CITIZENS' BANK V. BOARD OF ASSESSORS.
der the provisions of a homestead law, while his creditors are kept out of what is justly due them; bilt that matter rests in the discretion of the lawmaking power, and credit is given the debtor in full view of this comprehensive exemption. It follows that this bill eannot be sustained, and must be dismissed.
OI'.rIZENS' BANK OF LOUISIANA v. BOARD OF ASSESSORS FOB THE PARISH OF ORLEANS et al.
(Circuit Court, E. D. Louis1ana. January 23, 1893.)
1. TAXATION-ExEMPTIONS-PRESUMPTIONS. The presumption is always against an exemption from taxation, and the
burdl'n is on the party claiming the exemption to establish a legislati,e 1J:1,tent to that effect by a. clear preponderance of persuasive facUl. By the charter of the Citizens' Bank of Louisiana, as amended by Acts La. 1836, p. 16, the state loaned to the bank $12,000,000 of iUl bonds, of which $7,000,000 were actually used. These bonds were to constitute the capital of the bank, and were indorsed by it and sold. '1 he stockholders were not immediately to pay anything upon their subscriptions, bnt were merely to furnish mortgages upon (,'ll1tivated lands and slaves. Thtlse mortgagE'S were to be held as security for payment of the bonds, and were to bear 5 per cent. interest. The bank was to build certain railroads and canals, which were ultimately to be turned over to the state, and the state was to have a. small share of the profiUl of the bank, bnt only a small fraction of the profits were to be distributed either to the state or totlw shareholders nntil after tb.':l successive installments. of the bonds had been paid. 'Chus, practically, all the stock, securities, and profits of the bank 'l,'iere pledged and impounded fOl' the payment of the bonds. The. act provided that the ca[lital of the bank should be entirely exempt from taxation "during the continuance of its charter." HeW that, as the exemption was for the purpose of facilitating the repayment to the state of the Qapital thus advanced, the exemption must be construed to continue, not only for the duration of its charter as then fixed, but for as long as the charter should exist as extended by the st'lte at any future time. for the purpl-se of securing the repayment of such advances; and, the chartpr having been extended in 1874, the exemption ulsocontinned, although, by the constitution of 1868 then in force, the power of exempting property from taxation, except such as was used for church, school, or charitable purposes, was denied to the legislature. of the bonds having been paid, the legislatu!.'e. in 1880, (Acts 1880, No. 79,) authorized the bank to compromise und settle the liability of the stockholders upon their mortgages, the sums realized therefrom to be in satisfaction of the state bonds. but provided that the act shGUld not take effect unless within 12 months it was accepted, under the conditions prescribed in articles 234 and 237 of the state constitution. Article 234 PfOvided that the legislature should not renew, alter, or amend the charter of any existing corporation, or pass any general or special law for the benefit thereof, except upon condition that such corporation should thereafter "hold its charter subject to the provisions of this constitution." Held that, by accepting the act of 1880, the bank consented to waive the exemption from taxation, and the exemption would then have ceased if the legislature had power under the constitution to impose this condition. Article Ii of the constitution of Louisiana, which declares that the right of the people peaceably to assemble andpetitioD the IOvernment, or any
SAME-BANKING CAPITAL-CONSTITUTIONAL LAW.
S. SAME-WAIVER OF EXEMPTION.
OONSTITUTIONAL LAW-RIGHT OF PETITION-CORPORATIONS.
departmept ,thereot, ,shall never. ,be .allrldged, secures to every person, naturiilQrnrWicial, right tQ.aPiPly to any depi\J.1;D:lent of the governtor the redress '01'" grievances, or the ment, including the bestowal ota right, and is also a guaranty of the enjoyment of such redress or right, When obtalnl.>d, free f1'om all forfeiture or penalty for having sought or obtalned it; and when. this article is. l"ead in connection with article 234, forbidding the legisla:ture to remit the forfeiture of the charter of any existing corporation, or renew, alter, or amend the same, or pass any law for the b'Jnefit of such corporation, except upon condition that such corp9ration shall thereafter hold its charter subject to the provisions of the existing constitution, it is clear that the legislature is prohibited from at all impeding the right of petition, except that, when it has thus granted a fllvor tQ a corporation, it ll18Y interfere with that right so far as to exact It surrender' of all privileges other than those· which could be granted under the existing constitution.
