giving them power to make an agreement of this nature. Parties dealing with a municipal corporation are bound to know the extent of the powers lawfully confided to the officers with whom they are dealing in behalf of such corporation, and they must guide their conduct accordingly. Murphy v. City of Louisville, 9 Bush, 189. As a result, we think the stipulation was [425]not a valid one, *binding either the commissioners of the sinking fund or the city of Louisville. It is contended, however, on the part of complainant that the payment of the money to the commissioners of the sinking fund, pursuant to the provisions of the stipulation and its receipt by them estops the city of Louisville from asserting the invalidity of the stipulation. The claim of complainant on this branch of the case is in substance that it has the right under the agreement to the benefit of the judgment in favor of the Louisville Banking Company as res judicata in its favor, because the city, having received the money by virtue of the agreement, is estopped by that fact from insisting upon its invalidity. The money was paid to the commissioners of the sinking fund and not to the city, which is a separate and distinct corporation. No corporate act on the part of the city is shown since the payment which recognizes or approves it. There is no ratification by the city of Louisville of this unauthorized act of its attorney. In speaking of the act of the attorney as unauthorized we do not mean to reflect in the slightest degree unfavorably upon the conduct of the city attorney, which seems by this record to have been prompted solely by a regard for the best interests of the city and by the most scrupulous good faith. We speak only of the act as one for which the law would not hold the city answerable. But let us look for a moment at the position occupied by the respective parties and the facts which surround this alleged estoppel upon the city, and for this purpose the invalidity of the agreement is assumed. The banks of which complainant was one, at the time this agreement was entered into, conceded that they were liable to the payment of taxes under the Hewitt act, and denied that they were liable to pay taxes under the act of 1892. The city, on the contrary, asserted the right to tax under the act of 1892, and the question became one for judicial decision. The banks paid the moneys spoken of in the agreement, and proceedings were inaugurated to test the legal question involved in [426]the dispute. It is alleged on the part of the complainant that the taxes under the act of 1892 were and are greater in amount than under the Hewitt act, and it is not alleged or contended that the amount of moneys paid by the various banks was any greater than would have been due and payable under the act of 1892. That is, the banks have in fact paid no more than they ought to have paid if they had complied with the provi sions of the act of 1892. This court has just decided in the Owensboro Case (above cited) that the claim, on the part of the banks, of an irrepealable contract under the Hewitt act was not well founded, and that the banks (so far as concerns that contention) have been liable to pay taxes under the act of 1892 ever since that act was passed. The complainant now asserts that because the banks paid the money which they did under the agreement above mentioned (although such money was certainly no more than they were legally bound to pay under the act of 1892) that therefore the city is estopped from setting up the invalidity of this agreement. The result would be that complainant by virtue of the judgment in the Louisville Banking Company Case could only be taxed under the Hewitt act for the remainder of its corporate existence, although the act of 1892 is a perfectly valid act under which, but for the judgment above mentioned, the complainant would be liable to much greater taxation than the Hewitt act provides for. We think these facts form no basis for the equitable estoppel claimed by the complainant. The payment of money by complainant under the agreement, when it ought to have paid at least as large a sum under the act of 1892, but which it refused to pay under that act, because it denied the validity thereof, we think is not the basis for an appeal to the equitable powers of a court. As a result of the judicial inquiry, it is seen that the banks have been at all times liable to pay taxes under the act of 1892. The fact that they disputed this liability and paid the money under an agreement which did not admit the validity of the act of 1892 forms no basis for this equitable estoppel, when the fact appears that the moneys actually paid were certainly no more than the banks were liable to pay under the disputed act. If, however,[427] it were found that the banks had paid at any time an amount greater than they would have been liable to pay under the act of 1892, the city, by the passage of the ordinance approved August 6, 1895, provided a means for crediting any bank with the amount of such overpayment. In no way, therefore, has the complainant been legally damaged by the payment of the money to the sinking fund. The only thing that may be said is, that by virtue of the agreement, the complainant paid, and the sinking fund received, the money at the times mentioned, which otherwise would have been refused; but when we come to consider that, although the legal question was in dispute, the right was really with the city, and the banks were really li able to pay taxes under the act of 1892, we think the payment they then made under the agreement would form no equitable estoppel in favor of complainant. If so, it would thereby be enabled to secure for itself the benefit of the plea of res judicata, and would thus prevent the application of the act of 1892 to it during its corporate existence. This result