text:
Markey v. Langley

APPEAL from the Circuit Court of the United States for the District of South Carolina.

The Kalmia Mills, a corporation under the laws of South Carolina, having commenced the erection of a factory, borrowed from W. C. Langley & Co. of New York, in July, 1866, $150,000 upon a mortgage of its entire property. The notes given therefor were indorsed by B. F. Evans, president of the company, and by H. Cogswell and B. Mordecai, upon whom devolved the management of the mills, and the entire responsibility for the payment of its debts.

In October, 1866, an additional loan, secured in like manner, was made by Langley & Co. Both mortgages contain covenants, in case of default in the payment of either the principal or interest of the notes, that it should not be necessary to apply to a court for a foreclosure, but the mortgagees should have full power and authority to put the premises into the hands of some good broker and auctioneer, to be sold for cash or credit at their option and direction, at public sale, to the highest bidder, after thirty days' advertisement of the time and place of sale; the surplus from such sale, if any there should be after deducting expenses and the amount of the notes, to be paid to the said Kalmia Mills. To carry into effect this intent, the partners of the firm of Langley & Co. and the survivor were made the attorneys, irrevocable, of the corporation, to convey to the purchaser in fee-simple with such covenants of warranty as are usually inserted in conveyances of real estate; 'and, further, to do and perform all and every other act and acts, thing and things, which shall or may be necessary and proper for the full and complete effecting and performing of the covenants and agreements herein contained.'

No payment having been made, Langley & Co., on the 16th March, 1867, placed the property in the hands of Wardlaw & Carew, brokers, of Charleston, and duly advertised the same for sale. The terms were declared to be one-third of the purchase-money in cash; the remainder at six, nine, and twelve months, secured by a mortgage on the property.

The corporation seems to have been regarded as practically insolvent by its creditors, as well as by Evans, Cogswell, and Mordecai. The latter determined, in order to save themselves, to purchase the property at the sale. Advised that, being officers of the corporation, it was expedient, if not essential, that they should buy at such a sum as would, with the other assets of the company, be sufficient to pay all its debts, they announced their determination to the creditors to do so. Among them were Markey & Co., the contractors and builders engaged in erecting the factory, who had a written contract with the corporation prior in date to its said mortgages, but which, not having been recorded at the time they were executed, was not a lien on the building. It was recorded a few days before the sale, and from that date took effect as a lien for no 'greater sum than the just value which such building gave to the lands upon which it was erected:' it 'impaired no prior lien.' 6 Stat. S.C.. 32.

Markey & Co., being informed by the counsel of Langley & Co. of the intention of Evans, Cogswell, and Mordecai, to purchase, and having obtained from the latter a guaranty, that, in case they became the purchasers, they would continue the contract, and indemnify them from any loss from the failure of the Kalmia Mills to pay the amount due thereon, made no objections to the sale.

Evans, Cogswell, and Mordecai computed that $20,000, in addition to the assets of the company not covered by Langley & Co.'s mortgages, would suffice to pay the creditors in full, and announced that they were prepared to bid that sum in excess of the mortgage-debts. This intention they communicated to the creditors generally, and explained to Langley & Co. that their purpose was to form a new company, and raise by subscriptions to the capital stock a sufficient amount to pay off all debts, and to put the factory into operation; that, of course, they would be dependent upon indulgence as to payment, and aid to enable them to carry out the intention. Langley & Co., without committing themselves to any definite promise of assistance, expressed a willingness to give any reasonable indulgence as to time, provided adequate security were given. The determination to bid a sum estimated to be sufficient to pay all the creditors, and the announcement to them, were based upon the opinion that Langley & Co. had the authority and power as well as the willingness to extend to them, if they should be the purchasers and give satisfactory security, more favorable terms as to payment than those formally announced in the advertisement. The sale was made on the 23d of April, 1867, without objection or protest, the auctioneers announcing the terms as advertised, and adding that they were authorized to say that 'the purchasers will be able to negotiate more favorable terms with the sellers, provided it is to their mutual interests.' Langley & Co. had the property put up at the amount of the debt due to them. Cogswell, the only bidder, bid $20,000 over and above that amount, and became the purchaser 'for and on behalf of himself, Evans, Mordecai, and such other persons as should contribute to the purchase-money, and come in and unite with them in the formation of a new company for the purpose of carrying out the contemplated enterprise.'

The result of the sale being announced to Langley & Co., a personal negotiation was entered into between that firm and Cogswell, Evans, and Mordecai. The latter represented that they were unable to comply with the requirement as to the cash payment of $71,445.69, and asked for one year's indulgence, claiming that the expectation of receiving it had induced them to bid in the property. Langley & Co. reiterated their willingness to give it, provided their rights and interests were preserved and protected by additional adequate security.

This negotiation resulted in a written contract between the parties, in which were recited the sale, and the inability of the purchasers to comply with its terms; and it was agreed that Langley & Co. would 'accept in payment of the debt due to them this day by the Kalmia Mills under the said mortgages-the following notes of the said Cogswell, Evans, and Mordecai, under seal-one note (for the principal of the said debt) for $180,000, payable on 12th January, 1868, with interest from date; and three other notes (for the interest), each for $4,779.02, payable at five, six, and seven months, with interest from date: and upon execution and delivery of the said notes, and also of another note for the sum of _____ dollars,-which, being for an amount over and above the debt of the Kalmia Mills to Langley & Co., is to be assigned by them to the Kalmia Mills,-the said Langley & Co. will, as the attorney of the Kalmia Mills, execute a conveyance to Harvey Cogswell, in trust, first to pay said notes for the purchase-money, and then in trust for such uses as he and the said Evans and Mordecai shall by deed declare; and will enter satisfaction on the two mortgages of the Kalmia Mills, provided that the said Cogswell, Evans, and Mordecai shall within a reasonable time execute to Langley & Co. bonds and mortgages of their individual property therein specified, conditioned for the payment of all the notes given for the purchase-money.'

This agreement was carried out, and Langley & Co. received the five notes stipulated to be given,-four for the amount the mortgage-debt; and one for $20,000, which was intended to cover the other creditors, including Markey & Co., and which was assigned to the Kalmia Mills, and delivered to Evans, the president, to be held by him for the benefit of the creditors of said company. Evans, Cogswell, and Mordecai, in pursuance of the agreement, also executed to Langley & Co. a bond of indemnity for $100,000 with the stipulated condition, and mortgages of their individual property to secure it.

Notice of the willingness of Langley & Co. to modify the terms of sale was given openly at the sale; but the modifications above stated were made without consultation with, and, as far as the evidence shows, without the knowledge of, the other creditors.

The sale having been effected, Langley & Co., on the tenth day of May, 1867, in the exercise of the powers conferred upon them by the mortgages, executed and delivered a conveyance in fee-simple to Harvey Cogswell of the entire property covered by the mortgages in trust, out of and from the purchase-money, to pay first the costs and expenses of said sale, then to pay the several notes given for the purchase-money and subject to the trusts for the payment of the entire amount of the purchase-money to and for such uses, intents, and purposes, and to and for such person or persons, and in such shares, estates, and proportions, as the said Cogswell Evans, and Mordecai shall by deed declare, limit, and appoint. The deed also contained a proviso, that in case of default of payment to the said Langley & Co. of the notes given for the purchase-money, or any or either of them, they should sell the mortgaged property without application to any court, and pay the notes from the proceeds. This deed having been duly recorded, the purchasers entered into possession, and carried on the work upon the factory. Markey & Co. having, on the 11th of June, 1867, entered into an agreement with Cogswell, trustee, stipulating for the payment of $18,000 for the work already done, and to be done, by them, continued work under their contract, and received payments from time to time therefor. The purchasers discharged several debts due to operatives and other creditors of the Kalmia Mills, in all amounting to $16,674.21. They credited these payments on the $20,000 note, the amount of which had been made up by including the debts thus paid; and it is claimed that the payments should go to the extinguishment of the note, still leaving debts of the Kalmia Mills unpaid, amounting to $22,433.08. Many new debts were also contracted by Cogswell, trustee, in the course of the year during which the effort was made to carry on the enterprise. The purchasers failed in their attempt to form a new company; and, none of the notes given by them having been paid, they, in January, 1868, requested Langley & Co. to take possession of and sell the entire property conveyed by them to Cogswell, trustee, and also the individual property mortgaged to them, to make up any loss that they might sustain on the sale of the mill property. Langley & Co., accordingly, under the powers given to them, and in compliance with the prescribed terms, advertised the mill property for sale in Charleston on the 19th March, 1868.

Markey & Co. and other creditors of the Kalmia Mills opposed the sale, and threatened proceedings in the State court to enjoin it. Langley & Co. thereupon filed their bill in the Circuit Court, setting up their rights, and praying an injunction against proceedings on the part of the creditors to stop or interfere with the sale. Answers were filed; and Markey & Co. filed a cross-bill, praying that the sale be enjoined.

While the cases were under consideration, and before the argument was concluded, the day of sale arrived; and on order was made by consent, that the sale by Langley & Co., under their power, should proceed, 'provided that the said property at said sale be not sold for a sum less than $160,000, and that $40,000 of the credit portion of the purchase-money be retained to stand in place of the property, and subject to the liens and equities of the several parties, and subject to the further order of the court.'

William C. Langley became the purchaser for $160,000; and the sale was confirmed by the court, with the same condition and proviso as to the $40,000 which was made a charge upon the property purchased by him. Langley having sold the mill property to the Langley Manufacturing Company, which has since completed the factory and put it in successful operation, an order was subsequently made by the court releasing the land from the said charge, and substituting instead his bond with approved sureties, conditioned for the payment of such portions of the purchase-money into court as it should order, not exceeding the sum of $40,000.

By order of court, with the consent of all parties, Langley & Co. proceeded to sell the individual property of Evans, Cogswell, and Mordecai, mortgaged to them to secure the bond of indemnity, and received therefrom $52,148.