It appearing that it would have been ruinous to the stockholders, and detrimental to the credit of the state, to enforce the payment of the stock mortgages' accordlngto the tenus of the Citizens' charter, owing to the destruction 'of slave property, and the devastation of the war, the act of the state in authorizing the bank to compromise the liability of the Itockholders upon their mortgages was for the benefit of the state, and . for the purpose of ultimately securing payment of its,bonds, and was therefore not a privilege orfa:vor granted to the bank.. Hence the legislature had no' authority under. the constitution, to' imp05e. upon the bank the condition that tbeexemptionfrom taxation should bethereatter waived; and, although the bank, !by.its acceptance of the act, Intended to walve the exemption, the attempted waiver was of no effect, 'and the capital of the bank·1.$ stilI. exempt from taxation.
8AME-EXEMPTION FROM TAXATION-WAIVER.
TheimpOSitlon of ,a' tax upon the shares of the bank according to the Louislanastatute, which requires the bank to pay the tax, and then look· to the dividends upon the shares and to the stockholders for reimbursement, is a tax upon the bank itself. New Orleans v. Houston, 7 Sup. Ot. Rep. 198, 119 U. S. 265, followed.
In Equity. Bill by the Citizens' Bank of LoUisiana against the board of assessors for parish .ofOrleans and others to enjoin.the collection of taxes. Heard on application for an injunction pendente lite. Granted. :,', Henry O. Miller, for complainant. E. A. O'Sullivan an.dHenry Renshaw, for city of New Orleans and board of assessors. M. J. Cunningham, Atty. Gen., and R. Lyons, for tax collectors. BILLINGS, District Judge. This case has been submitted upon an application for an injunctioIl. pendente lite. The defendants are about to levy and collect a tax upon the shares of the bank. The question to be passed upon is whether the shares are exempted frl>m taxation. The 'ortginaJ.chart:er was grB,.nted in 1833. Acts 1833, p. 172. That act contemplated that the capital of the bank, which was .fixed .at $14,000,000, .would be by the issuance by the bank of its own., bonds. Th-e subscribers· for the stock were 00 pay nothingupoll' their subscripttoml', but were to funiish mortgages upon cultivated lands and 'SlaVes to secure the payment of their SU1:¥Jeri. 'p. ,Th mo;r.t.g . es'·:w.ere to. be h.ald .l¥J a seeurity .. ... .. for of the bank, a.ft;er three. years of
BOARD OF' ASSESSORS.
effort, found itself unable to negotiate>' its o'Wnbonds. Conse.quentls, in 1836,' '(Acts 1836, p. 16,) the ch.arter of the bank was amended, and the bonds of' the' state were loaned to the bank as its capital, to the amount of $12,000,000. The state was to have a graduated interest in the profits of the bank,-a. one·sixth interest in case the loan of bonds should be taken to the amount of the full capital. The amount of state bonds actually used by the bank was· $7,000,000. In 1852 the charter of the bank, having been forfeited for a failure to comply with the law with reference to specie payment, (Acts 1852, p. 109, No. 141,) was restored to the corporation, and it was reinvested with all the rights and priv· ileges· which it enjoyed under the original and amended charter. The original and amended charter of the bank, which was for 51 years, and would have expired in 1884, was in 1874 (Acts 1874, p. 77, No. 40) extended for the further period of 27 years, viz. till 1911. At the time of the granting of the originaJ and amended charters,-L e. in 1833 and 1836,-there was no constitutional prohibition which directly or inferentially prevented the legislature from exempting from taxation the capital of the bank. In 1874, when the charter was extended, the constitution of 1868 was in foree. Article 118 of that constitution is as follows:
"Taxation sluill be equal and uniform through(J\lt the state. All property !!hall be taxed in proportion to its value, to be ascertained as directed by law. The geneJ-'al.assembly shall have power. to. exempt from taxation property actually used for church, school, or charitable purposes. The general assembly may levy an income tax upon all persons pUrsuing any occupation, trade, or calling; and all such persons shall obtain a license, as provIded by law. All tax on incomes shall be pro rata on the amount of income, or business done; and all deeds of sale made, or that may be made, by collectors of taxes, shall be received by courts in evidence as prima facie valid sales. The general assembly shall levy a poll tax on all male inhabitants of this state over twentj·· one years old, for school and charitable purposes, which tax shall never ex· ceed one dollar per annum."
