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ties to the suits in question, were averred SAMUEL H. STONE, Auditor, et al., Appts.,
to be the county of Franklin and the sheriff
of that county; the board of councilmen of
the city of Frankfort; the city of Henderson;
and the county of Henderson and its sheriff.
The several decrees, it was alleged, conclu-
sively established that the acceptance of the
Hewitt act constituted an irrevocable con-
tract with the bank as respected taxation,
and that the revenue act of 1892, in certain
particulars, impaired such contract, and in
so far as it did so was in violation of the
Constitution of the United States and void.

v.

BANK OF COMMERCE.

(See S. C. Reporter's ed. 412-428.) Invalid agreement as to abiding the result of a test suit in relation to taxes-authority of city attorney-when estoppel does not arise from payment of taxes—omission to sue as ground for estoppel.

1.

2.

A city attorney whose duties by statute are to give legal advice to the city officers and boards, and to prosecute and defend suits for the city, has no power to bind the city by such an agreement.

3.

Certain of the defendants filed pleas to the jurisdiction. All the defendant's demurred to the bill, and some filed answers, to which plaintiff filed replications. The demurrers and pleas were overruled, and the cause was heard upon the pleadings and attached exhibits. On January 21, 1898, a final decree was entered sustaining the claims of res judicata made in the bill, and granting the relief prayed for so far as respected the assessment, certification, and collection of franchise taxes for the benefit of the defendants the board of councilmen of the city of Frankfort, the county of Franklin, the city of Henderson, and the county of Henderson. It was held that by the judgments relied upon by complainant it had been conclusively adjudicated as to those defendants that the Hewitt act constituted an irrepealable contract, and that the provisions of the revenue act of 1892 in conflict with that act impaired the terms of such contract, and were void. 88 [412]Fed. Rep. 987. *The decree adjudged that as to the defendants the county of Scott and the city of Georgetown, who were found not to have been either parties or privies to the records and decrees constituting res judicata, that no irrevocable contract had been established, by judgment or otherwise, and as to those defendants the bill was therefore dismissed. From the decree thus entered both parties appealed to this court.

The agreement of the commissioners of the sinking fund of the city of Louisville and the attorney of the city with certain banks, trust companies, etc., including the Bank of Commerce, that the rights of those institutions to certain limitations of taxation should abide the result of test suits to be brought, was beyond the power of such commissioners and attorney, and invalid; and the decree of the test suit brought in pursuance of such agreement is not res judicata as to those not actually parties to the record.

The payment of the money for taxes to the commissioners of the sinking fund pursuant to such agreement, not exceeding the amount really legally due, although disputed, does not estop the city of Louisville from asserting the invalidity of such agreement or its legal rights, nor make the decree in such test case res judicata in favor of the bank.

4.

The bank not having been legally damaged by the payment of the money due for taxes, there is no basis for an estoppel, and no equity for a decree relieving it from future taxation.

5.

Messrs. John W. Rodman and W. S. Prior for Farmers' Bank of Kentucky.

[412] *Mr. Justice White, after making the foregoing statement, delivered the opinion of the

court:

The decree below, so far as it granted the relief prayed as against the defendants other than the city of Georgetown and the county of Scott, is affirmed by a divided court. The decree, so far as it adjudicated against the complainant and in favor of the defendants the city of Georgetown and the county of Scott, those defendants not having been parties or privies to the judgments pleaded as res judicata, must be affirmed upon the authority of the decision in Citizens' Savings Bank of Owensboro v. City of Owensboro and A. M. C. Simmons, Tax Collector [173 U. S. 636, ante, 840].

And it is so ordered.

[No. 362.]

cided May 15, 1899.

Messrs. Ira Julian, W. H. Julian, L. L. Argued February 28, March 2, 3, 1899. DeBristow, J. C. B. Sebree, W. S. Taylor, Attorney General of Kentucky, T. H. Crockett, and James H. Polsgrove for Samuel H. Stone, et al.

The omission to sue formed no ground for an estoppel, as it must be assumed that the bank knew the agreement to be invalid, there being no dispute as to the facts and no misrepresentations made.

from of the Circuit Court of the United States for the District of Kentucky decreeing that the Bank of Commerce, plaintiff in an action against Samuel H. Stone, auditor, et al., is entitled to the benefit of the decision in the case of the Louisville Banking Company v. Thompson, under which its right to be taxed under the Hewitt law, and not otherwise, is res judicata, and its shares of stock exempt from all other taxation. Reversed, and case remanded, with instructions to dismiss the suit.

See same case below, 88 Fed. Rep. 398.