The court below decreed that the arrangement made between the purchasers at the sale in 1867 and Langley & Co. was within the scope of the power, authority, and duty of the latter, and binding upon all parties; that their right to priority of payment out of the purchase-money accruing from the sale in 1868 was not waived, and that they were entitled to be paid in full before any of the creditors, either of the Kalmia Mills or of the purchasers in 1867, should receive any portion thereof; that the note for $20,000 did not rank pari passu with the notes for the rest of the purchase-money secured by the trusts of the conveyance by Cogswell; and dismissed the cross-bill.

Markey & Co. thereupon appealed to this court.

Mr. Samuel Lord, Jr., and Mr. James Lowndes, for the appellants.

Sufficient having been realized by the first sale of the property to pay both the liens of the appellees and the appellants, they were transferred to that fund, and continued upon it in the same order in which they subsisted on the premises previous to the sale. This is the settled rule of equity; and the mortgagees, having notice of the lien of the appellants, were bound to apply the fund as would a court of equity. Olcott v. Bynum, 17 Wall. 63.

The appellants insist that the appellees' control of the terms of sale ended when the property was knocked down to Cogswell, except for the purpose of executing a conveyance and receiving the purchase-money. But this the mortgagees could not do; for a power to sell at public auction cannot be executed at private sale. Greenleaf v. Queen, 1 Pet. 138. Nor can property bound by two mortgages be sold under the first, so as to discharge the lien of the second, unless the holder of the latter be made a party.

The undisputed facts as to the arrangement referred to do not sustain the legal conclusion based upon them. That the departure from the terms of a specially delegated power cannot be justified upon the plea that the principal would be benefited thereby was expressly ruled in Greenleaf v. Queen, supra.

The appellants were sui juris, resided in the State, and were represented by counsel, who had conducted the negotiations preceding the sale. Upon what ground, then, could the appellees be justified in assuming to act for them, and determine what was best calculated to 'protect their rights and further their interests'?

If the doctrine of the court below, in sustaining the transaction upon the ground 'that it would have been sanctioned by the court if application had then been made to confirm it,' be correct, it follows that the extent of a power depends, not upon the terms employed in its creation, but upon the arbitrary will of the court. There is no such principle in law; for the court had no power to sanction a departure from the terms and conditions of the instrument under which the appellees were Dolan v. The Mayor of Baltimore, 4 Gill, 405.

Equity may aid a defective execution of powers, when the defect is only formal; but it cannot supply a defect in substance. Piat v. McCullough, 1 McLean, 69.

If the position we have assumed is untenable, it is submitted that the note for $20,000 is entitled to share pari passu with all the other notes in the proceeds, not only of the mill, but of the other property.

The sale in 1867 and the acceptance of the notes of the purchasers by the appellees extinguished their mortgage-debt, and with it the priority to which they had been entitled. 2 Hilliard on Mort., c. 36, sect. 1; Dooley v. Hays, 17 S. & R. 400; Mohler's Appeal, 5 Burr. 418; Hancock's Appeal, 34 Penn. 156.

The mortgage gave the mortgagees no power to vacate or abandon a sale made at auction, or to vary its terms. The arrangement made between them and the purchasers, after the sale, was not, therefore, within the scope of their power. 1 Hilliard, 138.

The rule is settled, that, in determining the extent of a power, the intention of the parties in its creation must constitute the guide. In the case at bar, the very nature of the power rendered its exercise necessary before the sale. Montague v. Dawes, 14 Allen, 369.

The mortgagees were not made the agents of the mortgagors for the purpose of a sale. Their power was studiously limited to the selection of a 'good broker or auctioneer.'

If the power to change the terms of sale, so as to bind the junior incumbrancers, existed at all, the conclusion is irresisti ble, that it was without limit so long as the mortgagees acted in good faith.

If the parties to a contract of sale which is still executory in any manner add to, subtract from, vary or qualify, its terms, the legal effect thereof is to rescind the original contract, and substitute a new one in its place. If new terms could be substituted, so could new prices or new qualities. Stead v. Dawber, 10 Adol. & Ell. 57; Marshall v. Lynn, 6 Mess. & Wels. 109.

If, then, the agreement be regarded as a change in the terms of sale, and binding on all parties having an interest in the proceeds, its legal effect was, necessarily, to annul the public sale, and make a private one of the mortgaged premises.

''Mr. Ch. Richardson Miles, contra''.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: Markey v. Langley


text: Talk:Markey v. Langley

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title: Talk:Markey v. Langley


text:
Markey v. Langley/Opinion of the Court

The statement of facts agreed upon by the counsel of the parties has abridged our labor in this case. We shall confine our remarks to the points, which, in our judgment, require consideration, referring to the facts only so far as is necessary for the elucidation of our views.

The validity of the two mortgages executed to Langley & Co., by the corporation known as the Kalmia Mills, is not questioned; nor can it be doubted that the power to sell, which they contained, was sufficient to warrant the sale of the mortgaged premises in the manner prescribed. Olcott v. Bynum, 17 Wall. 63. The good faith of Langley & Co. in making the sale, and of Cogswell, Evans, and Mordecai in making the purchase, are undisputed. No ground is disclosed for doubt as to either of these points. All concerned acquiesced at the time, and were apparently satisfied. This litigation has grown out of the large and unexpected depreciation of the property upon which both the appellants and appellees supposed their debts were abundantly secured, and out of the proceeds of which they expected to be paid, if a sale became necessary.

Upon the default of the mortgagor, the mortgages gave the mortgagees authority 'to put the mortgaged premises into the hands of some good broker and auctioneer, to be sold for cash or credit, at the option and direction of the mortgagees, at public sale to the highest bidder, according to the custom of vendue, after advertising' as directed; and, further, 'to do and perform all and every other act and acts, thing and things, which shall or may be necessary and proper for the full and complete effecting and performing of the covenants and agreements herein contained.'

The terms of sale advertised were a cash payment of one-third of the amount bid, and the balance in six, nine, and twelve months, secured by notes and a mortgage upon the premises. At the sale, the auctioneers announced that they were authorized to state 'that the purchasers would be able to negotiate more favorable terms with the sellers, provided it was to their mutual interests.'

The property was sold to Cogswell, for himself, Evans, and Mordecai, upon a bid of the amount due Langley & Co., and $20,000 in addition. One-third of the amount bid to be paid in cash was $71,445.69. The buyers thereupon represented to Langley & Co. that it was impossible for them to make the cash payment, and asked for indulgence, and a change of the terms of the sale with respect to the times when the payments were to be made.

Langley & Co., rather than re-advertise the property and take the risk incident to offering it for sale again, entered into an agreement with the purchasers, whereby it was stipulated as follows:--

That the purchasers should give to Langley & Co. their four several promissory notes, one for $180,000, payable on the 12th of January, 1868 (being for the principal of the debt then due to them), with interest; and three others, each for $4,779.92, payable respectively at five, six, and seven months, with interest (being for interest then due on the principal debt); and, in addition, another note for $20,000, payable with interest on the 3d of April, 1868.

The title to the mortgaged premises was to be conveyed to Cogswell, first to pay the several notes for the purchase-money, and then in trust for such uses and purposes as Cogswell, Evans, and Mordecai should appoint. They were also to give to Langley & Co. their bond, secured by several mortgages upon their individual property, conditioned to pay any residuum that might be left due on the notes after exhausting the property covered by the deed of trust to Cogswell. This agreement was in all things carried out by the parties. The note of $20,000 was intended to meet the liabilities of the Kalmia Mills to its creditors, other than Langley & Co. The debt due to Markey & Co. was one of those intended to be thus provided for.

A few days before the sale, Markey & Co. put on record a contract with the Kalmia Mills, under which they had been working upon the mortgaged premises. This gave them a mechanics' lien. They threatened to enjoin the proceedings to sell by Langley & Co. Cogswell, Evans, and Mordecai thereupon gave them a guaranty, that, if the guarantors became the purchasers of the premises, they would continue the contract under which Markey & Co. had been working, and indemnify them against any loss arising from the Kalmia Mills failing to pay the amount due on the contract. This being arranged, Markey & Co. interposed no obstacle to the sale. After the sale, they entered into a contract with Cogswell, the trustee, whereby it was stipulated that they should be paid the sum of $18,000 for their work done and to be done. They continued to work under this contract, and received payments from time to time.

The enterprise in which Cogswell, Evans, and Mordecai had engaged, with the premises they had bought as its basis, having failed, they requested Langley & Co. to take possession of the premises conveyed by the trust-deed to Cogswell, and of the premises covered by the mortgages given by Cogswell, Evans, and Mordecai, and to proceed to sell under the powers contained in those instruments. Langley & Co. thereupon advertised the Kalmia Mills property to be sold on the 10th of March, 1868. Markey & Co. and other creditors threatened to interpose by injunction. Langley & Co. thereupon filed this bill to settle their rights and those of the adverse parties. On the day fixed for the sale, the Kalmia Mills property, by consent of parties, was bought by Langley for $160,000. Forty thousand dollars of the fund was reserved by order of the court to await the result of this litigation. Subsequently, by the like consent of parties, the property mortgaged by Cogswell, Evans, and Mordecai was sold, and yielded the net sum of $52,148. The proceeds of both sales were less than sufficient to satisfy the amount due Langley & Co. by $6,152.13, leaving nothing to be applied to any other liability of the Kalmia Mills.

The contest in the court below was as to the application of the proceeds of these sales. The defendants claimed that Langley & Co. should be charged with the amount of the cash bid of Cogswell at the sale under the original mortgages, $71,449.69, as so much paid to them, because they had no right to waive its payment at the time of the sale, and include it in the notes given for the purchase-money.

This, if done, would leave a residuum of the proceeds of the sales large enough to pay the balance due Langley & Co., and also the amount due on the trust-note of $20,000. Failing this, the defendants insisted that this note should be paid out of the proceeds of the Kalmia Mills property, and of the property mortgaged by Cogswell, Evans, and Mordecai severally, pro rata with the other notes given for the purchase-money.

The court below decided against them upon both points. Here the same propositions have been urged upon our attention.

The first one cannot be maintained, for several reasons.

