author: By the Court.—Freedman, J.

text:
    MORRIS FALKENAU, et al., Plaintiffs, v. WILLIAM G. FARGO, President of The American Merchants Union Express Company, Defendant.
    The plaintiffs made out the receipt or contract in question from printed blanks in their possession, which had their nam.es and that of the defendants printed therein, and this receipt was presented by plaintiffs to defendants for the latter’s signature, with the package of goods for transportation, and was executed by defendants at the time they received the goods for transportation.

      Held, That plaintiffs were not in a position to claim the benefit of the doctrine and rule so well established, “that a common carrier cannot secure a limitation or restriction of his common-law liability by a mere notice or condition endorsed upon, or incorporated in, the receipt of the goods to the shipper; that such a notice is at most only a proposal for a special contract which requires the assent of the shipper to its terms, to make it binding upon him.”
    In this case the plaintiffs proposed to defendants a special contract of their own creation, and in the making thereof they were not influenced by the defendants. The defendants assented to it, and executed the same with plaintiffs, and became binding upon both parties, and the liability of the carrier is to be measured by the terms and conditions of this special contract.
    Before Barbour, Ch. J., and Freedman and Sedgwick, JJ.

      Decided February 1, 1873.
    Verdict for plaintiff. Judgment suspended, and exceptions to be heard in the first instance at General Term.
    The action was brought to recover the value of a package of jewelry belonging to the plaintiffs, and delivered by them to the American Merchants Union Express Company, to be transported and delivered by said company to A. B. Van Cott, plaintiffs’ agent at Milwaukee, Wis., but which, owing to the negligence of the company, never reached its place of destination.
    The answer admitted the receipt of the package, but denied the allegations of the complaint as to contents and value, and the company’s negligence. It then set up as follows :
    “ That at the time of the delivery of the said package “to the company there was delivered by the shippers “of said package to the said company for their signature, an agreement, partly written and partly printed, “which agreement was signed by the said company, “and re-delivered to the shippers of said package, and “ accepted by them ; that said agreement constitutes the “sole and only contract between the parties to this ac“tion, respecting the forwarding and transporting of “the said package, and by the terms thereof the said “company is not liable beyond the sum of fifty dollars “for the loss of the said package.
    “Defendants further aver that, by the failure on the “ part of the shippers of the said package to inform the “defendants of the value of the same, defendants were “ deprived of their just reward for the transportation of “the same.
    “Defendants further aver that they undertook to “transport the said package according to the directions “thereon, and used all reasonable care and diligence in “the prosecution of their said undertaking;' that the “defendants, being made to believe by the plaintiffs “that the said package contained ordinary merchandise “ only, placed the same in their car with their ordinary “merchandise for transportation as aforesaid; that the “said car, while on the Michigan Central Railroad, “near Ann Harbor, Michigan, was burned with all its 1 ‘ contents, including the package in question, on the “night of the 16th of October, 1870, without any fault “or negligence on the part of the defendants ; that, had “the defendants known, or had any reason to believe, “that the said package was a valuable one, they would ‘ ‘ not have placed the same in said car with their ordinary merchandise, but would have placed the same in “their safe with other valuable packages, and that in “that case the said package would no.t have been “ destroyed and lost to plaintiffs.”
    Upon the trial plaintiffs proved the value of the package to be $1,658.15, and rested.
    After defendants’ motion for a dismissal of the complaint had been denied, defendants’ counsel called upon plaintiffs to produce the contract referred to in the answer. It was produced and put in evidence by the defendants, and marked “ Exhibit A.” It read as follows :
    American Merchants Uinoh Express Company.
    New York, October 15 tJi, 1870.
    Received of F alebrar, Pollae & Co., 1 package, said to contain --, valued at (not given) dollars, marked A. B. Van Cott, Milwaukee, Wis., which we undertake to forward to the nearest point of destination reached by this company, subject expressly to the following conditions, namely: This company is not to be held liable for any loss or damage except as forwarders only, nor. for any loss or damage by fire, by the dangers of navigation, by the act of God or of the enemies of the Government, the restraints of Government, mobs, riots, insurrections, pirates, or from or by reason of any of the hazards or dangers incident to a state of war. Nor shall this company he liable for any default or negligence of any person, corporation or association to whom the above described property shall or may he delivered by this company for the performance of any act or duty in respect thereto', at any place or point off the established routes or lines run by this company, and any such person, corporation or association is not to be regarded, deemed or taken to be the agent of this company for any such purpose, but on the contrary, such person, corporation or association shall be deemed and taken to be the agent of the person, corporation or association from whom this company received the property above described. It being understood that this company relies upon the various railroad and steamboat lines of the country for its means of forwarding property delivered to it to be forwarded, it is agreed that it shall not be liable for any damage to said property caused by the detention of any train of cars or of any steamboat upon which said property shall be placed for transportation; nor by the neglect or refusal of any railroad company or steamboat to receive and forward the said property.
    Nor shall this company be liable for any loss or damage of any box, package or thing, for over $50, unless the just and true value thereof is herein stated, nor upon any property or thing, unless properly packed and secured for transportation; nor upon any fragile fabrics, unless so marked upon the package containing the same; nor upon any fabrics, consisting of, or contained in glass. This company will not be liable for any loss or damage unless the claim therefor shall be made in writing within thirty days from the accruing of the cause of action in a statement to which this receipt shall be annexed. The party accepting this receipt hereby agrees to the conditions herein contained.
    For the company,
    McKmetBY, Agent.

    Plaintiffs admitted that the "body of the paper “ Exhibit A ” was written in by the plaintiffs at their office, and that the same so filled np was presented by them to the defendants for their signature when the package in question was delivered to the defendants ; that it was then signed by the defendants and re-delivered to the plaintiffs.
    Plaintiffs also admitted that the package in question, with its contents, was burned while in transitu, without fault or negligence on the part of the defendants.

    Defendants’ counsel moved that the complaint be dismissed on the ground that, as under the evidence, no negligence was proved on defendants’ part, the plaintiffs cannot recover. Motion denied, and defendants’ excepted. .
    Defendants’ counsel moved the court to instruct the jury to find a verdict for the defendants’, upon all the evidence. Motion denied, and defendants’ counsel duly excepted.

      Defendants’ counsel moved the court to instruct the jury that in any event the plaintiffs are not entitled under the evidence to recover beyond the sum of $50, with interest from the time the cause of action, if any, accrued.. Motion denied, and defendants’ counsel duly excepted.
    The court directed the jury to render a verdict for the plaintiffs, for the sum of $1,832.26, being the value of the package with interest. Defendants’ counsel duly excepted.
    The court directed judgment to be suspended, and the exceptions to be heard in the first instance at General Term.

      Roger A. Pryor, for plaintiffs.

      Hooper C. Van Vorst, for defendants.
   By the Court.—Freedman, J.

The plaintiffs in this action are not in a position to claim the benefit of the doctrine, that a common carrier cannot secure a limitation or restriction of his common-law liability, by a mere notice endorsed upon or incorporated in his receipt, and that such notice is, at most, only a proposal for a special contract, which requires the assent of the shipper to its terms. According to the evidence, the plaintiffs had in their possession a blank receipt for the transportation of merchandise, which contained the name of the American Merchants Union Express Company, as forwarders, the name of plaintiffs’ firm, in large Roman capitals, as shippers, and a series of conditions and clauses regulating the manner of transportation and the liability of the express company in certain cases and contingencies. This blank receipt was filler! up by the plaintiffs at their own office, and the receipt, as thus prepared, was thereafter, namely at the time of the delivery of the merchandise for transportation, presented toy plaintiffs to the express company for signature. It therefore constituted a proposal on the part of the plaintiffs for a special contract, which was wholly of their own creation, and in the making of which they had not been influenced toy any act on the part of the company.