Statement by Mr. Justice Peckham: *The bill in this case was filed in 1897 by[413] the Bank of Commerce, a citizen and resident of the city of Louisville in the state of Kentucky, for the purpose of obtaining an injunction restraining the defendants from assessing the complainant and from collecting or attempting to collect any taxes based

upon the assessment spoken of in the bill, and for a final decree establishing the contract right of the complainant to be taxed in the method prescribed by the act of May 17, 1886, known as the Hewitt act, the terms of which it alleged it had accepted. The bill sought to perpetually enjoin the defendants from assessing the franchise or property of the complainant in any other manner than under that act. The material provisions of the Hewitt act are set out in the opinion of the court, delivered by Mr. Justice White, in the case of the Citizens' Savings Bank of Owensboro, Plaintiff in Error, v. City of Owensboro, 173 U. S. 636 [ante, 840].

In 1891 Kentucky adopted a new Constitution, section 174 of which, providing for the taxation of all property in proportion to its value, is also set forth in the above-cited

case.

The legislature of the state in 1892 passed an act in relation to the taxation of banks and other corporations which was in conflict with the Hewitt act, and provided for ]taxing the*banks in a different manner from that act, and also subjected the banks to local taxation, the total being much more onerous than that enforced under the Hewitt act.

The complainant was incorporated under an act of the legislature of Kentucky approved February 10, 1865, and it had all the powers granted by that act and the several amendments thereof as alleged in its bill.

There were various other banks in the city of Louisville which also alleged that they had accepted the terms of the Hewitt act, and by reason thereof had a valid contract with the state that they should be taxed only under the provisions of that act.

The complainant alleges in its bill that early in the year 1894 a demand was made on the part of the defendant the city of Louisville, based upon the act of 1892 and the ordinance adopted in pursuance thereof, for the payment of a license tax equal to four per cent of its gross receipts into the sinking fund of the city. The banks denied their liability to pay any tax other than that provided in the Hewitt act, and hence arose the differences between the city and the banks.

No litigation had been commenced for the purpose of testing the questions at issue between the city and the banks, although negotiations looking to that end had been in progress between the city attorney of Louisville and the members of the sinking fund board, on the one hand, and the counsel for the various banks and trust companies on the other. There is set forth in the bill of the complainant the action of the sinking

fund board as follows:

Sinking Fund Office, Feb'y 13, 1894. A committee, consisting of Messrs. Thomas L. Barrett, John H. Leathers, and George W. Swearingen, appeared before the board on behalf of the banks who are members of the Louisville clearing house, and stated that it was the purpose of said banks to resist the payment of the license fee demanded of them

under the license ordinance approved January 29, 1894, on the ground that said banks were not legally liable to pay the same, but, in order to save the sinking fund *from any[415] embarrassment occasioned by their refusal to pay said license fee, the banks, with two or three exceptions, were willing to enter into an arrangement whereby they would pay a part of the amount demanded of them and lend the sinking fund the balance thereof, to be repaid, with interest at four per centum per annum, if it was finally decided and adjudged that the banks were not liable to pay said license fees.

After discussion, the president was, on motion of Mr. Tyler, seconded by Mr. Summers, authorized to enter into the following arrangement with the different banks, trust and title companies who will be subject to the payment of the license fees if the license ordinance is finally adjudged to be valid and enforceable:

First. To accept from each of said banks and companies a payment equal to the difference between the amount they now pay to the state for state taxes and the amount they would be required to pay for state taxes under the provisions of what is known as the "Hewitt bill." This sum shall be an actual payment, not to be repaid under any circumstances, but its payment shall not in any manner or to any extent prejudice the banks or companies paying it or be taken as a waiver of any legal right which they have in the premises.

Second. In addition to making the above payments the said banks and companies, save those selected to test the question involved, shall each lend to the sinking fund a sum which, added to said payment, will equal four per centum of its gross earnings during the year 1893, and the sinking fund will execute for said loans its obligations, agreeing to repay the same, with interest at four per centum per annum, when and if it shall be finally adjudged by the court of last resort that said banks or companies are not liable to pay the license fee required by the ordinance aforesaid, but if it is finally adjudged that they are liable to pay said license fee, then the said loan shall be taken and deemed as a payment of said license fee, and the obligation to repay the same shall be void.

Third. The banks or companies selected to test the question involved will each lend the sinking fund a sum equal to four per centum of their gross earnings for the year 1893, and *will receive therefor the obliga-[416] tions of the sinking fund as above described.

