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United States v. State Bank

APPEAL from the Court of Claims.

This action and the following were brought, one by the State National Bank, of Boston, Mass., and the other by the Merchants' National Bank, of the same place, to recover from the United States $480,000 in gold coin, being the amount of certain gold certificates deposited, Feb. 28, 1867, in the subtreasury at Boston, and on the same day cancelled and forwarded to the Treasurer of the United States at Washington. The cause of action in each case grew out of the same transaction, and the findings of fact by the court below are the same. As they are substantially set forth in the opinion of the court, they are omitted here. The certificates of deposit referred to in the opinion are as follows: -

'UNITED STATES TREASURY, BOSTON.

'Deposited by Mellen, Ward, & Co., of Boston, on acc't of deposit of gold-c't'f's, amount four hundred & Twenty thousand dollars, the same to be exchanged for gold-c't'f's, or its equivalent, upon their order or demand.

'J. F. HARTWELL, Cr.

'Date, Feb. 28, 1867.

(Indorsed:) 'Pay only upon the order of C. H. Smith, cash.

'MELLEN, WARD, & Co

'BOSTON, Feb. 28, 1867."UNITED STATES TREASURY, BOSTON.

'Deposited by Mellen, Ward, & Co., of Boston, on acc't of gold certificates deposited. Amount one hundred & sixty thousand dollars, to be exchanged for gold-c'f'fs or its equivalent on demand.

'J. F. HARTWELL, Cr.

(Indorsed:) 'Pay only to the order of C. H. Smith, cash.

'MELLEN, WARD, & Co.

'BOSTON, Feb. 28, 1867.'

The Court of Claims rendered judgment in favor of the State Bank and against the Merchants' Bank. From the judgments rendered against them respectively the United States and the Merchants' Bank severally appealed to this court.

The Solicitor-General, for the United States.

The State Bank has merely the rights of the owner of a collateral security, and the specific recovery thereof against the United States, who is in possession, is the only relief to which it is entitled.

The Court of Claims has, in certain cases, cognizance of the legal rights of claimants against the United States; but it cannot enforce the moral obligations of the government or bestow its grace. Gibbons v. United States, 8 Wall. 269.

The charge that the certificates were received by the United States without consideration and in fraud of the rights of the State Bank is unwarranted, and in this proceeding, which is analogous to a petition of right, is inadmissible. The government is not, upon an implied assumpsit, liable for the torts of its officer committed while in its service and apparently for its benefit. Gibbons v. United States, supra; Clark v. Dupree, 2 Dev. (N. C.) L. 411; Mann v. Kendall, 2 Jones (N. C.) L. 192.

The receipts given to Mellen, Ward, & Co. by Hartwell, in the discharge of his official duty, define the claim. Smith, the cashier of the State Bank, having observed at the time that they were so given, they were thereupon indorsed by that firm to him as cashier. As the ordinary vouchers of such transactions, they measure the quality and degree of the obligation of the government, and obviously were to be surrendered whenever a successful demand was made for the fulfilment of the contract, whether at the sub-treasury or in a court. They were neither declared upon nor produced in the course of the trial. In this connection, it will be observed that the first receipt is perhaps negotiable, Miller v. Austen, 13 How. 218; and, therefore, like all other papers of its class, cannot in general be recovered upon, unless produced at the trial.

If, however, the former receipt be not negotiable, then both receipts express the contracts made by the United States in regard to the deposits, not only as to their substance but also as to the parties by whom they were to be enforced.

Mr. C. B. Goodrich, for the State Bank.

The doctrine of Bayne v. United States (93 U.S. 642), that public money obtained from a disbursing officer, without consideration, is money of the United States, applies where, as in this case, the United States, without consideration and by the fraud of its officer, receives the money of an individual. His right to it remains; and where, as in this instance, the government is liable to suit, may be judicially enforced. In such a case between private parties, assumpsit lies. Moses v. Macferlan, 2 Burr. 1005.

Where a party has acquired the legal right to property to which another has the better right, a court of equity will convert him into a trustee of the true owner, and compel him to convey the legal title. Stark v. Starrs, 6 Wall. 419; Meader v. Norton, 11 id. 458. See also United States v. Buford, 3 Pet. 12.

Mr. Sidney Bartlett, for the banks.

The legal title to the certificates was in the Merchants' Bank, and by the subsequent delivery of them was vested in the State Bank. Merchants' Bank v. State Bank, 6 Wall. 604.

The certificates were obtained by the cashier of the subtreasury at Boston, not by larceny nor by a fraudulent contract, in his individual right, but by a contract in the name of the United States, which he was by law fully authorized to make. The government is not, under such circumstances, a bona fide purchaser without notice, but is responsible for money derived under the contract and placed in its coffers. To hold otherwise, because the contract was part of a secret scheme of the cashier to appropriate to his own use the money after its receipt and to give a fraudulent voucher therefor, would be extraordinary indeed.

By cancelling the gold certificates, a person, had the contract thus cancelled been made with him, would be rendered liable for the sums due. In this case, the petition sets out all the facts; and if by law the liability of the government is founded either on its contract contained in the certificates, or on its treating them as money, the pleadings are sufficient to sustain a judgment therefor.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: United States v. State Bank


text: Talk:United States v. State Bank

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title: Talk:United States v. State Bank


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United States v. State Bank/Opinion of the Court

Upon analyzing this case as it is presented in the record, the facts are found to be few and simple.

Hartwell was cashier of the sub-treasury in Boston. He embezzled a large amount of money belonging to the United States, by lending it to Mellen, Ward, & Co. As the time for the examination of the funds in the sub-treasury approached, Mellen, Ward, & Co. endeavored to tide Hartwell over the crisis, and to conceal his guilt and their own by the devices out of which this controversy has arisen. They had sold to the Merchants' National Bank, of Boston, a large amount of gold certificates, with the understanding that they might buy back the like amount by paying what the bank had paid, and interest at the rate of six per cent per annum. Carter, one of the firm, arranged with Smith, the cashier of the State National Bank, of Boston, to buy from the Merchants' National Bank, of Boston, gold certificates to the amount of $420,000, and to pay for them with the checks of Mellen, Ward, & Co., certified to be good by Smith as such cashier, and then to deposit the certificates in the sub-treasury, where they were to remain until the ensuing day. A receipt was to be taken from the proper sub-treasury officer. The certificates were bought, paid for, and deposited accordingly. Hartwell received them from Smith in the presence of Carter, and made out the receipt to Mellen, Ward, & Co., or order. Smith inquired why the receipt was to them. Carter thereupon indorsed it by the firm name to Smith as cashier, and Smith took it without further remark.

Subsequently, pursuant to a like arrangement between the same parties, Smith, as such cashier, made a further purchase of gold and gold certificates from the Merchants' Bank, and converted the gold into gold certificates. The aggregate of the certificates thus procured was $60,000. Thereafter Smith, as such cashier, at the instance of Carter, made a further purchase of gold certificates from another bank to the amount of $100,000. All these certificates, amounting to $160,000, were also deposited by Smith in the sub-treasury in the presence of Carter, and a receipt taken and indorsed as before to Smith as cashier. The receipts specified that the certificates deposited were 'to be exchanged for gold certificates or its equivalent, on demand.' Only $50,000 of the last deposit is claimed by the appellee. The residue is not involved in this controversy. The total claimed is $480,000. All these things occurred on the 28th of February, 1867. On the following day, Smith presented the receipts at the sub-treasury, and payment was refused. The certificates were all cancelled, and sent to the proper officer at Washington. The gold which they represented has since remained in the treasury of the United States. Carter gave Smith plausible reasons, not necessary to be repeated, for desiring to make the deposits. The Court of Claims found these facts: 'He (Carter) submitted his plan to Hartwell, which was as follows: He proposed to buy gold certificates in New York, bring them to Boston, and borrow money upon them of the Merchants' Bank, and he then proposed to get Smith, the cashier of the State Bank, to pay for these certificates, and leave them with Hartwell during the examination. Hartwell made no objection to this plan, but he thought Smith would not do it. The plan was carried into effect by Carter, as hereinbefore set forth; but Hartwell had no agency in carrying it out, except to receive the moneys and gold certificates paid to him on the 28th of February, as aforesaid, and he had no actual knowledge of the proceedings taken by Carter on that day to obtain said gold certificates. When Carter and Smith deposited the $420,000 of gold certificates in the sub-treasury, as aforesaid, Smith did not know Hartwell, nor did Hartwell know Smith, or know that Smith was connected with any bank or money institution.'

The case, under another aspect, was before us on a former occasion. Merchants' Bank v. State Bank, 10 Wall. 604. We there held, after the most careful consideration, that the legal title to the certificates was, by the purchases made by its cashier, vested in the State Bank. We find no reason to change this view. The finding of the court shows clearly that Hartwell knew when he received the certificates that they did not belong to Mellen, Ward, & Co., and that they did belong to the State Bank, represented by Smith as its agent. Hartwell was privy to the entire fraud from the beginning to the end, and was a participant in its consummation.

It is not denied that Smith acted in entire good faith. What he did was honestly done, and it was according to the settled and usual course of business. Hartwell was the agent of the United States. He was appointed by them, and acted for them. He did, so far as Smith knew, only what it was his duty to do, and what he did constantly for others, and it is not denied that it was according to the law of the land. 12 Stat. 711. Smith no more suspected fraud, and had no more reason to suspect it, than any other of the countless parties who dealt with the subtreasury in like manner.

There could hardly be a stronger equity than that in favor of the plaintiff. It remains to consider the law of the case.

The interposition of equity is not necessary where a trust fund is perverted. The cestui que trust can follow it at law as far as it can be traced. May v. Le Claire, 11 Wall. 217; Taylor et al. v. Plumer, 3 Mau. & Sel. 562.

Where a draft was remitted by a collecting agent to a subagent for collection, and the proceeds were applied by the sub-agent in payment of the indebtedness of the agent to himself, in ignorance of the rights of the principal, this court held that, there being no new advance made, and no new credit given by the sub-agent, the principal was entitled to recover against him. Wilson & Co. v. Smith, 3 How. 763. See also Bank of the Metropolis v. The New England Bank, 6 id. 212.

