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Jacobs, Executrix, v. Jacobs et al.

presented for allowance, and through the processes named in the law, had become recognized claims against his estate.

The statutes are clear and not capable of a doubtful interpretation, regulating the duties of creditors in this behalf. The contention made on behalf of creditors, that the claims of the building associations shall be postponed to the payment of the claims of general creditors, by reason of the fact that the heirs of Charles C. Jacobs are, in law, postponed to the payment of the claims of general creditors, loses its effect and virtue by reason of the fact of the failure to have the same presented and allowed. To coin an expression, the claim was inchoate but never ripened into a legal claim, by reason of the failure to present the same in the manner and form as provided by the statute.

It is contended that, in law, the estate was not settled and determined at the time of the renewing of these mortgages. There had been no inventory taken and none seems to have been taken until five years after the death of the decedent. But the statute does not begin to run from the taking of the inventory; it is the notice of publication that is pivotal here. The proper notice was given, and it then became the duty of claimants against the estate to have proceeded actively in the collection of their various claims.

The building associations placed upon record their new mortgages, and to the extent of the indebtedness due to them, paid to the Jacobs family the amount due at the time of the death of Charles C. Jacobs. The amount of difference would be very small either way.

The building associations had no knowledge and were not parties to any transaction which would in any way interfere with their rights which are determined largely of record and of law; and, if the conclusion of fact as reached by the court be correct, then all rights which existed 'at the time of the death of Charles C. Jacobs, in September, 1890, were reserved to and are the rights of the building associations on distribution in 1897.

The doctrine of subrogation would, therefore, apply, as placing them exactly in the same position, having paid the same debts, standing in the same relation as the mortgagees to the original transaction, and, therefore, the court adopts the conclusions that each loan in the Texas Building Association Company is, in law, entitled to subrogation to the prior liens.

Lamping asserts a claim against this estate which he asks the court to find as anteceding the claims of the building association company. Lamping stood in a position where he knew of these transactions, as herein detailed. The success of the Jacobs Cordage Co. was his success. Its commercial standing was a matter of interest to him. His son was an officer; he was a director, and while owning in his own name but a very small amount of the stock, a single share, yet he was largely interested by reason of endorsements and otherwise, in seeing that the concern had good credit and its affairs managed in an economical and business way. If not the adviser, he had knowledge of these various loans, and during all of the time from 1887 to 1895, he had in his possession a mortgage upon the same property, except the homestead, which he withheld from record. It was his manifest duty, if he expected at this time or at any time subsequent to the taking of the mortgage, to have invoked the powers of a court of equity to set apart a portion of the

Hamilton Probate Court.

fund to satisfy his security, to have had the same recorded as notice to the world, and for the purpose of securing a lien against this property, the proceeds from the sale of which are now before the court for distribution. Had he expected to rely upon the mortgage as security, no other course would have been safe, advisable or legal. That he did not thus expect to avail himself is evident from the course prosecuted by him. But, had he expected to rely upon the claims that are now urged, by presenting the same to the executrix for allowance and payment within the time provided by the statute, he should have done so upon the appointment of Maria T. Jacobs as executrix. This he failed to do, and there does not seem to be in the testimony any state of facts which would give relief to him for his failure thus to properly prosecute his claim.

The position occupied by Lamping afforded unusual opportunities for the exercise of knowledge, that could have worked a perfect relief to him. He knew all of the circumstances and surroundings, and was certainly in a position where he could have known them, and, therefore, as against the building associations' rights, the claim of Mr. Lamping has no superior equity. He cannot assert a prior lien to this fund. The doctrine of estoppel, in my judgment, is a perfect defense to the prosecution of a claim along these lines.

It is the doctrine of substitution rather than the doctrine of subrogation, or rather the doctrine of subrogation by substitution, that must apply to the case at bar, and this as to the extent of the amount due and owing at the time of the giving of the two seventy-five hundred dollar mortgages-about ten thousand, five hundred dollars in all. Clearly, to this extent, the building association mortgages have the strongest equity and must be first paid.

But there is an unpaid balance, against which Lamping asserts a priority. The court has already found that this money in question was borrowed from the building association companies by Charles C. Jacobs, originally for the purposes of the Jacobs Cordage Co., with the knowl edge, certainly, of Lamping, possibly by his advice. That of whatever was done, he had full knowledge, is shown by the testimony.

