text:
Inhabitants of the Township of Bernards v. Stebbins/Opinion of the Court

'Sec. 3. The said commissioners authorized by this act may,     in their discretion, dispose of such bonds, or any part      thereof, to such persons or corporations and upon such terms      as they shall deem most advantageous for their said township,      but not for less than par; and the money that shall be raised      by any loan or sale of bonds shall be invested in the stock      of said railroad company for the purpose of building the      aforesaid railroad, and said money shall be applied and used      in the construction of said railroad, its buildings,      equipment, and necessary appurtenances, and for no other      purpose. The commissioners respectively, in the corporate     name of each of their said townships, shall subscribe for and      purchase stock in said railroad company to the amount they      may have severally borrowed as aforesaid; and by virtue of      such subscription or purchase of stock, upon receiving      certificates for the amount of said stock so subscribed for      or purchased by them, the said townships shall acquire all      the rights and privileges respectively of other stockholders      of said company, and it shall be lawful for the commissioners      provided for in this act, or either of them with the consent      of the others, or a majority of the said commissioners, to      participate in and to act in all the regular and legally      authorized meetings of the stockholders, and either of them      may act as director of said company, if he shall be duly      elected as such.'

By section 4, the commissioners were directed to report annually to the township committee the amount required for the next year to pay the interest or principal of the bonds, and to apply in payment thereof the dividends on the stock subscribed or purchased for the township; and any deficiency was to be assessed and levied upon the landed property of the township, like other taxes. By section 5, the railroad company might agree with the commissioners, 'in behalf of their respective townships,' to pay the interest accruing 'on the bonds issued by such townships,' for three years, or until the railroad should be completed and earning sufficient to pay dividends equal to the interest. By section 6, the commissioners might, after acquiring stock, exchange it for bonds issued, and cancel the bonds so received; or they might, with such consent as mentioned in section 2, sell the stock for cash at public sale, and apply the proceeds to the purchase or redemption of the bonds. And by section 7, at the end of 25 years, the sum due for principal and interest on the bonds, as reported by the commissioners, was to be assessed and levied on the landed property. By section 9, the commissioners were required, before entering upon the discharge of their duties, to give bond to the township, with sureties approved by the township committee or by the judge of the county court. By section 11, their pay and disbursements were to be 'audited and paid by the township committee, the same as other township expenses.' By section 12, the commissioners in each township were to 'constitute a board to act for their said townships respectively.' And by section 14, all bonds issued were required to be registered in the office of the county clerk, and the words 'registered in the county clerk's office' be printed or written across the face of each bond, attested by the signature of the county clerk, 'and no bond shall be valid unless so registered.'

Commissioners for the township of Bernards, in the county of Somerset, were appointed, and gave bond to the township according to sections 1 and 9. On the seventeenth of December, 1868, they filed in the county clerk's office the written consent of a number of tax-payers, not being a majority of all the tax-payers in the township, but being a majority in number and value of the owners of real estate therein; with an affidavit of one of the commissioners to the signatures; and an affidavit of the assessor that the signers were a majority of the tax-payers of the township and represented a majority of the real property of the township, and also that they were a majority of the tax-payers of the township appearing upon its assessment roll for 1867, or their legal representatives, and represented a majority of the landed property of the township appearing upon that assessment roll.

In the same month of December, 1868, the commissioners subscribed in behalf of the township for stock in the railroad company, of the value of $127,000, which did not exceed 10 per cent. of the assessed valuation of the landed property of the township in 1867; and caused bonds of the township to an equal amount to be printed in the form hereinafter set forth; and made an arrangement with the railroad company to exchange the bonds of the township for stock in the company, and to deliver the bonds of the company in installments, as calls for payments on subscriptions were made, and as the work on the railroad progressed. The railroad was afterwards built and put in operation through the town; and the commissioners issued to the railroad company, in exchange for stock, instruments to the amount aforesaid, in the form of bonds, of the denominations of $1,000, $500, and $100, respectively, signed by the commissioners, but not sealed, with interest coupons annexed. The form of the bonds and of the coupons was as follows:

'No.___. United States of America. $500.

'TOWNSHIP OF BERNARDS, SOMERSET COUNTY, STATE OF NEW JERSEY.

'The inhabitants of the township of Bernards, in the county     of Somerset, acknowledge themselves to owe to bearer five      hundred dollars, which sum they promise to pay the holder      hereof, at the American Exchange National Bank, in the city      of New York, twenty-three years after the date hereof, and      interest thereon at the rate of seven per cent. per annum,     payable semi-an nually on the first days of July and January      in each year, until the said prin cipal sum shall be paid, on the presentation of      the annexed interest coupons at the said bank.

'This bond is one of a series of like tenor, amounting in the     whole to the sum of one hundred and twenty-seven thousand      dollars, issued on the faith and credit of said township in      pursuance of an act entitled 'An act to authorize certain      towns in the counties of Somerset, Morris, Essex, and Union      to issue bonds and take stock in the Passaic Valley & Peapack      Railroad Company,' approved April 9, 1868.

'In testimony whereof the undersigned, commissioners of the     said township of Bernards, in the county of Somerset, to      carry into effect the purposes and provisions of the said      act, duly appointed, commissioned, and sworn, have hereunto      set our hands and seals the first day of January, in the year      of our Lord one thousand eight hundred and sixty-nine.

'JOHN H. ANDERSON,

'JOHN GUERIN,

'OLIVER R. STEELE,

'Commissioners.'

'Registered in the county clerk's office.

'WILLIAM ROSS, Jr., County Clerk.'

'$17.50. The inhabitants of the township of Bernards, in the     county of Somerset, will pay the bearer, at the American      Exchange National Bank, in the city of New York, seventeen      50-100 dollars, on the first day of January 1889, for six      months' interest on bond No. ___.

'JOHN H. ANDERSON,

'JOHN GUERIN,

'OLIVER R. STEELE,

'Commissioners.'

One-fifth of the whole amount of bonds was signed by the commissioners and delivered to the railroad company on the sixteenth of January, 1869, was registered on the eighteenth of the same month, and was afterwards put in circulation by the company. Upon a bill filed by certain tax-payers of an adjoining township in the spring of 1869, the court of chancery of New Jersey restrained the issue of like bonds, for want of the consent of a majority of all the tax-payers of the township. Lane v. Schomp, 5 C. E. Green, 82. The commissioners thereupon obtained, and filed in the county clerk's office on the first of September, 1869, the written consent of other tax-payers, which, with those whose consent had been previously filed, constituted a majority of all the tax-payers in the township, with similar affidavits of commissioner and assessor; and the remaining four-fifths of the bonds were afterwards issued and registered, and put in circulation. Of the bonds in controversy, some were issued before, and some after, the first of September, 1869.

The commissioners intended to issue, and supposed that they had issued, perfect bonds, and their failure to affix their seals to the bonds was by oversight and mistake. The bonds were purchased by the present owners in good faith, in open market, for the then market price of from 85 to 100 cents on a dollar, and without observing that they had no seals.

Cyrus Curtis, a citizen of New York, (of whom the appellee in the first case is the executor,) held and owned such bonds to the amount of $2,000, and held like bonds to the amount of $3,000, owned by other citizens of New York, in amounts varying from $1,300 to $500 each, except that one owned only $200, and delivered by them to him solely for the purpose of bringing suit on the coupons; and also held coupons, past due and unpaid, upon like bonds to the amount of $18,600, owned by citizens of New Jersey, who had assigned those coupons to him for the sole purpose of collecting the amount thereof. Thomas H. Morrison and Gardner S. Hutchinson, citizens of New York, (the appellees in the second case,) held and owned such bonds to the amount of $10,000, and also held like bonds to the amount of $12,000, owned by other persons, citizens of New York or Pennsylvania, in amounts varying from $6,000 to $500 each, as well as bonds to the amount of $5,100, owned by citizens of New Jersey, all which bonds had been transferred to them by the owners for the mere purpose of collecting the unpaid coupons thereon. In April, 1874, actions of debt were brought by Curtis, and by Morrison and Hutchinson against the township, in the circuit court of the United States for the district of New Jersey, to recover the amount of unpaid coupons for three years' interest on all the bonds so held by the plaintiffs; to which the township pleaded that the bonds were not sealed by the commissioners.

The plaintiffs in each of those actions thereupon, in the spring of 1876, after requesting the two surviving commissioners (the third having died meanwhile) to affix their seals to the bonds, which they declined to do unless by order of some court of competent jurisdiction, filed a bill in equity in the same court, praying for a reformation of the bonds; for an order that the surviving commissioners affix seals opposite the signatures; for a decree that the bonds should be deemed and taken to be as valid and effectual in law as if they had been in fact sealed by the commissioners before being issued; for a perpetual injunction against the setting up of the want of seals as a defense in the action already brought, or in any future action by the plaintiffs to recover principal or interest, due or to grow due, on the bonds; and for further relief. Demurrers to the bills were interposed and overruled; answers and replications were filed, and a hearing was had upon pleadings and proofs.

At the hearing, it was objected, in behalf of the township, that the plaintiffs, if entitled to any relief, could maintain their bills so far only as concerned the bonds that were both owned and held by them, and not as regarded the bonds owned by other persons. The court overruled the objection, and entered a final decree upon each bill that the bonds, or writings in the nature of bonds, therein described, be held and deemed to be as valid and effectual in law as if they had been in fact sealed by the commissioners before being issued; and that the township be perpetually enjoined from setting up the want of seals in the action at law already brought, or in any action to be thereafter brought, upon any of these bonds or coupons. From those decrees the township has appealed to this court.

