acres in the town of West Covington, upon extending the boundaries of the town of Hopwhich the owner resided, and a part of which kinsville. Another case-that of Stites v. Dunwas in cultivation, and part containing ever- navan (MSS. Opin.) — originated under the greens and shrubs and a large number of fruit same act, in which it was decided that the land trees, was constitutionally subject to taxation of the owner that was brought within the limfor municipal purposes. In the case of Sharp its of the town by the said act, containing 22 v. Dunavan, 17 B. Mon. 223, it was held that acres, and used as a residence, and for pasturwhere a town is extended by improvement, so ing and other agricultural purposes, was liable as to give those living adjacent to the town to municipal taxation. The foregoing referboundary all the advantages which the citi-ences are sufficient to show the doctrine that zens enjoy from the local government of the has prevailed in this state upon this question, town, the legislature had the constitutional and the manner in which it has been applied. power to extend the limits of the town and Applying it to these two cases, we find that the subject the owners of the property within the facts exhibited by the records before us, fairly extension to taxation for town purposes, and viewed, do not make out a case that would that the legislative discretion in the location of authorize the interference of the court in bethe lines of the extension could not be ques- half of either appellant Briggs or appellee tioned or controlled by the courts. In that Beall. Considering the character and location case 34 acres of land, including the residence of their property, its proximity to the two railof the owner, being a part of a tract of 140 roads, their depots and shops, running through acres which were used for agricultural pur- and located in the town, and to the business poses only, were brought within the limits of portion of the town, the actual and prospective the town by the legislative act. The owner's growth of the town, and the propriety, under residence was situated 25 poles from the existing conditions, of extending the police juoriginal boundary of the town, and 155 risdiction of the town over the locality, and the poles from the center of the business part of benefits and advantages necessarily afforded to the town, and near enough to enjoy the ad- and enjoyed by them, by reason of the very vantages of schools, churches, and the busi- existence and presence of the municipal govness of the town. This case and that of Chea- ernment, in common with other citizens and ney v. Hooser arose under the act of 1846, property owners on whom the burden of main be taxed as other city property. Durant v. Kauffman, 34 Iowa, 194. The mere fact that a city residence consists of 20 acres does not exempt it from city taxation if it is used for residence, lawns, orchards, groves, etc., which make it a fine piece of residence property. Ibid. If the lands are enhanced in value by the proximity of the settled portion of the city and the prospect of its soon becoming good city property it is liable to city taxation. Brooks v. Polk County, 52 Iowa, 460. In order to exempt land within a city from municipal taxation it is not sufficient merely to show that it is used for agricultural purposes, but it must be shown that it is used exclusively for such purposes, and that it does not derive such benefit from the expenditure of city taxes as to make it taxable for city purposes. Tubbesing v. Burlington, 68 Iowa, 691. A tract of 18 acres of land occupied as a homestead surrounded on all sides by platted land and having all the benefits of light, water, streets, and fire protection common to that portion of the city is subject to municipal taxation, although it is not subdivided by streets or alleys nor platted. Perkins v. Burlington, 77 Iowa, 553. In Ford v. North Des Moines, 80 Iowa, 626, the claim was made that there was an unreasonable extension of the municipal boundaries thereby making the subjecting of the property to taxation for abutting streets unconstitutional, but the court held that the mere fact that the property was overflowed by high water of the river was no reason why it should not be annexed to the municipality. Under a statute exempting land in good faith for agricultural purposes land held for speculation is not exempt, although it is at the time used for agricultural purposes and is not laid off into lots or blocks. Farwell v. Des Moines Brick Mfg. Co. (Iowa) 66 N. W. 176. Land abutting on the main street of a city is taxable, although it contains 13 acres, has never been platted in lots and blocks, and a part of it has always been used for agricultural purposes. Mendenball v. Burton, 42 Kan. 570. The mere fact that the land is devoted to agricultural purposes is not sufficient to exempt it from taxation. The question to be determined is whether or not the actual condition of the town and its growth authorized it to include the land