every corporation has power to make a note to secure the payment of its own debt.

Judgment reversed.


source: Caselaw Access Project

author: Shatjck, C. J. Minshall, J.,

license: Public Domain

text:
    Westlake v. The City of Youngstown

      Rights and liabilities of husband and wife — Act of March l% 1887 — Married woman could not dedicate land to public use, when — Act of April 3, 1861.

    1. Prior to the act of March 19, 1887, “to define the rights and liabilities of husband and wife” (84 O. L., 132) it was not competent for a married woman to dedicate to public use any lands which were a part of her general estate, except in the mode prescribed by statute.
    2. Lands of which a married woman became seized prior to the passage of the act of April 3, 1861, “concerning the rights and liabilities of married women” (58 O. L., 54), became in law subject to the possession of the husband, and until his death a right of action did not accrue to her to recover possession thereof from one who during her coverture had taken it without right.
    (Decided March 6, 1900.)
    Error to the Circuit Court of Mahoning County.
    On the 14th day of December, 1894, Mrs. Westlake commenced an action in the court of common pleas against the city of YoungstoAvn, her first cause of action being for the recovery of possession of certain .real estate described in her petition, and the second being for the recovery of the rents and profits thereof from January 1, 1884. The defendant answering admitted that it is a municipal corporation and that it had been in the possession of the premises described for more than tAventy-one years prior to the beginning of the action; and for a first defense it denies all the other allegations of the petition. For a second defense it alleged that more than twenty-one years before the suit was begun the plaintiff had dedicated the premises in question to the public use as a part of the streets and public grounds of the municipality and that it had accepted said dedication by using the grounds for the purposes aforesaid. It further alleged “that it has been in the open, notorious, exclusive, continuous and adverse possession, use and occupancy of said premises for more than twenty-one years prior to the commencement of this action.” By reply the plaintiff denied the alleged dedication. On the trial it was shown without contradiction that the plaintiff was married in 1850 and continued to be a married woman until December 10, 1883, when her husband, Covington- Westlake, died, and that in 1850 she began to reside upon the premises of which those in controversy are a part, title to said premises having before that time become vested in her by gift from her father. There was no evidence to sIioav that Mrs. Westlake had ever by the making and acknoAvledgement of any plat or by the execution of a deed or other instrument made a grant or statutory dedication of the premises to the public use claimed by the city. In support of its allegation of a dedication by her it relied upon evidence showing that about the year 1871, when the city took possession of the ground in controversy, the plaintiff’s husband, acting with representatiAes of the city, moved a fence upon the premises fixing street lines as they noAv are, and evidence tending to show that plaintiff Avith knowledge of AA-hat had been thus done acquiesced therein. The court thereupon instructed the jury with respect to the subject of dedication as follows:
    “To constitute a dedication on the part of the plaintiff it is essential that the plaintiff not only knowingly permitted the use of this property, by the defendant for public purposes, but that such permission was accompanied on her part with an intention that the public, the city of Youngstown, should use and occupy it for public purposes. If this intention is absent, no dedication would take place and you will not be justified in so. finding. If this intention exists, and you so find, and the same was accompanied by the fact that the property was, in pursuance of such permission of the plaintiff, taken posession of by tbe defendant and devoted to that use, it would constitute and be in law a dedication of her property tp the use designed by the plaintiff, and would prevent a recovery in this action by the plaintiff. This intention must be determined by you from all the facts, circumstances and evidence before you.” With respect to the limitation upon the plaintiff’s action the court instructed the jury as follows:
    If upon this question of dedication you find in favor of the defendant you need proceed no further, but should return your verdict for the defendant. If, however, you find that such dedication was not made, then you will proceed further to inquire and ascertain whether or not the city had been in the possession of this portion of lot No. 84 for a period of twenty-one years prior to the commencement of this action, which it is admitted was commenced on December 14th, 1894, as claimed by it. The defendant says it had been in the open, notorious, exclusive, continuous and adverse possession of the same during this time, This is a question of fact for your determination. If it had thus been in possession, then it is entitled to your verdict. If it had not thus been in possession, then the plaintiff is entitled to your verdict.
    Instructions to the contrary were requested by the plaintiff’s counsel and refused by the court. There was a verdict for the defendant. The plaintiff’s motion for a new trial Avas overruled and there was a judgment on the verdict. This judgment was affirmed by the circuit court.

      Norris & Wirt, and Murray & Koonce, for plaintiff in error.

      W. T. Gibson, City Solicitor, and Arrel, McVey & Robinson, for defendant in érror.
   Shatjck, C. J.

The questions presented are not affected by the act of March 19, 1887, to define the rights and liabilities of husband and wife ('84 O. L., 132), nor by the act of April 3, 1861, “concerning the rights and liabilities of married women” (58 O. L., 54). The act of the earlier date did provide that an estate of the character of this vested in a married woman should “be and remain her separate property and under her sole control,” but it did not assume to change the authority of the wife over, nor the rights of the husband in, any lands whose title had previously vested in her. In the fifth section it was expressly provided, “This act shall not affect any rights which may have become vested in any person at the taking effect thereof.” Since Mrs. Westlake’s title in these lands had previously vested in her, and by the marriage the husband’s rights had vested in him, they continued to be her general and not her separate property notwithstanding the act of 1861. The cases cited by counsel for defendant concern the separate property of the wife. They were influenced if not controlled by the act of March 23, 1866, “to amend sections 1 and 3 of an act entitled ‘an act concerning the rights and liabilities of married women,’ passed April 3, 1861,” (63 O. L., 47). That act amended section 1 of the act of 1861 by authorizing the wife during coverture to make contracts for labor and materials for improving, repairing and cultivating her separate property. It also amended section 3 of the act of 1861 by providing that the wife’s separate property should be liable to be taken for any judgment upon a contract which the first section authorized her to make. It did not amend section 5 of the act which provided that it should not affect interests already vested. The amending act gave to the wife a more extended control over her separate property but it did not expressly or by implication give a separate character to property which had theretofore been general. It follows that until the death of her husband in December, 1883, these premises were the general property of the plaintiff and not subject to her control under the provisions of these acts.

