Russell v. Insurance Association.

of its reference would depend upon the character of the report and the objections to it. In this case the proper disposition of the exceptions might depend perhaps, mainly upon undisputed facts and the law applicable to the same. We are, however, unable to agree with cousel for defendant in error that the court was not authorized to hear the exceptions unless the report had first been referred to a receiver or master commissioner. It is true that Sec. 5671, Rev. Stat., provides that the court" shall hear the allegations of all concerned" when the report of the referee is made; but this only has reference to the time of the hearing of the exceptions where a reference has been ordered. In such case the court defers the hearing before him until the report of the referee is filed. But whether the report of the receiver is referred or not, it is made the duty of the court to hear the allegations of all concerned and allow or disallow the account of the receiver. The referee renders no "account" but the "full and correct account" to be heard by the court is the "account" of the receiver which is referred to a referee and is finally to be allowed or disallowed by the court. So that, it is not within the discretion of the court, when proper exceptions by proper parties are filed to the report of the receiver, to refuse to refer the report and thereby deprive the exceptors of their right to a hearing upon the question whether the court ought to allow or disallow the account of the receiver.

If we look to the language and plain intent of Secs. 5670 and 5671, Rev. Stat., the court could not deprive plaintiffs in error of a hearing if they were proper parties to make the exceptions. The plaintiffs in error were members of the corporation, its policy holders, and directly interested and concerned in the account rendered by the receiver and in the disallowance of the claims to which they excepted, for they were bound to contribute to the payment of these claims. We, therefore, conclude that the court erred in his rulings in the premises.

We are strengthened in our conviction of the correctness of our conclusions by the able arguments of counsel for defendant in error, by which they demonstrate to our entire satisfaction that no other redress was afforded by law to these policy holders. They concede to plaintiffs in error the right to have their day in court, and to have the questions raised by them judicially determined, before payment can be enforced from them. But they say that an opportunity for a hearing was afforded them before the receiver; that they could contest these questions in an action brought against them to collect assessments; and that the conditions imposed by the court upon which a hearing might be had were in strict conformity to law. They also say that these exceptors and their interests were fully represented by the directors of the corporation. It can hardly be contended with any show of reason that in this ex parte proceeding, where the directors were the sole parties and where the claims in contest interested the directors individually, and where the interest of the policy holders was directly adverse to that of the directors, that the directors, represented the interests of the policy holders.

Again, it is contended that these policy holders had the right to appear before the receiver and there have this contention between themselves and the directors judicially determined. That it was their duty, if they cared to have a hearing, to go before the receiver and present their evidence. That if they were dissatisfied with the decision of the receiver they could have the same reviewed upon a bill of exceptions containing all the evidence after a motion for a new trial before him had

Geauga Circuit Court.

been denied; that having neglected to obtain a hearing and decision of this controversy before the proper tribunal they cannot now complain.

In support of this position reference is made to Sec. 5663, Rev. Stat., which provides that "the receiver shall call a general meeting of the creditors of the corporation, within four months from the time of his appointment, at which all accounts and demands for and against the corporation, and all its open and subsisting contracts, shall be ascertained and adjusted, as fully as may be, and the amount of money in the hands of the receiver declared; and he may settle controversies that arise between him and the debtors or creditors of the corporation by arbitrament or reference."

Neither this section nor any of the preceding sections conferring power upon the receiver contain an intimation that he is clothed with judicial powers; on the contrary he is only authorized to ascertain and adjust demands for and against the corporation as fully as may be, apparently by amicable settlements, while acting in the capacity of receiver. It any controversy between the corporation and its debtors arise he must proceed as provided in Sec. 5659, Rev. Stat., before the proper tribunal. Or, if assets are detained from him he may bring the proper action in the proper court to recover the same, as provided in Sec. 5662, Rev. Stat. The controversies that may arise between him as an individual and the debtors or creditors of the corporation may by agreement be settled by arbitrament or reference. And when all the power and authority conferred by law upon trustees to whom assignments are made for the benefit of creditors are added to his other powers, we are unable to find that he had any judicial authority to hear and decide this controversy. He could allow the claims and report his allowance to the court subject to examination and confirmation or disallow. ance by the court.

