Commercial Bank v. Bowman

| Oh. Super. Ct., Cinci. | Jan 15, 1855

Spencer, J.

The first question presented for consideration in the foregoing case is, whether the taxes, sought to be collected by the defendant, have' been assessed against the plaintiffs, under a valid law ; or whether they have been assessed wholly without warrant of laiv.

If assessed under a valid law, then the treasurer will be justified in enforcing their collection, even .though he adopt the extreme course, which it is alleged he threatens to take. For that course is fairly warranted by the provisions of the act, of March 1853, set forth in the petition.

If, on the other hand, they have been assessed, wholly without warrant of law, then the Treasurer will be a trespasser, should he commit the act threatened, and will be liable accordingly.

It is conceded on all hands, that the taxes in the present case have been regularly assessed under the act for the assessment and taxation of property, passed April 13th, 1852, which contains special provisions for the taxing of all property belonging to banks and banking companies, and that the mode of assessment therein adopted is wholly different from, and incompatible with the provisions of the 59th and 60th sections of the act, under which the plaintiffs became incorporated as a bank, as well, also, as with the provisions of the above recited “Act to provide for taxing banks and banking companies,” passed March 23d 1850, and which the plaintiffs claim as to them was a substitute for said 59 th and 60 th sections ; and that, it imposes a burden vastly more onerous upon the plaintiffs, than that imposed by either of said last named acts; a burden to which the plaintiffs have not assented. It follows, that if by the said last named acts the plaintiffs may claim an exemption from taxation, in every other mode, than as prescribed thereby upon the foundation of contract, then, as to them, the mode adopted in the present case, was wholly unwarranted by law, and ought not to be carried out.

The recent, very thorough and elaborate examination, to which the 59th and 60th sections of the act referred to have been subjected by the Judges of the Supreme Court of this State, and by the Judges of the Supreme Court.of the United States, renders it wholly unnecessary to do more than refer to the results of such examination, and shape our own opinion accordingly. In the cases of Debolt vs. The Ohio Life Insurance and Trust Co.; The Treasurer of Miami County vs. The Piqua Branch of the State Bank of Ohio; Mechanics’ and Traders’ Bank vs. Debolt; Bank of Toledo vs. Bond et al, decided by our Supreme Court, January Term 1853, 1 O. S. R. 563 et seq.; and the subsequent case of the Exchange Bank of Columbus vs. Hines, decided at the January Term 1854, 2 O. S. R. appendix to preface, XII, it was held that the 60 th section of the act of 1845 was not a contract between the State and the banks organized under said act, limiting thereby the power of the State to tax the banks thus organized; and that therefore the General Assembly had a right to repeal said section, and to tax the banks in any mode it might think proper.

This decision was based upon two grounds: 1st. That said section was merely part of a general law, adopted for the pullic exigency only, and was not intended as a pledge of the public faith, to establish and secure a private right. And 2d. That, if intended for this latter purpose, it was void, for want of power in the General Assembly to confer such a right without the ability to resume it at pleasure, inasmuch, as that would be a surrender pro tanto of the sovereignty of the State. The first two of these cases were taken up to the Supreme Court of the United States, upon error, in pursuance of the 25th Section of the Judiciary Act of the United States, which allows an appeal from the State Courts to those of the U. S., in cases involving the construction of the constitution of the United States, and will be found reported in the last vol. (16) of Howard’s Hep., page —. It is needless to say, that the opinions of our own Supreme Court underwent a searching review, and after a careful and anxious consideration, were overruled, by a majority of the Court, upon both grounds; the Court holding (six against three) that the 60th section of the act referred to, did create a contract, by which the power to tax the banks organized under the act, was limited to the mode therein prescribed; and that the law of 1851, prescribing a different and more burdensome mode of taxation, so far as it applied to such banks, was a violation of that contract, and therefore void within the 10 th Section of the first Article of the Constitution of the United States, which provides, that “No State shall .pass any laws, impairing the obligation of contracts.”

This decision of the only Court in the last resort, appointed to determine' such questions, is one to which we are obliged to conform, and settles the right of the plaintiffs to an exemption from the taxation now sought to be imposed upon them; so far at least as that right depends on said 60th Section.

