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of Ky. St. § 4225, providing that every corpo- In 1897 the Home and Savings Fund Comration which may be incorporated by or under pany amended its articles of incorporation by the laws of the state, having a capital stock divided into shares, shall pay an organization changing its name to the Home and Savings tax. After the enactment of the statute the Fund Company Building Association and acstock of the company was increased at inter- cepting the provisions of the Constitution. vals, and upon such increases the statutory tax In June, 1906, another amendment was adoptwas paid. Ultimately the charter was amended, increasing the capital stock from $10,000,- ed, authorizing the association to increase 000 to $15,000,000, prolonging the corporate ex- its indebtedness from $10,000 to $25,000 and istence, about to expire, for 99 years, and chang- increasing its capital stock from $5,000,000 ing the corporate name (which had been changed once before merely to comply with the stat

to $6,000,000. In February, 1907, another ute, that all "building associations" have such amendment was adopted, increasing the capwords in their title) from the Home and Sav- ital stock from $6,000,000 to $7,000,000. In ings Fund Company Building Association to the December, 1907, the articles of incorporation Avery Building Association. Claiming that a new corporation came into existence by virtue were again amended by increasing the capof such charter amendment, the state sued to ital stock from $7,000,000 to $10,000,000. In recover the organization tax on the original 1912 yet another amendment was adopted, incapitalization of the company, which had never creasing the capital stock from $10,000,000 been paid. Held, that while so much of the last amendment of the charter as merely increased to $15,000,000, prolonging the corporate exthe capital stock should not be regarded as the istence for a period of 99 years, and also creation of a new corporation within the mean-changing the corporate name from the Home ing of the statute subjecting such corporations to the payment of an organization tax, the and Savings Fund Company Building Assoradical change made in the name of the associa- ciation to the Avery Building Association. tion and the extension of its life was the crea- The Association paid the organization tax tion of a new corporation, subjecting the original capital to the payment of the tax.

on each increase of its capital stock made by [Ed. Note. For other cases, see Building and the amendments, but did not pay any organLoan Associations, Cent. Dig. § 3; Dec. Dig. ization tax on the original capital stock, as Om 3.]

there was no law in force at the time of its

In Appeal from Circuit

creation exacting an organization tax.

Court, Franklin County.

1914 this suit was brought in the name of the Action in the name of the Commonwealth commonwealth by a revenue agent, for the by its revenue agent against the Avery Build- purpose of requiring the association to pay ing Association to compel the payment of an the organization tax on its original capital organization tax and recover the penalty for stock of $5,000,000 and a penalty thereon, delinquency. Judgment for plaintiff, and de- as provided by statute, of 20 per cent., fendant appeals. Affirmed.

amounting to $1,000. The lower court ruled

that the association must pay the organiza. William Krieger and Thos. A. Barker, both tion tax of $5,000 on its original capital stock of Louisville, for appellant. John C. Duffy, and a penalty of $1,000, and this judgment of Hopkinsville, O'Rear & Williams and J. P. we are asked to reverse. Hobson & Son, all of Frankfort, for the Com- The theory of the commonwealth is that monwealth.

the various amendments adopted by the asso

ciation, and especially the amendment of CARROLL, J. In 1888, before the adop-1912, had the effect of creating a new cortion of the present Constitution of the state poration, and therefore the present corporaand the laws enacted pursuant thereto, a cor- tion, known as the Avery Building Associaporation styled the "Home and Savings Fundtion, although it has a capital stock of $15,Company,” with a capital stock of $5,000,000 000,000, has paid the organization tax on and a provision for its existence for 25 years, only $10,000,000 of this capital stock, and was organized under the general corpora- therefore it should be required to pay the tion laws of the state, or by special act of organization tax on the other $5,000,000, as the Legislature it is not material which was held by the lower court. The defense In 1891 the present Constitution went into of the Association is that the several charter effect, and in 1893 the Legislature of the amendments did not have the effect of creatstate enacted what is now section 4225 of ing a new corporation, as they only increased the Kentucky Statutes, providing that: the capital stock, changed the name, and con