The first question is as to the meaning and intent of the legislature in that part of the amended charter of 1836 upon the sub· ject of the exemption of the bank from taxation; that is, the ftrst question is, did the legislature, in the amended charter,-having established certain relations of the state to the bank, and declaring in section 4,p. 17, Acts 1836, "And the capital of said bank shall be exempted from any tax laid by the state, or by any parish or body politic under the authority of the state, during the continuance of its charter," it being provided that "the charter should continue fifty·one years," (section 30, p. 192, Original Charter Acts 1833,)-mean that the exemption should arbitrarily cease at the end of 51 years, or that the exemption should continue so long as the existing relations of the state to the bank should require that the charter should In dealing with this question, regard must be had to the rule that, when it is claimed a statute creates an exemption from taxation, it is to be strictJy construed, and that the presumption is against it. The foundation of this rule shows its meaning. It is founded upon the doctrine that taxation is so essential to the welfare of the state that the contract of exemption must be clearly
shown; that every reasonable doubt should be resolved, against it. :aut this rule dOOliJ not mean th.a.t the inference must, under all circumstances, be against the exemption. It means that the in· qujr!y must be an impartial one; the burden of satisfactorily establish,ing the exemption being uponbim who claims its existence. It must be made to appear to the court affirmatively that the intention of the legislature was· ,to exempt. To apply the rule to this case, the burden is upon the complainants; they must show that by the terms of the exemption, and under the facts as they existed at the time it . was 'granted, the exemption claimed was intended by the legislature, or the right to tax will be inferred. This intent will not be deemed established in case of mere doubt, or a merely ambiguous set of facts; there must be a clear preponderanooqf persuasive facts in favor of the exeIDiPtion, or it will be rejected. Thus, in TeDD,essee v. Whitworth, 117 U. S. 145, 6 Sup. Ct. notwithstanding this presumption, it was held that "the right to have shares ina corporation exempt from taxation was con· ferred upon a corporatiqn by a grant which gave to it all the rights, PQwers,; and privileges ,of: another corporation, if· the latter possessed such right of exemption." I will consider under this rule whether the words "during the continuance of its charter" mean "during the continuance as. fixed herein," or "during the continuance as fixed herein, and as the interests of the state may require the legislature hereafter to continue the corporation in existence." The answer to tbjiJ question will, as; it seems to me, depend upon the object of the legislature in .granting the exemption. This object will best appear from the relations of the state to the bank in 1836. Out of 12 directors, the legislature. originally appointed 6, and now it appoints 5. The state was to have an interest on a graduated scale ranging from one-sixth to one twenty-fourth in the profits of the bank, according to the amount of bonds taken by it. The bonds, to the amount of $12,000,000, to be issued by the state, were made by the state to the order of the bank, and by the latter indorsed, and were thus. payable to bearer. The stock mortgages were transferred to the state, and to .whomsoever might be the holders of the bonds. They were to bear interest at the rate of 5 per cent., and were payable in five fifth at February 1st in each of the years 1850, 1859, 1868, 1877, and 1886. The bank was to build certain railroads and canals, which ultimately were to be turned over to the state, and that portion of the profits belonging to the state should, when available to the state, be devoted to the cause of education in declared proportions throughout the profits of the bank were to be added to the capital of the bailk. There were to be no dividends among the stock· holders, nor diBtribution· of. eaJ,'nings to the state, except out of a small fra<;tion of the profits, and then not till after the sucecssive installments of the bonds .had been paid. It may be. remarked that none of the installm.ents of the bonds have been paid. I will sum up the statutory relations of the state to the bank thus disclosed by saying: The state furnished the entire capital by the. loan of its own bonds,and, till the bonds were paid, all the stock,