would not, in our opinion, be an equitable one, and as complainant has not in reality suffered legal injury by the payment of the money, there is no basis for the support of an estoppel. Mr. Justice Harlan and Mr. Justice In the above case the same question is involved that has just been determined in No. An equitable estoppel which is to prevent 362, [ante, 1028], and there will be a like the state from receiving the benefit of an ex-order reversing the judgment and remanding ercise of its power to alter the rule or rate the case to the Circuit Court with directions of taxation for all the time of the existence to dismiss the bill. of a business corporation should be based upon the clearest equity. It is fitly denominated an equitable estoppel, because it rests White dissented. upon the doctrine that it would be against the principles of equity and good conscience to permit the party against whom the estoppel is sought to avail himself of what might otherwise be his undisputed rights. The payment of money under the circumstances of this case, not exceeding the amount really legally due for taxes, although disputed at the time, does not seem to work such an equitable estoppel as to prevent the assertion of the otherwise legal rights of the city. Nor does the fact that the complainant SAMUEL H. STONE, Auditor of Public A bank, upon the execution of the agreement, [428]omitted to sue and obtain *judgment against the city, add any force to the claim of estoppel. FIDELITY TRUST & SAFETY VAULT[429] The complainant, it must be assumed, knew the invalidity of the agreement because of the lack of power on the part of those who signed it to bind the city or the sinking fund as a corporation. There was no dispute as to facts, and no misrepresentations were made. The law made the invalidity. Knowing the agreement to be invalid, the omission to sue forms no ground upon which to base the estoppel. The complainant had no valid agreement upon which to stand, and if it omitted to sue it was at its own risk. There would seem to be no reason of an equitable nature springing out of the facts herein why the complainant should not hereafter be bound to pay the taxes prescribed in the act of 1892. We think the judgment of the Circuit Court should be reversed, and the case remanded, with instructions to dismiss the bill, and it is so ordered. Mr. Justice Harlan and Mr. Justice CITY OF LOUISVILLE, Appt., บ. BANK OF COMMERCE. (See S. C. Reporter's ed. 428.) Stone v. Bank of Commerce, ante, 1028, followed. [No. 363.] v. CITY OF LOUISVILLE. FIDELITY TRUST & SAFETY VAULT v. counts, et al. 2. No such contract arose from that act as to corporations chartered after 1856, or whose charters were extended subsequent to that year. [Nos. 406, 407, 408, 409.] Argued February 28, March 2, 3, 1899. Decided May 15, 1899. APPEALS from decrees of the Circuit Court of the United States for the District of Kentucky sustaining demurrers to Argued February 28, March 2, 3, 1899. De- the complaint in each of the above-entitled A cided May 15, 1899. PPEAL from judgment of the Circuit Court of the United States for the District of Kentucky. See same case below, 88 Fed. Rep. 398. Messrs. Henry Lane Stone and William S. Taylor, Attorney General of Kentucky, for appellant. Messrs. James P. Helm and Helm Bruce for appellee. cases, and dismissing the same; they being actions brought by the above-named appel lants to enjoin the assessment and collection of certain taxes. Affirmed. See same case below, 88 Fed. Rep. 407. Statement by Mr. Justice Peckham: In these cases the respective trust com panies who are appellants, all four being Kentucky corporations chartered subsequent to the year 1856, filed their respective bills to enjoin the assessment and collection of certain taxes. The want of power to assess and collect the taxes complained of was in each bill made to depend upon two substantially identical grounds, which were briefly these: First. That a legislative act of the state of Kentucky, passed in 1886, and designated as the Hewitt act, had created an irrevocable contract between the state and the complainants, from which it arose that the taxes sought to be enjoined could not be assessed and collected without violating the clause of the Constitution of the United States for bidding impairment by a state of the obliga tions of a contract. not impair contract obligations. For these Messrs. James P. Helm and Helm Bruce Messrs. Henry Lane Stone and William S. Taylor, Attorney General of Kentucky, for appellees. *Mr. Justice Peckham delivered the opin-[431] ion of the court: It is unnecessary to determine whether the distinction between the business of a bank and that of a trust company was such as to cause it to be illegal to have agreed that the liability of the trust companies to taxation contrary to the Hewitt act should abide the result of the controversy as to the Louisville Banking Company, since we have just decided in Samuel H. Stone, Auditor, et al., v. Bonk of Commerce, No. 362. [174 U. S. 412, ante, 1028], that, irrespective of any distinction which might exist between the business of a bank eo nomine and that of a trust company, the commissioners of the sinking fund and the city attorney were without power to have made the agreement upon which the complainants relied in order to establish that they were privies to the decision in favor of the Louisville Banking Company. The plea of the thing adjudged depending upon the existence of privity being thus disposed of, there remains only to consider the alleged existence of an irrevocable contract arising from the Hewitt act. That no such contract arose from that act as to corporations chartered after 1856, or whose charters were extended subsequent to that year, was decided in Citizens' Savings Bank of Ownsboro v. City of Owensboro, 173 U. S. 636, ante, 