Since there was no evidence that a deed conveying these premises from the plaintiff to the defendant had been signed, sealed and acknowledged by her, as required by the statute defining the mode in which such a title might be conveyed by a married woman, the instruction given to the jury upon the subject of dedication assumed that the doctrine of estoppel might be so applied to her acts in pais as to divest her of title in her general property without compliance with the statute. It is not likely that this assumption would have been made if it had been observed that the case is not affected by any of the legislative enactments referred to. That this instruction was erroneous is made sufficiently apparent in Todd v. Pittsburg, Ft. Wayne & Chicago R. R. Co., 19 Ohio St., 514, where the true doctrine is stated find applied to a case differing in no essential respect from this. It was sought to so apply the rules of estoppel to a married woman’s act in pais as to defeat her action to recover possession of her lands after the death of her husband, but the court said: “During her coverture she had no power to bind herself by contract. No agreement of hers for the conveyance or encumbrance of her real estate, hoAvever solemnly entered into, could be enforced by a decree for specific performance. She could only dispose of or encumber it in the mode prescribed by the statute. And what she could not deprive herself of by direct and express contract with the defendant, we think it clear that she could not lose by the indirect method of an estoppel in pais, arising from facts such as those found in this case.”

There was no conflict in the evidence as to any fact material to the statutory limitations upon the plaintiff’s action. The action was brought more than twenty-one years after the defendant took possession of the ground in controversy, and more than ten years after the plaintiff. was relieved of the disability of coverture. If her cause of action accrued when the city took possession of the ground, the instruction given upon this subject was correct and the city was entitled to a verdict and judgment. If, however, her cause of action did not accrue until the death of her husband in 1883 it is quite clear that the instruction was erroneous, since the provision of the statute is that such an action “can only be brought within twenty-one years after the cause of such action shall have accrued.” The action is to recover possession of the property. Plainly no cause of action for that purpose accrued in Mrs. Westlake until she was legally entitled to the possession. In considering whether the right of possession was in her or in her husband while he lived, it should be borne in mind that it was her general property, and that her rights Avith respect to it were not enlarged, nor his diminished, by the legislation already referred to. It was in view of the previous dominion of the husband over the lands of his Avife during their joint lives that the act of 1861 was necessary, to the end that the wife might have control of them. That dominion included the right to occupy and lease and receive rents and profits. Whatever possessory right the wife had was domestic and not proprietary. The question is not affected by Williams v. Urmston, 35 Ohio St., 296, nor by Hershizer v. Florence, 39 Ohio St., 516. They were suits in equity to charge the estates of married women with their collateral obligations. In the former case the estate charged was admitted to be separate. In the latter, which was decided in 1883, it was said: “The rights of the husband which vested in him prior to the act of 1861, are not affected. He is still entitled jure uxoris to the possession, rents and profits during the joint lives of himself and wife. * * * The act of 1861 certainly did not convert his right of possession into the separate property of the wife, because it was a vested right and the act could not and did not purport to have that effect.” The case before us does not call for the application of the equitable principles recognized and applied to those cases. The plaintiff sued at law to recover possession of lands to which she was not entitled until the death of her husband in 1883.

Concerning other reasons urged by counsel for the defendant for the affirmance of the judgment it is sufficient to say that the ground of estoppel was not pleaded nor were all the essential elements of estoppel proved.

For the errors indicated, the judgments of the circuit and common pleas courts are

Reversed.

Minshall, J.,

dissenting. To make a dedication of land to a public use the execution of a deed is not necessary. It may be, and ordinarily is, presumed from the acts and acquiescence of the party, and the presumption arises from a much shorter period than is required to acquire lands by adverse possession. It has been presumed from an acquiescence of five years, and any period is sufficient Avhich in connection Avith the circumstances indicate an intention to donate. The husband and the wife might have united in a deed of dedication and she would have been bound; but as no deed is required, I fail to see why she might not have united with her husband in pais in making the dedication. The facts show that this was the case. The dedication was as much a benefit to her property as to the lands of others on the street; and it does not seem just or wise after such a great lapse of time to permit a recovery of the land from the city — a portion of one of its streets — on the ground that the wife had no power to make a dedication without joining in a deed with her husband.


author: Davis, J. Minshall, J.,

text:
    Union Central Life Insurance Co. v. Hook.
    ' Life insurance■ — Action for recovery on written contract — Inadmissibility of statements of agent — To vary contract — Presumption of knowledge, by insured, of provisions of policy — Insured cannot recover on verbal modification by agent, when.

    1. In an action to recover on a written contract for life insurance and upon an alleged subsequent verbal modification of the same, statements and representations made Ey the agent who solicited the policy, prior to and contemporaneous with the issue of the policy, are inadmissible to vary, in any respect, the terms of the written policy. In the absence of proof of fraud or mistake, such statements and representations are merged in the written contract.
    2. Where a life insurance policy has been accepted by the insured, and the policy has been in the possession of the insured for nine years, and he has paid nine annual premiums thereon, he will be conclusively presumed to have knowledge of all the stipulations and provisions of the policy.
    3. When such policy provided that the contract of insurance is ■ completely set forth in the policy and application and that none of its terms can be modified, except by an agreement in writing signed by the president, vice-president or secretary, and also that no agent has authority to extend or postpone the time of payment of any premium or note, the insured can not recover on a verbal modification of the terms of the policy made by an agent of the insurance company, extending the policy one year and waiving the payment of an annual premium, in the absence of such knowledge and acts by the insurance company as would estop it from alleging in defense the provisions of the policy.
    (Decided March 20, 1900.)
    Error to the Circuit Court of Knox County.
    The second amended petition, upon which the issues were finally made, alleged that on or about February 15, 1880, the defendant issued a policy on the life of the plaintiff for two thousand dollars “payable ten years after date, or to-wit, on or about the 15th day of February, 1890;” that the consideration was “the sum of $1,472 in ten equal annual installments of $147.20 each, in advance;” that after nine payments had been made, and shortly before the tenth became due, a certain modification of the policy was agreed upon “with the defendant through its agent, W. E. Hoyer,” thus: Hook agreeing to extend his policy one year, until February 15, 1891, and to give his note, maturing on that date, for $282.79 (the amount of two premiums, a tenth and eleventh, discounted for cash); and agent Hoyer agreeing to “waive the payment of the tenth annual premium” and agreeing further, that the note itself need not be paid at all, but should be deducted from the face of the policy, both note and policy maturing at the same time; and both agreeing that the policy should be held by the defendant as collateral to the note, “and that the amount for which said note was given, should be treated and regarded as a loan by the defendant to plaintiff, on said policy of insurance as then modified.”
    Plaintiff alleged that he survived the date of the maturity of his policy as modified, February 15, 1891, and asked judgment for its amount less the amount of the note, with interest from that date.
    The answer was a general denial.
    The plaintiff went to trial and concluded his testimony without offering the policy itself in evidence, persisting in the face of objection from the defendant, in introducing testimony designed to establish a parol contract of insurance, and resting his case on that.
    Other facts appear in the opinion. The verdict was for the plaintiff. Motion for a new trial by the defendant was overruled and judgment was rendered for the plaintiff, in the common pleas court, which was affirmed by the circuit court.