securities, or mortgages made by the stock subscribers, were transferred and hypothecated, and all the profits "If the bank were pledged and impounded, for the payment of the bonds. This summary suggests the way to reach an answer to the question, how long was the exemption to continue? For 51 years, or so long as the charter relations of the state to the exempted property continued? The object of the exemption must determine its originally expressed period of exemption. Here was an institution which had, and was to have, nothing for itself till its profits had with the stock mortgages paid the state's bonds. The exemption of its capital from ta:mtion was the exemption of something out of which the state's .own obligations were to be paid, and the public works-the railroads and canals--which the bank was to build were to be constructed. Thf' exemption was therefore, till the ,bonds should be paid, a reservation of the state's own property from taxation. One-fifth part of these bonds were not to mature till two years after the original period for the existence of the charter had elapsed. It seems to me that; the chief object of the exemption being to facilitate the payment of the state's own bonds, the period of exemption, declared m tIS:, be construed to be so long as the charter was by the legislature co}!tiulled in order that the state's bonds might be paid. It is true 51 years was a long period, but even in 1836 it was found necessary make the last installment of the bonds payable 53 years after th,? original charter commenced. The enterprise was of such great public moment that the state advanced the entire capital, possibly $12,('00,000, actually $7,000,000. The exemption was for the purpOfle of facilitating the repayment to the state for this advance, and thP. provision for it in the amended charter "during the continuance -of its meant, not only as therein fixed, but as the payment uf the state's obligations should lead the state afterwards to extend it. It is the whole charter, the object of the exemption, and the destination of the profits of the institution, which require this inference. Thl" supreme court, in Bank v. Bouny, 32 La. Ann. 245, held that, without regard to this clause expressly exempting from taxation the .capital, the reservation of the profits for the extinguishment of the bonds of the state cantained in the charter of 1836 prohibited the taxation of the accumulations by the state. If a corporation with-out capital, save as derived from its profits, is, by the scope and meaning of its charter, so destined and dedicated to the purposes of the state that, even without specific exemption of its accumulations, they.cannot be taxed by the state, it mnst follow that when, in the same charter, the capital is expressly exempted during its exiRtE'uce under the charter, the express exemption is in keeping with the implied, and inheres in the charter throughout its original and -prolonged term, if it be kept alive by the state, to render this ex-elusive destination or dedication available to itself. This was the view of the legislature in 1874, when they extended the charter. The act making that extension is Act No. 40, p. 77, and, with its title and preamble, is as follows:
"Whereas, by reason of the great su1fered by the agricultural Interest ,of the state In consequence of the late war, it would be ruinous for the stock-
hO . .of 111e' CltJzePs'BIliJk of .. ... " .' Years.' betQre, ,the. '. umltatiOno.f the pay wtth1Q.... .' nQ .. . the itmoUJll ofa.rreared Insta,llnlents and 'due by them; as wellu1the' balance of thelrtndebtedness;' . and wherli\8S, the sacrifiCe of the lands i!nortgaged for tliepa.yment of the state 'llonds;i8slled In favor of· the ban», w!>uldendangel' the security of the state; an4, '\Vhereas, it is the iu,terest of the state that apool0I!-gation of the charter 0:( the CitIzens'Bank be so asto enable said Institution ,toiJollect'the debts due'b7 the stockholders, and thereby facilitate'the payment .t the state bon(ls: ' " I "Section '1. Be it enaoted by the:seJl8,teand house of representatives of the ,tate convened, ,that thll vrovision of the thirtieth llection of the ",crt entitled act to Incorporate the Citizens' Bank of Loui8l.ana,', approved April 1, 1833, 'Which reads as follows':,'And the charter shall continue for and dUring the space of fifty-one years from the passage thereof\!--be amended,andre.enacted as follows: 'That the charter of the Citizens' BlUllr. of Louisiana ,$allcontln",efor and during the space of twenty-five yel1rs trom IlDd after tlme fixed torJts liquidation by the ,said charter, and shall expire on the thlrt1eth of January, 1911.' "See. 2. Be it further enacted, . etA, that the', Citizens' Bank of Louisiana, through its board of directors, be, and is hereby, authorized, to extend, with the ot the holders thereof, all the state bonds·iS8uedln,lts favor under the section of the act enti1;led'Anact amendatory and supplementary to the.eveml acts relaUve to the act to Incorporate the Citizens' Bank ot LouiSUt:b.a/approved January 30, 1836; now outstanding, as well as all Interest warrant,slSBued by said ,bank falling due from and atterthe passage of this act, to suchttme and on such· conditions as, ·may be agreed upon with the holders of said. l?pnds and warrant!!: ..pI'9v1ded, saIq. extension be not made for a period than,twenty-tlve yearS from the respective maturities, and at no hl'gher rate of than the said bonds now boor. "Sec; 3. Be it further Elttacted, etc., tliat the present act shall be In force from aud atter Its pasSll,ge, an,y law to, the contrary notwithstanding."
