Miller v. Ratterman

• Decision Date: 04 March 1890
• Parties: MILLER v. RATTERMAN, County Treasurer.
• Court: Ohio Supreme Court

24 N.E. 496

47 Ohio St. 141

MILLER v. RATTERMAN, County Treasurer.

Supreme Court of Ohio.

March 4, 1890

[Copyrighted Material Omitted]

Error to superior court of Cincinnati.

The action below was brought against the treasurer of Hamilton county to enjoin the collection of a tax. Plaintiff alleged in his petition, in substance, that the county auditor had placed upon the duplicate the sum of $23,700, purporting to be amount and value of preferred stock held by the plaintiff as executor, in the Dayton & Michigan Railroad Company and caused to be assessed against the plaintiff the sum of $493.22 as tax and penalty thereon; that the Dayton &amp Michigan Railroad Company is a corporation existing under the laws of Ohio, and that its property is situated wholly within this state, and that its stocks are not taxable under the laws of Ohio; and that the assessment is wholly illegal and void. By answer and cross-petition the defendant set up a claim for taxes for the six years preceding upon the stock described in the petition, amounting in all to $2,455.32, and penalty, averring that the personal property on which the taxes were assessed were certificates of the Dayton & Michigan Railroad Company, which were issued by the company as evidence of indebtedness of the company to the holders thereof, the same bearing interest at the rate of 8 per centum per annum, payable quarterly, and secured by mortgage of the company on all its property, income, and franchises, and by the Cincinnati, Hamilton & Dayton Railroad Company on its lease thereof, which mortgage had been recorded in all the counties in Ohio in which the property of the company was located, and was still in force.

At the trial, copies of the certificates and of the mortgage were introduced in evidence. The former is as follows: ‘ Certificate of Stock. No. ___. Shares _____. Dayton & Michigan Railroad Co. preferred stock. Secured by mortgage, and guarantied by the Cincinnati, Hamilton & Dayton Railroad Company. This certifies that _____ is the owner of _____ shares, of fifty dollars each, in the preferred stock of the Dayton & Michigan Railroad Company, transferable only on the books of the company, in person or by attorney, on the surrender of this certificate. This stock is issued in pursuance of an act of the general assembly of Ohio, passed April 16, 1870, entitled ‘ An act to enable railroad companies to redeem their bonded debts,’ and in accordance with, and subject to, the terms and conditions of a resolution of the stockholders of this company passed December 22, 1870, indorsed on the back hereof. The dividends, at the rate of eight per cent. per annum, are payable quarterly at the office of the Cincinnati, Hamilton & Dayton Railroad Company, in Cincinnati, on the first Tuesday of January, April, July, and October of each year, and are guarantied by that company. Witness the seal of the corporation, and signatures of the president and secretary, at Toledo, this ___ day of _____, 188_. _____, President. _____, Secretary. Authorized issue, $3,700,000. Shares, $50 each.'

Indorsement on certificate: ‘ This is to certify that on the 22d day of December, 1870, the stockholders of the Dayton & Michigan Railroad Company adopted the following resolution: ‘ Resolved, that this company, under and by virtue of the provisions of the act of the general assembly of the state of Ohio, entitled, ‘ An act to enable railroad companies to redeem their bonded debts,’ passed April 16, 1870, and for the purpose of providing means for the redemption of its bonds aforesaid, secured by mortgage on its road, does hereby create and authorize the issue of a preferred stock to an amount of three million seven hundred thousand dollars, divided into seventy-four thousand shares of fifty dollars each, and do hereby promise and guaranty to the holders thereof dividends thereon, payable quarterly, on the first Tuesdays of January, April, July, and October in each year, at the office of the Cincinnati, Hamilton & Dayton Railroad Company, at Cincinnati, at the rate of eight per centum per annum, on the par or nominal value thereof, provided, however, that the holders of the certificates of said preferred stock shall not have or exercise the right to vote the same, or as owners of the same, at any meeting of the holders of the capital stock of said company: and provided, also, that no further or other mortgage upon the property, rights, or income of said company shall ever hereafter be made to the prejudice of the holders of said preferred stock. And as security therefor the right of the holders of said preferred stock to the dividends thereon shall be secured by a mortgage on said property, rights, and income, which conditions shall be printed as part of the certificates to be issued for said stock.' And that on the 20th day of December, 1870, the directors of the Cincinnati, Hamilton & Dayton Railroad Company adopted resolutions, which were duly ratified by the stockholders of said company at a meeting thereof, duly called for that purpose, and held on the 15th day of February, 1871, whereby said company guarantied to the holders of said preferred stock punctual payment of the dividends thereon according to the terms thereof. And that on the 12th day of September, 1871, a mortgage on the property, income, and franchises of the Dayton & Michigan Railroad Company, and of the interest therein of the Cincinnati, Hamilton & Dayton Railroad Company, under its lease thereof, was duly executed, and delivered to Standley Matthews, as trustee, to secure the payment of said dividends, and has been recorded according to law. C., H. & D. and D. & M. R. R. _____, President. _____, Secretary.'