      Cooper & Moore; Maxwell & Ramsey and Robert Ramsey, for plaintiff in error-

      I. There was a failure of proof in two respects: The alleged policy was not proved, and the real policy was not shown to have matured.
    The petition counted deliberately and unequivocally upon a written agreement to pay $2,000.00 in ten years. The answer responded fully to that alleged cause of action when it denied the existence of such a contract. Its existence or non existence was the sole issue in the case; the only issue upon which the defense went to trial; the only issue which it submitted to the jury. It offered the policy, moved to exclude all parol testimony tending to vary its terms, demanded a peremptory charge to the jury and rested. No amendment was offered by the plaintiff. The defendant was entitled to judgment for failure of proof, Sec. 5296 Rev. St.; Dean v. Yates, 22 Ohio St., 388; Hill v. Supervisors, 21 Ohio St., 621; Thatcher v. Heisey, 10 Ohio St., 668; R. R. Co. v. Ward, 1 Bull., 332; Ins. Co. v. Osborn, 9 So. Rep., 869; Cremer v. Miller, 57 N. W., 318; Shomo v. Ransom, 18 S. E. 534.
    II. There was a fatal variance between the pleadings and the proof as to the nature of the contract.
    It is conceded that plaintiff is not entitled to recover upon the policy. He secured his judgment on the theory of a verbal contract. Having counted upon a policy or written contract, he can not in law recover upon a verbal contract, even though one exist. The variance between pleading and proof would be material. Stull v. Wilcox, 2 Ohio St., 569; Steiner v. Hellman, 40 N. Y. S., 36; King v. Faist, 37 N. E., 456; Wisbey v. Boyee, 27 S. W., 590.

      III. There was neither allegation nor , proof of any other contract of insurance than that evidenced by the policy.
    IV. All antecedent parol negotiations merged in the policy. Richards on Insurance, 81; Ins. Co. v. Lyman, 15 Wall., 664; Ins. Co. v. Mowry, 96 U. S., 547; Fowler v. Ins. Co., 116 N. Y., 389; Thompson
      v. Ins. Co., 104 U. S., 252; Ins. Co. v. Cohwning, 28 S. W., 117.
    Y. The statement of the agent was merely a speculation as to the future earning capacity of the policy, upon which no rights could be predicted.
    This suit is prosecuted because the plaintiff believes that sanguine assurances of that kind are actionable. But they are not. Armstrong v. Karstner, 47 Ohio St., 276; Saunders v. McClintock, 46 Mo. App., 216; Kosselbery v. Walton, 40 Ill. App., 626.
    VI. There was no authority in the agent for the alleged subsequent modification of the policy. McMillen v. Ins. Co., 24 Ohio St., 67.
    The authority to do the particular thing ascribed to agent Hoyer in this case, is still less to be presumed, since it is an act forbidden by the statute. Sec. 3631-4 Rev. St.
    VII. The testimony does not establish the alleged subsequent modification. Ins. Co. v. Reed, 33 Ohio St., 283; Upton v. Triblecock, 91 U. S., 45; Fish v.Clelland, 33 Ill., 237.

      Gritchfield & Devin; W. L. McElroy and J. B. Waight, for defendant in error.
    The statement so persistently repeated in the brief of counsel for plaintiff in error, that the cause of action set forth in the second amended petition was upon a written policy of insurance alone, is a mistake; the cause of action was upon a written policy of insurance and a subsequent- verbal agreement, made by the general agent, Hoyer, in reference thereto, making the date of maturity, that in the written policy was indefinite as to time, certain and definite.
    The statements of Godman at the time the policy was delivered as to when it would mature, are not material in this case, except as showing a reason and consideration for the agreement with Hoyer'. These statements, however, are certainly competent. Ins. Co. v. Walwrath, 17 C. C., 509; 9 Circ. Dec., 699.
    While preliminary verbal negotiations may become merged in the writing, subsequent verbal modifications of the written agreement do not. As to the claim that the alleged verbal agreement of Hoyer does not bind the company because of provisions in the policy, and in the note given, as to his authority; in the first place Hoyer was the general agent of the company, and as such had authority to bind them by such an agreement. Ins. Co. v. Eshelman, 30 Ohio St., 647; Mechem on Agency, Sec. 931; Am and Eng. Ency. of Law, Vol. 11 page 281, note 3.
    As to the right of the agent to make a verbal contract of insurance under the law, we call attenion to the fact that section 3631-4 R. S. on this subject was not passed until April 10. 1899, after the verbal contract was made in this case. Vol. 89, O. L., page 220. It is certainly settled in Ohio that a valid contract of insurance may be made by parole when not forbidden by statute, and it was not forbidden by statute February 13, 1889. Machine Co. v. Ins. Co., 50 Ohio St., 549.
   Davis, J.

The parties to this action entered into a written contract for insurance upon the life of the defendant in error. This contract, or policy, was delivered to the insured and was in his possession for nine years, at the end of which time the insured borrowed of the insurer the equivalent of two annual premiums, and gave therefor what is termed a collateral loan note, and deposited the policy with the insurance company as collateral security upon such loan. Thereafter and until the trial of this action in the court of common pleas the policy was in the possession of the insurance company. On the trial in the court of common pleas the. counsel for the plaintiff, before the first witness was called, stated that a demand had been made on the defendant for this life insurance policy which had been disregarded by the defendant. The counsel for the insurance compnay denied this statement. The plaintiff had requested a copy of all instruments of writing “in the possession or control of defendant which it intends to offer in evidence at the trial of this cause.” The defendant disclaimed any intention of offering the policy in evidence, apparently on the theory that it was incumbent on the plaintiff to do so, but then and there produced and made a tender of the papers to be used on the trial, including the policy issued to the plaintiff. This was a compliance with the request which was made of the defendant, and affords no excuse to the plaintiff for not introducing the written contract between the parties. The plaintiff did not then, nor at any time, offer the policy in evidence. At the close of the trial, it was offered in evidence by the defendant, and was read to the jury.

