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The Maggie Hammond/Opinion of the Court

1st. Had the libellants a lien upon the ship for the performance of the contract of affreightment at the place where the contract was made, or by the law of the place where the contract was to be performed?

2d. Did the act of the master in landing and storing the goods, and accepting new employment for the ship when the repairs were completed, create a lien upon the ship in favor of the libellants at the place where the cargo was landed, stored, and left?

3d. If the libellants did not acquire any lien, either by the law of the place where the contract was made, or by the law of the place where the cargo was landed, stored, and left, did the District Court have jurisdiction of the libel and of the cause of action therein set forth?

In connection with these questions it is necessary to state that the British Parliament, in 1861, by act of the 24th and 25th Victoria, gave jurisdiction to admiralty courts, to be exercised either by proceedings in rem or proceedings in personam,

'over any claim by the owner or consignee, or assignee of any bill of lading of any goods carried into any port in England or Wales in any ship, for damage done to the goods or any part thereof by the negligence or misconduct of, or for any breach of duty or breach of contract on the part of the owner, master, or crew of the ship, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales.' II. Assuming jurisdiction to exist.

1st. Whether the master unnecessarily delayed making the repairs? a question of fact merely.

2d. Whether at the date (November 4th) when he was certified that his vessel was in a condition to proceed on her voyage, he could safely have set off for a port so far north as Montreal? another question of mere fact.

3d. Whether, having believed, as he stated in his protest made at Cardiff on the 9th October that he did, that it had been ascertained that the vessel could not be repaired in time to complete her voyage before the close of the season, he was not bound to have procured another vessel if he could have done so, and forwarded the cargo by it? a question of law.

4th. Whether he could have procured such other vessel if he had sought for one? a question of mere fact.

This court assumed, on the evidence, that the master did delay his repairs; that he could have safely set off on the 4th of November; and that he could at an earlier date than this have found other vessels, though he might have had to pay a higher rate of freight than that for which he had himself contracted, and a higher rate of premium for insurance. So that the only questions of law, and the only questions, therefore, for report, were:

1. The point of jurisdiction.

2. The obligation of the shipowners in a case where the facts were as the court here assumed them to be.

Messrs. Brune and Brown, for the appellants:

I. On the three questions put as to jurisdiction, went into a very learned argument to show.

1st. That by the law of Scotland, where the iron was shipped, the libellants had no lien cognizable in courts of admiralty; citing herein the British statute of 1 William IV, ch. 69; Bell, Dictionary of Scottish Law; and the case of The Bold Buccleugh, &c. That the same want of lien existed equally by the law of Canada, where the owners of the vessel and of the cargo resided; the counsel here citing the language of the Commission to the Vice-Admiralty Courts there, essays by Canadian lawyers, British Statutes, the Lower Canada Reports, and old French Arrets.

2d. That the act of the master, in landing the goods and accepting new employment, gave no maritime lien, unless one was created by the statute of 24th and 25th Victoria; but that this act did not profess to create maritime liens, but only to confer jurisdiction by proceedings in rem, as appeared by the case of The Pacific; that there was a great difference between creating a maritime lien and authorizing a proceeding in rem; that the former, if created, would follow the vessel, while the latter, by being merely authorized, came to nothing, unless the proceeding was instituted, and the vessel was a fugitive from justice, which was not the case here.

3d. That there being no maritime lien by the law of England, and the contract being British as to ship, parties, mode of performance, place where made, and place where to be performed British every way, in short, and without any citizen having any interest in the matter-our courts ought not to originate rights, and to give a privilege which would not be given in the home of the parties.

II. On the point of the master's obligation. The learned counsel argued this point elaborately, but the argument was, after all, chiefly on the facts, and to show a case different from that assumed by the court, and presented, of course, as the case by the reporter. There was thus but little presented on the point for report.

Messrs. Teacle Wallis and J. H. Thomas, contra:

I. As to jurisdiction, having observed that the first and second of the inquiries had a point in common, argued that neither of them could be answered without determining a question of foreign law; that the shipment was made and the bill of lading executed in Scotland; and the cargo was to be delivered in Canada, and was landed and left in Wales; that each of these three places had its separate system of jurisprudence, Wales being governed by the English law; that the Scotch and colonial laws were held by the English courts to be foreign laws, and were required to be proven, as matters of fact, precisely as the laws of foreign nations; and that in the absence of proof-of which there was none here-the foreign law and our own must be presumed to be the same. No suggestion had been made in the pleadings or made below to show that that foreign laws differed in any respect from the general maritime law, as administered by the admiralty courts of this country, and the fact that they did not so differ being thus conceded throughout, the appellees had no reason for taking testimony to establish what was not disputed; Ennis v. Smith, as well as prior cases, precluding the appellant from mooting, in the tribunal of last resort, a question of fact not raised by the record.

The counsel then went into an examination of Scottish authors, seeking to disprove by the writings of Dr. Bell, that which the opposite side cited them to show; and they contended, on his authority and that of other Scotch writers, that the Scotch admiralty was altogether free from the restrictions and embarrassments which so much narrowed the jurisdiction in England, and was governed, like our own admiralty, by the broader rules and principles of the ancient usages, customs, and ordinances of the sea. It had 'the decision of all maritime and seafaring causes,' and the rules which governed its jurisdiction and remedies were derived from the identical sources to which this court resorted in Vandewater v. Mills, for the principle that 'the ship is bound to the merchandise and the merchandise to the ship.'