How, as every person is presumed to intend that which is the ordinary and natural consequence of his own purposed act, it follows that, when the express company assented to such proposal toy signing the same, and redelivering it to the plaintiffs, the proposal ripened into a special contract, and as such it became binding upon tooth parties. In regard to the provisions of that contract, plaintiffs cannot toe permitted to plead ignorance. Upon this point the case at bar is analogous to Breese v. U. S. Telegraph Co., 45 Barb. 274, affirmed in 48 N. Y. 132, and Westcott v. Fargo, decided toy the General Term of the Supreme Court of the Fourth Department, at the June Term of 1872.

The liability of the company is to toe measured, therefore, toy the terms of the special contract, and toy that it is provided that the company is not to be held liable for any loss or damage toy fire. How, although that provision does not include loss or damage toy fire occasioned toy the carelessness or negligence of the company, or its agents or servants, in respect to which the common-law liability of the company remained unaltered (Simmons v. Law, 3 Keyes, 217; Magnin v. Dinsmore, President, etc., ante, page 182), yet, plaintiffs having admitted on the trial, not only that the merchandise was burned while in transitu, tout also that this occurred without fault or negligence on the part of the company, nothing remained upon which, under the terms of the contract, a liability on the part of the defendants for the loss which had thus occurred could toe predicated (Lamb et al. v. Camden & Amboy R. R. & T. Co., 46 N. Y. 271).

The clause, that the company shall not be liable for any loss or damage of any box, package, or thing for over fifty dollars, unless the just and true value thereof is stated in the receipt, cannot, by any just construction of the whole instrument, be made to work, by the mere neglect of the shipper to declare the value, a limited liability on the part of the company, where no liability outside of it exists. Until a liability is actually incurred, the limitation clause remains a mere dormant stipulation.

When, therefore, it appeared, from the uncontroverted and admitted facts of the case, that the company was, in respect to the transportation of the merchandise in question, only an ordinary bailee or private carrier for hire, according to the terms of the special contract, that by the latter the company was wholly exempted from liability for loss or damage by fire, that the merchandise was .destroyed by fire while in transitu, and that such fire occurred without fault or neglect on the part of the company, or any of its agents or servants, the verdict, instead of being directed in favor of the plaintiffs, should have been directed for the defendants.

Defendants’ exceptions must be sustained, the verdict set aside, and a new trial ordered, with costs to appellant to abide the event.


source: Caselaw Access Project

author: By the Court.—Van Vorst, J.

license: Public Domain

text:
    RICHARD S. GRANT, Survivor of OLIVER DE FOREST GRANT, Plaintiff, v. ROBERT L. TAYLOR, Defendant.

    General liens of a banker or broker for a balance of account are not favored (2 Kent's Qommmtwries, 634, 636).
    If there be a usage giving to persons engaged in discounting, buying, advancing on, or selling bills or notes, a lien for a general balance against their customer, such usage should be proved. It will not be presumed to exist in the absence of an express agreement. Courts have taken notice, judicially, of the lien of bankers who are strictly such, and who are dealers in money; bnt even the lien of a hanker does not exist in any case, if there be circumstances existing that are inconsistent therewith (3 Mainning, Granger, and Scott).

    The circumstances in the case at bar are entirely inconsistent with the lien of the plaintiff upon the drafts in suit for a general balance, and plaintiffs cannot hold nor recover these drafts for a general balance of account after the specific advances made upon them have been paid.
    When there is no existing right to detain the possession of the collateral after a specific loan upon it has been paid, no lien can exist upon it after-payment. The right of a debtor to pay the advance, and take up a collateral before its maturity, is not reconcilable with the existence of a right in the creditor to hold on, and keep the collateral, after the payment of such advance, for any general balance due him from the debtor for other-indebtedness.
    This action having been brought upon the acceptances, and no allegations nor any issue made therein claiming to recover them, because of this lien, for a general balance against the person who pledged them, the plaintiff cannot recover on any such ground, and the judgment must be reversed.
    Before Morell, Sedgwick, and Var Vorst, JJ.

      Decided March 1, 1873.
    Appeal from a judgment entered upon the report of a referee by both parties.
    The firm of Grant & Son, of whom the plaintiff is the survivor, as the holders of eight separate bills of exchange, for ten thousand dollars each, drawn by Henry W. Hubbell upon and accepted by the defendant, commenced three separate suits against the defendant, the acceptor—the first action upon one, the second upon three, and the third upon the other form of the acceptances, the plaintiffs demanding judgment against the defendant in the three actions for $80,000, besides interest and protest fees.
    By an order made by the court, after the actions were severally at issue, they were consolidated into and tried as one action. The bills are dated respectively, August 19th and 28th, and September 4th, 6th, 9th, 11th, 13th, and 19th, 1867. They are all at three months, except the second, which was at ninety days, and the eighth, which was at four months from date. Grant & Son obtained the bills from Hubbell, the drawer, to whose order they were severally made payable, and by whom they were endorsed. Hubbell, the drawer and endorser, is not sued.
    The defendant, before accepting the eight bills in suit, had been engaged in certain joint adventures with Hub-bell, in importing goods from the East Indies, under credits from bankers in Hew York, and against these credits drafts had been drawn by Hubbell and accepted by defendant to pay for the merchandise. The merchandise had been received and sold by Hubbell, and their proceeds were received by him.
    Acceptances of the defendant had been obtained by Hubbell in a form similar to the ones in suit, for several years previous to the year 1867, under statements made by Hubbell to defendant, that it was necessary to raise money to pay drafts under the credits as they became due, and before the proceeds of the shipments of merchandise were realized.
    The eight drafts in suit were accepted by the defendant and delivered to Hubbell at his request, to meet the payment of drafts drawn against the credits given. The acceptances were made for no other purpose or consideration. The acceptances were to be used at the banks where Hubbell kept his accounts ; such was the defendant’s understanding at the time he made the acceptance. The City Bank was the only bank known to the defendant in which Hubbell kept his account.
    Grant & Son, whom plaintiff survives, were bankers and brokers in the city of Hew York, and as such purchased, discounted, and sold bills and notes. With the firm of Grant & Son, Hubbell had had many transactions for several years. They had been his brokers for the purchase and sale of gold. He had exchanged checks with them. He had a currency account with them, and they were interested with him in a steamer called the “ Shining Fairy,” in which they had a part interest.
    On the 19th day of September, Hubbell delivered to Grant & Son five of the bills accepted by defendant, bearing date respectively on the 4th, 6th, 9th, 11th, and 13th September, for the purpose of raising money thereon by their sale. Grant & Son were to sell the paper, and in anticipation of their sale they advanced him thereon on the same day, and within an hour of the receipt of the bills by them, the sum of forty-five thousand dollars. On the 20th September, Hubbell in like manner, and for a like purpose, delivered to Grant & Son a sixth acceptance, being the one dated the 19th day of August, and obtained an advance or loan thereon, in anticipation of its sale, of five thousand dollars. On the 28th day of September Hubbell in like manner, and for a like purpose, delivered to Grant & Son a seventh acceptance, being the one dated the 28th August, 1867, and obtained an advance or loan thereon, in anticipation of its sale, of the sum of ten thousand dollars. On the 17th day of October, 1867, Hubbell obtained from Grant & Son two loans—one of twelve thousand dollars, and the other of six thousand dollars, in all eighteen thousand dollars, upon no express terms. On the same day Hubbell paid back, on account of the same, six thousand five hundred dollars, leaving a balance due Grant & Son, on the transactions of that day, of eleven thousand five hundred dollars. Afterwards, on the same day Grant & Son called upon Hubbell for collateral security for the payment of the balance of the loans of that day, and he delivered to and left with them for that purpose, the eighth of said acceptances, being the one bearing date the 19th day of September, and which last acceptance Grant & Son were also authorized by Hubbell to sell.