The policy does not provide for payment at any definite time, but is payable at the death of the assured, or at any time when the premiums paid on said policy, together with the equitable proportion of the company’s surplus contributed by and belonging thereto, losses and expenses being deducted, shall equal the amount insured, with certain provisos.

The plaintiff sought to maintain the issues on his part, by testimony entirely outside of the written contract of insurance, chiefly the testimony of himself and his wife, of statements made prior to the issue of the policy by the agent who solicited the insurance, and as to the alleged subsequent verbal agreement. At every step the defendant’s counsel objected and excepted to the admission of this parol proof of the terms of the contract, because the policy itself was in court and at the command of the plaintiff ; and finally, having themselves put the policy in evidence, they asked the court to rule out all parol testimony, in whatever form, relating to the contract of insurance. The court refused to exclude the evidence, and the defendant excepted.

The plaintiff: having based his cause of action on the written policy and the alleged modification of it, could not prevail in his action without putting the policy in evidence. Much less could he contradict its express terms by parol testimony, as he did do. Assuming that the statements of the soliciting agent in regard to the time when the policy would mature, were made as claimed, they were merged in the written contract which was afterwards accepted and held by the insured for nine years without objection, .and, if they were any more than mere opinions, they were palpably variant from the terms of the subsequent writing. It was, therefore, clearly incompetent to qualify the written contract in that way, so as to make it payable definitely at the end of ten years. 2 Jones E vidence, Sec. 437.

. At the time this contract was made, a verbal contract of insurance was valid in this state; but it never was the adjudged law that when a written contract of insurance had been made and was in existence, another and different parol version of the same contract could be made the ground of action and recovery; and yet that seems to be just what was attempted here, although the plaintiff had expressly based his cause of action on the written policy and a subsequent verbal modification of it. It was not to support the verbal agreement subsequent to the policy that the conversations of. the soliciting agent were offered. This testimony was apparently intended to vary the terms of the written policy as to the time of payment, or, whatever was the pretext or intention, that was the effect of it. Therefore, all of that testimony was inadmissible. It "was prejudicial because it tended to persuade the jury that there had actually been a subsequent agreement, as claimed, to extend the time of payment from ten years to eleven years; although no definite time of maturity is named in the policy itself, or in the collateral loan note given by the plaintiff at the time of the alleged subsequent verbal agreement.

The policy, as already mentioned, was accepted by the insured and he paid the premiums on it for nine years, retaining possession of the document during the whole time and until he surrendered it as collateral security upon his loan. Under such circumstances the presumption is conclusive, in the absence of fraud and mistake, that he knew the contents of the instrument. 1 Jones Ev., Sec. 22. And he is conclusively bound by the terms of the policy, whether he has read it or not. Allen v. Ins. Co., 123 N. Y., 6; Walsh v. Ins. Co., 73 N. Y., 5; Ins. Co. v. Buffum, 115 Mass., 313. The policy contained the following stipulation:

“This policy is issued, and accepted, upon the express conditions and agreements contained upon the back hereof, which are made part hereof, and which are to be used and referred to in order to explain the rights and obligations of the parties hereto in all cases not herein specially provided for, and which explain the rights and obligations of the parties hereto as fully as if they were recited at length over the signatures hereto affixed.”

The following are among the conditions and agreements referred to in the clause just quoted:

“Third — That the premiums shall be paid on or before the days upon which they become due, at the office of said company in the city of Cincinnati, or to the duly authorized agent of the company holding a receipt therefor, and producing same, signed by the president, vice-president or secretary, and that all notes given the company as á lien upon this policy, or in settlement for premiums, or part premiums, shall be paid at maturity, no agent having authority to extend or postpone the time of payment of any premium or note.

“Tenth — That upon the violation of the foregoing conditions, or any of them, this policy shall be null and void, and all payments made thereon and also all accrued surplus or profits, shall be forfeited to said company.

“Eleventh — That the contract of insurance between the parties hereto is completely set forth in this policy, and the application therefor, and none of its terms can loe modified, nor any forfeiture under it waived, except by an agreement in writing signed by the president, vice-president, or secretary, whose authority for this purpose shall not be delegated.”

From these provisions it is apparent that it was stipulated between the parties:

That premiums shall be paid on or before the day on which they become due. 2. That all notes given the company as a lien upon the policy, or in settlement for premiums, shall be paid at maturity. 3. That no agent has authority to extend or postpone the time of payment of any premium or note. 4. That upon the violation of the foregoing conditions, or any of them, the policy shall be null and void, and all payments made thereon, and also all .accrued surplus or profits, shall be forfeited to said company. 5. That the contract of insurance between the parties is completely set forth in this policy and the application therefor. 6. That none of its terms can be modified, nor any forfeiture under it waived, except by an agreement in writing. 7. That such an agreement shall be signed by the president, vice-president or secretary, whose authority for this purpose shall not be delegated.

These stipulations excluded the possibility of an existence of a binding verbal contract, such as is alleged by the plaintiff. By his expressed agreement he has made it impossible to modify the terms of the policy by a verbal agreement, or by a writing, unless it should be signed by the president, vice-president or secretary of the company. Union Mutual Life Ins. Co. v. McMillen, 24 Ohio St., 80.

We do not decide that there might not be an estoppel by conduct, notwithstanding such an agreement. But that case does not arise here. The loan of the amount of the two annual premiums, the acceptance of the loan note and the policy as collateral security therefor, and the giving of the receipts for the premiums with the condition that “this payment * * * if made by note, the non-payment of the note at maturity will void the policy,” does not make such a case. It might be otherwise if the policy were, as alleged by the plaintiff, payable in ten years, but it is not so payable; and for anything that appears it may not have become payable in fifteen years. So that acceptance of the premiums for the tenth and eleventh years affords no presumption of an agreement to extend the payment from ten to eleven years, because that transaction was entirely consistent with the terms of the policy.

