dinance or by-law theretofore enacted by such city, unless the same is in conflict with the general laws relating to cities of the class to which it has been assigned, and to such extent only shall any ordinance or bylaw be repealed by the transfer, nor shall the powers, rights, duties or obligations of the city be in any wise affected by the transfer or any officer or employé thereof, or any debtor or creditor of the city. Defense may be made to the petition by any inhabitant of the city; and if defense is made, the court shall hear and determine the same, and render a judgment transferring or refusing to transfer the city to another class, as may seem proper. The pleadings and practice shall be the same as in equity cases, except as herein provided; but if the court shall be satisfied that the population of the city entitles it to be transferred to another class, it shall so adjudge if the proper notice or publication has been made; and no appeal shall lie from the judgment."

Similar provisions were attempted to be made as to other cities and towns by sections 3661, 3662; but so much of these sections as authorizes the court to assign or transfer a town or city from one class to another was held unconstitutional in Jernigan v. City of Madisonville, 102 Ky. 313, 43 S. W. 448. Yet in that case the court said: "So much of said sections, however, as provide means for taking the census or determining the population of any such city or town are constitutional and valid, and when the population of a town is ascertained, pursuant to the provisions of said sections, the Legislature will be authorized to make the proper transfer of such town or city." The same rule must necessarily be applied to section 3264. A census was taken by the city of Paducah, showing that it had the required population, and an ordinance of the city was then passed, setting forth the population of the city, and how ascertained, the class it was in, and the class in which it was entitled to be; and, these facts being laid before the Legislature, the act in question was passed. We are of opinion, therefore, that under the rule heretofore laid down by this court, from which we are unwilling to depart, the act of March 21, 1902, was not invalid because no previous law had been passed providing for such transfer. For if we reject all that part of the section relating to the judicial proceedings for the transfer, as unconstitutional, we have left not only that relating to the census, but the following: "And thereafter such city shall be governed by and under the general laws relating to the class to which it has been assigned, but the transfer from one class to another shall not in any wise impair or affect any ordinance or by-law theretofore enacted by such city, unless the same is in conflict with the general laws relating to cities of the class to which it has been assigned and to such extent only shall any ordinance or by-law be repealed by the

transfer, nor shall the powers, rights, duties, or obligations of the city be in any wise affected by the transfer or any officer or employé thereof or any debtor or creditor of the city." Under the principles laid down in the case referred to, this part of the section must be held in force, no less than that part of it relating to the taking of the census. It is, no doubt, true that if a city is transferred from one class to another, without any provision saving the rights of the officers, they would have only such rights as are conferred by the law governing the city in the class to which it is assigned, as they take their offices subject to the right of the Legislature to transfer the city from one class to another as provided in the Constitution. If the Legislature abolishes a municipal corporation, the rights of its officers cease with its existence, for they take their offices subject to the power vested in the Legislature to abolish them, when such power exists. Although it is provided in section 161 of the Constitution that the compensation of no municipal officer shall be changed after his election or during his term of office, this section must be read in connection with section 156, and does not impair the power of the Legislature to abolish the municipality or abolish the office by assigning the city to a different class, which is, in effect, to create a new municipal entity. A city of the second class is governed by different officers and with different powers from a city of the third class. Appellants, therefore, by the transfer of the city from one class to the other, were legislated out of office, except so far as their rights were saved by the provision quoted from section 3264, Ky. St. But that section must be read in connection with the other provisions of the act for the government of cities of the second class. By the first section of that act (Ky. St. § 3038) the cities of Covington, Newport, and Lexington are declared to be cities of the second class, "and the inhabitants thereof and of such other cities as may hereafter be declared cities of the second class respectively are created and continued bodies corporate and politic within their respective limits." By section 3172 it is provided as follows: "All offices created by laws in force prior to this act taking effect, not herein expressly provided for, shall be, and they are hereby, abolished upon the expiration of the terms for which present incumbents may have been respectively elected; but the general council shall have the power, by ordinance, to re-create such of said offices, and to prescribe the terms and duties hereof, as may be needed to effect the corporate purposes. At the regular election in one thousand eight hundred and ninety-five, and every four years thereafter, there shall be elected by the qualified voters of the city a mayor, city clerk, city treasurer, city attorney, city solicitor, if there be such officer, and civil engineer and assessor and city jailer, who shall hold office for a period of four years, and