"Every corporation which may be incorporat- ferred some additional powers on the origed by or under the laws of this state, having inal corporation; and so the corporation has a capital stock divided into shares, shall pay into the state treasury one-tenth of one per paid all the organization tax for which it is centum upon the amount of capital stock which liable. The association further pleads and such corporation is authorized to have, and a relies on the 5-year statute of limitation as like tax upon any subsequent increase thereof. Such tax shall be due and payable on the in: a bar to a recovery of any organization tax, corporation of the company and on the increase in the event it should be held that the effect of the capital stock thereof, and no such corpo- of the amendments was to create a new corration shall have or exercise any corporate pow-poration that would be subject to the organers until the tax shall have been paid, and upon payment it shall file a statement thereof with ization tax if action to recover it had been the secretary of state."

taken in seasonable time.

Ky.)

AVERY BUILDING ASS'N V. COMMONWEALTH

41

We have had before us several cases deal- 1 years and making some other changes in its ing with this question. In Senn v. Levy, 111 corporate affairs. In holding it liable for the Ky. 318, 63 S. W. 776, 23 Ky. Law Rep. 1331, tax, the court said: a creditor of the German-American Title “The amended articles of incorporation did Company brought suit to enforce the pay more than conform to the new statute. They ment of the double liability of stockholders created a new corporation. The old corporation

would have expired on May 19, 1911.

The new to creditors under section 547 of the Ken corporation runs for 25 years from April 19, tucky Statutes. The facts were these: The 1897, and may then be renewed for a like term German-American Real Estate & Investment from time to time. The highest amount of inCompany was incorporated under the Gen- debtedness which the old corporation could inCompany was incorporated under the Gen-cur was $25,000. The new company can issue eral Statutes, before the enactment of sec- a capital stock of one million dollars and may tion 547 of the statutes and at a time when incur an indebtedness of 20 per cent. of its there was no double liability on stockholders. paid-up capital. It also enjoys all the rights, In 1894, and in the manner provided by the statute upon building associations organized

privileges, and powers conferred by the new Kentucky Statutes for the amendment of ar- under it. We had this question before us in ticles of incorporation, the charter of this Senn v. Levy, 111 Ky. 318, 63 S. W. 776, 23 corporation was amended. The amendment Ky, Law Rep. 1331, and, according to the prin

ciples laid down in that case, the old corporachanged the name from the German-Ameri- tion was destroyed and a new one, with new can Real Estate & Investment Company to powers and new responsibilities, came into exthe German-American Title Company, in- iştence. The reasoning of that case is conclu

sive of the question.” creased the number of directors and also the shares of stock each must hold to qualify

In Bruner v. Louisville Packing Co., 144 him as a director, and further authorized the Ky. 471, 139 S. W. 764, the commonwealth president to appoint an executive committee sought to collect from the packing company with such powers as the by-laws might give. an organization tax on amended articles of In holding that the amendment created a incorporation filed by it in 1910. The compånew corporation and subjected the stockhold- ny was created in 1906, with a capital stock of ers to the double liability statute in force $750,000 upon which it paid the organizawhen the amendment was adopted, the court tion tax at the time of its creation. The said:

amended articles merely reduced the capital "It held itself out to the public, under its new

stock from $750,000 to $350,000, and changed name, as having amended its charter under the the name of the corporation from Louisville act of 1893, as there was no other law under Packing Company to New Louisville Packing which they could have amended but the act of Company. In the course of the opinion the April, 1893, and that law imposed the double

court said: liability sought to be enforced here. The old law had been absolutely repealed. The change change in the name of the corporation, accom