All of the parol testimony, therefore, relating to this alleged verbal agreement was incompetent ; and for the same reasons the charge of the court was erroneous, in so far as it related to the authority of an agent of the insurance company, whether it be construed as referring to the agent who solicited the policy, or the agent who made the alleged verbal modification ; and also the instruction that a verbal agreement by which the policy was to become due and payable at the time of the payment of the last yearly payment as extended, being made by a mere agent of the company, was binding on the company. Upon the competent evidence in this case the judgment ought to have been for the defendant. It follows that the judgment of the circuit court and the judgment of the court of common pleas must be

reversed.

Minshall, J.,

dissents from the last proposition of the syllabus, and from the reversal of the judgment.


author: Burket, J.

text:
    The Cleveland Trust Co. v. Lander, Treasurer.

      Taxation of National Bank shares — Restriction of section 5219, U. S. Rev. Stat. — Right >qf state to tax shares — Sections 2762, 2764, 2763, 2766 and 2769, Rev. Stat. — Sections 3701 and 5219, U. S. Rev. Stat. — Limitation of section 3 of article 12 and section 4 of article 13 of constitution — Prohibition of doable taxation of bank property.

    1. The restriction in section 5219, Revised Statutes of the United States, as to the taxation of national bank shares at a rate not greater than on other moneyed capital, requires that .both the rate per centum of taxation and the value of the assessment against such shares, shall not be greater than on other moneyed capital in the hands of individual citizens of the state.
    £■ The right granted to a state to tax shares of national banks, can not be exercised by a state, unless it imposes upon the moneyed capital in the hands of individual citizens of the state, a tax at least equal in amount upon the same valuation, as is imposed upon national bank shares.
    3. Section 2762, Revised Statutes, in requiring the shares of incorporated banks to'be listed for taxation at their true value in money, is not in conflict with section 3701, Revised Statutes of the United States.
    4. Sections 2764, 2765, 2766 and 2769, Revised Statutes, provide a method for fixing the value of the shares of a bank for taxation. The shares are taxed, and not the property of the bank, except its real estate.
    5. There is nothing in the constitution of this state to prevent the general assembly from conforming our tax laws to the restrictions contained in section 5219, Revised Statutes of the United States, as that section has been construed by the Supreme Court.
    6. The amount of the property of an incorporated state bank, less its non-taxable bonds, is not usually the equivalent of the amount of all its shares. If both are the same in amount, the general assembly, in conforming to the restrictions in section 5219, Revised Statutes of the United States, may impose the tax, either upon the property, or upon the shares; but if they differ materially in amount, the tax must be upon the shares.
    7. The limitations-in section 3 of article 12, and section 4 of article 13 of the constitution, prohibit double taxation of the property of banks, bankers and corporations.
    (Decided March 20, 1900.)

      Error to the Circuit Court of Cuyahoga County.
    The Cleveland Trust Company, plaintiff below, and also plaintiff in error here, is a corporation organized and incorporated under the statutes of this state, and is engaged in the banking business at the city of Cleveland. It has a paid-up capital stock of $500,-000 divided into shares of one hundred dollars each. It owns and holds 174 bonds of the United States, each of the denomination of one thousand dollars. In making its return for taxation in May, 1898, to the county auditor it deducted the value of said bonds from its capital stock and returned the balance, less the duplicate value of its real estate, to the county auditor for taxation. The county auditor added the amount of the value of the bonds to the return, and upon the basis of the amount of the return so increased by said addition, fixed the value of each share of its capital stock, and entered such shares upon the duplicate for taxation against the holders of such shares, and delivered the duplicate to the county treasurer, who proceeded to collect the taxes so assessed. Thereupon the Trust Company began its action against the treasurer, seeking to enjoin so much of the taxes as were levied by reason of the valuation placed upon said bonds and so added to said return, and tendered payment of the taxes levied upon its return as originally made by it. The ground upon which the injunction was asked is, that the United States bonds are non-taxable under section 3701, Revised Statutes of the United States, and “that it is the regular custom of banks and banking associations throughout the state of Ohio to deduct the value of government bonds owned by them from the paid-in capital stock returned, although not so apparent upon the face of their returns to the several county auditors; that said bonds were by the banks and banking associations of this state so deducted in the returns for 1897: that similar deductions of United States government bonds are likewise made by unincorporated banks in the state of Ohio under and by virtue of Revised Statutes of the State of Ohio, section 2759; that the auditor of Cuyahoga county, and the county auditors elsewhere throughout the state, as this plaintiff is informed and believes did not include United States government bonds so owned in fixing the total value for 1898 of the shares of the several incorporated banks of Ohio, as directed by section 2766 of the Revised Statutes of Ohio.”
    To this petition the county treasurer by his counsel demurred upon the ground that it did not state facts sufficient to constitute a cause of action. The common pleas sustained the demurrer, and the plaintiff not desiring to plead further, the court rendered final judgment dismissing the petition. The circuit court affirmed the judgment. Thereupon the trust company filed its petition in this court, seeking to reverse the judgments below.
    Garfield, Garfield & Howe, for plaintiff in error.

      P. II. Kaiser and F. L. Taft, for defendant in error.
   Burket, J.

The petition is in due and proper form, so that the demurrer is upon the merits of the cause, and not upon the form of the petition.

The taxation of banks and banking associations is regulated in this state by statute, and therefore the custom of banks and banking associations can avail nothing against such public statutes; neither can the acts or official course of procedure of county auditors make lawful that which is in conflict with such statutes. Custom cannot prevail over a statute. If the county auditors have been derelict in their duties, as to the taxation of banks, bankers, banking associations or the stock or shares of such corporations, the proper remedy is, not to still further transgress the law by remitting still other taxes in a vain effort to secure equality, but by bringing all up to the standard of the statute, and thereby securing equality of taxation as near as may be. Wagoner v. Loomis, 37 Ohio St., 571.

The demurrer was therefore properly sustained to the petition in so far as it founds its cause for relief upon the custom of banks, bankers and banking associations, and the acts and course of proceeding of county auditors in conflict with the statutes of the state.

We will next consider the petition as founded upon the ground that the government bonds are non-taxable, under section 3701, Revised Statutes of the United States. This section is in pari materia with section 5219, and both must be read together. They are as follows:

“Section 3701. All stocks, bonds, treasury notes, and other obligations of the United States, shall be exempt irom taxation by or under state or municipal or local authority.”