As to the scope and rules of admiralty jurisdiction in Canada, where the cargo in controversy was to be delivered, they stated that they had found no information in any books within their reach, and they relied on the fact of the difficulty of getting accurate information from books with which the profession here was necessarily unacquainted, and from which, if they knew them, they might derive erroneous ideas-the information being wholly separated from practical knowledge of the matters treated of-as but another illustration of the propriety of requiring all such matters to be established by proof. As to Canadian legislation, they had discovered nothing which threw any light upon the question.

As to the 3d question put, on the point of jurisdiction, while the jurisdiction of the English Admiralty Court to enfore the lien by process in rem did not exist before the recent statutes of Victoria, it seemed to them clear upon authority that the lien, though not enforceable, nevertheless did exist as part of the English admiralty law. The elementary writers were stated by them to be unanimous upon this point. Lord Tenterden used the strongest language in regard to it. 'That principle of maritime law, therefore,' said Kent, 'lays dormant, from the want of a court of law or equity to enforce it in rem.'

But whatever difficulty might have formerly existed as to jurisdiction in England, had been entirely removed by the act of 24 and 25 Victoria.

In The Bahia and The Ironsides, the words, 'carried into England or Wales,' were decided to have been purposely employed in their widest signification, and the statute, it was said, was not intended to be restricted to cases of importation. The iron, then, in this case, was carried into a port of Wales. The sole owner of the ship was domiciled in Nova Scotia, and not in England or Wales. The complaint is of breach of duty and contract on the part of the master and the ship. The case, therefore, came directly within the provisions and scope of the statute. All the discussion about Scott on Canadian law was irrelative. Unless it could be successfully argued that giving a remedy against the ship by proceeding in rem did not impose a lien, there seemed to be no room for dispute as to the existence of the lien by virtue of and under the statute. The lien having existed previously in England, and nothing having been needed but jurisdiction for its enforcement, there was no necessity of deriving a lien from the statute, and the statute would be regarded as authorizing an enforcement pro tanto of a lien already existing.

But the lien was given by the statute; and this was settled notwithstanding some loose language used in The Pacific. In Harmer v. Bell, the privy council laid down the doctrine of maritime lien, definitively and exactly, in the language of Story, J., in The Nester. They say:

'In all cases where a proceeding in rem is the proper course, there a maritime lien exists, which gives a privilege or claim upon the thing, to be enforce by legal process. This claim or privilege travels with the thing into whosesoever possession it may come. It is inchoate from the moment the claim or privilege attaches, and when carried into effect by legal process, by a proceeding in rem, relates back to the period when it first attached.'

If the injured shipper of goods, under the law of the place where the contract was violated, could have found his remedy by a proceeding in rem, the shipowner certainly could not complain that the same proceeding was taken for the same wrong, in a court of corresponding jurisdiction, where the offending res was found. The proceeding in rem, after all, was but 'a mode of proceeding and process,' as defined by this court, and its allowance or refusal constituted no 'question of jurisdiction.'

The fact that all the parties to this proceeding were aliens did not, in itself, and at this stage of the cause, furnish any ground for ousting, or even doubting, the jurisdiction. The lien, as between foreigners, was always administered in our courts by process in rem, on principles of comity. It was a matter of sound judicial discretion and not of jurisdiction, and like all matters of discretion could not be the subject of revision in the Supreme Court, or a ground of appeal to it. In the present case, the exercise of the discretion was not only lawful but just. The port of Baltimore was much nearer to the places of residence of both parties than any port of Great Britain. It was as easy of access to one party as the other, and the ship was within the jurisdiction of the District Court of Maryland, a fugitive, as it were, from her duty.

II. On the point of the master's obligation, the counsel replied to the argument of the other side, as to what the case on the evidence was; showing it to be that given by the reporter, and on which the law was scarcely a matter of question.

Mr. Justice CLIFFORD delivered the opinion of the court.

Common carriers by water, like common carriers by land, in the absence of any legislative provisions prescribing a different rule, are insurers of goods shipped, and are liable in all events and for every loss and damage, however, occasioned, unless it happens from the act of God or the public enemy, or by the act of the shipper, or from some other cause or accident expressly excepted in the bill of lading.

Whenever the goods intended for transportation are shipped on board, or delivered to the carrier or his agent for that purpose, it is the duty of the master, in the absence of any stipulation as to the period of sailing, to commence the voyage within a reasonable time, and he must proceed on the voyage in the direct and usual route to the port of delivery without any unnecessary deviation. Unless it becomes necessary to deviate for the purpose of making repairs or to avoid a storm, or an enemy or pirates, or to obtain necessary supplies, or for the purpose of assisting another vessel in distress, no deviation from the direct and usual route can in general be justified, nor will any other cause be admitted, except under very special circumstances, as a valid defence for any such delay in the transportation of the goods shipped under the bill of lading or other legal contract of shipment.

