62

Ryan at al. v. City of Cincinnati,

Board of Public Work ;-the words are "three-fourths of the property represented." There is also erased from the printed form the guarantee of these signers by which they agree to make good to the city any deficiency in the assessment caused by the insufficiency of value of the property of those not signing this petition. These last mentioned provisions are stricken out. It is argued by the plaintiff's that this is a statement to the Board of Public Works, that the signers had intended expressly to bring themselves outside the provisions of sec. 2272. This sec. 2272 operates as an exception to the restriction placed upon council by sec. 2271, which restriction limits the assessment in this case to twenty-five per cent. of the taxable value of the property. Section 2272 provides that in cities of the first class, "when a petition subscribed by three-fourths in interest of the owners of property abutting upon any street or highway of any description, is regularly presented to council for the purpose, the cost of any improvement of such street or highway may be assessed and collected in equal annual installments, proportioned to the whole assessment in a manner to be indicated in the petition, but if not so indicated, then in the manner which may be fixed by council."

Then it makes provision for non-signers or petitioners. In this case the claim is that these erasures were an announcement to the board of public works that the petitioners were not within the provision of sec. 2272, and inasmuch as they did not constitute three-fourths in interest that was a statement to the board of public works, that they were not to be held under that section for the full assessmentthat it was a statement that they did not waive the limitation of twenty-five per cent. Now, by striking out those words, the petitioners simply avoid saying that they are three-fourths of the property-owners in interest. They also say that they will not be bound for any deficiency by reason of the non-collectibility from non-signers. That is all they say. The petition does not come within sec. 2272 in its terms, because it is not signed by three-fourths of the property owners in interest. It does not bring sec. 2272 into operation, because that only relates to a petition that is signed by three-fourths. If it informed by erasures the board of public works that they were not three-fourths, I cannot see by what process of reasoning they then advised them of anything which related to sec. 2272, which applies to the three-fourths only. By advising the board of public works that they did not constitute three-fourths, do they advise them that they intend to except themselves expressly from the provision of a section that applies only to cases where threefourths sign the petition? I do not understand how that reasoning can be sustained. It then simply stands as a petition without regard to sec. 2272, and that brings us to the question whether that operates as an estoppel irrespective of the provisions of these two sections.

Now, a mere petition for improvement, I take it, does not estop property-owners from claiming the privileges of the statute, but this was not a mere petition for improvement, it was a petition also that the assessment for the whole cost of such improvement, except the cost of intersection and the two per cent., to be made and collected in ten equal annual installments, shall be made upon them; that is the effect of this writing.

Now, what effect did that have upon the authorities of the city? It was addressed to the board of public works, it was not addressed to the city council, but sec. 2272 requires that a petition shall be addressed to council only when it is a petition signed by three-fourths, so the fact that it was not addressed to council, but to the board of public works, can have no bearing in view of the conclusion we have reached, that sec. 2272 has no relation, no application to this petition.

It was known to these property-owners that the initial steps, the very first steps, under the statute must be taken by the board of public works, and that whatever was done by council must be done upon the recommendation of the board of public works, so when they addressed the board of public works, they did address the only authority that the statute provides for as the representative of the city for such a purpose. They therefore addressed the city through its board of public works, and they did set this improvement and all the legislation connected with it in motion, and as a conclusion of fact to be drawn from these circumstances, and from this evidence I cannot find otherwise than they, as far as they could do it, caused this improvement to be made.

Now, in the case of Mitchell v. The Commissioners of Franklin County, 25 O. S., 143, it was held by the Supreme Court that notwithstanding the unconstitutionality of the act where the abutting lot-owners cause a street to be improved under the act and bonds of the city to be issued to pay for the improvement, all who have participated in causing the improvement to be made are estopped from denying the validity of the assessment made in accordance with the act to pay such bonds. There the Supreme Court held that where an abutting property-owner caused an

improvement to be made by his petition, where he participates in causing the improvement to be made, and the improvement is made in consequence of his act, and he gets the benefit of that improvement, he cannot after all that is done turn around and attack the validity of the act.

In the case of Tone v. Columbus, 39 Ohio St., 251, this same improvement came before the Supreme Court again, and there they held that while the petitioner by causing the improvement to be made is estopped from attacking the validity of the act because it is unconstitutional, that, however, does not estop him from attacking the validity of the action of the city government-of council-in passing its various ordinances and resolutions. He can be held only to have intended to say by his petition for the improvement, "I petition that this improvement shall be made, but that it shall be made according to law." And the Supreme Court, however, said that active participation in the improvement will estop the party engaged therein from denying the validity of the assessment. This is not a case by which it is attempted to raise an estoppel by silence, but by reason of active participation in causing the improvement to be made. The case of Tone v. Columbus, makes no exception for cases of that sort-where a person actively participates in causing the improvement to be made he is estopped from denying the validity of the assessment.

