Case Name: Bates v. Peoples' Savings and Loan Association, et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1885-01
Citations: 42 Ohio St. 655
Docket Number: 
Parties: Bates v. Peoples’ Savings and Loan Association, et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 42
Pages: 655–674

Head Matter:
Bates v. Peoples’ Savings and Loan Association, et al.
1. The act of May 9, 1868, amending the act of May 5, 1868, commonly called the Building and Loan Association Act (S. & S. 194), which authorizes building and loan associations to receive deposits of money was not an act granting “ banking powers ” within the meaning of section 7, of article 13, of the constitution. Dea/rborn v. Northwestern Savings Bank, ante, approved and followed.
2. A person who applies to a building and loan association for a loan of money, and deposits therewith a sum of money, however small, for the purpose of making himself eligible as a borrower, and thereby receives a loan, is estopped, when sued for the money by the association, from denying that he was, in fact, a depositor-of the association.
3. Compensation for the use of money advanced by a building and loan association to a member or depositor, in excess of the rate of interest allowed by law, and not derived from dues, fines or premiums paid by the borrower for the right of precedence in taking said loan, is usurious. The premium which shall not be construed to make the loan usurious, under section 3, of the act of May 9,1868, is a premium bid by a member or depositor for the right of precedence in taking a loan, at a competitive sale of such right..
4. A building and loan association, having taken security for a loan advanced," by mortgage on real estate, may for the purpose of protecting its security, pay taxes or assessments levied on such real estate, which appear on the tax duplicate to have been duly and legally assessed, and where the association has no knowledge or notice of any defect or illegality in the assessment. Payments so made are the first lien on the premises, and as between the mortgagor and mortgagee cannot be defeated by showing an illegality or irregularity in the assessment.
5. In an action by such association to foreclose such mortgage, wherein its secretary and treasurer was made a party who prayed judgment in his own name for taxes so paid, and it appeared that the taxes were paid by him for the benefit of the association and with its money, a judgment for the plaintiff was rendered as well for the taxes so paid as for the foreclosure of its mortgage, without amending the petition so as to pray for relief on account of the taxes paid. Held: that the omission to so amend plaintiff’s petition was not a substantial prejudice to the mortgagor for which the judgment should be reversed.
6. For error in including usury in the judgment, the same is reversed.
ERROR to the District Court of Cuyahoga county.
The original action was brought by the Peoples’ Savings and Loan Association, a corporation of the state of Ohio, organized under the act of May 5, 1868, commonly called the Building and Loan Association act, and the acts amenda-tory of and supplementary thereto (S. & C. 194-5), against Samuel H. Bates and others to recover judgment on a note, executed by said Bates, of which the following is a copy:
“ OlevblaNd, Ohio, June 12, 1876.
“ One year after date, I promise to pay to the order of The Peoples’ Saving & Loan Association twelve hundred dollars for value received,‘ with interest at the rate of eight per cent, per annum, and premium at the rate of two per cent, per annum, both payable semi-annually on ,the 15th days of June and December until paid, the principal- to become due on failure to pay the interest or premium punctually as above stipulated.
$1,200.00. Samuel H. Bates.”
—and to foreclose a mortgage on certain real estate given to secure the payment of said note and to marshal liens on said premises.
A. L. "Withington, a defendant, by cross-petition, set up a claim for moneys paid for taxes and assessments upon said premises, as shown by the duplicate in the hands of the treasurer of the county for collection, to wit, certain moneys paid by him as purchaser at a delinquent tax sale, by the auditor of the county for which a certificate of sale was delivered by the auditor to him, and certain other moneys paid by him for other taxes and assessments subsequently levied and assessed on said premises, as shown by the duplicate of taxes in the hands of the treasurer of said county. The amount so paid, and which was alleged to be the first lien upon the premises, was $479.00.
' The defendant, S'. H. Bates, denied that he was a member of the plaintiff, and he denied that he was a depositor with the plaintiff within the meaning of said act. He also claimed that the statute referred to, which authorized the plaintiff to loan money to depositors, was of no effect, never having been submitted to the approval of the electors of the state, as required by section 7, article 13 of the constitution. He denied, as did one Bradley Bates, a defendant and subsequent judgment lien-holder, the right of Withingtonto assert a lien on account of the said taxes and assessments, and especially for a portion thereof which was alleged to have been illegally assessed.