The plaintiffs in error were not creditors of the corporation. When a general meeting was called under Sec. 5663, Rev. Stat., they were not notified of such meeting or invited to attend it; nor was any notice of his proceedings in the allowance or disallowance of claims given, or required to be given, to the corporation or its policy holders until the report of the receiver was filed in court in pursuance of Sec. 5670, Rev. Stat. By this latter section notice of the filing of such report was required to be given by publication, and then for the first time had these policy holders the right to know what action the receiver had taken in the allowance or disallowance of claims. The decision of the court below, however, was not based upon this contention, but was based upon Sec. 6353, Rev. Stat., where provision is made for the disallowance of claims by the probate court upon the written requisition therefor by the assignor or any creditor.

Assuming, without deciding, that Sec. 6353 is by Secs. 5658 and 5662, made applicable to proceedings for the dissolution of a corporation, the action of the court below was not justified. By Sec. 6353, only an assignor or creditor can file such written requisition for a disallowance of claims and these policy holders were neither. In the next place, by this section the probate court is only authorized to require a bond" to pay all the costs and expenses of contesting the same, such claim or claims." Again, by Sec. 5662, "all the provisions of law in respect to trustees of insolvent debtors * ** shall be applicable to such receiver, and to the property of the corporation, except as otherwise provided herein," that is in the chapter providing for dissolution of cor

Russell v. Insurance Association.

porations. Now we find it provided in Sec. 5671 that all parties concerned in the report may make allegations against it; which provision is inconsistent with the provisions of Sec. 6353, where only the assignor or creditor may file a written requisition for the disallowance of a claim. By Sec. 6353 the probate court upon entering an order disallowing a claim leaves the party to prosecute a suit for its allowance, while by Sec. 5671, the court upon the allowance or disallowance of the account enters its final decree.

As to the contention that the plaintiffs in error can assert the objections here raised in defense of a suit brought to collect assessments, it is only necessary to read Sec. 5671 and apply it to the facts of this case to demonstrate its fallacy. It is therein provided that the court "shall allow or disallow the account, and may decree the same to be final and conclusive upon all the creditors of the corporation, upon all persons who have claims against it, upon any open or subsisting engagement, and upon all the stockholders of the corporation." When the account of the receiver was adjudged by the court to be in all respects correct, and a decree was entered confirming it, what possible questions were left open for determination in another action? All parties interested in making allegations against that report had notice by publication of the time and place, when and where objections to it were to be made. The plaintiffs in error appeared and made their objections to it; and thereafter such rulings and decree of the court could not be questioned by them in any collateral action. Nothing remained undetermined except for what amount and during what periods they held policies in this mutual association.

The judgment of the court of common pleas is reversed for refusing to hear the exceptions filed by the plaintiffs in error and for striking the same from the files.

SCHOOLS-CONSTITUTIONAL LAW.

[Lucas Circuit Court, March 9, 1901.]

STATE EX Rel. Ward v. Franklin Hubbard, Clark, ETC., ET AL. 1. LAWS Relating to Schools are General LaWS.

The common schools are recognized and provided for in the constitution of the state and are institutions in which every community and every citizen is interested. Laws relating thereto are, therefore, of a general nature.

2 PHRASE IN 92 O. L., 683, CONSTRUED.

The phrase "paid to all teachers in city districts of the third grade of the first class" in act 92 O L., 683, relating to a teacher's pension fund in Toledo, should be construed to mean and to read "school districts in cities of the third grade of the first class,” and limits the application to that city.

& LACKS UNIFORM OPERATION AND IS UNCONSTITUTIONAL.

The act 92 O. L., 683, to create a school teachers' pension fund, in cities of the third grade, first class, and making it the duty of the proper officers of the board of education to deduct one per cent. of the salaries paid to all teachers, and pay the same into the city treasury to the credit of the “school teachers' fund," is in conflict with Sec. 26, Art. 2, of the constitution providing that all laws of a general nature shall have a uniform operation throughout the state. Said act prescribing that the same shall take effect September 1, 1897, and requiring the board of education to select three members at its first regular meeting after such date, and requiring the teachers to elect three members within thirty days after the act goes into effect, who, with the superintendent, shall constitute the board of trustees of the school teachers' fund, there being

Lucas Circuit Court.

but one such city to which the act could apply when it went into effect, or to which it could apply, within the time designated for the selection of such trustees, and there being no provision for cities which might afterwards come into this class. It cannot, therefore, be sustained on the ground that other cities might subsequently come within the class.