until their successors are elected and qualified; also members of the board of aldermen and members of the board of councilmen, who shall hold office as hereinafter provided, and until their successors are elected and qualified. At the general election in one thousand eight hundred and ninety-seven, and every four years thereafter, there shall be elected a judge of the police court. All officers elected under this act shall assume the duties of their several offices on the first Monday in January succeeding their election." In the cities of the second class, officers were elected in November, 1893, for four years. Subsequently the act for the government of cities of the second class was passed, on March 19, 1894; and it was held that the officers elected in 1893 for four years must give way to those elected under the act at the November election, 1895. In other words, the holding over of the old officers was confined to such a period as was necessary to set in motion the machinery of the municipal government under that act, and it was held that after the regular election of officers under the new act, and they entered upon the discharge of their duties pursuant thereto, the old officers must give way. This ruling was made upon the idea that neither the Constitution nor the act contemplated that the city should be left without officers for any time, or that it should have two sets of officers at the same time. Lexington v. Wilson, 97 Ky. 707, 31 S. W. 471; Rhinock v. Evans (Ky.) 31 S. W. 473; Newport v. Brown (Ky.) 31 S. W. 473; Duncan v. Simrall (Ky.) 44 S. W. 116.

We are therefore of opinion that, construing the acts together, as must be done, the same rule must be followed now in the case of a city coming into the second class as was applied to the cities originally in that class when the act took effect, and that appellants are entitled to discharge the duties of their offices until the induction into office of the city officers elected in November, 1903, and that in the meantime their powers, rights, and duties are in no wise affected by the transfer of the city from the third to the second class. They are therefore entitled to discharge their duties until then, and to receive the same compensation as before the transfer was made. In the meantime the city shall be governed by and under the general laws relating to the class to which it has been assigned-not to affect the powers, rights, duties, or obligations of the city, or any officer or employé or debtor or creditor thereof. Second-class cities have provided for them offices unknown to cities of the third class. These may be filled. For example, a board of aldermen, police, and fire commissioners are provided for second-class cities, but not for those of the third class. The offices of marshal of third-class cities and chief of police of second-class cities include the same duties. The marshal in this case will be treated as chief of police until

the appointment of a chief of police is made by the new régime after the election in November, 1903, unless a vacancy sooner oc

curs.

Judgment reversed, and cause remanded for further proceedings consistent herewith.

COMMONWEALTH v. COLLINS.

(Court of Appeals of Kentucky. March 19, 1903.)

TAXATION - OMITTED PROPERTY INFORMATION BY AUDITORS' AGENT-STATEMENT OF PROPERTY-SUFFICIENCY OF DESCRIPTION. 1. Ky. St. 1899, § 4241, provides that the auditor's agent shall file in the clerk's office a statement containing a description and value of the property to be assessed as omitted 'property, and the name and residence of the owner, etc. Held, that a statement describing such property as certain property amounting to from $50,000 to $60,000, and consisting of "cash, mortgages, notes, bonds, accounts, and choses in action," sufficiently described the same.

Appeal from Circuit Court, Mason County. "Not to be officially reported."

Information by the auditor's agent of Mason county against Laura G. Collins. Judg. ment for defendant sustaining a demurrer to the information, and the commonwealth appeals. Reversed.

G. A. Cassidy and B. S. Grannis, for the Commonwealth. L. W. Robertson, E. L. Worthington, Garret S. Wall, W. D. Cochran, and W. H. Wadsworth, for appellee.