The rents collected from the Jacobs property, went to the payment of the building associations' dues, but a very large amount of the dues, interest and premium was paid through the Jacobs Cordage Co., a concern that had for its vice-president Lamping, whose son was also an officer, and another son, an attorney, a director. Aside from all legal questions involved, as to which would determine, under the statute, whether Lamping was or was not a creditor of the estate at all, the court is of opinion that as against the building asssciations, as to the unpaid balance of their claim, Lamping has no prior lien, and can, therefore, assert no equity that would displace the rights of the building association companies.

I do not pass upon the question of negligence, laches, further than to say that if all doubts were resolved in favor of the validity of Mr. Lamping's claim as a debt against the estate, his neglect to have had the same presented and allowed under the statute, would raise serious questions as to its validity at this time; but the questions already passed upon by this court make it unnecessary for any adjudication to be made by this court at this time.

The order of the court, therefore, will be that after the payment of costs and expenses, the claims of the building associations

In re Assignment of the Jackson Brewing Co.

shall be first paid, including the principal and interest. After the pay. ment of the claims of the building associations, the balance shall be distributed in accordance with law.

Ernst Rehm; Phil. Roettinger; Harmon, Colston, Goldsmith & Hoadly.

F.A. Lamping; Follett & Kelly; Outcalt & Granger; L. G. Hummel; Paxton, Warrington & Boutet.

ASSIGNMENTS,

[Hamilton County Common Pleas.]

IN RE ASSIGNMENT of the JACKSON Brewing Co.

TAXATION OF PROPERTY IN HANDS OF Assignee.

Where an assignee conducts the assigned business as a going concern, making improvements in the plant, paying indebtedness, competing with other similar concerns, and making ready to turn it over to its owners as soon as the debts have been paid off, the assigned property is subject to taxation in his hands.

SPIEGEL, J.

This cause comes into this court upon an appeal from the court of insolvency determining that the assignee of said brewery, John B. Bobe, was not liable for the payment of taxes, municipal, county or state. The facts in the case are as follows:

"The Jackson Brewing Company made an assignment for the benefit of its creditors on March 3, 1894, to John B. Bobe, and on March 7, 1894, an order was made by the court directing the assignee to continue the business, and afterward, with the consent of three-fourths in number and amount of the creditors, an order was made directing the assignee to continue the business, which order has been continued in force ever since, and under said order of the court, the assignee still continues to carry on said business. The auditor of Hamilton county has assessed the personal estate in the possession of said John B. Bobe, as such assignee, for taxes as follows: For 1894, on $30,970, taxes amounting to $964.79; for 1895, on $23,430, taxes amounting to $725.25; for 1896, on $23,500, taxes amounting to $682.44; total taxes, $2,372.46."

Upon this state of facts the court of insolvency determined that in accordance with the decision of our Supreme Court in the case of McNeill, Assignee, v. Hagerty, Auditor, 51 O. S., 255, the application of the county treasurer for payment of taxes on the personal property of the Jackson Brewing Company, in the hands of the assignee, must be refused.

An examination of the case of McNeill v. Hagerty, supra, with the facts of which I am familiar, having tried the same-shows that both Judge McNeill, as assignee, and Judge Goebel, as trustee, were then converting the assets of the assigned estate into money for the purpose of paying the creditors. No question was raised in those cases as to a continuance of business for a term of years, as in the present case. On the contrary, Judge Spear distinctly states, upon page 263, as follows:

"It is made the duty of the assignee to convert the assigned property into money, and, at the expiration of eight months, file an account, as a step preliminary to an order distributing the money to creditors, which is to be done without unnecessary delay, according to their respect

Hamilton Common Pleas.

ive claims and rights. The effect of the assignment is to devote the property absolutely to the satisfaction of the debts of the assignor, just as they existed at the time of the assignment, subject, necessarily, to be depleted by the expenses of the trust."

And, following out this line of reasoning as to receivers, why taxes should be paid by them, Judge Spear says as follows, on page 265:

"The duty enjoined upon receivers to list is confined to receivers of corporations. Such receivers are usually empowered to prosecute the business for the benefit of the parties interested. This carries the idea of a continuance of the business as by the corporation, and its eventual surrender to the corporation again."

At the conclusion of the decision in this case Judge Spear calls special attention to the fact that the conclusion which he announces is fully supported by decisions in two well considered cases-one by the Supreme Court of Pennsylvania, and one by the Supreme Court of Connecticut, viz.: School Directors v. Rathvon, 30 Pa. St., 533, and Brooks v. Hartford, 61 Conn., 112.