I. Certain parcels of pig-iron, amounting in the whole to three hundred tons, consigned to the libellants, were, by their agents, resident in England, shipped August 23d, 1866, on board the Maggie Hammond, then lying at Ardrossan, Scotland, and bound on a voyage from that port to the port of Montreal, where the libellants reside. By the bill of lading, it appears that the iron constituting the consignment was shipped in good order and condition, and that the contract of shipment was that it should be delivered to the consignees at the port of destination in like good order and condition, 'the act of God, the Queen's enemies, fire, and all and every other dangers and accidents of the seas, rivers, and navigation, of whatever nature and kind soever, excepted.'

Subject to the terms of that contract the merchandise in question was delivered to the carrier; and having been duly laden on board, the ship sailed on the following day for the port of delivery, and until the seventh of September she proceeded on her voyage in perfect safety, when she encountered heavy gales which continued through the night, causing the ship to leak, and doing great damage to the sails; and it appears that the master, at six o'clock in the afternoon of that day, finding that the weather exhibited no appearance of improvement, and having consulted with the other officers of the vessel, and the crew, decided to bear away for some port of refuge, and that 'they wore ship with her head to the eastward.'

Prior to that change of course they had accomplished half the contemplated voyage, as it appears from the evidence that the ship, at noon of that day, was in latitude forty-nine degrees one minute north, and in longitude thirty degrees sixteen minutes west. Precisely what change was immediately made in the course of the ship does not appear; but it does appear that the master, on the following day, called the crew aft, and submitted the question to them whether they would go to the westward, or continue to go to the eastward, and that they decided to proceed to the eastward, which was equivalent to a decision to return. Much injury had doubtless been done to the sails, but they had spare sails, and it appears that the crew, before they were called aft, had bent and set the foresail, the maintopsail, the jib, the foretopmast staysail, the maintopmast staysail, the mizzen staysail, and the spanker, and the protest shows that the wind had subsided, and that the weather was more moderate.

Principal reason given by the crew for refusing to go westward, as reported in the protest, was, that they had not sufficient sails, that the ship was leaking badly, and that they were not able to do any more work until they had some rest.

Midway between western and eastern ports, and with a ship as seaworthy to go forward as to go back, the master nevertheless yielded readily to the suggestions of the crew, and decided to proceed to the eastward, and on the seventeenth of September the ship came to anchor, without any further damage, in the port of Milford, in Wales. Immediate steps were taken for a survey, which was held on the following day, but some of the recommendations of the surveyors were not satisfactory to the master, and he declined to carry them into effect. Dissatisfied with the results of that survey he called another, which was not held until the twenty-fifth of the same month, when it was recommended that the ship should proceed to Cardiff, where there were greater facilities for landing and storing the cargo and for repairing the vessel. Influenced by that recommendation the master, two days afterwards, weighed anchor, and the ship having been taken in tow by a steamtug, arrived at Cardiff on the next day and was safely moored for repairs in the dry-dock at that port. Subsequent surveys were also held, confirming the prior conclusion that the ship was in need of repairs, and thereupon the cargo was landed and stored. Expenses were incurred in executing the repairs to the amount of one hundred and eighty-five pounds and seventeen shillings, but the mechanics in accomplishing the work, stripped the vessel of her yellow metal, valued at one hundred and thirty pounds, which was allowed as a credit to the owner of the ship.

On the ninth of October the master made a formal protest, that the repairs recommended could not be completed until the season would be too far advanced for the ship to complete the voyage before winter. Her repairs were finished prior to the third of November, and on that day the surveyors certified that the ship was in a 'seaworthy state to proceed on her intended voyage.' Although the ship was ready for sea, still the master refused to reload the cargo and proceed to fulfil his contract, alleging that the season was too far advanced. Negotiations were instituted between the consignees and the owner of the ship for a compromise of the controversy, but before any conclusion was reached the ship, on the twenty-first of November, took on board another cargo and sailed for Baltimore, leaving the merchandise constituting the consignment of the libellants in store at the port where the repairs were made.

Left in store the merchandise remained there until the twenty-ninth of May of the next year, when the agents of the ship forwarded the same in another vessel, but the vessel with the goods did not arrive at the port of delivery until the twenty-second of July, eleven months after the iron was shipped on board the vessel of the respondent. Aggrieved by such unusual delay and learning that the ship had arrived at her port of destination, under the new contract of affreightment, the shippers and consignees of the iron stored and left at Cardiff, filed their libel in the District Court for the district where the ship then was, alleging a breach of the contract set forth in the bill of lading. Process of attachment was issued and the ship was seized on the 26th of February, 1867, the day before she finished discharging her cargo at Baltimore. Hearing was had and a decree was entered in favor of the libellants in the District Court for three thousand and ninety-two dollars and thirty cents, together with costs of the proceedings. Determined to contest the matter further the claimant appealed to the Circuit Court, and the appeal to this court is from the decree of the Circuit Court affirming the decree of the District Court.

II. Several questions of importance and of no inconsiderable difficulty are presented for decision in this case. Most of the material facts are exhibited in the preceding statement, and in view of that state of facts the libellants submit the following propositions:

1. That it was the duty of the master, as the agent of the shipowner, to transport the merchandise to the port of destination and deliver the same to the consignees without unnecessary delay, unless he was prevented from so doing by the act of God, the public enemy, or some one of the perils expressly excepted in the bill of lading; and that the evidence in the case does not show that the failure to transport and deliver the consignment was occasioned by any such causes.