Now, in this case, no question is made as to the validity of these various resolutions and ordinances save and except to that portion of the ordinance of assessment which is in excess of the twenty-five per cent. Then the inquiry is, "can they, by reason of this petition, be said to have caused this assessment to be made for the full amount regardless of the twenty-five per cent?"

It is a petition first for the improvement. It is a matter that is to be recommended first by the board of public works. Then it is also a petition that in connection with the improvement the assessment for the whole cost shall be placed upon their property.

When a petition relates to an assessment it must neceasarily be intended to address that body upon whom is cast the duty of making that assessment. Under the statute it is council that makes the assessment, and when the petition addresses the board of public works and prays the improvement, and at the same time that the assessment for the whole shall be cast upon them, it seems to me as a conclusion from the various requirements of the statute that it is intended to address itself to that body whose duty it is in the course of legislation to make the assessment. The duty of passing the ordinance of assessment was upon the council; therefore so much of this petition as addressed to the board of public works in connection with the petition for the improvement, sets forth as an inducement that the assessment shall be placed upon their property, can be held to have been addressed as much to the city council as to the board of public works.

Now, when a property-owner causes an improvement to be made, and causes assessment to be made, if he thus causes an improvement to be made upon the strength of a petition that the assessment should be made for the whole cost upon him, in the language of the Supreme Court in the case of Columbus v. Tone, it would be inequitable for him to turn back when pay-day comes, and say, "I did not intend what I said; I meant to restrict you to what I did not say, that is, to twentyfive per cent." I think in a case of this sort the ordinary doctrine of estoppel applies. So, therefore, when the petitioners applied to the city comptroller to limit the collection, or to separate what they considered illegal from the valid part, and he refused, their application was properly refused.

As to the part of the Ryan case in which the evidence was that after the verdict in the damage case, the Ryans notified council that they withdrew their signature from the petition, after having suffered their signature to remain with the city for nearly three years, and having caused the city to pass all these resolutions and go to the expense of the proceedings in court (which is one of the items which enter into the costs and expenses to be assessed by virtue of sec. 2284, of the statutes), and made no tender of reimbursement, did not offer to indemnify the city, but simply after having these advantages and putting the city to this expense and having secured all this legislation, they seek to withdraw their name; whether that shall have the effect of removing from them the estoppel-I think the mere statement of the case is almost a decision of it.

Upon the whole case, therefore, the petition will have to be dismissed. Harmon, Colston, Goldsmith & Hoadly, Wm. Wirthington and F. C. Ampt, for plaintiffs.

Hortsman, Hadden, Foraker & Galvin, for defendant.

[Superior Court of Cincinnati, General Term.]

HENRY PROBASCO V. FREDERICK RAINE, AUDITOR.

88

1. By article 12, section 2 of the constitution of 1851, the legislature has no power to exempt from taxation by express enactment, stocks or bonds of this state issued under that constitution and held by residents of this state.

2. In view of this want of power, the act of 1856 (53 Ohio L., 112) authorizing the issue of certificates of indebtedness of the state known as canal stock can not be construed to include in its provisions, the clause of the canal act of 1825 (Chase St., sec. 1473) exempting stock issued under that act from taxation, although without the constitutional objection, language in the act of 1856 referring to the act of 1825 might bear such construction.

3. So far as stockholders were concerned, the stock of 1825 was paid and extinguished, and the stock of 1856 was a new contract of loan taxation of which in no respect impaired the state's obligation under it.

4. Taxation of canal stock held by a resident of this state is not taxation of public property used exclusively for any public purpose.

5. Good faith in a tax return, which does not state truly the taxable personal property held by the taxpayer because of a mistake of law honestly entertained, does not prevent it from being a false return with section 2781 as amended 83 O. L., 92, when only inaction on the part of the tax official is shown,

TAFT, J.

These are two suits for injunction reserved on agreed statements of facts by the court at special term. Henry Probasco, a resident of this county, has held in his own right and as trustee during the six years beginning with 1881 and ending with 1886, upwards of $140,000 in the aggregate of the par value of certificates of indebtedness issued by the commissioners of the sinking fund of Ohio under the authority of an act of the general assembly passed April 8, 1856 (53 Ohio L., 112.) The auditor proposes to place upon the duplicate of the county in Mr. Probasco's name the varying amounts of these certificates which he held on the day before the second Monday in April of each of the six years, and thus authorize the county treasurer to collect tax on the same. Mr. Probasco has never listed the same for taxation during the years mentioned. None of the certificates of this kind have ever been listed for taxation or subjected thereto by state executive authority.

