source: Caselaw Access Project

author: Mr. Justice DANIEL

license: Public Domain

text:
    Robert M. Withers, Plaintiff in error, v. William B. Greene, Administrator of Richard May, deceased.
    The laws of Alabama place sealed instalments, commonly called single bills, upon the footing of promissory notes, by allowing the defendant to impeach or go into their consideration; and also permit their assignment, so that the assignee can sue in his own name. But in such suit, the defendant shall be allowed the benefit of all payments, discounts, and set-offs, made, had, or possessed against the same, previous to notice of the assignment.
    The construction of this latter clause is, that where an assignee sues, the defendant is not limited to showing payments or set-offs made before notice of the assignment, but may also prove a total or partial failure of the consideration for which the writing was executed.

      Proof of a partial failure of the consideration may be given in evidence in mitigation of damages.
    The English and American cases upon this point examined, showing a relaxation of the old rule, and allowing a defendant to obtain justice in this way, instead of driving him to a cross action for damages.
    Thus, where the obligor of a single bill was sued by an assignee, and pleaded that the bill was given for the purchase of horses which were not as sound nor of as high a pedigree as had been represented by the seller, such a plea was admissible.
    It is not a sufficient objection to the plea, that it omits a disclaimer of the contract, and a proffer to return the property. If the defendant looked only to a mitigation of damages, he was not bound to do either, and therefore was not bound to make such an averment in his plea.
    Nor is it a sufficient objection to the plea, that it avers that the obligation was obtained from him by fraudulent representations, or that it concludes with a general prayer for judgment. Pleas in bar are not to receive a narrow and merely technical construction, but are to be construed according to their entire subject-matter.
    In this respect there is a difference between pleas in bar and pleas in abatement.
    This cause was brought up, by writ of error, from the Circuit Court of the United States for the Southern District of Alabama.
    It was an action of debt brought in the District Court of the United States for the Middle District of Alabama, by May, assignee,?,pn a single bill, under seal, for the payment of three thousancFdollars, executed by R. W. Withers to A. B. Newsom, a citizen of Tennessee, and by him assigned to the plaintiff. Pending the suit May died, and Greene qualifiéd and revived in his name as administrator.
    After some pleas which were withdrawn, the defendant filed the following: —
    “ And for a further plea in this behalf, said defendant, by leave, &c., says, onerari non, because he says that heretofore, to wit, on the day of , in the year 1839, said defendant, at the instance and request of one A. B. Newsom, the payee of the' sealed note or writing obligatory in the plaintiff’s' declaration mentioned, purchased of the said Newsom two certain fillies, that is to say, one dark brown filly, said to have been foaled in the spring of the year 1835, and one sorrel filly, said to have been foaled the 22d day of June, in the year 1837, at and for a large sum of money, to wit, the sum of four thousand dollars, to be paid by the said defendant to the said Newsom ; for the payment of which said sum, in part, defendant gave to the said Newsom the said sealed note or writing obligatory, in the said plaintiff’s declaration described, and said defendant avers that said sealed note was given for and upon no other consideration whatsoever. And said defendant further avers, that the said Newsom falsely and fraudulently represented to said defendant, that the said fillies were raised by himself, and'that the said fillies were sound, and that the said fillies had certain pedigrees, that is to say, — (the pedigrees are set forth in the plea, but they are here omitted,) — all which said representations as to the soundness of the said fillies, as to the fact that they were raised by the said Newsom, and as to their pedigrees, were false and untrue, arid known to be false and untrue by the said Newsom, and were so made, as resaid, by the said Newsom to deceive and defraud the said defendant.
    “And said defendant further says, that he, relying upon the said false and fraudulent, representations of the said Newsom, and believing the same to be true, made the said purchase of the said fillies. And said defendant further says, that said fillies were purchased by him as aforesaid for their blood, and for the turf, and that otherwise they were wholly worthless to the said defendant. And said defendant further says, that the said Newsom was beforef, and at, and hath been ever since, and still is, a citizen of the State of Tennessee, residing three hundred miles or more from the residence of said defendant, who then resided, and still resides, in the County of Greene, in this State; and that said Newsom brought the said fillies from Tennessee to the residence of said defendant, in Greene County,, and then sold them to said defendant as aforesaid.
    “And said defendant further saith, that he did not discover the extent of the unsoundness of the said fillies until a long time after said purchase, to wit, the fall after the said purchase, when they were being trained for the turf, and that he did not learn that the pedigrees were false until a long time after said purchase, to wit, some time in the fall of 1839, or winter of the year 1839-40.
    “And said defendant further saith, from the time he discovered the permanent unsoundness of the said fillies as aforesaid, and the falsity of the said pedigrees as aforesaid, he was ready, willing, and desirous, to, and would have returned and delivered the said fillies to the said Newsom, if he had had an opportunity so to do, which he did not; and that from the discovery of the fraud of the said Newsom as aforesaid, up to the death of the said fillies, which happened during the winter and spring of the year 1840, he was willing and ready to deliver and return the said fillies to the said Newsom, as aforesaid.
    “ And said defendant further saith, that said fillies died, as aforesaid, without the fault or neglect of the said defendant or his servants ; all which several matters said defendant is ready to verify. And said defendant saith, that the said sealed note or writing obligatory was obtained from him by the said Newsom by the false and fraudulent representations as aforesaid, and is therefore, fraudulent and void in law; wherefore said defendant prays judgment, whether he ought to be charged with the said debt,” &c.
    To this plea the plaintiff demurred, and, in May, 1843, the court sustained the demurrer, and gave judgment for the plaintiff in the sum of three thousand dollars debt, and eight hundred and eighteen dollars damages, together with costs.
    The defendant sued out a writ of error, and brought the case up to this court.
    It was argued by Mr. John Y. Mason, for the plaintiff in error, and Mr. Bayly, for the defendant in error.

      Mr. Mason, for the plaintiff in error.
    The facts being well pleaded, and admitted to be true, it will be insisted for the plaintiff in error, that the demurrer should not have been sustained.
    The facts constituting the gist of the defence may be thus stated: ■—
    1. The consideration of the contract on the part of Withers was four thousand dollars, of which one thousand was paid, and the single bill was given for three thousand dollars.
    2. That the payee procured the contract by representations false and fraudulent, with a knowledge that they were false, and with the purpose to defraud.
    3. That, the facts being falsely stated, the fillies were wholly . worthless to the defendant.
    4. That the fraud was not discovered until long after the sale, and no opportunity offered to return them until they were dead; and that the fillies died without fault or neglect on the part of the defendant; and on these facts the question is, Can the plaintiff enforce' the contract, as to that part of the purchase money-which is unpaid ?
    The contract was made in Alabama, and the lex loci governs.
    The .plea proceéds on the ground, that, as to the defendant, there Was a total failure of consideration, but that, if the contract were not to-be regarded as nudum factum, there was a failure of consideration to the full amount sued for and unpaid.
    The statute, to avoid circuity of action, and to promote justice, authorized a defence at law, which without it could have only been made in equity.
    1. The conduct of the vendor amounted to dolum malum ad draumveniendum, which, being proved or admitted, vitiates all contracts, both at law and in equity. Story on Contracts, § 165; Ferguson v. Carrington, 9 Barn. & Cres. 59; Fermor’s case, 3 Coke’s R. 77.