2. That the ship, when she sprung aleak, and when her sails were injured, inasmuch as she was as near to western ports as to those situated to the eastward, should have proceeded to some one of the former for repairs, and that the circumstances did not justify the master in putting back to an eastern port for that purpose.

3. That if he was justified in putting back to the port selected as a port of refuge, that his subsequent conduct in respect to the merchandise shipped by the libellants was wholly indefensible; that he had no right to leave the merchandise in store, enter into a new contract of affreightment, and said with a new cargo for a distant port; that he was bound, as a carrier for hire, either to repair his own vessel, reload the cargo and resume and complete the voyage, as stipulated in the bill of lading; or, if the necessary repairs could not be made in season to enable him to fulfil his contract to transport and deliver the consignnient before the fall navigation would close, then it was his duty to procure another vessel and to transship the merchandise and send it forward to the port of delivery without unnecessary delay.

All of these propositions are controverted by the appellants, and they contend that the conduct of the master was in all respects justifiable; that he did everything which he, as such carrier, was required to do under the contract as expressed in the bill of lading, and that the libellants have no just cause of complaint.

Aside from the merits of the controversy, they also contend that the District Court had no jurisdiction of the case; and as that is a preliminary question it will be first considered before examining the questions more immediately involved in the pleadings. No such question is directly presented in the pleadings, and none such was raised in the court below, still the better opinion is that the question is open to the appellants, as it substantially appears that the home port of the ship is Yarmouth, Nova Scotia, and that both the libellants and claimant are foreigners. By the answer it appears that the claimant is a resident of the place where the ship belongs, and the libel describes the consignees as residents of Montreal, in Canada, and that the iron was shipped at Ardrossan, in Scotland.

Undoubtedly the owner of the cargo has a lien, by the maritime law, upon the ship for the safe custody, due transport, and right delivery of the same, as much as the shipowner has upon the cargo for the freight, as expressed in the maxim, Le batel est oblige a la marchandise et la marchandise au batel. Subject to the exception that the lien of the shipowner may be displaced by an unconditional delivery of the goods before the consignee is required to pay the freight, or by an inconsistent and irreconcilable provision in the charter-party or bill of lading, the rule is universal as understood in the decisions of the Federal courts, that the ship is bound to the merchandise and the merchandise to the ship for the performance on the part of the shipper and shipowner of their respective contracts.

Shipowners contract for the safe custody, due transport, and right delivery of the cargo, and for the performance of their contract the ship, her apparel and furniture, are pledged in each particular case, and the shipper, consignee, or owner of the cargo, contracts to pay the freight and charges, and to the fulfilment of their contract the cargo is pledged to the ship, and those obligations are reciprocal, and the maritime law creates reciprocal liens for their enforcement.

Consequently where the lien or privilege is created by the lex loci contractus, says Judge Story, it will generally, although not universally, be respected and enforced in all places where the property found or where the right can be beneficially enforced by the lex fori.

Such a lien is regarded as being in effect an element of the original contract, but in controversies wholly of foreign origin, and between citizens and subjects of the same foreign country, the admiralty courts of the United States will not, in general, entertain jurisdiction to enforce the maritime lien or privilege in favor of shipper or shipowner, in a case where the libellant would not be entitled to such a remedy in the place where the contract was made or where the cause of action set forth in the libel accrued.

Where the lien exists only by some local statute, and is not given by the maritime law, admiralty courts in another jurisdiction can no more take jurisdiction of a case not within the local statute than the courts of the country could do where the cause of action arose, but where the lien is given by the maritime law the question in such a case, in the admiralty courts of the United States, is not one of jurisdiction but of comity, as the jurisdiction to enforce a maritime lien for the breach of a contract of affreightment, either original or appellate, is, beyond controversy, conferred on all the Federal courts by the Judiciary Act.

Courts of justice, and text writers, everywhere concede that the ship, under the maritime law, is bound to the merchandise and the merchandise to the ship, independent of any local usage or statute; but it is true, as suggested by the appellants, that such a lien cannot be enforced in some countries, because the courts of admiralty, which alone are competent to give effect to the same by a proceeding in rem, are not, as now constituted, invested with any authority, except to a very limited extent, to exercise such a jurisdiction.

Maritime liens are of little or no value, in a country where there are no appropriate tribunals for their enforcement, as they must remain dormant and unavailable, but the denial of such jurisdiction to her admiralty courts, by one country, whether it be by legislation or by the prohibitions of her common law courts, cannot have the effect to impair or diminish the jurisdiction in such cases of the admiralty courts of any other country, if they are legally clothed with the power and authority to enforce such remedies for the breach of a maritime contract.

Such a remedy will not in general be accorded, in our courts of admiralty, to the citizens or subjects of a foreign country whose courts are not clothed with the power to give the same remedy in similar controversies to the citizens of the United States, but the question whether they will do so or not is not a question of jurisdiction in any case, as it is clear they may do so if they see fit, and in some cases they will take jurisdiction to prevent loss and injustice, especially if no objection is made by the consul of the nation to which the vessel belongs.