within its bounds. Maltus v. Shields, 2 Met. (Ky.) 553. In order to render land liable to city taxation, there must be, not only benefits actual or presumed, but also a town or city population on or near the land creating a necessity, or at least rendering it not unreasonable that the municipal government should be extended over it. Courtney v. Louisville, 12 Bush, 419. A tract of 15 acres of which 7 or 8 are used for pasture, 1 for garden, and the remainder for residence, barn, etc., is not land used exclusively for agricultural purposes within a statute exempting such land from taxation. Simms v. Paris (Ky.) 1 S. W. 543. The mere fact that the land is used exclusively for garden purposes is not sufficient to exempt it if it enjoys all the advantages which the corporation affords others. Eifert v. Central Covington, 91 Kỵ, 194. Where the complainant kept boarders who worked in the town, and stores had been erected near his property, he could not enjoin the collection of the tax on the ground that the limits of the town were extended solely to increase the revenue of the town at his expense. Beattyville v. Daniels, 15 Ky. L. Rep. 793. Where the proportion of the complainant's land which is within the town limits is only 6 acres, and he has sold a portion of his tract at an enhanced value because of the proximity of the town, while the streets are laid out past his property and buildings surround it, he cannot complain if he is taxed for municipal purposes. Elkton Trustees v. Gill, 94 Ky. 138. In State, Paulison, v. Taylor, 35 N. J. L. 184, the court asks, Can a man keep a farm or a large garden in the midst of a city or within city limits and claim that it shall be valued only according to the uses to which he applies it without regard to its actual market value? A statute requiring farm land to be assessed by taining it had been cast, it was, in our opinion, reasonable and just to require them and their property to bear a due proportion of the burden. By forbearing for so many years to assess their property, it is manifest that the municipal authorities were not seeking to foster private interests, or to lighten the burden of other taxpayers, by extending the boundaries. of the town; and when at last they did attempt to subject this property to taxation it was un der circumstances and conditions that showed that these parties were to be equal sharers with every other property owner in the town of the benefits of the municipal government. the acre is no longer applicable if the land has | tion for city purposes. Deeds v. Sanborn, 26 Iowa, been laid off into lots and blocks. State, Combes, 419; Deiman v. Fort Madison, 30 Iowa, 542. v. Vanhorne, 39 N. J. L. 444. A statute exempting property used for farm purposes applies only to land used for the cultivation of crops or the pasturage of stock, and not to dwelling houses and their appurtenances. Carriger v. Morristown, 1 Lea, 116. If the streets are extended to the complainant's property, and he is afforded police protection, he is subject to municipal taxation. Cook v. Crandall, " Utah, 344. A lot not used for agricultural purposes, and situated so near the city as to be protected and benefited by the municipal government, is not exempt from city taxation. Butler v. Muscatine, 11 Iowa, 433; Hershey v. Muscatine, 22 Iowa, 184. Land adapted to city uses, deriving increased value from the proximity of the city and having a city population near it rendering the city government over it reasonable, is liable to city taxation. But the court says undoubtedly land held for and adapted to agricultural purposes only cannot be subjected to ordinary municipal taxation simply because of proximity to a city, although this fact may afford extra facilities for reaching the city, and render it more valuable; nor merely because of improvements constructed by the municipality. Torbitt v. Louisville (Ky.) 4 S. W. 345. In a territory the district to be taxed for municipal purposes must be confined to the limits indicated by the buildings or public improvements of the city, and such outside district as is so near that it is probable that the protection of the police will be extended to it or that the benefits of the improvements made with municipal taxes will be received by its residents and property. People v. Daniels, 6 Utah, 288, 5 L. R. A. 444. If the property cannot be regarded as town lots, but is used for agricultural purposes alone, while the city improvements do not extend near it and there are only a few houses in its vicinity, it cannot be subjected to municipal taxation. Covington v. Arthur, 12 Ky. L. Rep. 163. Where the land is unplatted and is used for agricultural purposes, and is distinct from the platted portion of the town and from streets and lights, it is exempt, although the dwelling was at one time rented to a person who did not occupy it for agricultural purposes. Taylor v. Waverly (Iowa) 63 N. W. 347. Thirteen acres of land owned by a merchant doing business within the city, 1 acre of which