NUNN, J. In the month of July, 1901, the auditor's agent, F. S. Watson, filed in the county court of Mason county a statement alleging that certain property belonging to appellee, amounting to from $50,000 to $60,000 each year from 1884 up to and including 1901 was by her omitted to be assessed or listed for taxation for each of the years named. It appears that the demurrer to the information and statement was sustained in the county and circuit courts upon the grounds that the statement did not describe the property sought to be assessed as is required by section 4241 of the Kentucky Statutes of 1899. The description of the property as given by the auditor's agent in his statement is, in substance, that appellee, Laura G. Collins, omitted, neglected, and refused to list with the assessor of Mason county, Ky., or the board of supervisors of said county, and she omitted and neglected to assess said property with any one, and that the omitted property was subject to taxation for each of the years aforesaid, and that the omitted property consisted of cash, mortgages, notes, bonds, accounts, and choses in action.

Section 4241 of the Kentucky Statutes of 1899 is as follows: "It shall be the duty of the sheriff or auditor's agent to cause to be listed for taxation all property omitted or any portion of property omitted by the assessor, board of supervisors, board of valuation and assessment or railroad commission for any year or years. The officer proposing

*

to have such property assessed shall file in the clerk's office of the county in which the property may be liable to assessment, a statement containing a description and value of the property to be assessed, * * * and the name and residence of the owner of the property and the year or years for which the property is proposed to be assessed. * * On the filing of this statement the clerk of the court shall issue a summons against the owner to show cause * * why such property, if any, shall not be assessed at the value named in the statement filed. If it shall appear to the court that the property is liable for taxation, and has not been assessed the court shall enter an order fixing the value thereof at its fair cash value, estimated as required by law; if not liable he shall make an order to that effect. From so much of the order of the court deciding whether or not the property is liable to assessment, either party may appeal as in other civil cases.

Appellee's counsel contend that the description of the property in the information filed is insufficient, to wit, "Cash, mortgages, notes, bonds, accounts and choses in action," and that their demurrer was properly sus tained. They contend that the information should have stated how much cash, how much notes, and how much of each. If they were correct in this, the proper way to have reached the error would have been by motion to make the information more specific, and not by demurrer. By their demurrer appellee admitted that she was the owner of the property for each of the years of the value stated, and that it was subject to taxation, and had not been listed for taxation, nor any tax paid thereon. She was in a better position to know the truth or falsity of this allegation, and the kind and character of such property, and the amounts of each, if any, than the appellant. Under section 4052 of the Kentucky Statutes of 1899 it was her duty to list with the assessor all the estate of every kind that she had or owned each and every year named in the information. In the case of Commonwealth of Kentucky, by, etc., v. the Singer Mfg. Co. (Ky.) 21 S. W. 354, in discussing the auditor's agent act, the court, by Judge Hazelrigg, said: "The information on which the court is expected to act under this law must be, from the nature of the case, somewhat general. The citation is rather to search the conscience of one who is presumably evading the taxgatherer. It is the duty of each citizen to help bear the burden of taxation in common with his fellow, and equally with him; and even upon slight information that he is violating this duty the court should give him an opportunity to perform it." It is important to the state, and to each and every taxpayer in the state, that each and every owner of property shall not omit the listing of it, and the payment of taxes thereon. Every owner of property is presumed to be better acquainted with the

value and the description of his property than any other person, and we cannot understand the necessity for the sheriff or the auditor's agent, in proceeding under section 4241 of the Kentucky Statutes of 1899; and, indeed, it would be impossible for them to give a particular description or the exact amount of cash, notes, bonds, mortgages, choses in action, etc., that the owner may have in his possession, or may have had in his possession in the years passed. And this court is of the opinon that when the Legislature used the word "description" in that seetion, that such a construction of the word was not contemplated. We concur in the language of the court by Judge Hazelrigg, to wit: "The information on which the court is expected to act under this law must be, from the nature of the case, somewhat general." Wherefore the judgment of the lower court is reversed, and the cause remanded for further proceedings consistent herewith.

