The plaintiff was organized as a, corporation, July 1, 1914, with capital stock of $25,000, divided into 250 shares, of the par value of $100 each. To each of the defendants was issued a certificate for 50 of these shares, and the remaining stock went to R. W. Schutt and -F. H. Clark. These four became directors and officers of the company. Its fiscal year ended July 1st of each year, and the revenue department of the government permitted it to make annual reports for the assessment of taxes to that day of each year. On July 1, 1917, the company had on hand, as net earnings, $17,084.73,,' and a surplus of $881.33, or altogether, $17,-966.06! A dividend of 60 per cent was then declared, or $15,000, so that, after paying this, but $2,966.06 of the net *1295earnings and surplus remained. Clark purchased of the defendants the 300 shares of stock held by them, July 27th following, paying therefor to each one fifth of the earnings and surplus then on hand, or $593.21, and, in addition thereto, $150 per share for the stock held by each, or $7,500. All Federal taxes had been provided for when the dividend was declared. But,, on October 3d following, an act of Congress (40 Stat. at L. 300) to provide a revenue to defray war expenses and for other purposes was approved. This act is said to have been retroactive, and the taxes to be assessed upon the income of every corporation during the year of 1917: that is, from January 1, 1917. Section 200 of that act in part provides that:
“If a corporation or partnership, prior to March first, nineteen hundred and eighteen, makes a return covering its own fiscal year, and includes therein the income received during that part of the fiscal year falling' within the calendar jrear nineteen hundred and sixteen, the tax for such taxable year shall be that proportion of the tax computed upon the net income during such full fiscal year which the time from January first, nineteen hundred and seventeen, to the end of such fiscal year bears to the full fiscal year.”
In other words, the tax on the net income, under the act of Congress mentioned, for the year 1917 would be ascertained, and,> as the fiscal year in plaintiff’s business ended July 1, 1917, one half of the said taxes would be added to those assessed under the preceding acts of Congress for the fiscal year of its business terminating on that day. This amounted to $8,513.49. None of the parties to these actions had any knowledge or intimation that the act of Congress approved October 3, 1917, was contemplated, nor did any of them anticipate the same, and no provision with reference thereto was made, in declaring and distributing the dividend. Thereafter, and prior to April 1, 1918, plaintiff was required, under the law, to make a return of its income from July 1,, 1916, to July 3, 1917, and to include its statement of the amount of taxes author*1296ized by the act of October 3, 1917, and was compelled to and did pay the sum of $8,513.49 as war profits tax; to the revenue department of the government. In each of the suits by the Overland Sioux City Company, Incorporated, it demands judgment against each defendant for the proportion of this amount, less the earnings and surplus on hand, that his shares of stock bear to the entire number of shares issued by the company, or one-fifth of $8,513.49 less $2,966.06, or $1,109.48. Plaintiff bases this demand on two grounds: (1) That, by reason of the retroactive effect of the act of Congress approved October 3, 1917,, the parties hereto, by mutual mistake of law and fact, declared a dividend on the stock for $5,547.42 more than it should have done, and, owing to such mutual mistake, plaintiff paid to each defendant $1,109.48 in excess of the amount which might have been legally paid as a dividend on said stock; and that the mutual mistake of law and fact was of the officers, in omitting to take into consideration said act in computing the net earnings and surplus of the company; and (2) that $1,109.48 was paid each defendant, contrary to the provisions of the company’s articles of incorporation and bylaws. Clark, in the actions brought by him, claims that $593.21,. or one fifth of the surplus and earnings on hand, was paid to each of the defendants for his stock more than he was legally entitled to„ through mutual mistake of law and fact, and also that he was paid $1,109.48 for his stock in excess of the amount which he should have received from said stock; and because of this mutual mistake of law and fact, he prays recovery for these amounts.
l. appeal and • Error : scope of review: improper de- . murrer. I. The demurrer interposed in each action was general, and, as the suits are at law, might well have been overruled. Section 3562 of the Code; Timken Carriage Co. v. Smith & Co., 123 Iowa 555; Jones v. Brunskill, 18 Iowa 129; Davenport Gas L. & C. Co. v. City of Davenport, 15 Iowa 6; and other decisions,, too numerous for citation. That such a demurrer is not permissible in a law action, does not appear to have been suggested in the *1297trial, and error on this ground has not been assigned. But error in sustaining the demurrer is assigned by appellant on other grounds. Will the assignment of other grounds or reasons for overruling the demurrer obviate considering that which, in itself, renders the ruling conclusively erroneous? In Updegraft v. Edwards, 45 Iowa 513, this court rules that a party, after recognizing the sufficiency of ’ a general demurrer, might not take advantage of the defect. Baising no objection thereto in either court, as we think, was tantamount to an agreement that the issues at law should be presented in this irregular manner; and, as the precise objections to the petitions and amendments must be pointed out in assigning errors, or appear in the brief points, we are inclined to limit the revieAV to the error assigned to the court's ruling on the demurrer.