he has improved and uses for a residence, làwn, and outbuildings, is agricultural if the remainder of the tract is used for cultivation and pasture. Tubbesing v. Burlington, 68 Iowa, 691. In a petition to sever certain land from a municipality on the ground that it was agricultural land, the court says it is conceded that it is not liable for municipal taxation. It is further said cities ought not to be permitted to retain lands within their limits which are not needed for city purposes and which are not benefited by being within the corporation, against the will of the owners, for the mere purpose of deriving revenue therefrom. Evans v. Council Bluffs, 65 Iowa, 238. Land used for agricultural purposes, remote from the city proper and not near to any street or VII. Power of municipality to exempt. The municipality cannot exempt agricultural property from taxation if the power is not conferred by the legislature. Third Municipality v. Ursuline Nuns, 2 La. Ann. 611. VIII. Original incorporation. The fact that the land is included within the municipality at its original incorporation, and not by extension of its limits, does not change the rule as. to exemption from liability. Buell v. Ball, 20 Iowa, 282; Deeds v. Sanborn, 22 Iowa, 214. IX. Assessments. The principles applying to assessments are somewhat different from those applying to taxation in general, and are set out in notes to Re Madera Irrig. Dist. Bonds (Cal.) 14 L. R. A. 755; Davis v. Litchfield (Ill.) 21 L. R. A. 563; and Raleigh v. Peace (N. C.) 17 L. R. A. 330. But for the purpose of showing how the conflict of decision runs into even this. branch of the subject, attention is called to the following cases: In Pennsylvania, where the rule of absolutepower in the legislature is applied to other cases, it is held that farm lands cannot be charged with theexpenses of improving the streets running through them. Scranton v. Pennsylvania Coal Co. 105 Pa. 445. On the other side, Maryland holds that an assessment for benefits may be authorized upon property outside of city limits. There is a strong distinction between such an assessment and regular city taxes. Brooks v. Baltimore, 48 Md. 265. So, special paving and curbing assessments are not taxes for "any city purpose" within the meaning of the Iowa exemption law. Farwell v. Des Moines Brick Mfg. Co. (Iowa) 66 N. W. 176. So, in Indiana an exemption of agricultural property from general city taxation does not apply to assessments for improvements. Kalbrier v. Leonard, 34 Ind. 497. Agricultural land within a city is subject to local assessments for street improvement. Taber v.. Grafmiller, 109 Ind. 206. If the property is within the limits of the town, and abuts on a street upon each side of which lots are platted, upon many of which lots houses are built, so that the construction of a highway is reasonable, the abutting lots may be assessed for the work, although a portion of the lots adjoin farm property in the rear and are not built upon. Hood v. Lebanon, 12 Ky. L. Rep. 813. X. Method of raising question. If the property has been unlawfully annexed tothe city the collection of a tax thereon may be enJoined. Peru v. Bearss, 55 Ind. 576. The question of the validity of the tax cannot be raised by a suit against the collector for levying on and selling property for the nonpayment of the tax. Walden v. Dudley, 49 Mo. 421. The power of a city to tax farm land cannot be called in question in an injunction suit by the owner to restrain the execution of an order annexing the property to the city. Stilz v. Indianapolis... H. P. F. ich has been worked, is not liable to taxa- | 55 Ind. 515. The taxes involved in these cases having been levied and assessed under laws existing before the passage of the act of July 3, 1893, providing for the government of towns of the fifth class, it is not necesssary to pass upon any question that might be raised under any of the provisions of that act bearing upon the question of municipal taxation. Nor is it necessary for us to determine the effect of the provisions of our present Constitution requiring that taxes shall be uniform upon all prop. erty subject to taxation "within the territorial limits of the authority levying the tax," and prohibiting the exemption from taxation of any property except such as is exempted by the Constitution. Copeland v. St. Joseph, 126 Mo. 417. It is only necessary to say that under the provisions of the Constitution all property not ex empted by that instrument is required to be "assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale." This plain requirement will prevent exorbitant and arbitrary valuations, and placing more than an equal and just proportion of the public burdens ou any taxpayer. Finding no error in the judgment in the case of Briggs, trustee, the judgment is affirmed. But, for the reasons given, the judgment in the case of appellee Beall is reversed. It is conceded by counsel for the town that only so much of his property as lies between the Owensboro & Nashville Railroad and Greenville street or pike, ought to be subjected to taxation in this proceeding, and the cause is accordingly remanded, with directions to so adjudge. TENNESSEE SUPREME COURT. Frank H. POST, Appt., v. MECHANICS' BUILDING & LOAN Court for Knox County in a proceeding to wind up the affairs of an insolvent building AS-association. Modified. 