      Both Hubbell and defendant failed, and made an assignment for the benefit of their creditors on the 23d of October, 1867. The defendant did not know, until after the failure, that the eight acceptances had been placed with, or were in the hands of, Grant & Son.
    Of the sum of forty-five thousand dollars, loaned and advanced by Grant & Son on the five acceptances delivered to them by Hubbell on the 19th September, Hub-bell used thirty-five thousand dollars in taking up and retiring other outstanding paper previously made and used for the joint business of himself and Taylor.
    It does not appear what particular application was made of the balance of the advance of that day, or of the other moneys obtained from Grant & Son, by Hub-bell, above specified. The referee before whom the action was tried has, however, found “that all the intervening and subsequent advances and cash charges were used in the general business in which the said Hubbell was then engaged,” and to which he adds : “which it is fairly to be inferred, and I therefore find, “was the said joint business of himself and the said “Taylor, as there was no proof that the said Hubbell “ was engaged in any other business.”
    Heither the inference nor finding of the referee is justified by the evidence, for the case shows that Hubbell was engaged in other business not necessarily connected with the adventures in which he was jointly concerned with defendant. There were transactions of his in gold and currency. He was a large borrower of money from Grant & Son, other than on the drafts in question. The presumption would, be, as there was no general copartnership formed between Hubbell and defendant, that these other operations were on his individual account. If they were connected with the special joint adventures in the importation of merchandise from the East, evidence of this should have been affirmatively given.
    The moneys advanced by the plaintiffs’ firm on the, drafts in question were not charged on their books to Taylor and Hnbbell, bnt to Hnbbell individually, as were also the other sums loaned by them to him from time to time, to large amounts. The name of defendant does not appear on their books as a debtor to them.
    Nor is there any evidence that Grant & Son regarded the defendant as liable to them for the moneys advanced on the drafts, in any other light than as the acceptor of the drafts upon which they had advanced the moneys. The loans were made to Hubbell on the strength of defendant’s name being on the drafts as acceptor.
    The referee has also found that Grant & Son were authorized, from the business relations and course of dealings between themselves and Hubbell, to sell the drafts in question, on which they had advanced the moneys, “on the street, or to become the purchasers “thereof themselves, at the value of such paper, hav“ing reference to the business standing of the parties “to it and the current rates of money, and to apply “the proceeds to the credit of said loans; and said “paper was left as collateral for said advances made “upon it, subject to such disposition of it by Grant & “ Son ; and if not so sold or discounted, was to remain “in the hands of Grant & Son as collateral security for “such advances, and for any general balance of ac- “ count.”
    On the 26th September, 1867, John W. Thompson, of the National Bank at Ballston Spa, N. Y., wrote to Grant & Son, proposing to buy paper from them in these words: “We want to buy 10, 20, 25 thousand “dollars fire-proof paper, three or four months to run “ or less. Have yon any that yon know is good beyond “question?”
    On the 28th September Grant & Son enclosed to Thompson, by letter, a list of paper which they proposed to sell, amounting to over $50,000, made by Hoyt, Tillinghast & Co., and other parties, amongst which were two of the acceptances of the defendant for $10,000 each, which they had taken from Hnbbell on the 19th September ; and they offered to sell some to him at the rate of 8 per cent, per annum discount. In their letter they advised Thompson that they considered Taylor’s paper as good as either of the others.
    On the 30th September Thompson enclosed the money to Grant & Son for the purchase of the acceptance of Taylor for $10,000, which fell due on the 12th December, being one of the five acceptances first received by them from Hubbell; and on the 2d October, Grant & Son sent to Thompson the acceptance in question, with a check for the discount allowed him.
    The referee has found “That on the second day of October, 1867, the said Grant & Son elected to become the purchasers of the said five drafts (the five received by them on the 19th September), and did actually discount the same “at the rate of twelve per cent, per an“num interest, and one-fourth of one per cent, com- “ mission, which was allowing all that said paper was “ worth at the time ; and on said second day of October “said Grant & Son so entered said transaction in the “statement book, being the book in which such transactions were originally entered, and afterwards carried “ the same into several other of their books ; by which “entries they credited the said Hubbell with the “amount of the said drafts, less said sums advanced, “and said interest and commission.”
    On the 4th October, 1867, the advances made on the first seven acceptances were carried by Grant & Son into the general account of Hubbell on their books.
    The referee further finds that Grant & Son never rendered any account of said transaction, so entered on their books, of the discount by them of the five drafts on the second of October to Hubbell. That they made out a statement to be sent him, but on the nineteenth of October following, fromfacts and circumstances which came to their knowledge, their confidence in the "business standing and responsibility of Taylor and Hubbell became so impaired as to lead them to apprehend their speedy failure; in consequence of which Grant & Son, on the 19th day of October, caused entry to be made in their statement-book, and in their other books, reversing the entries of the second of October, intending thereby to cancel the same.
    The referee has found as a conclusion of law, 4 4 That the entries in the book of Grant & Son made on the 2d October, 1867, stating the discounting of the five acceptances, and the sale of one of them to John W. Thompson,and the other circumstances attending the transaction, are evidences of an agreement on the part of the said Grant & Son with the said Hubbell to purchase and discount the said five acceptances at the rate of twelve per cent, per annum, for the time they had to run, and one-fourth of one per cent, commission, and that the same was a usurious and unlawful agreement, and rendered the acceptances void in the hands of Grant & Son, and that they are not entitled to recover on the same, but should surrender them to Taylor; and that the entries made by Grant & Son in their books on the 19th day of October, by which they attempted to cancel the said transaction, were without legal effect in purging the same of usury.”
    But the referee further finds, as conclusion of law, “that the illegal transaction in the purchase and discounting of the five acceptances did not taint with usury, or render illegal the loan of forty-five thousand dollars previously advanced upon tire collateral security of the five acceptances, but that the same remained good and valid.”
    So much of the referee’s report as finds the five acceptances void in the hands of Grant & Son for usury on the grounds stated by him, are excepted to by the plaintiff; the portion which finds the original loan of forty-five thousand dollars to be untainted by usury, and that the same remains good and valid, has been excepted .to by the defendant.

      George H. Foster, for plaintiff.

      Joseph H. Choate, for defendant.
   By the Court.—Van Vorst, J.

As both parties have appealed, this subject requires examination. The conclusion of the referee must be considered in connection with his fourth finding of fact, in which among other things he finds in these words : ‘1 The said Grant & Son “ had been the bankers and brokers of the said Hubbell “ in his prosecution of the said joint business during the “whole time that the said firm of Grant & Son had been “in existence, dating from some time in the year 1861 ; “ and prior to the year 1869, they had frequently sold “the paper of the said Hubbell and Taylor for the ac- “ count of said Hubbell, in conducting the said joint £ £ business at the current market rates. During the year “ 1867, such paper was unsalable, but from the business “ relations and course of dealings between the parties, “ the said Grant & Son were authorized to sell the said “ collaterals on the street, or to become the purchasers “ thereof themselves at the value of such paper, having “ reference to the business standing of the parties to it “ and the current rates for money, and to apply the pro- “ ceeds to the credit of said loans, and said paper was “ left as collateral for said advances made upon it, subject to such disposition of it by Grant & Son.”