840. Indeed, the opinion in that case and the opinion announced in Stone v. Bank of Commerce, supra, are decisive against the appellants, who were complainants below, as to every issue which arises for decision on these records, and the decrees below rendered are therefore af firmed. Second. That in a suit previously brought by the Louisville Banking Company, a Kentucky corporation, it had been finally decided by the court of appeals of the state of Kentucky that the act in question (the Hewitt act) had created in favor of the corporations accepting its provisions an irrevocable contract, which could not be impaired without violating the Constitution of the United >]States. It was averred in each of the bills that, although the complainants were not parties to the suit brought by the Louisville Banking Company, they were each, nevertheless, privies to the record and decree rendered therein because of a certain agreement, which, it was averred, had been entered into between the complainants, the commissioners of the sinking fund, and the city of Louisville, through the city attorney, from which the privity relied on was asserted to have been created. The agreement in question was stated in full in each of the bills. By virtue of the privity thus asserted the decree rendered in favor of the Louisville Banking Company was pleaded as establishing conclusively, by the estoppel arising from the thing adjudged, the irrevocable nature of the contract springing from the Hewitt act and the want of power to impair it by assessing or collecting the taxes in controversy. The court below decided that the complainants were not privies to the decision in the case of the Louisville Banking Company, because there was such a difference between the business of a banking company proper and that of a trust company that neither the commissioners of the sinking fund nor the THIRD city attorney of the city of Louisville had lawful power to agree that the liability of NATIONAL BANK OF LOUIS, 132] v. the trust companies to taxation should abide SAMUEL H. STONE, Auditor of Public Ac the result of the case brought by the Louisville Banking Company to test the right to tax it contrary to the contract which it was charged the Hewitt act had embodied. Because of the want of privity held not to exist, for the reason just stated, the court below decided that the plea of the thing adjudged was untenable. On the merits of the case, the court below held that, as each of the complainants had been chartered after the year 1856, subsequent to an act adopted by the Kentucky legislature in that year, reserving the right to repeal, alter, or amend all charters thereafter granted, there was not an irrevocable contract, and hence that the levy of the taxes complained of did counts, et al. Argued February 28, March 2, 3, 1899. cided May 15, 1899. De- | in addition, were illegal because they were, in certain designated respects, repugnant to the Constitution and laws of the state of APPEAL from a decree of the Circuit Court of the United States for the District of Kentucky sustaining the demurrer and dismissing a suit in equity brought by the Third National Bank of Louisville, plaintiff, against Samuel H. Stone, auditor, et al., to enjoin the assessment of certain taxes. Reversed, and case remanded for further proceedings. See same case below, 88 Fed. Rep. 990. The facts are stated in the opinion. Messrs. James P. Helm and Helm Bruce for appellant. Messrs. Henry Lane Stone and William S. Taylor, Attorney General of Kentucky, for appellees. The appellant, a banking corporation organized under the national banking act, and whose charter was renewed on August 6, 1894, for a period of twenty years, filed its bill to enjoin the assessment of certain taxes for the years 1895, 1896, and 1897. The grounds of relief set out in the original and amended bills were substantially as follows: First. That the corporation had accepted the terms of an act of the general assembly of the state of Kentucky, denominated as the Hewitt act, from which it resulted that there was an irrevocable contract protecting the bank from all municipal taxation and from all state taxation except such as was imposed by the Hewitt act. The provisions of the Hewitt act thus relied on were fully stated in Citizens' Savings Bank of Owensboro v. The City of Owensboro and A. M. C. Sim[433]mons, Tax Collector [173 U. S. 636], ante, 840. Moreover, it was alleged that on the 18th day of June, 1894, the city of Louisville having theretofore attempted to collect from the bank certain license taxes, contrary to the terms and conditions of the contract cre ated by the Hewitt act, the bank commenced suit to prohibit the collection of said taxes, and that these proceedings culminated in a decree of the court of appeals of the state of Kentucky prohibiting the collection of the taxes in question, on the ground that the bank had an irrevocable contract, arising from the Hewitt act, which could not be impaired. The bill specifically alleged that the decree thus rendered by the court of appeals of the state of Kentucky constituted the thing adjudged, and by the presumption arising therefrom established beyond power of contradiction the existence of the irrevocable contract right. In addition the bill alleged that the taxes in question were illegal because they were imposed on the franchise and property of the bank in violation of the act of Congress with reference to the taxation of national banks by the respective states. Rev. Stat. § 5219. The taxes were, moreover, averred to be in violation of the act of Congress, because they were discriminatory, and, Kentucky. that as well in this case as in another case An opinion was filed by the court holding considered at the same time relating to the taxes for the years 1893 and 1894 demurrers to the bills should be overruled and motions for preliminary injunctions granted. 