There certainly are grave difficulties in the way of maintaining that under this statute, which is a tripartite contract,-that itl. a 'contract between the state, the bank, and the" bondholders,-the state can secure the extension Of its own bonds for the period of 25 years,and the contiiluation of the eharter which, in effect, destines the profits of the bank to the payment of' its bonds for 2 years beyond' that period. and at the time disregard that destination by a tax which, by the decision of the supreme trio bunal of the state. is held to be so inconsistent with that destination , as to be' prohibited by it. It is to be observed that the legislature merely extended the charter, inferring that the original words ."during its continuance" carried With them the original exemption throughout the period of the extension. I think in this the legislature drew the inference from the entire charter, which a study of it requires. . The reMon, in the original charter, as amended- in 1836, for making the duration of the exemption coextensive with any prolongation of the charter, inhered" in the purpose which was paramount with the state npon the subject of time in connection with ,the eXUltenceof the'batlk, in that the bank and the exemption endure tilFthebondsshe hadbolTowed had been paid; but in !the extension (:lfthe charter, and 'the eontinuance of the exemption, tW() other parties alSo had an interest and fixed rights,-the bank and the bondholders. It,ls unnecessary tQ",speak of. the inter,est otthe .bondholders, and there .is a oomplication as to their right to insist upon the ex.emp-
CITIZENS' BANK 11. BOARD OF ASSESSORS.
tion from their release of the bank, except so far as relates to the stock mortgages. It may, however, be remarked that, as between the holders of the bonds and the obligors upon the bonds, the state was the maker and principal, and the bank the indorser and surety, though, as between themselves, the bank was under the obligation to pay as the principal. The release of the surety did noil discharge the principal, and the state was still left liable as a prin· cipal obligor, who had the right to look to the bank for repayment; and thus there exists the same necessity to consider the question of exemption as though there had been no release of the bank by the holders, for the bank had and haB an interest subordinareonly to that of the state in having the exemption maintained The period of its existence. and with it the right of the state to partici· pate in its profits. to the extent of reserving one-sixth part thereof, and the. pledge and impounding of all its profits, were continued along with its existence for the further period of 27 years. It was the payee and second obligor upon the state bonds whose payment WaB by the same act postponed. It has a right, therefore, as trustee for its own stockholders, to insist upon the exemption, unless it has by some act waived this right. The respondents, the tax officers, say it has waived this right by assenting to the condition of Act No. 79, Acts 1880. It is CODceded that the directors of the bank gave the assent, as requir« by that act. The act is as follows:
"Whereas, due proof has been shown to the house In which this bID oligInated that article 48 of the constitution has been complied with, therefore: "Section 1. Be it enacted by the general aBBembly of the state of Louisiana, that the Citizens' Bank of Louisiana, In addition to the powers now conferred by law, shall have power to compromise and settle the liability of the mortgage stockholders of said bank arising out of the stock mortgages granted by them to secure their subscriptions to the capital stock of sald bank; sald compromi$eB to be made when deemed judicious by Bald bank, and with the assent of the bondholders: provided, the same be approved by the directors on the part of the state, as provided In this act, on such terms as· may be agreed upon; and, when effected, the Bald stock mortgages to be released and canceled. "Second. That all sums realized from said compromises, as well as from the enforcement of said mortgages, by the usual legal proceedings, shall be held and applied by the banking department of said bank to the satisfaction of the bonds of the state, Issued in aid of the bank, and to the legal liabilities of said mortgage stock department, and to the neceBBary expenses of Bald department. "Third. That the directors for the state on the board of Bald bank shall be increased to five, to be appointed by the governor, when this act shall be accepted by the bank, whose duties shall be the same as now provided by law; and, in addition thereto, they shall supervise the. compromise, as contemplated In section one ot this act, and tor this purpose they shall hold meetings. when upon 80 to meet by the president of the board of directors of the Citizens' Bank, and shall keep a reoord of their meetings, and no compromises under the provisions of this act shall be effected without the approval of the majority of said directol'B on the part ot the state. "Fourth. That this act shall not be binding or confer any right upon the banX unless accepted within twelve months from the date of this act, and under the conditions prescribed in articles 234 and 237 of the constitution; such al> oopta.n.ce to be manifested by the bank in wrltli1g, and tiled in the otllce ot the aecretary ot state. · · ... , .