A party who, without right and with guilty knowledge, obtains money of the United States from a disbursing officer, becomes indebted to the United States, and they may recover the amount. An action will lie whenever the defendant has received money which is the property of the plaintiff, and which the defendant is obliged by natural justice and equity to refund. The form of the indebtedness or the mode in which it was incurred is immaterial. Bayne et al., Trustees, v. United States 93 U.S. 642.

The United States must use due diligence to charge the indorsers of a bill of exchange, and they are liable to damages if they allow one which they have accepted to go to protest. United States v. Barker, 12 Wheat. 560; Bank of the United States v. The United States, 2 How. 711; The United States v. Bank of the Metropolis, 15 Pet. 377.

In these cases, and many others that might be cited, the rules of law applicable to individuals were applied to the United States. Here the basis of the liability insisted upon is an implied contract by which they might well become bound in virtue of their corporate character. Their sovereignty is in no wise involved.

Atlantic Bank v. The Merchants' Bank (10 Gray (Mass.), 532) and Skinner v. The Merchants' Bank (4 Allen (Mass.), 290) are, in their facts, strikingly like the case before us, and they involved exactly the same point. It was held in each of those cases, after an elaborate examination of the subject, that the defrauded bank was entitled to recover.

But surely it ought to require neither argument nor authority to support the proposition, that, where the money or property of an innocent person has gone into the coffers of the nation by means of a fraud to which its agent was a party, such money or property cannot be held by the United States against the claim of the wronged and injured party.

The agent was agent for no such purpose. His doings were vitiated by the underlying dishonesty, and could confer no rights upon his principal.

The appellee recovered below the amount claimed. A different result here would be a reproach to our jurisprudence.

Judgment affirmed.

NOTE.-In Merchants' Bank v. United States, MR. JUSTICE SWAYNE, in delivering the opinion of the court, remarked, the opinion in United States v. State Bank (supra, p. 30) decides this case.

Judgment affirmed.


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United States v. Clark (96 U.S. 37)

APPEAL from the Court of Claims.

This case was, on the appeal of the United States, before this court at the last term, and is reported in 94 U.S. 73, where the finding of the Court of Claims is stated.

The judgment below was then reversed, on account of an insufficient finding, and the cause remanded for further proceedings. Upon a subsequent trial, the Court of Claims made a further finding, and rendered judgment for Clark. The United States then brought the case here. As the additional finding is set forth in the opinion of this court, it is not necessary to insert it here.

Mr. Assistant-Attorney-General Smith for the United States.

Mr. Thomas H. Talbot, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: United States v. Clark (96 U.S. 37)


text: Talk:United States v. Clark (96 U.S. 37)


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United States v. Clark (96 U.S. 37)/Opinion of the Court

This is an appeal from the Court of Claims, and very few cases involving no larger sum of money have given us more trouble. It was before us at the last term, and is reported. 94 U.S. 73. Upon an examination of the record, after the case had been submitted to us, it was discovered that on an essential fact in issue the Court of Claims had made no finding, but had sent us the evidence on that point. The judgment was therefore reversed, on the ground that there was no sufficient finding of the facts on which to render a judgment, and the cause was remitted to that court for further proceedings.

The Court of Claims has now found, with sufficient distinctness, the existence of the fact required; but it still sends to us, with the record, the evidence on which it so found. It is this which produces the embarrassment, as we shall presently see.

The suit is brought by Clark, under the act of May 9, 1866 (14 Stat. 44, Rev. Stat., sects. 1059, 1062), which authorizes the Court of Claims to hear and determine the claim of any disbursing officer for relief from responsibility on account of capture or other loss of funds while in the line of his duty, and for which such officer was and is held responsible; and, in case the loss has been found to be without fault or negligence on the part of such officer, to make a decree setting forth the amount thereof, which shall be allowed as a credit by the accounting officers of the treasury in the settlement of his accounts.

The Court of Claims finds that the claimant lost by robbery, while in the line of his duty as assistant-paymaster in the army, at Franklin, Texas, on the sixth day of April, 1865, a package of government funds; that the package was in his official safe at his quarters, and the loss was without fault or neglect on his part. The fifth finding of the court, and the one which was made to supply the defect found in the case when it was here before, is as follows: 'The package of government funds which the claimant lost by robbery, as above stated, contained the sum of $15,979.87.'

If this were all, there would be no difficulty in holding that these findings sufficiently established all that is necessary to support the decree in favor of the claimant for a credit of that sum in his account with the government. But the Court of Claims has mingled with, and made a part of its finding of facts, and sent here as part of the record, the proceedings of a court-martial which tried and convicted Thomas Boylan and Louis Morales of committing the robbery by which the money was lost. It sufficiently appears that the only evidence on which the Court of Claims made its fifth finding, namely, the amount of the money which was in the government package so lost, was the record of the court-martial, and that claimant there testified to the amount of the loss. Also, that he was of good character, personally and officially; had always kept regular and exact accounts of the funds in his official custody; made due returns in regard to them, and properly accounted therefor. And that he immediately reported to his superior officer that the funds in that safe were $15,979.87, which was the amount of the loss appearing in his official reports, and charged against him as a deficiency on the final revision and settlement of his accounts by the accounting officers of the treasury.

It is clear that upon this testimony alone the Court of Claims fixed the sum lost by claimant. We are asked by the counsel for the government to hold that it is not competent evidence to establish that fact.

It is manifest that, before we can do this, we must also hold that where that court has found in due form, and presented to us one of those ultimate facts which it is required to find, and which is necessary to its judgment, and has at the same time presented as part of its finding all the evidence on which that fact was found, we can look at both findings to see whether that evidence was competent proof of that fact. This is precisely what was done in Moore v. United States, 91 U.S. 270.

Counsel for the United States insist that a party in the Court of Claims has a right to bring before this court for review any and every ruling of the Court of Claims upon the admission or the rejection of evidence, and also its weight and effect upon the case. The question thus presented is one of much perplexity, and involves the right to a bill of exceptions in a court which sits without a jury, where the evidence is all in writing, and whose judgments we have, by our rules, sought to make final as to all the facts in the case.

We do not propose here to enter this field of inquiry further than this case requires. And we think it does require us not to weigh the evidence, nor to decide whether the court below was bound to note the exception prayed by counsel, or even to include in their findings the matters of evidence we have above stated. But we are of opinion that when that court has presented, as part of their findings, what they show to be all the testimony on which they base one of the essential, ultimate facts, which they have also found, and on which their judgment rests, we must, if that testimony is not competent evidence of that fact, reverse the judgment for that reason. For here is, in the very findings of the court, made to support its judgment, the evidence that in law that judgment is wrong. And this not on the weight or balance of testimony, nor on any partial view of whether a particular piece of testimony is admissible, but whether, upon the whole of the testimony as presented by the court itself, there is any evidence to support its verdict; that is, its finding of the ultimate fact in question.

Entering upon the inquiry, whether there is here any evidence on which the court could have found the amount of the loss by the robbery, it seems too plain for argument that the record of the court-martial is wholly incompetent.

1. Clark was no party to that proceeding, and is not, therefore, bound by its findings; and, by a well-known rule, there is no mutuality, and, therefore, it cannot bind the United States. 2. The amount of the robbery was in no way an essential issue in the trial of the robbers. 3. And it may well be doubted whether a criminal proceeding in a military court can be used to establish any collateral fact in a civil proceeding in another court.

Nor can the evidence of a witness in that case be competent to establish a fact in another case, without some reason, such as his death or insanity since it was given. We will recur to this point presently.

Was the good character of the claimant, the regularity of his accounts, and the prompt report of the loss and its amount, competent evidence to establish that amount? The only thing in all this which could have any tendency to prove the sum lost is the report of its loss. This is but the testimony of the party claimant, and testimony not under oath. If he is incompetent as a witness, this less direct mode of testifying must also be excluded. If he is competent, and had been introduced on the stand, this fact might be used as corroborative evidence. But while he is alive and competent, it must be excluded as primary or independent evidence; because there is better evidence in the sworn statement of the party himself, produced on the stand and subject to cross-examination.

It is obvious, however, that the court or the counsel were laboring under the conviction that claimant was not a competent witness, and were struggling to find other evidence of a fact which was known to him alone. In this we think they were mistaken, and that for the purpose of proving the contents of the stolen package, and for that purpose alone, he was competent.

We are of opinion that, by the rules of evidence derived from the common law, as it is understood in the United States, whenever it becomes important to ascertain the contents of a box, trunk, or package which has been lost or destroyed, under circumstances that make some one liable in a court of justice for the loss, and the loss and the liability are established by other testimony, the owner or party interested in the loss, though he may be a party to the suit, is a competent witness to prove the contents so lost or destroyed. I Greenl. Evid. §§ 348-350, and notes.

This is one of those exceptions to the rigorous rule of the common law excluding parties and persons having an interest in the result of the suit from becoming witnesses in their own behalf, which has been engrafted upon that system. It is founded in the necessity of permitting the only party who knows the matter to be proved to testify, in order to prevent an absolute failure of justice, where his right to relief has been established by other evidence. We are aware that there is a conflict of authority on this point, but we believe the preponderance is in favor of the proposition we have stated; and looking at it as a matter of principle, in the light of the progress of legislation and judicial decision, in the direction of more liberal rules of evidence, we have no hesitation in adopting it, in the absence of legislation by Congress on the subject.