But by the 4th Section of the act above quoted, passed March 23d, 1850, it was provided, “that if any existing bank whose charter prescribed any particular mode of taxation for the same, should by a vote of its stockholders, consent to the provisions of said act, and file the evidence of such consent with the Auditor of State, such bank should thereafter, for the purpose of taxation, be subject to the provisions of said act, and be exempt from the payment of any other tax imposed by its charter.”

The law containing this Section was adopted in consequence of the complaints made by a large portion of the community, that the banks did not bear their equal portion of the public burthens; and to quiet, in some sort these complaints by providing a nearer approximation to equality, it was proposed to abandon the system of taxing-banks upon their dividends, and substitute for it the plan of subjecting their capital stock and surplus profits, to the same rate of taxation that other moneys and credits were subjected to. The banks, themselves, felt in a strong degree the public pressure, and in many instances yielded to it, preferring to surrender a portion of their valuable rights, rather than encounter a growing sentiment of hostility ; and doubtless believing that such surrender would secure them immunity for the future. Among others, the present plaintiffs accepted of the terms offered by this 4 th Section — and accordingly, as averred in the petition, filed with the Auditor of State the evidence of their assent to abide by the provisions of said act — and the same was accepted by said Auditor, and the plaintiffs charged with taxes in pursuance thereof during the ensuing year and up to the passage of the act of 1851.

The provisions of this 4th Section are so plainly a substitution, for the mode of taxation provided (as to these plaintiffs) by the 60th Section above referred to, as to become part of the plaintiffs’ chartered rights-, as binding ^upon the State, and as irrepealable, as the 60th Section originally was; furnishing, for the future, during the existence of the bank, the only rule by which it could be taxed, without their own consent. If this construction could for a moment be doubted, and it were said that the act was repealable at pleasure, upon the ground that the exemption it created, was indefinite as to time, it would follow that the surrender by the plaintiffs of their right to be taxed under their original charter, would be only co-extensive with the right substituted for it, and when the latter failed, the original would be restored. So that in any view of the matter, the law of 1851,under the decision of the highest tribunal known to us, must be held void, so far as it is sought to be rendered applicable to the plaintiffs, as being in violation of rights solemnly secured to them by contract; to the maintenance of which the faith of the State is pledged. It would therefore furnish no protection to the officer seeking to enforce its provisions. 2. The question next to be considered is, whether the evil threatened is one to be prevented by injunction ; or whether the plaintiffs are bound to wait until the wrong has been committed, and seek redress, by compensation in damages. If the question were newly presented ; or if in cases, supposed to be analogous to this, (and to which reference will be hereafter made,) the Supreme Court, of Ohio had not denied the remedy by injunction, we should have felt but little difficulty in granting the relief asked. As those cases upon a cursory examination may seem to conflict with the decision to which we have arrived, it is proper to present our views more in detail, than we should otherwise have desired.

When the remedy at law is difficulty, or doubtful, or accompanied with great embarrassment, if the title of the plaintiff be clear, a court of equity will interfere to protect it. In all such cases, the application is addressed to the sound discretion of the Court, and must be decided according to the peculiar circumstances of the case. 2 Story Eq., § 863. It is true, that such discretion-is not merely arbitrary, but is governed by fixed rules, which furnish a safe guidance for it. Subject however to these rules, the cases in which equity will interfere, to prevent wrong, are not limited either in number or character; but on the contrary, are daily multiplying, with the multiplied changes and conditions in life. So that injunctions are much more liberally granted now than in former times, and are applied to a vastly greater variety of subjects. The rules, within which the application, (to be successful,) must fall, are, that the title of the plaintiffs is dear, not doubtful; that the evil with which it is menaced, is immediate and impending, not lying in the mere fancy of the party, however well founded; that the harm will be gréat, or the loss irreparable, and such as cannot be adequately recompensed in damages, by an action at law; or when the remedy, by action, is exceedingly doubtful, or difficult; or inadequate to correct the evil.