It may be that, where there has been a corporation exists only in its corporate name, panied by a substantial change in the scope, and a change of name was an abandonment, not rights, and powers of the corporation, the only of the corporate name, but of the corpora- amended articles of incorporation have the eftion itself. The old creature was destroyed and fect of creating a new corporation. a new one sprang into existence, clothed with Licking Valley Building Ass'n, 118 Ky. 791 [82 all the new powers and charged with all the new S. W. 435, 26 Ky. Law Rep. 730]. No such responsibilities imposed by the statutes which case is here presented. No new rights or powgave it birth. When the stockholders of the ers were conferred by the amended articles. old corporation accepted certificates of stock in The change in the name itself was slight. It the new concern, they assented to, and acqui- was authorized and made in the manner pointesced in, the amendment, and were thenceforth ed out by the statụte. No new corporation bound for all the liabilities of the new concern was created. It is simply a case where the old imposed upon it by law. Necessarily the lia corporation is continued under a slightly changbilities and burdens are coexistent with the ben- ed name, for exactly the same length of time, efits. And there is no difference in principle and with precisely the same rights and powbetween a reorganization and an amendment ers as were provided in the original articles of which accomplishes the same purpose.”

incorporation. Being the same corporation and Com. v. Licking Valley Building Associa- ing in the statute requiring that it be paid the

having paid the tax once, and there being nothtion, 118 Ky. 791, 82 S. W. 435, 26 Ky. Law second time, it follows that the judgment of the Rep. 730, was a suit by the commonwealth to lower court was proper." recover an organization tax. The defense In Ohio Valley Tie Co. v. Bruner, 148 Ky. was that the association had been incorporat- 358, 146 S. W. 749, the question before the ed under the general laws of the state pre-court was whether a corporation which had vious to the adoption of the present Consti- once paid this tax must pay it again when it tution and the laws regulating corporations proceeds to extend its corporate existence by now found in the Kentucky Statutes, and amendment. The court answered this queshence it was not liable for the payment of tion in the negative, saying: this tax. It appears that by the original "If the corporation, however, should, by articles the capital stock of the association amendment, substantially change, its scope, was $1,000,000, divided into 2,000 shares of right to exact the organization tax; but that

rights, and powers, there might be a consequent the par value of $500 each. The period of question is not here for decision. The ground its corporate existence was fixed at 25 years, of its collection in such a state of case would which expired in May, 1911. In April, 1911, change were so substantial or material as to

rest upon the determination of whether the amended articles of incorporation were filed, create in fact a new corporation. For the sake extending the life of the corporation for 25 of clearness it is to be borne in mind that this

Com. v.

decision applies to corporations which have so much of this last amendment as merely once paid the tax. Should a corporation, organ- increased the capital stock should not be ized under chapter 56 of the General Statutes, although already in possession of a corporate regarded as the creation of a new corexistence, seek the benefits flowing from the poration within the meaning of the statute general corporation laws of the Kentucky Stat- subjecting new corporations to the payment utes by organizing or amending under them, it of an organization tax; would need to pay its organization tax once.

tax; but the radical This was expressly held in Com. v. Licking Val- change made in the name of the association, ley Building Ass'n, 118 Ky. 791 [82 S. W. 435, as well as the extension of its life, must, 26 Ky. Law Rep. 730]. But it would need to we think, be treated as the creation of a pay the tax only once, just as those created un- new corporation, subject to the payment of der the present general corporation law need to pay only once."

this tax. In Com. v. Southern Pacific Co., 164 Ky.

It was held in Senn v. Levy, supra, that 818, 176 S. W. 375, the question before the changing the name of the company from court was whether certain amendments, sub- the German-American Real Estate Investsequent to the enactment of section 4225, ment Company to the German-American Tito the charters of the corporations, which tle Company was such a radical change as had been created prior to the present Con- to create, in fact, a new corporation substitution, so changed the nature and char-ject to the laws in force when the amendacter of these corporations as to make them, ment was adopted. in effect, new corporations, subject to the In the Licking Valley Building Associapayment of the organization tax on the orig- tion Case the association extended by amendinal capital stock, and the court said they ment to its charter its life, which was about did not.

to expire, and conferred upon the associaThese cases are the only ones dealing with tion some powers that it did not enjoy unthe matter now before us, and the precise der the old charter; and this amendment question we have was not directly involved was held to create a new corporation. in any of them, although these cases furnish. In the Louisville Packing Company Case material aid in determining the question the corporation was created in 1906 and paid here presented.