An examination of both these cases will show that the distinction pointed out by Judge Spear in the case relied upon by counsel for the assignee is contained in them in the language of the Pennsylvania case:

"It (taxable property) does not necessarily embrace property which the law has taken into its own hand simply to collect and then distribute, and of which it has designated the temporary stockholders and trustees for the better accomplishment of its work."

And in the language of the Connecticut case:

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'The provision of the general statutes, paragraph 3841, that trustees residing in this state, having in their hands personal property liable to taxation belonging to the trust estate,' shall make return thereof to the tax assessors, applies only to property in the hands of trustees which is invested in some permanent form, and from which interest or income is sought to be derived."

The facts in the case before me show that the assignee, for a period of four years has been conducting the business of the Jackson Brewing Co. in the same manner as the business of other brewing companies is conducted. He has manufactured beer, sold it, made necessary improvements in the brewery, paid off debts, and in all respects conducted it as a going concern, ready to be turned over to its owners again when the debts have been paid off. Upon what principle, then, is there any distinction between the conduct of the business of the Jackson brewery and that of the Moerlein brewery, or Hauck brewery or Windisch-Muhlhauser brewery, or any of the other breweries of our city? The assets of the Jackson brewery have not been converted into money for the purpose of paying the creditors. On the contrary, it has been conducted as a going business, and from the profits derived therefrom the debts are being gradually paid.

I do not believe it to have been the intention of the decision in Mc Neill v. Hagerty, supra, to extend the principles of that case any further than the facts upon which the decision is based.

The question of double taxation, upon which counsel for the assignee relies, arises daily in our state, and has been determined in a subsequent case by our Supreme Court, to-wit, in the case of Reinboldt v. Wayne, 52 O. S., 160, to be only apparent double taxation.

The distinction between the case of McNeill v. Hagerty, supa, and the case at bar is one based upon facts which can not be overlooked by

Lawton v. Lawton, Executrix, Etc.

the court; facts which entitle the state and its subdivisions to the payment of taxes for the protection given the Jackson Brewing Co. in thus continuing the conduct of its business in competition with other breweries paying their share of the public burden.

The judgment of the court of insolvency is reversed and the prayer of the treasurer of Hamilton county for payment of taxes granted. Frank F. Dinsmore, for the county treasurer. Adam A. Kramer, for the trust estate.

SALE AND ENCUMBRANCE OF PROPERTY DEVISED.

[Superior Court of Cincinnati, Special Term.]

ANNIE A. LAWTON V. ANNIE A. LAWTON, EXECUTRIX, ETC.

1. EXECUTOR'S SALE OF PROPERTY AT EXPIRATION OF TRUST CREATED BY WILL.

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Where there is the provision in a will, "I give and bequeath to my daughter, Annie, to be held in trust, my two-story frame house to collect all rents for a term of five years; pay all taxes and assessments; the remainder to be used as she sees fit; after the expiration of five years this property to be sold and divided equally between my six children," and the will as a whole showing that the testatrix had implicit confidence in her daughter, Annie, the reasonable intendment of the will is that this daughter should sell the property, and the law will imply that such power was conferred.

2. MORTGAGE OF PROPERTY BY Legatee BefoRE DISTRIBUTION.

A mortgage given by one of the six children upon all her right, title and interest in the above property is valid against the mortgagor's interest in the proceeds of the land thus devised to be sold.

DEMPSEY, J.

Plaintiff, as one of the heirs and devisees of Mary B. Lawton, deceased, filed her petition in partition against the other heirs and devisees, and also against herself, Annie A. Lawton, as executrix of said Mary B. Lawton. To plaintiff's petition, Annie A. Lawton, as executrix, filed her cross-petition wherein she averred that said Mary B. Lawton died December 1, 1892, leaving a last will and testament of which the crosspetitioner was appointed executrix, and which will was duly probated in Hamilton county, December 16, 1892. The material parts of said will are as follows:

First. I desire all my just debts and funeral expenses to be paid as soon as possible after my decease.

Second. I give and bequeath to my daughter, Annie A. Lawton, to be held in trust, my two-story frame house (describing the real estate in the petition). To collect all rents for the term of five years; and pay all taxes and assessments against said property. The remainder to be used as she sees fit.

Third. After the expiration of five years this property to be sold and divided equally between my six children.

Fourth. Any moneys or chattels remaining after my obligations are all paid, the remainder to be used by my daughter, Annie, as she sees fit.

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