2. conroKAConrOKAtions : transfer of shares: recovery because of unanticipated event. *12983. Corporations : transfer of shares: mistake of law and fact. *1297II. In the sale of the stock by the respective defendants to Clark, there aauis no mistake of fact or law. Each Avas aware of everything then known concerning the company’s business and its property. None of the parties appears to have been possessed of prophetic poAvers. If„ in negotiating for the sale of the stock, the earnings and surplus on hand were taken into account, this does not appear to have been on the theory that defendants, as shareholders, had any legal claim or interest therein. The company retained title thereto; for neither earnings nor surplus pass to shareholders until this is done through the declaration of dividends or distributed from the company’s assets. That earnings on hand and surplus, in the absence of anything appearing to the con-' trary, belong to the corporation, and are to be considered as tending to enhance the value of the several shares of stock, will not be questioned. Undoubtedly,, the purchaser took these matters into account, as he did the past earnings of the company, in ascertaining the value of the shares of stock purchased. What might happen to the company in the future Avas not a matter of negotiation. On that score, the purchaser took his chances quite as fully on any change *1298in the laws or enactment of new laAvs relating thereto as he did on its continued prosperity. The parties acted in good faith; and, as there existed no restrictions on the transfer of the stock, the respective defendants parted Avith, and Clark acquired, absolute title thereto. Farmers’ & Merchants’ Bank v. Wasson, 48 Iowa 336. Though the act of Congress, approved October 3, 1917, was,, in a sense, retroactive, in that it assessed the war excess profits tax on the net income of the entire year 1917, such taxes were not payable by the shareholders, nor does it appear that Clark advanced or paid out any money on that account. Such taxes are made payable by the corporation, as appears from Section 14 of the act of Congress, approved September 8, 1916, Avhich, in this respect, governs the act of Congress approved October 3, 1917. Even if there Avere a mutual mistake of fact or laAv then,, it does not appear to have occasioned any loss to Clark, the plaintiff, in the actions brought by him. Moreover, the facts alleged do not constitute a mistake, mutual or otherAvise. Neither party Avas in error as to any existing fact, nor concerning the law as it then existed; and the enactment of a laAv subsequently Avill not be construed as manufacturing a mistake when none existed. The demurrers to the petitions filed by Clark, but for their form, AArere rightly sustained.
4. Corporations : recovery of dividend because of unanticipated event. III. If the company paid out the dividend or any part of it illegally, it may be conceded that the portions so advanced to the shareholders might be recovered by the company, as of money had and received. But Avas the dividend or any part illegal? No one will so pretend, unless it Avas rendered so by the act of Congress, approved October 3, 3917. That act did not undertake to undo anything which had gone before. It did not require the payment of the excess profits Avar tax exacted from any specified fund, or income of any xsarticular period. The only feature of the act in any sense retroactive *1299is the portion declaring the net income for the entire year 1917 the unit on which the tax levy should be made. This* tax, not the income, is to be apportioned, where the taxable year is not the calendar year, but the fiscal year of the corporation. This appears from Section 200 of the act:
“The first taxable year shall be the year ending December thirty-first, nineteen hundred and seventeen, except that in the case of a corporation or partnership which has fixed its own fiscal year, it shall be the fiscal year ending during the calendar year nineteen hundred and seventeen. If a corporation or partnership, prior to March first, nineteen hundred and eighteen, makes a return covering its own fiscal year, and includes therein the income received during that part of the fiscal year falling within the calendar year nineteen hundred and sixteen, the tax for such taxable year shall be that proportion of the tax computed upon the net income during such full fiscal year which the tune from January first, nineteen hundred and seventeen, to the end of such fiscal year bears to the full fiscal'year.”
The inclusion of proportion of the tax in the report of the period ending July 1, 1917, is purely administrative, having solely to do with the levy and collection of the tax long after the approval of the act. How, then, can it be said that the enactment of this act had any. bearing or effect on the dividend declared, or transfer of the stock? Counsel have argued as though the tax must have been paid from the earnings of the company prior to July 1, 1917. The act contains no such requirement, and, as the fax was not payable until nearly a year later, there would seem to be no ground for such an inference. Nor is there any basis in the record for the suggestion that, to discharge the tax, the company must have encroached on its capital. The record warrants no such deduction. For all that appears, the company’s earning capacity may have continued as be-' fore, and have been ample out of which to have discharged the tax long before it became payable. As indicated, the act was not retrospective, save as including the net income of the calendar year prior to October 3, 1917, with that *1300of the portion of the year following, in making up the net income on which taxes were to be collected and levied, and cannot be construed to have affected in any manner the legality of dividends paid, or the sale of stock. Indeed, for all that is alleged, there may have been no income during the first half of 1917. The exaction of taxes was prospective, and not such as was likely to impair the company’s capital, — at least, it was not so alleged. What we have said disposes ~of the other error assigned.
The trial court’s ruling, that none of the several petitions stated a ca?use of action, is — Affirmed.
Weaver, C. J., Stevens and Arthur, JJ., concur.