It was contended in behalf of the township that the bonds were void-First, because they were not under the seals of the commissioners, as required by the statute; second, because the statute did not authorize the issue of bonds with annexed and detachable coupons not under seal; third, because the consent of the tax-payers to the borrowing of money and issue of the bonds was obtained by fraud; fourth, because the consent of a majority of all the tax-payers, as well as of those who represented a majority of the landed property of the township, was not obtained before the subscription for stock and the issue of the bonds; fifth, because the bonds were issued by the commissioners directly to the railroad corporation in exchange for stock, instead of being sold or disposed of by the commissioners, and the money thus obtained applied to the purchase of stock, as required by the statute.

In dealing with these objections, it must be borne in mind that the cases before us are not actions at law upon the bonds or coupons, but bills in equity to restrain the township from setting up the want of seals in the actions at law heretofore brought by these plaintiffs against the township to recover the amount of the coupons; and the objections above recited are to be considered so far only as they affect the question whether the bills can be maintained.

It has been settled, upon fundamental principles of equity jurisprudence, by many precedents of high authority, that when the seal of a party, required to make an instrument valid and effectual at law, has been omitted by accident or mistake, a court of chancery, in order to carry out his intention, will, at the suit of those who are justly and equitably entitled to the benefit of the instrument, adjudge it to be as valid as if it had been sealed, and will grant relief accordingly, either by compelling the seal to be affixed, or by restraining the setting up of the want of it to defeat a recovery at law. Smith v. Ashton, Freem. Ch. 308; S.C.. Cas. t. Finch, 273; Cockerell v. Cholmeley, 1 Russ. & M. 418, 424; Wadsworth v. Wendell, 5 Johns. Ch. 224; Montville v. Haughton, 7 Conn. 543; Rutland v. Paige, 24 Vt. 181. See, also. Wiser v. Blachly, 1 Johns. Ch. 607; Green v. Morris & Essex R. Co. 1 Beasl. 165, and 2 McCart. 469; Druiff v. Parker, L. R. 5 Eq. 131.

By the necessary effect and the very terms of the statute of New Jersey of 1868, the money is borrowed on the credit of the township, the stock obtained by the disposal of the bonds belongs to the township, the bonds are issued on behalf of the township, and are the bonds of the township, and the commissioners, though not elected by the township, but otherwise appointed as provided by the statute, act in issuing the bonds, and in doing everything else that they are required by the statute to do, as the agents of the township. This view has been affirmed by the judgment of the supreme court of New Jersey, construing this very statute, in Morrison v. Bernards, 7 Vroom, 219, and by the judgment of this court upon the effect of a similar statute of New York in Draper v. Springport, 104 U.S. 501.

In Draper v. Springport it was held that the mere fact that the commissioners had only signed, without sealing, the bonds, did not exempt the town from liability to a purchaser thereof in good faith and for valuable consideration. And Mr. Justice BRADLEY, in delivering judgment, said:

'It is apparent from the law that the substantial thing     authorized to be done on behalf of the town was to pledge the      credit of the town in aid of the railroad company in the      construction of its road, by subscribing to its capital      stock, and issuing the obligations of the town in payment      thereof. The technical form of the obligations was a matter     of form rather than of substance. The issue of bonds under     seal, as contradistinguished from bonds or obligations      without a seal, was merely a directory requirement. The town,     indeed, had no seal; and the individual seals of the      commissioners would have had no legal efficacy; for the bonds      were not their obligations, but the obligations of the town;      and their seals could have added nothing to the solemnity of      the instruments.' 'We cannot agree with the courts of the      state that the form of a seal was an essential part of the      transaction.'

It was argued that the power conferred upon the commissioners to issue bonds was a statutory power, defects in the execution of which could not be supplied or relieved against in equity. There is much learning on this subject in the books. But Mr. Chance, upon a full review of the older cases, has clearly demonstrated that the true ground upon which equity grants relief is 'the same as that on which it relieves against the want of livery, the want of enrollment, or any other ceremony required, either at common law or by statute, but considered as not meant to be positively essential. The main point to be ascertained, at least with reference to forms prescribed by act of parliament, is whether the legislature has attached a decisive weight to the observance of the forms.' Chance, Powers, § 2989. See, also, 2 Sugd. Powers, (7th Ed.) 125-129.

In Darlington v. Pulteney, Cowp. 260, 267, Lord MANSFIELD said that the reason why equity could not relieve from defects in the execution of statutory powers to make leases, was 'that there is nothing to affect the conscience of the remainder-man.' And in De Riemer v. Cantillon, 4 Johns. Ch. 85, where a sheriff's deed of land sold by him on execution omitted, by mistake in the description, an important part of the estate advertised and intended to be sold and purchased, and the purchaser, with the consent of the judgment debtors, took possession of and improved the whole, and afterwards, at their request, sold it, and conveyed by a like description, all parties understanding and believing that the whole was included in both deeds, and the price paid by the second purchaser being estimated on this basis, Chancellor KENT, upon a bill in equity filed by the last purchaser against the debtors, restrained them from prosecuting suits brought against him for the recovery of the land not included in the description, and decreed that they should release it to him.

In the present case, the commissioners, in issuing the bonds, acted rather in the capacity of agents of the township than as donees of a statutory power in the ordinary sense; and the direction of the statute that the bonds should be under the seals, as well as the hands, of the commissioners, was declared by this court in Draper v. Springport, supra, to be 'a matter of form rather than of substance,' 'merely a directory requirement,' and not 'an essential part of the transaction.' The bonds are, in other respects, in the form prescribed by the statute. The commissioners intended to issue them in behalf of the town, pursuant to the statute, and stated on the face of the bonds that they had done so, and that they had thereto set their hands and seals. The town received full consideration for the bonds, and the purchaser bought them in open market, in good faith and for value, and in ignorance of the want of seals. These facts present a strong case for the interposition of a court of equity, having jurisdiction of the cause and of the parties, to prevent the formal defect of the want of the seals of the commissioners from being set up to defeat an action at law upon the bonds or coupons. The mere fact that the purchasers, at the time of their purchase, did not observe the omission of seals upon securities having in all other respects the appearance of municipal bonds, is not such negligence as should prevent them from applying to a court of equity to correct a mistake of this character. See Wadsworth v. Wendell and Montville v. Haughton, supra; Harris v. Pepperell, L. R. 5 Eq. 1; Elliott v. Sackett, 108 U.S. --; [S.C.. 2 SUP. CT. REP. 375.]

The objection that the statute did not authorize the bonds to be issued with coupons, if it is of any validity, (which we do not intimate,) will be fully open to the defendant in the actions at law upon the coupons.

The suggestion that the consent of the tax-payers to the issue of the bonds was obtained by fraud is not supported by the evidence. The consent of a majority of all the tax-payers of the township has been held necessary by the court of chancery and by the supreme court of New Jersey. The chancellor, in granting an injunction against the issue of bonds without such consent, expressed the opinion that the want of such consent would afford no defense at law after the bonds had been once issued, and had come into the hands of innocent holders for value. The supreme court decided otherwise. Lane v. Schomp, 5 C. E. Green, 82; Morrison v. Bernards, 7 Vroom, 219. The question has not, so far as we are informed, been passed upon by the court of errors.

The exchange of the bonds directly for railroad stock would seem, in the absence of any decision in the courts of the state upon the point, to be a substantial compliance with the statute, or, at the most, a matter which would not defeat the rights of a bona fide purchaser. See Scipio v. Wright, 101 U.S. 665; Montclair v. Ramsdell, 107 U.S. 147, 160; [S.C.. 2 SUP. CT. REP. 391.] But if either the want of a written consent of a majority of all the tax-payers, or the fact that the bonds were issued directly in exchange for stock, is a fatal objection as against a purchaser for value and in good faith, it may be availed of by the township in the actions at law on the coupons. If these objections are not of that character, they do not impair the equity of the purchasers to relief against the accidental omission of the seals of the commissioners. The validity of both these objections, therefore, may be more appropriately determined in the actions at law.

The remaining question argued at the bar is how far the citizenship of the real parties in interest, and the amount of the claim of each, should affect the exercise of jurisdiction, and the extent of the decree. The position of the plaintiffs is that the bonds and coupons being payable to bearer, they are entitled to sue, at law or in equity, on all the coupons held by them; that the combination of the holders of several claims of moderate amount against the same defendant for the purpose of diminishing and sharing the expense of litigation, was entirely proper, and should be encouraged by the court; that the bonds and coupons owned as well as held by the plaintiffs, and by others not citizens of New Jersey, clearly brought the case within the jurisdiction of the court; and that to deny to citizens of New Jersey the right to transfer their claims to the plaintiffs for the purpose of collection in the same suit would be to discriminate unjustly between the citizens of New Jersey and the citizens of other states. But, in the matter of the jurisdiction of the federal courts, the discrimination between suits between citizens of the same state and suits between citizens of different states is established by the constitution and laws of the United States. And it has been the constant effort of congress and of this court to prevent this discrimination from being evaded by bringing into the federal courts controversies between citizens of the same state.