      To deprive the defendant of the benefit of this defence, it must clearly appear- that the vendee acquiesced in the contract after he discovered, the fraud. The fact of such acquiescence must be determined on the circumstances of each case.
    The offei to return the article purchased would show that there is no-.acquiescence; but the party must have reasonable time to do this act of repudiation, thereby rescinding the contract in whole. In this case it will be insisted that the fillies could not be returned or tendered after they died, and that the excuse is sufficient for not doing so before that event, and after the fraud was detected.
    ■ 2. It is stated by Kent,' that, “ in cases where the consideration has totally failed, the English courts have admitted that fact to constitute a good defence between the original parties to a bill of exchange, though a partial failure is no defence.” 2 Kent’s Com. 473; Morgan v. Richardson, 1 Camp. N. P. 40, note; Mann v. Lent, 10 Barn. & Cress. 877. “ But with us a
    partial as well as total failure of consideration may be given in evidence by the maker of a note to defeat or mitigate a recovery, as the case may be.” 2 Kent’s Com. 473; Hills v. Bannister, 8 Cowen, 31; Sill v. Rood, 15 Johns. 230; 13 Wendell, 605; Cook v. Mix, 11 Conn. 432.
    With regard to the quality of goods sold, the seller is bound to answer where he -has made, fraudulent representations concerning them, which amounts to a warranty in law. Seixas v. Wood, 2 Caines’s R. 48. In the English cases, where the right to defend or to recover back money paid under contracts has been denied,- it -is conceded that the vendee may sue on the warranty or for the deceit. The leading case of Hunt v. Silk, 5 East, 449.
    In Alabama the rule has been established, under their statute, that, where “ fraud enters into the transaction, it is competent for the defendant, on proof of it, to show a defect in the consideration in diminution of damages.” And that, “ wherever a defendant' can maintain a cross action for damages, on account of a defect in personal property purchased by him, or for a non-compliance by the plaintiff with his part of the contract, the former may, in defence to an action upon his note, made in consequence of such purchase or contract, claim a deduction corresponding with the injury sustained.” Peden v. Moore, 1 Stewart & Porter, 71; 3 Stewart, 98.
    In the case of Peden v. Moore, the court below refused to instruct the jury, that, if they believed that the consideration of the note had failed to the full amount, except what had been paid, they should give a verdict for the defendant; and ruled that, unless a total failure of consideration was proved, they should find for the plaintiff. The decision was reversed, and the rule established, that a partial failure of consideration was admissible in defence. See, also, Barrett v. Stanton and Pollard, 2 Alabama, 181. The ease of Peden and Moore, it is submitted, must rule this.
    The defendant Withers, in an action against Newsom, on proof of the facts stated, would be entitled to recover damages for the fraud practised. Such a suit may be maintained without any offer to return the goods sold. Fielder v. Starkin, 1 H. Bl. 17; Patteshall v. Tranter, 3 Adolph. & Ellis, 106; Caswell v. Coare, 1 Taunt. 566; 2 Kent’s Com. 480, note.
    In an action by payee against the maker of a nóte, it is competent for the maker, in reduction of damages, to prove that the sale was effected by means of false representations on the part of the payee, although the chattel has not been returned or tendered to him. Harrington v. Stratton, 22 Pick. 510; Parish v. Stone, 14 Pick. 198; McAllister v. Reab, 4 Wendell, 483; Spalding v. Vandercock, 2 Wendell, 431; Burton v. Stewart, 3 Wendell, 236; Miller v. Smith, 1 Mason, 437.
    It is statéd by Chief Justice Mansfield, in 1 Taunton, that the rule which allows fraud or breach of warranty to be given, in evidence in mitigation of damages, arises from the desire to avoid circuity of action. Under the statute of Alabama, arid the rule established in Peden v. Moore, the defence in this case is admissible a fortiori. In Mississippi, where there is a similar statute,- the same rule prevails. Harman v. Sanderson, 6 Smedes & Marsh. 41, 42.
    •The modern English cases have greatly relaxed the ancient rule on the subject of rescission of contracts for sales of personal property. Poulton v. Lattimore, 9 Barn. & Cress. 269; Steward v. Coesvelt, 1 Carr. & Payne, 23; Percival v. Blake, 2 Carr. & Payne, 514; Chitty on Contracts, 463, 743, ed. 1848.
    In the case of Parish v. Stone, 14 Pick. 198, and Harrington v. Stratton, 22 Pick. 516, and in Peden v. Moore, the. English cases are reviewed, and I submit that it is clearly shown that the techriical reasons on which the decisions were founded cannot be justified, and do not apply, where the authority to make the defence is given, as here, by the statute. If it shall be held that the worthlessness of the fillies sold to the defendant does not constitute a total failure of consideration, because they were, or might have been, of value, for the plough or otherwise, to the vendor, and it shall also be held that the excuse offered by the vendee, for his failure to return is insufficient, he is still entitled’to an abatement. Beecker andBeecker v. Vrooman, 13 Johns. 302, 303, find cases cited; Lewis v. Cosgrave, 2 Taunt. 2, 3. In this case the court held, that,, “as it was clearly a fraud, and a man cannot recover the price of goods' sold under a fraud, a new trial should be granted.” Any defence which in England'may be made in assumpsit for the price of the goods sold may be made in Alabama, under her statute, in a suit on a sealed bill, for the purchase-money.
    The utmost effect, therefore, which can be given- to the failure to offer to return is, that the defendant cannot rescind the contract in toto, avoid the payment of the note in suit, and recover back the money paid, if the property be of any value But he is entitled to such abatement in mitigation of damages, if sued in assumpsit, or by' virtue of his special plea, if sued in debt, as the price exceeded the fair value of the goods sold.'
    And this conclusion entirely conforms to the principle on which the duty to return is founded, to put the parties, as near as may be, in statu quo. ■ It avoids circuity of action, and gives to the plaintiff a fair value for his property, fraudulently sold at a price extravagantly beyond it. The sum already paid would, without doubt, have been decided by the jury, if submitted to them, to be rather more than a fair price for the property sold, on the facts-admitted in this case.

      Mr. Bayly, for the defendant in error,
    contended that the defendant ought to have returned or offered to return the property,- and that this should have been done immediately upon the discovery of the fraud. 12 Wheaton, 183; 2 Kent’s Com. 480; 1 Campbell, 190; 4 Mass. 402; 15 ib. 319. He who would rescind a contract must put the other party in as good a situation as he was-before; otherwise he cannot do it. Chitty on Contr. 276; Hunt v. Silk, 5 East, 449; Conner v. Henderson, 15 Mass. 314.
    Many other authorities might be added to the same effect, but, on a subject on which the cases are so numerous and so entirely uniform, it will be sufficient to give a reference to a few of them, without citing them at large. See Pulsifer v. Hotchkiss, 12 Conn. 234; Masson v. Bovet, 1 Denio, 69; Coolidge v. Brigham, 1 Metcalf, 547; People v. Niagara C. P., 12 Wendell, 246; Barnett v. Stanton, 2 Alabama, 181, 195; Minor v. Kelly, 5 Monroe, 272.
    Moreover, this ought not to have been a plea in bar of the whole action. The question what the fillies were wo,rth was one for the jury to decide. In the cases cited by the opposite counsel, the plea wént merely to -the diminution of damagés, instead of being in bar of the whole claim.
   Mr. Justice DANIEL

delivered the opinion of the court.

This cause, from the District Court of the United States for the Middle District of Alabama, is brought here undér the act of Congress of 8th August, 1846, ch. 104..

The- plaintiff in error* was sued in the court below, upon a single bill for the sum of j§ 3,000, executed by him on the 16th of February, 1839, payable on the 1st of January ensuing, to A. B. Newsom or order, and which was assigned by Newsom to May, the testator of the defendant'.

What were the grounds of defence first assumed by the defendant does not appear, and' it is immaterial now to inquire. The pleas first filed were by consent of parties withdrawn, and by leave of court the defendant filed a special plea, • averring that the note.sued on was given by him for a part of the price of two fillies purchased by him of Newsom for $ 4,000; that Newsom ^Is'-iy and fraudulently represented to the defendant that these fillies were reared by himsell; that they were sound and of-a high pedigree (as is set forth in the plea); that the defendant, desiring to possess these fillies for their blood and for the turf, and induced and deceived by the false representations of Newsom, paid him the sum of $ 1,000 in cash, and executed the note in question for the residue of the purchase-money ; that the representations of Newsom as to the fillies having been reared by him, of their soundness, and of their pedigree, were all untrue, and all known to be untrue by Newsom at the time of the sale; that the defendant did not ascertain either the extent of the unsoundness of these fillies, or the falsehood of the pretended pedigree, until during the autumn and winter of the year 1839 ; that the said Newsom at the time of the sale resided, and has continued to reside, in a different State, and ‘more than three hundred miles from the defendant ; that from the time of discovery by the defendant of the unsoundness of the fillies, and of the .falsehood of their pedigree, up to the time of their death, which happened without any fault of the defendant or his servants, in the spring of 1840, he, the defendant, was willing and ready, and desirous, of returning the fillies to the said Newsom, but never had an opportunity' of so doing. The plea concludes with stating, that the nr .te or writing obligatory was obtained from him by Newsom by his false and fraudulent representations, and is therefore void; and" with a prayer whether defendant should be charged with the debt. To this plea thefe was a demurrer by the plaintiff below, and the judgment of the court below sustaining the demurrer, brought hither by writ of error, this court is called on to examine.

. Although the legal principles and inquiries involved in this cause are to a great extent local in their character and operation, it will be found to embrace rules, both with respect to pleading and to the interpretation of contracts, extending in some respects beyond the influence of merely local jurisprudence. The contract in question having been made within the State of Alabama, and designed to be performed within that State, the lex loci contractus must justly be understood as entering into and controlling the effect of its stipulations, and having been sued upon within the same State, the lex fori must, in a great degree, regulate the mode of its enforcement.

By a statute of Alabama (see Aikin’s Digest, p. 283, § 138), it is enacted, “ that, whensoever any suit is depending m any of the courts founded on any writing under the seal of the person to be charged therewith, it shall be lawful for the defend ant or defendants therein, by a special plea, to impeach or g > into' the consideration of such bond, in the same manner as if the said writing had not been sealed.” By another statutory provision of the same State it is declared (see Aikin’s Digest, p. 328, <§> 6i), “ that all bonds, obligations, bills single, promissory notes, and .other writings, for the payment of money or any other thing, may be assigned by indorsement,- whether the same be made payable to the order or assigns of the obligée or payee or not; and the assignee may sue in his own name, and maintain any action which the obligee or payee might have maintained thereon previous to assignment, and in all actions to be copimenced and sued upon any such assigned bond, obligation, bill single, promissory note, or other writing aforesaid,the defendant shall be allowed the benefit of all payments, discounts, and set-offs, made, had, or possessed against the same; previous to notice of the assignment, in the same manner as if the same had been sued and prosecuted by the obligee or payee therein.” By the enactment herein first cited, it is obvious that specialties are divested of any force or solemnity at any time ascribed to them by reason of their having a seal annexed, and are placed, with respect to all inquiries which may be instituted into the validity of their consideration; precisely upon the footing of parol agreements. With respect to the construction of the second provision (§ 6) of the statute above cited-, the question has been suggested, whether the right conferred by the first enactment, to inquire into the consideration of contracts in contests between the original parties, is extended, by the correct meaning of the statute, to the defence allowed to obligors at the suit of assignees, or whether obligors in assigned bonds, notes, &c., are not restricted in their defence to transactions posterior in date to the writing itself, and forming no necessary part of the original consideration, the language of the statute, as already quoted, being this: — “shall be allowed the benefit, of all payments, discounts, and set-offs, made, had, or possessed against the same’? (i. e. against the.bonds) “previous to notice of assignment, in the same manner as .if the same had been-sued and prosecuted by the obligee therein.”