It was acting under this understanding and course of dealing, without doubt, that the plaintiff on the 28th of September offered to John W. Thompson $20,000 of the paper at a discount, in excess of the legal rate of interest. Thompson took one note at that rate. There is no evidence that the plaintiff at the time reported that transaction to Hubbell. But on the 2d October, the day on which they sent the draft to Thompson, they expressed their election in writing in their own "books, to take to themselves all the five acceptances, at the rate of 12 per cent, per annum, including the one already disposed of to Thompson at 8 per cent. They could not have properly taken to themselves this difference of four per cent, on the sale of this acceptance, unless they were justified in the act of crediting Hubbell with the avails of the five acceptances on that day, at the rate of 12 per cent., and charging the same to themselves. Grant & Son had fixed the market value of the paper in then-letter to Thompson, and had pronounced the paper good. The findings by the referee, and the facts and circumstances above alluded to, seem to justify the conclusion to which he came, that these five acceptances were void in the hands of Grant & Son, on account of usury.

But it is difficult to perceive upon what principle the referee can make a discrimination in favor of the moneys loaned, and exempt them from the taint which he fastened upon the drafts The acceptances were placed in the hands of Grant & Son, and the money was loaned and advanced by them on the faith of the paper left with them. When they advanced the money, they did so with the expectation of reaping all the advantages which the possession of the acceptances under the understanding and agreement, which the referee has pronounced usurious, would give them.

This advantage was to accrue to them on account of the loan and forbearance of the money. As far as appears, that was the only consideration for the advances.

If instead of advancing forty-five thousand dollars, they had advanced the whole amount of the first acceptances, less twelve per cent., under an understanding or agreement, that they could take to themselves the paper at an usurious rate of interest, they could no more recover the moneys advance as a loan, than they could successfully maintain an action upon the papers upon which the money was loaned. The referee has found as facts that Hubbell had made payments to Grant & Son, and was entitled to money credits against them, subsequent to the 19th of September, which in the aggregate exceeds the sum of sixty thousand dollars, the amount of the specific advances made by Grant & Son on the first seven drafts; on the eighth acceptance no specific advance was made. The referee applies these payments and credits to the extinguishment of these specific advances made on the seven acceptances, and he finds as conclusion of law, that by the payments which were made on general accounts by Hubbell to Grant & Son, and the credits in his favor, between the 19th of September and the 26th of October, all the specific loans or advances of money on account of which the said seven acceptances were delivered to Grant & Son by Hubbell as collateral security, were paid.

To the findings of the referee in these respects, the plaintiff has excepted ; but we can discover no error in principle in the application of the payments made by the referee. There having been no application made by the parties at the time the law would apply them, which the referee has done, and there is no good reason assigned to disturb the application and findings made by him in this respect.

But the referee, after applying the payments and credits of Hubbell to the extinguishment of the specific advances made by Grant & Son on the seven acceptances, finds that there is a balance against Hubbell, on “ all the accounts and transactions” between the parties, of $40,937.96, and for which general balances both Hubbell and the defendant are jointly liable, and are jointly legally chargeable therewith. And he also finds as conclusions of law, that Grant & Son as bankers, both by agreement and in law, had a general lien upon the said drafts for any balance of account which -there might at any time be in the course of the dealings in their favor against Hubhell; and that the last three drafts, exclusive of the five which he finds to be tainted with usury, are good and valid securities in the hands of the plaintiff for such balances, and that he is entitled to recover on such three drafts, against the defendant, the principal and interest of such balance of $40,937.96 ; and he reports accordingly, that the plaintiff is entitled to judgment against the defendant for the. balances. The evidence in the case, upon which the referee bases his findings, of any agreement between Grant & Son and Hubbell, that they should retain the drafts for any general balance of account in their favor against Hubbell, is far from satisfactory, and is based upon some general statements of Hubbell, who was a witness on the trial when such agreement was made, and upon what consideration and under what circumstances does not appear.

The weight of evidence rather tends to show that the first seven drafts were left as collateral security for the specific advances, amounting in the aggregate" to sixty thousand dollars, made thereon, and that they were to be sold by Grant & Son as Hubbell’s brokers, and the advances retained thereout; or, as the referee has found, Grant & Son had themselves an election to take them at the market rate. It does not appear that any such right to detain for a general balance had ever been claimed or set up by Grant & Son on any previous occasion ; but that, when acceptances had been theretofore paid to Grant & Son by Hubbell, they were delivered up.

In his fifth finding of fact the referee expressly finds, that in all similar prior transactions in the year 1867, the loans made by Grant & Son on the collateral security left with them by Hubbell were either paid by Hubbell and the collaterals talcen up by him before their maturity, or such loans were extinguished by the collection of the amount thereof "by Grant & Son from the collateral securities at maturity.” Such previous dealing is entirely inconsistent with any right to detain the securities for a general balance. When there is no right to detain the possession of the collateral, after a specific loan upon it is paid, there can be no lien upon it after payment of the loan. The right of the debtor to pay the advance and take up a collateral before maturity, is not reconcilable with a right in the creditor to hold on after payment for any general balance. A right of possession is an essential ingredient to a lien upon personal property.

On the days when these particular drafts were left with plaintiff, there is no evidence that anything was said or agreed that they were to be detained for any general balance of account, and there is nothing in the previous dealings of the parties, as already urged, which tends to show that any such right was set up or supposed to exist.

Besides, the conduct of Grant & Son, in offering for sale two of the drafts to John W. Thompson, in September, shows conclusively that they had no idea of any right to hold on the paper after its payment; for by such disposition they would put it out of their power to do so. •

But there is another objection to impressing these acceptances with a lien for a general balance of account in favor of plaintiff.

The eight drafts were accepted by defendant for a specific purpose, to meet the payment of drafts drawn against credits given on the purchase of merchandise, and to be used at the bank where Hubbell kept his account, which was proved to be the City Bank.

At the time they were taken to Grant & Son, no consideration had as yet been received by either maker or acceptor. They were in no true sense, as the referee supposed, and has found, “ business paper. ’ ’

Hubbell could not pledge them for any previous indebtedness from himself to Grant & Son, nor could he leave them properly as security for any moneys other than such as he might specifically obtain upon them.

General liens for a balance of account are not favored (Kent’s Com., Vol. 2, pp. 634, 636).

If there be a usage giving to persons engaged in discounting, buying, advancing on, or selling, bills or notes, a lien for a general balance against their customer, such usage should be proved. It will not be presumed to exist in the absence of an express agreement. Courts have judicially taken notice of the lien of “ bankers,” who are strictly such, and who are dealers in money. But even the lien of a banker does not exist if there be circumstances in any case inconsistent therewith (Bradnas v. Barnett, 3 Manning, Granger & Scott).

There are circumstances in this case above alluded to which are entirely inconsistent with a right to detain the drafts for a general balance.

It is obvious from these considerations that Grant & Son cannot hold nor recover on these acceptances for a general balance of account after the specific advances made upon them have been paid.

Besides, this action is brought upon the acceptances. There is no allegation in the complaint seeking to charge defendant jointly with Hubbell for this balance, and no opportunity has been given to the defendant by way of answer to deny his liability, express or implied, for any such balance of account. There was no issue on this subject raised by the pleadings.

If Taylor was at all liable for such balance, he was so jointly with Hubbell, and should be sued with Hub-bell therefor. A joint debtor cannot be separately prosecuted by such. indirection, especially when his joint liability is disputed.