In the judiciary act of 1789, the only express provision to this end was that the circuit court should not 'have cognizance of any suit to recover the contents of any promissory note or other chose in action in favor of an assignee, unless a suit might have been prosecuted in such court to recover the said contents if no assignment had been made, except in cases of foreign bills of exchange.' St. Sept. 24, 1789, c. 20, § 11; 1 St. 78; Rev. St. § 629, cl. 1. That provision has been held not to be restricted to actions at law, but to include bills in equity to foreclose mortgages, or to compel the specific performance or enforce the stipulations of contracts. Sheldon v. Sill, 8 How. 441; Corbin v. Black Hawk Co. 105 U.S. 659.

In Barney v. Baltimore, 6 Wall. 280, a bill in equity for the partition of real estate and for an account of rents and profits, in the circuit court of the United States for the district of Maryland, by a citizen of Delaware, owning a share in the estate, against citizens of Maryland, owning other shares therein, and to whom the owners of the remaining shares, being citizens of the District of Columbia, and not of any state, and therefore not authorized to sue in the circuit court of the United States, had conveyed their shares without consideration, under an agreement to reconvey upon request, and for the sole purpose of giving jurisdiction to the federal courts, was dismissed, because the grantors were necessary parties to the suit, and because their conveyance, not transferring their real interests to the other parties, was a fraud upon the court.

The act of March 3, 1875, c. 137, § 5, directs that if, 'in any suit commenced in a circuit court,' it shall appear to the satisfaction of the court, 'at any time after such suit has been brought,' 'that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable' by the circuit court, that court 'shall proceed no further therein, but shall dismiss the suit,' and shall make such order as to costs as shall be just, and its order of dismissal shall be reviewable in this court on writ of error or appeal. 18 St. pt. 3, p. 470.

In Williams v. Nottawa, 104 U.S. 209, decided by this court since the hearing of these cases in the circuit court, an action was brought by Williams, a citizen of Indiana, in the circuit court of the United States for the western district of Michigan, against a township in that state and district, upon its bonds payable to bearer. The action, as the record on file shows, was brought in September, 1874, about six months before the passage of the act of 1875. It appeared that Williams personally owned only three of the bonds, of $100 each, and that the other bonds in suit had been transferred to him solely for the purpose of collection with his own, by the owners thereof, all of whom were citizens of Michigan, except one Tobey, whose bonds amounted to $300 only, and whose citizenship was not disclosed by the record. The circuit court gave judgment for the plaintiff for the amount of the bonds belonging to Williams and to Tobey, and in favor of the township for the remainder. Upon a writ of error sued out by Williams to reverse the judgment in favor of the township, this court held that, in obedience to the act of 1875, the action should be wholly dismissed; because, so far as concerned the bonds owned by citizens of Michigan, who could not sue a Michigan township in the courts of the United States, it could not be doubted that the transfer to the plaintiff, being colorable only, and never intended to change the ownership, was made for the purpose of 'creating a cause cognizable in the courts of the United States;' and, as to the bonds owned by Williams and by Tobey, there was a collusive joinder, because, when the suit was begun, the amount due to each was less than $500, and therefore insufficient to maintain a suit in the federal courts.

The decision in Williams v. Nottawa establishes that the circuit court of the United States cannot, since the act of 1875, entertain a suit upon municipal bonds payable to bearer, the real owners of which have transferred them to the plaintiffs of record for the sole purpose of suing thereon in the courts of the United States for the benefit of such owners, who could not have sued there in their own names, either by reason of their being citizens of the same state as the defendant, or by reason of the insufficient value of their claims. The principle of that decision is equally applicable to suits in equity to assert equitable rights under such bonds.

It was argued that these bills in equity were only auxiliary to the actions at law, which were brought before the passage of the act of 1875, and therefore that act had no application. The answer to this is twofold: First. The bills in equity, filed since the passage of the act, are independent suits, of broader aim than the actions at law. The actions at law are to recover the amount of coupons only; the bills in equity seek not merely an injunction against setting up the defense of want of seals in the pending actions on the coupons, but also a decree declaring that the bonds shall be deemed valid. Second. Even the actions at law, brought before the passage of the act of 1875, are subject, under the adjudication in Williams v. Nottawa, to be dismissed in whole or in part, as the facts may require, in the court in which they are pending.

It follows that these bills should have been dismissed so far as regarded the bond for $200 owned by a citizen of New York in the first case, and also as to all the bonds owned by citizens of New Jersey in either case. But no valid objection has been shown to the maintenance of these bills so far as regards those bonds of which the plaintiffs are the bearers, and which are actually owned either by themselves, or by other citizens of New York or Pennsylvania, to a sufficient amount by each owner to sustain the jurisdiction of the circuit court. Thompson v. Perrine, 106 U.S. 589; [S.C.. 1 SUP. CT. REP. 564, 568;] Chickaming v. Carpenter, 106 U.S. 663; [S.C.. 1 SUP. CT. REP. 620;] Douglas Commissioners v. Bolles, 94 U.S. 104, 109; Cromwell v. Sac Co. Id. 351, 360. The decrees of the circuit court must be modified accordingly.

The decrees in favor of the appellees being reversed as to a large part of their claims, they should pay costs in this court; but as they still maintain their bills as to the rest of their claims, they should recover costs in the court below.

The decrees of the circuit court are reversed, and the cases remanded, with directions to enter decrees in conformity with this opinion.

Mr. Justice FIELD took no part in this decision.


text: Talk:Inhabitants of the Township of Bernards v. Stebbins/Opinion of the Court

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Warner v. Connecticut Mutual Life Insurance Company

'I, Mary Beers, wife of Cyrenius Beers, of Chicago, of lawful     age and sound mind, in view of the uncertainty of human life,      do make, publish, and declare this my last will and      testament.

'First. I order all of my debts to be paid, including the     expenses of my funeral and last illness.

'Second. I give and bequeath to my husband, Cyrenius Beers,     all the estate, both real, personal, and mixed, of which I      die seized or possessed, to be held by him in trust for the      following uses, purposes, and trusts, and none other; that is      to say: To receive the rents, income, and profits thereof      during his life, with the remainder to my children, Mary C.      Foster, wife of Orrington Co. Foster, Rissa J. Beers, and      Charles G. Beers, share and share alike, to them, their heirs      and assigns, forever. But provided that said Cyrenius Beers     may incumber the same by way of mortgage or trust deed or      otherwise, and renew the same, for the purpose of raising      money to pay off any and all incumbrances now on said      property, and which trust deed or mortgage so made shall be      as valid as though he held an absolute estate in said      property. But provided further, that the said Cyrenius Beers     may, in his discretion, during his life, sell and dispose of      any or all the real estate of which I may die seized or      possessed, as though he held an absolute estate in the same,      and out of the proceeds pay any of the incumbrances upon any      of the property of which I may die seized and possessed, and      the remainder, over and above what may be required to pay the      indebtedness upon said property, the same being now      incumbered, to rein vest in such way as he may see proper,      and from time to time sell and reinvest, such reinvestment to      continue to be held in trust the same as the estate of which      I may die possessed; that is to say, the said Cyrenius Beers      only to have the use during his life of said estate, with the      right of sale and to incumber and reinvest, the remainder      after his death to go to my children and their heirs forever.

'Third. I hereby appoint said Cyrenius Beers executor of this     my last will and testament, hereby waiving from him all bail      and security, as I have a right to do under the statute in      such cases made and provided, as such executor.'

Cyrenius Beers qualified and acted as executor, administered the estate fully, and was discharged September 20, 1877.

The appellants are children and devisees of the testatrix, and the only ones interested in the mortgaged premises, as such; a brother, the only other child, Charles G. Beers, having released his interest to them. The life estate of Cyrenius Beers was determined by his death, on or about February 25, 1878. The accruing interest on the mortgage debt had been duly paid by him until the maturity of the principal sum, February 24, 1874, when the appellee and Cyrenius Beers entered into a written agreement whereby the time of payment of the principal of the mortgage debt was extended and postponed until February 24, 1879, in consideration of the agreement of Cyrenius Beers to pay the same when due, and interest thereon in the mean time at the rate of 9 per cent. per annum, payable semi-annually.

[Statement of Case from pages 359-361 intentionally omitted]

Mr. John S. Miller for appellants.

[Argument of Counsel on page 361 intentionally omitted.]

Edward S. Isham, for appellee.

MATTHEWS, J.


text: Talk:Warner v. Connecticut Mutual Life Insurance Company


text:
Warner v. Connecticut Mutual Life Insurance Company/Opinion of the Court

This appeal brings into review a decree for the foreclosure of a mortgage of real estate and a sale of the mortgaged premises, and dismissing a cross-bill filed by the appellants praying that the mortgage might be declared not to be a lien on the premises and delivered up to be canceled. The mortgage in question was dated February 24, 1869, and was made by Cyrenius Beers and Mary Beers, his wife, to secure payment of a debt due from the husband to the mortgagee, according to the terms of his bond, conditioned for the payment thereof on February 24, 1874, with interest at the rate of 8 per cent. per annum, payable semi-annually. The title to the real estate mortgaged is recited in the mortgage to be in the wife. Mary Beers died, leaving a will, which was duly admitted to probate in March, 1872. It is as follows:-

This extension of the time of payment of the mortgage debt was made without any consent thereto on the part of the appellants. It is claimed on their behalf that, as owners of the estate mortgaged by the testatrix to secure the debt of her husband, they are in the position of sureties, and that the extension of time for the payment of the debt, without authority from them, is, in equity, a discharge of the lien of the mortgage. The appellee insists, in reply to this claim, that the agreement by which further time was given for the payment of the debt, during which the mortgage was continued in force, was authorized by the will of Mary Beers and binds her devisees. Whether this be so is the precise question we are required to decide.