“Section 5219. Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state subject only to the two. restrictions, that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by non-residents of any state shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county or municipal taxes, to the same extent, according to its value, as other real property is taxed.”

Section 5219 was passed long after 3701, and has a modifying influence on the latter. Before the passage of 5219 it was held by the supreme court of the United States, in Bank Tax Cases, 2 Wallace, 200, that United States bonds owned and held by a bank must be deducted from the amount of its capital in making its returns for taxation; but afterward it was held by the same court that the value of the bank shares might be fixed upon the whole capital stock including the bank’s investments in government bonds. Van Allen v. The Assessors, 3 Wallace, 573, and many subsequent cases.

So that the holding now is that shares in national banks, and in incorporated state banks, may be taxed at their true value in money including in such value all government bonds owned and held by such bank. People v. The Commissioners, 4 Wallace, 244; Bradley v. The People, 4 Wallace 459; Frazer v. Siebern, 16 Ohio St., 614; section 2762, Revised Statutes of Ohio.

In every respect, except the issuing of bills to circulate as money, state banks carry on a similar business, and operations and investments of a like character as national banks, and it is therefore proper to compare the investments of capital in such banks with capital invested in national bank shares. That capital invested in state banks which do not issue bills, is moneyed capital in the hands of individual citizens as that term is used in said section 5219 is shown in the case of Mercantile Bank v. New York, 121 U. S., 138, where the court in speaking of such banks and the change in said section as amended in 1868, say: “Of course, so far as investments in such banks are moneyed capital in the hands of individuals, they are included in the clause as it now stands.” And being so included, that is being capital which comes directly in competition withcapital invested in national bank shares, it follows that the taxation on national bank shares cannot be greater than upon capital invested in state banks, whether the taxation on state banks be upon their shares or upon their taxable capital. In that case the court say:- “A tax upon the money of individuals, invested in the form of shares of stock in national banks, would diminish their values as an investment and drive the capital so invested from this employment, if at the same time similar investments and similar employments under the authority of state laws were exempt from an equal burden. The main purpose, therefore, of congress, in fixing limits to state taxation on investments in the shares of national banks, was to render it impossible for the state, in levying such a tax, to create and foster an unequal and unfriendly competition, by favoring institutions or individuals carrying on a similar business, and operations and investments of a like character.” See also First National Bank of Garnett v. Ayers, 160 U. S., 660.

It is urged that section 5219 provides only, that the rate, that is the per centum, on the fixed valuation, shall not be higher on national bank shares than on other moneyed capital, and the language used in Van Allen v. The Assessors, 3 Wallace, 573, People v. Commissioners, 4 Wallace, 244, and the holding of this court in .Frazer v. Siebern, 16 Ohio St., 614, would seem to support this view; but when we turn to the later cases of People v. Weaver, 100 U. S., 539, Cummings v. National Bank, 101 U. S., 153, Supervisors v. Stanley, 105 U. S., 305, Boyer v. Boyer, 113 U. S., 689, and Williams v. Supervisors, 122 U. S., 154, we find that it is not only the rate per centum, but also the valuation, so that having the rate and valuation of national bank shares, the same as other moneyed capital, the taxation will be the same, which is the aim and purpose of said section 5219. If the same rate should be preserved and a much higher valuation of such shares allowed, the tax to be paid on such shares would be higher than on other moneyed capital, and that would violate the intention. of the section in question. Section 5219 was materially changed by the amendment of February 10,1868, whereby the provision as to the tax on shares of state banks was omitted, and the restriction that the taxation on national bank shares shall not be at a greater rate than on other moneyed capital, was inserted. As the section now stands it is the taxation and not merely the per cent, that cannot be at a greater rate than on other moneyed capital. To make the taxation the same as on other moneyed capital, it is necessary that both the rate and valuation should be the same. And this rule as to the rate and valuation prevails in this state. In Exchange Bank v. Hines, 3 Ohio St., 1., we find the following on page 15: “Taxing by a uniform rule requires uniformity in the mode of the assessment upon the taxable valuation. Uniformity in taxing implies equality in the burden of taxation; and this equality of burden cannot exist without uniformity in the mode of the assessment, as well as in the rate of taxation.” The restriction therefore in said section 5219, to the effect that taxation on national bank shares “shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such state,” means that both the rate per centum and the valuation on national bank shares shall not be greater than on other moneyed capital. From this it follows that if the government bonds held by a national bank are included in its return for taxation from which the value of its shares is determined, the same must be done in the returns of incorporated state banks. To allow incorporated state banks to deduct their government bonds from their returns for taxation, and deny that right to national banks, would be to compel the latter to pay greater taxation on the same investment than the former. To prevent such a result was the object of said section 5219. It therefore follows that in order to retain the right to tax national bank shares without deducting the bonds held by the bank from its return, we must in like manner tax tlie shares of incorporated state banks, or else impose a tax of equal amount upon the property of state banks. The case of Van Slyke y. The State, 23 Wis., 655, affirmed in 154 U. S., 581, does not conflict with this conclusion. In that case the tax upon the property of the bank was the full equivalent of a tax upon its shares, and that being so, it could make no difference whether the tax was called a tax on shares, or on the capital, so long as the amount was in the proper sum, and no injustice was done to anyone. The case was affirmed by the supreme court of the United States upon the authority of National Bank v. Commonwealth, 9 Wallace, 353; Lionberger v. Rouse, 9 Wallace, 468, which cases clearly recognize the rule that national bank shares cannot be taxed differently from state banks or their shares as to the amount of the tax.

The doctrine that the capital of a bank is the equivalent of all its shares, upon which the Wisconsin case was decided by the state court, and which happened to be true in that case, has been so often and emphatically repudiated by the supreme court of the United States that it cannot now be successfully relied upon. Owensboro National Bank v. Owensboro, 173 U. S., 664, and cases there cited. It is true, however, that if in any particular case the amount of the taxable capital substantially equals the amount of all the shares, that it matters not whether, as to an incorporated state bank, the tax is upon the capital, or upon the shares, as the tax by either mode would be the same in amount. But as the amount of the taxable capital may be much less than the amount of all- the shares, and always is so where a bank owns and holds non-taxable bonds, the doctrine of taxation of the capital being the equivalent of taxation of all the shares has been repudiated by the supreme court of the United States, and we are bound by those decisions. Our statutes as to taxation of banks and shares in banks, as well as said section 5219, have been revised and changed since the case of Frazer v. Siebern, 16 Ohio St., 614, and the statement in that case that the limitation as to other moneyed capital refers merely to the per centage of tax to be levied, has not been approved by the supreme court of the United States, but has been ruled differently by that court in cases above cited. That case is therefore not an authority as to the force, effect and construction of our present statutes on that subject, nor as to the present restriction in said section 5219, as to the rate of taxation on national bank shares. But as to the proposition that the taxation on national bank shares cannot be greater than the taxation on state banks or their shares, that case is sound.