It is claimed, and,I,think justly, that the meaning of the as.'lel1t is 'tbatthe directors agreed to waive the exemption, as they did
the legislature. If the legisla.ture had a right, under the, constitution, to require this agreement as a condition of an act or statute inuring to the benefit of the bank, then the agreement to waive .is valid and obligatory. If the legislature, under the constitution" ·had not the right to require this agreement as such a condition, then the agreement is void, and the rights of the bank are unaffected by it. In order to determine this question, we must look at two provisions of the 234, and article 5. These articles are as follows, (article 234:)
"The .general assembly shaJ1 not' remit the forfeiture of the charter of any corporation now existing, alter, or amend the sallie, nor pass any general or ilpecial law for the of snch corporation, except upon the can· dition that such corporation shall thereafter hold its charter snbject to t,he provisions of this constitution." 1 '
aU ,other: special privileges enjoyed by the bank, as required by
ot the people peaceably, to assemJ:lle and petition the government, or any department thereof, shall never be al;1l1qged." , '
"I ta,ke iUto be undeniable that the ,"right of petition," as that expresSion is used in the constitution of the state, means the right of every being, naturaJ.. and artificial, to apply to any department of government, including the legislature, for the redress of grievance or the bestowal of right, and is a further guaranty of the .of such redress or right when obtained,. free from all forfeitw-e or penalty for having sought or obtained it. If these are read together, it is clear that they mean that the constitution prohibited the legislature from at, all impeding the right of petition, except that in case it remitted a forfeiture to aC9rporation, or ,altered its charter, or passed any general or special law for ita it might interfere with that right, so far as to exact a .sUrrender of all privileges other than those which could be granted under the existing constitution. This was a power . given to the legislature in case the alteration or oJ,'. general or special law was for' the benefit of the corporati,on, and not, as in this case, where the amendment-the speciallaw,.....was to enable the bank to apply certain securities to the payment of obligations upon which the state was an obligor, and thus to protect the credit of the state. The question turns upon whether the thing sought was such a thing as is meant and specified in article 234. The thing granted was for thebank,with the assent of the directors appointed by the state, .to for the state and bondholders out of the stock 'by compromise, 1. e. without a foreclosure and sale. These stock mortgages were hypothecations of plantations and slaves. The destruction of slavery 'had reduced the value of the more fh!ln half, or possibly two thirds. It was necessary to find a purchaser for the mortgaged property, and at a plica eql1al to the par value of the stock of the subscriber, or for bank itself to become the purchaser of the property. Tlw
CITIZENS' BANK tI. BOARD OJ' ASSESSORS.