But there is legislation by Congress, and it is doubtless to be attributed to this that Mr. Clark was not called to prove the contents of the lost package. Sect. 858 of the Revised Statutes, originally enacted July 2, 1864, declares that 'in the courts of the United States no witness shall be excluded in any action on account of color, or in any civil action because he is a party to or interested in the issue tried.' This was a complete abolition of the rule of exclusion under the common law in all the courts of the United States, and under it the claimant would have been competent to prove not only the contents of a lost package, but every other fact necessary to establish his claim or title to the relief sought by the suit. Four years later, however, Congress became dissatisfied with this departure from the old rule of evidence as it applied to suits in the Court of Claims, and by the act of June 25, 1868 (Rev. Stat., sect. 1079), intended to restore it. It is there enacted that 'no claimant, nor any person from or through whom any such claimant derives his title, claim, or right against the United States, nor any person interested in any such title, claim, or right, shall be a competent witness in the Court of Claims in supporting the same; and no testimony given by such claimant or person shall be used, except as provided in the next section.' The next section provides for the examination of such parties at the instance of the government counsel.

It can hardly be supposed that Congress intended to do more in this last statute than to restore the common-law rule of exclusion as it stood before the passage of the act of 1864. There is nothing in the language of the act of 1868, nor in the purpose to be subserved, which required more; and in this respect the later act was limited to the Court of Claims, leaving the more progressive rule of 1864 to its full operation in all other courts. The peculiar form of expression of the act of 1868, so far from militating against this view, rather tends to confirm it. The parties are excluded from being witnesses in support of the title, claim, or right asserted in the suit, and no testimony given by them,-that is, no testimony given elsewhere on those points,-shall be used. But it is not inconsistent with this view, that, if the title or right of the claimant to relief is established by other evidence, he may be competent to prove, as under the common-law rule, the contents of the package in regard to which his right, title, and claim to relief has already been established. We are of opinion, therefore, that for this purpose the claimant was a competent witness, and that his testimony was the best to be had, since the court finds that he kept no clerk or assistant who might know the necessary facts.

It follows, that, since there was no competent evidence before the Court of Claims, as shown by their own finding, of the contents or amount of the lost package, their finding on that subject was erroneous, and the case must be returned for a new trial. But as all the other facts necessary to a judgment have been found, and are without error in the finding, the new trial or hearing will be limited to the question of the contents of the lost package.

As the case has now been twice before us, and as counsel for the United States has insisted on a plea of the Statute of Limitations, we must dispose of that now.

'Every claim against the United States, cognizable in the Court of Claims, shall be for ever barred, unless the petition is filed. . . within six years after the claim first accrues.' Rev. Stat., sect. 1069. The petition of plaintiff in this suit does not, in the just sense of the word, set forth a claim against the United States. It sets up a defence to a claim of the United States against the plaintiff. The Court of Claims finds that plaintiff is now sued in another court by the United States for the sum in controversy here.

The plaintiff asks, and by the very terms of the statute under which the Court of Claims acts can obtain, no judgment for money against the United States, nor fix any liability on the government to pay him any thing. By a very curious provision, the Court of Claims is authorized to establish for him a defence to a claim, which claim the government can only establish judicially in some other court. If that court could entertain jurisdiction of this matter when offered as a defence, it is very clear that the Statute of Limitations would be no bar to such defence there. Why should it be here? We think it is a principle of general application, that so long as a party who has a cause of action delays to enforce it in a legal tribunal, so long will any legal defence to that action be protected from the bar of the lapse of time, provided it is not a cross-demand in the nature of an independent cause of action. But if we are mistaken in this, it is clear that, until the accounting officers of the treasury had refused to recognize the sum lost as a valid credit in the settlement of his accounts, there was no occasion to apply to the Court of Claims; and the statute, if applicable to this class of cases at all, did not begin to run until then. In the language of the statute, the officer is not held responsible for this amount until the accounting officers reject it as a credit, and it is only when he has been or is so held that he is authorized to sue in the Court of Claims to establish his defence.

Judgment reversed, and cause remanded for further proceedings     in accordance with this opinion.

MR. JUSTICE HARLAN, with whom concurred MR. JUSTICE CLIFFORD, MR. JUSTICE SWAYNE, and MR. JUSTICE STRONG, dissenting.


text: Talk:United States v. Clark (96 U.S. 37)/Opinion of the Court


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United States v. Clark (96 U.S. 37)/Dissent Harlan

MR. JUSTICE HARLAN, with whom concurred MR. JUSTICE CLIFFORD, MR. JUSTICE SWAYNE, and MR. JUSTICE STRONG, dissenting.

I concur in the reversal of the judgment in this case, because there was no competent evidence before the Court of Claims of the amount of public moneys taken from Clark by this alleged robbery. But I feel obliged to express my dissent from some of the conclusions announced in the opinion of the majority of my brethren.

The proviso to the third section of the Civil Appropriation Act of July 2, 1864, declares, that 'in the courts of the United States there shall be no exclusion of any witness on account of color, nor in civil actions because he is a party to or interested in the issue tried.' 13 Stat. 351. Prior to its passage, the courts of the United States adhered, with great strictness, to the common-law rule that a party to the record cannot be a witness, either for himself or a co-suitor in the cause. Bridges et al. v. Armour et al., 5 How. 91; Stein v. Bowman et al., 13 Pet. 209.

Broad as was its language, that proviso was regarded as applying only to the courts of the United States referred to in the judiciary act. Congress, however, by sect. 3 of the general appropriation act of March 2, 1867 (14 Stat. 451), directed that it should 'be construed to embrace all suits to which the United States shall be a party in the Court of Claims, either as plaintiff or defendant,' thus rendering a party to an action in that court a competent witness against the United States, without reference to his interest in the issue.

That section remained in force but a short while; long enough, however, as we may infer from a subsequent enactment, to convince the legislative department that it was against public policy to allow suitors in the Court of Claims to testify in their own behalf against the government. Hence, by an act providing for appeals from that court, and for other purposes, approved June 25, 1868 (15 id. 75), it was declared,--

'That no plaintiff, claimant, or any person, from or through whom any such plaintiff or claimant derives his alleged title, claim, or right against the United States, or any person interested in any such title, claim, or right, shall be a competent witness in the Court of Claims in supporting any such title, claim, or right, and no testimony given by such plaintiff, claimant, or person shall be used: Provided, that the United States shall, if they see cause, have the right to examine such plaintiff, claimant, or person as a witness, under the regulations and with the privileges provided in sect. 8 of the act of March 3, 1863, entitled 'An Act to amend an act to establish a court for the investigation of claims against the United States, approved Feb. 24, 1855."

The privilege here referred to was that accorded to the government to require the claimant, upon the order of the court, to submit to an examination, under oath or affirmation, as to any and all matters pertaining to his claim, such examination not to become evidence in the cause except at the discretion of the United States. 12 Stat. 766.

The provisions of the acts of July 2, 1864, and June 25, 1868, so far as they relate to the competency of witnesses, were reenacted in the Revised Statutes. Sects. 858, 1079, 1080.

An act, approved May 9, 1866 (14 Stat. 44), confers jurisdiction upon the Court of Claims 'to hear and determine the claim of any paymaster, quartermaster, commissary of subsistence, or other disbursing officer of the United States,. . . for relief from responsibility on account of losses by capture or otherwise, while in the line of his duty, of government funds,. . . and for which such officer was and is held responsible: Provided, that an appeal may be taken to the Supreme Court, as in other cases.'

Sect. 2 provides 'that whenever that court shall have ascertained the facts of any loss to have been without fault or neglect on the part of such officer, it shall make a decree setting forth the amount thereof, upon which the proper accounting officers of the treasury shall allow to such officer the amount so decreed as a credit in the settlement of his accounts.'

Under the authority of this statute Clark instituted this action against the United States, asserting that, in the year 1865, while in the line of his duty as paymaster, in the State of Texas, he had, without fault or neglect on his part, been robbed of government funds in the sum of $15,979.87, and praying that a decree be rendered relieving him from responsibility therefor.

The fact of a loss, without the fault or neglect of Clark, having been shown by other witnesses, this court holds that he is a competent witness, in his own behalf, to prove the extent of such loss. He is thus allowed to establish, by his own testimony, one of the essential facts upon which any decree in his favor must rest; viz., the amount for which he should receive credit in the settlement of his accounts.

In that view I cannot concur. I think it cannot be sustained upon principle or authority. The will of Congress as to the conditions upon which it allows the citizen to sue the government has been expressed in plain and unambiguous language, which leaves no room for construction. It is obviously our duty to execute the statute without reference to our opinion as to its wisdom or policy. If, under the circumstances of particular cases, it seems harsh when construed according to its terms, the remedy is with another department of the government, and not with the judiciary. The act which furnishes the sole authority for the institution of this action describes the demand of a disbursing officer to be relieved from responsibility for government funds which have been lost, as a 'claim' which the Court of Claims may hear and determine. Congress not only expressly provides that no plaintiff or claimant in that court shall be a competent witness in supporting any claim or right he may assert against the United States; but, as if ex industria to prevent all misapprehension, and remove all possible doubt as to its intention, declares that 'no testimony given by such plaintiff, claimant, or person shall be used.' Nevertheless, this court holds that Clark may testify as to the extent of the credit he is entitled to receive, and that his testimony upon that point may be used against the United States. If at the time of framing the act of June 25, 1868, the draughtsman intended to employ such terms as should effectually and in every conceivable contingency exclude the testimony of claimants when offered in their own behalf in the Court of Claims, he could, in my opinion, have used no more appropriate language. It is so simple and clear, that it would seem impossible for the utmost ingenuity to suggest a mode of defeating what appears to have been the evident purpose of Congress. A 'claimant' or a 'plaintiff' in the Court of Claims is incompetent as a witness against the United States. Is not Clark a 'plaintiff,' and does he not in this suit set up a claim or right? If allowed to be a witness to prove the amount of his loss, will he not give testimony in support of a 'right' to be credited therewith? Is not the act explicit and imperative that no 'plaintiff' shall be heard to support his claim or right in that court by his own testimony, and that his testimony shall not be used against the government? It seems to me that these questions must be answered in the affirmative. Under what rule, then, can Clark be a competent witness in his own behalf? How can his testimony be received against the government, without utterly disregarding the plainly expressed will of that department, which has the power to declare the conditions upon which the United States may be sued by the citizen?

With entire respect for the opinion of my brethren, I submit that the construction which the court places upon the act of June 25, 1868, seems to fall very little short of judicial legislation.