In construing these provisions of the Alabama statute as being, iii pari materia, we cannot regard them as changing the rights of the parties arising out of the contract itself, nor as conferring new rights on. others not inherent in such original obligations, but we regard them rather as securing those rights, except so far as they may have been legally and justly transferred.' There could be no doubt of the right to impeach the consideration, or the right to claim the benefit of payments, set-offs, or discounts, on the part of the obligor as against his obligee. The statute was not designed to take from the,nobligor any of these rights, but merely to deny to him the claim to discharge his obligation by payments, &c., to the original obligee, after he knew the'obligation to have been transferred to another. Neither did the statute create in the assignee any new right varying the character of the contract itself. It conferred on him merely the rights to take by assignment, and to sue. in- his own name, — in effect, the power to acquire in the mude prescribed an equitable title, and to prosecute that title in a court of law. Contracts at common law, to which this simple power of assignment is extended by statute, differ essentially from those which arise out of and are governed by the law merchant, or from such as are placed on the footing of the law merchant by express legislative enactment. We conclude, then, that,, in a case like the present,, the obligor would have the right to impeach the consideration for which the writing was given, or to show its discharge by payments or set-offs made or existing at any time before notice of assignment, or by discounts to prove either a total or partial failure of the consideration for which the writing was executed, accordingly as the truth of the case would warrant either defence. This interpretation of the law we consider as accordant, not only with the language and the rational meaning of the statute, but as sustained by the decisions of the courts in the State whose peciiliar policy we are discussing, and by decisions in other States upon statutes containing provisions similar to those in the statute of Alabama. ' Recurring, to the latter statute itself, its terms declare that whensoever, that is, in every 'case, in whic? suits shall be instituted founded on any writing under seal, the per-sou to be charged therewith, comprehending every and'any person, whether he sustains a relation to an assignee or to any other person, may impeach the consideration of the bond or other writing (Aikin’s Dig., p. 233, § 138), and then proceed with respect to the rights and'powers of the assignee to provide, that he may sue in his own name, and may maintain any action which the obligee or payee might have maintained thereon, previous to assignment (Aikin’s Dig., p. 328, $‘6) ; he has the same rights and remedies which pertained to the obligee or payee, and none other.

And first, with respect to the defence as against the assignee, founded on the total failure of consideration, it has be.en ruled under the statute of Alabama, in the case of Clements v. Loggins, 2 Alabama, 514, that, when the payée.'of a note -is inquired of by one wishing to purchase it, whether he has any defence against it, and answers that he has none, hefdoes not thereby preclude himself from making any defence against the note growing out of the original transaction, of which he had no knowledge at the time. And it will be found that the example put by the court in this case (see p. 519) is one of total failure of consideration. Yet this defence could never be permitted if it is to be sought for within a narrow interpretation of the words payments, set-offs, and discounts, — such a one as would not embrace the true character of the transaction. Again, in the case of Wilson v. Jordan, in 3 Stewart & Porter, it is said by the court, on p. 98, — “The decisions of this'court have gone far to abolish the distinction with us between the effect of a partial, and total failure of consideration ” ; and again, the court uses this language: — “ Nor do we feel the least dissatisfaction with our former decisions, so far as they tend to place partial and total failure of consideration on the same'footing, instead of driving the parties to circuity of action.” The doctrines ruled by the Supreme Court of Alabama are closely coincident with those of the courts of other States, in the construction of statutes similar to that of the former State. Thus, in the cine of Clements v. Loggins, 2 Alabama Reports, 514, as late as 1801, the court, by way of illustration, refer to the cases of Buckner v. Stubblefield, 1 Washington, 296, and of Hoomes v. Smock, Ibid. 390, decided by the Court of Appeals upon the Virginia' statute, a law more restrictive in its terms than is the Alabama statute, as the former speaks only of just discounts against the obligee, being silent as to payment and set-off, (see 3 Stat. at Large, 379; 4 ib. 275; 6 ib. 87; 12 ib. 358, and Acts of 1795, and of January, 1820,) and both the cases thus referred to are instances of entire want.of consideration, the writings assigned having been void ab initio. ■

It seems proper in this place to advert to an opinion of the Supreme Court of Virginia, in one of the earlier cases before them under the statute, with respect to any change.which that statute might have been supposed to produce in the relative situations of parties m contracts made assignable thereby. In the case of Norton v. Rose, in 1796, reported in 2 Washington, the law (on page 248) is thus expounded by Roane, Justice, with the concurrence of the whole court: — “It was not intended to abridge the rights of the obligor, or to enlarge those of the assignee beyond that of suing in his own name; and since it is-clear that, prior to this law, an original equity attached to the bond followed it into the hands of the assignee, this law does not expressly, nor by implication, destroy that principle.” The same doctrine was ruled in Pennsylvania, as early as the year 1776, in the case of Wheeler v. Hughes, reported in 1 Dallas, 27. In Pennsylvania, bonds, bills, and promissory notes were by act of Assembly made assignable,-as. promissory notes in England under the 3d and 4th of Anne, but as the statute of Pennsylvania omitted to declare that those writings “ should be placed upon the footing of bills of exchange,” it was therefore decided that the assignee of such writing stood in the same place as his obligee or payee, so as to let in every defalcation which the obligor had against him before notice of- the assignment, and that the only intent of the act of Assembly was to enable the assignee to sue in his own name, and to prevent the obligee from releasing after notice of-assignment. This doc-: trine has been frequently reaffirmed in the same State, as will be seen in 2 Dall. 45; 6 Serg. & Rawle, 175, and 16 ib. 20.

Turning next to a class of cases founded on what has been denominated the partial failure of consideration, although involving bad faith, breach of warranty, false and deceitful Warranties, false representations in the procuring of contracts, such as might in particular aspects extend to the entire rescission of contracts, it will be seen that the Supreme Court of Alabama have’, in the construction of their statute, ruled that a defence founded on either or on all of the .facts here enumerated shall be admissible in diminution of damages. And in allowing, this mode- of defence, which seems to fall more strictly within the import of the terms set-offs, and discounts than objections aimed at .the total abrogation of contracts can do, the courts of Alabama have acted in accordance with those of other States in construing' statutes similar to their own, consistently, too, with the principles of reason and justice adopted by modern tribunals when acting apart from statutory provisions. The case of Moorehead v. Gayle, reported in 2 Stewart & Porter, 224, was an action by the assignee against the maker of a promissory note, given for the price of a slave warranted sound. The defence set up was the unsoundness of the slave at the time of the contract, as evinced by his early death and by Other circumstances. The court in this case say, that, if it had been necessary to offer to return the slave to permit this defence, yet by the early and sudden death of the slave the vendee would, under the circumstances, have been excused from making the offer; and in considering the right of the vendee to avail himself of the defence, either of a t.otal or partial failure of consideration, the court are led to compare the principle enunciated in the case of Thornton v. Wynn, in 12 Wheaton, 183, with the doctrine as laid down in the State of Alabama under her laws, and with respect to the rule of Thornton v. Wynn remark as follows : — “It was the most rigid that has anywhere prevailed against relief by way of defence to the action at law. It was doubtless adopted as a part of the system which has been exploded in this State and in many States of the Union, as well as in several of the English courts, that a partial failure of consideration is not a defence to an action at law, brought to recover the price of the article sold, but that in such case's the vendee must resort to his cross- action, which remedy, on account of its dilatory nature and circuitous form, is by this courand many others of high authority deemed inconsistent with jus tice,wand the more correct rules of modern practice.”