ALBANY MILL CO, et al. v. HUFF BROS. et al.

(Court of Appeals of Kentucky. March 19, 1903.)

CORPORATIONS-CONDITIONAL SALE OF STOCK -DEBTS OF AGENT-LIABILITY.

1. Under the direct provisions of Ky. St. 1899, § 950, no appeal lies from a judgment of the circuit court allowing a separate recovery of claims of less than $200.

2. Under Ky. St. 1899, § 545, providing that shares of stock shall be transferred on the books of the corporation, a transaction whereby the vendors held the stock until it was paid for the transfer to be then made-was not a completed sale.

3. Where the stockholders of a milling corporation turned over the property to one under an uncompleted sale of half of the stock, the corporation was liable for debts contracted by him within the scope of his authority, whatever the intention of the stockholders may have been.

Appeal from Circuit Court, Clinton County. "Not to be officially reported."

Proceeding by the stockholders of the Albany Mill Company for a liquidation. From a judgment allowing claims of Huff Bros. and others the corporation appeals. Affirmed in part, and reversed in part.

Sam C. Hardin and L. C. Winfrey, for appellant. Allen Sandidge and Bertram & Bertram, for appellees.

The

O'REAR, J. Appellant was incorporated April 6, 1892, to do a milling business at Albany, Ky., and to engage in manufacturing lumber, flour, etc. It owned a mill at Albany, which it operated from 1892 till 1901. sole stockholders were P. H. Hoskins, who owned 6 shares; J. F. Brents, 61⁄2 shares; E. J. Hopkins, 1 share; Ben Young, 1 share; and T. F. Gutherie, 5 shares. Each share was of par value of $200. P. H. Hopkins was president, secretary, and treasurer, and he and Brents and Gutherie constitute the board

of directors. On September 1, 1899, P. H. Hopkins and J. F. Brents contracted to sell 10 shares, or "one-half of the mill property," to one Lee Clark. The contract was written, and is as follows:

"Agreement between Hopkins and Brents and Lee Clark. P. H. Hopkins and J. F. Brents of the first part and Lee Clark of the second part, all of Clinton County, Ky., to contract. P. H. Hopkins and J. F. Brents sold to Lee Clark ten shares (one half) of the Albany Mill to be paid for as follows, four hundred dollars paid, and one note of five hundred and ten dollars due Jan'y 1st, 1900, one note for $520.00 due May 1st, 1900, one note for $530.00 due September 1st, 1900, and one note for $540.00 due Jany. 1st, 1901, all to bear interest at 6% per annum after maturity. If any one of the notes fails to be paid off in a reasonable time after it becomes due then all of the notes become due and collectible.

"The said Clark is to have one half of all the assets of the Albany Mill Co. and assume one half of the liabilities of said Company. He agrees to apply the profits of the mill to pay off the old debt after the necessary repairs are paid for and not run the company in debt until he has paid for his part of the mill and discharged the old debts. The said Hopkins and Brents agree to transfer certificates of stock to said Clark as soon as the last payment is made. A lien is retained on said property to secure the payment of the notes and Hopkins and Brents are to retain their offices as directors of said milling Company until the next annual election. It is further agreed that the said Lee Clark has possession and control of the property sold to him from the first of September, 1899."

On the minute book of the corporation this entry appears: "September 1st, 1899, P. H. Hopkins and J. F. Brents placed ten shares or one half of the Albany Mill Company property in the hands of Lee Clark to run and manage same he agreeing in writing to make no debts against said company. They, Hopkins and Brents, retaining the certificates of stock and also continuing to be directors, etc., as formerly." About December, 1899, the Gutherie stock had been contracted to Lee Clark. This entry appears on the cor. poration's minute book with reference to that transaction: "1900. May 7th. At a meeting of the stockholders of the Albany Mill Co. at Albany, Ky., on May 7th, 1900, the death of T. F. Gutherie, one of the directors was suggested. It was agreed that the two living directors, P. H. Hopkins and J. F. Brents, be continued directors until the one-fourth of the mill property owned by T. F. Gutherie is sold and certificates of stock transferred to purchaser, then a director to be appointed. Said Hopkins to continue to act as president, secretary and treasurer. Adjourned." Clark took charge of the plant and operated it under the foregoing agreement till 1901, when, being unable to pay for the stock, he sur