It is also urged that when section 5219 mentions “other moneyed capital in the hands of individuals,” it means other taxable moneyed capital, and that as federal bonds are not taxable they should be deducted from the return of the bank before fixing the amount from which to ascertain the value of each share, and People v. Commissioners, 4 Wallace, 244, 256, and Mercantile Bank v. New York, 121 U. S., 138, are cited and relied upon. Those cases do say that the phrase means “other taxable moneyed capital.” But conceding that to be the meaning, it does not aid the cause of the plaintiff in error. Certainly the meaning is “taxable capital,” because if it meant nontaxable capital, the shares of national banks could not be taxed at all. And here lies the distinction, the tax is upon the shares, and not upon the capital. If the tax was on the capital, the federal bonds would have to be deducted, but being upon the shares, no such deduction is required, allowed, or authorized. A state has the power to tax both the capital and stock or shares of a corporation, unless prohibited by its constitution, and to do so would not be double taxation. Owensboro National Bank v. Owensboro, 173 U. S., 664, 681, 682.

It is urged against the Van Allen case, and other like New York cases, that they are not applicable in this state, because New York has no constitutional provisions like ours in reference to taxation. By this is meant that New York was not hindered by such constitutional limitations and restrictions, and was therefore free to pass laws conforming to the principles of'the Van Allen case; while Ohio is so restricted by its constitution as to make it impossible to conform to that case. As the constitution of the United States, and the acts of congress passed in pursuance thereof, are the supreme law of the land, it may well be doubted whether the constitution of a state is of sufficient vigor to serve as an excuse for not conforming to the acts of congress. Should we be unable to conform to section 5219 and the Yan Allen case, Ave would be denied the right to tax national bank shares. Such shares being personal property, are required to be taxed .under the provisions of our constitution; and if the claim of the plaintiff in error is right, in this regard, it would lead to the absurd result, that by reason of our constitution we cannot tax such shares, and by reason of the same instrument we must tax them.

In the case of Lionberger v. Rouse, 9 Wallace, 468, the state of Missouri was bound by a contract with two banks whereby it Avas not able to conform to the Yan Allen case as to those two banks, but it conformed as to all of its other banks, and the supreme court of the United States held that as the state had done all Avithin its power to conform to the laws of the United States, it might tax national bank shares at the same rate as its own banks, other than said two which held such contract; but we know of no case, and none has been cited, wherein a state has been excused from conforming to section 5219 and the Yan Allen ease, by reason of a limitation in its constitution, and still allowed to tax the shares of national banks the same as if it had so conformed. Besides, there is no provision, limitation or restriction in our constitution to prevent us from conforming to the act of congress, and the decisions of the United States supreme court, as will hereinafter appear.

Our constitution has no provision as to non-taxable government bonds, and such bonds having been issued, and national banks thereafter established under acts of congress, with limited power of taxation granted to the states upon the shares of such banks, it became necessary to revise and conform our tax laws to the new order of things under said sections 3701 and 5219, and our own state constitution, to the end that we might exercise the right to tax such national bank shares, and at the same time observe the provisions of our constitution as to equality of taxation. In securing equality of taxation, it must be borne in mind that exact equality is impossible, and that inequalities which cannot be remedied without an infraction of the constitution or acts of congress, are, and of right should be, disregarded.

As unincorporated banks are allowed to deduct their non-taxable bonds from their assets, and incorporated banks are not allowed to make such deductions in fixing the amount upon which the value of the shares is calculated, it is urged that there is an inequality in taxation produced thereby which violates that principle of the constitution which aims at equal taxation. Whether this produces such inequality as calls for a remedy it is impossible to determine. The unincorporated bank pays taxes on all of its property except non-taxable bonds, while the value of the shares of the incorporated bank is based • upon the value in money of the tangible property of the bank, including such bonds, but nothing is added under our statute for the value of the franchise and privilege of carrying on a corporate business. This intangible and untaxed property of the corporation may, and often does, exceed the value of the nontaxable bonds held by unincorporated banks or individuals, and in some'of the states heavy taxes are imposed on such property. The two kinds of banks cannot well be assessed by the same statute, because the unincorporated bank has no shares, no franchise, and no privilege to carry on a corporate business in which there is only a limited liability for the debts of the bank. Both are to be so taxed as to bear a burden equal to that borne by individuals, and the obligation is upon the general assembly to pass laws to that end.

Section four of article thirteen of the constitution, provides that the property of corporations shall be subject to taxation the same as the property of individuals. Section three of article twelve, provides that the general assembly shall provide by law for taxing all the property of banks and bankers, without deduction, so that all property employed in banking shall always bear a burden of taxation equal to that imposed on the property of individuals.

And section tAvo of article twelve, provides that laws shall be passed taxing by a uniform rule all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise; and also all real and personal property, according to its true value in money. Then follows certain exemptions of public property, and of an amount not exceeding two hundred dollars to each individual.

It will be noticed that the property of corporations shall be subject to taxation the same as the property of individuals. This implies that corporations shall be taxed, either by the same methods as individuals, or by separate statutes producing the same result, as in the opinion of the general assembly shall be best. It will further be noticed that banks and bankers shall be taxed upon all their property without deduction, by such laws as will compel them to bear a burden equal to that imposed upon the property of individuals. This clearly implies that separate statutes are to be passed for the taxation of the property of banks and bankers, because they are taxed without deduction, and a deduction not exceeding two hundred dollars is allowed to individuals. This matter of deductions, if nothing else, makes it necessary to have statutes for the taxation of the property of banks and bankers different from that of individuals.