In addition, it also appears by the evidence that long after these actions were commenced, and in the month of January, 1869, the plaintiff commenced an action in this court against the defendant Hubbell individually, in which he demands judgment against him for moneys advanced and lent to him subsequent to the 19th September, 1867, and in which he demands judgment for $40,937.96, the precise balance for which the referee has found that plaintiff has a general lien on the drafts in question, and for which judgment has been rendered upon the referee’s report against the defendant in this action. It also appears by the evidence that Hubbell has consented in the above-mentioned action of the plaintiff against him individually, that judgment be entered against him therein for such balance.

In the form in which the defendant is sued, he has had no opportunity to set up by answer the effect of this subsequent action brought by plaintiff, and the offer of Hubbell therein. But in any aspect, the assertion of the plaintiff in such formal way by action of a claim against Hubbell individually for this balance, would appear to be inconsistent with a claim of a joint liability against Taylor and Hubbell for the same cause of action.

For these reasons the judgment founded upon the report of the referee is erroneous, and should be reversed. Having come to this conclusion, it is not necessary to pass upon the other grounds of reversal urged by the defendants, growing out of the execution of the compromise agreement of the 21st November, 1867.

The judgment appealed from should be reversed, the order of reference set aside, and a new trial ordered, with costs to the appellant to abide the event.

Monell and Sedgwick, JJ., concurred.

Noth.—The following case (Taylor v. Grant) relates to the same securities, and was decided upon nearly the same points.—Reporters.


text:
    ROBERT L. TAYLOR, Plaintiff and Appellant, v. RICHARD S. GRANT, Survivor of OLIVER DE FOREST GRANT, and HENRY W. HUBBELL, Defendants and Respondents.
    Parties to bills or acceptances that are void in the hands of a holder, for usury, are entitled to demand, and to hav.e the same delivered up for cancellation (Revised Statutes,. 5th Bd., vol. 3, page 778, §§ 8, 18, 14). *
    Before Monell, Sedgwick, and Van Vorst, JJ.

      Decided March 1, 1873.

      Mr. Choate, for appellant.

      Mr. Foster, for respondent Grant.

      Mr. Miller, for respondent Hubbell.
   By the Court.—Van Vorst, J.

The consideration which we have given to this case, and to the case of Grant, survivor, against the plaintiff (see this case, ante) in which he is individually sued as the acceptor of the eight drafts described in the complaint herein, affords good reasons for the conclusion that this action was properly brought.

The bills of exchange were without consideration between drawer and acceptor. They were really made and accepted to raise funds to meet other drafts drawn in the same form against bank credits used for the payment of merchandise bought for the joint account of the defendant Hubbell, the drawer, and the plaintiff, the acceptor of the same.

The drafts, instead of being used in the bank where the acceptor understood they were to be placed for this purpose, were pledged with the firm of Grant & Son, of which firm the defendant Grant is the survivor, and specific sums of money "borrowed by the defendant Hubbell upon them.

* Note.—The other points and facts in this case are fully considered in Grant 0. Taylor, ante, page 338.—Reporters.

The referee has found that five of the acceptances were received by Grant & Son under such understanding and circumstances as render them void in their hands for usury.

He also finds that all the specific advances made by Grant & Son on the drafts had been paid by Hub-bell in cash, or by credits in his favor.

The defendant, Richard S. Grant, survivor, claims still to hold the drafts to answer a general balance of account in his favor against Hubbell, and for which he seeks to charge the plaintiff jointly with defendant Hubbell.

The plaintiff in his complaint avers that he has requested the defendant, Richard S. Grant, to render him an account of the advances and moneys for which he claims to hold the drafts, and that such request has been refused.

• The defendant, Richard S. Grant, survivor, brought three separate actions upon the eight drafts. The first upon one, the second upon three, and the third on the remaining four.

This action was commenced after the first action in Grant’s-favor was at issue, but previous to issue joined in the remaining two.

If the plaintiff is at all liable to Grant & Son for any amount over and above the specific advances made on the drafts, he is only so jointly with the defendant Hubbell. The plaintiff being prosecuted in the three actions in favor of Grant as the acceptor of the drafts, and no other liability or claim being made against him therein, other than as the acceptor of the bills, and that to the full amount appearing upon their face, no opportunity has been afforded him in these actions to set up by way of answer Ms non-liability for the indebtedness created by Hubbell in favor of Grant & Son, and for which he is really sought to be charged. For a full and just.determination of the controversy, and for the protection of the plaintiff, who is sought to be made liable for an indebtedness created by the defendant Hubbell against them jointly, the presence of Hubbell is necessary as a party defendant, so that he also be concluded thereby.

And besides, if the acceptances are void in the hands of the defendant Grant for usury, as is claimed in the complaint, the plaintiff is entitled affirmatively to demand that they be delivered up to be cancelled (Revised Statutes, 5th Edition, vol. 3, p. 773, §§ 8, 13, 14).

We think this action was properly brought, and that it affords a remedy for a full determination of the rights and liabilities of all the parties. The judgment appealed from should be reversed, the order of reference set aside, and a new trial ordered, with costs to the appellant to abide the event.

Modele and Sedgwick, JJ., concurred.


author: By the Court—Sedgwick, J. Barbour, C. J. (dissenting).

text:
    JAMES H. MILLS et al., Plaintiffs, v. ABRAHAM B. DAVIS et al., Defendants.
    Where a sheriff has collected money on an execution by levy upon and sale of the property of the defendant therein, and while the money was in his hands, sufficient to satisfy the execution, an order of injunction was served upon him, issued from the D. S. District Court, in proceedings in bankruptcy against the defendants in the execution, this court will not, on the motion of plaintiffs in the execution, grant an order absolutely corvmcmding the sheriff to pay over the money collected by him to the plaintiffs in the execution.

      Such an order should he reversed. In making this decision the court goes so far only as to decide that, “if under such an injunction there is a question whether the money in the sheriff's hands ma/y not be, in the meaning of the Bankrupt Act, the property of the debtor's (the defendants in the execution), and if it may be, that the injunction forbidding its transfer should be obeyed."—Babboub, Ch. J., dissenting.'
    Before Barbour, Ch. J., Freedman and Sedgwick, JJ.

      Decided March 1, 1873.
    This is an appeal from an order of Judge Mokell, granted at Special Term, on the 16th day of February, 1871, compelling the sheriff to pay over money collected, upon the following facts :
    On the 20th September, 1871, the defendants were doing business in the city of New York as grocers, and were indebted to plaintiffs for goods sold and delivered, and the plaintiffs commenced an action on that day by personal service on each of said defendants, of the summons and complaint in the above-entitled action.
    Said defendants did not appear in the action, and on the 11th October, 1871, the plaintiffs recovered judgment against them for the sum of $1,063.20 damages and costs, issued execution for its collection the same day, and delivered the same to the said sheriff with an endorsement thereon,. that he should levy and collect the same of defendant’s property, with interest from the 11th day of October, 1871.
    That said sheriff made a levy the same day, and took into his actual possession property on said levy more than sufficient to pay said judgment.
    That defendants, after the levy and before the 21st day of November, 1871, paid said sheriff in cash on said execution the sum of $600 in all at different times,, and that on the last-named day the said sheriff sold property of said defendants, amounting to $853.70, and that he now has in his hands $1,453.70 from which to pay said execution, being more than enough, beside his fees and charges, for that purpose.
    That the time to return the execution expired on the 10th day of December, 1871. That on the 11th day of December, 1871, such return not being made and the money not paid over, the plaintiff’s attorney applied to the sheriff to satisfy the execution or return the same, and he did not do so. The plaintiffs then ruled him to do so, or they would apply to the above-named court, on the 3d day of January, 1872 (see Rule — of Supreme Court), for an attachment against said sheriff, and that both parties appeared, and, after several adjournments, on the 16th day of January, 1872, the said sheriff made and filed his return on said execution, whereby he admits the levy and sale, and the sufficiency of money in his hands to satisfy the execution, and states that after the sale by him and the receipt of the money on the execution, and on the 29th day of November, 1871, an order, of which a true copy is annexed to his return, was served upon him, issued by the District Court of the United States for the Southern District of New York.
    The said order contains the following provision: u Now therefore you, and each of you, are commanded absolutely to desist and refrain from, until the further order of the court, from making any transfer or disposition of any of the property of the said debtors not exempt by the act of Congress, entitled ‘ an Act to establish a uniform system of bankruptcy throughout the United States,’ approved March 2d, 1867, from the operation of the said act, and from any interference therewith, except to preserve the same until the further order of the courtP

    The proof shows the validity of the debt, and that the debt was honestly due and the judgment honestly recovered the usual way ; and no collusion appears between the parties to the execution.