We are reminded, at the outset of the argument, by the counsel for the appellants, that, being sureties, they are favorites of the law; that their contract is strictissimi juris; and that nothing is to be taken against them by intendment or construction. It is quite true that 'the extent of the liability to be incurred must be expressed by the surety, or necessarily comprised in the terms used in the obligation or contract;' that is, 'the obligation is not to be extended to any other subject, to any other person, or to any other period of time than is expressed or necessarily included in it.' 'In this sense only,' continues Mr. Burge, Law Surety, (1st Amer. Ed.) 40, 'must be understood the expression that the contract of the surety is to be construed strictly. It is subject to the same rules of construction and interpretation as every other contract.' Besides, the rule of construction applies only to the contract itself, and not to matters collateral and incidental, or which arise in execution of it, which are to be governed by the same rules that apply in like circumstances, whatever the relation of the parties. So that the fact that the appellants occupy the relation of sureties cannot control the determination of the question whether the agreement extending the time of payment of the mortgage, debt, and the continuance of the mortgage as an incumbrance upon the estate, was a valid execution of the powers conferred by the will of the testatrix. That question must be answered according to its own rules.

It is further said, however, on the part of the appellants, that the agreement of February 24, 1874, cannot be sustained in support of a continuation of the mortgage lien, as an execution of the powers conferred by the will of Mary Beers, because it does not appear that it was so intended by Cyrenius Beers, the donee of those powers. It is argued that the agreement of extension makes no reference either to the power or to the property of the testatrix, which is the subject of the power; that every provision contained in it can have its full operation and effect; that is, all that it professes to do or provide for can be done, according to its full tenor, without referring the act to the power, and by referring it solely to the individual interest of Cyrenius Beers, as the debtor of the appellee. This, however, on an examination of its terms, will appear to be an erroneous view of the true meaning and legal effect of the agreement of extension. It recites the indebtedness of Cyrenius Beers to the appellee as then due and unpaid; that he had applied to them to extend the time for the payment of the principal sum; that Cyrenius Beers and Mary, his wife, had executed and delivered their deed of mortgage to secure the payment thereof. It is thereupon witnessed that the Connecticut Mutual Life Insurance Company doth thereby extend and postpone the time of payment of the principal sum until February 24, 1879, interest to be paid thereon at the rate of 9 per centum per annum; and in consideration thereof Cyrenius Beers agrees to pay the principal sum on the day named therefor, and the interest thereon as stipulated; it being understood that, upon a failure to pay any installment of interest, the whole of the principal sum shall thereupon become due, and may be collected without notice, together with all arrearages of interest. It is also understood and agreed between the parties that nothing in the agreement shall operate to discharge or release Cyrenius Beers from his liability upon the bond originally given for the payment of the debt, 'but it is expressly understood that this instrument is to be taken as collateral and additional security for the payment of said bond.' It is also expressly understood and agreed between the parties that in the event of failure on the part of Cyrenius Beers 'to fulfill, keep, and promptly perform, as well in spirit as in letter, the covenants in said mortgage contained, given by said Cyrenius Beers to said company, then, at the election of the said company, 'the whole of said principal sum in the condition of said bond mentioned shall thereupon at once become due and payable, and may be collected without notice, together with all accrued interest thereon at said rate of nine per centum per annum, anything herein before contained to the contrary not withstanding.'

Taking the instrument in all its parts, and looking at its * entire scope and purpose, it must be admitted that, notwithstanding its omission of any direct and express stipulation of that character, its meaning and legal effect are to continue in force, so far as the parties to it had lawful authority to do so, the covenants and lien of the mortgage as security for the payment of the original debt, with the interest reserved at the increased rate until the expiration of the extended time of payment. This effect was undoubtedly intended by the parties, and this intention could not take effect except by virtue of the powers contained in the will of Mary Beers. Cyrenius Beers, as debtor, had no power to continue the mortgage in force, nor as tenant for life to renew it as a mortgage in fee. This is a demonstration, therefore, that the instrument must be treated as an execution of those powers, because, if it cannot otherwise operate according to the intention of the parties, it must be referred to the power which alone can make it effectual in all its provisions.

The rule applicable in such cases, it is claimed, is that deduced as the doctrine of Sir Edward Clere's Case, 6 Roport 17b, as stated by 1 Sugd. Powers, (7th London Ed.) 417, that 'where the disposition, however general it may be, will be absolutely void if it do not inure as an execution of the power, effect will be given to it by that construction.' Mr. Chance, however, says:

'There are, indeed, in the case dicta apparently to this     effect: that if the instrument refer not to the power, and      can have some effect by means of the interest of the party,      though not all the effect which the words seem to import,      still the instrument shall not operate as an execution of the      power, the intention being thus contravened. It appears quite     clear, however, at this day, and a reference to the      authorities will, it is apprehended, show that it has been      considered clear for nearly two centuries, that the rule is      not thus confined indeed, it may well be asked why, admitting      that the intention can be discovered to pass all, the      intention should not prevail in the one case as well as in      the other? What rule of law or construction would be thereby     violated?' 2 Chance, Powers, (London Ed. 1883) § 1597, p. 72.

'And notwithstanding Sir Edward Clere's Case, an intent,     apparent upon the face of the instrument, to dispose of all      the estate, would be deemed a sufficient reference to the      power to make the instrument operate as an execution of it,      inasmuch as the words of the instrument could not otherwise      be satisfied.' 2 Sugd. Powers, (7th London Ed.) c. 6, § 8, p.     412.

In the present case, as we have seen, the legal effect and meaning of the instrument cannot be satisfied without treating it as an execution of the powers under the will, for Cyrenius Beers, merely as debtor, as mortgagor, and as owner of the life estate under the will of his wife, could not lawfully agree to keep in force and renew a mortgage upon the estate of which the appellants were devisees in remainder in fee.

The supreme court of Illinois in the case of Funk v. Eggleston, 92 Ill. 515, had the question under consideration, and in a learned opinion, in which a large number of authorities, both English and American, is reviewed, discarded even the modified English rule of later date, and adopted that formulated by Mr. Justice STORY in Blagge v. Miles, 1 Story, 427, as follows:

'The main point is to arrive at the intention and object of     the donee of the power in the instrument of execution, and,      that being once ascertained, effect is given to it      accordingly. If the donee of the power intends to execute,     and the mode be in other respects unexceptionable, that      intention, however manifested, whether directly or      indirectly, positively or by just implication, will make the      execution valid and operative. I agree that the intention to     execute the power must be apparent and clear, so that the      transaction is not fairly susceptible of any other      interpretation. If it be doubtful, under all the     circumstances, then that doubt will prevent it from being      deemed an execution of the power. All the authorities agree     that it is not necessary that the intention to execute the      power should appear by express terms or recitals in the      instrument. It is sufficient that it should appear by words,     acts, or deeds demonstrating the intention.'

The rule as adopted by this court was tersely stated by Mr. Justice STRONG in delivering its opinion in Blake v. Hawkins, 98 U.S. 315, 326, in this form:

'If the will contains no expressed intent to exert the power,     yet if it may reasonably be gathered from the gifts and      directions made that their purpose and object were to execute      it, the will must be regarded as an execution. After all, an     appointment under a power is an intent to appoint carried      out, and if made by will the intent and its execution are to      be sought for through the whole instrument.'

In the case of Munson v. Berdan, 35 N. J. Eq. 376, it is said:

'It is sufficient if the act shows that the donee had in view     the subject of the power.'

And in White v. Hicks, 33 N. Y. 383, 392, DENIO, C. J., said:

'This doctrine proceeds upon the argument that by doing a     thing which, independently of the power, would be nugatory,      she (the donee of the power) conclusively evinced her      intention to execute the power.'

And in Sewall v. Wilmer, 132 Mass. 131, 134, the supreme judicial court of Massachusetts, in reference to a will made in Maryland, which was the domicile of the testatrix, but the provisions of which related to both real and personal estate situated in Massachusetts, held it to be a valid execution of a power contained in the will of her father, whose domicile was in that state, although it would have been otherwise held in Maryland. GRAY, C. J., said:

'But in this commonwealth the decisions in England since our     revolution, and before the St. of 7 Wm. IV. and 1 Vict. c.     26, § 27, have not been followed; the court has leaned      towards the adoption of the rule enacted by that statute as      to wills thereafter made in England, namely, that a general      devise or bequest should be construed to include any real or      personal estate of which the testator has a general power of      appointment, unless a contrary intention should appear by his will; and it has been      adjudged that the mere facts that the will relied on as an      execution of the power does not refer to the power, nor      designate the property subject to it, and that the donee of      the power has other property of his own upon which his will      may operate, are not conclusive against the validity of the      execution of the power; but that the question is in every      case a question of the intention of the donee of the power,      taking into consideration not only the terms of his will, but      the circumstances surrounding him at the time of its      execution, such as the source of the power, the terms of the      instrument creating it, and the extent of his present or past      interest in the property subject to it.'

We cannot doubt that Cyrenius Beers, in the agreement of February 24, 1874, intended to exert whatever power had been conferred upon him by the will of his wife to continue in force the mortgage to the appellee as an incumbrance upon her estate, for the reason that it is upon that supposition alone that it can have its due legal effect, ut res magis valeat quam pereat; and, by force of the rules which we have seen ought to govern in such cases, we hold that if the agreement as made is within the scope of the power, it must be regarded as a valid execution of it.