"W’ithington, by way of reply, admitted that the claim set forth in his cross-petition “ is founded upon a contract made in the name of this defendant for the benefit of another, to-wit: The Peoples’ Savings and Loan Association; and the said cross-petition asserts a claim for taxes actually paid without any claim for, the penalties allowed by law to an independent stranger to the property, at a tax sale.”
It further appeared by the evidence that Withington was at that time the secretary and treasurer of the plaintiff, and that said taxes were paid by him with the money of the plaintiff, and for the purpose of preserving the security of its mortgage lien.
It also appears from the record that previous to the loan in question, S. H. Bates had not been a member or depositor of the plaintiff; and the circumstances under which he became a depositor are thus stated by Withington, the secretary and treasurer Of the plaintiff
“ On the 10th day of June, 1876, said S. H. Bates came into our place of business and said that he wanted to borrow some money to pay off a mortgage on his house and lot, and would give a mortgage to secure it. I explained to him that he would have to become a depositor before our rules would allow us to lend money to him. At his request, I wrote out for him an application to borrow money; said application is hereto annexed, marked Exhibit 1), which he signed and left with me ; that was the only bid he made. On June 12, 1876, he came in again, and I told him that the directors had decided to loan him the money he wanted and he then deposited $2.00 with us and executed the note, Exhibit 0, and on the 14th of June he executed the mortgage and we paid him the full sum of $1,200.”
The following is a copy of Exhibit D :
“ To the Peoples’ Saving and Loan Association :
“I wish to obtain a loan of your Association of twelve hundred dollars on the following described property in the city of Cleveland, county of Cuyahoga, and state of Ohio, viz:
“ Thirty-three feet from the north side of Sub-lot No. 68 back to a point, and twenty feet from the south side of Sub-lot No. 67 in Severance and Eolsom’s allotment, and being 53 feet front on Eulton street and about forty feet wide rear’, and about one hundred feet deep.
“ Being a depositor in said Association, I bid for said loan at the rate of two (2) per cent, per annum premium, in addition to eight per cent, interest, said premium and interest to be paid semi-annually.
“ S. H. Bates,
Applicant.”
The district court, to which the case had been taken by appeal, decreed in favor of the plaintiff for the full amount claimed under the said note and mortgage, and also for the amount so paid by Withington, its' secretary and treasurer, on account of taxes.
W. C. Bogers, for plaintiff in error:
I. The law under which the defendant in error was incorporated is unconstitutional. Const, ar't. 13, § 7. Eor a definition of banking see Bouvier’s Law Die. ; McCullough Com. Diet. 24; Webster’s and Worcester’s dictionaries; 2 New Am. Cyclopedia, 572. ' Boone, in his Law of Corporations, section 212, defines banks as “ of three kinds, viz : banks of deposit, banks of discount and banks of circulation,” citing numerous authorities. The words bank and bankers are found defined in the same way in the following cases: Bank v. Collector, 3 Wall. 498 ; Oulton v. Sawings Institute, 17 Wall. 118; N. Y. State Loan, &c. Co. v. Helmer, 77 N. Y. 64; ■ Warren v. Shook, 91 U. S. 704 ; Curtis v. Leavitt, 15 N. Y. 157; Bominger v. Keyes, 73 Ind. 377; Bank v. Baldwin, 23 Minn. 203-5 ; State v. Hel/ines, 3 N. J. L. 606 (Penn. 1057); City of New Orleans v. N. 0. Sawings Institute, 52 La. An. 531; and see Bank v. Baker, 15 Ohio St. 77; Medus. v. OolUer, 16 Ohio St. 607 ; Shinkle v. Bank, 22 Ohio St. 517, 524; 35 Ohio St. 263.
A word of general use among all people, such as “ bank ing,” when used in a constitution, is not to receive its narrowest legal use, though such a construction of the word may sometimes be proper in a statute; but in a constitution it is to receive its broadest popular use: that we understand to be the true manner of construing constitutional provisions. See Cooley Cons. Limitations, 72, 80. Words are to be construed in their ordinary meaning; and in Field v. People, etc., 2 Scam. (Ill.) 79, the court says : “ A constitution is a limit of power to a legislature, though a grant of power to the other departments of government; and a legislature therefore cannot exercise any power not expressly granted to them.” If we look to the debates on banking when the constitution was formed, for an interpretation, the examination will prove very unsatisfactory. 1 Debates, 707, 709; 2 Id. 417, 796, 850.