      J. Sterling Smith, for appellants,
    argued as follows : I. We shall assume that this court will not compel a person to disobey a valid order or injunction of another court, and that the Special Term order here appealed from must be reversed, if by obeying it the sheriff would render himself liable to punishment by the IT. S. District Court for contempt.
    II. By violating the injunction the sheriff would render himself liable to punishment, provided the IT. S. District Court had jurisdiction to issue it.
    Upon a motion to punish for contempt no question can be raised against the injunction, except that the court had no jurisdiction to issue it (Sullivan v. Judah, 4 Paige, 444; The People v. Sturtevant, 5 Seld. 263).
    III. The U. S. District Court had jurisdiction to issue the injunction in question.
    1. Such jurisdiction is expressly conferred by the Bankrupt Act of 1867 (see Sections 1 and 40).
    2. And the bankrupt court may enjoin the sheriff of a state court from proceeding (In re Mallory, 6 Nat. Bankrupt Reg. 22).
    IV. The money which the sheriff holds is the debtor’s property within the meaning of the injunction, and to pay it upon the plaintiff’s execution would be a violation of the injunction.
    1. The several States have surrendered to and vested in the Congress of the United States the power to establish “Uniform laws on the subject of bankruptcies” (U. S. Constitution, Art. 1, sec. 8, sub. 4).
    2. Congress having enacted a bankrupt law, which is now in force, all laws of the States conflicting with such bankrupt law are inoperative (Sturges v. Crowninshield, 4 Wheaton, 122-196; In re Merchants’ Ins. Co., 6 Nat. Bk. Reg. 43).
    3. By the provisions of the bankrupt law no creditor can acquire a preference, either by way of payment or lien, through a judgment that is obtained or levied after such creditor has knowledge that the debtor cannot pay his creditors in full; and an assignee can recover any such payment from the person so receiving it, or so to be benefited by it (sec, 35, 39 ; In re Black & Secor, 1 Bk. Reg. 81).
    4. It is for the bankrupt court to determine whether or not the plaintiffs in this action have acquired any lien upon or title to the moneys in the sheriff’s hands by virtue of their judgment and execution (Bankrupt Act, sec. 1; In re Wynne, 4 Bk. Reg. 5; In re Mallory, 6 Id. 26).
    5. If the plaintiff’s judgment conflicts with the provisions of the Bankrupt Act, the assignee is the proper party to demand and receive the proceeds of the sheriff’s sale.
    “The act of Congress, which is in this respect the “ supreme law, operates directly on the rights of those “ creditors, making void their preference and postpon- “ ing their claim to the proceeds of sale, and letting the “assignee, as the owner of the fund, in upon it. He “claims not upon an adverse title, but under and “ through the bankrupt, by virtue of the act of Congress. His claim is adverse to the creditors only in “ the sense that they are postponed and he supersedes “ them, and comes in upon the fund and not the property, as we have seen, because of the rightful juris- “ diction of the state court at the time to seize and sell “the property” (Roher’s Appeal, 62 Penn. 498).

      TJios. Clement Campbell, for respondents, presented the following points: I. The state courts are just as supreme in their sphere as the United States courts. The doctrine that the States have rights, and that all sovereignty and power exists in the States not expressly or necessarily granted to Congress, applies with full force to the judicial department of the State government.

      ¡No act of Congress can therefore be passed, suspending the general power of the state courts, or curtailing their general jurisdiction. The Bankrupt Act does not attempt to do this, nor does it by word or by implication render an act of the state courts void or voidable. The most that is claimed or can be claimed for it, is that when proceedings are instituted under it, it starts where the state court ended, and carries forward the work begun in that court, subject to the rights and liens then existing by the action of the state courts. We claim, therefore :
    1. When the state court has obtained jurisdiction, whatever is done can only be reviewed in that court, and all its acts are valid and binding.
    2. In administering the bankrupt law by the United States courts, all the liens are therefore to be protected and upheld, and all acts of the state court and its officers ; and wherever, therefore, a person is deprived of his property by the acts of the state court in good faith, and that property is transferred to another by State judicial proceedings, the title and right to the same, is gone, unless such proceedings are reversed by the regular action of the state courts, where the acts of the state courts are prior to the commencement of proceedings in bankruptcy.
    3. Where the state courts acquire jurisdiction by actual adjudication, that is, where the acts of the State court have become fixed by judgment, and they have seized and hold the debtor’s property by a receiver, sheriff, or other officer, it can hold the property until the lien is satisfied, as by proceedings in bankruptcy only the receiver can be reached after the lien is satisfied.
    . 4. Any property, therefore, to which the bankrupt has lost his right by action, in consequence of the proceedings in the state court, before the commencement of proceedings in bankruptcy, is gone, and cannot be reached in any way by the assignee in bankruptcy.

      5. The rights and property of the bankrupt which are affected by an injunction are such as the assignee in bankruptcy can reach and hold, and no others, and the assignee can only reach the property the bankrupt has at the time of the commencement of the bankrupt proceedings. This is manifest from section 14 of the Bankrupt Act, and the decision of the bankrupt courts (Sedgwick v. Minck, 1 Bankrupt Reg. 204; Bump on Bankruptcy, pp. 167, 246, 318, 244; In the matter of Arledge, 1 Bankrupt Reg. 195; Sedgwick v. Place, 1 Bankrupt Reg. 204; In re Merick, 1 Bankrupt Reg. 195; Goodrich v. Remington, 6 Blatchford, 515; R. & R. & St. L. R. R. v. McKay, 3 B. R. 12; In re Clark, et al., 3 B. R. 130; Clark v. Benniger, 39 How, 371; Matter of Hugh Campbell, 7 Annual Law Register, 100; U. S. v. Howland, 4 Weaton, 115; 10 Weaton, 25 ; In re Hoseberger, 3 B. Register, 33; Clark v. Benniger, 38 How, 341; Lamson v. Burton, 4 B. R. 1; In re Campbell, B. R. 36, also Supp. B. R. XXXVI ; In re Bernstein, R. R. Sup. 43 ; Mitchell v. Winslow, .1 Story's C. B. Bep. 631; Milford r. Milford, 9 Vesey, 87-100; Brown v. Heathcoat, 1 Atkins, 160; Alderd v. Boston, H. & E. R. R., 5 B. Reg. 230, Nos. 6 and 7; Matter of Wymon, 4 B. Reg. 6, Chief Justice Chase’s decision.
    II. The order called an injunction, served on the sheriff, does not in any way affect the merits of the motion or order, and is no answer to the application to pay over the money.
    1. It does not, in words or terms, restrain the sheriff from paying over the money or satisfying the execution; it only prevents him from making any transfer of defendants' property, or interfering therewith, except to presene it.