The question next to be considered, therefore, is whether Cyrenius Beers was empowered by the will of his wife to consent to an extension of the time of payment of the mortgage debt, and a continuance thereby of the lien on the mortgaged estate. It is to be observed, in the first place, that he is made executor of the will, tenant for life for his own use of all the property of the testatrix, and trustee of the legal title. Whether his title as trustee is to be considered as a fee-simple or for life, or a chattel interest only, it is not necessary to decide. Its duration is to be measured by the nature of the purposes for which it was created, and they include the power to mortgage, to sell, and to reinvest in his own name as trustee. And it is not without significance, although of how much importance is not material, that the remainder in fee limited to the children of the testatrix, and which is described as a limitation of all the estate of which the testatrix should die seized or possessed, is subsequently referred to as what shall remain after the death of the tenant for life, and after the exercise by him of the power of mortgaging or selling and reinvesting has been exercised for the purpose of paying the indebtedness upon the property. It is further to be noticed that the powers to mortgage and to sell are authorized to be exercised by him for the purpose specified, 'as though he held an absolute estate in said property.' The specific power given is to 'incumber the same by way of mortgage or trust deed or otherwise, and renew the same, for the purpose of raising money to pay off any and all incumbrances now on said property,' and the additional power to 'sell and dispose of any or all the real estate of which I may die seized or possessed, as though he held an absolute estate to the same, and out of the proceeds pay any of the incumbrances upon any of the property of which I may die seized and possessed,' and 'the remainder over and above what may be required to pay the indebtedness upon said property, the same now being incumbered, to reinvest in such way as he may see proper, and from time to time sell and reinvest, such reinvestment to continue to be held in trust the same as the estate of which I may die possessed.'

It is too plain to admit of dispute, that under these ample powers Cyrenius Beers might have secured, by a new mortgage, a loan of the sum of money, at the stipulated rate of interest, necessary to pay his indebtedness to the appellee, and that he might by a new loan from the appellee itself, secured by a new mortgage, upon the same terms and for the same time as granted by the agreement of extension, have raised the money and discharged the mortgage now in suit. Such a transaction would have been strictly within the letter of the authority. And yet it would, in fact, have been nothing but what was accomplished by the agreement of extension, namely, a continuance of the old loan, secured by the old mortgage for a new term, and at a higher rate of interest. The two transactions, though not the same in form, are so in substance, and a substantial execution of the power is all that is required. In the case of Bullock v. Fladgate, 1 Ves. & B. 471, where the power was to convert an estate into money and to purchase other lands, which were the subject of the appointment, the master of the rolls, Sir WILLIAM GRANT, no conversion having taken place, but the original estate having been appointed, said:

'I apprehend that equity will uphold an appointment of the     estate itself as amounting substantially to the same thing;      on which principle it is that appointments deviating      considerably from the letter of the powers under which they      were made, have frequently been supported.'

The power to incumber the estate 'by way of mortgage or trust deed or otherwise, and renew the same,' is broad enough to include the renewal and extension of an existing incumbrance as well as the creation of a new one; and this is not inconsistent with the declaration that it is to be 'for the purpose of raising money to pay off any and all incumbrances now on said property.' The object clearly was to meet the demand of the existing mortgagee for punctual payment of the debt secured, and to prevent the possible sacrifice of a forced sale to satisfy the demand, if not complied with; an object which could as well be accomplished by extending the existing mortgage, as by substituting a new one in its place. The power to renew a mortgage given for the purpose of raising money to pay off an existing incumbrance is expressly given; to renew an existing one, to avoid the necessity of creating a new incumbrance, is, we think, reasonably and fairly to be implied, as equally within the intention of the testatrix, and within the scope of the powers created by the will. The extension of a mortgage debt, and continuance of a mortgage lien, is one mode of incumbering the property, and may be a step, and possibly, under some circumstances, a very important and necessary one, in preparing for its payment and extinguishment. Indeed, it might well be, as the transaction shows the parties to it so understood, that Cyrenius Beers, uniting in himself the various characters of principal debtor and joint mortgagor, and of executor of his wife's will, tenant for life of the estate devised, and trustee with the ample powers conferred upon him of dealing with the incumbrance, was, in reality, constituted by the testatrix as the representative of all the interests created by the will, fully authorized, as if he were absolute owner of the estate, even as she could have done in her life. time, to consent to the extension of the time of payment of the mort. gage debt without prejudice to the mortgage security.

There is no error in the record, and the decree of the circuit court is affirmed.


text: Talk:Warner v. Connecticut Mutual Life Insurance Company/Opinion of the Court


text:
Flash v. Conn

The defendant filed six pleas, to some of which the plaintiffs demurred and to others filed replications. The defendant filed a rejoinder to one of the replications, to which the plaintiffs demurred. The cause was heard upon the several demurrers, and the court rendered the following judgment:

'This cause came on to be heard upon the plaintiffs' demurrers to defendant's first, second, fifth, and sixth pleas, and to defendant's rejoinder to plaintiffs' replication to defendant's third plea, and the court having determined that the plaintiffs' declaration is insufficient in law, it is therefore considered by the court that plaintiffs take nothing by their said suit,' etc.

From this judgment this writ of error is prosecuted.

E. A. Perry, for plaintiffs in error.

C. W. Jones, R. L. Campbell, and Mike L. Woods, for defendants in error.

[Argument of Counsel from pages 373-375 intentionally omitted]

WOODS, J.

title: Flash v. Conn


text: Talk:Flash v. Conn

title: Talk:Flash v. Conn


text:
Flash v. Conn/Opinion of the Court

The only question arising upon the record is whether the declaration presents a cause which entitles the plaintiffs to recover in this action. This was the question considered by the court below, and upon what it deemed the insufficiency of that declaration its judgment was based. The sufficiency of the pleas and rejoinder were not considered, for, if the declaration was bad, the question whether the pleadings of the defendant were good was an immaterial one. If the pleas and rejoinder of the defendant had been adjudged good, that would not have been a final judgment to which a writ of error would lie, but the plaintiffs would have had leave to reply and surrejoin. We are therefore limited to the consideration of the sufficiency of the declaration.

The liability which this suit was brought to enforce arises, as the plaintiffs contend, on the tenth section of the act mentioned in the declaration, namely, the act of the legislature of New York passed February 17, 1848, entitled 'An act to authorize the formation of corporations for manufacturing, etc., purposes.' The tenth section of the act, and the eleventh and twenty-fourth, which also have reference to the liability of stockholders of the company, were as follows:

'Sec. 10. All the stockholders of every company incorporated     under this act shall be severally individually liable to the      creditors of the company in which they are stockholders, to      an amount equal to the amount of stock held by them      respectively, for all debts and contracts made by such      company, until the whole amount of capital stock fixed and      limited by such company shall have been paid in, and a      certificate thereof shall have been made and recorded as      prescribed in the following section:

'Sec. 11. The president and a majority of the trustees,     within thirty days after the payment of the last installment      of the capital stock so fixed and limited by the company, shall make a      certificate stating the amount of the capital so fixed and      paid in, which certificate shall be signed and sworn to by      the president and a majority of the trustees; and they shall,      within the said thirty days, record the same in the office of      the county clerk of the county wherein the business of said      company is carried on.

'Sec. 24. No stockholder shall be personally liable for the     payment of any debt contracted by any company formed under      this act, which is not to be paid within one year from the      time the debt is contracted, nor unless a suit for the      collection of such debt shall be brought against such company      within one year after the debt shall become due; and no suit      shall be brought against any stockholder *  *  * until an      execution against the company shall have been returned      unsatisfied in whole or in part.'

Section 12 of the act will also throw some light on the present controversy. It provided that within 20 days from January 1st in every year every company organized under the act should make a report, which should be published, which should state the amount of the capital of the company, the proportion paid in, and its existing debts, and which should be signed by the president and a majority of the trustees, and verified by the oath of the president, and filed in the office of the clerk of the county where the business of the company was carried on; and if any of said companies should fail to do so, all the trustees of the company so failing should be jointly and severally liable for its debts then existing.

The defendant contended on several grounds that the declaration set out no cause of action on which the suit could be maintained against him. The first ground was that the liability of the stockholders under section 10 of the act under which the company was organized, and which the suit was brought to enforce, was in the nature of a penalty, and could not be enforced in any court sitting beyond the limits of the state by which the law was passed.

It is well settled, and is not denied by plaintiff's counsel, that the penal laws of one state can have no operation in another. They are strictly local, and affect nothing more than they can reach. The Antelope, 10 Wheat. 66; Scoville v. Canfield, 14 Johns. 338; ''Western Transp. Co. v. Kilderhouse, 87 N. Y. 430; Lemmon v. People, 20, N. Y. 562; Henry v. Sargeant'', 13 N. H. 321; Story, Confl. Laws, (8th Ed.) § 621.