The bank had no legal right to make the loan or take the mortgage. S. & C. 809, § 90; Rev. Stats. § 3266. To do so was not merely an act in excess of power, but an absolute illegality, and was clearly within the following decisions: Humphrey v. Mooney, 5 Col. 282; 12 Cent. L. Jour. 386; Piche v. Py. Go., 9 Exch. L. R. 262 ; Keene v. Coleman, 39 Pa. St. 302; Hurlburt v. Britain, 2 Doug. (Mich.) 191; Thomas v. Py. Go., 101 U. S. 71; Bank of Wooster v. Stevens, 1 Ohio St. 233 ; Strauss v. Eagle Insurance Go., 5 lb. 59; Huber v. German Gong. Church, 16 lb. 371 ; Franklin Bank v. Comil Bank, 86 lb. 855 ; Kilbreth v. Bates, 38 lb. 187. Nor is the plaintiff in error estopped from setting up this defense. 1 Bates’ Ohio Dig. 272, § 114; 11 Ohio, 487, 492 ; 8 Ohio 257; 20 Ohio 283 ; 38 Ohio St. 349, 357; Tone v. Columbus, 39 Ohio St. 281.
II. Bates was not a depositor at the time of making the loan, nor at the time of signing the note. He did not bid ; there was no competition. That he afterwards handed the secretary two dollars did not make him a depositor within the meaning, of the statute.
III. The decree includes usurious interest. Building Association v. Wilook, 24 Conn. 147; 58 Me. 569; 19 W. Ya. 676 ; 30 Pa. St. 470 ; 16 Rich. Eq. (S. C.) 135; 75 N. C. 292. V
IY. As against any one we had a right to show that the whole or a large part of the amounts sought to be recovered from these lands as taxes and assessments, were illegal. S. & 0. 1591, § 42; Id. 1416, § 114; 19 Ohio, 324; 105 TJ. S. 422 ; 106 U. S. 196 ; 38 Ohio St. 517; Williams v. Townsend, 31 N. Y. 411. The doctrine of caveat emptor applies to tax sales and taxes. Blackwell on Tax Titles, 65; Oooley on Taxation, 326, 328, 329, 351, 375 ; 17 Mich. 218 ; 30 Md. 139 ; 3 Ohio, 232; 30 Ohio St. 598 ; 27 Ohio St. 527.
R. P. Ra/nney, for defendant in error,
urged that the act under which the defendant was incorporated was not in conflict with section 7 of article 13 of the constitution, and in determining whether this is so, it is proper to consider contemporaneous exposition (Sedgwick on Stat. and Const. Con. 251, 487; Stewart v. Laird, 1 Cranch, 299; Rogers v. Goodman, 2 Mass. 477; Packard v. Richardson, 17 Mass. 143; Moers v. City of Reading, 21 Pa. St. 188); and made and argued the following points.
1. “ Banking powers,” as used in the constitution, includes all banking powers. A construction that would make it read as if the words were"any banking power” would contradict the plural form of expression, and would make all provisions' for the use and investment of the funds of insurance companies and other corporations, invalid.
3d. When the constitutional convention sat, there existed' in the state three systems of banking, or banks incorporated by the State, all authorized to issue notes to circulate as money, which were the only moneyed corporations then, or at any time before, incorporated by the State.
2. The identical and operative words of the section — banking powers — before the adoption of the constitution, had been held by the supreme court of the state, when found in a charter, not to import an exclusion from any of the uses of or dealings in money, except only issuing notes or bills to circulate as money. 14 Ohio, 6.
4th. It is evident, from the proceedings of that body, that the only thing complained of as liable to abuse in the future, or needing any additional safeguard, was this faculty of issuing a circulating medium. 1 Convention Debates, 708, 709; 2 Id. 344, 345, 346, 392, 393, 395.
5th. It was announced from this bench, by the then Chief Justice, who had long served in every department of the stale government, that this section had no wider extent, and was only applicable to corporations having that special privilege. 14 Ohio, 6; 3 Ohio St. 31.