4. LACKS UNIFORMITY IN TAXING.

A law which imposes the burden of taxation upon teachers as a class of citizens for the purposes of a teachers' pension fund, is not taxing by a uniform rule, as required by Sec. 2, Art. 12, of the constitution. Therefore the act, 92 O. L., 683, constitutes a taking of private property without due process of law and is invalid on that ground.

5. DEDUCTION FROM SALARY NOT DEeduction frOM PUBLIC FUND.

A deduction of the money from a teacher's salary is not a deduction from a public fund, on the theory that teachers receive so much less salary, and can not be sustained on that ground. A teacher's salary is his own property and he has the constitutional right to use it for his own benefit or for the benefit of others, as he may see fit.

6. MEMBERSHIP ON PENSION BOARD DOES NOT ESTOP CONTEST.

The fact that a teacher has been elected a member of the pension board under the provisions of act 94 O. L, 683, does not estop him from attacking the validity of the act, particularly where he appears to have constantly been opposed to its enforcement from its enactment, never lost an opportunity to state his opposition to it, and was elected by three-fourths of the teachers as their representative in opposing the act.

7. ACCEPTANCE OF POSITION WITH NOTICE DOES NOT ESTOP.

Nor will the fact that a person accepted a position as teacher under notification in writing that his appointment was subject to the provisions of law and rules of the board which might be enforced relating to the appointment and compensation of teachers, estop him from attacking the constitutionality of the act in question, for he accepted the position subject only to valid and constitutional laws of the state.

8. MANDAMUS LIE TO COMPEL FULL PAYMENT.

Mandamus will lie to compel the president and business manager and clerk of the board of education of Toledo to sign and issue a warrant upon its treasurer for the full amount of salary coming to a teacher, without deducting any part thereof, to apply to the school teachers' fund authorized by act 94 O. L., 683, the act being unconstitutional.

I. N. Huntsberger, for the plaintiff, cited:

Laws of a general nature: Silberman v. Hay, 59 O. S., 582 [53 N. E. Rep. 258]; Cincinnati v. Steinkamp, 54 O. S., 284, 294, 295 [43 N. E. Rep. 490]; Kenton v. State, 52 O. S, 59; State v. Davis, 55 O. S., 15 [4 N. E. Rep. 511]; Mott v. Hubbard, 59 O. S., 210; Alter v. Cincinnati, 56 O. S., 47 (s. c. 5 Circ. Dec., 356; 12 R. 119); Adams v. Nemeyer, 54 O. S., 614 [46 N. E. Rep. 1154; Commissioners v. Rosche Bros., 50 O. S., 103, 113, 115 [33 N. E. Rep. 408; 19 L. R. A. 584]; State ex rel. v. Bargus, 53 O. S., 94, 108 [41 N. E. Rep. 245; 53 Am. St. 628]; State v. Buckley, 60 O. S., 272 [54 N. E. Rep. 272]; State v. Gardner, 58 O. S., 599, 609, 610 [51 N. E. Rep., 136; 65 Am. St. 785]; State v. Kurtz, 11 Dec. [8 N. P. 152]; Karb v. State, 54 O. S., 383, 391 [43 N. E. Rep. 920]; Hixon v. State, 54 O. S., 470, 483 [43 N. E. Rep. 1000]; Gaylord v. Hubbard, 56 O. S., 25, 35 [46 N. E. Rep. 661; State v. Cowles, 63 O. S.; State ex rel. v. Brown, 60 O. S., 462, 470, 471 [54 N. E. Rep. 525]; Sutherland Constitutional Limitations, 162, et seq.; State v. Ellet, 47 O. S. [23 N. F. Rep. 931; 21 Am. St. 772]; Ex parte Falk, 42 O. S., 638; State v. Winch, 45 O. S., 663 [18 N. E. Rep. 380]; State v. Smith, 48 O. S., 211 [26 N. E. Rep. 1069]; State v. Tooker, 8 Circ. Dec., 56 [16 R. 647]; Diemer v. Hudson, 9

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State v. Hubbard.

Circ. Dec., 858 [18 R. 890; see also 21 R. 82]; Emery v. Coles, 7 Dec., 414 [5 N. P. 199]; Hall v. Kleeman, 6 Dec., 323 [4 N. P., 201]; Cincinnati v. Ehrman, 9 Dec., 1 [6 N. P., 169].