Upon this branch of the case the question for solution is, therefore, whether the individual liability of stockholders provided for by section 10, above quoted, is in the nature of a penalty, or whether it is, as plaintiffs contend, based on a contract between the stockholders and the creditors of the company. We think the liability imposed by section 10 is a liability arising upon contract. The stockholders of the company are by that section made, severally and individually liable within certain limits to the creditors of the company for its debts and contracts. Every one who becomes a member of the company by subscribing to its stock assumes this liability, which continues until the capital stock is all paid up and a certificate of that fact is made, published, and recorded. The fact that the liability ceases when these events take place does not change its nature and make that a penalty which would, without such limitation, be a liability founded on contract. Such has been the construction given to section 10 by the court of appeals of New York. In the case of Wyles v. Suydam, 64 N. Y. 173, that court had under consideration sections 10 and 12 of the act under which the Pensacola Lumber Company was organized. The complaint alleged the liability of the defendant, both as a stockholder under section 10 and as a trustee under section 12. The complaint was demurred to, on the ground that two causes of action were improperly joined. The court sustained the demurrer. In giving the reasons for its judgment it said:

'The cause of action against the defendant as a stockholder     consists of the debt and the liability created by statute      against stockholders where the stock has not been paid in and      a certificate of that fact recorded. In effect the statute in     such a case withdraws the protection of the corporation from      the stockholders, and regards them liable to the extent of      the amount of their stock as copartners. Corning v.     McCullough, 1 N. Y. 47. The allegations in the complaint are     sufficient to establish a perfect cause of action against the defendant as a stockholder, primarily      liable for the debts to the amount of his stock.

'The allegations against the defendants as trustee also     constitute a distinct and perfect cause of action, but of an      entirely different character. Here the liability is created     by statute, and is in the nature of a penalty imposed for      neglect of duty in not filing a report showing the situation      of the company. The object of the action is the same, viz.,     the collection of a debt; but the liability and the grounds      of it are entirely distinct and unlike. That there are two     causes of action in this complaint seems too clear to require      much argument. The first cause of action against the     defendant as a stockholder is an action on contract. The     six-years' statute of limitation applies. 1 N. Y. supra. The     defendant is entitled to contribution. But in respect to the     action against defendant as trustee, this court held, in      Merchants' Bank v Bliss, 35 N. Y. 412, that the three-years'      statute of limitations applied under the following provision      of the Code: 'An action upon a statute for a penalty or      forfeiture when the action is given to the party aggrieved."

This decision is upon the precise point of the controversy in this case. It declares that the liability such as that which the plaintiffs in this action seek to enforce is one arising upon contract, and is not in the nature of a penalty. This decision has never been modified or overruled by the court of appeals of New York.

We think this is a case where the construction of the state court is entitled to great, if not conclusive, weight with us. It is the settled construction of a law of the state, upon which the rights and liabilities of a large number of its citizens must depend. If the viability of a stockholder under section 10 arises upon contract, the six-years limitation applies to it; if the liability is in the nature of a penalty, the three-years' limitation applies. It is clear that confusion and uncertainty would result should the state and federal courts place different constructions on the section. Such a result ought, if possible, to be avoided. It is true that this decision was made after the defendant had become a stockholder in the Pensacola Lumber Company, but there had been no previous contrary decision. As said by this court in Burgess v. Seligman, 107 U.S. 20, [S.C.. 2 SUP. CT. REP. 10,] 'even in such cases, for the sake of harmony and to avoid confusion, the federal courts will lean towards an agreement of views with the state courts if the question seems to them balanced with doubt.'

If this were a case arising in the state of New York we should therefore follow the construction put upon the statute by the courts of that state. The circumstance that the case comes here from the state of Florida should not leave the statute open to a different construction. It would be an anomaly for this court to put one interpretation on the statute in a case arising in New York and a different interpretation in a case arising in Florida. Our conclusion, therefore, is that this action was not brought to enforce a liability in the nature of a penalty. The right of the plaintiffs to sue upon this liability in any court having jurisdiction of the subject-matter and the parties is therefore clear. Dennick v. Railroad Co. 103 U.S. 11.

The next contention of the defendant is that the recovery of a judgment against the company in the state of New York on the debt due the plaintiffs, and the issue of an execution thereon, returned unsatisfied, is a necessary condition to the liability of the defendant; and as the declaration only avers the recovery of a judgment in the state of Florida it is insufficient. It appears from the declaration that before the year allowed by section 24 of the statute for bringing suits against the company on the debts due the plaintiffs had expired, the company had been adjudicated a bankrupt by the district court of the United States for the southern district of New York; that all its property had been sold, and the proceeds thereof were insufficient to pay the costs and expenses of the bankruptcy proceedings.

Although it has been held by the court of appeals in the case of the Rocky Mountain Bank v. Bliss, 89 N. Y. 338, that a judgment in a court of the state of New York was necessary to fix the liability of a stockholder under section 10 of the act under consideration, yet the same court, in the case of Shellington v. Howland, 53 N. Y. 371, held that in an action brought to charge a defendant as stockholder in a company organized under the same law, an adjudication in bankruptcy of the company excused a compliance with the condition, which required a suit to be brought against the company within a year after the maturity of the debt, and a judgment to be recovered and an execution to be issued thereon and returned unsatisfied. We see no reason why we should not follow this decision, and it is conclusive of the question under consideration.

The object of section 24 was to compel the creditor to exhaust the assets of the company before seeking to enforce the liability of the stockholder. When the declaration shows that this was done, and that a literal performance of the condition would have been vain and fruitless, the performance of the condition may well be held to have been excused.

Lastly, it is objected that the declaration sets out a case which should have been prosecuted in equity and not at law. There is no ground for this objection to rest on. In the cases of Pollard v. Bailey, 20 Wall. 520, and Terry v. Tubman, 92 U.S. 156, to which we are referred in its support, the liability of the stockholders was in proportion to the stock held by them. Each stockholder was, therefore, only liable for his proportion of his debts. This proportion could only be ascertained upon an account of the debts and stock, and a pro rata distribution of the indebtedness among the several stockholders. This, the court held, could only be done by suit in equity. But in this case the statute makes every stockholder individually liable for the debts of the company for an amount equal to the amount of his stock. This liability is fixed, and does not depend on the liability of other stockholders. There is no necessity for bringing in other stockholders or creditors. Any creditor who has recovered judgment against the company and sued out an execution thereon, which has been returned unsatisfied, may sue any stockholder, and no other creditor can. Such actions are maintained without objection in the courts of New York under section 10 of the statute relied on this case. Shellington v. Howland, supra; Weeks v. Suydam, 64 N. Y. 173; Handy v. Draper, 89 N. Y. 334; ''Rocky Mountain Nat. Bank v. Bliss'', Id. 338.

We have considered all the objections made to the declaration. In our opinion none of them are well founded. Our conclusion is, therefore, that the declaration was sufficient, and it follows that the judgment of the circuit court declaring it insufficient must be reversed, and the cause remanded for further proceedings in conformity with this opinion.

title: Flash v. Conn/Opinion of the Court


text: Talk:Flash v. Conn/Opinion of the Court

title: Talk:Flash v. Conn/Opinion of the Court


text:
Terre Haute Railway Company v. Struble

John G. Williams, for plaintiff in error.

''Jeff. Chandler'', for defendant in error.

HARLAN, J.

title: Terre Haute Railway Company v. Struble


text: Talk:Terre Haute Railway Company v. Struble


text:
Terre Haute Railway Company v. Struble/Opinion of the Court

This action was brought by Struble, the defendant in error, to recover damages for an alleged breach of a written contract entered into between him and the Terre Haute & Indianapolis Railroad Company. A verdict and judgment were rendered in favor of plaintiff for the sum of $10,440. The defendant moved for a new trial and in arrest of judgment and both motions having been denied, the case has been brought here for review.

By the contract in question, Struble obligated himself to build and keep in good order, on his leased grounds in East St. Louis, Illinois, all necessary stock-yards and feeding-pens suitable for the reception, feeding, handling, loading, and unloading of live-stock whic might be shipped or transported over the Terre Haute & Indianapolis Railroad to and from East St. Louis; to receive and unload all live-stock over that road; to collect all freight and charges on same and pay over to the company or its authorized agents all moneys so collected; to order from the proper agent of the company all cars necessary for the transportation of live-stock from East St. Louis; to load in a proper manner all live-stock for transportation from that place by that company; to bed such cars at a cost to shippers of not more than one dollar per car, to be collected by him from shippers; and to attend to all other necessary matters pertaining to the safe and prompt loading of all such live-stock for transportation over that road.

The company, in consideration of the performance by Struble of the stipulations of the contract, agreed to build all necessary loading schutes for the use of the company connected with said yards; to send all live-stock coming to East St. Louis over its road to Struble's yards, except such as may be specially ordered otherwise by shippers or owners; to pay him 50 cents per load for all stock received by him over the road and unloaded in his yards, and two dollars for each and every car of live-stock loaded by him to be transported by the company from East St. Louis; and to give him the loading of all live-stock which may be transported over its road from that city. Struble's yards were completed and opened for business in December, 1870. From that date until some time in October, 1873, all live-stock coming to East St. Louis over defendant's line was unloaded at those yards, and live-stock shipped over that road from that city was loaded by Struble. Early, however, in the fall of 1873 the National Stock-yards were completed and opened for business. They were just outside of the corporate limits of East St. Louis, and near defendant's road. The plaintiff claimed that up to October, 1873, he performed all the conditions of the contract, and was ready, willing, and able to comply with it in all respects until it should, by its own terms, be terminated, but that he was prevented by defendant after that date from fully executing it. All this the defendant denied.

The record contains numerous assignments of error, but we shall notice only such as are relied on in argument. They seem to embrace every essential question in the case.

1. It is claimed that the court below erred in admitting evidence offered by the plaintiff. The specification under this head refers to evidence as to the number of cars loaded with live-stock and taken by the defendant from the National Stock-yards between August 1, 1874, and April 1, 1880. The contention of plaintiff was that, within the meaning of the contract, he was entitled to load those cars, and recover therefor from the defendant the price fixed in the contract for such services; this upon the alleged ground that that stock had not been specially ordered by shippers or owners to the National Stock-yards, and could have been directed by the defendant to Struble's yards had it made any or proper effort to do so. In this view the evidence objected to was competent, as furnishing a basis to estimate the damages which plaintiff sustained by reason of the breach of the contract, if such breach was established by the evidence.