Fourth. This arrangement is to be entered into with the understanding that the said banks and companies will institute without delay and diligently prosecute such actions as may be necessary to settle and adjudge the right and liabilities of the parties in the premises, and pending such procedings the sinking fund will not prosecute them or any of them for doing business without license A true copy. Attest: J. M. Terry, Secretary and Treasurer.

bank of any class should succeed in establishing a contract and the validity thereof under the Hewitt bill, that that should exempt all banks and companies falling within that class from the payment of taxes, except as provided in the Hewitt bill.

Fourth. On the faith of this agreement all
of the banks and companies aforesaid paid
It is agreed between the city of Louisville, into the sinking fund the amounts of taxes
the commissioners of the sinking fund of the claimed against them, under the terms and
city of Louisville, represented by H. S. Bar- conditions named in the minutes of the sink-
ker, city attorney, acting under the advice ing fund commissioners of February 13,
and by the authority of the board of sinking 1894, an attested copy of which is hereto at-
fund commissioners, given at a regular meet-tached as part hereof, but at a later date and
in further reliance upon said agreement all[418]
said banks and companies, except those ac-
tually involved in the test cases, paid the
whole of the amount of taxes claimed as
against them by the city of Louisville with-
out reservation, until the question thus
raised should be finally disposed of.
Humphrey & Davie,
Helm & Bruce,

ing of said board, and the mayor of the city
of Louisville, on the one part, and the vari-
ous banks, trust and title companies of
the city of Louisville, acting by Humphrey
& Davie and Helm & Bruce, their attorneys,
of the other part:

For Banks, Trust and Title Companies of the
City of Louisville.

Following the above, the complainant's bill contains what is termed a "stipulation between the city of Louisville, the commissioners of the sinking fund of the city of Louisville, and the banks, trust and title companies of the city of Louisville," which stipulation reads as follows:

First. That in February, 1894, it was agreed between the city of Louisville and the board of sinking fund commissioners, acting together in the interest of the said city and the various banks, trust and title companies, acting through their committee, to wit, Messrs. Thomas L. Barrett, John H. Leathers, and George W. Swearingen, and their counsel, to wit, Messrs. Humphrey & Davie and Helm & Bruce, that the question of the liability of said banks and trust and title companies to pay municipal taxes, either license or ad valorem, otherwise than as provided by the revenue law, commonly known as the Hewitt bill, should be tested by appropriate litigation looking to that end. [417] *Second. In order to effectually test the question as to all of said companies they were divided into three classes, it being understood that all who had accepted the provisions of the said Hewitt bill would fall in one or the other of the classes named, to wit: A. Banks whose charters had been granted prior to 1856.

B. Banks whose charters had been granted subsequent to 1856.

C. National banks.

It being understood that the trust and title companies which had accepted the provisions of the Hewitt bill would fall in class B, above named.

Third. In pursuance of that agreement the sinking fund commissioners caused to be issued warrants against the Bank of Kentucky, representing class A, the Louisville Banking Company, representing class B, and the Third National Bank, representing class C, and these banks respectively applied for a writ of prohibition against the city court of Louisville proceeding with the hearing, that being the manner pointed out by the city charter for testing the validity of city ordinances.

It was distinctly understood and agreed at that time, and this agreement was made for the best interest of all parties to it, that if any bank in any class should eventually fail to establish the existence and validity of the contract which it was claimed was made under the Hewitt bill, that all of that class should thereafter regularly and promptly submit to the existing laws and pay their taxes; and it was also agreed that if any 1030

Approved:

H. S. Barker, City Att'y.
C. H. Gibson,
Pres't Com'rs Sinking Fund City of Lou.
A true copy. Attest: Huston Quinn.
Arthur Peter.
M. McLoughlin.

The Louisville Banking Company was one of the banks which brought an action for the purpose of testing the question of its liability to taxation. The charter of that company was granted subsequent to the year 1856, and, in that respect, it was like the defendant bank. It also claimed to have accepted the provisions of the Hewitt act. In the litigation which followed, the Louisville Banking Company was adjudged by the court of appeals of Kentucky to have an irrepealable contract throughout its charter existence to be taxed under the Hewitt act, and judg ment pursuant to that adjudication was entered in favor of that company. The complainant herein claimed the benefit of the foregoing adjudication, and the circuit court allowed it, and gave judgment as follows:

"1. That the complainant is entitled to the benefit of the proceedings taken in the case of the Louisville Banking Company v. R. H. Thompson, Judge, etc., in the Jefferson court of common pleas, and the proceedings taken in said cause on appeal to the court of appeals of Kentucky, wherein the Louisville Banking Company was appellant and the said R. H. Thompson, judge, etc., and the city of Louisville were appellees, to the same extent as if the complainant had been a party to said proceedings.