The form of the certificates was as follows:

"STATE OF OHIO CANAL STOCK, COLUMBUS, OHIO.

Office of the Commissioners of the Sinking Fund:

Be it known that the State of Ohio owes to or assigns the sum of bearing interest from the - day of ——, 18—. inclusively, at the rate of six per centum per annum, payable half yearly on the first days of January and July in the city of New York being stock created in pursuance of the act of the general assembly of the State of Ohio passed April 8, 1856, the principle of which is reimbursable in the city of New York at the pleasure of the state, after the thirty-first day of December, 1885, which debt is recorded in this office, and is transferable only by appearance in person or by attorney according to law upon the books of the commissioners of the sinking tund.”

The certificates were signed by the auditor of state as president of the sinking fund commissioners, countersigned by the secretary of the state, and certified to be Judgment reversed by the Supreme Court; opinion 50 O. S.. 378

Superior Court of Cincinnati.

88

in due form of law and valid by the attorney-general. On the margin at the top is the following: "Provisions of the Constitution of Ohio adopted, A. D. 1851, Article 7. The faith of the state being pledged for the payment of its public debt, in order to provide therefor, there shall be created a sinking fund which shall be sufficient to pay the accruing interest on such debt and annually to reduce the principal thereof, by a sum not less than one hundred thousand dollars, increased yearly, and each and every year by compounding at the rate of six per cent. per annum. Art. 7. The auditor of state, secretary of state aud attorney-general, are hereby created a board of commissioners to be styled The Commissioners of the Sinking Fund."

The plaintiff purchased his certificates from persons who bought them under this act of 1856 referred to in the body of the certificates. All the certificates sought to be taxed have been redeemed by the state, and the question presented to this court for decision is whether the plaintiff should have returned these certificates, and not having done so, whether the auditor of this county can now legally assess him on the grand duplicate of the county for the years from 1881 to 1886.

Section 2736, Rev. Stat., provides as follows: Each person required to list property shall annually upon receiving a blank for that purpose from the assessor or within ten days thereafter, make out and deliver to the assessor, a statement verified by his oath, of all the personal property, moneys, credits, investments in bonds, stocks, joint-stock companies, annuities or otherwise, in his possession, or under his control, on the day preceding the second Monday in April of that year, which he is required to list for taxation, either as owner or holder thereof, or as parent, husband. guardian, trustee, executor, administrator, receiver, accounting officer, partner, agent, factor or otherwise.

Section 2737 provides the form of the return to be made, and under the fifteenth subdivision is as follows: fifteenth, the amount of all the moneys invested in bonds, stocks, joint-stock companies, annuities or otherwise.

Section 2731 provides that all property, whether real or personal in this state and whether belonging to individuals or corporations; and all moneys, credits, investments in bonds, stocks or otherwise, of persons residing in this state, shall be subject to taxation, except only such as may be expressly exempted therefrom.

Section 2730, which is a section defining the meaning of terms used in the Title of Taxation, contains the following: "The terms 'investments in bonds' shall be held to mean and include all moneys in bonds or certificates of indebtedness of whatever kind, whether issued by incorporated or unincorporated companies, towns, cities, villages, townships, counties, states or other incorporations, or by the United States, held by persons residing in this state, whether for themselves or others.

It is very clear that the certificates in question being certificates of indebtedness of a state, come under the definition of "investments in bonds" given in sec. 2730 cited above, and that unless the legislature had not the power to tax them or has somewhere expressly exempted them from taxation, that the plaintiff should have returned them while he held them. It is claimed by counsel for the plaintiff both that the legislature had no power to tax them, and that it has expressly exempted them. This is said to follow from the history of the legislation by which they were issued. The act under which they were issued is entitled "an act to provide for the payment of the public debt of the state due January 1, 1857, and for the payment of the interest on the public debt." By the first section of the act it is provided "That the commissioners of the sinking fund be and they are hereby authorized to issue in accordance with the provisions aud conditions of the act of February 4, 1825, creating the state debt, and of the several acts amendatory thereof, transferable certificates of stock, bearing interest at a rate of interest not exceeding six per centum per annum payable semi-annually at the transfer agency in the city of New York, the principal to be redeemable at the pleasure of the state at such time between the years 1875 and 1886 as the commissioners may determine; the certificates to be transferable at said agency in the manner prescribed by law or coupon certificates as the said commissioners may deem most advisable to be registered at said agency.