2. The court, among other things, said to the jury that in determining the quantity of stock that would probably have been shipped from the plaintiff's yards, they should include only such as the jury believed would have been possible for the defendant to direct to those yards. In the same connection the court said:

'The jury, in considering the meaning of the words 'all     live-stock which may be transported over the said railroad      from East St. Louis,' found in the last clause of the      contract sued on, must determine from all the evidence before      them what stock is included. The words evidently apply to     such stock as in the ordinary course of the defendant's      business should be shipped from that point over their line of      railroad. It applies to all such stock whether loaded at     plaintiff's yards or some other yards used for loading stock      so shipped. As already suggested, it should be applied only     to stock which it was possible for defendant to have loaded      by plaintiff. It does not apply to stock, the owner or     shipper of which directed the loading to be done by some      person other than the plaintiff, and over the loading of      which defendant had no control.'

We are of opinion that there was no error in these instructions. The contract contemplated, upon the part of Struble, all the preparations necessary in and about his yards to meet the necessities of the company's business in the transportation of live-stock; and upon the part of the company that it would do all it could, in the absence of special orders from shippers, to bring live-stock to plaintiff's yards to be by him loaded in cars for transportation over defendant's road. Such was, in substance, the direction given to the jury. The court could not, under any reasonable interpretation of the contract, have said less than it did.

3. It is assigned for error that the court overruled defendant's motion for a new trial. A large part of the printed argument on behalf of defendant is devoted to a discussion of the grounds assigned in support of the motion for a new trial. But the action of the court below in refusing a new trial is not subject to review here. This has long been settled by the decisions of this court. Railroad Co. v. Fraloff, 100 U.S. 24; ''Wabash Ry. Co. v. McDaniels''. 107 U.S. 456; [S.C.. 2 SUP. CT. REP. 932.]

The judgment must be affirmed. It is so ordered.


text: Talk:Terre Haute Railway Company v. Struble/Opinion of the Court


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Miller v. Mayor of the City of New York

On the sixteenth of April, 1867, the legislature of New York passed an act creating a corporation by the name of the New York Bridge Company, for the purpose of constructing and maintaining a permanent bridge over East river, between the cities of New York and Brooklyn. Laws 1867, c. 399. The act, among other things, authorized the corporation to acquire and hold so much real estate as might be necessary for the site of the bridge, and of all piers, abutments, walls, toll-houses, and other structures proper to it, and for the opening of suitable avenues of approach, but no land under water beyond the pier lines established by law. It declared that the bridge at the middle of the river should not be at a less elevation than 130 feet above high tide, and should not be so constructed as to obstruct 'the free and common navigation of the river;' that it should not obstruct any street it might cross, but span such street by an arch or suspended platform of suitable height to afford passage under it for all purposes of public travel and transportation; and that no street running on the line of the bridge should be closed without full compensation to the owners of the property upon it; and designated the points of the commencement and termination of the bridge.

On the twentieth of February, 1869, the legislature passed an act amending the act of incorporation, and providing for the representation of the two cities of New York and Brooklyn in the board of directors of the bridge company, and directing that the company should proceed without delay to construct the bridge, authorizing it, for that purpose, to use and occupy so much of the lands under the water of the river, not exceeding a front on either side of 250 feet, nor extending beyond the pier lines, as might be necessary for the construction of the towers of the bridge.

On the third of March of the same year congress passed an act entitled 'An act to establish a bridge across East river between the cities of Brooklyn and New York, in the state of New York, [as] a post-road.' In it the acts of the legislature of New York are referred to, and the bridge to be constructed under them was declared to be 'a lawful structure and post-road for the conveyance of the mails of the United States,' provided the bridge should be so constructed and built as 'not to obstruct, impair, or injuriously modify the navigation of the river.' To secure a compliance with this condition the company was required, previous to commencing the construction of the bridge, to submit to the secretary of war a plan of it, with a detailed map of the river at its proposed site, and for the distance of a mile above and below, exhibiting the depths and currents of the stream, together with such other information as might be deemed requisite by the secretary to determine whether the bridge, when built, would conform to the prescribed conditions of the act 'not to obstruct, impair, or injuriously modify the navigation of the river.'

The secretary of war was, by the act, authorized and directed, upon receiving the plan and map, and other information, and upon being satisfied that a bridge built on such plan and at said locality would conform to these conditions, to notify the company that he approved the same; and, upon receiving such notification, the act declared that such company might proceed to the erection of the bridge, conforming strictly to the approved plan and location. But until the secretary spproved the plan and location, and notified the company of the same in writing, the bridge should not be built or commenced.

Soon after the passage of this act the company had the required plan and maps prepared and submitted to the secretary of war. It is conceded that in this respect the provisions of the act were complied with. The secretary then appointed a commission of engineers, consisting of three officers of the army, two of them having the rank of lieutenant colonel of engineers, and the third a captain of engineers, to examine and report upon the proposed bridge, its height, strength, plan, location, and practicability, the effect of its piers and foundations and abutments upon the navigation of the river and the approaches to the harbor, and to what extent the bridge might obstruct or interrupt the passage of vessels and the free access to the United States navy-yard at Brooklyn. The commission heard all parties interested, and made an elaborate report upon the subject to the chief engineer of the United States army, at Washington, and through him the report was submitted to the secretary of war. A majority of the commission was of opinion that the height of the center of the main span of the bridge above high water should be increased from 130 to 135 feet. They also made various recommendations with reference to the dimensions and strength of various parts of the structure, to the projection of the pier or tower foundations of the bridge, and to the attachment of guys or stays to its main span. They reported as their conclusions:

(1) That there was no doubt of the entire practicability of     the structure, nor of its stability when completed; (2) that      no sensible effect would be produced by the pier or tower      foundations and abutments upon the navigation of the river,      or upon the approaches to the harbor of New York; (3) that the bridge would not offer any important impediment      to the free access of naval vessels to the United States      navy-yard at Brooklyn, nor any obstruction or interruption to      the passage of merchant vessels under it, further than      requiring the larger class of ships to send down or house      their royals, and in some cases their top-gallant masts; (4)      that the bridge, as projected, would conform to the      prescribed conditions of the act of congress relating to it,      unless it be decided that the words 'obstruct or impair'      implied that it should not necessitate any such preparation      for passing it, on the part of vessels of the larger class,      as is involved in housing or sending down of top-gallant,      royal, or sky-sail masts.

On the nineteenth of June, 1869, the secretary of war approved the report of the commission, with the views and recommendations it contained, provided that the height of the center of the main span of the bridge should not be less than 135 feet in the clear at mean high water of the spring tides, and that the structure should conform in all other respects to the conditions recommended by the commission. The secretary also directed the chief of engineers to furnish the bridge company with a copy of the act of congress establishing the bridge, a copy of the report of the commission and of his own report, and to notify the company that the span and location of the bridge were approved subject to the conditions mentioned. This action of the secretary was indorsed on the report. In accordance with his direction, the chief engineer notified the company of the approval of the secretary and of the conditions which accompanied it. construction of the bridge and prosecuted the same until the year 1875, when the legislature of the state passed an act dissolving the company and declaring the bridge to be a public work of the cities of New York and Brooklyn, and providing for its completion by them. It is conceded by stipulation of the parties that the provisions of this act were complied with, and that the management of the work was devolved upon trustees to be appointed by the two cities. When this suit was commenced, the work had progressed so far that the towers and anchorages on both sides of the river had been completed, and upwards of $6,000,000 had been expended; and, as already said, since that time the bridge has been completed and opened to the public.

''Wm. H. Arnoux'', for appellant.

[Argument of Counsel from pages 390-391 intentionally omitted]

''Jos. H. Choate'', for appellee.

FIELD, J.

title: Miller v. Mayor of the City of New York


text: Talk:Miller v. Mayor of the City of New York


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Miller v. Mayor of the City of New York/Opinion of the Court

This suit was commenced in May, 1876, to restrain the erection of the suspension bridge then under construction over East river, in the state of New York, between the cities of New York and Brooklyn, at the height of 135 feet above the river at high-water mark, which was the proposed elevation of the structure. As the bridge has since been completed, if the plaintiff can make good his contention, and establish that when he filed his bill he was entitled to the relief prayed, he may claim that the bridge shall be raised to a greater elevation, or be entirely abated. He is the lessee of certain warehouses on the banks of the river above the point of the proposed crossing of the bridge, and he states that he brings the suit on behalf of himself and of all others similarly situated. No one, however, has united with him in its prosecution. He stands alone as complainant, and alleges that the bridge, if erected as projected and intended to the height designated, would be built without lawful power and authority; that it would be a nuisance, and obstruct, impair, and injuriously modify the navigation of the river, and might seriously and prejudicially affect the commerce of the port of New York; that merchant vessels from the New England states and British provinces, and from ports south of New York, and vessels engaged in foreign commerce, pass and repass on the river the intended location of the bridge; that the masts of a large proportion of these vessels exceed 135 feet in height; and that the expense to them of striking parts of their masts in passing under the bridge if built as proposed, with the detention and additional towage rendered necessary, would be so great as to destroy his warehouse business and be a private and irreparable injury to him, for which an action at law would afford no adequate redress. He accordingly prays an adjudication of the court upon the character and effect of the proposed bridge in conformity with these allegations, and an injunction restraining the further prosecution of the work of building it at the height of 135 feet above mean high-water, or at any other height that would obstruct, impair, or injuriously modify the navigation of the river.