The mortgagor makes no objection to the sale as made. If it were defective, this would cure the defect, and give it validity. Taylor's Admr. v. Chowning, 3 Leigh, 654; Benham et al. v. Rowe et al., 2 Cal. 387. If the power require the sale to be for cash, and it is made for part cash and part credit, the departure from the power is beneficial to the mortgagor, and the sale is valid. Hubbard v. Jarrell, 23 Md. 75. When the power is to sell for cash, and the sale is made accordingly, the mortgagee may allow time for the payment of the purchase-money; and whether this arrangement is made before or after the sale is immaterial. Mahone v. Williams, 39 Ala., N. S. 202.

Where mortgaged premises were offered for sale for cash under a power which required the sale to be so made, they were struck off for $2,375. The purchaser tendered $1,200 cash, and offered to give any security that might be required for the payment of the balance when the sale was confirmed. The mortgagee declined to receive the money and the security, as not in conformity with the terms of the sale. The property was offered for sale again, and bought by the mortgagee for $1,600.

The court said,--

'In determining upon the approval or rejection of the sale in such cases, the true question to be considered is, not so much whether there has been a literal or technical, as a fair and reasonable, compliance with the terms of sale, and a bona fide disposition of the property.

'Without intending to charge the mortgagee in this case with the wilful violation of his trust, the circumstances disclosed by the proof show reasonable ground for the inference that he misapprehended the nature of his duty as trustee, which required an advantageous sale of the property for the benefit of all the parties interested.'

The sale was vacated. Horsey v. Hough, 38 Md. 139. See also Gibson's Case, 1 Bland, Ch. 144; Olcott v. Bynum, 17 Wall. 63.

Where a power coupled with a discretion has been exercised, a court of equity, in the absence of fraud, very rarely interferes. Olcott v. Bynum, supra.

In this case, the mortgagees were expressly authorized to sell for cash or on credit. This gave them authority to do either, or to combine them in the sale. What was done was a simple exercise of the discretion with which they were clothed. It was in pursuance of the notice given at the vendue. It was intended to promote the sale of the premises upon the best terms that could be procured. Such an exercise of the power was as competent after as before the property was struck off. In this respect, the power is without restriction. The arrangement was apparently greatly beneficial to Markey & Co. and the unsecured creditors, as well as to Langley & Co. It does not appear that there was any bidder but the purchasers. It is clear that they could not have made the cash payment. If insisted upon, the sale would have fallen through. Besides the mortgaged premises, a large amount of additional property was pledged for the payment of the purchase-money. The light thrown backward by subsequent events shows clearly that it was the only way to secure the payment of the debt due to Langley & Co., and leave any thing for the other creditors. The arrangement seemed to furnish the means of satisfying all demands. That it failed to do this was not the fault of Langley & Co.

A mortgagee, in such circumstances, is a trustee for the benefit of all concerned. He must regard the interests of others as well as his own. He should seek to promote the common welfare. If he does this, and keeps within the scope of his authority, a court of equity will in no wise hold him responsible for mere errors of judgment, if they have occurred, or for results, however unfortunate, which he could not reasonably have anticipated. Hext v. Porcher, 1 Strob. Eq. 172.

The second proposition is also untenable.

The liens of the mortgages and the mechanics' lien attached to the proceeds of the sales in the same manner, in the same order, and with the same effect, as they bound the premises before the sales were made. Astor v. Miller and Others, 2 Paige, 68; Sweet v. Jacobs, 6 id. 355; Brown v. Stewart, 1 Md. Ch. Decis. 87; Olcott v. Bynum, 17 Wall. 63.

In the view of equity, the new securities stood in substitution for the old ones; the liens of Langley & Co. being prior in point of time to all others, and first to be paid. As the case is developed in the record, such appears plainly to have been the intent of the parties. The note of $20,000 was the last to mature.

If the sale to Cogswell had been made by a master or a trustee other than those named in the power of sale, for cash or on credit, the money, when received, would have been paid over according to the priorities of the liens of the parties entitled to receive it. Langley & Co. would have been first paid.

The fact that the sale was made by the mortgagees, acting as trustees and performing the functions of a master, does not change the principle involved, nor affect its application.

It appears that a question was raised in the court below as to the right of the unsecured creditors of the Kalmia Mills to share with Markey & Co. in the proceeds of this note. As there can be no such proceeds, we need not consider that subject.

Decree affirmed.

title: Markey v. Langley/Opinion of the Court


text: Talk:Markey v. Langley/Opinion of the Court


text:
Terry v. Tubman

ERROR to the Circuit Court of the United States for the Southern District of Georgia.

Mr. Harvey Terry for the plaintiff in error.

Mr. William H. Hull, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Terry v. Tubman


text: Talk:Terry v. Tubman

title: Talk:Terry v. Tubman


text:
Terry v. Tubman/Opinion of the Court

The plaintiff, a citizen of Georgia, brings his action to recover from Mrs. Tubman the sum of $5,400. He alleges that he holds the circulating notes of the Bank of Augusta, Ga., to that amount; and that the defendant was, in June, 1862, and thenceforth, a holder of three hundred and seven shares of the stock of that bank, of the nominal value of $100 per share.

The Bank of Augusta was chartered Dec. 27, 1845, and its charter contained the following provision:--

'SECT. 3. That the individual property of the stockholders in said bank shall be bound for the ultimate redemption of the bills issued by said bank in proportion to the number of shares held by them respectively; and, in case of a failure of said bank, all transfers of stock made within six months prior to a failure of refusal on the part of said bank to redeem its liabilities in specie when required shall be void, and the private property of the individual or individuals transferring said stock shall be liable for the redemption of the bills of said bank, as above stated.'

The defendant pleaded the Statute of Limitations, alleging that all of the bank-notes sued on were issued by the Augusta bank prior to June 1, 1865; and that, before that date, the bank had become insolvent, unable to meet its liabilities, had voluntarily stopped payment and ceased to do business, and so continued down to the time of the plea. To this plea the plaintiff demurred. The Circuit Court rendered judgment for the defendant on this plea, from which the plaintiff brings his writ of error to this court.

The Statute of Limitations of the State of Georgia was passed on the 16th March, 1869, and is as follows, so far as this action is concerned; viz.:--

'SECT. 3. And be it further enacted, That all actions on bonds or other instruments under seal, and all suits for the enforcement of rights accruing to individuals or corporations under the statutes or acts of incorporation, or in any way by operation of law, which accrued prior to 1st June, 1865, not now barred, shall be brought by 1st January, 1870, or the right of the party, plaintiff or claimant, and all right of action for its enforcement, shall be for ever barred.

'SECT. 6. That all other actions on contracts, express or implied, or upon any debt or liability whatsoever due the public, or a corporation, or a private individual or individuals, which accrued prior to the 1st June, 1865, and are not now barred, shall be brought by 1st January, 1870, or both the right and the right of action to enforce it shall be for ever barred. All limitations hereinbefore expressed shall apply as well to courts of equity as courts of law; and the limitations shall take effect in all cases mentioned in this act, whether the right of action had actually accrued prior to the 1st June, 1865, or was then only inchoate and imperfect, if the contract or liability was then in existence.'

The plea demurred to alleges, and it is to be here assumed to be true, that the bank-notes held by the plaintiff had been issued by the bank prior to June 1, 1865,-the time specified in the limitation act just quoted. It is further alleged, and to be taken as true, that, prior to that time, the bank had become notoriously insolvent, unable to meet its liabilities, and had ceased to do business.

The question is, whether the right of action now sought to be enforced had, on or before June 1, 1865, by means of these facts, accrued to the plaintiff. If it had, the present action is barred by the statute; for it can hardly be contended that this is not one of the actions embraced within the terms of the statute.

The plaintiff insists that no cause of action against the stockholder existed on the 1st of June, 1865, and not until the bank had made its assignment in 1866, its affairs had been administered, and a demand of payment of the bills had been made upon the bank, and had been refused. His fourth point is this:--

'4th, That the liability of said defendant stockholder (had not attached, and did not attach, under said charter) to pay said bank bills before the assignment of said bank and the assets of said bank had been administered and applied to payment of its debts, and did not attach until demand for payment was made on said bank bills; and, therefore, said action did not accrue before the first day of June, 1865, but accrued since the assignment of said bank, and the administration of the assets, establishing the ultimate liability of said stockholders, and since the breach of contract to pay on demand,-to wit, on the day of commencement of this suit.'

In this point the plaintiff alleges that the defendant's liability did attach when the assets of the bank had been administered and demand of payment made upon the bank, and that the defendant was not liable until that time.

The facts upon which he claims the benefit of this legal result he alleges in his complaint as follows:--

'And your petitioner avers that the said president, directors, and company of the Bank of Augusta afterwards-to wit, on the sixth day of January, A. D. 1866-assigned and conveyed, for the benefit of its creditors, all of its property, both real and personal, its choses in action, claims and demands of every kind whatever, for the payment of its debts, in redemption of its bills, and so far as it could do so by its own act, and for all the purposes of the payment of its debts in the enforcement of the collection thereof, by suit or otherwise, and for the purpose of its creation, has become and is a dissolved corporation; that it has no place of business, rendering a demand for payment of said bills and a suit against said corporation wholly futile and useless.'

There is in the complaint no allegation that payment of the bills has ever been demanded of the bank; but presentment for payment is excused on the ground that the condition of the bank rendered a demand useless. There is no averment that a judgment had been obtained against the bank, or that a suit had been commenced upon the notes. It is excused on the ground that it had assigned all of its property, and was substantially dissolved.

There is no averment that its assets had been administered and applied to the payment of its debts in any other manner than that it was insolvent, and had made an assignment of its property.

The plaintiff's allegations fall far short of what, in his points, he insists is necessary to constitute a cause of action.

The concurrence of the facts alleged in the complaint and in the manner indicated brings into operation, as he insists, the provision of the charter that the individual property of the defendant is bound for the redemption of the bills of the bank, and authorizes the present suit against the defendant.