an organization tax on its capital stock. [1] It will be observed that the original After this it reduced its capital stock and name of this association was the Home and changed its name from Louisville Packing Savings Fund Company, and that in 1897 it Company to New Louisville Packing Comchanged its name by amendment to that pany. But the court said this was not the of the Home and Savings Fund Company creation of a new corporation, and did not Building Association. This amendment subject the corporation to the payment of an merely added the words “Building Associa- organization tax on the new and reduced tion" to the title, and it may be conceded capital stock authorized by the amendment. that these additional words were merely It is insisted that this opinion, in effect, , added to comply with section 856 of the overruled Senn v. Levy. We do not so conKentucky Statutes, providing that the words strue it. In holding that the slight change "Building Association" must forma part in the name did not have the effect of creof the name of every building and loan as- ating a new corporation, the court was largesociation. Under these circumstances, we ly influenced by the fact that this corporado not think this amendment had the ef. tion had paid an organization tax once on fect of creating a new corporation, as it did all of its capital stock. This was really the not change, in any material manner, the controlling point in the decision, and this name or the powers or privileges conferred point was reiterated in the Ohio Valley Tie on the original corporation by the act cre- Company Case. ating it.

In the case we have we find that a cor[2] The amendments of 1906 and 1907 poration known as the Home and Savings merely increased the capital stock, and au- Fund Company or as the Home and Savthorized the association to increase its in- ings Fund Company Building Association debtedness above the sum designated in its it is not material which was created, with original charter; and we are inclined to a capital stock of $5,000,000, before the statthink that these amendments did not have ute authorizing the collection of an organithe effect of so changing the powers or priy-zation tax was enacted. We find that by ileges of the association as to make it a various amendments to its charter this orignew corporation in the sense that all of its inal corporation has been converted into a capital stock would be subject to the pay- corporation styled the Avery Building Asment of the organization tax.

sociation, with an authorized capital stock [3] But in 1912 another amendment to the of $15,000,000. On $10,000,000 of this capital charter was adopted, increasing the capital stock it has paid this organization tax, but stock from $10,000,000 to $15,000,000, prolong-on $5,000,000 of it, it has not. So that we ing the corporate existence, which was then have now a new corporation with a capital about to expire, for a period of 99 years, and stock of $15,000,000 upon $5,000,000 of changing the corporate name from the Home which the organization tax has never been and Savings Fund Company Building As-paid.

Ky.)

CONSOLIDATION COAL CO. V. VANOVER

43

ed difference between this case and the and transmitted, will not require dismissal, Louisville Packing Company Case and the where the clerk copied, at the instance of the Ohio Valley Tie Company Case, as in each plaintiff

, the entire record in the case, and certi

, of those cases the corporation had paid the the stenographer's transcript of the evidence, organization tax on the full amount of its signed by the judge, and indorsed by the clerk, authorized capital stock in existence at the was a true and correct copy of the case as it time it was sought to again subject the stock appeared of record in his office.

[Ed. Note.--For other cases, see Appeal and to the payment of another organization tax. Error, Cent. Dig. SS 2789, 2790; Dec. Dig. Euro. In the Southern Pacific Company Case the 641.] names of the corporations were not changed, 2. TRIAL 11-EQUITY CASE-TRANSFER TO the amendments merely conferring upon COMMON-LAW DOCKET. them larger and other powers than were au- Under Civ. Code Prac. § 6, providing that thorized by the original articles of incor- actions of which courts of chancery had exporation. But these powers were in the line clusive jurisdiction before the 1st day of Auporation. But these powers were in the line gust, 1851, must be equitable, and Čiv. Code of the powers conferred by the original char- Prac. $ 12, providing for the transfer of ister, and did not, as the court held, make any sues of fact in equity cases to the ordinary material or radical change in the nature of docket for trial upon motion of the parties,

it was error to transfer an action seeking an the business the corporations were authoriz- injunction against threatened trespass for the ed by their original charters to carry on. lack of adequate remedy at law, which involved

This case, we think, falls distinctly within an issue of fact regarding a boundary, to the the rule announced in Senn v. Levy; and, common-law docket, with directions to the jury adhering to the doctrine announced in that lief asked being by way of injunction, the accase, we see no escape from the conclusion tion is purely equitable, though depending on that this corporation is liable for the or- an issue of fact. ganization tax on $5,000,000 of its capital dig. s 30; Dec. Dig. Om 11; Action, Cent. Dig.