rendered the mill to appellant. During his control he had incurred about $1,200 of debts for labor and material furnished to the mill. In this suit by the stockholders for a liquidation (they having since sold the plant to one Perkins), a reference was had to the master commissioner to audit claims against appel lant corporation. A number of laborers and materialmen presented claims which were allowed as debts against appellant. The judgment of the circuit court allowed a separate recovery for each one. The following were less than $200 and the appeals as to them are dismissed: J. S. Duvall, Russell Bros., C. S. Means, Bill Means. See section 950, Ky. St. 1899; Caldwell's Adm'r v. Hampton (Ky) 51 S. W. 174.

The court is of the opinion that, by the contracts above set out, the vendor stockholders had merely contracted to sell the recited portions of their stock, but that the sale was not complete. Section 545, Ky. St. 1899. They continued to hold their stock till it was paid for, and the transfer of the certificates was had. In the meantime, and until the sale of the stock should be completed, the directors of the mill company turned over to Clark its management and operation. His apparent office was such as they had the right, under the articles of their corporation, to create. His duties as manager were not unusual, and were clearly within the scope of the directors' authority to employ. The stationery, sign, and newspaper advertisements used all continued to be in appellant's corporate name. Many of the claimants testified that they contracted with Clark, believing he was appellant's agent, while others said (generally day laborers) that they were employed by Clark, and had heard that he had bought the mill. We find that, as a matter of fact, they were employed for and rendered their services to appellant under the contracts and situation above set out. It may have been, and doubtless was so, that Clark, Hopkins, and Brents believed that their contract operated as a conveyance of the mill property to Clark, and that the retention of the certificates of stock gave their vendors an adequate first lien upon the property, as well as that Clark's operation of the mill would be upon his own responsibility alone. The property of a corporation is not conveyed by a transfer of its stock. However the certificates of stock may be sold and assigned, the title of the corporation to its property remains unchanged thereby. The corporation does not cease by such transfers. Under section 538 Ky. St. 1899, not less than three persons (and under the General Statutes [chapter 56, § 1] not less than two) could form such a corporation as appellant is. Whether the purchase of all the stock of the corporation by one person would ipso facto dissolve the corporation, is not decided. Louisville Banking Co. v. Eisenman, 94 Ky. 83, 21 S. W. 531, 1049, 19 L. R. A. 684, 42 Am. St. Rep. 335.

Nor can the belief or intention of the stock

holders in the transactions in this case affect the legal status of the corporation in its relation to its property and its creditors. Whatever may have been Clark's motive or belief, under the arrangement described, his act within the scope of the corporate powers was the act of the corporation, and bound it as such. We do not mean to say that Clark's representations and contracts with his laborers might not have bound him personally also. But we are called on here to consider only the effect of his acts upon the corporation. The circuit court adjudged appellant liable for the debts created and mentioned above.

6 per cent. semiannual dividend on the bridge company's stock, and provide a fund for the liquidation of its bonded indebtedness on maturity. After complying with the contract for some time, the railroad companies claimed that the charges were heavier than the traffic would bear, and threatened to withdraw from the contract if a reduction were not made. The railroad companies then provided only 4 per cent. dividends, which the stockholders of the bridge company received for 19 years without demanding more. Held, that there was a modification of the contract.

4. In an action by minority stockholders of a corporation owning a railroad bridge against certain railroads using the bridge to recover capital stock of the bridge company alleged to have been wrongfully appropriated by the railroad companies, evidence considered, and held to show no misappropriation.