1. Loans at fixed premiums without free and competitive bidding, as required by the Tennessee statutes (Mill. & V. Code, § 1751) cannot be lawfully made by a building and loan association, but are usurious if the premium is more than lawful interest. 2. Payments of dues upon stock in a building and loan association cannot be credited upon a usurious loan to a stockholder in winding up the affairs when the association is insolvent, since such credit would relieve the borrowing shareholder from his share of the losses and throw them all on the nonborrowing stockholders. The facts are stated in the opinion. Messrs. Green & Shields and Webb & McClung, for appellants, Post and advance payment stockholders: These contracts have in them all of the elements of mutuality and equality of benefits which take the contracts out of the usury laws and make them valid as building and loan contracts. Patterson v. Workingmen's Bldg. & L. As80. 14 Lea, 693. The construction of a written contract is a matter of law which this court determines. for itself without embarrassment from the holding of the court of chancery appeals. Toomey v. Atyoe, 95 Tenn. 374. Borrowing stockholders are estopped to deny the validity of their subscriptions for stock or to dispute that they are stockholders in said association. 3. Payment of dues in advance under ciation when the stock is in fact not matured sociation when insolvent. Morawetz, Priv. Corp. 2d ed. 108, 116: Morrow v. Nashville Iron, S. & C. Co. 87 Tenn. 262, 3 L. R. A. 37; Cartwright v. Dickinson, 88 Tenn. 488, 7 L. R. A. 706; Endlich. Bldg. Asso. 60, 61. The borrower's relation to the association as borrower is separate and distinct from his re Endlich, Bldg. Asso. 448, 477, 478. The payment of dues upon stock are not payments to the mortgage debt, and do not ipso facto work an extinguishment of so much of the mortgage, and hence, they are not to be regarded as partial payments. Endlich, Bldg. Asso. 2d ed. § 477; Rogers v. Hargo, 92 Tenn. 35. The usury in the loan would only entitle the borrower to have the contract of loan purged of NOTE. On the question of the right to apply | niston Loan & T. Co. (Ala.) 29 L. R. A. 120, and note; payments made on stock in a building and loan as- Buist v. Bryan (S. C.) 29 L. R. A. 127; Randall v. sociation as credits on a mortgage given by the National Bldg., L. & P. Union (Neb.) 29 L. R. A. 138. stockholder, see Southern Bldg. & L. Asso. v. An its usury, and could in no way affect the valid-| ity of the borrower's stock in the association. The insolvency of an association and its inability to carry out its contract with the bor rower work the same result. Rogers v. Hargo, 92 Tenn. 38. The statutes chartering building and loan associations must be strictly complied with or the loan will be held usurious. Bates v. People's Sav. & L. Asso. 42 Ohio St. 655; Reeve v. Ladies' Bldg. Asso. (Ark.) 18 L. R. A. 134, note. Mr. Julius Parker, for S. V. Armstrong: If usurious then it must be governed by the The objection to the validity of the action of rules governing other usurious loans, --the the association in declaring the stock matured borrower charged with the sum actually reresolves itself into an insistance that the declar-ceived and credited with all sums paid, whether ation of dividends was erroneous and therefore illegal. The capital stock of a corporation is a trust fund for the payment of creditors. This lies at the basis of the doctrine of the illegality of dividends which encroach on the capital stock. 2 Thomp. Corp. § 2136. In the case at bar there are no creditors asking the court to enforce this doctrine intended alone for their benefit. Upon the declaration of a dividend by directors it becomes eo instanti the property of the shareholders, and can be recovered by them as a debt notwithstanding the intervention of a condition of insolvency. Cook, Stock & Stockholders, 2d ed. § 543. When one paying money under mistake has deprived the party paid of legal rights, or influenced him to waive or lose them, the plaintiff will be estopped to show his mistake and to recover the payment so made. Guild v. Baldridge, 2 Swan, 295. It is not an answer to this contention to say that the directors who made the mistake were the common agents of all the stockholders including this appellant. As to dividends the corporation and the stockholder to whom such dividend was declared stand at arm's length and in opposition. Cook, Stock & Stockholders, 2d ed. §§ 543 et seq. The relation between the withdrawing | stockholder whose withdrawal notice has matured, and the corporation, is that of creditor and debtor. Endlich, Bldg. Asso. § 136. The