Jefferson Circuit Court.

taxpayer to the assessor of property for taxation, 'a false return' within the meaning of original and amended section 2781, Revised Statutes, there must appear, if not a design to mislead or deceive on the part of the taxpayer, at least culpable negligence."

And on page 486, Spear, Judge, says: "In Insurance Co. v. Capellar, 38 Ohio St., 560, the company disclosed the real facts to the auditor by returns on the blanks furnished, but deducted its reinsurance fund as a debit from its credits, and returned the balance for taxation. The auditor proposed to correct these returns under section 2781, for five years, and the suit was to enjoin this proposed action.

"As made by the company, the statements were unquestionably erroneous. The claim was made in argument by the learned attorney general, that the returns were false, and he argued, as is urged here, that the word 'false' meant 'not true;' that the returns did not comply with the statutes and hence were 'false.' This was denied by counsel for the company (now one of the eminent counsel for defendant in error in this case), who contended as is here contended, that the returns were not 'false,' inasmuch as there was no concealment or intentionally false statements, and that the returns showed every item, and the auditor had full knowledge of their character. The information as to ownership was given the auditor on the returns; in the present case like information was given by the taxpayer verbally. The court held that the returns were not false within the meaning of the statute, and confined the judgment to the amount due as taxes for the current year, without penalty."

Following out the same line of decisions in the case of Probasco v. Raine, Auditor, 50 Ohio St., 378. The third proposition of the syllabus. is: "As to what constitutes a "false return" under section 2781 Revised Statutes, Ratterman v. Ingalls, 48 Ohio St., 468, is followed and approved."

Burket, Judge, in delivering the opinion of the court, says, page 394: "From the agreed statement of facts, it appears that these stocks were registered, and therefore could not be concealed; that such stocks had never been taxed by state authority, and that there was good reason for the belief that the stocks were not taxable; and therefore the court is unanimous in the opinion that the returns for taxation for the year 1881 to 1886, both inclusive, were not false returns, within the meaning of that term, as defined by this court in Ratterman v. Ingalls, 48 Ohio St., 468."

And in 38 Ohio St., 560, Insurance Co. v. Cappeller, the syllabus is: "A fire insurance company made return of its property for taxation to the auditor of the proper county upon a printed blank form furnished to it by the auditor for that purpose, as required by law, in which all its property subject to taxation and the value thereof was truly stated. Among other items so returned were all 'legal claims and demands for money or other valuable thing, or for labor or service due or to become due' to it, and the value thereof. There was also stated in said return in conformity to the requirements of the form so furnished, a list of debts owing by said company, including an item for 're-insurance,' the amount of which item was fifty per centum of all premiums received on policies not then expired. The amount of debt so returned was deducted from the amount of 'claims and demand;' and the remainder was placed upon the tax list and duplicate by the auditor who understood the character of the claim, as the amount of credits due the company subject to taxation. Held:

Sherard et al. v. Lindsay.

"1. The item returned as 're-insurance' was not a legal bona fide debt' within the meaning of section 2730 of Revised Statutes.

"2. The amount of said item was erroneously deducted by the auditor from the amount of 'claims and demands' due the company, when the credits of the company were placed on the tax list and duplicate of the county for taxation.

"3. The return of the company was not false within the meaning of sections 2781 and 2782 of the Revised Statutes.

"4. The county auditor, under section 1038 of the Revised Statutes, may correct an error in the amount of taxes upon the current duplicate, resulting from such erroneous deduction."

And on page 273 McIlvaine, Judge, says: "The point is, were these returns or statements false? They were made upon printed blanks furnished by the auditor, and in conformity thereto. The law required the auditor to furnish blanks for that purpose. The value of all property of the company subject to taxation was truly returned. The amount of reinsurance was also returned among the debts of the company, in conformity to the requirement of the blank form. No doubt the auditor at the time the blank was furnished, believed that this item, with full knowledge of its character, was a debt which could properly be deducted from the credits of the company; and that the company, when it returned the item, was of the same opinion But, however that may be, we are of opinion that the returns as made, under the circumstances shown, were not false within the meaning of this section. This point is further elucidated by the decision upon the next question made in this case, as we do not think that the remedy provided by sections 2781 and 2782 was intended to apply in cases where section 1038 is applicable."