Special or local form of act in question: Mott v. Hubbard, supra; Pittsburg, etc., R. R. Co. v. Martin, 53 O. S., 386 [41 N. E. Rep. 690]; Kenton v. State, supra; State v. Pugh, 43 O. S., 98 [1 N. E. Rep. 439]; State v. Constantine, 42 O. S., 437 [51 Am. Rep., 833]; State v. Mitchell, 31 O. S., 607; Ex parte Falk, supra; State v. Winch, supra; State v. Ellet, supra; State v. Smith, supra; Costello v. Wyoming, 49 O. S., 202 [30 N. E. Rep. 613]; State v. Gardner, 4 Dec., 34; Hermann v. Cincinnati, 6 Circ. Dec., 151 [9 R. 357], affirmed 52 O. S., 676, without report; State v. Cowles, supra.

Judicial notice that act cannot apply to other cities: State v. Constantine, supra;

For purposes of legislation of a general nature, it is not permissible to classify school districts any more than counties or townships, according to grade or class of cities therein: State v. Cowles, supra; State v. Buckley, 60 O. S., 272, 297; Commissioners v. Rosche, Mott v. Hubbard, Silberman v. Hay, Cincinnati v. Ehrman, Ex parte Falk, State v. Ellet, Costello v. Wyoming, State v. Gardner, supra;

Must be reasonable basis for classification: Costello v. Wyoming, supra; State v. Anderson, 44 O. S., 247 [6 N. E. Rep. 571]; State v. Pugh, supra; State v. Baker, 55 O. S., 1, 10 [44 N. E. Rep. 516]; Kenton v. State, supra; State v. Smith, supra; In re Preston, 64 O. S.; Yeagill v. State, 10 Circ. Dec., 794 [20 R. 646].

Act violates Secs. 1, 2, 7, 16 and 19, Art. 1, and Sec. 2, Art. 12 of the constitution; State v. Ferris, 53 O. S., 314 [41 N. E. Rep. 579]; Gaylord v. Hubbard, supra; Hixon v. Burson, 51 O. S., 486; Karb v. State, 54 O. S., 391; Wasson v. Commissioners, 49 O. S., 622, 636 [32 N. E. Rep. 472; 17 L. R. A. 795]; Silberman v. Hay, 59 O. S., 582; State v. Guilbert, 56 O. S. 575, 616, 623, 627 [47 N. E. Rep., 551; 38 L. R. A. 519]; State v. Gardner, supra;

Uniform taxation-Class legislation: Bank v. Hines, 3 O. S., 1, 15; Coal Co. v. Rosser, 53 O. S., 12, 23, 24 [41 N. E. Rep. 263; 53 Am. St. 622].

Property cannot be taken without compensation: State ex rel. v. Bader. 56 O. S., 780 [47 N.. E. Rep. 564]; 60 O. S., 584 [54 N. E. Rep. 1110]; Wasson v. Commissioners, supra; State ex rel. v. Bader, 5 Circ. Dec., 703 [12 R. 659]; Hubbard v. Fitzsimmons, 57 O. S., 436 [49 N. E. Rep. 477]; Sutherland Innes Co. v. Evart (Vil.), 86 Fed. Rep. 597; Tiedeman Mun. Cor., Sec. 254; State v. Guilbert, State v. Gardner, Alter v. Cincinnati, supra.

Taxation-Unconstitutional laws: Phila. Association v. Wood, 39 Pa. St., 73; Henderson v. Insurance Co., 135 Ind., 23 [34 N. E. Rep. 565]; State v. Insurance Co., 12 La. Ann., 802; State v. Guilbert and State v. Gardner, supra.

Act is mandatory and violates right of self government: State v. Commissioners, 54 O. S., 333, 340, 342 143 N. E. Rep. 587]; Commis sioners v. State, 50 O. S., 653, 661, 662; Zanesville v. Telephone and Tel. Co., 63 O. S., 402; 64 Ib.; Cooley on Const. Lim. (6 ed.), 207, 223; contra, State ex rel. v. Commissioners, 35 O. S., 458, 467.

Uniform laws required as to licensing, hiring, paying and pension. ing teachers: State v. Shearer, 46 O. S., 275, 280, 281 [20 N. E. Rep