It is said that the utmost which can be claimed for the act is that it prescribes the general common-law rule, that a party cannot testify in his own behalf, and that this case comes within one of the recognized exceptions to that rule. In support of that position, we are referred to sects. 348-350 of 1st Greenleaf's Evidence. But neither they nor the authorities cited in the notes prove what is claimed for them. That eminent text-writer says that 'the oath in litem is admitted in two classes of cases: first, when it has been already proved that he party against whom it is offered has been guilty of some fraud or other tortious and unwarrantable act of intermeddling with the complainant's goods, and no other evidence can be had of the amount of damage; and, secondly, where, on general grounds of policy, it is deemed essential to the purposes of justice.' An example of the first class is the case cited in East India Company v. Evans et al., 1 Vern. 306, where a man ran away with a casket of jewels. The injured party was allowed to testify in odium spoliatoris. Another case, of the same class, is Herman v. Drinkwater, 1 Me. 27, where the plaintiff shipped a trunk and two boxes on a brig then in the port of London, of which the defendant was master. The latter undertook to transport them to New York. The plaintiff, desiring to accompany them, engaged passage for himself in the same vessel, and sent on board his clothes and other baggage necessary for his accommodation. The defendant sailed without him, and on the voyage to New York broke open the trunk and rifled it of its contents. The plaintiff, in an action against the master, was held to be a competent witness, in his own behalf, to prove the contents of the trunk. It will not be pretended that the case now before us is within the first class just stated. The United States was not guilty of any fraud or tortious act whereby Clark lost the funds intrusted to him.

Nor can this case, consistently with the authorities, be embraced in the second class, familiar examples of which are actions against innkeepers, stable-keepers, and common carriers. Such actions always proceed upon the theory that the defendant was guilty of some fraud or negligence or breach of trust, whereby the plaintiff lost his property. Upon grounds of public policy the latter was sometimes allowed, at common law, to prove by his own oath certain facts essential to a recovery, no other evidence being attainable. To this head may be referred, says Mr. Greenleaf, the admission of the party robbed, as a witness for himself, in an action against the hundred, upon the Statute of Winton. But that action was authorized upon the ground that the hundred was guilty of some wrong or negligence whereby the plaintiff had received the injury complained of. Nothing of that kind can be predicated of the government in a case like this. No element of wrong or fraud or negligence on its part can exist in any action instituted under the act of May 9, 1866. Paymaster Clark was intrusted with public funds for disbursement, and their loss was not caused by the neglect of any other government officer. By the law then in force, he was responsible for them, although they had been feloniously taken from him. United States v. Prescott et al., 3 How. 578. Congress, in 1866, influenced doubtless by the hardship of special cases, perhaps of this particular case, enabled disbursing officers to obtain a credit for government funds taken from them, without fault or negligence on their part. A subsequent statute, however, declares that no testimony given by a plaintiff in the Court of Claims against the United States shall be used. Whatever exceptions to the common-law rule public policy or necessity has established, the terms of the act of June 25, 1868, exclude all possibility of exceptions to the rule which it prescribes. In the Court of Claims no plaintiff can testify against the United States in support of his claim or right. So reads the statute; and it is, I submit, the duty of this court to obey it, leaving to Congress to make such changes in the rules of evidence as its views of public policy may suggest. It may be unfortunate for Clark if he be denied an opportunity to testify to the amount of his loss; but, as said by Lord Campbell, 'it is the duty of all courts of justice to take care, for the general good of the community, that hard cases do not make bad law.' East India Company v. Paul, 7 Moo. P. C. C. 111.

I dissent also from that portion of the opinion which overrules the plea of limitation interposed by the government.

The act of March 3, 1863 (12 Stat. 765, re-enacted in Rev. Stat., sect. 1069), declares that 'every claim against the United States, cognizable by the Court of Claims, shall be for ever barred, unless the petition setting forth the statement of the claim be filed. . . within six years after the claim first accrues.'

Immediately upon the passage of the act of May 9, 1866, Clark had the right to proceed in that court, but he did not file his petition until April 12, 1873. 'In general, it may be said that it is a rule in courts of equity as well as in courts of law, that the cause of action or suit arises when and as soon as the party has a right to apply to the proper tribunals for relief.' Angell, Lim. 37, c. 6, sect. 42; 2 Story, Eq. Jur.,

This court holds that Clark's suit was not the assertion of a 'claim,' within the meaning of the limitation clause of the act of 1863. From that construction I dissent.

Clark resorted to the Court of Claims under the authority of an act which, as already suggested, entitles the demand for relief under its provisions as a 'claim,' and in his affidavit to the petition he speaks of his demand as a 'claim,' and of himself as a 'claimant.' The Revised Statutes, following that act, designate such a demand as a 'claim,' and give the Court of Claims jurisdiction of 'all claims founded upon any act of Congress.' In every just sense, this claim is so founded.

Clark, in order to obtain relief from responsibility for the funds in question, was required to present to the proper accounting officers a decree of the Court of Claims directing that he should receive credit for the amount taken from him by the alleged robbery. It was not, therefore, a misuse of words for Congress to describe a demand for relief under the act of 1866 as a 'claim.' If a 'claim,' it was clearly barred, unless it did not accrue until the credit which Clark had given himself in his report was rejected at the treasury in 1871; but, unquestionably, his crediting himself with the amount taken from him by the robbery was an unauthorized act. The accounting officers could not, except in pursuance of a decree of the Court of Claims, lawfully admit such a credit; and their failure to promptly disallow it did not give him any additional right, nor deprive the government of any right which it possessed. Neither his nor their action could suspend the running of the Statute of Limitations. His claim, therefore, accrued immediately upon the passage of the act of May 9, 1866. Not having been asserted by suit within six years from that date, it was barred.

I am of opinion that the judgment should be reversed, with directions to dismiss the petition.


text: Talk:United States v. Clark (96 U.S. 37)/Dissent Harlan


text:
Cromwell v. County of Sac County of Sac

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

This action was brought by Cromwell upon four bonds of the County of Sac, in the State of Iowa, each for $1,000, and four interest coupons attached to them, each for $100. The bonds were issued on the 1st of October, 1860, and made payable to bearer on the 1st of May, in the years 1868, 1869, 1870, and 1871, respectively, at the Metropolitan Bank, in the city of New York, with annual interest at the rate of ten per cent a year. The coupons in suit matured after the 1st of May, 1868. They were, at the option of the holder, payable at that bank, or receivable for county taxes at the office of the treasurer of Sac County.

As a defence, the county relied upon the estoppel of a judgment rendered in its favor in a prior action, brought by one Samuel C. Smith upon certain earlier maturing coupons upon the same bonds, accompanied with proof that Cromwell was, at the time, the owner of those coupons, and that the action was prosecuted for his benefit. It appears, from the findings in that action, that the County of Sac authorized, by a vote of its people, the issue of bonds to the amount of $10,000, for the erection of a court-house; that they were issued by the county judge, and delivered to one Meserey, with whom he had made a contract for the erection of the court-house; that immediately thereafter the contractor gave one of the bonds as a gratuity to the county judge; that a court-house was never constructed by the contractor or any other person pursuant to the contract; and that the plaintiff became the holder before maturity of the coupons in controversy, but it does not appear that he gave any value for them. Upon these findings the court below decided that the bonds were void as against the county, and accordingly gave judgment in its favor upon the coupons, holding that any infirmity of the bonds, by reason of illegality or fraud in their issue, necessarily affected the coupons attached to them. When that case was brought here on a writ of error, this court held that the facts disclosed by the findings were sufficient evidence of fraud and illegality in the inception of the bonds to call upon the holder to show, not only that he had received the coupons before maturity, but that he had given value for them; and, not having done so, the judgment was affirmed. Smith v. Sac County, 11 Wall. 139.

When the present case was first tried, the court below, holding that the judgment in the Smith case was conclusive against Cromwell, excluded proof of his receipt of the bonds and coupons in this suit before maturity for value, and gave judgment for the county. But when the case was brought here at the last term, this court held that the court below erred in excluding this proof; and that the point adjudged in the Smith case was only that the bonds were void as against the county in the hands of parties who had not thus acquired them before maturity and for value. The judgment was accordingly reversed, and the cause remanded for a new trial. Cromwell v. County of Sac, 94 U.S. 351.

Upon the second trial, the plaintiff proved that he had received, before their maturity, the bonds payable in 1870 and 1871, with coupons attached, and given value for them, without notice of any defence to them on the part of the county.

As to the bonds payable in 1868 and 1869, and coupons annexed, it appears that the plaintiff purchased them from one Clark on the 1st of April, 1873, after their maturity, for the consideration of a precedent debt due to him from Clark, amounting to $1,500; that they had previously been held by one Robinson, who had pledged them to a bank in Brooklyn as collateral security for a loan of money; that Clark purchased them of Robinson on the 20th of May, 1863, by paying this loan to the bank, then amounting to $1,192, and applying the excess of the amount of the bonds over the amount thus paid, in satisfaction of a precedent debt due to him by Robinson. To each of these bonds there were attached, at the time of Clark's purchase, the coupon due May 1, 1863, and all the unmatured coupons. Robinson stated to Clark that the coupons previously matured had been paid, and that those due on the first of the month would be paid in a few days. Clark had no notice at the time of any defence to the bonds, except such as may be imputed to him from the fact that one of the coupons attached to each of the bonds was then past due and unpaid. There was a special verdict referring to the judgment in Smith v. Sac County, and showing the facts above stated as to the purchase of the bonds and coupons.

The law of New York allows interest at the rate of seven per cent a year, and any agreement for a greater rate avoids the whole contract. The law of Iowa provides that the rate of interest shall be six per cent a year on money due by express contract, where a different rate is not stipulated, and on judgments and decrees for the payment of money; but that parties may agree in writing for the payment of interest not exceeding ten per cent a year, and that in such case any judgment or decree thereon shall draw interest at the rate expressed in the contract.