Apply these rules to the present case; the title of the plaintiffs, to an exemption from the burthen to which it is sought to subject them, is clear and complete. The laws, under which the defendant attempts to justify, are imperative in their terms. Under the first, (that of April 1851,) a tax has been imposed, by the proper authorities of the State, upon the plaintiffs, which the defendant, as one of its officers, believing it to be his duty to enforce, has required should be paid. The time appointed for payment, by said law, has elapsed. By another law, passed in March 1853, it is made the duty of the defendant, in his official capacity, upon default being made, to enter, if need be, fordbly into the banking house of the plaintiffs, and to seize by force such property, moneys, bills, notes, or otherwise, as he may deem necessary to satisfy said tax; and in a summary manner dispose of the same for that purpose. And the defendant has notified the plaintiffs, of his intention to proceed under the law. In addition to all this, the law proffers to indemnify the officer against the consequences of such action on his part. It can hardly be supposed, under these circumstances, that the defendant will not proceed forthwith, to execute the law, and that the danger therefrom to the plaintiffs is imminent and impending. Then, as to the extent of the injury threatened; it involves property to a very large amount; in any aspect between 8 and $10,000, and probably between 15 and $20,000. For it is hardly to be supposed, that in the seizure of bills and notes, to satisfy a claim of 8 or $9000, the officer, to bring himself within safe bounds, would not feel himself required to seize effects, a great deal larger in nominal value and amount. But, finally:

Should the officer execute his purpose, would the injury fall within that class, which is termed in law great, or irreparable; or such as could not be adequately compensated in damages by an action; or where the ordinary remedy by action is inadequate to repair the evil ?

It is difficult to lay down any precise rule as to what mischiefs are deemed irreparable; but the term may be applied, not only in respect to the nature of the injury itself as being one, where the damage cannot be fully compensated ; but also to the position of the parties, where the evil, in contemplation of law, cannot well be remedied or prevented by any act of the parties themselves. As instances of the former, may be stated the invasion of franchises; the infringement of a patent or copyright; the destruction of an heir loom; or of ornamental trees upon an estate; because in such cases the injury cannot well be estimated; and is therefore not the subject of full compensation. As instances of the latter, may be stated waste committed by a tenant in possession of lands; by an administrator or other trustee, of the effects committed ta his charge; the improper transfer of a negotiable note, or hill; the threatened destruction of partnership property, by one of the firm. In all these cases the injury might be the subject matter of compensation in damages, but it is insusceptible of remedy by the mere act of the party himself, and will be prevented by injunction. On the other hand, a mere trespass to land, or goods, is not ordinarily the subject of an injunction; not only because it may be compensated by a jury in damages; but also because, in legal contemplation, the party has it in his own power to prevent the injury, without calling in the aid of injunction. Every man in possession of property, is presumed to be able to resist of himself any encroachment upon it. But when he is not thus in possession, and cannot obtain possession, or otherwise prevent the act, without himself being a wrong doer, then he may be aided by injunction. Now, in the case of waste, the landlord could not enter upon the land, to prevent its commission, without himself being a trespasser. On the other hand, when the person in possession of land is about to be intruded upon, he may repel force by force. In the former case, therefore, the party about to be injured may have redress by injunction; in the latter not.

In view of all its accompanying circumstances, the injury threatened in the ease now before the Court, may well be deemed irremediable; not only in regard to the difficulty, (if not utter impossibility) of restoring the plaintiffs after its commission, to the condition they occupied before; but also, in regard to the helplessness of their condition, in resisting the wrong, without the aid of an injunction. The act contemplated by the defendant is clearly a trespass, but certainly not one of an ordinary character, and fugitive in kind. It is one contemplated by a public officer, under color of law, and under a direct command thereof; a law which not only authorizes him, to do the act, but calls to his aid, in its execution, the power of the county; a law which imposes a penalty on the defendant for refusing to perform the act, and renders it highly penal in the plaintiff to resist such performance, (Vide Sec. 10.) A law too which professes to indemnify the officer, and all acting under his command, against the consequences of the act. Can this possibly be assimilated to a case of ordinary trespass? The law under which the defendant would thus justify, is one which is general in its character, and in its ordinary application, is of binding obligation; it is only because of the special immunity of these plaintiffs, from the tax assessed, (an immunity not apparent in the law itself, nor in the law assessing the tax, but to be gathered from another law, containing a special exemption in their favor,) that the law has no binding force as to them. Can it be asked, or expected, that the plaintiffs under such circumstances, should be able, or even dare, to oppose the execution of the act, as a mere wanton trespass by the defendant ?