[Ed. Note. For other cases, see Trial, Cent. stock. If it should not be required to pay $ 312.] this, it would necessarily follow that a cor

3. EQUITY Ow377-ISSUE OF FACT TO JURY. poration organized under the old statute

In such case the proper practice is to orcould, in fact, become a new corporation, der an issue out of chancery submitting only with new powers and privileges, and yet be the question of fact to the jury. exempt from the payment of the organiza- [Ed. Note. For other cases, see Equity, Cent. tion tax to which all other new corporations Dig. 88 788–793; Dec. Dig.' ww377.] are subjected. It was manifestly the pur- | 4. EQUITY Own 381-ISSUE OF FACT TO JURY--pose of the new legislation to put all cor

WEIGHT OF VERDICT. porations as nearly as might be on the same sue of fact is submitted to a jury, the chancellor

Where, in a purely equitable action, an isfooting so far as the general laws of the may disregard the verdict and enter judgment state were concerned, and if this corporation upon his own view of the weight of the eviis not subject to the statute imposing an dence, as the verdict is merely advisory, and organization tax, it would be difficult to so jury in a common-law action.

not entitled to the weight of the verdict of a amend the charter of an old corporation as

[Ed. Note.-For other cases, see Equity, Cent. to 'bring it under the influence of this stat- Dig. $8 813-817; Dec. Dig. 381.] ute.

5. APPEAL AND ERROR O 301-PRESENTATION The defense that the right of the common- OF GROUND OF REVIEW-MOTION FOR NEW wealth to enforce the collection of this tax TRIAL - NECESSITY TRANSFER TO LAW is barred by the 5-year statute of limitation

DOCKET. must be held unavailing, as this suit was appeal of the error of the court below in trans

It is no objection to the consideration on brought within 5 years from 1912, when the ferring the case to the common-law docket amendment was adopted that made this cor- that such error was not made a ground for new poration subject to the organization tax. We trial, since such error occurred before the trial. do not, however, decide, as it is not neces. Error, Cent. Dig. $$ 1743, 1753–1755; Dec.

[Ed. Note.-For other cases, see Appeal and sary so to do, that the 5-year statute would Dig. 301.] bar the collection of the tax if the amendment that converted the old into a new cor

6. WITNESSES 345-IMPEACIIMENT-ARREST

ON CRIMINAL CHARGE. poration had been adopted more than 5 years Under Civ. Code Prac. $ 597, providing that before the organization tax was sought to be a witness may be impeached by contradiction, collected. In short, we merely mention this by evidence of statements conflicting with his question of limitation in passing.

testimony, and by evidence of his bad general

reputation, but not by evidence of particular The judgment is affirmed.

wrongful acts, except that his conviction of felony may be shown by his examination or the record of the judgment, evidence that a witness

had been arrested on a charge of false swearing CONSOLIDATION COAL CO. v. VANOVIR. was inadmissible, in the absence of any attempt (Court of Appeals of Kentucky. Oct 13,

to show a conviction. 1915.)

[Ed. Note. For other cases, see Witnesses, 1. APPEAL AND ERROR Om641 MOTION TO

Cent. Dig. 88 1126-1128; Dec. Dig. Om 315.] DISMISS-RECORD. Failure of plaintiff to file a schedule

Appeal from Circuit Court, Letcher County. in the lower court, and of the clerk below to

Action by the Consolidation Coal Company certify that the entire record had been copied ! against Sam Vanover. Judgment dismissing

plaintiff's petition, and plaintiff appeals. , tion in transferring the case to the commonReversed and remanded.

law docket. Section 6 of the Civil Code proHager & Stewart, of Ashland, Jesse Mor- vides: gan and B. P. Wootton, both of Hazard, and

“Unless otherwise provided by this Code or L. E. Harvie, of Whitesburg, for appellant. chancery had jurisdiction before the 1st day

other statute: 1. Actions of which courts of Roscoe Vanover, of Pikeville, and David of August, 1851, may be equitable; and acHays, of Whitesburg, for appellee.