    He had no property belonging to the debtors. He sold their property on the 21st day of November, 1871. The order was issued November 27th, and served on the sheriff, Hovember 28, 1871. He had converted the defendants’ property into money seven days before the order was served.
    By levy and sale, the right of the debtor in the property is gone, even where there is only a levy on property sufficient to pay that is deemed a satisfaction of the judgment, even though the same is wasted by the sheriff. If the sheriff converts the property or money to his own use, the debtor cannot be compelled to pay the same over again.
    In the language of the courts, and within the meaning of the bankrupt law, the debtors were divested of their property by the legitimate proceedings of the state courts, and their right of property was gone. The money arising from the proceeds of the sale really is in the custody of the court, held by its officer, the sheriff, and the same must be distributed according to law, and the United States court has nothing to do'with it.
    The proceedings of the plaintiffs have been regular and in good faith, and they acquired a lien thereby which has ripened into a right which this court is bound to protect and carry into complete effect. ' •
    The United States courts, throughout the whole country, and particularly those sitting in the State of Hew York, have uniformly held the state court in such case, cannot be divested of her jurisdiction, and that it is not only proper the state court should act, but it has to and is bound to (In re Bernstein, B. R,. Sup. 43; In re Smith, B. R. 169; In re Keen, 2 B. R. 124; In re Campbell, B. R. 36; In re Schrupf, B. R. 41).
    III. When the bankrupt’s property has been sold by the sheriff under a state court judgment, no injunction as to the proceeds can or will be granted from the United States court, but the sheriff will be required to account to the assignee for the balance (In re Campbell, B. R. 36; In re Bernstein, B. R. Sup. 43).

      The reason, is obvious; there is no property .in the hands of the sheriff belonging to the bankrupt, and consequently none for his assignee.
    IV. The order is correct, and should be affirmed. The sheriff is fully protected in paying over the money. The assignee in bankruptcy can have no claims on him for it. The bankruptcy courts have so decided. The very act itself so provides. And this court has jurisdiction to, and is bound to distribute the money, by proper orders to the sheriff, according to law.
   By the Court—Sedgwick, J.

The plaintiff took judgment against the defendant on October 11th, 1871. Execution upon it was issued to the sheriff, who levied upon personal property belonging to the defendants.

On November 21st, 1871, he sold the property under the levy, and received the proceeds of the sale. On the 29th of the same month the sheriff was served with an injunction issued by the United States District Court in bankruptcy for this district, in a proceeding to adjudicate the defendants to be bankrupts.

This injunction commanded the sheriff to desist and refrain from making any transfer or disposition of any of the property of the defendants.

The injunction recites the filing of the petition to have the defendants adjudicated involuntary bankrupts, etc.

After the service of this injunction, the plaintiffs, upon notice of motion, obtained at the Special Term an order that the sheriff pay over to them the money held by him under the execution. The sheriff resisted the motion, by presenting the fact of the service of the injunction upon him.

The present appeal is taken from this order.

The courts heretofore, when the sheriff was virtually a stakeholder of money for contesting parties, and was without fault, have refused to compel him to decide the controversy between those parties, at his own personal risk.

The rule is stated in 2 Tidd’s Pr., 4th Am. Ed. p. 1017: “If the property "be disputed (which frequently happens on a commission of bankruptcy, etc.), the court, on the suggestion of a reasonable doubt, will protect the sheriff by enlarging the time for making his return, till the right be tried between the contending parties, or one of them has given him a sufficient indemnity. The rule for this purpose is a rule to show cause. And the Court of King’s Bench, upon the application of the sheriff, enlarged the time for his making a return to a writ of fieri facias, upon suggestion of a reasonable doubt, whether the goods seized under the writ were not bound by an extent, afterwards issued at the suit of the crown for malt duties, for the purpose of inducing the plaintiff to go into the Court of Exchequer, and there contest the question of right with the crown, in a more eligible manner than in this court. So where it appeared by affidavit that writs of extent and fieri facias had been issued on the same day, the Court of King’s Bench, for protecting the sheriff, refused to allow a venditioni exponas, to be issued on the return of the fieri facias to compel Mm to sell the goods under it.

So, where a bankrupt brought an action, and his assignees another, against the sheriff, the court allowed the latter to pay the money levied into court, and stayed the proceedings until the trial of an issue between the bankrupt and his assignees. And in general, when an action is brought against the sheriff, by assignees of a bankrupt, for taking goods in execution after a bankruptcy, the courts will assist the sheriff by staying the proceedings until he is indemnified on proper and equitable terms, and the terms imposed by the Court of King’s Bench in a late case were, the sheriff paying over the money levied to the assignees, with the costs of the action up to that time, being allowed Ms poundage and expenses incurred in the execution.

In Bernasconi v. Farrbrother, 7 B. & Co. p. 381 (1827), Lord Tenterden said: “The court will give the sheriff all the protection due to a public officer, when he acts bona fide within the scope of his duty; and as between the' sheriff, a judgment creditor, and the assignees of a bankrupt, it will always take care that the sheriff shall not be made an instrument of trying, at his own expense, the validity of a commission. In such case the court has been always ready to interfere, when the sheriff has come promptly, and has acted in the straight course of his duty indifferently and equally between the parties, and to administer to the sheriff all the equity which a court of equity could give him upon a bill of inter-pleader, and this has been done uniformly upon motion.”

The principle involved in these rules was specifically recognized in Shaw v. Chester, 2 Edwards Ch. R. p. 407.

This case last cited was affirmed (8 Page, Ch. R. p. 338).

The main proposition decided by it was, that as a general rule the sheriff could not sustain a bill of inter-pleader against contending claimants of property seized by him under execution. Several reasons were given for the conclusion; among them were :

1st. It would appear by such a bill that the complainant had been guilty of a tort against' one or another of the adverse claimants.

2d. The sheriff could get from the court whose process he had executed, all the relief the case called for.

3. The sheriff did not need the protection of a court of equity, because the law gave him a right to indemnity in proper cases.

This case further admits, p. 409, that there may exist a condition of facts which justified the filing by a sheriff of a bill of interpleader. Such a bill is allowed when it is brought for the determination of equitable rights, as set up by the claimants (2 Daniels, Ch. Pr. 1566).

It thus appears that in a proper proceeding the sheriff will receive due protection, and is not obliged to pro • ceed at his own risk, under all circumstances, to obey the letter of the process which it is his duty to execute. The court will look at the circumstances, and make the order proper to the particular facts presented. On this appeal, however, the single Question is, should the court below have made the unconditional order appealed from that the sheriff pay over the money ? -

The sheriff urges that he should not be compelled by order to pay over, because he is bound by law to obey the injunction, which would be violated if he paid over the money, and because such a payment by him would subject him to punishment as for a contempt of the district court in bankruptcy.

The injunction was issued by the court in bankruptcy under the 40th' section of the bankrupt law. The power to grant such process is a beneficial and almost neces.sary part of a bankruptcy system. ' The other powers of the bankruptcy court over an estate would accomplish little in dividing the estate among creditors, if the court did not gain the power to preserve it from dispersion or illegal transfer as soon as the proceeding in bankruptcy began. As it is issued by a court of competent jurisdiction, that court can alone determine finally what constitutes a violation of it. Nor if the court here come to the conclusion that payment by the sheriff to the plaintiffs under this order would protect him from punishment in the district court, would such a conclusion bind this latter court.

It must proceed according to its own views of the law.

Further, if this court can not legally and judicially determine what is or what is not a violation of the injunction, and yet sees that the question here arises as to whether payment by the sheriff is not a violation, it will not proceed to adjudicate upon the question either for or against the sheriff, but will leave that for the court having the jurisdiction.