It would take a bold man to come to the rescue, under threats of pains and penalties of law, bearing all the semblance of binding validity, in opposition to an officer, aided by the power of the county; whose express duty it is made by the law under penalties, to perform the act; and who is indemnified thereby against the consequences of its performance.

Whatever therefore may be the naked power of the plaintiffs in legal contemplation, to resist this trespass, it is power shorn of its usual strength; it is power which no prudent man would attempt to exercise ; and no prudent man would aid in its exercise. In such a case it seems to me the plaintiffs ought not to be required to resist force by force; but ought to be permitted to come into Court, and standing upon their rights, ask to be protected in their enjoyment; — prevention by injunction seems to be their only efficient remedy.

But there is other and stronger ground here, for granting the injunction, growing out of the nature of the act, and the injury resulting therefrom. The plaintiff is a banking corporation having valuable franchises, created by law, annexed to which, are certain exemptions from taxation, which.add materially to the value of the franchise. The State of Ohio, under whom the grant is claimed, has passed a law, the effect of which, if carried out, is to violate the said grant, by imposing a- tax, not only different in the mode of assessment, from that pointed out in the grant, but nearlj fivefold more burdensome; amounting annually to one sixth part of the entire capital of the bank, and to nearly, if not quite, double its annual dividends.

This tax, it has made it the duty of the defendant, as one of its officers, annually to enforce and collect, by what means and under what penalties, we have already seen. Now, it cannot be denied, that if the tax thus imposed can be collected, the value of the franchise is as much impaired thereby, as it would be by a law limiting the bank in the amount of its semi-annual dividends. Nay, more, it is doubtful, under the averments of the petition, whether it would not so depreciate the value of the franchise, as to compel its entire surrender. The burthen, (it must be observed,) is not an isolated, or transitory one, but a con-tinning and permanent one. It is one which has been sought to be enforced, by the predecessors in office of the defendant, under the same injunctions of law, for the two preceding years, now again sought to be enforced by the defendant himself. The whole tax during these three years, amounting to more than the annual dividends of the bank; and up to this time, to three fifths of its whole capital stock; a tax, which in two years more, at the same rate, would absorb the entire capital; whereas, if properly assessed, it would not have amounted during the whole five years to more than the one sixth part of the capital stock. If the State itself, instead of its officers, could be sued and rendered amenable to the process of its courts, it would hardly be doubted, that an injunction would be an appropriate remedy against her, for continued and continuing trespasses; amounting, as already seen, to a great depredation, if not entire destruction of the plaintiffs franchise.

It would be of no moment to the enquiry, that the destruction of the franchise was not the intention of the law; it is enough that such is its actual and necessary operation.

But, although the defendant does not stand in the place of the State, and is not responsible in law, for the acts of his predecessors in office, and therefore not chargeable therewith, yet it is not to be overlooked, that the act now sought to be done by him, is a continuation or repetition, in behalf of the seme principal, and under the same command, of the very same grievance; all tending in the aggregate to work out the same result, though the acts of either might, perhaps, be insufficient of themselves for that purpose.

In the case of Osburn vs. The United States Bank, 9 Wheat. 340, Ch. J. Marshall, in alluding to the connection of the State with its officers, under the same circumstances, says : “ The law, if executed, would unquestionably effect its object, and would deprive the bank of its chartered privileges, so far as they were to be exercised in the State of Ohio,” &c. “ It was to be expected, that a person, continuing to hold an office, would perform a duty enjoined by his government, which was completely within his power. This duty was to be repeated until the bank should abandon the exercise of its chartered rights.

ci To treat this as a common casual trespass, would be to disregard entirely its true character and substantial merits. The application to the Court was to interpose its writ of injunction, to protect the bank, not from the casual trespass of an individual, but from the total destruction of its franchise.”

But how was the franchise to be destroyed or impaired by the mere act of an individual ? The Court saw the evil not in the individual act, but in the law which urged the individual on; not once ; but from year to year, until the work of destruction should be complete. On page 342 they say: u The single act of levying the tax in the first instance is the cause of an action at law; but that affords a remedy only for the single act; and is not equal to the remedy in chancery, which prevents its repetition, aud protects the franchise.”