6th. The general assembly has, for a long number of years, upon its own sole authority, provided for the organization of associations, not having that faculty, whose main purpose has been to furnish safe depositories for small sums upon interest; which laws have been from time to time, and- repeatedly, amended, compiled and revised, and stand unimpeached upon the statute books to this day ; and under which have grown up a large number of associations, having the custody, in the aggregate, of very large sums of money.
7th. During all this time, every department of the state government has dealt with and treated these associations as valid and subsisting corporations of the State; and has taken no step (which their legal duty would otherwise have required) to arrest their operations or prevent their increase. In the hundreds’ of cases which have been decided in this, and the inferior courts, judgments have been rendered, liens have been adjusted, and sales of land made and confirmed.
8th. Upon any fair construction of the several acts under which these institutions are organized (and especially that of 1868, which defines the powers of the defendant in error), no banking power, as anywhere understood in the commercial world, is conferred upon any of them.
9th. This constitutional provision, brought from Illinois here, and from here taken to Kansas, and being almost literally the same in the constitution of each of the three states, has been subjected to a full judicial examination in the highest courts of the first and last of these states; where it was directly decided that the provision applied only to banking cor porations, authorized to issue a paper currency ; and laws, never submitted for approval, were upheld, although confessedly investing the corporations organized under them with some powers usually exercised by banks. 93 Ill. 191; 20 Kan. 440.
If any additional circumstance could be added, in the nature of things, to show what was intended by this provision, I know not what it could be. It is as plain as any proposition can be made, that the provision here, as in Illinois and Kansas, was intended to apply only to such corporations as were then, or ever had been in this state, invested with the special privilege of issuing a paper currency ; and was not intended to take from the general assembly the right to regulate all other phases of dealing in money, as other business interests might be regulated, either through the agency of corporations or otherwise as experience should dictate. Much less was it ever intended to disable that body from promoting a great public policy, by providing safe places of deposit for the small sums which the working class can command, which with the repeated accumulations and interest upon them, in a few years, have enabled them to secure comfortable homes. Quite a number of such institutions existed under special, charters, in the larger cities of the State, at the very moment the constitution was framed and adopted. To suppose that they were intended to be brought within the great vortex of the banking problem is simply absurd.
It. A. Harrison and W. W. Boynton, also for defendant,
contended that section 7 of art. 12 of the constitution applies only to banking which proposes to issue paper money.
I. What is banking ? See the argument of Daniel Webster in the case of Bank of the United States v. Primrose, published in the 6th volume of his Works, pages 106-127 et seq. • Bank of Sonora v. Fairbanks, 52 Cal. 196; Dmidson v. Lanier, 4 Wall: 447, and see O. L. I. & T. Oo. v. Debolt, 16 How. 438; 3 Ohio St. 31; 14 Ohio, 6. 1. In ascertaining the meaning of the constitution it is needful to look at the liistori cal facts and surroundings, and find the intention of its framers. Kennedy v. Geis, 25 Mich. 83 ; Gronise v. Gronise, 54 Pa. St. 255; Story on Const. § 400; 10 Minn. 108 ; 22 Wend. 396; 7 Tex. App. 210; 5 Md. 337, 350 ; 37 Ohio St. 590, 643 ; 1 Ohio, 469, 479, 480; 10 Ohio, 513, 515 ; 15 Ohio, 338, 341 ; 1 Ohio St. 511, 543; 3 Ohio St. 80, 85. (a.) The statutory history prior to the present constitution. 2 Chase 865, § 5; Id. 904, § 2; Id. 1070, 1072; Swan’s Stats. 139, 140, 141, 145; 1 S. & C. 117, 152, 154, and see Exchange Ban% v. Iline, 3 Ohio St. 31. (5.) The proceedings of the constitutional convention (for references thereto see citations in argument of Mr. Ranney).