Viewed in the light of these suggestions the case seems to be one where the jurisdiction may be sustained without difficulty, even though it be true that the shipper had no lien upon the ship by the law of the place where the contract of shipment was made. Appellants contend that the law of the place where the contract was made gives no such lien to the shipper in any case, but there is very respectable authority for a different opinion, independent of the usual presumption that the law of the place where the contract was made is the same as that of the forum where the remedy for the breach of it is sought.

Maritime law, says a learned commentator upon the law of Scotland, partakes more of the character of international law than any other branch of jurisprudence; and he adds, what is more material to the present inquiry, that in all the discussions respecting the same in the courts of the subject are the continental collections and treatises on the subject are received as authority by their judges where no unfitted for adoption there by any peculiarity which their practice does not recognize. Reference is then made to the principal continental treaties, usually referred to here, and frequently recognized by this court as the sources from which the rules of the maritime law were drawn.

Speaking of the power and authority of the master of the ship, the same commentator says that he may hypothecate the ship for the supply of necessaries, and, as a last resort, he may sell the ship and cargo for that purpose. Abroad he has full authority to enter into a charter binding the owners and the ship, and he cites in support of that proposition the continental writers usually referred to as authority for that well-known rule of maritime law.

Shipowners, the author says, have a lien as carriers for the security of the freight, and that the shipper, where the goods have been sold, lost, or injured, during the voyage, may have recourse upon the property of the vessel as a guarantee for the personal obligation of the shipowner. He admits that the rule last mentioned is not generally followed in England, and that there is no adjudged case to that effect in the courts of Scotland, but he insists there is in their jurisprudence no reason for denying the privilege given in such cases by the maritime law, and he expresses the opinion that such a remedy would be sustained in their courts.

Suppose, however, that neither of the preceding propositions are correct, still it is clear that the jurisdiction in this case may be sustained upon another ground. Two causes of action are set forth in the libel, and before entering further into the discussion of the question of jurisdiction it becomes necessary to ascertain what they are and where they respectively arose, as alleged in the libel and as shown in the evidence. Obviously the first cause of action is founded solely on the alleged failure of the shipowner to fulfil the contract of affreightment to transport the iron from the place of shipment to the port of destination, and to deliver the same to the consignees.

Non-delivery of the merchandise is the gravamen of the charge set forth in both articles of the libel, but the libellants also allege that the master, after the ship departed on her voyage, abandoned the same, and made some improper disposition of the shipment; that he neglected to transport and deliver the same, and that he entered into a new contract of affreightment with another party, and that the ship subsequently sailed for the port of Baltimore, in charge of another master, not having the iron of the libellants on board.

Subsequent to the landing and storing of the goods the shipowner discharged the master and appointed another in his place, and the ship took another cargo on board and sailed for the port where the process was served in this case, the shipowner claiming the right so to do upon the ground that the season was too far advanced for the ship to proceed to her port of destination, and insisting that he might lawfully detain the shipment until spring, in order that the ship might complete the voyage and earn full freight.

In determining the question of jurisdiction the court must assume that the several propositions submitted by the libellants in respect to the merits of the controversy are correct. Assume that to be so, then it follows that the master improperly put back for repairs; that he abandoned the voyage without any lawful excuse; that he improperly entered into a new contract of affreightment, subjecting the ship to new perils and to a new lien, and that she had proceeded on a distant voyage, leaving the consignment of the libellants at the port where the same was stored at the time the iron was landed from the ship.

Landed and stored as the merchandise was in Wales, the question is, whether the refusal of the master either to transport the goods in his own ship or to transship the same and send the shipment forward in another vessel, and the subsequent abandonment of the voyage, gave the shippers and consignees any lien on the ship by the law of the country where those wrongful acts of the master took place.

Jurisdiction is possessed by the Admiralty Court of England 'over any claim by the owner or consignee, or assignee of any bill of lading of any goods carried into any port in England or Wales in any ship, for damage done to the goods or any part thereof by the negligence of misconduct of, or for any breach of duty or breach of contract on the part of the owner, master, or crew of the ship, unless it is shown to the satisfaction of the court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales.'

Prior to that enactment the jurisdiction thereby conferred could not have been exercised by that court, and conse quently the extent of the jurisdiction depends entirely upon the meaning of that provision. By the words of the act the jurisdiction conferred is confined to the case of goods carried into England or Wales, and it is equally clear that the claim must be made by the owner or consignee, or by the assignee of the bill of lading, but it cannot be denied that the case before the court in all those respects comes within the very words of the enactment.

As construed by the courts of that country the intent of the act is to give a remedy to the owner or consignee whenever the ship arrives in a British port and the cargo is not duly delivered in consequence of a breach of contract or duty on the part of the owner, master, or crew of the ship; and the meaning has been so extended by construction that the admiralty court will entertain a claim for short delivery of the cargo, or a case where the goods are only incidentally brought into a port in England or Wales, the court holding that the word carried is not used in the sense of imported, but that it includes every case of a breach of contract or duty by the carrier whenever the ship arrives in a British port.

