
    *The State of Ohio v. The Farmers’ Bank of Canton.
    When the profits of a bank are applied in payment of stock, the profits, so applied, are subject to the tax imposed by the act of March 12, 1831, on dividends.
    This is an action of debt, upon an agreed state of facts, from the county of Stark.
    The Farmers’ Bank of Canton was incorporated by act of December 16, 1817. By the application, to them, of section 27 of the’ act of 1816 (2 Chase’s L. 913), dividends of so much of the profits of the institution as the directors might judge expedient were to be made semi-annually. By the act of 1831, “to tax bank, insurance, and bridge companies ” (Swan’s Stat. 916), the board of directors of each bank, etc., were to transmit to the auditor of state a statement of all dividends made by such bank within ten days after it may be made, so that a tax of five per centum on the dividend may be computed and collected. A penalty, not exceeding $1,000 is imposed, in case of refusal.
    It is agreed that the bank, between 1832 and 1837, besides its-ordinary dividends, upon which the state tax was duly paid, at' four different times, between the years 1832 and 1837, “ applied and appropriated sums which amount, in the aggregate, to $50,000' of the profits of the business, carried on by said bank, to the payment of the capital stock of the bank, belonging to the stockholders,” without complying with the above requisition of the law,. This action of debt is brought to recover from them the four penalties claimed to have been incurred by these neglects; and it presents the question, whether a tax attaches to such profits,, earned by the bank, as are applied in payment of its stock, belonging to the stockholders.
    A. W. Loomis, for the plaintiff.
    John Harris, for the defendant.
   *Lane, O. J.

The nature of the interests belonging to a corporation, and to the stockholders' of such corporation, have recently been investigated by this court. State of Ohio v. Franklin Bank of Columbus, 10 Ohio, 91. As explained by the-court, a corporation is a creature of the law, created to exercise certain franchises, and for this purpose is invested with specific powers, among which is that of holding property as a natural person, which is controlled by its proper officers, and may be sold for its debts, but is not the property of the individual corporators; that the separate shares of the stock, in a private corporation, are not the property of such corporation, but of the individual corporators; that bank stock, and the profits earned by its use, are the property of the corporation, but that(bank shares are the property of individuals.

Now, dividends in a bank, under the laws above cited, consist of that portion of its profits which the directors separate from the .general stock, and apply to the benefit of the stockholder. Whenever, by the act of the directors, the ownership of profits is so changed that i*t ceases to be the property of the corporation, and becomes the property of the stockholder, it is a dividend of profits, upon which the tax was intended to apply. The application of the profits, in this case, to the shares, which are the property of the stockholder, is plainly a dividend, within this definition, and the neglect of furnishing the statement is an act incurring the penalty.

That penalty is any sum not exceeding $1,000. As no attempts were made to conceal the acts, and as a communication has been had with some former officers of the state, in which doubts of the validity of this tax were seriously entertained, we think it is not just to impose a penalty beyond the tax and interest.

Judgment for plaintiff.  