2. The signification which we attribute to the word “ associations,” as used in section 7, appears from the following facts and considerations: (1.) When the constitution was adopted, the word associations was in common use in many statutes relating to banking, in its unrestricted meaning. (2.) It has such meaning in every other provision of the constitution in which it is used. (3.) It was severed from its relation to the word corporations in the constitution of Illinois, from which the provision under examination was taken; the framers of our constitution rejecting the very word, viz.: corporations, that would have conveyed the exact meaning intended, if only a corporate association was meant. The words in the Illinois constitution were “ corporations or associations with banking powers.” (4.) The meaning we attribute to it, is its ordinary meaning. (5.) Any other meaning would leave it in the power of the legislature to. restore to individuals and associations of individuals authority to issue and lend their bills to circulate as money. At common law, banking was open to individuals to be exercised by them at their pleasure. Attorney-General v. Utica Insurance Go., 2 Johns. Ch. 377; approved in State v. Qrcmmlle Alexandrian Society, 11 Ohio, 1.
3. What results, then, from what we maintain to be the genuine'meaning of the word “ associations ?” Obviously, that the term “banking powers,” as used in the constitution, signi-' fies the making, issuing, lending and circulating their notes and bills as currency, and the doing of other business merely incidental thereto. Otherwise, the purpose must be imputed to the framers of the constitution and to the people who adopted it, of prohibiting all unincorporated associations and individuals from exercising their right to lend money, or buy or sell promissory notes or bills of exchange, or receive money on deposit, unless authorized by an act of the legislature; and an act, too, which, in order to take effect, shall have been submitted to a vote of the people and been approved by a majority of the electors of the state. An imputation of a purpose to thus fetter, if not destroy, the exercise of such important rights upon which the commercial prosperity of the State depends, —and which, during the .entire history of the State, has been substantially without governmental interference, — is, it is submitted, utterly inadmissible. We repeat, clearly, no such cheek upon the commercial interests of the state was intended.
II. The plaintiffs in error are estopped from denying the power of the defendant in error. 27 Ohio St. 343 ; 11 Ohio, St. 516 ; 17 Ohio, 407 ; 29 Ohio, St. 330, 340 ; 11 Cush. 285 ; 38 Mich. 779 ; 6 Cow. 23 ; 4 Allen, 406 ; Bigelow on Estoppel 424; Morawetz on Corp. §§ 142, 143,' 144, 145; 98 U 621 ; Angelí and Ames on Corp. § 94; Tone v. Oolumbus, 39 Ohio St. 281.
Robinson <& White, also for defendant in error on questions not argued by co-counsel:
1. As to what constitutes a depositor, see Gatline v. Savings Bank, 7 Conn. 495; 25 Ohio St. 203; Endlich’s Law of Building Associations, § 76; 24 Conn. 147.
2. The association, having a lien on the premises of Bates, stood in a legal position to pay the taxes thereon, and when so paid, such amount of taxes would operate a lien on the premises in preference to all others. Revised Statutes, § 2853; Godfrey v. Watson, 3 Atk. ; Mix v. Hotchkiss, 14 Conn. 32; Williams v. Hilton, 35 Me. 547; Page v. Foster, 7 N. H. 302.
On the sale of the land for delinquent taxes the lien of the state for taxes then due was transferred to the purchaser at such sale, and if the sale was invalid on account of any irregularity in the proceedings of any officer having any duty to perform in regard thereto, the purchaser was still entitled to receive from the owner the amount of taxes, penalty and interest legally due thereon, and all taxes paid by the purchaser subsequent to the sale, and the land was bound therefor. Revised Statutes of Ohio, § 2880 ; 29 Ohio St. 498.
Bates’ premises were certainly subject to taxation. The plaintiffs in error have never sought to ascertain the amount legally assessable and taxable thereon, and have never offered to refund that amount to the defendants in error. These taxes and assessments stood charged upon Bates’ land, ac cording to the tax duplicate, which was regular and correct on its face. This duplicate in the hands of the treasurer was his warrant for demanding and collecting these taxes and assessments. Iloglen v. Cohan, 30 Ohio St. 443; 7 Ohio St. 42. Without any offer, tender, or attempt to pay the legal impositions upon these premises, the plaintiffs in error cannot now complain that the lienholder paid them. Southard v. Dorrington, 19 Nebraska 119; Williams v. Hilton, 35 Me. 547 ; 62 Illinois 381 ; Jones on Mortgages, § 1134, and cases cited.
Bradley Bates, holding a judgment lien attaching after the taxes became delinquent and the premises sold, stands in no better position to question the validity of the defendant’s tax claims than the owner himself. Qillett v. Webster, 15 Ohio, 623.