The earlier case of Peden v. Moore, reported in 1 Stewart & Porter, 71, furnishes a still more full exposition, by the Supreme Court of Alabama, of the rules of decision deducible from the law of that State. The action in Peden v. Moore was brought to recover the amount of a promissory note. The defence pleaded was failure of consideration, payment, and set-off; — whether total or partial failure of consideration does not ap-; pear in the form of the pleading, and it would seem that, so far as the form of pleading was involved, the fact of the failure being total or partial was deemed immaterial by the courts, and was a question of proof, inasmuch as the court below regarded as allowable, and even as indispensable, proof of total failure, whilst the Supreme Court decided that proof of partial failure was' admissible, and that the exclusion of such proof in that case was error in the inferior court. The defendant below moved the court to instruct the jury, that, if they believed the consideration had failed, except to the amount which had been paid, they should find a verdict for the defendant. This the court refused, but instructed the jury, that, unless a total failure of consideration was proved, they should find a verdict for the plaintiff. In reviewing the opinion of the court below,, the Supreme Court of Alabama say, — “ It is our policy to avoid circuity of action, that litigation may be stopped in the germ, before it is permitted to put forth its branches. This idea is most strikingly illustrated by our statutes providing for arbitration and set-off, as well as by the decisions of.our courts. Now, to permit a defendant to allege in diminution of a sum sought to be recovered by breach of his contract, that the consideration which induced the contract on his part fias partially failed, would have the effect of making one action subserve the purpose of two, and upon the score of convenience it must be unimportant to the plaintiff whether his recovery is diminished, or whether, after having recovered the entire sum, he is compelled to refund a portion .of it; or, if important, the importance would consist in ending litigation, and avoiding the costs of the defendant’s action. And surely it would be more compatible with justice, to permit a party to retain that which ex equo et bono cannot be demanded of him, and which by law he may recover back ,• and more especially, when none of the great principles of right or the landmarks of property would be disturbed. Perhaps it may be said, that the inquiry is. too complex for the determination of an ordinary jury. Not so. • There would- be no more difficulty in ascertaining the sum to be deducted from the defendant’s indebtedness, than in admeasuring the quantum of the damages sustained in an action for a false warranty, or for a deceit. In either case, the jury will naturally inquire the sum which was agreed to be paid, and to what extent the consideration is deficient; so that the obstacles to the achievement of justice will not be greater iri-the one instance than in the other. ■ We are entirely aware of the decisions which inhibit the defence even of a total failure where there is a warranty on which the defendant may have his remedy. These decisions doubtless proceed upon the principle, that the warranty is a subsisting contract, and the damages sustained by its breach unliquidated. We consider them, however, so far shaken, if not overruled, as to leave the question open for examination. Upon authority, both in point of respectability and numbers, it is clearly provable that, where fraud enters into the transaction, it is competent for the defendant, upon proof of it, to show a defect in the consideration in diminution of damages. This qualified admission of the defence originated from the rule, that fraud avoids the contract ab initio. In point of justice, we can discover no sufficient reason for permitting the defence to be set up where there is a fraud in the transaction, and in denying it when there is a false warranty unaccompanied by fraud. In either case, it is the duty of the jury to graduate the plaintiff’s recovery by the injury which the defendant has sustained; for the old common-law notion, that fraud so vitiated every contract which partook of it as not to allow of a recovery, though it but partially impaired the benefit which the defendant expected- to derive, has been exploded; more recent authority only allowing it to go in reduction of damages. The cases of Poulton v. Lattimore, 9 Barn. & Cress. 259, of Germaine v. Burton, 4 Starkie, 32, and Miller v. Smith, 1 Mason, 437, are cases in which the defendant had the plaintiff’s warranty, yet this circumstance is not considered by the courts which decided them as interposing an obstaclé to the defence! ” The court, in conclusion, with respect to this de-fence, remark, — Believing, therefore, that the greater benefit would result from its toleration, we are of opinion, that wherever a defendant can maintain a cross action for damages on account of a defect in personal property purchased by him, or of a noncompliaiTce by the plaintiff with his part of the contract, he may, in defence to an action upon his note. made in consequence of such purchase or contract, claim a deduction corresponding with the injury he has sustained.”

These copious extracts from the opinions of the Supreme Court of Alabama are' thought to be warranted, not only on account of the intrinsic foree of the reasoning they contain, but still more so, perhaps, from the fact that they present the best and most authoritative interpretation of the statutes they are meant to expound, as well as of the policy in which those statutes have had their origin. • But beyond the influence and effect of these decisions as expositions of local law, they may be regarded as coincident with the dpctrines promulged-by the highest tribunals of a portion at least of the States of the Union, and as not conflicting, in principle at least, with some of the later opinions of the English bench. By the earlier English decisions the following principles appear to have been inflexibly ruled, viz.: — Thats whenever a contract was tainted by fraud, it never could, if this were shown, be made the foundation of a recovery to any extent, but must be set aside in toto. That in all instances;wherein a party was injured either by a partial failure of consideration for the contract, or by the non-fulfilment of the contract, or of a warranty, the person so injured could npt defend himself,.in an action on the contract, by proving these facts, but could find redress' only in a cross action against the plaintiff.. These rules of the common-law courts appear to have yielded materially to the influence of common sense and common convenience. An example of this may be perceived in the permission given in cases where a recovery is sought upon the principle of quantum meruit, to set up as a defence that the plaintiff has unfairly, or injuriously, or imperfectly fulfilled his obligations towards the defendant, and that he should in such cases recover -so far only as he could prove a meritorious performance; admitting, in these instances at least, the defence founded on discount or on a partial failure of consideration, or a dishonest performance. See the cases of Basten v. Butter, 7 East, 479; of Farnsworth v. Garrard, 1 Camp. 38; of Denew v. Daverell, 3 Camp. 451; of Poulton v. Lattimore, 9 Barn. & Cress. 259. In the case of King v. Boston, 7 East, 481, on a note, the plaintiff had sold a horse to the defendant, warranted sound, for twelve guineas, of which the defendant had paid three. In fact, the horse was not sound, and, the defendant refusing to pay more, this action was brought for the value of the horse to recover the difference. It was proved that the horse at the time of the sale was not worth more than £1 11s. 6c?., and that the defendant had sold him for £1 10s. Lord Kenyon held that the plaintiff could only recover the value, and more having been paid him by the defendant, he non-suited the,plaintiff. Caswell v. Coare, 1 Taunton, 566, was an action upon a warranty of a horse. It was ruled in this case, that, if the horse is not returned, the measure of damage is the difference between his true value and the price given, which may be shown. Indeed, the ground on which the English judges have restricted this species of defence to cases of quantum meruit implies the admission, that there is nothing in the character of-the defence itself, with respect to express undertakings, that is inconsistent with justice or with the true obligations and duties of the contracting parties. The objection is this, — that if in suits on contracts for specific undertakings, and for stipulated compensation, the defendant could, under the general issue, be let' in to show either failure of consideration or non-performance, the plea not disclosing either' ground, would effect a surprise upon the plaintiff; but that where, as on a quantum meruit, the'plaintiff was to show a meritorious cause of recovery, he must come prepared to encounter any and all objections in conflict with the position he assumes and must maintain. With all the respect due to the learned men by whom this distinction is made, it may be permitted to doubt whether it is not perhaps more apparent and technical than real; for it may be asked, whether, in cases of contracts for specific performances and for stipulated equivalents, the plaintiff is not equally bound to prove an honest performance, — such a one as comes up to the equivalent promised by the defendant? Indeed, it would seem, so far as danger of'surprise is to be apprehended, that where the rights and duties of parties were set forth in the contract, and in the pleadings founded upon the contract, there would be less danger of surprise than there possibly could be in instances where the forms' of proceeding indicated neither, but where every thing was left open to contest at the trial.

The remarks of some of the English judges appear to be peculiarly applicable to this view of the subject. Lawrence, J., in Basten v. Butter, 7 East, 484, speaking of the distinction attempted between a quantum meruit and other forms of action, says', — “The rule laid down by Mr. Justice Buller may be a good one, if the plaintiff has had no notice of the kind of defence intended to be set lip against his demand. But even there, if the plaintiff have previous notice that the defendant means to dispute the goodness or value of the work done, I think the defendant ought to be let in to his defence. For, after all, considering the matter fairly, if the work stipulated for at a certain price were not properly executed, the plaintiff would not have done that which he would have engaged to do ; the doing of which would be the consideration for the defendant’s promise to pay, and the foundation on which his claim to the price stipulated for would rest; and therefore, especially if he should have notice that the defendant resists payment on that "ground, he ought to come prepared with proof that the work" was properly done.” And Le Blanc, Justice, remained, —• I think that in either case the plaintiff must be prepared to show that his work was properly done, if that be disputed, in order to prove that he is entitled to his reward; otherwise, he has not performed that which he undertook to do, and the consideration fails; And I think it is competent to the defendant to enter into such a defence, as well where the agreement is to do the work for such a sum, as where it is general to do such work. If a man contracted with another to build him a house for a certain sum, it surely would not be sufficient for the plaintiff to show that he had put together such a quantity of brick and timber in the shape of a house, if it could be shown that if fell down the next day; but that he had done the stipulated work according to his contract. And it is open to the defendant to prove that it was executed in such a manner as to be of no value at all to him, or not to be of the value claimed.”