The main questions determined in the court below-such, at least, as are deemed sufficiently important to be here noticed were, in substance, these: 1st, Whether the judgment in Smith v. Sac County barred a recovery by Cromwell; 2d, whether as to the bonds maturing in 1868 and 1869, and the coupons annexed, he had the rights of a holder for value before dishonor, and without notice of any defence to them; 3d, whether, if entitled to recover on the bonds and coupons, he should be allowed interest on them after maturity at the rate prescribed by the law of New York, or by that of Iowa; and, 4th, whether the judgment should bear interest at the rate of ten, or only six, per cent a year.

The judges of the Circuit Court were divided in opinion on these questions. Conformably to the opinion of the presiding judge, who held that the bonds which matured in 1868 and 1869, and the coupons thereto attached, were, when purchased by Clark, dishonored paper, judgment, bearing six per cent interest per annum, was entered in favor of Cromwell, only for the amount mentioned in the bonds which matured in 1870 and 1871, and the coupons annexed, with interest on them at seven per cent a year after maturity. This judgment is now brought here for review, each party having sued out a writ of error.

Mr. John N. Rogers for Cromwell.

A purchaser for value of an unmatured negotiable bond, with an overdue coupon attached thereto, does not take it as dishonored paper, subject to all defences good against the original holder. Bass v. Kewitt, 20 Wis. 260; National Bank of North America v. Kirby, 108 Mass. 497; Brooks v. Mitchell, 9 Mee. & W. 15; Goodman v. Simonds, 20 How. 343; Murray v. Lardner, 2 Wall. 110; Goodman v. Harvey, 4 Ad. & E. 870; Burnham v. Brown, 23 Me. 400; Oridge v. Sherborne, 11 Mee. & W. 374; Grafton Bank v. Doe, 19 Vt. 463; Ferry v. Ferry, 2 Cush. (Mass.) 92; United States v. Union Pacific Railroad Co., 91 U.S. 72; Miller v. Race, 1 Burr. 452; S.C.. 1 Sm. L. C. 597 and notes.

If the rate of interest where the contract is made differs from that at the place of payment, the agreement of the parties for either rate is valid. Miller v. Tiffany, 1 Wall. 298; Depau v. Humphreys, 8 Mart. (La.) 1; Chapman v. Robertson and Others, 6 Paige (N. Y.), 627; Peck v. Mayo, 14 Vt. 33; Butters v. Olds et al., 11 Iowa, 1.

Under the Iowa statute which governs this case, the bonds after maturity bear interest at ten per cent per annum. Hand v. Armstrong, 18 Iowa, 324; Lucas, Thompson, & Co. v. Pickel, 20 id. 490. In the States where a similar statute prevails, the decisions are to the same effect. Brannon v. Hursell, 112 Mass. 63; Marietta Iron Works v. Lottimer, 25 Ohio St. 621; Mouett v. Sturges, id. 384; Kilgore v. Powers, 5 Blackf. (Ind.) 22; Phinney v. Baldwin, 16 Ill. 108; Etnyre v. McDaniel, 28 id. 201; Spencer v. Maxfield, 16 Wis. 178, 541; Pruyn v. The City of Milwaukee, 18 id. 367; Kohler v. Smith, 2 Cal. 597; McLane v. Abrams, 2 Nev. 199; Hopkins v. Crittenden, 10 Tex. 189 Miller v. Burroughs, 4 Johns. (N. Y.) Ch. 436; Van Buren v. Van Gaasbeck, 4 Cow. (N. Y.) 496.

The judgment and the bonds bear the same rate of interest. Marietta Iron Works v. Lottimer, supra; McLane v. Abrams, supra; Henry v. Ward, 4 Ark. 150. But if it be otherwise, then the rate of six per cent applies only to so much of the judgment as was rendered on the coupons.

Cromwell, as the purchaser before their maturity of the bonds falling due in 1870 and 1871, and without notice of any defences which might impair their validity, and as the purchaser from a bona fide holder of the remaining bonds, who, before they matured, bought them without notice of any infirmity, is not limited to recovering the sum he paid therefor, but is entitled to the full amount due thereon, according to their tenor and effect. Lay v. Wissman, 36 Iowa, 305; National Bank of Michigan v. Green, 33 id. 140; 140; Park Bank v. Watson, 42 N. Y. 490; Fowler v. Strickland, 107 Mass. 552.

Mr. Galusha Parsons for the county.

Negotiable paper is dishonored by any breach of the engagement which it imports. McClure v. Township of Oxford, 94 U.S. 429; Vinton v. King, 4 Allen (Mass.), 562; Newell v. Gregg, 51 Barb. (N. Y.) 263; First National Bank of St. Paul v. County Commissioners, 14 Minn. 77; Arents v. Commonwealth, 18 Gratt. (Va.) 750.

The past-due coupons attached to the bonds maturing in 1868 and 1869 were notice to Clark, the purchaser, that the paper was dishonored, and the plaintiff did not acquire the other bonds in the ordinary or usual course of business. Suidam v. Williamson et al., 20 How. 428; Vermilye & Co. v. Adams Express Co., 21 Wall. 138; McClure v. Township of Oxford, supra; Collins v. Gilbert, 94 U.S. 753; Shirts v. Overjoh, 60 Mo. 305; Davis v. Bartlett & St. John, 12 Ohio St. 534.

The plaintiff, if entitled to recover, is limited to the amount paid by him, with interest. Moore v. Ryder, 65 N. Y. 441; Cardwell v. Hicks, 37 Barb. (N. Y.) 458; Story, Prom. Notes, sect. 191; Daniel, Neg. Ins., sect. 758; Chitty, Bills, 677; Huff v. Wagner, 63 Barb. (N. Y.) 229; Todd v. Shelbourne, 8 Hun (N. Y.), 510; Campbell v. Nicholls, 4 Vroom (N. J.), 81.

Interest on the bonds and coupons, after maturity and before judgment, was computed at an improper rate. Brewster v. Walkefield, 22 How. 118; Young v. Godbe, 15 Wall. 562; Goddard v. Foster, 17 id. 123; Ward v. Morrison, Car. & M. 367. The judgment bears interest at the true rate. Hamer v. Kirkwood, 25 Miss. 95; Rogers v. Lee County, 1 Dill. 529.

MR. JUSTICE FIELD, after stating the case, delivered the opinion of the court.

title: Cromwell v. County of Sac County of Sac


text: Talk:Cromwell v. County of Sac County of Sac


text:
Cromwell v. County of Sac County of Sac/Opinion of the Court

It appears that, on the second trial of this case, the plaintiff proved that he had received two of the bonds in suit, those payable in 1870 and 1871,-with coupons attached, before their maturity, and given value for them, without notice of any defence to them on the part of the county. Under our ruling, when the case was first here, there can be no doubt of his right to recover upon them. The only questions for our determination as respects them relate to the interest which they shall draw after maturity, and the interest which the judgment shall bear. These questions we shall hereafter consider.

As to the other two bonds in suit,-those payable in 1868 and 1869,-and coupons annexed, it appears that when Clark purchased them, on the 20th of May, 1863, there were attached to each the coupon due on the first of that month and all subsequent unmatured coupons. His vendor stated to him that the coupons previously matured had been paid, and that those due on the first of the month would be paid in a few days. He had no notice at the time of any defence to the bonds, except such as may be imputed to him from the fact that one of the coupons attached to each of the bonds was then past due and unpaid. And the principal question for our determination is, whether, this fact existing, the plaintiff had, as to these bonds, the right of a holder for value before dishonor, without notice of any defences by the county; or, as stated by counsel, whether this fact rendered the bonds themselves, and all subsequently maturing coupons, dishonored paper, and subjected them, in the hands of Clark and the plaintiff succeeding to his rights, to all defences good against the original holder. The judges of the Circuit Court were divided in opinion upon this question; and, as in such cases the opinion of the presiding judge prevails, the decision of the court was against the plaintiff, and he was held to have taken the bonds and subsequent coupons as dishonored paper, subject to all the infirmities which could be urged against them in the hands of the original holder. In this decision we think the court erred. The special verdict does not show that the coupons overdue had been presented to the Metropolitan Bank for payment, and their payment refused. Assuming that such was the fact, the case is not changed. The non-payment of an instalment of interest when due could not affect the negotiability of the bonds or of the subsequent coupons. Until their maturity, a purchaser for value, without notice of their invalidity as between antecedent parties, would take them discharged from all infirmities. The non-payment of the instalment of interest represented by the coupons due at the commencement of the month in which the purchase was made by Clark was a slight circumstance, and, taken in connection with the fact that previous coupons had been paid, was entirely insufficient to excite suspicion even of any illegality or irregularity in the issue of the bonds. Obligations of municipalities in the form of those in suit here are placed, by numerous decisions of this court, on the footing of negotiable paper. They are transferable by delivery, and, when issued by competent authority, pass into the hands of a bona fide purchaser for value before maturity, freed from any infirmity in their origin. Whatever fraud the officers authorized to issue them may have committed in disposing of them, or however entire may have been the failure of the consideration promised by parties receiving them, these circumstances will not affect the title of subsequent bona fide purchasers for value before maturity or the liability of the municipalities. As with other negotiable paper, mere suspicion that there may be a defect of title in its holder, or knowledge of circumstances which would excite suspicion as to his title in the mind of a prudent man, is not sufficient to impair the title of the purchaser. That result will only follow where there has been bad faith on his part. Such is the decision of this court, and substantially its language, in the case of Murray v. Lander, reported in the 2d of Wallace, where the leading authorities on the subject are considered.