They therefore wisely passed by the single act in the particular case, and viewed the results which must follow from its repetition in future times, as contemplated by the law. In a word, they looked through the agent to the principal; acting from necessity upon the latter through the former. “If the State of Ohio, (say they,) could have been made a party defendant, it can scarcely be denied that this would be a strong case for an injunction,” &c. “But if the person who is the real principal, the person who is the true source of the mischief, by whose power, and for whose advantage it is done, be himself above the law; be exempt from all judicial process; it would be subversive of the best established principles to say, that the laws could not afford the same remedies against the agent employed in doing the wrong, which they would afford against him, could his principal be joined in the suit.”

It is true, in the case cited, that the Court, speaking of the effects of the law, therein complained of, say it would undoubtedly be to “ deprive the bank of its chartered privileges, so far as they were to be exercised in Ohio; ” not by the single trespass therein complained of, but by the repetition of trespasses, which the law contemplated. But the Court did not mean to intimate thereby, that an injunction would not be granted, unless the franchise were totally destroyed. On the contrary, they first laid down the law to be, that an injunction would be granted to prevent a permanent injury from being done to the party entitled to a franchise, or privilege; because the same cannot be estimated in damages; and then arguing from the lesser to the greater evil, go on to state, that if the lesser evil would be prevented, how much more the greater, i. e. the total destruction of the franchise.

This case, it seems to me, in its general principles, is directly applicable to the one now under consideration, and is conclusive of it. But, in one respect, it falls far short of the present case; for there the State was under no special obligation to regard the chartered rights of the complainants; here she has created those rights herself, and has solemnly agreed to respect them. But the law, under which she has warranted the defendant to act in her behalf, and as her agent, is in derogation of those rights, and must seriously impair, if not wholly destroy them.

That was a case of trespass, accompanied with great damage and nothing more. This is the case of a like trespass upon a right, whioh the State is under obligation to protect.

There is another point of view, in which this case may be regarded, that ought not to be entirely overlooked. The business of plaintiffs is that of banking; in the conducting of which, one of its chief operations, (and from which much profit is derived,) is to receive the moneys of others on deposit, and their notes and bill's for collection. By the terms of the law, under which the defendant assumes to act, it is made his duty to seize upon the moneys, bills, notes and other property found in the banking house of the plaintiffs, without stint or limit, until he has gotten enough in his own judgment, to satisfy the amount of the taxes assessed; and dispose of the same at auction to the highest bidder. In the practical progress of such an operation, it is scarcely possible he should avoid an injury to some one, whose only connexion with the bank consists in keeping his funds with them upon deposit, and using their services in collecting his paper. It would be difficult to imagine an act having, a greater tendency to destroy the business of a bank, than the seizure of its effects, under such circumstances; its credit and character must inevitably be ruined by it; and I hazard nothing in saying, that no hank, which allowed such seizure to take place from year to year, could possibly stand up against it. No action, or series of actions, could restore the credit thus destroyed, or reimburse in damages. Smart money, (which in cases of ordinary trespass is always allowed to meet the contingency of losses, which could not be otherwise compensated,) could not be recovered here. For the mandate of the law, though it would not wholly justify the officer, would shield, him from the charge of wanton wrong, unless under cover of its protection, he committed wilful abuse. Neither is it any answer to say, that all this evil might be avoided, by a voluntary payment on the part of the plaintiffs, of the amount illegally assessed. In the first place, it is all assumption to say, they have the money wherewith the payment is to be made, without injuring other parties. But, secondly, it is no part of the policy of the law to require an individual to submit to an illegal exaction, rather than encounter a greater evil, and upon his refusal to do so, to deny him its aid. The same answer would have been equally sufficient in the case of Burnet vs. the City of Cincinnati, 3 Ohio 88. The complainant there could have avoided the sale of his property, by the payment of an insignificant tax; but the Court did not refuse to aid him on that account.

We have been referred by the defendant’s counsel to three cases decided in our Supreme Court, in which the remedy by injunction has been refused, on the ground that the act of the officer was a simple trespass, and so remediable by a recovery in damages, by an action for such damages ; which cases are supposed to be conclusive against the present application; But it seems to us they are all very clearly distinguishable from the case now before us.