Section 2. The said commissioners shall not, by authority of this act, issue certificates to an amount greater than the principal of the funded debt of the state, made payable at the pleasure of the state after the year 1856, after the application of the sinking fund available for that purpose to the payment thereof.

Section 3. The moneys arising from the sale of the certificates authorized by this act shall be applied by the commissioners of the sinking fund to the redemption of the certificates of the funded debt of the state, made payable as stated in the second section of this act.

Section 4 provides for payment of interest on the public debt.

88

Probasco v. Raine, Auditor.

The act of 1825 referred to in this law, is the act in which canal commissioners were appointed, and canals were ordered constructed, and an indebtedness created therefor. The commissioners were authorized to issue certificates as follows (Chase's Statutes, 1473-sec. 4).

"They shall borrow from time to time, moneys on the credit of the state, at a rate of interest not exceeding six per centum per annum, and not exceeding in the year eighteen hundred and twenty-five, the sum of four hundred thousand dollars, and in any succeeding year, during the progress of the work hereby contemplated, a sum which shall not exceed six hundred thousand dollars, for which moneys so to be borrowed, they shall insue [issue] transferable certificates of stock redeemable at the pleasure of the state, at such time between the year one thousand eight hundred and fifty, and the year one thousand eight hundred and seventy-five, as the said commissioners of the canal fund may determine, to be paid out of said fund, and transferable at such place or places, as in the opinion of the said commissioners of the canal fund, shall best promote the interest of the state.'

Provision is made in section 5 of this act for a yearly taxation in addition to the taxation for ordinary purposes, and then the act proceeds in the same section (Chase's St., 1474, sec. 5), " And the faith of the state is hereby pledged, that the tax hereby levied shall not be altered or reduced, so as to impair the security hereby pledged for the payment of the interest, and the final redemption of the principal sums to be borrowed by virtue of this act; and that no tax shall ever be levied by the legislature, or under the authority of this state, on the stock to be created by virtue of this act, nor on the interest which may be payable thereon; and further, that the value of the said stock shall be in no wise impaired by any legislative act of this state."

In 1826 another act was passed providing for further construction and indebtedness and with similar provisions as to taxation of certificates. A series of acts followed which it is not now necessary to specify.

It will be seen that by the act of 1825 the stock or certificates issued thereunder, were expressly exempted from taxation, and that such exemption may be said to be one of the provisions and conditions of the act of 1825 creating the state debt. Did the legislature, in 1856, intend to make such exemption from taxation a part of the contract in the issuance of the stock under discussion? Under the constitution of 1802 the legislature had power to exempt such property as it chose from taxation, and it has been definitely decided by the Supreme Court of the United States, in Piqua Bank v. Knoop, 16 Howard, 369, and Jefferson Bank v. Skelly, 1 Black, 436, that under that constitution one legislature could make a contract for the state with a citizen containing an exemption from taxation as a condition which would bind succeeding legislatures in the exercise of the sovereign power of taxation. In the constitution of 1851, a change was made, and the wide discretion given to the legislature under the one of 1802, as to the mode by which a revenue should be raised, was much restricted. Article XII, sec. 2, of the present constitution provides "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; but burying grounds, public school houses, houses used exclusively for public worship, institutions of purely public charity, public property used exclusively for any public purpose and personal property to an amount not exceeding in value $200.00 for each individual may by general laws be exempted from taxation, but all such laws shall be subject to alteration or repeal, and the value of all property so exempted shall from time to time be ascertained and published as may be directed by law."

The language of this section is mandatory, and requires the legislature to tax all the property therein described, except what is specifically named as within the discretion of the legislature to tax or exempt. Exchange Bank v. Hines, 3 Ohio St., 1; Zanesville v. Richards, 5 Ohio St., 589; Bradley v. Bauder, 36 Ohio St., 28. Are the certificates in this case, within the terms used in the constitution to describe the property upon which the legislature is enjoined to levy taxes? At the time the constitution was adopted, certificates of indebtedness issued by corporations, municipal and state, were known as stocks, and would be naturally included within the term "investments in stocks," used in art. XII, sec. 2, of the constitution. This appears from the constitutional debates and current dictionaries and literature. Moreover, it is apparent from the definition of "investments in stocks," given in the first taxing law passed after the adoption of the constitution in 1851 (50 Ohio L., 136). Indeed, the certificates in the case at bar bear the name upon them, "Canal Stock." In the present law and by present usage these certificates are known as investments in bonds. Unless, therefore, there is some reason for holding that the term "investments in stock" used in the constitution, though wide