Standing by for years, seeing his taxes paid by the lien-holder without warning him of any fault in the taxes and assessments, and making no effort to ascertain the amount ilegally chargeable on the premises which he occupies and enjoys, it is too late now for him to compel the association to take the risk of illegality. The defense against these tax claims is barred by the plainest principles of equitable es-toppel.
W. G. Rogers in reply :
1. The term “ bank ” and banking has not received a uniform construction by our courts. 3 Ohio St. 31, 37; Id. 71; 15 Ohio St. 87.
2. The debates in the constitutional convention are very unsafe guides for an interpretation of the constitution. 3 Ohio St. 46.
3. As to the intention of the framers of the constitution. If the intention was to prohibit but one feature of the many in banking, — viz., the issuing of its own notes for circulation, unless authorized by vote of the people, — how readily it must have occurred to the able jurists framing this section, that the language they were using was quite too broad and comprehensive. How naturally would the suggestion have arisen, simply prohibit associations with power to issue their own notes for circulation, until the people confer the authority by direct vote. 'We submit that such random, loose, wild and inappropriate use of words cannot be attributed to such solemn fundamental organic law. See Green v. Graves, 1 Doug. (Mich.) 356.
4. An examination of all the statutes, general and local, prior to the adoption of the constitution, shows that about twenty-four acts were passed in that time concerning savings banks alone, and about one hundred and sixteen in the same time concerning banks of issue, of deposit and of discount. That is to say, about one sixth of the banking acts passed in that time were devoted exclusively to deposit banks. Such examination also shows that in every charter of any bank since about 1825 the three different banking powers were specifically conferred on each issue bank.
As a result of the various legislation we had in existence in Ohio when the constitution was adopted six different kinds of banks, — viz., the State Bank and its branches ; the independent banks; the free banks; banks of deposit, such as the Ohio Life Insurance and Trust Company, the largest of its kind Ohio ever had; savings banks with stock, such as the Fairfield Co. Savings Institute (incorporated 46 vol. 248); and sav ings banks without stock, such as the Society for Saving at Cleveland. A close scrutiny of the statute book does not aid their interpretation of the constitutional clause.
5. At th'e time of the adoption of the constitution, and immediately prior thereto, there was in Ohio a very strong feeling, of jealousy of all corporations. And this jealousy was especially strong against corporations dealing in money, that is, banks. Some say it was this jealous feeling that led to the constitutional convention being called. The desire to pnt some cui’b on such corporations was undoubtedly a strong factor. At this day it is hard for us to recall to our minds the intense feeling then existing on that subject.
. Counsel claim the evil of a depreciated currency was the only evil sought to be cured by this clause. The history of that time contradicts the assertion; and the plain and obvious meaning of the language carries us further. If it was found that our construction did not remedy that evil, there might be more force in the argument. But it is not so. The language is clearly broader and the mischief more extended than to allow óf a halt here. - The entire system of conferring corporate powers was changed. Special charters were prohibited. Banking corporations, even without the power of issuing paper money, are peculiarly liable to abuse. Great jealousy, as before said, was then felt of the immense power wielded by large aggregations of capital, controlled by moneyed corporations, which secure the confidence of communities, and absorb in their vaults all the money, the vital element of business and commercial activity. Such, they deemed, demanded a jealous circumspection, and the power of creating such corporations they decided should be firmly retained by the people.
Our construction, on the other hand, protects the depositor as well as the bill-holder. The disastrous failure of the Ohio Life Insurance and Trust Company, bringing ruin to so many Ohio homes, happened later, it is true ; but at least one member of the convention, Judge Holt (2 Debates, 393) foretold such failures. The most disastrous bank failures in the United States have been of deposit banks. The effect of the failure of issue banks is so widely diffused — few have more than one bill of it — that tbe injury done is not great. It is the depositors wlio are the sufferers. This state had in every act, before 1851, put a limit to the amount of the bills banks might issue, and had required security’for their redemption. There was no complaint then, on those grounds. But a deposit bank, with a capital perhaps of less than ten thousand dollars, might obtain deposits of half a million or more, and when the cashier and president took their trip to Canada, what adequate remedy had the depositors ? The liability of the stockholders would be but nominal. It is difficult to see any ground for such unjust discrimination, for such inviduous distinction against the chief sufferers from any bank failure, whether it be of an issue or a deposit bank.