It would seem, then, to be fairly deducible from the reasoning of the English judges, from the case of Basten v. Butter, in 7 East, decided in 1806, to that of Poulton v. Lattimore, 9 Barn. & Cress., ruled in 1829,. that this defence would by those judges themselves be deemed permissible, whenever it could be alleged without danger of surprise, and consistently with safety to the real rights of the parties ; and it appears to be a deduction equally regular, that, where notice of the defence was given, either by pleading or by any other effectual proceeding, neither surprise nor any other invasion of the rights of the parties could occur, or be reasonably apprehended. But however the rule laid down- by the courts in England should be understood, it has repeatedly been decided by learned and able judges in our own country, when acting, too, not in virtue of a statutory license or provision, but upon the principles of justice and convenience, and with the view of preventing litigation and expense, that where fraud has occurred in obtaining or in the performance of contracts, or where there has' been a failure of . consideration, total or partial, or a breach of warranty, fraudulent'or otherwise, all or any of these facts may be relied on in defence by a party, when sued upon such contracts; and that he shall not be driven to assert thern^either for protection, or as a ground for compensa ;ion in a cross action. Thus, in the case of Runyan v. Nichols, 11 Johns. 547, the Supreme Court of New York decide, that, in an action upon an attorney’s bill, the defendant might give evidence of neglect of duty on the part of the plaintiff, if this defence was set up by plea, or after a notice to the same effect given to the plaintiff before the trial. In Beecker v. Vrooman, 13 Johns. 302, it was decided-by the same court, that, in an action for the price of a chattel, the defendant may prove a deceit in' the sale, and that the chattel was of no value, and thus defeat the plaintiff’s action ; or, if the defect produce merely a partial diminution of the value, he may show that in mitigation of damages. In the case of Sill v. Rood, 15 Johns. 230, which Was an action on a promissory note given for the price of a chattel, the defendant was allowed, under the general issue, to show deceit in the sale. And it was holden further, that a promissory note given for the price of a chattel represented to be valuable, when in truth it was of no value, is without consideration and void. In the case of Grant v. Button, 14 Johns. 377, the suit was for the price of-work and labor, and it was ruled that the defendant, in order to reduce the amount of the plaintiff’s claim, might show that the work was not done faithfully and in a workmanlike manner. This, too, was the case of a' contract for an agreed price. In Spalding v. Vandercook, 2 Wendell, 432, Chief Justice Savage, in delivering the opinion of the court says, — “In Beecker v. Vrooman, 13 Johns. 302, it is settled that deceit in a sale of a chattel may be shown in bar or in mitigation. The doctrine of .the cases just cited, deduced from principles of justice and from the beneficial purpose of preventing circuity of action, would seem to apply with decisive influence to subjects falling within the range of a polity, by which those doctrines were peculiarly and authoritatively commended. We cannot doubt, therefore, after a full examination of the questions on this record, that, under the provisions of the statute of Alabama pleaded in this case, the plaintiff in error had the right to rely in his defence, either upon a fraud practised on him in the formation of his contract, or on a false or fraudulent warranty, or on a total or partial failure- of the consideration on which the contract was entered into by him, or on any payments, discounts, or set-offs, in the language of the statute, “ made, had, or possessed by him,” provided that the three last grounds of defence shall have come into existence, and been justly belonging to the plaintiff in error, before he had notice of the assignment of his obligation.

A doubt has been suggested as to the power of the plaintiff in error to defend himself, by reason either of fraud or of failure of consideration, — a doubt arising, not from any want of verity of'the facts in either of those averments, but from the form of the pleadings in the cause. Thus it is said, that, if he designed to avoid the contract for fraud, he should have averred his disclaimer immediately on a discovery of the fraud, and his proffer to restore the property to the defendant in error, which it is thought the plea has not done. Secondly, it has been supposed that, if a diminution of the price alone was intended, the plea should not have concluded with averring that the writing was procurred by false and fraudulent representations, and was therefore void; or with a. general prayer for judgment whether the defendant below should be charged, ¡fee. With respect to pleas in bar,- it may be premised, that they are never construed with the severity which is applied in testing .pleas that are merely dilatory. If, by rational intendment, they meet the cause of action, or, in the quaint phrase of the old writers, they are certain to a general intent, they are deemed sufficient. If their structure merely, and not their substance, is to be assailed, this must be done by a special demurrer; a proceeding by no means favored, as it has rarely any real relation to the merits of the controversy. The averments in this plea with respect to the readiness to réturn the property are these : — First, that the defendant below resided at a greater distance than three hundred miles from the plaintiff, and in a different State. Secondly, that, from the time at which the defendant below .discovered the unsoundness of the fillies, and thé falsehood of their pedigree, he was ready and willing, and desirous, to return them, and would have returned them to the plaintiff, if he had had an opportunity of so doing, which he had not. The law requires of no man that which is unreasonable or impracticable. hex neminem cogit ad vana seu impossibilia.- In this case, the defendant below avers his want of power to rid himself of that which he also avers had been fraudulently imposed upon him, and the plaintiff by his demurrer admits the fact, and the character of the fact, as set out in the plea. But it has been said, that the defendant below might have tendered a return of the property-by notice through the post-office, and was therefore bound to do so. It may be inquired, whether this position does not involve a petitio principii. Does not the averment of absolute destitution of the power to return the property imply the absence of all the means leading to that measure, and carry with it the necessary inference of ignorance of the locality of the plaintiff, or of his post-office ? -A letter directed to the State of Tennessee, generally, or to some place more than three hundred miles from the defendant below, and in a different State, might, and probably would, have been as unavailable for any practical purpose as a letter addressed to the State of New Hampshire. The plaintiff in error has averred his inability to return the property, and the defendant in error admits the truth of the averment. But the objection to this.issue in law is properly applicable only to that aspect of the case which places the rights of the plaintiff below exclusively on the ground ^f a total rescission of the contract. If the purchaser chose to retain the property, and either to sue upon the warranty of pedigree and soundness, or to defend himself upon the ground of difference between the true and the pretended value of the property, he was bound neither to give immediate notice, nor to tender a return of the property; he would be permitted to discount the difference between the real and the simulated value. But here the difficulty already mentioned is suggested, namely, that this defence is -inconsistent with the couclusion of the plea, which says, “and said defendant saith, that the said sealed note or writing obligatory was obtained from hint by .the said Newsom, by false and fraudulent representations as aforesaid, and is therefore fraudulent and void in law,- wherefore said defendant prays judgment whether he ought to be charged with said debt,” &c. This conclusion is said to call for an entire rescission of ihe contract, as founded-in fraud, and cannot be reconciled with the facts previously stated as constituting a • cause for partial relief.

We have already said, that pleas in bar are to receive, if not a liberal, certainly not a narrow and merely technical construction ; and we will further observe, that, if the difficulty suggested be sound, there never could be a defence in mitigation of damages, where there should be alleged fraud in the inception of the contract, or where there should be a false or deceitful warranty, however willing the defendant might be to accept the difference between the real and the pretended value, and however circumstances might place it beyond his power to return the property. The injured party would in all cases be driven to repudiate the whole contract, or to go without compensation. This course, however, we have seen, is in contravention of the current of decisions which admit of the defence in mitigation of damages. But pleas in bar are always construed according to their entire subject-matter, and will be sustained accordingly, as taken altogether, and will not be determined by a disjoining of their members, or by laying stress on what may be immaterial. It seems, moreover, that the prayer for judgment,,or conclusion of such pleas, is not considered as essential to their validity. Thus it is stated by Chitty, Vol. I. p. 558, speaking of pleas in bar, “ that this prayer, before the recent rule,” (alluding to the rules.of pleading adopted in England in the 4th of William IV.,) ought properly to have corresponded with, and been founded upon, the commencement of the plea, and the effect of the matter contained in the body of it ” ; but, continues this author, as the court would ex officio give judgment in favor of the defendant according to the substance of the plea, without reference to the conclusion, an error with regard to the prayer of judgment in the concluding part of the plea was not material, except in the case of a plea in abatement.” In the case of The King v. Shakespeare, 10 East, 87, upon a demurrer to a plea in abatement, Lord Ellenborough said, — “ Praying judgment of the indictment means no more than praying judgment on the indictment: and if this were the case of a plea in bar, the court would give that judgment which, upon the whole record, appeared to be the proper judgment, though not prayed for by the party. But in abatement the court will give no other than the proper judgment prayed for ■by the party, and.withont the defendant prays a particular and proper judgment in abatement, the court are not bound to give the proper judgment upon the whole record, as they would be in the case of pleas in bar.” In Attwood v. Davis, 1 Barn. & Ald. 173, it is said by Bayley, Justice, that “ there is a distinction between a plea in bar and a plea in abatement; in the former, the party may have a right judgment upon a wrong prayer, but not in the latter.” In the case of Rowles v. Lusty, 4 Bingham, 428, upon a writ of entry, it was ruled, that the prayer for judgment for the messuages and land in the count did not vitiate the plea, notwithstanding the commencement-of the plea applied only to the messuages and parcel of the land. And in this last case, The King v. Shakespeare and Attwood v. Davis are cited as áuthority.

But again, (and this appears to give a conclusive answer to any objéction to the admission here of proofs in diminution of damages,) if we must treat this case according to the strictest rules of pleading, it might be said that the plea averring the note to have been obtained by fraud, which is admitted, by the demurrer, would be sufficient to entitle the defendant below to a judgment on a declaration counting merely on the note, without regard to the question of total or partial rescission of the original contract. And then, if the plaintiff could be entitled to recover at all, it must be on a count on the original contract, or on a quantum valebat for the thing sold. And this would open the entire range of inquiry as to the character of the con-’ tract, and as to what in truth constituted the quantum valebat on which, if on any thing, the plaintiff could found himself.

Upon this branch of the case, we think the matter averred in the special plea of the defendant below was legitimately pleaded tinder the statute, and with sufficient certainty and pertinence to authorize a defence on the grounds of a false and deceitful warranty, or of a partial failure of consideration, and that he should have been let in to sustain, if he could, such a defence before the jury. We therefore consider the. judgment of the District Court to be erroneous, and do adjudge that the same be reversed, and that this cause be remanded to that court, with instructions to cause an issue to be made up on . the special plea filed by the defendant below,, under the Statute of Alabama, and a venire facias to be awarded to try that issue.