Where the master of a ship, on a voyage from New York with cargo consigned to Dunkirk, put into a port in England in consequence of an accident, and there landed the cargo and refused either to give delivery of it there or to carry it on to its destination, the court held that there was a clear breach of duty over which it had jurisdiction.

Special reference is made by the appellants to the case of The Pacific, as showing that the sixth section of the Admiralty Court Act gives merely a conditional right to sue the ship, that it does not create a maritime lien; but the decision in that case is not an authority for the proposition as applied to the case before the court, as the conclusion would be inconsistent with what the same learned judge decided in the case of The St. Cloud, where he said the act was intended to operate by enabling the party aggrieved to arrest the ship in cases where, from the absence of the shipowner in foreign parts, the common law tribunals could not afford effectual redress.

Effectual redress in such a case cannot be afforded, even in an admiralty court, without authority to arrest the ship; and wherever that authority exists the proceeding may be in rem, which is an admiralty proceeding, founded upon a lien; and it makes no difference whether it is held in the courts of the particular jurisdiction, that it exists by maritime usage, or that it was created by statute, if it be of such a character that it is recognized in our courts as a maritime lien. Extended argument upon the subject, however, seems to be unnecessary, as the later decisions in the admiralty courts of that country have disapproved of the prior decisions, and adopted a more liberal construction of the sixth section of the act.

Tested by these suggestions the better opinion is that the sixth section of that act does give a maritime lien in a case like the present; but suppose it is otherwise, that it merely gives the right to sue the ship, still the concession cannot benefit the appellants, as the admiralty courts here administer the foreign law, and the consequence is that the filing of the libel in the District Court here secures to the libellant the same lien in the ship as if the libel had been filed in his behalf in the jurisdiction where the wrongful acts set forth in the libel were committed.

Process n rem is founded on a right in the thing, and the object of the process is to obtain the thing itself, or a satisfaction out of it, for some claim resting on a real or quasi proprietary right in it. Unless, therefore, the suit in rem can be prosecuted in the jurisdiction where the property is found it cannot be prosecuted at all, as the suit cannot be maintained without service of process upon the property described in the libel.

Process having been duly served in the district where the ship was found and where the libel was filed, the jurisdiction of the District Court is without any well-founded legal objection. In this country, says Mr. Parsons, it seems to be settled that our admiralty courts have full jurisdiction over suits between foreigners, if the subject-matter of the controversy is of a maritime nature, but the question is one of discretion in every case, and the court will not take cognizance of the case if justice would be as well done by remitting the parties to their home forum.

Jurisdiction being established it becomes necessary to examine the merits and to state our conclusions whether the decree from which the appeal was taken should be reversed or affirmed.

Grave doubts are entertained whether the master was justified in putting back for repairs, as he was quite as near to western ports as to those situated to the eastward, and the record furnishes no reason to conclude that he would have encountered any greater perils or difficulties in proceeding to the westward than he did in putting back to the port selected as the port of refuge; but it is not necessary to pursue that inquiry, as it is not the intention of the court to rest the decision upon that ground.

Ships, to be seaworthy, ought in general to have spare sails where the voyage is a long one, and if the ship in this case was properly furnished in that behalf the conduct of the master in putting back for the reasons assigned in the protest is quite indefensible, as it is clear that he might have gone forward just as safely, and if he had done so it cannot be doubted that he might have gone to any one of a halfdozen western ports where he could have repaired his ship in ample season to have enabled him to complete the voyage, deliver the cargo, and return to the open sea without the least danger of any obstruction from ice in the river navigation. None of these matters, however, were much urged by the appellees at the argument, and they are accordingly passed over without further remark.

Grant that the conduct of the master in putting back is without objection, and that he was justified in landing and storing the goods with a view to a survey, and for the purpose of repairing the ship, the question then is whether his subsequent conduct in refusing, after the repairs were finished, to complete the voyage or to procure another vessel, transship the goods, and send them forward, and in sailing for another and a distant port under a new contract of affreightment, leaving the goods of the libellants in store, without making any provision for their transportation and delivery, constitutes a breach of the contract of affreightment made with the shippers of the goods, as set forth in the bill of lading.

As agent of the owners the master is bound to carry the goods to their place of destination in his own ship, unless he is prevented from so ding by the act of God, the public enemy, or by the act of the shipper, or from some one of the perils expressly excepted in the contract of shipment. When the vessel is wrecked, or otherwise disabled in the course of the voyage, and cannot be seasonably repaired to perform the voyage, or cannot be repaired without too great delay and expense, the master is at liberty to transship the goods and send them forward in another vessel, so as to earn the whole freight, but he is not entitled to recover for freight if he refuses to transship the goods, unless he repairs his own vessel within a reasonable time and carries them on to the place of delivery.

He is not only at liberty, in case of such a disaster, to transship the goods and send them forward, but it is his duty to do so, if he cannot repair his own vessel in a reasonable time, and if another vessel can be had in the same or a contiguous port, or at one within a reasonable distance; and in that event he is entitled to charge the goods with the increased freight arising from the hire of the vessel so procured.