*"2. That it is res judicata between the[419] complainant and the city of Louisville that the complainant is entitled to be taxed under what is known as the Hewitt revenue law, and not otherwise, and it is therefore adjudged, ordered, and decreed that the defendants Samuel H. Stone, Charles Findley, and George W. Long are perpetually enjoined and restrained from making any assessment under the act of November 11, 1892, or certifying the same to the city of Louisville upon

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any rights, properties, or franchises, or shares of stock of the complainant, and that any provisions of the Constitution of the state of Kentucky and any provision of the said act of November 11, 1892, or of the city charter which may be construed as authorizing the levy or assessment of any tax against the complainant, its rights, properties, or franchises, other than is allowed by the said Hewitt law, is, during the corporate existence of the complainant, unconstitutional and void, and that the complainant and its shares of stock are exempt from all other taxation whatsoever, except as prescribed in the said Hewitt law, so long as said tax shall be paid during the corporate existence of complain

ant."

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[419] *Mr. Justice Peckham, after stating the facts, delivered the opinion of the court: We have already decided, in Citizens' Savings Bank of Owensboro v. City of Owensboro, 173 U. S. 636 [ante, 840], that in the case of a bank whose charter was granted [420] subsequently to the year 1856, and which had accepted the provisions of the Hewitt act, and had thereafter paid the tax specified therein, there was nevertheless no irrepealable contract in favor of such bank that it should be thereafter and during its corporate existence taxed under the provisions of that act. And in the same case we held that the bank was properly taxed under the act of the legislature of Kentucky passed in 1892. Unless the complainant is right in its contention that it is a privy to the judgment in the case of the Louisville Banking Company (mentioned in the foregoing statement), and that the question is res judicata in its favor, the complainant has failed to make good its claim to be exempted from the provisions for its taxation under the act of 1892. The circuit court has held that the complainant was entitled to be regarded as privy to the judg ment above mentioned in favor of the Louisville Banking Company (88 Fed. Rep. 398), and that it could therefore avail itself of the judgment in that case as res judicata.

The sole question to be determined in this case is as to the validity and effect of the agreement above set forth. The complainant herein was not in fact a party to the judgment in the Louisville Banking Company Case, and it can only obtain the benefit of that judgment by virtue of the agreement.

The commissioners of the sinking fund form a separate and distinct corporation from the city of Louisville, and no right is shown to sign or make the agreement for

itself or to bind the city thereby. The agreement is not signed by the mayor, nor is it pretended that there was any action on the part of the general council of the city authorizing the making of the agreement. It was signed by the city attorney, and if he had no power to sign on behalf of the city there is nothing to create any liability on its part by virtue of the agreement, unless the payment of the money therein spoken of operates by way of estoppel to prevent the city from setting up the invalidity of such agreement. The effect of the payment of the money will be adverted to hereafter.

Upon its face there is no agreement even formally made between the city of Louisville and the banks of which the complainant herein is one, unless the signature of the city attorney makes a valid agreement for the[421] city. When the agreement was made no suit had been commenced by any of the parties; no litigation in regard to matters in dispute was pending. Prior to the making of the agreement it was a question altogether in the future as to what means should be adopted, and what suits commenced, for the purpose of establishing the rights of the various parties, as claimed by them. The question as to what course should be pursued was not one of law only. It was also one of policy. The stipulation actually entered into was of an administrative as well as of a legal nature, involving the administration of the law regarding taxation and the best means of determining the legal questions involved in the dispute, while at the same time obtaining, so far as possible, payment of the taxes claimed by the commissioners of the sinking fund as due from the various banks and trust companies. These were questions which an attorney would have no power to decide, and concerning which he would have no power to make any agreement.

An attorney, in his capacity merely as such, has no power to make any agreement for his client before a suit has been commenced or before he has been retained to commence one.

Before the commencement of

a suit, or the giving of authority to commence one, there is nothing upon which the authority of an attorney to act for his client can be based. If before the commencement of any suit an attorney assumes to act for his principal it must be as agent and his actual authority must appear, and if it be not shown it cannot be inferred by comparison with what his authority to act would have been if a suit were actually pending and he had in fact been retained as attorney by one of the parties. The authority of an attorney commences with his retainer. He cannot while acting generally as an attorney for an estate or a corporation accept service of process which commences the action without any authority so to do from his principal. This was directly decided in Starr v. Hall, 87 N. C. 381, and Reed v. Reed, 19 S. C. 548, so far as regards a personal defendant, but the same rule would follow in case of a corporation unless authority to appear were specially given.