The interest stipulated was a mere incident of the debt. The holder of the bond had his option to insist upon its payment when due, or to allow it to run until the maturity of the bond; that is, until the principal was payable. Many causes may have existed for a failure to meet the interest as it matured, entirely independent of the question of the validity of the bonds in their inception. The payment of previous instalments of interest would seem to suggest that only causes of a temporary nature had prevented their continued payment. If no instalment had been paid, and several were past due, there might have been greater reason for hesitation on the part of the purchaser to take the paper, and suspicions might have been excited that something was wrong in issuing it. All that we now decide is, that the simple fact that an instalment of interest is overdue and unpaid, disconnected from other facts, is not sufficient to affect the position of one taking the bonds and subsequent coupons before their maturity for value as a bona fide purchaser. National Bank of North America v. Kirby, 108 Mass. 497. To hold otherwise would throw discredit upon a large class of securities issued by municipal and private corporations, having years to run, with interest payable annually or semiannually. Temporary financial pressure, the falling off of expected revenues or income, and many other causes having no connection with the original validity of such instruments, have heretofore, in many instances, prevented a punctual payment of every instalment of interest on them as it matured; and similar causes may be expected to prevent a punctual payment of interest in many instances hereafter. To hold that a failure to meet the interest as it matures renders them, though they may have years to run, and all subsequent coupons dishonored paper, subject to all defences good against the original holders, would greatly impair the currency and credit of such securities, and correspondingly diminish their value. We are of opinion, therefore, that Clark took the two bonds in suit and the subsequently maturing coupons as a bona fide purchaser, and as such was entitled to recover upon them, whatever may have been their original infirmity. The plaintiff, Cromwell, succeeded by his purchase from Clark to all Clark's rights, and can enforce them to the same extent. Nor does it matter whether, in the previous action against the county by Smith, who represented him, he was informed of the invalidity of the bonds as against the county, and knew, when he purchased, the circumstances attending their issue, or whether he was made acquainted with them in any other way. The rule has been too long settled to be questioned now, that, whenever negotiable paper has passed into the hands of a party unaffected by previous infirmities, its character as an available security is established, and its holder can transfer it to others with the like immunity. His own title and right would be impaired if any restrictions were placed upon his power of disposition. This doctrine, as well as the one which protects the purchaser without notice, says Story, 'is indispensable to the security and circulation of negotiable instruments, and it is founded on the most comprehensive and liberal principles of public policy.' Story, Prom. Notes, sect. 191. The only exceptions to this doctrine are those where the paper is absolutely void, as when issued by parties having no authority to contract; or its circulation is forbidden by law from the illegality of its consideration, as when made upon a gambling or usurious transaction.

The plaintiff, therefore, holds the bonds and the subsequent coupons as his vendor held them, freed from all infirmities attending their original issue. Nor is he limited in his recovery upon them, or upon the other two bonds, as contended by counsel for the county, to the amount he paid his vendor. Clark had given full value for those he purchased, and could have recovered their amount from the county, and his right passed to his vendee. But, independently of the fact of such full payment, we are of opinion that a purchaser of a negotiable security before maturity, in cases where he is not personally chargeable with fraud, is entitled to recover its full amount against its maker, though he may have paid less than its par value, whatever may have been its original infirmity. We are aware of numerous decisions in conflict with this view of the law; but we think the sounder rule, and the one in consonance with the common understanding and usage of commerce, is that the purchaser, at whatever price, takes the benefit of the entire obligation of the maker. Public securities, and those of private corporations, are constantly fluctuating in price in the market, one day being above par and the next below it, and often passing within short periods from one-half of their nominal to their full value. Indeed, all sales of such securities are made with reference to prices current in the market, and not with reference to their par value. It would introduce, therefore, inconceivable confusion if bona fide purchasers in the market were restricted in their claims upon such securities to the sums they had paid for them. This rule in no respect impinges upon the doctrine that one who makes only a loan upon such paper, or takes it as collateral security for a precedent debt, may be limited in his recovery to the amount advanced or secured. Stoddard v. Kimball, 6 Cush. (Mass.) 469; Allaire v. Hartshorne, 1 Zab. 665; Williams v. Smith, 2 Hill (N. Y.), 301; Chicopee Bank v. Chapin, 8 Met. (Mass.) 40; Lay v. Wissman, 36 Iowa, 305.

The only questions remaining, which we deem of sufficient importance to require consideration, relate to the interest which the bonds and coupons in suit shall draw after their maturity, and the interest which the judgment shall bear. The statute of Iowa on this subject provides that the rate of interest shall be six per cent a year on money due by express contract, unless a different rate be stipulated, and on judgments and decrees for the payment of money in such cases; but that parties may agree in writing for any rate of interest not exceeding ten per cent a year, and that any judgment or decree thereon shall draw the rate of interest expressed in the contract.

The bonds by their terms, as already stated, bear interest at the rate of ten per cent until maturity. The plaintiff claims that they should draw the same rate of interest after maturity, and that, under the statute of Iowa, the judgment should also bear ten per cent interest. The court below allowed only seven per cent on the bonds after maturity, that being the rate in New York, where the bonds were payable, and only six per cent on the judgment. In this ruling, we think the court erred. By the settled law of Iowa, as established by repeated decisions of her highest court, contracts drawing a specified rate of interest before maturity draw the same rate of interest afterwards. Hand v. Armstrong, 18 Iowa, 324; Lucas, Thompson, § Co. v. Pickel, 20 id. 490. A like decision has been made in several of the States upon similar statutes. Brannon v. Hursell, 112 Mass. 63; Marietta Iron Works v. Lottimer, 25 Ohio St. 621; Monett v. Sturges, id. 384; Kitgore v. Powers, 5 Blackf. (Ind.) 22; Phinney v. Baldwin, 16 Ill. 108; Etnyre v. McDaniel, 28 id. 201; Spencer v. Maxfield, 16 Wis. 178, 541; Pruyn v. The City of Milwaukee, 18 id. 367; Kohler v. Smith, 2 Cal. 597; McLane v. Abrams, 2 Nev. 199; Hopkins v. Crittenden, 10 Tex. 189. There are, however, conflicting decisions; but the preponderance of opinion is in favor of the doctrine that the stipulated rate of interest attends the contract until it is merged in the judgment. Pearce v. Hennessey, 10 R. I. 223; Lash v. Lambert, 15 Minn. 416; Searle and Others v. Adams, 3 Kan. 515; Kitchen et al. v. The Branch Bank at Mobile, 14 Ala. 233. The statutory rate of six per cent in Iowa only applies in the absence of a different stipulated rate. As the judgment in case of a stipulated interest in the contract must bear the same rate, it could not have been intended that a different rate should be allowed between the maturity of the contract and the entry of the judgment.

The case of Brewster v. Wakefield (22 How. 118) is cited against this view. That case came from a territorial court, and arose under a statute which allowed parties to agree upon any rate of interest, however exorbitant, and only prescribed seven per cent in the absence of such agreement. This court, bound by no adjudication of the territorial court, and looking with disfavor upon the devouring character of the interest stipulated in that case, gave a strict construction to the contract of the parties. 'The law of Minnesota' (then a Territory), said the court, 'has fixed seven per cent per annum as a reasonable and fair compensation for the use of money; and when a party desires to extort, from the necessities of a borrower, more than three times as much as the legislature deems reasonable and just, he must take care that the contract is so written in plain and unambiguous terms; for with such a claim he must stand on his bond.' The statute of Iowa only allows the parties by their agreement to stipulate for interest up to ten per cent a year,-a rate which has not been deemed extravagant or unreasonable in any of the States lying west of the Mississippi. Be that as it may, the question is one of local law under a statute of a State, and the construction given by its tribunals should conclude us.

The position of counsel, that because the rate of interest in New York, where the bonds were payable, is only seven per cent, the bonds can only draw that rate after maturity, is not tenable. When the rate of interest at the place of contract differs from the rate at the place of payment, the parties may contract for either rate, and the contract will govern. Miller v. Tiffany, 1 Wall. 298; Depau v. Humphreys, 8 Mart. (La.) 1; Chapman v. Robertson, 6 Paige (N. Y.), 627, 634; Peck v. Mayo, 14 Vt. 33; Butters v. Olds et al., 11 Iowa, 1. The bonds were made with reference to the law of Iowa as to interest, and not to that of New York, where interest above seven per cent is deemed usurious and avoids the whole contract. The obligor is a municipal corporation of Iowa, the bonds were deliverable in that State, and proceedings to enforce their payment could only be had in courts sitting there.

With reference to interest on the coupons after their maturity, that can be allowed only at the rate of six per cent under the law of Iowa. See, as to coupons drawing interest, Aurora City v. West, 7 Wall. 82.

It follows, from the views expressed, that the plaintiff was entitled to judgment for the amount of the four bonds and the coupons in suit, with interest on the bonds after maturity until judgment at the rate of ten per cent a year, and with interest on the coupons after their maturity until judgment at the rate of six per cent a year; and that the judgment should draw interest at the rate of ten per cent a year upon the amount found due on the bonds, and at the rate of six per cent a year upon the amount found due on the coupons, including the costs of the action.

The judgment of the Circuit Court must, therefore, be reversed, and the cause remanded with directions to enter a judgment for the plaintiff in conformity with this opinion; and it is

So ordered.


text: Talk:Cromwell v. County of Sac County of Sac/Opinion of the Court


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Turnpike Company v. Illinois

ERROR to the Supreme Court of the State of Illinois.

This was a proceeding by information in the nature of a quo warranto, instituted on the 13th of October, 1873, in the St. Clair County Circuit Court, Illinois, by the people of the State of Illinois, on the relation of one Bowman, against the St. Clair County Turnpike Company, charging it with unlawfully holding and exercising, without warrant therefor, the franchise of maintaining a toll-gate near Cahokia Creek, upon a street in the city of East St. Louis, called Dyke Avenue, and collecting tolls for passing through the same on said street. The company justified under its charter, or act of incorporation, and several supplements thereto. The plaintiff replied that the land occupied by Dyke Avenue had been dedicated by the owners thereof to the city of East St. Louis, as a public street, and that the legislature, by an act passed March 26, 1869, had granted to the said city exclusive power and control over said Dyke Avenue, and imposed upon it the sole right and duty of granding, filling up, paving, sewering, and otherwise improving and keeping said street in repair, and the right to abate and remove obstructions therefrom. The company demurred, and insisted that this last-mentioned act of the legislature impaired the obligation of the contract made with itself in and by its said charter and the supplements thereto. The County Court, and the Supreme Court of the State, on appeal, held the justification of the company to be insufficient, and gave judgment of ouster.