The act of April 16, 1870, referred to in the certificate, is as follows: ‘ An act to enable railroad companies to redeem their bonded debts. Section 1. Be it enacted by the general assembly of the state of Ohio, that it shall be lawful for any railroad company incorporated under the laws of this state, for the redemption of its bonds secured for the redemption of its bonds secured by mortgage or other lien upon its road, property, or income, to issue and dispose of preferred stock to such an amount as may be authorized by the stockholders as hereinafter provided for, and to guaranty to the holders thereof semi-annual or quarterly dividends, not exceeding eight per centum per annum, payable at its office, or at such place as may be designated by the directors. Sec. 2. The unpreferred stock of the company shall be entitled to dividends only out of the surplus of the profits after setting apart a sum sufficient to pay the dividends upon the preferred stock. Sec. 3. Before any stock shall be issued under this act, a majority of the directors who desire the same shall call a meeting of the stockholders of said company, designating the time and place, and distinctly the purpose, of said meeting, which meeting shall be held at the principal business office of said company in this state; notice of said meeting shall be given at least thirty days by continued publication in at least two newspapers published and having most general circulation in this state, and one in New York city. If at said meeting the consent of a majority in interest of the existing stock of the company shall be given to the issue of such preferred stock of the company, it shall be the duty of the president and secretary of said company to make out an abstract stating the total amount of pre-existing stock, the amount of preferred stock authorized, and the vote of said meeting, to which they shall attach copies of said notice, and designate the time for which and papers in which the notices have been published, to which abstract and statement they shall make affidavit, and file the same in the office of the secretary of state. Sec. 4. It shall be lawful for the directors of such company to dispose of such preferred stock on such terms as they may deem advisable in exchange for, or redemption of, any outstanding bonds, for the payment of which said company is bound, whether as principal or guarantor, and whether the same have matured or not, or said company may dispose of such stock, or any part thereof, for cash; but in such event the proceeds thereof shall be set apart and appropriated only to the purchase and redemption of its bonded indebtedness as aforesaid. Sec. 5. This act shall take effect from its passage.’

Omitting the parts of the mortgage which are recitals, the balance of the mortgage is as follows:

‘ Now, therefore, this indenture, entered into between the Dayton & Michigan Railroad Company, party of the first part, the Cincinnati, Hamilton & Dayton Railroad Company party of the second part, and Stanley Matthews, party of the third part, witnesses: That the party of the first part, in consideration of the premises, and of one dollar to it paid by the party of the third part, the receipt whereof is hereby acknowledged, hath granted, bargained, sold, and conveyed, and by these presents grants, bargains, sells, and conveys, to the said party of the third part, and his heirs, successors, and assigns, forever, all the said railroad and appurtenances, and the real estate, and all the rights, franchises, issues, and profits therefrom, of the said the Dayton & Michigan Railroad Company, described and conveyed in any and all of the said foregoing recited mortgages and deeds of trust, and all the estate, right, and title of the party of the first part in and to the same, and that the party of the second part, in consideration of the premises, and of the sum of one dollar paid to it by the said party of the third part, the receipt whereof is hereby acknoweldged, hath granted, bargained, sold, and conveyed, and by these presents does grant, bargain, sell, and...