The court below did not find in the allegations of a possible loss to the plaintiff in his warehouse business, or in the proofs offered to sustain them, sufficient ground to restrain the completion of the work. It dismissed his complaint as being without substantial merit. We approve of its action and decree. The erection of the bridge at the elevation proposed was authorized by the action of both the state and federal governments. It would, therefore, when completed, be a lawful structure. If, as now completed, it obstructs, in any respect, the navigation of the river, it does so merely to an extent permitted by the only authorities which could act upon the subject. And the injury then apprehended, and alleged by the plaintiff and now sustained, is only such as is common to all persons engaged in commerce on the river and doing business on its banks, and therefore not the subject of judicial cognizance. These conclusions will clearly appear by a reference to the legislation under which the work was commenced and prosecuted.

It is contended by the plaintiff with much earnestness that the approval of the secretary of war of the plan and location of the bridge was not conclusive as to its character and effect upon the navigation of the river, and that it was still open to him to show that if constructed as proposed it would be an obstruction to such navigation as fully as though such approval had not been had. It is argued that congress could not give any such effect to the action of the secretary, it being judicial in its character. There is in this position a misaprehension of the purport of the act. By submitting the matter to the secretary, congress did not abdicate any of its authority to determine what should or should not be deemed an obstruction to the navigation of the river. It simply declared that, upon a certain fact being established, the bridge should be deemed a lawful structure, and employed the secretary of war as an agent to ascertain that fact. Having power to regulate commerce with foreign nations and among the several states, and navigation being a branch of that commerce, it has the control of all navigable waters between the states or connecting with the ocean, so as to preserve and protect their free navigation. Its power, therefore, to determine what shall not be deemed, so far as that commerce is concerned, an obstruction, is necessarily paramount and conclusive. It may in direct terms declare absolutely, or on conditions, that a bridge of a particular height shall not be deemed such an obstruction; and, in the latter case, make its declaration take effect when those conditions are complied with. The act in question, in requiring the approval of the secretary before the construction of the bridge was permitted, was not essentially different from a great mass of legislation, directing certain measures to be taken upon the happening of particular contingencies, or the ascertainment of particular information. The execution of a vast number of measures authorized by congress, and carried out under the direction of heads of departments, would be defeated if such were not the case. The efficiency of an act as a declaration of legislative will must, of course, come from congress, but the ascertainment of the contingency upon which the act shall take effect may be left to such agencies as it may designate. South Carolina v. Georgia, 93 U.S. 13.

It is also objected that the notice given by the chief engineer to the company was not a compliance with the requirement that notification should be given by the secretary; but there is not force in the objection. When a secretary of the government is required to give information on any subject, he may act, and generally does act, through officers under him. He is not expected to make over his own signature all the communications required from the department of which he is the head. It would be impracticable for him to do so. The official communication is deemed made by him when it is made under his sanction and direction.

The bridge being constructed in accordance with the legislation of both the state and federal governments, must be deemed a lawful structure. It cannot, after such legislation, be treated as a public nuisance; and however much it may interfere with the public right of navigation in the East river, and thereby affect the profits or business of private persons, it cannot, on that ground, be the subject of complaint before the courts. The plaintiff is not deprived of his property nor of the enjoyment of it; nor does he from that cause suffer any damage different in character from the rest of the public. He alleges that his business of a warehouse-keeper on the banks of the river above the bridge will be in some degree lessened by the delay attending the passage under it of vessels with high masts. The inconvenience and possible loss of business from this cause are not different from that which others on the banks of the river above the bridge may suffer. Every public improvement, while adding to the convenience of the people at large, affects more or less injuriously the interests of some. A new channel of commerce opened, turning trade into it from other courses, may affect the business and interests of persons who live on the old routes. A new mode of transportation may render of little value old conveyances. Every railway in a new country interferes with the business of stage coaches and side-way taverns; and it would not be more absurd for their owners to complain of and object to its construction than for parties on the banks of the East river to complain of and object to the improvement which connects the two great cities on the harbor of New York.

Several cases have been before this court relating to bridges over navigable waters of the United States in which questions were raised as to the authority by which the bridges could be constructed, the extent to which they could be permitted to obstruct the free navigation of the waters, and the right of private parties to interfere with their construction or continuance. In these cases all the questions presented in the case at bar have been considered and determined, and what we hereafter say in this opinion will be little more than a condensation of what was there declared. The power vested in congress to regulate commerce with foreign nations and among the several states includes the control of the navigable waters of the United States so far as may be necessary to insure their free navigation; and by 'navigable waters of the United States' are meant such as are navigable in fact, and which, by themselves or their connection with other waters, form a continuous channel for commerce with foreign countries or among the states. The Daniel Ball, 10 Wall. 557. East river is such a navigable water. It enters the harbor of New York and connects it with Long Island sound. Whatever, therefore, may be necessary to preserve or improve its navigation the general government may direct; and to that end it can determine what shall and what shall not be deemed an interference with or an obstruction to such navigation.

In the Wheeling Bridge Case, a bridge erected over the Ohio river at Wheeling, under an act of the legislature of Virginia, which prevented the passage of steam-boats with high chimneys, was adjudged to be an unlawful structure; and the court ordered that it should be raised so as to afford a free passage to the steamers, or that some other plan should be adopted by a day designated which would relieve the navigation from the obstruction, or that the bridge should be abated. Congress thereupon interfered, and declared the bridge, as it was built at its existing elevation, to be a lawful structure. The court then held that the objection to the bridge as an obstruction to the navigation of the river was removed; that although it might still be an obstruction in fact, it was not so in contemplation of law, and the decree of the court for the abatement of the bridge could not be enforced. 'There was no longer,' said the court, 'any interference with the enjoyment of the public right, inconsistent with the law, no more than there would be where the plaintiff himself had consented to it after the rendition of the decree.' For its interference with the public use of the stream no individual could complain, as the power which could control and regulate that use had made the structure creating the interference a lawful one. 18 How. 430.

The case of Gilman v. Philadelphia, 3 Wall. 713, is much stronger than the Wheeling Bridge Case, and is conclusive against the pretensions of the plaintiff. It there appeared that a bridge was about to be built over the Schuylkill river at Chestnut street in the city of Philadelphia, under the authority of an act of the legislature of Pennsylvania, when a party owning valuable coal wharves just above Chestnut street filed a bill to prevent its erection, alleging, as in the present case, that it would be an unlawful obstruction to the navigation of the river, and a public nuisance, inflicting upon him special damage, and claiming that he was entitled to be protected by an injunction to restrain the progress of the work, and to a decree of abatement should it be completed. The river was tide-water, and navigable to the wharves of the plaintiff by vessels drawing from 18 to 20 feet of water; and, for years, commerce to them had been carried on in all kinds of vessels. The bridge was to be only 30 feet high and without draws, and, of course, would cut off all ascent above it of vessels carrying masts. The city justified its intended action under the act of the legislature, setting up that the bridge was a necessity for public convenience to large population residing on both sides of the stream. The court below dismissed the bill, and this court affirmed its decree, holding that as the river was wholly within her limits the state could authorize the construction of a bridge until congress should, by appropriate legislation, interfere and assume control of the subject. In giving its opinion the court observed that it should not be forgotten that bridges which are connecting parts of turnpikes, streets, and railroads are means of commercial transportation as well as navigable waters, and that the commerce over them may be greater than on the water; that it was for the municipal power to determine which should be preferred, and how far either should be made subservient to the other; and that this power could be exercised by the state until congress interfered and took control of the matter.

All the considerations which governed the decision of that case operate with equal, if not greater, force in the present case. In that case different parts of a city separated by a navigable water were connected by a bridge; in this case two cities thus separated are united. In that case the obstruction was complete and permanent to all vessels having masts; in this case the obstruction does not exist except to a limited class of vessels having high masts, and to them it is little more than a temporary inconvenience. In that case there was no approval of the structure by congress, except such as may be inferred from its silence; in this case there is its direct authorization of the bridge after a careful consideration of its effect upon navigation by a commission of distinguished engineers. In that case the bridge was held to be a lawful structure against all private parties, the federal government alone having the right to object to the obstruction to the navigation of the river which it might cause and to remove it; in this case that government does not object, but approves and sanctions the structure; and the public benefit from it far outweighs any inconvenience arising from its interference with the navigation of the stream.

The recent case of Escanaba Co. v. Chicago, 107 U.S. 678, [S.C.. 2 SUP. CT. REP. 185,] follows the decision in Gilman v. Philadelphia, and is equally pointed and decisive. In the light of these cases (and others of the same purport might be cited) the claim of the plaintiff that the construction of the great work which was to connect, and which has since then connected, the cities of New York and Brooklyn should have been suspended, appears to be wholly without merit.

The decree of the court below be affirmed; and it is so ordered.


text: Talk:Miller v. Mayor of the City of New York/Opinion of the Court


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Memphis Gas-Light Company v. Taxing District of Shelby County, Tennessee

Henry Craft, George Gantt, and Josiah Patterson, for plaintiff in error.

J. B. Heiskell, for defendant in error.

MILLER, J.


text: Talk:Memphis Gas-Light Company v. Taxing District of Shelby County, Tennessee