The company then sued out this writ of error.

The statutes of Illinois bearing upon the question are set forth in the opinion of the court.

Mr. John W. Noble and Mr. John C. Orrick for the plaintiff in error.

The object of the supplement to the charter was to confer a benefit on the company, and, upon the same terms, to add to the franchises previously existing. Pruffett et al. v. Great Western Railroad Co., 25 Ill. 353; Commonwealth v. Hancock Free Bridge Co., 2 Gray (Mass.), 58; Attorney-General v. ''Germantown, &c. Turnpike Co., 55 Pa. St. 466; Canal Bridge v. Gordon'', 1 Pick. (Mass.) 297; Willink v. Morris Canal, 3 Green (N J.), Ch. 377.

Admitting that the right granted to the corporation by the supplement of 1861 was that of the toll-gate on Dyke Avenue, that right, by virtue of the seventeenth section of the charter, continued as long as the corporation; and its purchase by the State was as much a condition precedent to its extinguishment as is the purchase of any other right conferred by the charter. An attempt to extinguish it in any other manner impairs the obligation of the contract contained in the charter, and is unconstitutional and void.

Mr. James K. Edsall, Attorney-General of Illinois, contra.

If the Supreme Court of Illinois was correct in its construction of the act of 1847, and that of 1861, the franchise to collect tolls on Dyke Avenue expired in 1872; and this court will not inquire whether that construction was correct or not. Insurance Company v. The Treasurer, 11 Wall. 204; Kennebec Railroad v. Portland Railroad, 14 id. 23.

The construction given to those acts was the true one. Sedgwick, Const. Law, 338, 339, 342; Angell, Highways, 358; Angell & Ames, Corp. 66; 2 Kent, Com. 276, 298; Pennsylvania Railroad Co. v. Canal Com'rs, 21 Pa. 9; Canisius v. Merril, 65 Ill. 67; Chesnutwood v. Hood, 68 id. 132; Charles River Bridge v. Warren Bridge et al., 11 Pet. 420; Dubuque & Pacific Railroad Co. v. Litchfield, 23 How. 66; Stormfellz v. Turnpike Company, 13 Pa. St. 555.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Turnpike Company v. Illinois


text: Talk:Turnpike Company v. Illinois

title: Talk:Turnpike Company v. Illinois


text:
Turnpike Company v. Illinois/Opinion of the Court

The question before us is, whether any contract was set up by the defendant company, now plaintiff in error, in its justification, which has been impaired by the subsequent legislation of the State.

The charter of the company, as set out in its plea of justification, was an act of the legislature of Illinois, approved Feb. 13, 1847, entitled 'An Act to incorporate the Saint Clair County Turnpike Company.'

By the first section of this act it was enacted as follows:--

'That all such persons as shall become stockholders, agreeably to the provisions of this act, in the corporation hereby created, shall, and for the term of twenty-five years from and after the passage of this act, continue to be a body corporate and politic, by the name of 'St. Clair County Turnpike Company,' and by that name shall have succession for the term of years above specified; may sue and be sued, complain and defend, in any court of law or equity; may make and use a common seal,' &c., conferring the usual corporate powers.

By the second section it was enacted as follows:--

'The said corporation shall have the right to construct and maintain a turnpike road from the bank of the Mississippi River opposite the city of St. Louis, to High Street, in Belleville, St. Clair County, Illinois; said road to be made on the great western mail route.'

Provision was then made for erecting certain toll-gates on the line of the road, and a schedule of tolls was prescribed.

The fifteenth section of the charter is in the following words:--

'The State reserves the right to purchase said road at the expiration of said charter, by paying to said corporation the original cost of said road, laid out and expended in constructing the same, to be ascertained by examination of the books of said corporation, by commissioners to be appointed by the legislature; and, in case of non-payment or redemption by the State at the expiration of the charter, the said road, with all its appendages, shall remain in the possession of said corporation, to be used, controlled, and possessed under the rights and restrictions in this charter contained, and may demand and receive tolls as herein stated, until such time as the State shall refund said sum of money, the original cost of construction, and which right the State hereby reserves.'

The seventeenth and last section was as follows:--

'The corporation hereby created shall be safe and secure for and during the term of the charter, and until the road shall be redeemed by the State as provided, in all the rights, interests, and privileges granted and intended to be conferred to said company by the strict letter and meaning thereof, the corporation complying strictly, clearly, and fully on their part.'

It is conceded that the original route of the turnpike, as located under the second section, did not embrace Dyke Avenue, where the toll-gate complained of has been erected. That avenue extends from Cahokia Creek to the present bank of the river, and is connected, by a bridge across Cahokia Creek, with the turnpike as originally located.

A supplement to the charter was passed Feb. 16, 1861, the second section of which was as follows:--

'The St. Clair County Turnpike Company is hereby authorized to extend their road across Cahokia Creek, using the bridge over said creek which connects the St. Clair County Turnpike Company with the dyke on Bloody Island, and over said dyke to its western shore opposite the city of St. Louis; and shall keep the road on said dyke and bridge in good repair, and build a new bridge if the present one should float away or become unsafe for travelling, but shall not be held responsible for any destruction of the dyke by high floods; and the said company is hereby authorized to erect a toll-gate on said dyke, or on or near said bridge, and collect the following rates of toll, viz.:' [Certain tolls being then prescribed.]

It is by virtue of this act that the defendant claims the right to erect and maintain the toll-gate, and to exact the tolls in question.

The term of the charter expired in 1872; but the defendant, in its plea, alleged that the State had never yet redeemed the franchises granted to it, nor paid, or offered to pay, the costs of constructing the turnpike, or attempted to exercise the right reserved in the fifteenth section of the charter. The question is, whether, by virtue of this section, the company is entitled to hold possession of and take tolls on Dyke Avenue, as well as on the original line of its road. The Supreme Court of Illinois held that it is not entitled to do so as against the State, or as against the city of East St. Louis, claiming under the authority of the State. It held that the dyke and the bridge over Cahokia Creek never became the property of the corporation: that their use merely was granted to it; so that it cannot be said that they form a part of the road constructed by the corporation, which the State, in electing to take its road, would have to pay for; that the franchise of charging tolls for their use is entirely distinct and separate from the franchise of charging tolls for the use of the road constructed by the corporation; and that the fair construction of the act of 1861 is, that it was designed that the corporation should have the use of the bridge and dyke, with the right to charge tolls thereon, until the period fixed for the termination of the corporation and the taking of control of its road by the State, and no longer In this view we concur. The original charter of the company gave it the right, in consideration of building the turnpike authorized thereby, and of keeping it in repair, to erect certain toll-gates, and to exact certain tolls for the use of the turnpike, until the expiration of twenty-five years from the date of the charter, and as much longer as the State should fail to redeem the franchises so granted, by paying the cost of the work. This was undoubtedly a contract; but it related only to the turnpike then authorized to be constructed. Any donations or franchises which the State might subsequently grant to the company would stand upon their own considerations, and could not fairly be claimed as parcel of the consideration of the original contract. In 1861, when the term of the charter had more than half expired, the State gave the company a new and additional privilege; namely, the privilege of using the bridge and dyke in question, and of erecting a toll-gate thereon. The only consideration required was, that the company should keep them in repair; but should not even be responsible for any destruction of the dyke by high floods. The consideration was continuous, and correlative to the continued use. No term was expressed for the enjoyment of this privilege; and no conditions were imposed for resuming or revoking it on the part of the State. It cannot be presumed that it was intended to be a perpetual grant; for the company itself had but a limited period of existence. At common law, a grant to a natural person, without words of inheritance, creates only an estate for the life of the grantee; for he can hold the property no longer than he himself exists. By analogy to this, a grant to a corporation aggregate, limited as to the duration of its existence, without words of perpetuity being annexed to the grant, would only create an estate for the life of the corporation. In the present case, the turnpike company was created to continue a corporate body only for the term of twenty-five years from the date of its charter; and although, by necessary implication, a further continuance, with the special faculty of holding and using the turnpike authorized by the act until redeemed by the State, is given to it for that purpose, yet it is only by implication, arising from the necessity of the case, and, therefore, cannot be extended to other purposes and objects. Grants of franchises and special privileges are always to be construed most strongly against the donee, and in favor of the public. We think the Supreme Court of Illinois construed the grant liberally in this case, when it declared 'the fair construction' to be, that it was designed the corporation should have the use of the bridge and dyke, with the right to take tolls thereon, until the period fixed for the determination of its existence; and we think that that period cannot be extended by implication beyond the prescribed term of twenty-five years, except for the purposes contained in the charter.

If the company had been authorized to construct the dyke and bridge, and had done so; or if it had been authorized to acquire a proprietary interest in the property in fee, and had acquired such interest,-the case would have had a different aspect. Then the question would have been, whether the State could have taken back the property without just compensation. But it does not arise in this case. The only question here is, whether, in resuming the possession of the bridge and dyke, by subjecting them to the control and management of the city of East St. Louis, it has passed a law impairing the obligation of a contract. We think it has not.

Judgment affirmed.


text: Talk:Turnpike Company v. Illinois/Opinion of the Court


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Tennessee v. Sneed

ERROR to the Supreme Court of the State of Tennessee.

The facts are stated in the opinion of the court.

Mr. Robert McPhail Smith and Mr. Philip Phillips for the plaintiff in error.

Mr. Joseph B. Heiskell, Attorney-General of Tennessee, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Tennessee v. Sneed


text: Talk:Tennessee v. Sneed

title: Talk:Tennessee v. Sneed


text:
Tennessee v. Sneed/Opinion of the Court

In the month of March, 1874, Bloomstein, the relator, presented his petition to the State Circuit Court sitting at Nashville, Tenn., in which he stated that he was the owner of certain real and personal estate, which was assessed for State taxes in the year 1872 to the amount of $132.60; that he tendered to Sneed, who was collector of taxes for Davidson County, in payment of said taxes, the amount thereof in 'funds receivable by law for such purposes;' that the collector refused to receive the same, but issued a warrant to his deputy to collect the amount claimed; that he has ever since been ready to make such payment, and now brings said funds into court to abide the action with respect thereto; that said funds consist of $2.60 in legal-tender currency of the United States, and $130 in bills of the Bank of Tennessee, which were issued subsequently to May 6, 1861, although some of them bear an earlier date; that the bills tendered were originally made payable in gold or silver coin, and were embraced within the twelfth section of the act chartering said bank. He prayed for an alternative writ of mandamus to compel the collector to receive the said bills in payment of such taxes, or to show cause to the contrary.