Mr. Justice NELSON dissented. (See Appendix.)

Order.

This cause came on to be heard on the' transcript of the record from the Circuit Court of the United States for the Southern District of Alabama, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said Circuit Court in this cause be, and the same is hereby, reversed, with costs, and that this cause be, and the same is hereby, remanded to the said Circuit’.Court, with instructions to cause an issue tobe made upon the special plea filed by the defendant below, under the statute of Alabama, and to award a venire facias de novo. to try that issue.


author: Mr. Justice 1NELSON

text:
    Hiram Benner, Joseph B. Browne, and Salisbury Haley, Assignees of Eleazer P. Hunt, Appellants, v. Joseph Y. Porter.
    Whilst Florida was a Territory, Congress established courts there, in which cases appropriate to Federal and State jurisdictions were tried indiscriminately.
    Florida was admitted into the Union as a State, on the 3d of March, 1845.
    The constitution of the State provided, that all officers, civil and military, them holding their offices under the authority of the United States, should continue to hold them until superseded under the State constitution.
    But this article did not continue the existence of courts which had been created, as part of the Territorial government, by Congress.
    In 1845, the Legislature of the State passed an act for the transfer from the Territorial to the State courts of all' cases except those cognizable by the Federal courts; and, in'1847, Congress provided for the transfer of these to the Federal courts.
    Therefore, where the Territorial court took cognizance, in 1846, of a case of libel, it acted without any jurisdiction.
    The case of Hunt v. Palao, 4 Howard, 589, commented on and explained.
    This was an appeal from the District Court of the United States for Florida.
    It originated in the Superior Court for the Southern District of Florida, in March, 1846, and was transferred to the United States District Court for Florida on the 14th of May, 1847.
    On the 24th of March, 1846, Joseph Y. Porter filed a libel in admiralty against the appellants, in the Superior Court for the Southern District of the Territory of Florida, for the proceeds of the sloop Texas, charging that he had furnished supplies and stores to the master, at the port of Key West, whilst the vessel .was engaged in the business of wrecking.
    On the 22d of May, 1846, the Superior Court gave judgment for the libellant, for the sum of $ 1,223.02.
    On the 14th of May, 1847, the cause was transferred to the District Court of the United States, and an appeal prayed fey the defendants to this court.
    Upon this appeal the case came up.
    It was argued fey Mr. Westcott and Mr. Gilpin, for the appellants,. and by Mr. Jones, for the appellee.
    The counsel for the appellants made three points, of which it is only necessary' to notice the first, as the. decision of the court turned upon it.

      L The first , reason assigned for a reversal of this decree is that the . Territorial, court, established and organized in and for the Southern District of Florida, by the act of Congress of 1828, so far as it respects its jurisdiction of cases of Federal character, yras abolished by the admission of Florida as a State, on the 3d of March, 1845. Congress could not, .under the Constitution, continue such , court after Florida became a State. The Federal courts in a State must be established and organized under and in conformity to the Constitution. They must be constitutional courts. The Territorial courts were not established under the provisions of the Federal Constitution relating to the judicial system. The Territorial judges were appointed for four years; The judges of the constitutional federal courts in the States held their offices during good behaviour. This court has decided the question. (American Insurance Company v. Canter, 1 Peters, 5110 Hunt v. Palao, 4 Howard, 589;)
    No Territorial statute was in force in 1845,. investing any tribunal with admiralty jurisdiction. The act referred to in the case in 1 Peters had long been repealed, and Congress had exercised its right of legislation on that subject. The libel was filed in the court as a Federal court, and under the general law;of admiralty.' .Neither the convention of the people of Florida that formed the'State constitution, nor the Legislature of the State, possessed any power to provide for the continuance of the Territoral courts, as Federal courts, nor to intern fere with cases exclusively of Federaljurisdietion, in any wise, No'provision of the State constitution, or of any act of the State Legislature, could in any degree affect such cases, even as to their transfer to the Federal court organized after the State government w:ent .into operation. The State Legislature avoided such interference as to the transfer of the papers of “cases of Federal character and jurisdiction.” (State Act of July, 1845, §<§> 8, 11, 12, 13, and 14; Thompson’s Digest, pp. 53, 54, &c.)
    The continuance of. the Territorial courts as Federal courts, after the Territorial government ceased to exist, was incompatible with the Federal Constitution. Those provisions of the Federal Constitution having reference to the Federal judiciary in the States, then became of force. Even the consent of a State cpuld not justify a departure from the Constitution.
    It has elsewhere been contended, that the act of Congress of the 3d of March, 1845, admitting Florida as a States and the supplementary act of 'the same day, for the.establishment of a Federal District Court (with Circuit jurisdiction) for the whole State, did not, ex vi termini, operate as a repeal of the act» establishing the Territorial courts, and annihilate those Territorial courts, as Federal courts ; but that such abolition of the Territorial courts then in existence was only effected when the constitutional Federal courts in the State were fully organized. This is the true question in this case, and is fairly stated. We contend that the Territorial courts, as Federal courts, were abolished the moment Florida was admitted as a State. The State constitution continued them as State courts only. It borrowed them from the Territorial organization, temporarily, till the permanent State courts should be organized by the Legislature, and the State judges elected, and all the authority 'of the Territorial judges to act a day after the admission of Florida as a State was derived from the State constitution, and from that alone.
    In this case the suit was instituted, and the decree appealed from was made, after the State courts were organized, and after the State Circuit Judge for the Southern District of Florida had been chosen, and the State court there fully organized and in operation. The jurisdiction exercised by the Territorial judge was as a Federal court, in a case of exclusive Federal jurisdiction and character, and upon the ground that the Territorial court, as a Federal court, was not abolished until the term of four years, for which the judge had been appointed, had expired, or until he was superseded by the appointment of another Federal judge, to whom the jurisdiction of the Territorial court, of k Federal character, had been legally assigned by act of Congress. A law officer of the United States, in 1845, wrote an elaborate opinion in favor of the right of the Territorial judges to .continue to try and decide'cases of Federal character and jurisdiction. It was published in the newspapers, and is to be found in the Daily Union of the 5th of May, 1845, No. 4, Yol. I., which is in court for the use of the counsel for the appellee, if he desires to use it. The United States treasury officers continued to pay the salaries of the Territorial judicial officers of Federal appointment,-it is believed, till the State Federal courts were organized. The printed opinion of the former' Solicitor of the /Treasury, referred to, will be. allowed to pass for what it is worth, without any comment, unless the counsel for the appellee urges it as entitled to consideration. Nor is it deemed necessary to discuss the question whether an.illegal payment of salaries of judges by the treasury can revive and continue courts that are by the law of the land defunct, and the existence of which would be inconsistent with .the Constitution. It has been said, the course pursued has been sanctioned by Congress, in the appropriation acts of 1845 and 1846; but it is submitted that the allegation is not sustained by a reference to the acts ; and, besides, as ¡before argued, the power of Congress to continue the Territorial courts, as Federal courts, in the State, is denied. But so'far from Congress intending to allow or sanction the continuance of these Territorial courts as Federal courts, after the 3d of March, 1845, and so far from its having passed any law confirming the. acts of the judges, by the act of the 22d of February, 1847, ch. 17, the question now presented is expressly reserved for the decision of this court. (See section 8 of said act, Pamph. Laws of 1847, p. 24, ch. 17.)
    It has been suggested, that, if the arguments just urged are correct, this court will dismiss the appeal in this case without reversing the decree, upon the ground that the proceedings recited in the record were not the acts of a court, were not judicial proceedings, but acts of naked, unwarranted usurpation, utterly null and void, and that no appeal' can lie. from the decree, as the decree of a judicial tribunal. The suggestion is not deemed to be of very great importance. The decision of this court without a technical reversal of the decree made below, but declaring it to be a nullity for the reason stated, will be all-sufficient for appellants, and we are careless as to the disposition <4f the caáe'here, consequent on such judgment. Our. remedy in such case is plain. If we had paid the money on a void decree, we could recover it back. All parties are liable to us in damages; even the judge may not be exempt, if the case is so decided. But it is. conceived that, the decree being rendered under color of judicial authority, and the appeal being taken under the eighth section of the act of Congress of February 22, 1847, ch. 17, before cited, which looks to the decision of this question by this court, and provides the appeal in order that it may be obtained, it is proper that the decree should be formally reversed and set aside, and the case sent, back by the mandate of this court to the present United States District Court for the Southern District of Florida, under the same act, in order that the judgment of this court may be entered of record in that court, into which the proceedings and decree appealed from have been transferred under that act.
    The record shows that the respondents made objection as to the jurisdiction in the court below; though, if omitted, the decree would not thereby have been legalized.
    On the part of the appellee it was contended,—
    l. That, upon principles of general law recognized by the common law, and from a civil necessity operating under all changes of sovereignty and jurisdiction, the tribunals established by Congress in the Territory of Florida continued in existence, and in the practical exercise of their functions, until superseded by other tribunals, called into actual existence and endued with the practical functions of judicature.
    2. That this principle applies, a fortiori, to the Superior Courts established by Congress in the Territory for the exercise of those functions of judicature which the Constitution has appropriated exclusively to the judicial power of the United States; such as civil cáses of admiralty and maritime jurisdiction, and seizures under the revenue laws, &c.
    3. That there is nothing in either of the acts of Congress referred to inconsistent with the continued existence of the said Superior Courts in the active exercise of their functions, as instance courts of admiralty, until the District Court for the new District of Florida should be called into being and activity.
    4. But, on- the contrary, the identical act. of Congress (22d Feb., 1847, ch. 17) which called this identical appeal into existence,— the authority asserted for' this court, actually assumed by the court, and whereof the court is, at this moment, in the active use and exercise, to review, in the regular course of appellate jurisdiction, the decree of the said Superior Court for the Southern District of Florida, — does necessarily infer the existence of that court, and its continued p'ossession of its judicial functions at the time of the rendition of the decree in question. The still subsisting relation between that court and this, of inferior court and appellate court, being recognized and admitted, to deny the existence of either court, or to assert the utter extinguishment of its judicial capacity, would be equally absurd, whether denied or asserted of the inferior or of the appellate court.
   Mr. Justice 1NELSON

delivered the opinion of the court.