Upon the theory of the complaint before us, the ultimate redemption, for which the property of the stockholder is by statute made liable, is not that amount or proportion remaining after the assets of the bank have been applied, so far as they will go, in payment of the bills; for there is no averment that the trust under the assignment has been closed, or that a large proportion of the amount due upon the bills will not be paid from that source. The plaintiff, in his present suit, insists that the liability of the defendant has accrued to him for the reasons, 1st, That the bank did, in 1866, assign all of its property for the payment of its debts; 2d, That thereby, for all purposes of the payment of its debts, it has ceased to exist as a corporation; and, 3d, That a demand of payment and a suit against the bank for the recovery of the bills would be useless. These facts create a liability, he insists, which justify a suit against the defendant commenced in 1872. If they do not, he shows no cause of action in his complaint.

He has, however, demurred to the defendant's plea, which averred that the same facts existed, and justified the commencement of a suit on the first day of June, 1865; in other words, that his right of action had accrued prior to June 1, 1865, and that the same is barred by the statute quoted.

Thus, when the plaintiff avers that the bank made an assignment of all its property, and thereby ceased to exist as a corporation, the defendant makes an equivalent averment when he alleges that before the first day of June, 1865, the bank had notoriously stopped payment and ceased to transact business, and has thenceforth so continued. When the plaintiff alleges that for the reasons stated a demand upon the bank for payment, or a suit against it, would be useless, the defendant makes an equivalent averment when he alleges that on the first day of June, 1865, the bank 'had become notoriously insolvent, and unable to meet its liabilities.'

It seems to be quite clear that the same allegations made by the plaintiff to show that he had a cause of action when he brought this suit in 1872 are found in the plea he has demurred to, alleging that the cause of action was in existence on the first day of June, 1865. If his complaint is good, the plea is good; if the plea is bad, the complaint is bad.

A demurrer seeks the first fault in pleading, and it is with the plaintiff that the first error exists, if error there be.

We are of the opinion, also, that the facts alleged in the plea are sufficient to make it a good plea; in other words, that the cause of action, so far as there is a separate and distinct right of action in favor of each bill-holder, was in force on the 1st of June, 1865.

We are of the opinion that it is not necessary first to exhaust the assets of the bank by legal proceeding. The case is not so much like that of the guaranty of the 'collection' of a debt, where the previous proceeding against the principal debtor is implied, as it is like a guaranty of 'payment,' where resort may be had at once to the guarantor without a previous proceeding against the principal. Wadsworth v. Wadsworth, 11 Wend, 100; 17 id. 103; 2 Pars. on Bills and Notes, pp. 142, 143.

A judgment and execution unsatisfied are evidence of insolvency, of inability to collect. They are, however, evidence only; and the fact may be established as well by other evidence, among other modes, by an assignment and continued suspension of business, or other notorious indications. Camden v. Doremis, 3 How. 533; Reynolds v. Douglas, 12 Pet. 497; 2 Am. Lead. Cas. 134-136.

We think the liability for the 'ultimate redemption' of the bills, if properly enforced, arises when the bank refuses or ceases to redeem, and is notoriously and continuously insolvent.

Kimber v. Bank of Fulton, 49 Ga. 419, is a decision directly in point by the Supreme Court of the State of Georgia.

The case of Pollard v. Bailey, 20 Wall. 520, is an authority against the maintenance of a separate action by one creditor who seeks to obtain his entire debt to the possible exclusion of others similarly situated. The proper proceeding is in equity, where all the claims can be presented, all the liabilities of the stockholders ascertained, and a just distribution made.

Judgment affirmed.

title: Terry v. Tubman/Opinion of the Court


text: Talk:Terry v. Tubman/Opinion of the Court


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Hoffman v. John Hancock Mutual Life Insurance Company

APPEAL from the Circuit Court of the United States for the Northern District of Ohio.

Mr. James A. Garfield, for the appellant, cited Insurance Company v. Wilkinson, 13 Wall. 222; Masters v. Madison County Alert Insurance Co., 11 Barb. 624; May on Ins., sects. 134, 143; Taylor v. ''Merchants' Fire Ins. Co.'', 9 How. 390; 42 N. Y. 54; 20 Barb. 468; 2 Ins. Law Jour. 23; 25 Barb. 189; Hallock v. ''Commercial Ins. Co.'', 2 Dutch. 268; 25 Conn. 207; id. 542; 43 Barb. 351; Cooper v. Pacific, 3 J. C. R. 254; 3 Ohio St. 549; 4 id. 353; ''Fraternal Life Ins. Co. v. Applegate'', 7 id. 292; Bliss on Life Ins., sect. 317.

Mr. H. L. Terrell for the appellee.

MR. JUSTICE SWAYNE delivered the opinion of the court.


text: Talk:Hoffman v. John Hancock Mutual Life Insurance Company


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Hoffman v. John Hancock Mutual Life Insurance Company/Opinion of the Court

There is a direct conflict in the testimony of the two principal witnesses in this case, and the discrepancies are irreconcilable. According to our view, the case must turn upon the application of legal principles to facts about which there is no controversy. An elaborate examination of the testimony is, therefore, unnecessary. A brief statement will be sufficient for the purposes of this opinion.

Justin E. Thayer was the general agent of the appellee at Cleveland, Ohio. He was authorized to appoint sub-agents; and on the 7th of April, 1869, appointed A. C. Goodwin such agent. This arrangement continued until the 7th of June, 1869. It was then put an end to by the parties; and they agreed that thereafter Goodwin should act as an insurance broker, and that he should receive for such applications as he might bring to Thayer thirty per cent of the first premium paid for the insurance.

On the 7th of August, 1869, Goodwin gave to Frederick Hoffman a receipt, signed by Goodwin as agent, setting forth that he had received from Hoffman $922.57, 'being the first annual premium on an insurance of $8,000 on the life of Frederick Hoffman, for which an application is this day made to the John Hancock Mutual Life Insurance Company of Boston. The said insurance to date from Aug. 7, 1869, subject to the conditions and agreements of the policies of said company, provided that the said application shall be accepted by the said company, and a policy be by them granted thereon. The said policy, if issued, to be delivered by me, when received, to the holder of this receipt, which shall then be given up. It is expressly agreed and understood, that, if the above-mentioned application shall be declined by the said company, it shall be deemed that no insurance has been created by this receipt; but the amount above receipted shall be returned to the holder of this receipt, which shall then be given up.' The amount of the premium specified was paid by Hoffman to Goodwin as follows:--

A horse valued at.................. $400.

A sixty-day note to Goodwin......... 100.

A cancelled debt owing by Goodwin to Hoffman. 53.

A premium note of................... 369.

-

$922.

-

Goodwin reported the application to Thayer, but said nothing of the receipt. Thayer forwarded the application, and in due time received the policy. Some time afterwards, Hoffman called for the policy. Thayer demanded the premium. Hoffman refused to pay it, and produced Goodwin's receipt. Thayer then, for the first time, learned the existence of the receipt and the particulars of the alleged payment of the premium. He refused to ratify the transaction.

Ineffectual attempts were made to sell the horse. Finally Thayer, to save trouble to his company, agreed, that if Hoffman would take back the horse, and pay in his stead $250 to the company, the transaction should be closed, and the policy be delivered. This Hoffman refused to do, and sued the company in the Court of Common Pleas of Cuyahoga County for what he had delivered to Goodwin. A verdict was found for the defendant. He took a new trial under the statute of Ohio. Upon the re-trial, a verdict was rendered in his favor. The defendant moved for a new trial, which was granted. In this condition of things, Hoffman died. The suit abated by his death, and was not revived. Thereupon his widow, Henrietta Hoffman, filed this bill. It prayed that the company should be compelled to deliver the policy to her, and to pay the amount of the insurance-money specified. The policy was upon what is known as the 'endowment plan.' It provided that the amount insured should be paid to Hoffman at the end of ten years, or to his wife in the event of his death in the mean time. No part of what was paid by Hoffman to Goodwin ever came into the hands of Thayer or the company, or inured in any wise to the benefit of either.

Goodwin testified that his share of the premium was 'two hundred and seventy-six dollars and some cents;' and, further, that Thayer assented to the transaction in advance, and, with full knowledge of the facts, ratified it subsequently.

If it be admitted that the facts as to assent and ratification by Thayer are as stated by Goodwin,-a concession by no means warranted, in our judgment, by the state of the evidence, the question arises, What is the legal result?

Agencies are special, general, and universal. Story's Agency, sect. 21. Within the sphere of the authority conferred, the act of the agent is as binding upon the principal as if it were done by the principal himself. But it is an elementary principle, applicable alike to all kinds of agency, that whatever an agent does can be done only in the way usual in the line of business in which he is acting. There is an implication to this effect arising from the nature of his employment, and it is as effectual as if it had been expressed in the most formal terms. It is present whenever his authority is called into activity, and prescribes the manner as well as the limit of its exercise. Upton v. Suffolk Co. Mills, 11 Cush. 586; Jones v. Warner, 11 Conn. 48; Story's Agency, sect. 60, and note; 3 Chitt. Law of Com. & Manuf. 199; U.S. v. Babbit, 1 Bl. 61; 1 Pars. on Contr., 4th ed., pp. 41, 42.

Life insurance is a cash business. Its disbursements are all in money, and its receipts must necessarily be in the same medium. This is the universal usage and rule of all such companies.

Goodwin had settled his own debt to Hoffman of $53.67, and had appropriated to himself Hoffman's note of $100.

If he had the right to take his percentage in such way as he might think proper, this did not justify his taking the horse at $400. Nor, if Thayer had expressly agreed to take the horse in payment of the premium pro tanto, could that have given validity to the transaction. If the agent had authority to take the horse in question, he could have taken other horses from Hoffman, and have taken them in all cases. This would have carried with it the right to establish a stable, employ hands, and do every thing else necessary to take care of the horses until they could be sold. The company might thus have found itself carrying on a business alien to its charter, and in which it had never thought of embarking.

The exercise of such a power by the agent was liable to two objections,-it was ultra vires, and it was a fraud as respects the company. Hoffman must have known that neither Goodwin nor Thayer had any authority to enter into such an arrangement, and he was a party to the fraud. No valid contract as to the company could arise from such a transaction. This objection is fatal to the appellant's case.