Shipments are made that the goods may be transported to the place of delivery, and the master should alwasy bear in mind that it his duty to accomplish that object. Inexcusable delay occurred before it was ascertained what repairs were necessary, and before the work was actually commenced. They came to anchor in Milford Haven on the seventeenth of September, and a survey was called on the following day, but the master was dissatisfied with the result, and on the twenty-fifth of the same month he called another, so that the ship did not arrive at the port where the repairs were made until the twenty-eighth of the month, ten days after her arrival at Milford.

Duties remain to be performed by the master or the owner, after the vessel is disabled. His obligation of safe custody, due transport, and right delivery still continues and is by no means discharged or lessened while it appears that the goods have not perished in the disaster.

Nothing will excuse the carrier under such circumstances but the causes stipulated in the bill of lading, and he is still bound by virtue of his original contract to use his utmost exertions to transport or send forward the goods to the port of delivery. Such carriers may be answerable for the goods in case of loss or injury, even though no actual blame can be imputed to them; and after the loss or injury is established the burden lies upon the respondent to show that it was occasioned by one of the perils excepted in the contract of shipment or bill of lading.

Diligence and promptitude were due in this case from the master, especially if he believed that there was any danger that the time which would be occupied in making the repairs would render it impracticable to carry forward the goods before the close of the fall navigation; and if he was of the opinion, in view of all the circumstances, that the repairs could not be completed in season to transport the goods to the port of delivery, he was bound to procure another vessel, transship the goods, and forward them to the consignees.

Much testimony was introduced by the appellants to show that another vessel could not have been procured, but most of it is not of a character to apply to the case before the court. Bound to keep safely, duly transport, and rightly deliver the goods, it is no defence for the carrier to allege that the price of freight at that time was higher than it would have been earlier in the season, as the charge for the increased price would have fallen upon the goods and not upon the appellants. They had contracted to transport the goods, and it is no defence to a suit for the breach of the contract that the rate of the insurance at that time was higher than it was earlier in the season. Excuses of the kind constitute no defence to such an action, as the carrier is bound to perform his contract unless he is prevented from so doing by the act of God, the public enemy, or by the act of the shipper, or from some other cause or accident expressly excepted in the bill of lading or contract of shipment.

Under the circumstances of this case the appellants were bound to transport the goods in their own vessel, or to procure another and send them forward to the port of delivery. Opposed to this view is the suggestion that they were not bound to transship immediately, as they had the right to detain the goods and repair their own vessel for that purpose; but the decisive answer to that suggestion is, that they had no right to detain the goods for any such purpose, unless the repairs could be made in time to enable the ship to transport the goods to the port of delivery before the navigation closed.

Without entering into the details of the evidence, suffice it to say, the court is of the opinion that another vessel might have been procured for that purpose, and that it was the duty of the master to have transshipped the goods unless he could repair his own vessel in season to complete the voyage.

Aside from that proposition, however, the court is of the opinion that the repairs were finished in season to have enabled the master to transport the goods in his own vessel, and it is clear that he was bound to do so unless he was prevented by some one of the causes expressed in the bill of lading. Mere fear that he might encounter ice in the voyage, or that he might not be able to return till spring, if he transported the goods to the port of delivery, constitutes no defence, as he was bound by his contract to complete the voyage without unnecessary delay, unless, as before explained, he was prevented by some one of the causes expressed in the bill of lading. His ship was fully repaired on the third of November, and the navigation did not close until the fifteenth of December following, which would have given him ample time to deliver the cargo and complete the voyage. Forty days would have been a long voyage, and probably it might have been accomplished in thirty-five.

Viewed in any light, as shown by the evidence, the decree of the Circuit Court is correct.

DECREE AFFIRMED.

title: The Maggie Hammond/Opinion of the Court


text: Talk:The Maggie Hammond/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Copelin v. Insurance Company

ERROR to the Circuit Court for the District of Missouri, in which court Copelin brought suit against the Phoenix Insurance Company, on a policy of insurance for $5000 on the steamer Benton, valued in the policy at $45,000. The policy contained these stipulations:

'In case of loss, the party insured shall use every practicable effort for the safeguard and recovery of said steamboat, and if recovered cause the same to be forthwith repaired; and in case of neglect or refusal, on the part of the assured, to adopt prompt and efficient measures for the safeguard and recovery thereof, then the insurers are hereby authorized to interpose and recover the said steamboat, and cause the same to be repaired for account of the assured, to the charges of which the said insurance company will contribute in proportion as the sum herein assured bears to the agreed value in this policy. The acts of the assured or assurers, or of their joint or respective agents, in preserving, securing, or saving the property insured in case of danger or disaster, shall not be considered or held to be a waiver or acceptance of abandonment.'