This is an appeal from the District Court of the Southern District of the State of Florida.

Joseph Y. Porter, the appellee, filed a libel in admiralty, on the 24th of March, 1846, against the respondents, in the Superior Court for the Southern District of the Territory of Florida, for the proceeds of the sloop Texas, charging that he had furnished supplies and stores to the master, at the port of Key West, while she was engaged in the business of wrecking upon the Florida coast, and on the high seas.

The respondents, among other grounds of defence, denied the jurisdiction of the court. As the conclusion at which' we have arrived, upon this branch of the defence, disposes of the case, it will be unnecessary to set -out the pleadings at large, or to refer more particularly to the facts.

The Territorial government of Florida was established by the act of Congress of March 30th, 1822, amended by the act of March 3d, 1823, and the judicial power vested in two Superior Courts, and such inferior courts and justicés of the peace as the Legislative Council of the Territory might from time to time establish. One of these courts was held in West, and the other in East Florida. The judges were appointed by the President and Senate, for the term of four years, and possessed civil and' criminal jurisdiction within their respective districts ; and also the same jurisdiction in all cases arising under the laws and Constitution of the United States, which the acts of 24th September, 1789, and 7th March, 1793, vested in the court of the Kentucky District. 3 Stat. at Large, 654; Ibid. 750.

The number of judges was afterwards increased to five, and original and exclusive cognizance of all cases of admiralty jurisdiction within the Territory in terms conferred upon them. (Act of Cong., May 26, 1824, 4 Stat. at Large, 45; Act of Cong., May 15, 1826, Ibid. 164; Act of Cong., May 23; 1828, Ibid. 291; Act of Cong., July 7, 1838, 5 Stat. at Large, 294; Thompsoh’s Dig. 585, App’x, where all the acts of Congress concerning the Territory of Florida are collected.)

Exclusive jurisdiction in these cases was specifically conferred by the act of May 15, 1826, probably on account of the case of The American Insurance Co. and others v. Canter, (1 Peters, 511,) in which it was held that the jurisdiction was not, as originally prescribed, exclusive, but might be vested by the Legislative Council of the Territory in subordinate courts. The case arose in 1825.

The court for the Southern District, in which the present case arose and was decided, was established by the act of Congress of May 23d, 1828, at Key West, and had conferred upon it all the jurisdiction within the district which belonged to the other Superior Courts of the Territory; besides a considerable enlargement of admiralty powers, which became necessary on account of the numerous wrecks usually happening upon that coast.

The objection to the .jurisdiction taken by the respondents, however, is, not that the acts of Congress were insufficient to donfer the power exercised by the courts, but that’the acts had been abrogated and the jurisdiction superseded at the time of the rendition of the decree, by the admission of the Territory bf Florida, as a State, into the Union, and were no longer in force. The admission was on the 3d of March, 1845,

The suit was commenced on March 24th, 1846, and the decree in favor of the libellant pronounced on May 22d of the same year. All the proceedings, therefore, took place before the court after the passage of the act of Congress admitting Florida into the Union; and must be upheld, if upheld at all, upon the ground that the jurisdiction still continued under the Territorial authority, notwithstanding the erection of the Territory into a State.

The people-of the Territory, claiming a right to an admission into the Union under the pledge given by the sixth article of the treaty with Spain of the 22d. February, 1819, met in convention and adopted their constitution, 11th January, 1839; but it was not acted upon by Congress till March 3, 1845. It was then accepted, and the Territory admitted, in the language of the act, “ into the Union on an equal footing with the original States in all respects whatsoever.” No conditions were annexed, except that she should not interfere with the disposal of the public lands, nor levy any tax on the same, while they remained the property of the United States.

Her constitution distributed the powers of the government into three separate and distinct departments, executive, legislative, and judicial, and prescribed the organic law of each. The judicial power was vested in a Supreme Court, Courts of Chancery, Circuit Courts, and justices of the peace, and the jurisdiction of each of them either defined, or provided for-by imposing the duty upon the General Assembly. The State was to be divided into at least four convenient circuits, and until others were created by the proper authority, were to be arranged as the Western, Middle, Eastern, and Southern Circuits, for each of which a circuit judge was to be appointed. And, in order to avoid any inconvenience or delay in the organization of the government, an ordinance was adopted (art.-17 of the constitution), that all laws, and parts of laws now (then) in force, or which may hereafter be passed by the Governor and Legislative Council of the Territory of Florida, not repugnant to the provisions of this constitution, shall continue in force until by operation of their provisions or limitation, the same shall cease to be in force, or until the General Assembly of this. State shall alter or repeal the same ” ; and further, that all officers, civil and military, now holding their offices and appointments in the Territory under the authority of the United States, or under the authority of the Territory, shall continue to hold and exercise their respective offices and appointments, until superseded .under this constitution.”

It will be seen, therefore, under this ordinance of the conVention, that, on the. admission of Florida as a State into the Union, the organization of the government under the new constitution became complete; as every department became filled at once by the adoption of the Territorial laws and appointment of the Territorial functionaries for the time being.

The convention being the fountain of all political power, from which flowed that which was embodied in the organic law, were, of course, competent to prescribe the laws and appoint the officers under the constitution, by means whereof the government could be put' into immediate operation, and thus avoid an interregnum that must have intervened, if left to an organization according to the provisions of that instrument. This was accomplished by a few lines, adopting the machinery of the Territorial government for the time being, and until superseded by the agency and authority of the constitution itself.

After the unconditional admission of the Territory into the Union as a State, on the 3d of March, 1845, with her constitution, and complete organization of the government under it, by which the authority of the State was established throughout her limits, it is difficult to see upon what ground it can be maintained that any portion of the Territorial government or jurisdiction remained still in force.

The distinction between the Federal and State jurisdictions, under the Constitution of the United States, has no foundation in these Territorial governments; and consequently, no such distinction exists, either in respect to the jurisdiction of their courts or the subjects submitted to their cognizance. They are legislative governments, and their courts legislative courts, Congress, in the exercise of its powers in the organization and government of the Territories, combining the powers of both the Federal and State authorities. There is but one system of government, or of laws operating within their limits, as neither is subject to the constitutional provisions in respect to State and Federal jurisdiction.

They are not organized under the Constitution, nor subject to its complex distribution of the powers of government, as the organic law; but are the creations, exclusively, of the legislative department, and subject to its supervision and control. Whether, or not, there are previsions in that instrument which extend to and act upon these Territorial governments, it is not now material to examine. We are speaking here of those, provisions that refer particularly to the distinction between Federal and State jurisdiction.

We think it clear, therefore, that on the unconditional admission of Florida into the Union.as a State, on the 3d of March, 1845, the Territorial government was displaced, abrogated, every part of it; and. that no power of jurisdiction existed within her limits, except that derived from the State authority, and that by force and operation of the Federal Constitution and laws of Congress; and, especially, no jurisdiction 'in Federal cases until Congress interfered and extended the judicial tribunals of the Union over it.

The only pretext for a different conclusion is,, that matters of exclusive Federal jurisdiction within the Territory, which, under our system, did not and could not páss under the State authority, still remáined ,• and that with it, to that extent, and for the purposes of Federal jurisdiction, the Territorial organization continued. But, in the view we have already presented, and which need not be repeated, no such distinction existed in the Territorial government. Matters of this description had been blended together with those belonging to State jurisdiction, and were incorporated into, and became part; and parcel of, the same system. The Federal, causes of action were subject to the same-tribunals as others, and to the same remedies,. including writs of error, and appeals to the Appellate Court of the Territory, and through which, alone, eases could be brought up for revision to the Supreme Court of the United States. This Appellate Court consisted of the judges of the Superior Cpurts of the several judicial districts.

The position taken in support of the jurisdiction assumes that the admission of the State, and consequent transfer of all actions and causes of action belonging to the State authorities, had the effect, not only to separate the Federal from the State subjects of jurisdiction, but also to remodel the judicial system of the Territory itself, and adapt its jurisdiction to the trial of Federal causes, — assumptions that need only to be stated to carry with them their refutation. And, besides, were' this admitted, and we could suppose that the jurisdiction of the courts was left untouched, as it respected the Federal cases pending or accruing, nothing would be gained in thq, argument in favor of its validity.