6. The California and Kansas cases are not' wholly in point. The wording, as well as meaning of their constitutions is different from ours. Section 34 of article 4 of the California constitution expressly says that banks of discount are not included in the prohibition of the preceding section, and Judge Brewer, in the Kansas case (p. 461) says: “ Currency banks only, are intended to be covered,” thereby showing his definition of banks agrees with ours.
Our clause being taken, with verbal improvements, from that of Illinois, Judge Ranney wishes us to follow the decision "of the 93d Illinois. "With all due deference we would suggest, contemporánea expositio est optima etfortissima in lege. And we find in HincTdey v. Bellville, 43 Ill. 1S3, decided in 1867, construing a charter given in 1850, two years after the adoption of that Illinois constitution, as follows: Sylla. — “The term banker includes all business of a money-changer ; and this court understand the term money-changer in the same sense as defined by ‘Webster ’ (Noah): ‘ A broker who deals in money or'exchanges.’ ”
Reference is also made to the opinion of Taney, C. J. (in 16 IIow. 416), but Judge Taney is careful to add that Grier, J., alone, agrees with his opinions, and Catón, Daniel, Campbell, Wayne, Curtiss and McLean, JJ., all dissent from bis grounds and reasonings. Taney, O. J., was probably misled by tbe rash and ill-considered dictum of Mr. Webster, cited by our learned opponents. And McLean, the Ohio judge, same case (p. 449), in effect gives the same definition as Noah Webster, saying: “ The privilege of issuing bills of circulation which terminated in 1843, can have no effect upon the question of taxation. That company still exercised, under its charter, its banking powers as a bank of deposit, and did a much larger business than any bank of the state. After 1843 its dividends were taxed as other banks. It was in fact a bank, and discounted, and was the principal bank in the state.” As authorities not before cited, giving definitions of the word u bank,” see Baker v. State, 54 Wis. 377; First National Bank v. Ocean National Bank, 60 N. T. 288.

Opinion:
McIlvaine, C. J.
The statute under which the plaintiff was organized authorized it to loan money among members and depositors of such corporation, thereby, by plain implication, authorizing it to receive deposits of money. The receiving of deposits is claimed to be a banking power, and inasmuch as this statute was not submitted to the electors of the state for their approval, as required by section 7, article 13 of the constitution, it is claimed that it is without force or effect. A similar question was submitted to this court in Dearborn v. Northwestern Savings Bank (ante, page 617), in connection' with which this case was fully argued and submitted. In that case it has been x-esolved that " associations with banking powers," as used in the section of the constitution referred to, relates only to banks of issue. This ruling is conclusive against the claim made in this case as above set forth.
The loan made by plaintiff to S. H. Bates, as evidenced by the note and mortgage sued on, can be maintained as within the power of the plaintiff corporation only on the assumption that the defendant Bates was, at the time the loan was made, a depositor of the plaintiff.
The fact is, that at the time the loan was made, the defendant deposited with the plaintiff the sum of two dollars. Whether this deposit would be considered as colorable merely, and an evasion of the statute, in an action by the state to punish the usurpation of a franchise not granted by the charter of the plaintiff, we need not now inquire. It is enough for us now to say that the defendant, who acquiesced in the form and manner of the deposit, as the means whereby he realized the money loaned, and became in fact the debtor of the plaintiff, who was managing a trust fund for the benefit of its members, should not be heard to deny that he was a depositor.
• Was the loan usurious ? Section 2 of the act of May 5, 1868, as amended May 9, 1868, reads as follows: " Such corporation shall be authorized and empowered to levy, assess and collect from its members such sums of money, by rates of stated dues, fines, interest on loans advanced, and premiums bid by members or depositors for the right of precedence in taking loans, as the corporation by its by-laws shall adopt; also, to acquire, hold, incumber and convey all such real estate and personal property as may be legitimately pledged to it on such loans, or may otherwise be transferred to it in the due course of its business; provided that the dues, fines and premiums so paid by members or depositors of such corporation, although paid in addition to the legal rate of interest on loans taken by them," shall not be construed to make the loans so taken usurious."