ftrst Wail impossible; the second was ruinous for the state. r.rherefore it Wail enacted that, with the consent of the state's representatives, the bank might, upon receipt of a fair sum, by way of adjustment, release any of the mortgaged property, and apl'ly the sum reaJized to the payment of the state's bonds. This was in no true sense a law passed for the benefit of the bank. It was rather a legislative permission to resort to the only practicable method of making the mortgages available to the extinguish. ment of the state's bonds, and should be denominated as a law passed by the state for the benefit of itself. Again, it was in no sense the creation of a'special right, but was. rather the recognition by the state of a. right evidently existing, which any com·1I of equity would, in a case where all the parties were before the court, have recognized, without the act of 1880. It would follow that the legislature, in compelling the bank to make any renunciation in order to have force and operation given to that statute, acted, not only without authority, but in defiance of the con· stitutional prohibition which forbade it to impede. the right of peti· tion, except in a certain claBS of cases, of which the application for the grant of recognition contained in the act of 1880 was not one; and that the renunciation exacted from the bank by theJegislature, in violation of the constitution of the state, is void. My conclusion, therefore, is that the original charter contemplated and declared that the exemption should be coextensive with the charter, and that the bank has done nothing which can prevent her from insisting upon her capital being exempt from taxation, in accordance with the terms of her charter. The thing sought by this bill to be preserved from taxation is the shares of the stockholders. . he thing exempted in the charter eo nomine, is the capital of T the bank. In Bank v. Bouny, supra, the supreme court of this state held that, since the profits were pledged and impounded for the payment of the state's bonds, taxation by the state of the accumulations and of the shares was prohibited. In New Orleans v. Houston, 119 U. S. 265, 7 Sup. Ct. Rep. 198, the supreme court of the United States held that under the statute prescribing the manner of collecting a tax upon the shares of a corporation, as it then existed, (and it is unchanged,) since the corporation is required to pay the tax, and must look to the dividends upon the shares and to the stockholders for reimbursement, it was a tax upon the corporation itself. A fortiori would this be true when dividends are prohibited, and the profits or earnings of the cor· porations are otherwise destined. Let, therefore. the injunction pendente lite issue. v.54F.no.1-6
.:lliEVELAND 'O!TY FORGE mON ;00. v. TAYLOR BROS. mON-WORKS CO., Limlted. BRElNTISS.TOOL & SUPPLY CO. v. SAME. NILES TOOL >WORKS v.SAME. "(C1rcQit Court, E. D. LoulslaIl8.
Nos. 12,154, 12,:ui2, 12,153.
RIGHTS OIl' CREDITORS-ATTAOIDIENTS.
A provi8l.0n'1n the charter of acorpl>ration, requiring the advertisement of 10 days' notice of a. stockholdel'lil'. meeting for the purpose at altering or amendlp.g the cJlarter, is so far for the benefit of creditors that a resothe corporation,pil.ssed at a meet;l.n.g called without such notice, inefrectual to prevent a subsequent attachment of the corpora· ,tion's' :property by exlsting creditors. .
These were three a:etionS commenced by attaohments brought, the Cleveland Clty ]forge Iron Company, thePnmtis$ TOOl & Supply Company, and the Niles Tool Works Company, Linlited.. Heard on the of the defendant coworation to dissolv.e the attachments anddism.i1os the suits. Denied. '.' The motion to dissolve the attachments was baaed upon the ground tbatthe defendant corporation had been dissolved before the attachments were levied, and' the. was as to whether thedi.I!&Qlution had taken pllWeas creditors. . A resolution purpol"tingto dissolve. the corporation in fact been pailsed at a meethJg of the stockholders hellI ;November but this meeting :was held without any advertisement of notice thereof. Article5 tof.the corporation's charteJ:"required 10 days' notice should be ,given of anYJDeeting Wbeheld for the purpQse of altering 01", amending the charter; a,nd article 7 declared that whenever the corporation was dissolved. its affairs should. be, wound up by three stockholders, to be appointed as liquidators at a general meeting of the stockholders, convened after 30 days'advertised notice. Denegt.e,'Bayne & Denegre, for plaintiff Cleveland City Forge . Iron W. S. Ptll'kerson, for plaintiffs Prentiss Tool & Supply Co. and Niles Tool WorkS. T. J. &:inm.es, B. K. Miller, and A. H.Wilson, for defendants. BILLINGS, District Judge. In' all these casell the same question is presented. In each the suit was commenced with an attach· ment of the property of the defendants. In the first the attachment was levied and the citation served befMe fany steps were taken on the part of the defendants towards recording the dissolution. In the last two cases the meeting of the stockholders of the defendant corporation had been held, and the resolution to dissolve had been passed, but not recorded before the filing of the euit. According to the return of the marshal in all of the cases, service was made on December 7, 1892, and according to the certificate of the recorder of mortgages the resolution of the