By what rule should the stocks or judgment have been valued for taxation? In Exchange Bank v. Hines, 3 Ohio St., 1, one paragraph of the syllabus is: "Choses in action are to be listed at their true value. If a note for instance is wholly worthless, it is not to be listed at all; if it is of some value but less than its face, it is to be listed at what it is worth." At page 25 Bartley, C. J. says:

"In estimating the taxable valuation of credits, they are not to be taken at their nominal amount, but like the valuation of other property, every circumstance affecting, in any manner, their value, should be taken into consideration. If the debtor be wholly insolvent, the credit is of no value, and therefore, has no basis for taxation. If the debtor be in doubtful or failing circumstances, if the claims be disputed, contested, or involved in litigation, or if any defense by way of payment, or otherwise, either in whole or in part, against the claim, be known to exist, it should be considered, and all proper allowance made, in estimating its taxable valuation. The actual value in money of credita thus ascertained, constitutes as proper a basis for taxation, as that of any other kind of property."

In Cameron v. Cappeller, 41 Ohio St., 533, the syllabus is:

"1. A statement for the taxation of personal property, moneys, credits, investments in bonds, stocks, joint stock companies or otherwise, which omits a judgment, in reference to which proceedings in error are pending. in the supreme court, may be corrected by the county auditor under the power conferred by sections 2781 and 2782, Revised Statutes

"2. In putting such judgment on the tax duplicate the auditor should place it there at its true value at the time the owner should have listed it, and not at its nominal value."

Jefferson Circuit Court.

Nash, J., in the opinion says, "Such judgment should be listed at its true value at the time of listing.

"The district court in the case now before us, proceeded to render the judgment, which the court of common pleas, in its opinion should have given and in doing this valued the interest of Cameron in the judgment at its nominal value in 1876, 1877, and 1878, only deducting therefrom the amount of his attorney's fees. In these years there was a proceeding in error, pending and undecided in the supreme court to reverse the judgment. By it important, novel and difficult questions of law were raised and it was uncertain whether the judgment would be affirmed. This situation certainly lessened the value of the judgment during its pendency. In fact, the petition averred that these things wholly destroyed the value of Cameron's interest in the judgment, and when the district court acted the averments of the petition had not been denied.

"Therefore, we think that there was error in the judgment of that court for which a judgment of reversal is entered herein."

But let us look at the value of the judgment, or the value of these stocks as they are shown by the evidence.

The original proceeding was commenced under section 3388, Revised Statutes, as amended, 87 O! L. 159, which provides, "A stockholder who refuses to convert his stock into the stock of the consolidated company, shall be paid at least the actual value of such stock, to be ascertained, not alone by its market value previous to the making of such agreement for consolidation by the directors, but from a consideration of the earning capacity of the road in which stock is held, without reference to such proposed consolidation, condition of said road, betterments, cars and other property, its existing connections and any other facts tending to increase or diminish the value of the stock, such payment to be made before the consolidation takes effect." The section further provides, in case of disagreement as to value, for arbitration and an appeal to the common pleas

court.

Persons who were members of the annual city board of equalization in the years of 1891, 1892 and 1893, called as witnesses, testify that Sherard was before the board during their session in each of said years, and asked them to fix the value of the stock or judgment for the reason that he was unable to do so on account of the uncertainty of the result of the litigation then pending. Some of the witnesses testify that he then stated in his opimon the stocks should have been placed higher than they were placed by the witnesses or the jury.

It is also testified that Sherard furnished the board with New York newspapers containing printed reports of the stock market, in which was quoted the price of stock in the new or consolidated company on the stock boards, the defendant claims for the purpose of inducing the annual board to affix to said stock or judgment thereon a less value than they would otherwise have done.

The proceedings of boards of equalization are not conducted upon the strict rules of evidence that are applicable in courts, and will not be set aside on account of the fact that they took evidence that would not have been taken in courts of justice, much less will such proceedings be held invalid for such reason when attacked collaterally.

The record in case of the Pittsburg, Cincinnati & St. Louis Ky. Co. v.Robert Sherard, Jr., is given in evidence and one ground of error urged was that the proceeding was prosecuted too late, the statute providing "such payment to be made before the consideration takes effect." If that

Sherard et al. v. Lindsay.

assignment of error had been sustained Sherard would, instead of the amount awarded by the judgment, been entitled to receive stock in the consolidated company, and in that view of the case the value of such stock is material.

In Probasco v. Raine supra, the court lay stress upon the fact that, "from the agreed statement of facts it appears that the stocks were registered and therefore could not be concealed." In the case at bar, in each of the years the annual city board affixed the value, there was a public record open to the inspection of the board (or any citizen) at the court house in the city in which it held its sessions, and each member by law authorized to administer oaths; they could have examined Sherard under oath, and got his sworn opinion of the value and examined other witnesses. They had a duty to perform in its nature judicial, that duty they assumed, and from evidence then satisfactory to them, and fixed the value at wha they believed to be its true value; and, although in the light of subsequent events, the county auditor or tax inquisitor may think the value should have been placed higher, we are of the opinion the annual city board had jurisdiction, and that on the facts as shown, their action is conclusive and final for the years they acted.