*When an attorney has been retained he has[422] certain implied powers to act for his client,

in a suit actually commenced, in the due and
orderly conduct of the case through the
courts. In cases of suits actually pending
he may agree that one suit shall abide the
event of another suit involving the same
question, and his client will be bound by this
agreement. Ohlquest v. Farwell, 71 Iowa,
231; North Missouri R. Company v. Steph-tucky, provides that-
ens, 36 Mo. 150 [88 Am. Dec. 138]; Eidam
v. Finnegan, 48 Minn. 53 [16 L. R. A. 507];
Gilmore v. American C. Insurance Company,
67 Cal. 366; 1 Lawson, Rights, Rem. & Pr.
§ 173, p. 292; 1 Thompson, Trials, § 195.

One case has gone to the extent of holding the attorney's authority to agree that the case of his client should abide that of another included his right to agree that the case should abide that of another involving the same question, although his client was not a party to that case and had no power to interfere in its prosecution or defense. Scarritt Furniture Company v. Moser, 48 Mo. App. 543, 548.

There might perhaps be some doubt about the correctness of a decision which so extended the power of the attorney. It would be carrying the authority of an attorney a good way to thus hold. It is not, however, in the least necessary for us to decide the question in this case.

the commencement of a suit and a retainer to defend may be a mere technicality, but the power of an attorney depends upon the authority given him to commence à suit or to defend a suit actually brought, and he has no power as an attorney until such fact exists. Section 2909, Revised Statutes of Ken

"There shall be elected by the general council, immediately upon the assembling of the new board, a city attorney, whose duty it shall be to give legal advice to the mayor and members of the general council, and all other officers and boards of the city in the discharge of their official duties. If requested, he shall give his opinions in writing, and they shall be preserved for reference. It shall also be his duty to prosecute and defend all suits for and against the city, and to attend to such other legal business as may be prescribed by the general council."

We do not think this section gave him the power to bind the city by the agreement in question. He is undoubtedly the retained attorney of the city in every suit brought against it, and it would have been his duty to take charge of the litigation when it should arise between the banks and the commissioners of the sinking fund or the city of Louisville. That is, when the suit was com menced, the statute operated in place of a[424] retainer in case of a personal client. When suits were commenced against the city it was his duty to defend them, but he had no power to appear for the city as a defendant in a suit which had not been commenced or to accept service of process and waive its service upon the proper officer, without authority from that officer. Merely as city attorney, he had no larger powers to bind his clients before suit was commenced than he would have had in the case of an individual in like circumstances. There must be something in the statute providing for the election or appointment of an attorney for a corporation that would give such power; otherwise it does not exist. We find nothing of the kind in the statute cited. The supreme court of New York held, at special term, that the counsel to the corporation of the city of New York had no greater powers than an ordinary attorney to bind his client. People v. Mayor, etc. of New York, 11 Abb. Pr. 66.

Nothing of the kind exists in the agree ment here in question. It is more than a mere agreement of an attorney to abide the event of a decision in an actually existing suit. This agreement was not in the execution of the general power of an attorney to decide upon the proper conduct of a suit then on its way through the courts. It was an agreement much more than that, and of a different nature. As we have said, the question to be determined was one of policy as well as of law; eminently one for the con[423]sideration of the city authorities, its mayor, and its general council, aided and assisted by the advice of the attorney of the city. But it was a decision of a corporate nature, and not one to be decided by any but the cor-ceived, is much more extensive than a mere poration, and it was one which we think was agreement to abide the event of another beyond the power of an attorney to make suit, and it is quite plain that it embraces while acting merely in his capacity as attorney before suit brought and without spe- the city to, even if an action had then been more than the attorney had the right to bind cific authority. commenced and the agreement was made in that action. However imperative may have been his duty to save costs and expenses to the city, he was not authorized on that ac count to enter into agreements of the nature of this one, where no suits had been commenced against the city and the commencement of which he had no power to provide for.

The agreement here in question, it is per

Nor do we see that the commissioners of the sinking fund were granted any power to make the stipulation in question; certainly none to bind the city of Louisville. Our attention has not been drawn to any statute

All the above cases relate to the authority of the attorney after the actual commencement of suit and after the jurisdiction of the court has attached and the agreements made were in the discharge of the duties owing as between attorney and client, and subject to the supervision and power of the court itself.

We are also of opinion that as city attorney he had no greater power to bind the city by that agreement than would an attorney have in the case of an individual. The power of an attorney to conduct an actually existing suit, and in its proper conduct to agree to certain modes or conditions of trial, cannot be enlarged by implication, so as to embrace a power on the part of an attorney, before litigation is existing and before he has been retained to conduct it, to enter into an agreement of the nature of this one. It might be convenient to have such power and

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