intervention of a condition of known insolvency between the creation of this relation and the withdrawing stockholder's getting his money does not change his relation back again to that of stockholder, and in winding up the insolvent association the withdrawing stockholder whose withdrawal notice has matured is entitled to be paid in priority to other stockholders. Endlich, Bldg. Asso. § 486. The right of the stockholder who gives notice of withdrawal in accordance with the by-laws and whose notice under those by-laws has matured is prior to that of general stockholders. The ground for this holding is that this is the contract method of terminating the relationship of stockholder and creating the relationship of creditor. That reason applies with its full force to this case, although the initiative step here was taken by the corporation and only assented to by the stockholder. Messrs. Lucky, Sanford, & Tyson, for Curtis, Armstrong, Condon, and Hunt: Every esssential fact to constitute usury interest, dues, or fines. Williar v. Baltimore Butchers' Loan & A. Asso. 45 Md. 547; Kupfert v. Guttenberg Bldg. Asso. 30 Pa. 471; Southern Bldg & L. Asso. v. Anniston Loan & T. Co. 101 Ala. 582, 29 L. R. A. 120. In no event can appellants be required to pay back on their loans more than the amounts they actually received less the sums they paid thereon as interest, credited as partial payments, they sharing losses with other stockholders upon the sums paid in by them as dues. Rogers v. Hargo, 92 Tenn. 35. The investing stockholders who had paid in advance of March 27, 1895, are not preferred creditors, are simply stockholders, and have that much more of capital invested in the corporation. The facts found by the appellate court stamp the loans as usurious. Reeve v. Ladies' Bldg. Asso. supra; Endlich, Bldg. Asso. 1st ed. § 353, 355, 356; 2d ed. 403; Martin v. Nashville Bldg. Asso. 2 Coldw. 418. Whenever a loan is found to be usurious then the borrowers have the right to have every payment made by them to the creditor credited on the loan. Martin v. Nashville Bldg. Asso, and Southern Bldg. & L. Asso. v. Anniston Loan & T. Co. (Ala.) 29 L. R. A. 120, note, and authorities there cited; Endlich, Bldg. Asso. 1st ed. § 496. The case at bar conclusively entitles the borrower to a credit for all of his payments. The association being the creditor has received from the borrower so much money as dues on the stock held by it as collateral. Where a creditor making a usurious loan and taking collateral from his debtor receives and collects on the collateral money he is clearly chargeable with the collections on collateral. Endlich, Bldg. Asso. 2d ed. § 477; Lord v. Ocean Bank, 20 Pa. 386, 59 Am. Dec. 728. If the transaction is not brought within the provisions of the acts governing loan associations it must be governed by the rules governing other cases of mortgagor and mortgagee. Williar v. Baltimore Butchers' Loan & A. Asso. 45 Md. 547. Even where the borrowing stockholder is in default and the association seeks to enforce its mortgage against him he is entitled to have credited on his debt the amount without interest he has paid on his stock. 2 Endlich, Bldg. Asso. $$ 149, 482. Messrs. Henderson, Jourolmon, Welcker, & Hudson, and Cormick, Henderson, & Sansom for interveners. Wilkes, J., delivered the opinion of the court: This is a bill filed to wind up the defendant company as an insolvent corporation, and to properly and equitably distribute its assets. It was filed by a shareholder and creditor. The association answered, and admitted its insolvency, and a decree was pronounced maintaining the bill as a general creditors' bill, adjudging the corporation as insolvent, and requiring all creditors to come in and file their claims, and a receiver was appointed. The chancellor passed upon the rights of the various parties, and gave decree accordingly. The case was appealed, and the court of chancery appeals has passed upon the questions involved, and the cause is now before us on appeal by several parties. The questions presented are important, and some of them quite difficult. We are content to mention and dispose of them as presented. It is found, as a matter of fact, by the court of chancery appeals, that the by-laws of the association contain a provision that no funds of the association should be loaned for a greater premium than 30 per cent, and, as a matter of fact, that the loans were not made under competitive bids, but by agreement between the borrowers and association, at a fixed premium, and were evidenced by notes payable six years after date, and secured, principal and interest, by mortgages upon real estate. These mort gages further provided to secure the dues and fines prescribed by the by-laws. No loans appear to have been made to parties other than stockholders in the association, and the stock of the borrowing shareholder was in each instance by the contract pledged to the association, to secure the loans made in addition to the real-estate