The only inconvenience or harm in such a course is, that for a time the law will refuse definitely to decide to whom the money belongs. There must, under any system of bankruptcy, be a time when the enjoyment of the rights of the general body of creditors is postponed, •and when it is impossible to proceed at once to ascertain the claims against and in favor of the estate. The law says that upon an adjudication that a person is a bankrupt, his estate belongs to his creditors. They, however, at the time of the adjudication are not in possession of the estate, nor is any one in their behalf. Time must elapse before an assignee can be appointed to take possession. Before the adjudication in involuntary cases, while the preliminary proceedings are pending, all matters must be considered in view of the possibility that an assignee will be appointed. It would not be just that in the meantime an individual creditor should proceed in his own interest, while the law leaves, without a representative to oppose him, the general body of creditors. Whatever his rights may, in the end, appear to be, it would be inexpedient and unjust to suffer him to obtain them primarily, according to what he may represent them to be. Nominally he acts against the bankrupt. Really, however, the party in interest' against him are the bankrupt creditors.

Formerly, under the English bankruptcy law, a sheriff that took, under legal process, property belonging to a man who had committed an act of bankruptcy, became liable to the assignee in bankruptcy afterwards appointed, though at the time of the taking the sheriff had no notice that the act of bankruptcy had been committed, and the commission had not issued (Cooper v. Chitty, 1 Smith Leading Cases, p. 562). We have prevented, in part, the hardship of such a liability to a sheriff, by giving the court power to issue an injunction which gives him notice of the true state of the case, and is a proper answer in his mouth when he is called upon to execute process against the estate affected "by the "bankruptcy proceedings.

The Supreme Court, Ex parte Fleming, 4 Hill, p, 581 refused to compel, by mandamus, a ministerial officer to do a certain act, because he had been forbidden to do it by an injunction issued by the United States District Court.

The position taken by plaintiffs’ counsel is, that the injunction forbids the transfer of the defendants’ property, but that the money in the sheriff’s hands never was the defendants’ property; and therefore that the injunction does not apply to such money.

Necessarily the injunction, and the part of the statute providing for it, referred to what in view of the bankrupt act might, be the property of the debtors. Under the act the assignee may recover property of the bankrupts taken or procured, or suffered to be taken, by legal process, while he is insolvent, and with intent to take and give a preference.

The present plaintiff has recovered judgment against, and taken property of the defendants, and clearly is of that class of persons against whom recovery may be had in proper cases. If the sheriff still had in hand the property levied on, there can be no doubt that this injunction referred to it.

The mere fact that the property has been turned into money, does not prevent it still remaining the debtor’s property under the bankrupt act. That act administers equitable as well as legal principles.

Now assuming the question to arise, we can see that for any proper and equitable purpose equity would consider the proceeds of the goods as having the same quality and legal relation as the goods themselves; certainly if there were a case where a man, to defeat the operation of the bankrupt act, combined with one of his creditors to dispose fraudulently, by color of legal proceedings, of Ms property, at all stages of the combination, the legal title of the property as between him and his other creditors would remain in him. It is not necessary to say, that the court does not suggest that such is the present case. We mean to go only so far as to see, if under this injunction there is a question as to whether the money in the sheriff’s hands may not be, in the meaning of the bankrupt act, the property of the debtors. We think it may be, and that the injunction forbidding its transfer should be obeyed. We have come to the conclusion that in such a case an order absolutely commanding the payment of the money by the sheriff should be reversed.

Freedman, J., concurred.

Barbour, C. J. (dissenting).

As there is a limit to the jurisdiction and powers of all courts in regard to the granting of injunctions, so there are bounds which no act of congress or of state legislatures can properly pass. An act of a state legislature, for instance, which should in terms authorize a state court to enjoin a circuit or district court of the United States, against proceeding with a cause before it, or from doing any act whatever, would be a nullity; and so as to an act of congress that should attempt to confer power upon the federal courts to enjoin those of a state. This principle was recognized by congress in the act of 1793. The state and federal governments are, within their respective spheres, each sovereign and independent of the other, and no part of the governmental machinery of either can legally be controlled or interfered with by the legislatures or courts of the other. It is true that a different view of the powers and rights of the two classes of governments in this regard appears to have recently been taken by high federal officials, and that an actual existing state government has, in effect, been crushed out and annihilated by means of writs of injunction issued by a district court of the United States, but that act, there can be no doubt, was a monstrous usurpation, against which the reason of every sound lawyer revolts.

District courts of the federal government may, in bankruptcy cases, enjoin the parties before them from proceeding in actions in other U. S. courts or the courts of states; and so state courts, of equity jurisdiction may, under the common law, in like manner, and to the same extent, enjoin their suitors against proceeding in the federal courts,, or those of other States. The rules of comity, however, which have heretofore existed between the tribunals of the respective governments, together, perhaps, with a prudent consideration of the lex talionis, have prevented the exercise of those powers except in few and rare instances. But, neither congress, nor any federal court of original jurisdiction, has any legal authority or right to interfere with, or control, a state court, or to inhibit the execution of its process by the officers appointed by state law for that purpose. To hold otherwise would be to concede that the federal government may enact such laws, or establish such rules of practice, as will work the utter extinction of every state court and state government. It was upon that ground that the act passed during the war, requiring the payment of a stamp duty upon the initiatory process in suits in state courts, was held by those tribunals, with remarkable unanimity, to be void, although congress was empowered by the constitution to levy taxes, etc.; for it was seen that if the power of the federal government to interfere thus with the process of state courts was to be admitted, its legal right to tax such courts out of existence must necessarily be conceded. The injunction of the district court, which in effect required the sheriff to abstain from obeying the state law and the legal command of this court, was therefore wholly inoperative and void in so far, at least, as regards the sheriff’s claim that such injunction justifies him in refusing to obey the precept and perform his official obligation. The federal government has no more legal or constitutional power, either through its courts or otherwise, to thus control the ultimate process of a state court or prohibit its execution, than the government or court of a state has to enjoin a United States marshal against the execution of process placed in his hands by a federal court. Where the sheriff has made a levy under an execution, prior to the proceedings in bankruptcy, the lien thus acquired in favor of the judgment creditor cannot be divested by those proceedings; and it may be added, that no levy can be made after the judgment debtor has been declared a bankrupt or a receiver has been appointed, because the bankrupt is then ipso facto divested of all his estate and property subject to execution.

Many cases may be supposed in which the court might properly, and would, to save a sheriff from possible harm, refuse to make an order of the character of that appealed from in this case ; and indeed there are hundreds of precedents of that description. But, upon a question involving its jurisdiction and powers in a matter essential to its very existence, the high duty which the court owes to the State that created it, and whose rights as a government it is bound to guard and preserve, requires the assertion and exercise of such powers as are necessary to protect itself and its suitors against illegal and dangerous usurpations. I should find no difficulty, therefore, in arriving at the conclusion that the order appealed from ought to be affirmed, even though the sheriff should be left to defend himself before the district court for an actual violation of its injunction.

In the case before us, however, the sheriff will expose himself to no hazard of the character suggested. For the papers show that the property of the judgment debtor was sold by the sheriff, and the entire amount of the execution was collected by him on or before the 21st of November, 1871. The defendant in the execution and bankrupt, therefore, was wholly divested of all ownership in the money paid over by him to the sheriff, and in the property sold by the latter, eight days before the issuing of the injunction which required the sheriff to abstain from making any transfer of the property of such defendant, and such money had become the property of the judgment creditors ; and it follows that when the injunction was served, the sheriff held no property in his hands belonging to the bankrupt which had been seized or taken by him under the execution. He had nothing in his hands but money derived from sales and collections, and that belonged to the creditors in the judgment.

The order appealed from should be affirmed, with costs.