It is insisted by the counsel for the appellee, that Hoffman, by bringing his action at law, repudiated and rescinded the contract, if there was one; and that the appellant is thereby estopped from maintaining this bill. Authorities are cited in support of this proposition. Herrington v. Hubbard, 2 Ill. 569; Dalton v. Bentley, 15 id. 420; Smith v. Smith, 19 id. 349; Cooper v. Brown, 2 McLean, 495; Williams v. ''Washington Life Ins. Co.'', 4 Big. Life & Acc. Ins. Rep. 56.

As the point already determined is conclusive of the case, it is unnecessary to consider this subject.

Decree affirmed.


text: Talk:Hoffman v. John Hancock Mutual Life Insurance Company/Opinion of the Court


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Whitfield v. United States

APPEAL from the Court of Claims.

During the war of the rebellion, Whitfield, a resident of the State of Alabama, being the owner of a hundred and seventy-seven bales of cotton raised by himself, sold it to the Confederate States, agreeing to receive in payment their eight per cent bonds. In January, 1865, payment of the purchase-price was made and accepted in bonds of the kind agreed upon, payable to bearer, and falling due in the years 1868, 1871, and 1880. Whitfield kept the bonds in his possession, and, at the trial of this case below, produced them in open court. The cotton was never taken away by the Confederate States authorities, but remained in his possession until Sept 1, 1865, when it was seized by the treasury agents of the United States, acting under color of the authority of the abandoned and captured property acts. After the seizure, fifty-nine bales were, pursuant to an arrangement, restored to him, as compensation for putting the cotton in good order, and the remaining one hundred and eighteen bales sent forward to New York, where they were sold by the cotton agent of the United States, and the proceeds paid into the treasury. This suit was brought to recover these proceeds.

In the Court of Claims, the petition was dismissed: whereupon Whitfield appealed to this court.

Mr. P. Phillips for the appellant.

There was no legal authority for the seizure of the cotton. It did not come within the definition of captured property as recognized in United States v. Padelford, 9 Wall. 537.

The Court of Claims, in Sprott v. United States, 8 Ct. of Cl. 499, decided that the government of the Confederate States was an unlawful assemblage, without power to take, hold, or convey real or personal property. If such be the law, the sale in question did not divest the title of the claimant.

Conceding, however, that they could enter into a contract of purchase recognizable in our courts, the question is then presented, whether property so purchased, the possession of which was never parted with by the owner, can be taken from him by the United States after the overthrow and dissolution of that government, he being then the holder of the securities given as the consideration of the purchase.

Let it be supposed that Whitfield had sold this cotton to A., and had received his bond for the purchase-money, but had never parted with the possession. A. becomes insolvent; but his property had been forfeited to the United States. Surely, under these circumstances, the government, asserting its claim through A., could never rightfully demand the cotton without paying the purchase-money.

There is no difference between this supposititious case and that now before the court, as the contract, under the same circumstances, was made with the Confederate government.

When a government enters into a contract of purchase or other mercantile operation, it puts off its sovereignty; and, in such transactions, its rights and obligations are regarded by the court as standing on no higher ground than like transactions between individuals. 2 Story, Com., § 1330; United States v. Buford, 3 Pet. 12; Davis v. Gray, 16 Wall. 232.

Conceding the right of the government to exercise all powers necessary to carry on the war to a successful termination, we maintain that war does not operate proprio vigore a confiscation of the enemy's property.

It is for the legislative body to determine the policy on which the war shall be conducted.

Congress determined the question how far belligerent rights should be exercised.

The act 13th July, 1861, provides for the seizure of ships or vessels belonging to citizens of States engaged in insurrection, found at sea.

By the act 6th August, 1861, property sold or given, with intent to use or employ the same for the purpose of promoting the insurrection, is made subject to prize or capture.

By the act 17th July, 1862, the property of persons designated by six enumerated classes is, in a certain contingency, subject to confiscation.

In neither of these acts is the title of the owner divested by the seizure. This takes place only when judicial proceedings are instituted, and a judgment of condemnation is had. Then the property is sold, and the proceeds paid into the treasury.

With neither of these acts had the Treasury Department any concern. Its sole authority is under the act of 1863, which limits its power to captured or abandoned property.

As the government has not chosen to proceed against this cotton under the act of 6th August, 1861, as having been sold for the purpose of promoting the insurrection, in the mode pointed out in the act, it cannot now claim to hold it on that ground by virtue of the seizure made in this case.

If this cotton was neither captured, abandoned, nor condemned under any act of Congress directing its confiscation, the government of the United States can only claim title to it by virtue of its right to succeed to the property owned by the conquered government.

This right must rest alone upon general principles of international law.

It was on the theory of succession or representation alone that the suits brought in England by the United States against the agents of the Confederacy could be maintained.

The Vice-Chancellor, after announcing as a clear principle of public law, that any government which de facto succeeds to any other, whether by revolution or restoration, conquest or reconquest, succeeds to all the public property of the displaced power, held that 'this right is the right of succession. This right of representation is a right not paramount, but one derived through the displaced authority, and can only be enforced in the same way, and to the same extent, and subject to the same correlative obligations and rights, as if that authority had not been suppressed, and was itself seeking to enforce it.' United States v. Prioleau, 2 Hem. & M. Ch. Cas. 560; United States v. McRae, 8 L. R. Eq. 75.

It is admitted, that when terms of sale are agreed on, and every thing the seller has to do with the goods is complete, the contract of sale becomes absolute between the parties, without actual payment or delivery, and the property, and the risk of accident to the goods, vest in the buyer.

When the sale is for cash, the vendee, though he acquires a right of property by the contract, does not acquire the right of possession until he pays or tenders the price.

When it is on a credit, the vendee, in the absence of stipulation, is entitled to immediate possession, as the right of possession and the right of property vest at once in him.

But this doctrine is subject to the important qualification, that this right of possession is not absolute, and will be defeated if the buyer becomes insolvent before he obtains the actual possession: for though the buyer has the property vested in him, so as to subject him to the risk of any accident, he has not an indefeasible right to the possession; and his insolvency without payment defeats that right, equally after the transitus has begun as before the seller has parted with the actual possession. Bloxam v. Saunders, 6 B. & C. 941.

There is manifestly a marked distinction between those acts, which, as between vendor and vendee, go to make a constructive delivery, and vest the property in the vendee, and that actual delivery which puts an end to the right of the vendor to hold the goods as security for the price. Arnold v. Delano, 4 Cush. 38; D'Aquila v. Lambert, 2 Eden, 77; Kinloch v. Craig, 3 T. R. 119; Mason v. Lickbarrow, 1 H. Bl. 357.

But the title of the vendor is not entirely divested until the goods have come into the possession of the vendee. He has, therefore, a complete right, for just cause, to retract the intended delivery, and stop the goods in transitu. The cases in our courts of law have confirmed this doctrine, and the same law obtains in other countries. Comm. of Gaius, p. 232; 1 Domat, Civ. Law, 202, note.

The right of the vendor is not affected by the fact that he received the note or bond of the vendee in payment of the price. Bell v. Moss, 5 Wheat. 204. Nor is his lien lost by an express agreement that he will retain the goods for the vendee, either with or without rent. Townley v. Crump, 4 Ad. & Ell. 63; Miles v. Groton, 2 Cr. & M. 511; Winkes v. Hassels, 9 B. & C. 372.

As the seizure did not displace the title of the claimant, he is entitled to recover.

Mr. Solicitor-General Phillips for the United States.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Whitfield v. United States


text: Talk:Whitfield v. United States

title: Talk:Whitfield v. United States


text:
Whitfield v. United States/Opinion of the Court

In United States, Lyon et al. v. Huckabee, 16 Wall. 414, we held that real property purchased by and conveyed to the Confederate States during the war passed to the United States at the restoration of peace, by capture; and we sustained the title of the United States thus acquired against a claim made by the vendors of the Confederate States, that the conveyance was obtained from them by duress. The same principle was recognized and acted upon in Titus v. United States, 20 Wall. 475. We have thus decided that the Confederate States government could acquire title to real property by purchase; and it is not easy to see why a different rule should be applied to personal property. The ownership of that, even more than real property, was required for the operations of the Confederacy. Contracts of sale made in aid of the rebellion will not be enforced by the courts; but completed sales occupy a different position. As a general rule, the law leaves the parties to illegal contracts where it finds them, and affords relief to neither. A sale of personal property, when completed, transfers to the purchaser the title of the property sold.

Whitfield's sale, in this case, was not on credit, but for bonds which passed from hand to hand as money. The transaction, in this respect, was not different from a sale to the United States for any of their public securities payable at a future day. The sale was complete when the bonds were accepted in payment. The title then passed to the Confederate States without a formal delivery. From that time, Whitfield ceased to be the owner of the cotton.

The claim, then, that he had the right to retain the possession of the cotton until the purchase-money was paid, because of the insolvency of the Confederate government, is not applicable to the facts established by the evidence, as the purchase-money had been paid before the insolvency. But, if this were otherwise, it is not easy to see how his claim, growing out of his illegal contract as it does, can be enforced against the United States in the Court of Claims. In Sprott v. United States, id. 459, it was decided that one owing allegiance to the government of the United States could not avail himself of the courts of the country to enforce a claim under a contract by which, for the sake of gain, he knowingly contributed to the 'vital necessities of the rebellion.' For that reason, we refused to give effect to a purchase of cotton from the Confederate government. This case is not distinguishable from that in principle. Cotton, as we have often said, was, during the late war, as much hostile property as the military supplies and munitions of war it was used to obtain. When Whitfield, therefore, sold his cotton to the Confederacy, and took their bonds in payment, he contributed directly to the means of prosecuting the rebellion. He says in his petition, it is true, that his sale was not made to aid the rebellion; but the purchase was clearly for that purpose, and no other. This he could not but have known. Under such circumstances, 'he must be taken to intend the consequences of his own voluntary act.' Hanauer v. Doane, 12 Wall. 347. By his sale, he knowingly devoted his cotton to the war; and his rights must follow its fortunes. The courts of the country would not relieve him against one who held title by conveyance from the Confederate States, and under that title had obtained possession. Neither would they interfere in behalf of a purchaser from the Confederate States to enforce possession under his sale. But when his possession has been lost by reason of his sale, no matter how, the courts will afford him no relief against the loss. Having by his acts entered the lists against his rightful government, he cannot, if he loses, ask it for protection against what he has voluntarily done. In this case he seeks to enforce a right growing out of his contract of sale, which was tainted with the vice of the rebellion. It was a contract which could not have been enforced against him, and he is equally powerless under its provisions against others. He seeks in effect, by this action, to recover, in the courts of the United States, the purchase-money due from the Confederate States, upon the principle that a sale upon credit implies a guaranty of the solvency of the purchaser until the payment is made. We have already seen that such is not his position here; but if it were, having lost his possession, he has no standing in court for relief. He is not the owner of the property, and his lien is not one the courts of the United States will enforce.