To this writ the defendant, in answer, showed, among others, the following causes why the writ should not issue:--

1. That the suit is expressly prohibited by the act of the General Assembly of the State passed Feb. 21, 1873, c. 13, sect. 2. 2. That it is prohibited by the act (c. 44) of the same year. 3. That the receipt of such bank-notes in payment of taxes was prohibited by the Constitution of the State of Tennessee of 1865. 4. That no such action lay at common law to enforce action by an officer in defiance of the legislative command. 8. That the notes were issued in aid of the late war against the United States.

The petition having been dismissed, the case was thereupon taken to the Supreme Court of the State. On the 26th of May, 1875, a judgment of affirmance was rendered.

It is from this judgment that the writ of error to this court is brought.

The bank in question was chartered in the year 1838, and its charter contained, as its twelfth section, the following provisions:--

'SECT. 12. Be it enacted, that the bills or notes of the said corporation originally made payable, or which shall have become payable, on demand, in gold or silver coin, shall be receivable at the treasury, and by all tax-collectors and other public officers, in all payments for taxes or other moneys due the State.'

The judgment of the Supreme Court declared that the present proceeding was, virtually, a suit against the State, and that it was not maintainable prior to the act of 1855, which act was carried into the Code as sect. 2807. By this act it was provided that suits might be brought against the State 'under the same rules and regulations that govern actions between private persons,' and that process commencing the same might be served upon the attorneys-general of the several districts. This act was repealed in 1865, many years before the commencement of this proceeding, and again in 1873, by the acts presently to be mentioned. We have in the present action a decision of the Supreme Court of the State upon its own statutes and modes of proceeding, to the effect, 1st, that a writ of mandamus, in a case like the present, is a proceeding against the State; and, 2d, that it cannot be sustained in this case.

On the 28th of February, 1873, the legislature of Tennessee enacted 'that no court has, or shall hereafter have, any power, jurisdiction, or authority to entertain any suit against the State, or against any officer of the State, acting by authority of the State, with a view to reach the State, its treasury funds or property; and all such suits now pending, or hereafter brought, shall be dismissed as to the State or such officer, on motion, plea, or demurrer of the law officer of the State, or counsel employed by the State.'

On the 21st of March, 1873, it enacted 'that in all cases in which an officer, charged by law with the collection of revenue due the State, shall institute any proceeding, or take any steps for the collection of the same, alleged or claimed to be due by said officer from any citizen, the party against whom the proceeding or step is taken shall, if he conceives the same to be unjust or illegal, or against any statute or clause of the Constitution of the State, pay the same under protest; and, upon his making said payment, the officer or collector shall pay such revenue into the State treasury, giving notice at the time of payment to the comptroller that the same was paid under protest; and the party paying said revenue may, at any time within thirty days after making said payment, and not longer thereafter, sue the said officer having collected said sum, for the recovery thereof. And the same may be tried in any court having the jurisdiction of the amount and parties; and, if it be determined that the same was wrongfully collected, as not being due from said party to the State, for any reason going to the merits of the same, then the court trying the case may certify of record that the same was wrongfully paid and ought to be refunded; and thereupon the comptroller shall issue his warrant for the same, which shall be paid in preference to other claims on the treasury.'

Sect. 2 of the act provides 'that there shall be no other remedy, in any case of the collection of revenue, or attempt to collect revenue illegally, or attempt to collect revenue in funds only receivable by said officer under the law, the same being other or different funds than such as the tax-payer may tender, or claim the right to pay, than that above provided; and no writ for the prevention of the collection of any revenue claimed, or to hinder or delay the collection of the same, shall in any wise issue, either injunction, supersedeas, prohibition, or any other writ or process whatever; but in all cases in which, for any reason, any person shall claim that the tax so collected was wrongfully or illegally collected, the remedy for said party shall be as above provided, and in no other manner.'

The act of March 25, 1873, provides 'that the several taxcollectors shall receive, in discharge of the taxes and other dues to the State, bank-notes of the Bank of Tennessee, known as the old issue, warrants on the treasury legally outstanding, gold, silver, national bank-notes, and nothing else.' It is said that the acts of 1873, to which reference is made, are laws impairing the obligation of the contract contained in the twelfth section of the bank charter. This is done, it is said, not by a direct infraction of the obligation, but by placing such impediments and obstructions in the way of its enforcement, by so impairing the remedies, as practically to render the obligation of no value. This is the only point in the case involving a question of Federal jurisprudence, and the only one that it is necessary for us to consider. The question discussed by Mr. Justice Swayne, in Walker v. Whitehead (16 Wall. 314), of the preservation of the laws in existence at the time of the making of the contract, is not before us. The claim is of a subsequent injury to the contract.

There are, no doubt, many cases holding that the remedy may be so much impaired as to affect the obligation of the contract. In Webster & Mann v. Rose (6 Heisk. (Tenn.) 93), a stay-law was decided to be unconstitutional. In Blair v. Williams (4 Litt. (Ky.) 34), the same was held of a law extending the time of a replevin beyond that in existence when the contract was made.

In Malony v. Fortune (14 Iowa, 417), and in Cargill v. Power (1 Mich. 369), an extension of time for the redemption of a pre-existing mortgage was held to be unconstitutional.

In Willard v. Longstreet (2 Dougl. (Mich.) 172), a law forbidding the sale of property on execution for less than two-thirds of its appraised value was to be unconstitutional as to pre-existing contracts.

In Walker v. Whitehead (supra), it is said, 'Nothing is more material to the obligation of a contract than the means of its enforcement. The ideas of validity and remedy are inseparable, and both are parts of the obligation which is guaranteed by the Constitution against impairment.'

These are the authorities quoted to sustain the plaintiff's theory, and the list might easily be enlarged.

On the other hand, our own reports and those of the States are full of cases holding that the legislature may alter and modify the remedy to enforce a contract without impairing its obligation. The case of Sturges v. Crowninshield (4 Wheat. 122), is among the first of the class where the question arose upon the abolition of the right of imprisonment of the debtor as a means of compelling payment of his debt. Mason v. Haile (12 Wheat. 370) was a case of the same class. Mr. Justice Thompson says: 'Imprisonment of the debtor. . . may be allowed as a means of inducing him to perform his contract; but a State may refuse to inflict this punishment,. . . and leave the contract in full force. Imprisonment is no part of the contract, and simply to release the prisoner does not impair its obligation.'

On the general subject, and for numerous illustrations, reference is made to the following cases, which it is not necessary to examine in detail: Bronson v. Kinzie, 1 How. 311; Von Hoffman v. City of Quincy, 4 Wall. 535; Bruce v. Schuyler et al., 9 Ill. 221, in each of which a large number of cases is collected.

If a particular form of proceeding is prohibited, and another is left or is provided which affords an effective and reasonable mode of enforcing the right, the obligation of the contract is not impaired. Bronson v. Kinzie, supra; Huntzinger v. Brock, 3 Grant's Cases (Pa.), 243; Evans v. Montgomery, 4 Watts & S. (Pa.) 218; Read v. Frankfort Bank, 23 Me. 318.

The rule seems to be that in modes of proceeding and of forms to enforce the contract the legislature has the control, and may enlarge, limit, or alter them, provided that it does not deny a remedy, or so embarrass it with conditions and restrictions as seriously to impair the value of the right. Bronson v. Kinzie, supra.

If we assume that prior to 1873 the relator had authority to prosecute his claim against the State by mandamus, and that by the statutes of that year the further use of that form was prohibited to him, the question remains, whether an effectual remedy was left to him or provided for him. We think the regulation of the statute gave him an abundant means of enforcing such right as he possessed. It provided that he might pay his claim to the collector under protest, giving notice thereof to the comptroller of the treasury; that at any time within thirty days thereafter he might sue the officer making the collection; that the case should be tried by any court having jurisdiction, and, if found in favor of the plaintiff on the merits, the court should certify that the same was wrongfully paid and ought to be refunded, and the comptroller should thereupon issue his warrant therefor, which should be paid in preference to other claims on the treasury.

This remedy is simple and effective. A suit at law to recover money unlawfully exacted is as speedy, as easily tried, and less complicated than a proceeding by mandamus. Every attorney knows how to carry on the former, while many would be embarrassed by the forms of the latter. Provision is also made for prompt payment of the amount by the State, if judgment is rendered against the officer on the merits.

We are not cited to any statutes authorizing suits to be brought against a State directly, and we know of none. In a special and limited class of cases, the United States permits itself to be sued in the Court of Claims; but such is not the general rule. In revenue cases, whether arising upon its internal revenue laws or those providing for the collection of duties upon foreign imports, it adopts the rule prescribed by the State of Tennessee. It requires the contestant to pay the amount as fixed by the government, and gives him power to sue the collector, and in such suit to test the legality of the tax. There is nothing illegal or even harsh in this. It is a wise and reasonable precaution for the security of the government. No government could exist that permitted the collection of its revenues to be delayed by every litigious man or every embarrassed man, to whom delay was more important than the payment of costs.

We think there is no ground for the assertion that a speedy and effective remedy is not provided to enforce the claim set up by the plaintiff. This is the only question properly before us, and we are of the opinion that it presents no ground for reversing the judgment of the court below.

The other important questions discussed in the opinion of the court below and argued by the counsel it is not necessary here to examine; they do not arise at this time.

Judgment affirmed.

title: Tennessee v. Sneed/Opinion of the Court


text: Talk:Tennessee v. Sneed/Opinion of the Court