88 Fed. Rep. 990. The record, however, estab lishes that, subsequently, on the attention of the court being directed to the fact that the term of the original charter of between the levy of taxes for the years 1894 complainant had expired in the interval and extended on August 6, 1894), the court and 1895 (the charter having been renewed entered a decree in the case at bar sustaining demurrers to the original and amended bills and dismissing the suit. From the decree so made this appeal was taken. The assertion of an irrevocable contract arising from the *Hewitt act is disposed of[434] by the opinion in Citizens' Savings Bank v. The City of Owensboro and A. M. C. Simmons, supra. The contention that the presumption of the thing adjudged takes this case out of the ruling in that case is without foundation, because the suit brought to prohibit the collection of the taxes and in which the judgment relied on was rendered related to taxes for years prior to the expiration of the charter and before the same was renewed. Indeed, the suit wherein the judgment relied upon as constituting res judicata was rendered was commenced before the expiration of the original charter. Manifestly, as decided by the court below, a decree establishing the existence of an irrevocable contract, exempting or limiting the bank from taxation for one charter term, is not the thing adjudged as to whether the bank was subject to taxation during a new period of existence derived from a renewal of its original charter life. for, however persuasive the reasons supporting the conclusion that the corporation could not be taxed during its original charter, it was obviously impossible to have decided that the same rule applied to an extension, which only commenced after the initiation of the suit, wherein was rendered the decree relied on as constituting res judicata. A question cannot be held to have been adjudged before an issue on the subject could possibly have arisen. For these self-evident reasons, in New Orleans v. Citizens' Bank, 167 U. S. 371 [42: 202], where a plea of res judicata as to a contract right of exemption was maintained, after the renewal of a charter, the cour eliminated from consideration all the judgments which had been rendered prior to the period when the amended charter took effect These considerations would render it necessary to affirm the judgment but for the fact that the taxes which it was sought to enjoin were imposed upon the franchises and property of the bank and not upon the shares of stock in the names of the shareholders. It follows, therefore, that they were illegal, be APPEAL from a decree of the Circuit Court of the United States for the Dis- See same case below, 88 Fed. Rep. 990. Messrs. James P. Helm and Helm Bruce [435] *Mr. Justice White delivered the opinion of the court: The appellee, the Third National Bank, filed its bill to enjoin the collection of certain taxes, relying upon grounds in all respects like unto those alleged in case No. 404, just decided. There was, however, this difference between the facts of the latter case and those arising on this record: In this case the taxes sought to be enjoined were levied prior to the renewal of the charter of the bank. Because of this difference the court below concluded that the want of power to assess and levy was conclusively established by the presumption of the thing adjudged arising from the decree of the court of appeals of Kentucky, to which we have referred in case No. 404. We need not, however, consider the question of res judicata upon which the court below based its conclusion, as we have in case No. 404, just announced, held entirely with out reference to the plea of res judicata that taxes in form exactly like those here in ques tion were illegal because levied upon the CITY OF LOUISVILLE, Appt., V. CITIZENS' NATIONAL BANK. CITIZENS' NATIONAL BANK OF LOUIS- บ. SAMUEL H. STONE, Auditor of Public Ac- (See S. C. Reporter's ed. 436, 437.) Third Nat. Bank v. Stone, ante, 1035, and followed. [Nos. 365, 405.] Argued February 28, March 2, 3, 1899. De- APPEALS from decrees of the Circuit Court of the United States for the District of Kentucky to the effect that the plea of res judicata established an irrevocable contract by virtue of the decree in the case of Third National Bank v. City of Louisville, as to taxes for years prior to the date of the extended charter, but not as to taxes imposed after the extension of the charter, because such taxes were not in controversy when said suit was tried; and that the Citizens' National Bank, seeking to enjoin the collection of certain taxes, was without right to relief in No. 405, but in the first case, No. 365, was entitled to the relief sought. Decree in No. 365 affirmed, and in No. 405 reversed, and the last-mentioned case, No. 405, remanded to the court below for further proceedings. The facts are stated in the opinion. Messrs. Henry Lane Stone and William S. Taylor, Attorney General of Kentucky, for the City of Louisville, appellant in No. 365. and Samuel Stone, auditor, appellee in No. 405. Messrs. James P. Helm and Helm Bruce for appellee in No. 365, and for appellant in No. 405. [436] *Mr. Justice White delivered the opinion[436] of the court: The Citizens' National Bank was organized on the 8th day of August, 1874, its charter being stipulated to endure for a period of twenty years. On April 1, 1894, the charter was renewed and extended for twenty years. The bank in these two cases filed its bills to enjoin the collection of certain taxes on the ground that by the effect of a statute of the state of Kentucky, usually referred to as the Hewitt act, an irrevocable contract had been entered into between the state and the bank, from which it resulted that the taxes complained of could not be levied without im |
