Nimon's Estate. Although the question is doubtful the gift to Raymond George Nimon under the authorities must be treated as vested in him at the testator's death. That this was testator's intention seems to be indicated by the fact that in the sixth paragraph of the will the gift to his granddaughter, Ann Margaret England, is not vested until her majority, as had he intended that the gifts in the third paragraph should also be contingent it must be presumed he would have made an express provision to that effect. Raymond George Nimon having died a minor there is no necessity that letters should be taken out on his estate, and the share of this fund vesting in him so far as it is personalty, will be distributed to his mother, his next of kin. She will also be entitled to receive the income on his share of the fund arising from sale of real estate during her life; distribution of this will Le made to her upon her giving proper security, or to a trustee to be appointed to receive and invest it. In re Insurance Licenses Requiring Revenue Stamps. Insurance department-Licenses--Issuing of United States revenue stamps -Act of Congress of October 22nd, 1914. The various certificates of authority or licenses relative to an insurance company or its agents or an insurance broker required to be issued by the Insurance Commissioner of the State of Pennsylvania under the Act of June 1st, 1911, do not require the attachment thereto by the Insurance Commissioner of the revenue stamps prescribed by the Act of Congress of October 27, 1914. In issuing such certificates or licenses the Insurance Commissioner is performing a strictly governmental function and is an agent of the state and no tax can be constitutional imposed upon the state in issuing such certificates. Whether such certificates or licenses must be stamped by the person for whose benefit they are issued is some thing with which the Insurance Department has nothing to do. December 14, 1914. Hon. Charles Johnson, Insurance Commissioner, Harrisburg, Pa. Sir:-This Department is in receipt of your favor of the 3rd inst. in which you ask an opinion as to whether the various certificates of authority or licenses required to be issued by the Insurance Department under the Act of June 1, 1911, P. L. 607, must have attached thereto revenue stamps as required by the Act of Congress approved October 22, 1914. The Act of Assembly to which you refer, establishing the Insurance Department, provides, in the 4th paragraph of Section 4, defining the duties of the Insurance Commissioner: "He shall furnish, when required for evidence in court, certificates under seal of the Department relative to the authority of a company, agent or broker to transact business in this Commonwealth, upon any particular date, and such certificate shall be competent evidence thereof; and he shall at the request of any person, and on payment of the fee, give certified copies of any charter, statement or record in his office whenever he deems it not prejudicial to public interest." It further provides, in Section 13: "The Insurance Commissioner shall issue certificates of authority to insurance companies of other states and foreign governments and their agents, and to the agents of Pennsylvania companies, and he may renew the certificate of authority of any mutual assessment life or accident association and its agents, which is now lawfully doing business in this Commonwealth," etc., and in Section 14, in part as follows: "Companies to which certificates of authority are issued, as provided in the In re Insurance Licenses Requiring Revenue Stamps. preceding section, shall from time to time certify to the Insurance Commissioner the names of agents who may be either individuals, partnerships or corporations appointed by them to solicit risks," etc. Like provisions in the Act require certain certificates to be furnished by insurance companies to the Insurance Commissioner. Section 20 provides: "The Insurance Commissioner may issue to any suitable person a license to act as an insurance broker, to negotiate certificates of insurance or re-insurance," etc. The Act of Congress approved October 22, 1914, provides in Section 5: "That on and after the first day of December, nineteen hundred and fourteen, there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this Act, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters or things, or any of them, shall be written or printed by any person or persons, or party who shall make, sign or issue the same, or for whose use or benefit the same shall be made, signed or issued, the several taxes or sums of money set down in figures against the same, respectively, or otherwise specified or set forth in the said schedule." Section A imposes, among other things, certain specified taxes upon various kinds of certificates and contains this provision: "Certificates of any description required by law not otherwise specified in this Act, ten cents." Section 6 of the Act imposes a penalty: "If any person or persons shall make, sign, or issue, or cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, without the same being duly stamped for denoting the tax hereby imposed thereon, or without having thereupon an adhesive stamp to denote said tax." Section 15 provides, in part: "That it is the intent hereby to exempt from the stamp taxes imposed by this Act such state, county, town, or other municipal corporations in the exercise only of functions strictly belonging to them in their ordinary governmental, taxing or municipal capacity." Your inquiry raises the question whether the certificates referred to are issued in the discharge of the governmental functions of the state. The exemption in Section 15 of the Act of Congress "to state, county, town and other municipal corporations," although the section refers only to "bonds, debentures and certificates of indebtedness," must be construed as a recognition of the well settled principle that the state and its subordinate subdivisions are exempt from taxation by the Federal government. In the case of