Section two of article twelve seems to make provision for the passage of laws for the taxation of the property of individuals only, but it is. broad enough in its terms to include the property of banks and bankers and of all other corporations. But as separate provision is made for the taxation of banks and bankers in section three of the same article, and for the taxation of the property of corporations in section four of the next succeeding article, it seems to be thereby clearly indicated that each of those sections should have a distinct force, effect and scope of its own, but in connection with the others, so as to make a harmonious whole. It is conceded by Thurman, J., in Bank v. Hines, 3 Ohio St., 1. 46, that said section three has its separate- force and scope, and it was said by him that there was no absolute necessity for said section four, because without it, section two would have embraced corporations. But it will be noticed that he does not say that with section four in the constitution, section two embraces the same subject. Having been'thought of sufficient importance to be inserted in the constitution by the convention, and adopted by the people, section four must be presumed and held to have an object and force of its own, but in connection with said section two; and that object and scope is to enable the general assembly to pass laws peculiarly suited and fitted for the listing and taxation of the property of corporations, so as to secure taxation on their property the same as on the property of individuals. It was then, as now, well known that in the extensive, scattered and diversified business and interests of corporations it is often difficult to bring upon the tax duplicate the full valuation of their property, and that to secure that end it might be necessary to pass Jaws applicable to corporations and not applicable to individuals. The same is true as to banks and bankers; but both as to corporations and as to banks and bankers, the taxation is restricted so as to be the same as that of individuals, and to thereby prevent oppression. While the courts cannot make tax laws, they can prevent inequality and oppression by enforcing the restrictions of the constitution.

Shortly after the decision of Van Allen v. The Assessors, 3 Wallace, 573, the general assembly of this state enacted statutes conforming to that decision, and providing for the taxation of shares on banks, both state and national, and repealed the statutes taxing the property of such banks. The passage of those statutes was not merely a mode of fixing the taxable value of the property of incorporated banks, but it was providing for the taxation of the shares of such banks. The power of the general assembly to pass laws taxing shares of incorporated banks in the hands of the stockholders is found in that provision of said section two of article twelve which says that laws shall be passed taxing by a uniform rule all* * * stocks, etc.

Having passed a law for the taxation of all shares, that is all stocks of incorporated banks, it repealed the law taxing the capital or property of the bank, so as to conform to the last sentence in section three of the same article, which says, “So that all property employed in banking shall always bear a burden of taxation equal to that imposed on the property of individuals.” The shares or stocks in a bank are personal property, and are employed by the owner in banking, and therefore should be taxed the same as the property of individuals. To also tax the property of the bank, less the government bonds owned and held by it, would reduce the dividends to be received by the shareholder or stockholder, and would by such double taxation impose greater burdens upon the property employed in banking than upon the property of individuals.

So as to other corporations, the general assembly could pass laws under section two of article twelve taxing the stocks of the corporation in the hands of its stockholders, and also taxing the property of the corporation, less the non-taxable bonds owned and held by it, but section four of article thirteen steps in and limits and restricts the power so granted by section two of article twelve, by providing that the taxation on the property of corporations shall be the same as on that of individuals. Aside from the limitations and restrictions in said sections three and four, the general assembly might tax both the stocks and property of banks and corporations, less untaxable bonds, without thereby imposing double taxation. Owensboro National Bank v. Owensboro, 173 U. S., 664, 681, 682.

It is because of said limitations that it is provided in section 2746, Revised Statutes, that where the capital stock of a corporation is taxed in the name of the company, that the stock shall not be taxed, and for a like reason that no provision is made for the taxation of the capital of incorporated state banks when the shareholders are taxed' on their shares. The same limitations apply to national banks, but as to them there is the additional restriction contained in section 5219, Revised Statutes of the United States.

Instead of section four of article thirteen of the constitution, by a strained construction overriding the intention of the general assembly in passing the statutes for the listing and valuation of property in the hands of individuals, and making those statutes also applicable to the listing and valuation of the property of corporations against the intention and purpose of the general assembly, that section was inserted into the constitution for the purpose of clearly authorizing the general assembly to pass laws for the taxation of the property of individuals, and different laws for the listing and valuation of the property of corporations, provided, however, that the result should be that the taxation of the property of both should be the same, that is, that the burden of taxation should rest equally upon all property in the state, whether held by individuals or corporations, and leaving the general assembly free to select the methods which in its opinion would best reach that result. The limitations and restrictions in question are as to the result, and not as to the method of taxation. The result must be the same, equality of taxation, but the methods by which such result shall be attained are left to the discretion and sound judgment of the general assembly. The obligation to pass such laws as will secure equality of taxation is by the constitution placed upon the general assembly, as was held by this court as to section twenty-one of article two of the constitution in Dalton v. State, 43 Ohio St., 660.

Whether the taxaation shall be upon the shares of incorporated state, banks or upon their capital, is also left by the constitution to the general assembly, but whichever method is adopted, the law must be so framed that the burden upon the capital invested in the state bank will at least equal the burden placed upon national bank shares. The most convenient manner of accomplishing that result is to tax the shares of both kinds of banks, state and national, by the same sections of the statute, as is now done in this’State. That method having been adopted by the general assembly, the courts have no power to interfere and adopt a different one.

The evident object and purpose of the plaintiff in error is to- so construe our constitution and statutes in connection with said sections 3701 and 5219, Revised Statutes of the United States, as to escape with a less burden of taxation than is paid upon a like amount of investment in national bank shares. This cannot be done. The burden must be equal. The taxation on national bank shares cannot be greater than upon capital invested in state banks by reason of said section 5219, and it cannot be less by reason of section two of article twelve of our constitution.

The statutes of this state providing for the listing and valuation of different classes of property for taxation in and by different modes and agencies, have been held to be constitutional by this court, and by the supreme court of the United States. Wagoner v. Loomis, 37 Ohio St., 571, and Cummings v. National Bank, 101 U. S., 153. The claim of the plaintiff in error that the United States bonds owned and held by it should be deducted from its capital stock before fixing the amount of its resources as a basis for ascertaining the value of each share of its stock, is therefore not tenable. Neither can it be allowed to pay taxes on its capital, less such bonds owned and held by it, and thereby relieve its shareholders from paying taxes on the shares held by them, because there is no statute authorizing the payment of such taxes on its capital stock, and the statute requiring payment of taxes by the shareholders being valid, it cannot be set aside or disregarded by this court. The demurrer to the petition by the court below was therefore properly sustained, and the circuit court was right in affirming the judgment.

Judgment affirmed.