Judgment affirmed.


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Page:American Journal of Sociology Volume 4.djvu/162

 WALSH SCHOOL YARD — SCENES IN WALSH PLAYGROUND


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Category:Judge Pursuivant

The Judge Pursuivant stories.

title: Category:Judge Pursuivant


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Carey v. Brown

APPEAL from the Circuit Court of the United States for the District of Louisiana.

Mr. Conway Robinson for the appellants.

Mr. Thomas J. Durant for the appellee.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: Carey v. Brown


text: Page:American Journal of Sociology Volume 4.djvu/402


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title: Talk:Carey v. Brown


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Page:A short history of social life in England.djvu/164

144 weaving it themselves, "to the high displeasure of Almighty God, great diminution of the King's people and extreme ruin, decay, and impoverishment of this Realm. … Therefore for reformation of these things … and to avoid that most abominable sin of idleness out of the Realm," every person occupying land shall, for every sixty acres under plough, sow one quarter of an acre in flax and hemp. Thus care was taken to make every Englishman contribute his share of work to the common weal. It must be remembered that every Englishman at this time was trained to arms, ready equipped for fighting with arms corresponding to his rank, though there was no regular army or uniform for soldiers. The law which in the thirteenth century enacted that every man from fifteen to sixty should bear arms, from bows and arrows to swords and daggers, still held good. Shooting was the common amusement of the people; every village had its pair of butts, and on Sundays and holidays all able-bodied men were required to appear in the field "as valiant Englishmen ought to do." But in the early part of the sixteenth century the people were growing slack: they played their games of bowls,


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Carey v. Brown/Opinion of the Court

The appellants were defendants in the court below. Tucker and Hoskins, the other defendants, declined to appeal

The case was ably argued here by the counsel upon both sides.

It is insisted that the bill is fatally defective for want of parties. It alleges that the complainant was the owner and holder of the ten promissory notes which lie at the foundation of the case. In his testimony, he says he held the legal title to them, and that they were delivered to him by their respective owners, with power to settle and dispose of them at his discretion, and with no condition imposed but the implied one that he should account for the proceeds to those from whom he received them.

The transfer created a trust. Those who transferred them were the cestuis que trust, and Brown was the trustee.

The general rule is, that in suits respecting trust-property, brought either by or against the trustees, the cestuis que trust as well as the trustees are necessary parties. Story's Eq. Pl., sect. 207. To this rule there are several exceptions. One of them is, that where the suit is brought by the trustee to recover the trust-property or to reduce it to possession, and in no wise affects his relation with his cestuis que trust, it is unnecessary to make the latter parties. Horsly v. Fawcett, 11 Beav. 569, was a case of this kind. The objection taken here was taken there. The Master of the Rolls said, 'If the object of the bill were to recover the fund with a view to its administration by the court, the parties interested must be represented. But it merely seeks to recover the trust-moneys, so as to enable the trustee hereafter to distribute them agreeably to the trusts declared. It is, therefore, unnecessary to bring before the court the parties beneficially interested.' Such is now the settled rule of equity pleading and practice. Adams v. Bradley et al., 6 Mich. 346; Ashton v. The Atlantic Bank, 3 Allen, 217; Boyden v. Partridge et al., 2 Gray, 191; Swift and Others v. Stebbins, 4 Stew. & P. 447; The Association, &c. v. Beekman, Adm'r, et al., 21 Barb. 555; Alexander v. Cana, 1 De G. & Sm. Ch. 415; Potts v. The Thames Haven and Dock Co., 7 Eng. Law & Eq. 262; Story v. Livingston's Ex'r, 13 Pet. 359. Where the want of parties appears on the face of the bill, the objection may be taken by demurrer. Where it does not so appear, it must be made by plea or answer. Here the defect, if there was one, did not appear in the bill, and no plea or answer setting it up was filed in the Circuit Court. It was first made here. A formal objection of this kind cannot avail the party making it, when made for the first time in this court. Story v. Livingston's Ex'r, supra.

It is said that Hoskins prescribed a condition precedent; and that Brown, not having complied with it, never acquired any right or title to the property in controversy. We had occasion to consider this head of the law in Davis v. Gray, 16 Wall. 230.

Hoskins executed a deed to Brown, and forwarded it to Parkerson, to be held by him until all the notes of Hoskins given for the purchase-money, still outstanding, were cancelled and delivered to Parkerson. Parkerson was the recorder of the parish where the land was situated. Brown then held ten of the notes. He and Hoskins believed they were all. Upon being advised by Tucker of the deposit of the deed, Brown wrote to have a copy of it forwarded to him for examination, and inquired, as he had done several times before, whether Hoskins had in any way incumbered the property. Parkerson thereupon sent him a copy of the deed, with a certificate, signed himself as recorder, setting forth, that, upon examining the records in his office, he found that 'said Hoskins has not subjected said property to any mortgage except as forfeited taxes to the State.'

There was an eleventh note, upon which, several years before, a judgment had been rendered in favor of Mrs. Knight. The judgment had been so inscribed in the office of Parkerson, that, under the law of Louisiana, it became a mortgage upon the premises. The certificate was false, and Parkerson knew it. It cannot be doubted that Tucker knew these facts also. The inscription was, as it had been, concealed from Brown. This was the beginning of the web of fraud woven by the confederates. Brown, being satisfied with the deed, transmitted the ten notes to Parkerson, with directions to cancel them, to record the deed, and to send it to him by mail. Instead of doing as directed, Parkerson handed over the letter and notes to Tucker, withheld the deed from record, and retained possession of it. Subsequently, Davis, the law partner of Tucker, visited Hoskins in Texas, where he lived, delivered up his deed to Brown, and procured from him a quitclaim-deed for the same property to Parkerson and himself for the consideration of $250. Later, they gave Hoskins, voluntarily, a guaranty against his liability upon all the outstanding notes. They conveyed the premises to Carey, a brother-in-law of Parkerson. Carey claims to have been a bona fide purchaser, without any notice of the rights of Brown. In order to strengthen his title, he took measures to have the premises sold under the judgment in favor of Mrs. Knight. Upon learning the existence of the judgment, Brown offered twice to furnish to Carey the means to discharge it. The money was refused. The property was sold under the judgment, and bought in by Carey. He paid the judgment and the costs. The balance of his bid, upon which the property was struck off to him by the sheriff, remained in his hands unpaid, and unaccounted for to any one. Public notice was given at the sale of the claim of Brown. Thereafter Carey claimed to hold under the sale, as well as under the deed from Parkerson and Davis.

It is not denied that Parkerson and Davis had full knowledge of all the facts touching the conveyance by Hoskins to Brown when they received the deed from Hoskins to them; and the evidence, both direct and circumstantial, is plenary to show that Carey, before Davis and Parkerson conveyed to him, was equally well advised. It is impossible to resist the conviction that there was a deliberate scheme; that all the appellants and Tucker were parties to it, and that every act of each of the Confederates touching the property, after the deposit of the deed to Brown with Parkerson, was done to give effect to the purpose of the conspiracy.

In the presence of these facts, the doctrine of conditions precedent can have no application. Sterner principles intervene, and become factors in the determination of the case.

The court decreed that the deed of Hoskins to Brown was, as against the subsequent deed of Hoskins to Parkerson and Davis, a valid subsisting title; that the deed of Parkerson and Davis to Carey was void, and of no effect; that the ten notes should be delivered up by Tucker, and cancelled; that Brown should pay to Carey the amount Carey had paid in satisfaction of the judgment; that, upon such payment being made, Carey should convey the property to Brown as trustee for those whom Brown represented in the litigation; and that the decree should be without prejudice to Brown's claims for mesne profits, and to Tucker's claim against Brown for professional services.

It is said the decree is erroneous because it did not ascertain the amount proper to be allowed to Tucker, and order its payment.

It was not proper to deal with that subject in this suit. Tucker had no lien either upon the notes or the land. Not having appealed from the decree below, he cannot object to it here.

It is said, also, that the decree is erroneous as to the effect of the deed from Hoskins to Brown. Upon the delivery of the ten notes to Parkerson, the deed became effectual. He should have cancelled the notes, and put the deed on record.

The lien of the judgment was ample for the security and indemnity of Hoskins. Brown would have taken the title subject to the incumbrance. The light thrown backward by the subsequent events shows that he would have been ready and willing to satisfy the judgment whenever its existence was made known to him.

He was prevented from discharging the lien by the fraud of those who now seek to avail themselves of it. This they cannot be permitted to do.

It is insisted that the decree does injustice to Carey. It gave him all he was entitled to. He acquired whatever title he had ex maleficio, and held it as a trustee in invitum for Brown and his cestuis que trust. Mongar v. Shirley, not yet reported.

A case of clearer equity on one side, and of iniquity on the other, is rarely presented for the consideration of a court of justice.

Decree affirmed.

title: Carey v. Brown/Opinion of the Court


text: Talk:Carey v. Brown/Opinion of the Court


text:
Baker v. White

ERROR to the Circuit Court of the United States for the District of Connecticut.

Mr. Charles E. Perkins for the plaintiff in error.