South Carolina vs. United States, 199 U. S., 437, Mr. Justice Brewer said, page 453: "It is admitted that there is no express provision in the Constitution that prohibits the general government from taxing the means and instrumentalities of the states, nor is there any prohibiting the states from taxing the means and instrumentalities of that government. In both cases the exemption rests upon necessary implication, and is upheld by the great law of self-preservation; as any government, whose means employed in conducting its operations, if subject to the control of another and distinct government, can exist only at the mercy of that government. Of what avail are these means if another power may tax them at discretion?" And on page 456 also said: "The exemption of the state's property and its functions from Federal taxation is implied from the dual character of our Federal system and the necessity of preserving the state in all its efficiency." In the case of United States vs. Railroad Company, 17 Wall., 322, there was an attempt to collect a tax on money due from the railroad company to the City of Baltimore. The tax was not sustained. The court said, page 327: "The right of the states to administer their own affairs through their legislative, executive and judicial departments, in their own manner, through their own agencies is conceded by the uniform decisions of this court and by In re Insurance Licenses Requiring Revenue Stamps. the practice of the Federal government from its organization. This carries with it an exemption of those agencies and instruments from the taxing power of the Federal government." In Ambrosini vs. United States, 187 U. S., 1, Chief Justice Fuller said: "The granting of the licenses was the exercise of a strictly governmental function, and the giving of the bonds was part of the same transaction. To tax the licenses would be to impair the efficiency of the state and municipal action on the subject, and assume the power to suppress such action. And considering license and bond together, taxation of the bond involves the same consequences. * "The general principle is that as the means and instrumentalities employed by the general government to carry into operation the powers granted to it, are exempt from taxation by the states, so are those of the states exempt from taxation by the general government." In case of Polock vs. Farmers Loan & Trust Company, 157 U. S., 429, known as the "Income Tax Case," Mr. Chief Justice Fuller said, page 584: "As the states cannot tax the powers, the operations, or the property of the United States, nor the means which they employ to carry their powers into execution, so it has been held that the United States have no power under the Constitution to tax either the instrumentalities or the property of a state." The Insurance Department is required by law as part of the duties in the administration of that department and in the regulation of insurance companies, agents and brokers, to issue certificates of authority and licenses. In issuing such certificates and licenses, the Insurance Commissioner is performing a strictly governmental function and is an agent of the state. It necessarily follows that no tax can be constitutionally imposed upon the state in issuing such certificates. The Act of Congress, however, provides that "There shall be levied, collected and paid * * *by any person or persons, or party who shall make, sign or issue the same, or for whose use or benefit the same should be made, signed or issued, the several taxes," etc. The same principles which exempt the state from taxation also apply to the duties of the state officers in reference to the tax. The Federal government cannot interfere with the instrumentalities or agencies of the state government in carrying out its governmental functions. The state officials are the agencies created by the state government to discharge 'the governmental duties. The Federal government cannot by law impose any specific duties upon state officials with reference to the collection of the tax provided by the Act of Congress. Whether the certificates or licenses of authority issued by your department are required to be stamped by the persons for whose benefit the same are issued is a matter which concerns the Federal government, and the persons holding such certificates or licenses. It is no part of your official duty to require such certificates or licenses to be stamped or to affix or cancel such stamps. If, however, such stamps are voluntarily furnished you, and in affixing or cancelling them you are not interfering with the discharge of your official duties to the state, I see no reason why as a matter of comity to the Federal government, you may not affix and cancel such stamps, but if you do so it should be understood that it is upon this footing. Very truly yours, JOHN C. BELL, Kaufmann vs. Bankers Surety Company. Suretyship Change in contract—Liability—Authority of the agent. A corporation engaged in the business of suretyship can be relieved from its obligation on a bond only when the departure from the contract, the performance of which it insures, is a material one and to the disadvantage of the surety, and so where the bond is conditioned for the faithful performance by the principal of the building of certain houses and their completion free from mechanics' liens and the contract is changed so that the risk of mechanics' liens is materially increased there can be no recovery against the surety. When the obligee of a surety bond requires of the agent confirmation from the Home Office of his authority to execute the bond and the obligee changes the contract for which the bond is given, the latter cannot afterwards say that the agent had authority to ratify the change in the contract between the principal and the obligee. Motion for new trial. No. 127 Fourth Term, 1911. C. P. Allegheny County. Wm. Kaufmann, for plaintiff. Stone & Stone and W. Clyde Grubbs, for defendant. MACFARLANE, J., January 12, 1915. This action is on a bond of the Bankers Surety Company