Among the claims presented was one of appellees Huff Bros. for about $301. Of this sum, the commissioner found that $222 represented debts contracted by Clark individually, and not in connection with the operation of appellant's mill and business. Nor did it purport to be connected with it. But it was for saw logs and labor furnished at another mill, in another part of the county, owned by other persons, and wholly disconnected with appellant's plant and business. We are of opinion that the circuit court erred in adjudging any part of this $222 against appellant.

The judgment in favor of Huff Bros. is reversed, and cause remanded, with directions to enter a judgment in conformity to this opinion. As to T. V. Stephenson, the judgment is affirmed.

CORPORATIONS - MINORITY STOCKHOLDERS RIGHT TO SUE-CONTRACTS-CONSTRUCTION BY PARTIES-MODIFICATION-USE OF RAILROAD BRIDGE TOLLS ON TONNAGE - REBATES-DISTRIBUTION.

1. In a suit by the minority stockholders of a corporation to enforce the corporation's contract with another corporation, it was alleged that the majority stockholders of the plaintiff corporation, who were also its officers and directors, were the majority stockholders, officers, and directors of the defendant corporation, which was deriving such large pecuniary benefits from its breach of the contract that the majority stockholders of plaintiff corporation, owing to their interest in defendant corporation, after being requested so to do, would not sue, as was their duty, to enforce the contract. Held sufficient to entitle the minority stockholders to sue.

2. It appearing that under the same contract a third corporation had the same rights and had been guilty of the same breaches as defendant corporation, so that a suit against this third corporation would, if successful, establish the liability of defendant corporation, the minority stockholders were entitled to maintain suit against the third corporation, also, though none of its officers or directors had any connection with the third corporation.

3. A corporation owning a railroad bridge contracted with various railroad companies to allow them to use the bridge in consideration of a sufficient payment annually to produce a

5. A corporation owning a railroad bridge contracted to allow certain railroad companies to use the bridge in consideration of, among other things, the payment by the railroad companies for all necessary repairs and expenses of maintaining the bridge. Many years after the contract was made, increasing traffic in a canal crossed by the bridge, and regulations of the War Department, required the construction of a new draw span and fender piers, which could not have been required by any conditions existing or in the contemplation of the parties when the contract was made. Held, that the draw span and piers were not improvements for which the railroad companies were liable under the contract.

6. The approach to a bridge is a part thereof, so that an attempted conveyance by a company chartered to build and operate a bridge of an approach thereto is ultra vires.

7. The directors of a corporation owning a railroad bridge conveyed an approach to the bridge to a railroad company, which was using the bridge by agreement. The conveyance was without consent of the stockholders, and ultra vires. Held, that as the deed was void, and the possession of the railroad company was, in effect, that of a tenant, limitations was no defense in an action by the bridge company o recover the approach.

8. Certain railroad companies contracted for the use of a bridge belonging to an independent corporation, the contract providing that they should pay tolls, which "shall not be in excess of a charge sufficient to produce in the aggregate a sum equal to the expense of keeping the bridge in repair and paying a dividend of 6 per cent. semiannually on the capital stock of the bridge company." This was afterwards modified so as to call for 4 per cent. semiannual dividends, and thereafter, for 24 years, the railroad companies paid enough to furnish such dividends. Held, a construction of the contract by the parties, so as to require the railroads, during the life of the contract, to furnish 3 per cent. dividends, though the contract merely provided that they should not be required to pay "to exceed" that percentage.

9. Certain railroad companies contracted for the use of a railroad bridge belonging to an independent corporation, agreeing to pay each year a sum sufficient to pay the expenses of the bridge, and a certain dividend on the bridge company's capital stock. To provide this sum, all the railroads paid a certain charge on their tonnage crossing the bridge, and at the end of the year the bridge company returned as rebates the excess of the sum paid in over that required. One road connecting with the bridge at one end delivered to and received from the other roads all its tonnage passing over the bridge, and in its accounts with the other roads was charged with tolls on all such tonnage, but the annual rebates were paid to the connecting roads. This road sued the bridge company for the rebate, and