mortgages. The court of chancery appeals find that these mortgages and notes matured at a definite time, and were enforceable at maturity, irrespective of the maturity of the stock hypothecated to secure the loans. The court of chancery appeals held. under this finding and statement of facts, that all of the loans made by the association to its members were in violation of the laws of the state in regard to usury, and that, in the adjustment and settlement of the rights of the parties, the loans should be purged of all usury. It is not necessary to dwell upon the question of whether the loans as made by the association were unlawful, unwarranted, and usurious. We have recently passed upon this question in one of its features in the case of McCauley v. Workingman's Bldg. & S. Asso, in which we held that such loans were unlawful and usurious, under the statutes of our state, when the premium was fixed upon which loans could be made, and the money was not loaned under free and competitive bidding, as required by the statutes. It is not necessary for us to go further in this case. McCauley v. Workingman's Bldg. & S. Asso. 97 Tenn. In accord: Patterson v. Workingmen's Bldg. & L. Asso. 14 Lea, 696; Bates v. People's Sav. & L. Asso. 42 Ohio St. 655; Endlich, Bldg. Asso. 2d ed. 409-411; Id. 1st ed. 394, 397; Reeve v. Ladies Bldg. As80. (Ark.) 18 L. R. A. 134, note. The next question is: Treating the loans as usurious, upon what basis shall they be adjusted in the distribution of the assets of an insolvent corporation, and in the winding up of its affairs? The court of chancery appeals held that the borrowing stockholders should be charged with the money actually obtained by them from the association, with 6 per cent - interest per annum upon such amount, but should have credit thereon for all moneys paid by them into the association on any and all accounts, including the payment of dues upon their stock, but that they were not entitled to have these payments credited upon the principle of partial payments. That court was of the opinion that the contracts of the members to pay dues upon their stock, and to repay their loans, were indissolubly tied together; that the payment of the former was intended as a payment pro tanto of the latter, and, inasmuch as the loans were usurious, the subscriptions were also tainted, and the borrowing stockholders were entitled to have their payments on stock dues credited upon the loans from the association. The court further held that, as a matter of fact, the dues paid into the association were paid in on stock, and that, under a proper construction of the contracts and law applicable to them, the agreement to pay dues, fines, and interest all entered into the undertaking of the borrowing member when he made his loan, and the taint of usury. therefore, attached to the whole transaction; and for this reason that court concludes that the payments upon stock should be credited upon the loans. The effect of this would be to relieve the borrowers from all losses in the business of the association, and throw such losses exclusively upon the nonborrowing stockholders. We think the question involved in this feature of the case is not one of fact, but of law and fact, to be determined by a proper construction of the charter, by-laws, and contracts entered into by the borrower and stockholder with the association. We are of opinion the court of chancery appeals is in error in not observing the distinction, well settled, between the borrower's relation to the association as a borrower and as a stockholder. Upon this point that court says: "The one distinct from the other may be thinkable, but, from a judicial view, they are essentially parts of one and the same contract so far as the construction of the contract is concerned. This being so, the element of usury, tainting the note, taints also its necessary element of payment as fixed by the contract." The subscriptions to stock, and the obtaining a loan, are two distinct things; and, while one is clearly dependent upon the other, still they are not indissolubly connected. A shareholder may never become a borrower. While it is the original scheme that all shareholders will become borrowers, still it is not compulsory. Likewise, a borrower is not in every instance a stockholder, as outsiders are allowed to borrow surplus funds of the association after the preference demand of the stockholders is satisfied. But, as to borrowing stockholders, their contracts and obligations as shareholders and borrowers are in many respects distinguishable and different. The shareholder enters primarily into his contract of subscription. This is a plain, simple contract, tainted with no usury or other irregularity, and could stand alone. Having made this contract and become a subscriber, he applies for a loan. He states in his application that he is a stockholder, and thus puts himself in position to claim the preference given to the stockholders in making loans. Payments made on stock are simply in |