Would it be contended it Robert Sherard, Jr.,had in his annual return to the assessor fixed the value at $20 per share and the annual city board increased it to $25 (the amount they did affix) that their action would not have been conclusive?

If the action of the annual city board is not conclusive, what in the light of the evidence would have been a fair valuation, at the time they should have been returned for taxation? In 1890 Sherard held 2,343 shares of the par value of $50 each; he made a sworn return to the assessor, and stated that the amount of all moneys invested in bonds, stocks, joint stock companies or otherwise $26,450, which includes the stock in controversy, the value at which they were placed in the returns is not shown. Prior to 1891 the witnesses fixed their value at from $10 to $14 per share and it is testified that along the line of the road they were offering to sell and could not get $9 per share. Prior to 1891 they were not carried on the stock boards, the only sales being where some one along the line of the road could be found who would purchase. We find that for the year 1890 they were returned at their true value.

In, April, 1891 there had been an appraisement of the stock, and in 1892 and 1893, a judgment and proceedings in error were pending. If the judgment should be reversed for a reason that would bar the proceeding, he would be entitled to receive stock in the consolidated company, if for some other error occurring in the proceeding the cause would be retried.

The testimony fixes the value of stock in the consolidated company during 1892 and 1893 at from $40 to $60 on shares of $100, and it is testified sales were made for less.

From the testimony and the questions raised in the proceeding in error, we are of the opinion that the value affixed by the annual city boards was at the time its full cash value, and probably more than any banker, broker or speculator would have given, under the state of the litigation, and the then surrounding circumstances.

The injunction so far as it relates to the sums placed upon the duplicates as additional taxes for 1890, 1891, 1892 and 1893 is made perpetual. This leaves only the questions arising upon the returns for 1894. At the time the returns for taxation should have been made, the judg

Jefferson Circuit Court.

ment had been affirmed by the supreme court and the money paid to Sherard, and a portion of it invested in the non-taxable bonds of the United States. Section 2737, Revised Statutes of Ohio, provides, "Such statement shall truly and distinctly set forth, * * * sixteetnh the monthly average amount or value, for the time he held or controlled the same, within the preceding year, of all moneys, credits or other effects, within that time invested in, or converted into bonds or other securities of the United States or of this state, not taxed to the extent he may hold or control such bonds or securities on said day preceding the second Monday of April; and any indebtedness created in the purchase of such bonds or securities shall not be deducted from the credits under the fourteenth item of this section."

In Shotwell v. Moore, 45 Ohio St., 632, the syllabus is:

"First-Subdivision 16 of section 2737 of the Revised Statutes of Ohio which provides that the statement of each person required to list property, shall set forth the monthly average amount or value for the time he held or controlled the same, within the preceding year, of all moneys, credits, or other effects, within the time invested in, or converted into bonds or other securities of the United States, is not in conflict with section 2701 of the Revised Statutes of the United States, which provides that all 'stocks, bonds, treasury notes, and other obligations of the United States, shall be exempt from taxation by, or under state, municipal or local authority.'

"Second-The method provided in subdivision 10 of section 2737, for estimating the taxable value of property converted during the year into nontaxable securities, is not in conflict with section 2, of article XII, of the constitution of this state, which requires that laws shall be passed, taxing all property by a uniform rule, according to its true value in money."

This case of Shotwell v. Moore, having gone to the supreme court of the United States, is reported in 129, United States 590. The syllabus is: "A state may make the ownership of property subject to taxation, relate to any day or days or period of the year which it may think proper; and the selection of a particular day on which returns of their property for the purpose of assessment are to be made by taxpayers does not preclude the making of assessments as of other periods of the year. Section 2737 of the Revised Statutes of Ohio, which requires the taxpayer to return to the assessor, as of the day preceding the second Monday in April in each year, among other things a statement of the monthly average, amount or value, for the time he held or controlled the same, within the preceding year, of all moneys, credits, or other effects, within that time invested in or converted into, bonds or other securities of the United States or of this state, not taxed to the extent he may hold or control such bonds or securities on said day preceding the second Monday of April, and any indebtedness created in the purchase of such bonds or securities shall not be deducted from the credits under the fourteenth item of this section, does not tax the citizens for the greenbacks or other United States securities which he may have had at any time during the year, but taxes him upon the money, credits, or other capital which he has had and used, according to the average monthly amount so held, and is not in conflict with section 3701 of the Revised Statutes of the United States exempting the obligations of the United States from taxation under state, municipal or local authority."