Mr. A. P. Hyde, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Baker v. White


text: Talk:Baker v. White

title: Talk:Baker v. White


text:
Baker v. White/Opinion of the Court

The Odorless Rubber Company, being in an embarrassed condition, undertook to relieve itself by obtaining additional subscriptions to its capital stock. It was conceived, that, in order to do this, it was necessary that those holding the existing stock should submit to a reduction of its par value, as it was not really worth par at that time; and new subscribers could not be expected to take a stock which they knew to be below the value they were to pay for it. Accordingly, on the 10th June, 1872, at a meeting of the stockholders, 'on motion of S. L. Warner, it was voted, that whereas the capital stock of this company now issued, and the assets of the same, have become impaired to the extent of thirty per cent on the whole amount of said stock,-to wit, the sum of $72,000.50,-therefore voted, that stock to the amount of $72,112.50 be called in and cancelled upon the books of this company.'

At a former meeting it had been resolved that the capital stock of the company be increased to $200,000, or eight thousand shares.

The defendant, after these resolutions had been adopted, signed the following instrument, and set opposite his name two hundred and forty, as the number of new shares for which he subscribed:--

'We, the undersigned, hereby agree to take the number of shares of the capital stock of the Odorless Rubber Company placed opposite our respective names, and pay for the same as follows; to wit, $6.25 per share whenever cash subscriptions to the amount of $118,000 shall have been made, and the balance in equal monthly instalments of ten per cent each from the date of June 1, A.D. 1872. Said stock to be fully paid whenever eighty-five per cent of the par value shall have been paid into the treasury of the company; it being understood that none of said subscriptions shall be valid or obligatory until at least said amount of $118,000 of stock shall have been subscribed as aforesaid, and that thirty per cent deduction is made on the old stock of this company, as per vote of stockholders June 10, 1872.

'Dated at Middletown, this tenth day of June, 1872.'

He was elected a director, and acted as such for a short time, and paid his instalments regularly until he had paid $2,700. He then refused to pay any more; and, the corporation having been adjudged bankrupt, the plaintiffs, as assignees, brought the present suit to recover the unpaid instalments, amounting to $3,300.

Two defences were relied on by defendant: 1. That one of the conditions on which he agreed to pay was that thirty per cent of the old stock was to be deducted or extinguished, and this had not been done. 2. That the subscriptions had been obtained by fraudulent representations as to the condition of the company; that the whole proceeding was a fraudulent design to relieve the old stockholders of a broken corporation at the expense of the new subscribers; and that, as soon as he had learned enough of the condition of the company to become aware of this fraud, he abandoned the concern, and repudiated the contract.

This suit was brought in the District Court; and the judge of that court refused to charge the jury, when requested, that in the true construction of the subscription-paper, above quoted in full, the subscription was not obligatory until the thirty per cent reduction of old stock had been made, and also rejected evidence of the fraud in obtaining the defendant's subscription.

On a writ of error to the Circuit Court, where these matters were shown by a bill of exceptions taken in the District Court, the judgment of that court was reversed.

The Circuit Court rested its judgment on the construction of the subscription-paper; and as that is sufficient to dispose of the case, and as we concur in the view taken by that court, we shall only consider that question.

The counsel for plaintiffs in error construed the paper as if it read thus:-- 'It being understood that none of the subscriptions shall be valid or obligatory until at least said amount of $118,000 of stock shall have been subscribed as aforesaid, and it being also understood that thirty per cent deduction is made on the old stock of this company, as per vote of stockholders June 10, 1872.

'Dated Middletown, the tenth day of June, 1872.'

Reading it thus, they argue that the last clause, relating to the thirty per cent deduction, is only a representation of what was understood to be an existing fact at the time it was made, and not a condition like the one as to the amount of stock to be taken, without which the subscription was not obligatory.

It is possible so to construe the language of the instrument, if the surrounding circumstances demanded it. But to one who saw the paper for the first time, and knew nothing more, it would seem a forced, and not a natural, construction. If the word 'that' just before 'thirty per cent' were omitted in the original, the plain grammatical meaning would be, that the subscriptions were only obligatory in case the $118,000 of stock was subscribed, and the thirty per cent of the old stock called in or deducted.

We cannot give to the use of the word 'that' such force as to destroy the natural and reasonable meaning which the sentence would have without it.

But when, leaving grammatical and verbal criticism, we look to the admitted surrounding circumstances of the case, what was meant is quite clear.

The paper bears the same date as the resolution to reduce the stock. That resolution did not profess to have the effect of reducing the stock of itself, but only declared that $72,112.50 of said stock be called in,-a thing to be done in future; and the bill of exceptions shows that the directors accordingly made an effort to get the stockholders to surrender and cancel stock to that amount, but failed to get it done.

When a subscriber put his name to the agreement to take new stock, the obtaining of the $118,000, on which his subscription depended for its validity, was a thing to be accomplished in the future: and so, on the tenth day of June,-the date of this paper, a subscriber, looking to these two things promised, but yet to be performed, said, 'I subscribe, but it is upon condition that I am only to be liable when they are performed; that is, when $118,000 new stock is subscribed, and when thirty per cent of the old stock is called in and cancelled, as per resolution of the company of this date.'

We are of opinion that the Circuit Court properly construed this instrument; and, as it is not proved or asserted that this stock ever was so reduced, the defendant was not liable on that contract.

But, when we come to look for the judgment of the Circuit Court which should be affirmed on these considerations, we find that there was in that court no final judgment. There exists in the record only an order reversing the judgment of the District Court. But, supposing a more formal entry to have been made, it could only be that the judgment and verdict in the District Court be set aside, and a new trial awarded.

We have so repeatedly decided that such an order as this is not a final judgment from which a writ of error lies to this court, that it needs no further discussion. Parcels v. Johnson, 20 Wall. 653; Macomb v. Commissioners of Knox County, 91 U.S. 1.

But the case was fully argued by counsel on the merits. The court, in conference, came to the conclusion (which was unanimous) indicated in this opinion; and we have concluded to let the opinion accompany the only judgment which we can render on this record.

Writ of error dismissed.

title: Baker v. White/Opinion of the Court


text: Talk:Baker v. White/Opinion of the Court


text:
Author:Manly Wade Wellman

As Gans T. Field

 * The Hairy Ones Shall Dance, a Judge Pursuivant story
 * (part 1 of 3)
 * (part 2 of 3)
 * (part 3 of 3)
 * The Black Drama, a Judge Pursuivant story
 * (part 1 of 3)
 * (part 2 of 3}}
 * (part 3 of 3)
 * (reprint)
 * (poem)
 * , a Judge Pursuivant story
 * , a Judge Pursuivant story
 * , a Judge Pursuivant story
 * , a Judge Pursuivant story

Short stories

 * When the Lion Roared (1927)
 * (poem)
 * Faithful Footsteps (1931)
 * The Invading Asteroid (1932)
 * Rebels of the Moon (1932) with Max Jergovic
 * with Gertrude Gordon
 * Fearful Rock (Sgt. Jaeger)
 * (part 1 of 3)
 * (part 2 of 3)
 * (part 3 of 3)
 * (Sgt. Jaeger story)
 * with Gertrude Gordon
 * Fearful Rock (Sgt. Jaeger)
 * (part 1 of 3)
 * (part 2 of 3)
 * (part 3 of 3)
 * (Sgt. Jaeger story)
 * with Gertrude Gordon
 * Fearful Rock (Sgt. Jaeger)
 * (part 1 of 3)
 * (part 2 of 3)
 * (part 3 of 3)
 * (Sgt. Jaeger story)
 * (part 3 of 3)
 * (Sgt. Jaeger story)
 * (Sgt. Jaeger story)
 * (Sgt. Jaeger story)
 * (Sgt. Jaeger story)
 * (Sgt. Jaeger story)

title: Author:Manly Wade Wellman


text:
Burbank v. Bigelow (92 U.S. 179)

APPEAL from the Circuit Court of the United States for the District of Louisiana.

Mr. Benjamin F. Butler for the appellant.

Mr. Thomas J. Durant for the appellee.

Mr. JUSTICE BRADLEY delivered the opinion of the court.

title: Burbank v. Bigelow (92 U.S. 179)


text: Talk:Burbank v. Bigelow (92 U.S. 179)

title: Talk:Burbank v. Bigelow (92 U.S. 179)


text:
Burbank v. Bigelow (92 U.S. 179)/Opinion of the Court

This is an appeal from the decree of the Circuit Court of the United States for the District of Louisiana.

The appellant is the widow and executrix of Thomas S. Burbank, deceased, late of New Orleans, and tutrix of his minor children. She was complainant below, and filed her bill on the 8th of February, 1869, against Edmond B. Bigelow, of Wisconsin, for an account of a certain partnership which she alleges existed between her husband and said Bigelow; and, amongst other things, she specially prays that Bigelow may account for, as part of the partnership assets, the proceeds of a certain judgment for $13,864.34, which he recovered in his individual name against one Edward W. Burbank, on the twenty-seventh day of February, 1866, in the said Circuit Court. The complainant alleges that this judgment was for a debt due the partnership, and ought to be applied to the payment of the partnership debts, a portion of which, to a large amount, are pressing against her husband's estate.

The court below did not pass upon the merits of the case, but dismissed the bill for want of jurisdiction; upon what ground, there being no written opinion in the case, does not distinctly appear. The only ground alleged in support of the decree is, that Edmond B. Burbank, the original defendant, together with one Hancock (a former partner of his), shortly before the filing of the bill in this case, filed their joint petition in the District Court of the United States for the District of Wisconsin to be declared bankrupts, and a decree of bankruptcy was rendered against them on the twenty-third day of January, 1869; but no assignment was made by the bankrupts until the 11th of February, 1869 (three days after filing the bill), when an assignment was made to George W. McDougall, of Wisconsin. In his schedule of assets in bankruptcy, Bigelow refers to the judgment recovered by him against Edward W. Burbank, but states that it had been assigned to W. W. Bigelow, and conditionally assigned to one Porter for the benefit of creditors.