The rate of " interest on loans advanced" is six per cent, per annum, as regulated by the statute on interest. The parties, however, to a bond, bill, promissory note or other instrument of writing for the forbearance or payment of money at any future time, may stipulate therein for the payment of interest upon the amount thereof, at any rate not exceeding eight per cent, per annum. If a rate exceeding 'that allowed by law be stipulated for, it is settled, that the parties must be remitted to the rate of six per cent, per annum. McClelland v. Sorter, 39 Ohio St. 12.
The rate of interest stipulated for in the note sued on is in excess of the highest rate allowed by law, unless the " premium at the rate of two per cent, per annum " is not, under section 2, above quoted, to be regarded as interest. The provision of the statute is, that such corporation may collect from its members stated " dues, fines, interest on loans advanced, and premiums bid by members cmd depositors for the right of precedence in taking loans f &c., " provided that the dues, fines and premiums so paid by members or depositors of such corporation, although paid in addition to the legal rate of interest on loans taken by them, shall not be construed to make the loans so taken usurious." The premium named in the note is unlike the premium named in the statute. It was1 not measured or ascertained by competitive bidding among the members and depositors, as we understand the statute to require. It was, in fact, a part of the price named by the lender to bo paid by the borrower for the use of the money loaned. The assent of the borrower to pay the price required, did not make him a bidder within the meaning of this statute. Calling the excess above the highest legal rate a premium did not change the nature of the transaction. It was usurious.
The court below also gave judgment in favor of the plaintiff for $603.00 (which was declared to be the first lien on the premises), on account of taxes and assessments appearing upon the tax duplicate of the county as having been duly assessed against the mortgaged premises and paid during the existence of plaintiff's lien, by Withington, its treasurer, with the moneys of the plaintiff and for its benefit, for the purpose of protecting its mortgage security. During the trial, defendant offered testimony tending to show that a portion of the taxes and assessments so paid was illegally assessed against the property, which testimony was rejected by the conrt. The rejection of this testimony is assigned for error.
Section 2853 of Revised Statutes reads as follows : " Any person having a lien upon real estate may pay the taxes thereon in so far as the .same are a lien upon such real estate, and the amount of taxes so paid shall, from the time of payment, operate as a lien upon such real estate, in preference to all other liens, and the money so paid may also be recovered by action for money paid to his use against the person or persons legally liable for the payment of such taxes."
The record shows that the taxes and assessments appeared on the duplicate to have been regularly and legally assessed, and that the plaintiff had no knowledge or notice of any defect or illegality in the assessment. The statute only gives a á lienholder the right to pay taxes and thus save his security in so far as the taxes are a lien upon the real estate. Hence the question fairly arises, was the plaintiff bound to inquire as tO' the legality of the taxes, beyond the appearances of the duplicate, and as to defects of which he had no knowledge or notice. This question is not free from doubt. But, inasmuch as the owner of the real estate, under like circumstances, would be justified in paying the taxes, and might afterwards, under the statute, upon discovering an illegality in the assessment, recover them back from the county without being held to the consequences of having made voluntary payment, so we think the lienor should be justified in making the payment to protect his lien, although he has no right to recover them back from the county in case of a subsequent discovery of illegality in the assessment. In the latter case, the payment by the lienor should be considered as payment by the owner, and the right to recover back wonld attach to the owner. Such holding does not nullify the limitation in the statute upon the right of a lienor to save his security by a payment of taxes, but leaves the same with ample scope for operation. If the owner has no knowledge of illegality in the assessment, or if he has such knowledge, and does not communicate it to his mortgagee, wo think the statute should be so construed as to authorize the latter to protect his lien by making payment of the taxes appearing on the duplicate to have been regularly and legally assessed.
Another question, as to pleading, has been raised. The plaintiff has not prayed for judgment on account of taxes paid. "Withington has prayed for judgment therefor in his own name. The record shows that the judgment for taxes paid (without penalties) was properly denied to Withington, and although no amendment was made to plaintiff's petition, judgment was rendered in favor of plaintiff for the amount so paid. An amendment should have been made to plaintiff's petition, but as 'Withington has undoubtedly assented to all that was done, and as the defendant has suffered a mere techinal prej u-dioe, we would not reverse the judgment for such error.
For including usurious interest in the judgment for flamtiff, the judgment is reversed and cause remanded.