The first, that of McCoy vs. The Corporation of Chillicothe, 3 Ohio 370, was the case of an application to restrain the collection by distress upon chattels, of an insignificant tax, that is, as to amount. The Court said there was no special circumstances in the case, to distinguish it from one of a common trespass ; except that the act sought to be enjoined, was about to be committed under the color of law ; that the injury was not irreparable, but could be remedied by action.

The second, that of the Mechanics’ and Traders’ Bank vs. Debolt, 1 Ohio State Reports 591, was an application for an injunction by one of the banks, chartered under the act of 1845, to restrain a tax under the law of 1851, imposed in violation of the 60th section of the former act, securing to the bank, (as in the present case,) immunity from such taxation. The Court held, that the tax was properly assessed, and therefore there was no cause of complaint.

But, in addition to this, the Court, resting upon the case of McCoy vs. Chillicothe, said it was a case of ordinary trespass, which could be remedied by action at law, and was therefore not the subject of injunction.

It will be observed that the Court in both these cases cite with approbation the decision of Osburn vs. The United States Bank, and distinguish between the cases, in this, that in those cases, it was a matter of isolated trespass, not calculated to work irreparable mischief, whereas in that, it was said, the trespass was to be committed under circumstances calculated to destroy the franchise of the Bank; but it is also to be observed, that when those two cases were decided, there was then no law in Ohio, as now, making it penal in the party to resist the collection of the tax, thereby taking away from the party all its protection, should harm come to another, from his resistance.

The third case is that of the Exchange Bank of Columbus vs. Hines, 2 Ohio State R. App. to preface XII. We have as yet been furnished with no report of this case? and, therefore, cannot say how far it has gone, or what it has decided on the subject. It was a case however, like the last, in which the Court held that the tax was rightfully assessed. No injunction, therefore, could be granted. It is understood, however, that the Court also held, that an injunction would not be granted, because of the insolvency of the Treasurer, inasmuch, as the 13 th Section of the law of March, 1853, provided indemnity to the Treasurer, and furnished him with the means of payment; this, however, it is supposed, like the others, was a case of isolated trespass, involving no special circumstances to distinguish it from ordinary trespasses.

But the case now before the Court, is wholly disembarrassed, by the decision of the Supreme Court of the United States, of any question, as to the right of the plaintiffs to be exempt from the tax now assessed. It is the case, not of an isolated or single trespass, but a continuation of such trespasses; under circumstances necessarily calculated to impair the franchise of the plaintiffs. Had our Supreme Court, in the two cases last cited, been clear in the right or title of the complainants to the exemption claimed, it is doubtful whether they might not have hesitated before they refused the injunction. At all events, it is believed, that they would not have refused in a case, when the injury was repeated and continued, as in the present instance.

King, Anderson, & Sage for plaintiffs. Pugh & Pendleton for defendants.

But the question now presented was decided by the Circuit Court of the United States for the district of Ohio, at the last October Term, in the case of Worsley vs. Dodge; and the Commercial Bank of Cleveland, where an injunction was granted, under a statement of facts, very similar to that made in the present case, though not presenting perhaps as strong grounds for interference by injunction. The Court in granting the injunction, refer to the principle laid down upon that subject, injthe case of the State of Pennsylvania vs. The Wheeling Bridge Co. 13 How. 567, viz: “ there must be such an injury as from its nature is not susceptible of being adequately compensated by damages at law; or such as from its continuance or permanent mischief must occasion a constantly recurring grievance, which cannot otherwise be prevented than by an injunction;” and then add with reference to the case before them, a the character of the trespass complained of, and threatened, is not only an annual recurring grievance, but if continued, must be fatal to the Bank. The tax and the penalty for non-payment, together with the costs of collection, would impair the credit, and destroy the usefulness of any bank.” This, in the opinion of the Court, was an injury not to be remedied by action done.

Believing, as we do, that this decision is in consonance with sound principle, and is not in conflict with the decisions of our own Courts, we are disposed to adopt it as our guide in the present case; and shall therefore grant the injunction asked for.

Judges Storer and Gholson concurred in the above opinion.