to the plaintiff to indemnify him against loss by reason of the failure of Mary Engel to perform a written contract of May 20 and May 31, 1910, for the erection of buildings on certain property. The contract called for a loan by Kaufmann to Mrs. Engel of $70,000 secured by judgment bond and mortgage of May 20, 1910, at six months with interest to be charged in advance against the loan, the mortgage to be a first lien, and the company's bond was to secure Kaufmann against prior liens and against the noncompletion of the buildings. Advances of $850 on each of forty-five houses, a total of $38,250, to be made at various stages of their completion, the last payment to be made on final completion. The sum of $14,000 to be advanced at various stages of completion of two apartment houses, the last payment when both are completed, $500 when a street is graded, paved and curbed, and $3,000 on the completion of a power house with certain machinery. The contract authorized Kaufmann to retain in advance a charge against the loan of $3,500 for "services" in preparing papers, examining liens, etc., appraising the property, supervising the construction, passing on validity of releases of liens, and doing work necessary to maintain the mortgage a first lien. Interest for six months, attorney's fees for examination of title, and insurance premiums to be charged against the proceeds of the mortgage in advance. Kaufmann entered his judgment bond and the property was sold thereon at sheriff's sale, was bid in by the plaintiff and he claims in this suit the sum which he paid to finish some of the forty-five houses, the amount of certain mechanics' liens which were held to be prior to his mortgage, costs, taxes and expenses for counsel. Binding instructions were given on the ground that on November 19, 1910, Kaufmann and Mrs. Engel entered into a written agreement modifying the contract secured by the bond, that this modification was to the disadvantage of the surety and that although there was testimony that Reid, the general agent of the company, consented to the modification there was no authority to do so. It The contract of November 19, 1910, released Mrs. Engel from the requirement to build the apartment houses and the loan was reduced to $48,000 and a credit of $22,000 entered on the record of the mortgage. stipulated that all the rents were to be held by the Kaufmann Realty Company until the mortgage was satisfied of record and that that company should receive $192 for services rendered in connection with the agreement, this sum to be charged against the loan. Kaufmann vs. Bankers Surety Company. We cannot agree with the contention of counsel for the plaintiff that the defendant was surety on the original contract only so far as it related to the forty-five houses. The bond recites, "Whereas the principal has entered into written contracts dated May 31st and May 20th with the obligee for the completion and erection of forty-five houses * * *. Contract provides that no prior mechanic's lien shall be put upon the property of the principal ahead of the interest of said obligee." But the bond is to indemnify against nonperformance of "said contract," and the mortgage which was upon the entire property was to be a first lien. The rule in ordinary suretyships that any alteration of a contract by the principal parties without the assent of the surety is fatal to its validity whether the surety sustains an injury or not, as stated in Bensinger vs. Wren, 100 Pa., 500, and Robbins vs. Robinson, 176 Pa., 341, does not apply to corporate suretyship where the latter is an undertaking for money consideration by a company chartered for the conduct of such business. In Young vs. American Bonding Co., 228 Pa., 373, it was said that "The courts generally hold that such a company can be relieved from its obligation for suretyship only where a departure from the contract is shown to be a material one" and that such contracts should be construed most strictly in favor of the obligee. "The test is to be found in the answer to the question whether it substantially increased the chances of the loss insured against. It is not a question whether the variance actually caused the breach of the bond; but whether it was such a variance as a reasonably careful and prudent person undertaking the risk would have regarded as substantially increasing the chances of loss." The testimony shows that part of the six months' interest was released and the plaintiff's statement of account shows that after making the required payments there remained in his hands a balance to protect him against mechanics' claims of $8,644.73, as follows: Interest from July 10, 1910, to November 20, 1910, on Title expense, $70,000, "Commission" (5% on $70,000), Insurance, Balance payable account of buildings, To be paid when 45 houses are completed, To be paid when apartments are completed, To be paid when power house is completed, To be paid when street is paved, $ 220.00 1,516.67 3,500.00 369.60 $ 5,606.27 $64,394.73 $38,250.00 14,000.00 3,000.00 500.00 $64,394.73 Balance to protect plaintiff against mechanics' claims, 8,644.73 If he had retained the full six months' interest this balance would have been reduced to $8,061.40. On November 19, 1910, all of the items for title expenses, interest, commission and insurance had been charged against the loan and to that total, $5,606.27, was added $192 for the Kaufmann Realty Company, increasing the advance charge to $5,798.27. Deducting this from $48,000, the balance payable on account of buildings was $42,201.73. It is argued that this was to the advantage of the surety as it gave a larger amount to apply to the forty-five houses. The contract does not fix the amounts to be expended on the various buildings, it provides only that these amounts should be paid when the buildings were completed and this total amount was payable when the forty-five houses and the power house were completed. The amount of payments was not changed and when the houses and power house were completed Kaufmann could pay and was |