The admission of the State into the Union brought ihe Territory under the full and complete operation of the Federal Constitution, and the judicial power of the Union could be exercised only in conformity to the provisions of that instrument. By art. 3, 4 1, “ The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as Congress may, from time to time, ordain and establish. The judges, both of the supreme and inferior courts, shall hold their offices.during good behaviour.”

Congress must not only ordain and establish inferior courts within a-State, and prescribe their jurisdiction, but the judges appointed to.administer them must possess the constitutional tenure of office before they can become invested with any portion of the judicial power of the Union. There is no exception to this rule in the Constitution. The Territorial courts, therefore, were not courts in which the judicial power conferred by the Constitution on the Federal government could be deposited. They were incapable of receiving it, as the tenure of the incumbents was but for four years. (1 Peters, 546.) Neither were they organized by Congress under the Constitution, as they were invested with powers and jurisdiction which that body were incapable of conferring upon a court within the limits' of a State.

Another answer, also, to the ground taken, is, that Congress on the same day oh which the act passed admitting Florida as a State, organized the State into a judicial district, to be called the District of Florida, and ordained and established a District. Court within the same, and. conferred upon it the judicial powers belonging to the general government within the State. The act also provided for the appointment of a judge, together with other officers necessary to its complete and efficient organization. The laws of the United States; not locally inapplicable, were, also, extended over the State. Act of Congress, March 3, 1845 (5- Stat. at Large, 788).

It is true, the judge was not appointed to fill the office until the 8th of July, 1846, a 3^ear and five months, afterwards ; but the court was established, and invested with jurisdiction over the Federal cases. The powers remained in abeyance until the office was constitutionally filled. The vesting of the judicial power did not depend upon the appointment of the officer .to administer it, as the grant in the constitution to Congress to ordain and establish inferior courts, and to invest them with the judicial power of the Union, is complete in itself; and they had acted and established the. court, and invested it with the power, without condition or qualification.

Without, then, pursuing the examination further, we are satisfied that, in any aspect in which the question can be viewed, whether we look at the effect of the act of Congress admitting the Territory of Florida, as a State, into the Union,-with her constitution and organized government under it, alone or in connection with the establishment of a Federal court .within her limits, her admission immediately, and by constitutional necessity, displaced the Territorial government, and abrogated all its' powers and jurisdiction. The State authority was destructure of the Territorial; and, in connection with the establishment of the Federal jurisdiction, the organization of the government, State and Federal, under the Constitution of the Union, became compíete throughout her limits. . No place was left, unoccupied for the' Territorial organization.

We have chosen to place the decision upon the effect of the admission of the State with a government already organized under her constitution, and prepared to go into immediate operation, because such is the case presented on the record; but we do not thereby intend to imply or admit that a different conclusion would have been reached if it had been otherwise, and the State had come into the Union with nothing but her organic law, leaving the organization of her government under it to a future period.

We conclude, therefore, that the court below possessed no jurisdiction of the case, and that the decree must be revérsed.

Neither the act of Congress admitting the Territory of Florida, as a State, into the Union, nor the one organizing the District Court within it, made any provision for the transfer into the District Court of the cases of Federal jurisdiction pending at the. time in the Territorial courts. Those cases, were, therefore, left in the state in which they stood at the change of government, until the act of Congress of the 22d February, 1847 (Sess. Laws, ch. 17). That act provided for a transfer to the District Court, and also for a review of the judgments and final decrees on writs of error, or appeal, as the case might be, in the proper cases, to this court. It also provided for a review of the judgments or final decrees that had been rendered in Federal cases in the Territorial courts after the change of government, upon the idea that this jurisdiction still continued. And when thfe District Court for the Southern District of the State of Florida was established by an act of Congress, 23d February, 1847 (Sess. Laws, eh, 20), the like transfer was made to that court of all cases pending in that district, with like power to review, on writ of error or appeal, judgments and final decrees rendered by the Territorial courts after the change of government. • •

The case now before us was brought up .for review by virtue of the authority of these acts, which have removed the objections that existed to our jurisdiction in the case of Hunt v. Palao et al., 4 Howard, 589. Provision was made by the ordinance of the convention of Florida for the transfer of all actions at law, or suits in chancery, pending in. the Territorial courts at the time of her admission, into such court of the State as had jurisdiction of the subject-matter. In pursuance of this injunction, the General Assembly of the State passed an a(¿, 22d July, 1845, transferring all case's to the proper courts of the State, except cases .cognizable by the Federal courts. (Acts of General Assembly, 1 Sess., p. 9, §§ 5, 8, and p. 13, §§ 13, 14.)

The case of Hunt v. Palao et al., already referred to, was one that had been transferred by this act of the General Assembly, from the Territorial court in which- the judgment had been rendered, to the Supreme Court of the.-State; and we held, on an application for a writ of error, to review the judgment, that we possessed no power over. it without further legislation by Congress, for the reason that the Territorial court in which the judgment was rendered no longer existed; and that the State court to which it had been transferred could exercise no judicial power over it, as the law of the State directing the transfer of the record could not make it a record of the court, nor authorize any proceedings upon it.

The subsequent legislation of Congress respecting the transfer of these records to the District Courts, to which we have referred, grew out of this decision. That was a case of Federal jurisdiction, which the State government,.confessedly, had no power over; but the language of the court was general, and applicable to all cases pending in the Territorial courts at the change of government.

We perceive no ground for qualifying the opinion expressed on that occasion, believing it sound and incontrovertible ; but it may be proper to state with a little more fulness the effect of it, as it respects cases of State jurisdiction. The Territorial courts were the courts of the general government, and the records in the custody of their clerks the records of that government; and it would seem to follow, necessarily, from these, premises, that no one could, legally, take the possession or custody of the same without the assent, express or implied, of Congress. Such assent is essential, upon the plainest principles, to an authorized change of their custody.

On the admission of a Territorial government into the Union as a State, the concurrence of both the Federal and State governments would seem to be required in the transfer of the records, in cases of appropriate State jurisdiction, from the old to the new government. An act of Congress, would be incapable of passing them under the State jurisdiction, as would be an act of the Legislature of the State to take the records out, of the custody of the Federal government.. Both should concur.

The like concurrent legislation would also seem to be required in respect to cases pending in this court for, review on writs of error or appeal from the Territorial courts, which appropriately belonged to State jurisdiction, to enable us to send down the mandate to the proper State tribunal for any further proceedings that might be necessary in the cause. Otherwise, Congress itself should specially provide for the execution of the mandatev

Wp have said that the assent of Congress was essential to the authorized transfer of the records of the Territorial courts, in suits pending at the time of the change of government, to the custody of State tribunals. It is proper to add, to avoid misconstruction, that we do not mean thereby to imply or express any opinion on the question, whether or not, without such assent, the State judicatures would acquire jurisdiction. That is altogether a different question. And, besides, the acts of Congress that have been passed, in several instances, on the admission of a State, providing for the transfers of the Federal causes to the District Court, as in the case of the admission of Florida, already referred to, and saying nothing at the time in respect to those belonging to State authority, may very well imply an assent to the transfer of them by the State to the appropriáte tribunal. Even the omission on the part of Congress to interfere at all in the matter may be subject, to a like implication. And a subsequent assent would, doubtless, operate upon past acts of transfer by the State authority.

It is to be regretted that proper provision has not always been made by Congress, upon a change of government, in respect to the pending business in the Territorial tribunals, so as to remove all embarrassment and perplexity on the subject.

From the examination we have given to the legislation upon the admission of several of the new States into the Union, we have found but few 'instances of any provision having been made in respect to the cases pending in the old government; and those are limited to the transfer of the Federal cases to the District Court organized in the new State. In some of the constitutions of the States, provision had been made for the pending business of appropriate State jurisdiction; but not in all of them. A very slight attention to the subject by Congress, at the time, would remove all the difficulties that have occurred in several of the States recently admitted.

Upon the whole, we are satisfied that the Territorial goverment of Florida became superseded on the .unconditional admission of the Territory into the Union as, á State, on the 3d of March, 1845, and consequently, that the court below, whose authority depended upon that government, had no jurisdiction to redder the decree in the case, and that the decree must be reversed.

A doubt was suggested, on the argument, as to the proper disposition of the case in the event of our arriving at the conclusion, that the jurisdiction of the court below ceased at the termination of the Territorial government. But the acts of Congress of February 22 and 23, 1847 (Sess. Laws, ch. 17, § 8, and ch. 20, *§> 7), which provided, specially, for a review of this class of cases in this court; have also 'provided for the execution of any judgment that may be given in them, by directing that the mandate shall be issued to the District Court of the State into which the same acts had already transferred the records.

The case, therefore, can take. the usual direction in cases where this court determines that the court below acted without jurisdiction in. the matters before it; and that is, to reverse the decree and remit the case, with directions that the court dismiss the proceedings, which direction is given accordingly.

Order.

This cause came on to be heard on the transcript of the record from the .District Court of the United States for the District of Florida, and was argued by counsel. On consideration whereof; it is now here ordered and decreed by this court, that the decree of the said District Court in this cause bp, and the same is hereby, reversed and annulled, for the want of jurisdiction in that court, and that this cause be, and the same is hereby, remanded to the said District Court, with directions to dismiss the libel in this cause.