The court below is supposed to have dismissed the bill for want of jurisdiction, on the ground that the controversy belonged exclusively to the Bankrupt Court in Wisconsin, as an incident to the proceedings in the bankruptcy of Burbank. It is not pretended that the court had not jurisdiction of the person of the defendants. Edmond B. Bigelow, the original defendant, was duly served with process in New Orleans, and put in an answer to the merits on the 1st of March, 1869. Thereupon an amended and supplemental bill was filed; and W. W. Bigelow, the alleged special assignee, and George W. McDougall, the assignee in bankruptcy, were made defendants, and duly appeared. W. W. Bigelow formally adopted the answer of Edmond B. Bigelow; and McDougall exhibited the proceedings in bankruptcy, and, having by order of the court been subrogated to the rights of Edmond B. Bigelow, filed a separate answer, adopting the defence set up by him. Subsequently he filed another answer, in which he claimed that the District Court of Wisconsin alone had jurisdiction of the case.

During the progress of the cause, on application of the complainant, a receiver was appointed by the court, who collected the amount due on the judgment referred to in the pleadings. The court, therefore, had possession of the subject-matter in controversy, as well as jurisdiction of the parties: so that the only question remaining is, whether it had jurisdiction of the cause, or controversy.

Of this there does not seem to be the slightest doubt. What possible advantage could be gained by sending the parties to Wisconsin to litigate the questions raised in this suit we cannot perceive. A right of property is controverted. The complainant contends that the fruits of the judgment recovered by Bigelow, the bankrupt, against Edward W. Burbank, belong to the firm of which her husband was a partner. The bankrupt and his assignees deny this. It is a controversy, the determination of which is clearly embraced within the jurisdiction conferred upon the circuit courts by the second clause of sect. 2 of the original Bankrupt Act, now sect. 4979 of the Revised Statutes. We recently decided, in the case of Lathrop, Assignee, v. Drake et al., 91 U.S. 516, that this jurisdiction may be exercised by any circuit court having jurisdiction of the parties, and is not confined to the court of the district in which the decree of bankruptcy was made. Therefore the time when the bankruptcy occurred or when the assignment was made is totally immaterial. The court, under the Bankrupt Act, has jurisdiction of the cause as between the assignee in bankruptcy and the complainant, without reference to the citizenship of the parties. As between the other parties and the complainant, of course, citizenship is material. But no objection to the jurisdiction exists on that account in point of fact, as the residence of the parties is such as is required in order to give it. Therefore, though the suit had not been commenced until after the appointment of the assignee, and after the assignment to him, the complainant might still have instituted the suit in the Circuit Court in Louisiana, if process could have been served upon the defendants.

But, inasmuch as the parties were citizens of different States, she might have done this without the aid of the section referred to. We recently held, in the case of Eyster v. Gaff et al., id. 521, that the Bankrupt Law has not deprived the State courts of jurisdiction over suits brought to decide rights of property between the bankrupt (or his assignee) and third persons; and, whenever the State courts have jurisdiction, the circuit courts of the United States have it, if the proper citizenship of the parties exists. In the case last referred to, a suit to foreclose a mortgage was commenced before the mortgagor went into bankruptcy; but the decree was not rendered until after that event and the appointment of an assignee. We decided that the validity of the suit or of the decree was not affected by the intervening bankruptcy; that the assignee might or might not be made a party; and, whether he was or not, he was equally bound with any other party acquiring an interest pendente lite.

As no other ground was assigned affecting the jurisdiction, we are of opinion that the court had jurisdiction of the case, and ought to have decided it upon its merits.

Decree reversed.


text: Talk:Burbank v. Bigelow (92 U.S. 179)/Opinion of the Court


text:
Smith v. Vodges

APPEAL from the Circuit Court of the United States for the Eastern District of Pennsylvania.

Mr. N. H. Sharpless and Mr. Richard C. McMurtrie for the appellants.

Mr. William A. Manderson for the appellee.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: Smith v. Vodges


text: Talk:Smith v. Vodges

title: Talk:Smith v. Vodges


text:
Smith v. Vodges/Opinion of the Court

The law of this case is too well settled to admit of doubt. In order to defeat a settlement made by a husband upon his wife, it must be intended to defraud existing creditors, or creditors whose rights are expected shortly to supervene, or creditors whose rights may and do so supervene; the settler purposing to throw the hazards of business in which he is about to engage upon others, instead of honestly holding his means subject to the chance of those adverse results to which all business enterprises are liable. Sexton v. Wheaton, 8 Wheat. 229; Mullen v. Wilson, 8 Wright, 413; Stileman v. Ashdown, 2 Atk. 481.

Fraud is always a question of fact to be determined by the court or jury upon a careful scrutiny of the evidence before it.

The view which we take of this case renders it unnecessary to consider the objections urged by the counsel of the appellants against the reference to the master, the exceptions to the master's reports, and the questions raised by the demurrers to the original and the amended bill.

Passing by these subjects, and looking only to the merits of the controversy, two points to be examined arise. They involve questions of fact which must be solved in the light of the evidence found in the record. The burden of proof rests upon the appellee.

1. What was the pecuniary condition of the bankrupt when the property in question was bought at the sale under execution, and conveyed by the sheriff to Esther A. Smith?

The date of the transaction was the 2d of June, 1862. The amount paid was $1,450. The property consisted of a dwellinghouse and store-room, which she had leased in the year 1859. The rent was $150 per year. She and her husband occupied the premises up to the time of the sale. She kept a dry-goods store and a millinery and dress-making establishment in her own name. She was eminently successful. The bill avers and admits, that, at the time of the purchase of the property, she had realized profits to the amount of $10,000, and that the property was paid for out of this found. There is proof in the record to the same effect. In conducting her business, she paid promptly; and it does not appear that she then or subsequently owed any thing which is unpaid. The husband had paid all his debts except two. For those he had given extension notes, having short times to run; and they were paid at maturity.

This investment for the benefit of the wife was never challenged by any creditor of the husband or the wife; and it is not now challenged in behalf of any creditor whose debt subsisted then or accrued for a considerable time afterwards. Under the circumstances, the investment was moderate in amount, proper to be made, and, we think, liable to no legal objection as to its validity. The testimony to be considered in connection with the next point throws a backward light, which is also favorable to the wife with respect to this part of the 2. What was the pecuniary condition of the bankrupt when he extinguished the ground-rent by which the property was incumbered?

The money was paid about the 1st of January, 1866; and the amount was $3,000.

After the 1st of January, 1863, the business, which had before been carried on in the name of the wife, was conducted in that of the husband. It continued to be prosperous for several years. He thinks he made from $10,000 to $15,000 a year. He sold the first year from fifty to sixty thousand dollars' worth of goods. Such is his testimony, and it is uncontradicted. He paid all his debts, and considered himself in independent circumstances. His standing was such, that he had no difficulty in buying goods on credit. A merchant says, 'His credit was good. I was willing and anxious to sell him all the goods I could' (Corbin's testimony). The cashier of the Fourth National Bank, speaking of his credit in that institution between the years 1864 and 1868, says, 'He was able to get all he asked for, which was the greatest amount at one time, $5,000, only on account of his average good balance in bank' (McMullen's testimony).

No debt now exists which existed prior to 1868; and there is none now existing which can be said in any sense to stand in renewal or continuity of any such prior debt.

In the early part of 1867, there was a marked reflux in the tide of prosperity throughout the country. It swept many of those exposed to it into hopeless insolvency. The bankrupt became embarrassed and depressed. His wife proposed to relieve him by making a loan of $4,000, to be secured by a mortgage upon the property in question. This suggestion was carried out. The loan was made and the mortgage given in March, 1867. The money was paid over to his creditors. This enabled him for a time to weather the storm. But times grew worse. The shrinking in the value of dry-goods was immense. He testifies that muslins for which he paid seventy cents per yard he was compelled to sell for twenty.

His loss by shrinkage he estimates at $20,000. In 1868, when his stock had been reduced in value to about $20,000, he sold it for that sum to the clerks, all females and relatives, who had been employed in the store, and took their notes accordingly. These notes he indorsed to his creditors. Some of them have been paid, and others not. When the stock in the hands of the vendees had been reduced to a remnant, worth about $2,000, it was sold under process in favor of his wife for the payment of the accumulated rents due to her.

The mortgage to secure the loan of $4,000 is still unsatisfied.

The bankrupt testifies that his failure was due to the losses of a firm of which he was a member; and that, but for that connection, he would still be in prosperous circumstances.

We think the payment of the $3,000 to extinguish the ground-rent was honestly made, and was warranted by the condition at that time of the bankrupt's affairs. They were then prosperous, and he had no reason to anticipate the reverses which followed. If there could otherwise be any doubt as to the integrity of this transaction, it is removed by the loan and mortgage and the application of the money borrowed. If there had been a purpose to defraud when the property was bought or the ground-rent extinguished, the mortgage would not have been given. It is entirely inconsistent with such an idea. The loan replaced the amount paid for the ground-rent, with an excess of $1,000; and it equalled the amount paid for both the property originally and in extinguishment of the ground-rent, less $450.

We hold the transactions both as to the ground-rent and the original purchase to have been honest and valid.

Where money has been misappropriated, the general rule of equity is, that those wronged may pursue it as far as it can be traced, and may elect to take the property in which it has been invested, or to recover the money. Piatt v. Oliver, 3 How. 401.

Lord Ellenborough held that the same rule is applicable at law. Taylor v. Plummer, 3 M. & S. 562.

It was claimed by the counsel for the appellants, that, if the transactions here in question should be adjudged fraudulent, the assignee would only have a lien upon the premises for the amount to which it might be held he was entitled with interest.

The conclusions at which we have arrived upon the facts render it unnecessary to consider the law of the remedy.

Decree reversed, and cause remanded, with directions to dismiss the bill.

title: Smith v. Vodges/Opinion of the Court


text: Talk:Smith v. Vodges/Opinion of the Court


text:
Lamar v. Browne

ERROR to the Circuit Court of the United States for the District of Massachusetts.

Mr. George T. Curtis and Mr. E. N. Dickerson for the plaintiff in error.

Mr. Assistant Attorney-General Edwin B. Smith for the defendants in error.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Lamar v. Browne


text: Talk:Lamar v. Browne

title: Talk:Lamar v. Browne


text: The American Journal of Sociology/Volume 04/Number 1/The Persistence of Social Groups III