tions of which such jurisdiction was exclusive must be equitable. 2. All other actions must be

ordinary. CLAY, C. Alleging that it was the owner

Section 12 of the Civil Code provides: and in the actual possession of a certain tract of land on Elkhorn creek, in Letcher

"In an equitable action, properly commenced county, and that the defendant, Sam Van-case transferred to the ordinary docket for the

as such, either party may, by motion, have the over, threatened to enter on said land, tear trial of any issue concerning which he is endown the dwelling house thereon, and com- titled to a jury trial;. but either party may remit other acts of trespass, plaintiff, the Con- quire every equitable issue to be disposed of be

fore such transfer." solidation Coal Company, brought this action against the defendant to enjoin him

This is not an action for damages or mere from trespassing on said land. The defend- trespass to try title. It is not an action ant pleaded, in substance, that he was the where other than injunctive relief was asked, owner of a particularly described part of the and the injunctive relief was merely ancilland in question, and denied that he was lary to the main relief. It is a case where threatening to tear down the dwelling house the only relief asked was an injunction reor commit any acts of trespass on any por- straining the defendant from committing certion of the land claimed by plaintiff, except tain threatened acts of trespass on the propthat which he himself owned. Over the ob- erty in question. This relief was asked on jection of the plaintiff, the case was trans- the ground that the defendant was insolvent ferred to the common-law docket. A trial and plaintiff had no other adequate remedy before a jury resulted in a verdict and judg- at law. Where relief by way of injunction ment for the defendant. Plaintiff appeals. is the sole and only relief asked, such an ac

[1] We are met at the outset by a motion tion was purely equitable before the 1st day of the defendant to dismiss the appeal, be- of August, 1851, and courts of chancery alone cause plaintiff failed to file a schedule in the had jurisdiction. The action being purely lower court, and the clerk of that court fail- an equitable one, though depending on an ised to certify that the entire record had been sue of fact, it was error on the part of the copied and transmitted to this court. In re-chancellor to transfer the case itself to the ply to this contention, it is sufficient to say common-law docket, with directions to the that the clerk below copied, at the instance jury to return a general verdict. The proper and direction of the plaintiff, the entire rec- practice in such a case is to order an issue ord in the case, and his certificate shows out of chancery and submit only the questhat the transmitted record, together with tion of fact to the determination of the jury. the stenographer's transcript of the evidence, [3, 4] In a case like this of a purely equitasigned by the judge, and indorsed by the ble character, the verdict of the jury is mereclerk, is a true and correct copy of the case ly advisory, and is not entitled to the weight as it appears of record in his office. The of the verdict of a jury in a common-law acmotion to dismiss the appeal is therefore tion. In the latter case, the verdict can only overruled.

be set aside when flagrantly against the eviThe description of the tract in the deed un-dence; whereas, in a case like this, the chander which plaintiff holds is, in part, as cellor may disregard the verdict and enter follows:

judgment in conformity with his view of the "Beginning at an oak tree on line of Jane weight of the evidence. Bannon v. Patrick Vanover's at ford of creek above Jane Van- Bannon Sewer Pipe Co., 136 Ky. 556, 119 S. over's residence.

W. 1170, 124 S. W. 843. There are two oak trees near the ford of [5] There is no merit in the contention that the creek; the plaintiff claiming one as the the error of the court in transferring the case beginning corner, and the defendant the to the common-law docket cannot be considother. On the decision of this issue of fact ered, because it was not made a ground for depended plaintiff's right to relief. The a new trial. Being an error that occurred court did not direct an issue out of chancery before the trial, it was not a part of the for the purpose of trying this issue of fact, trial, and it was not, therefore, necessary to but transferred the case to the common-law make it a ground for a new trial. It stands docket and directed the jury to find either on the same plane as any other error occurfor the plaintiff or the defendant on the ring before the trial commenced. whole case. Upon the jury returning a ver- [6] Over the objection of plaintiff, defenddict for the defendant, the court entered a ant was permitted, on the cross-examination judgment dismissing plaintiff's petition. of plaintiff's witness, Newt Fannin, to show

[2] The principal question presented by that Fannin had been arrested on a warrant

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