The cause having been submitted to the court without a jury, the court found that the boat insured struck a snag, and sunk in the Missouri River, November 3d, 1865, and that the injury was caused by one of the perils against which the company had insured; that though the plaintiff had no right to abandon for a total loss, he gave notice that he did so abandon; but the defendants did not accept such abandonment; that they did, however, under the provisions of the policy, take possession of the vessel for the purpose of raising and repairing her, and returning her to the plaintiff; that accordingly they raised the boat, proceeded to repair her, and tendered her to the plaintiff, at the home port, on the 9th of May, 1866, more than six months after she had been injured. It was further found, that the repairs and tender were not made within a reasonable time; that had the boat been tendered earlier in the season, so as to be used for the spring trade on the river, she would have been worth $5000 more to the plaintiff; that when she was tendered to him, the repairs made were not sufficient to indemnify him for the injury the boat had sustained; that it would have required an expenditure of $5000 more to have made the additional repairs necessary to complete the indemnity; and that the plaintiff refused to receive the boat when she was tendered to him, but did not point out the deficiencies in the repairs. It was still further found that the expense of raising and repairing the boat, actually incurred by the defendants, was $12,150.62, of which $1763.70 was the cost of the repairs made; that the boat, as tendered to the plaintiff, was worth $12,000, and that when injured she was worth $25,000. Upon the facts thus found, the Circuit Court gave judgment for the plaintiff for the amount named in the policy. And the insurance company brought the case here.

Mr. J. O. Broadheal, for the Company, plaintiff in error:

If there was no right to abandon as for a total loss, and no acceptance of abandonment, the question becomes simply one of damages under the policy. The vessel, when tendered to the owner, was worth $12,000. It would have taken $5000 to put her in complete repair,-that is to say, to make her as good as she was before she received an injury. This would make $17,000. But the underwriters paid $12,150.62, the expense of raising and repairing the vessel; and if they are now, by the judgment of the court, required to pay, in addition, the amount of the policy, $5000, with interest, they pay over $17,000 to the owner; in other words, they pay more than a total loss; so that, although there was no right to abandon, and no abandonment accepted, and no total loss, the insurer is held liable for a total loss.

It is provided by the terms of the policy that the acts of the assurer or assurers, or their agents, in preserving, securing, or saving the property insured, in case of damage or disaster, shall not be considered or held to be a waiver or acceptance of abandonment.

The expenses for raising and repairing the boat, $12,150, were paid out by the underwriters, under the policy, in attempting to rescue the boat, 'to the charges of which the insurance company is only bound to contribute in proportion as the sum assured bears to the agreed value in the policy,'-that is, as $5000 is to $45,000, or one-ninth part of those expenses,-the balance, of course, to be paid by the boat; and the insurance company may make the expenses in rescuing the boat for account of the asured. One-ninth of $12,150 is $1350, leaving $10,800 due by the assured. If from this is deducted $5000, the amount necessary to put the boat into complete repair, there remains $5800 due, which is more than the amount of the policy, if there was no abandonment, no total loss.

The judgment below proceeds on an idea, that although there was no total loss, yet the insurance company has rendered itself liable for a total in other words, that there was a constructive total loss; but how can it be said that there is a constructive total loss when there is no right to abandon, no acceptance of abandonment, and of course no abandonment?

If the assurer the failed, after saving the boat, to put her in complete repair, the most that can be said is that he has failed to make good the loss to the assured, and that is all the contract requires the assurer to do.

[The learned counsel then went into an examination of the evidence on which the court below made its finding, to show that it was the fault of the assured that the boat was not repaired and tendered to him in a reasonable time.]

Messrs. Glover, Shepley, and Rankin, contra.

Mr. Justice STRONG delivered the opinion of the court.

title: Copelin v. Insurance Company


text: Talk:Copelin v. Insurance Company

title: Talk:Copelin v. Insurance Company


text:
Copelin v. Insurance Company/Opinion of the Court

Nothing in this record requires us to look beyond the special finding of the facts made by the court, or to do more than determine whether, upon the facts found, the plaintiff below was entitled to the judgment given.

As the sum insured by the policy was not greater than the sum required to make the additional repairs necessary to indemnify the plaintiff, it is difficult to perceive why, in any aspect of the case, he was not entitled to the judgment given. The defendants complain, however, that they have been held liable as for a constructive loss, when there was no right to abandon, and when the abandonment of which the plaintiff gave notice was not accepted. Doubtless had the defendants taken possession of the boat, as they were authorized to do, by the provisions of the policy, and had they raised, completely repaired, and returned her to the plaintiff in a reasonable time, they could not have been held liable for a total loss. It is an established fact that there was no right to abandon when they did take possession of the vessel. And it was expressly stipulated in the policy, that the acts of the assured, or insurers, or of their joint or respective agents, in preserving, securing, or saving the property insured, in case of danger, or disaster, should not be considered, or held to be, a waiver or acceptance of an abandonment. It is well settled, however, that an offered abandonment may be accepted, even when the assured has no right to abandon, and, if accepted, it must be with its consequences. And an acceptance need not be expressly made. It may even be refused, and yet the insurers, by their conduct, may make themselves liable as for a total loss. Though, by the terms of the policy, these defendants had a right to take possession of the boat, and repair her for account of the plaintiff, yet this was a privilege accorded to them only, that they might thus make indemnity for the loss. Taking possession to make partial repairs, not amounting to indemnity, was not contemplated by the contract. It was not authorized. Nor did the contract warrant taking possession of the boat, and holding her for an unreasonable time. The insurers were bound to repair and return without unnecessary delay. In holding longer than was necessary for making repairs, they must be regarded as acting, not as insurers, but as owners, for they had no other authority than that of owners for their failure to return within a reasonable time. Their action was, therefore, a substantial recognition and acceptance of the abandonment of which they had been notified, for in no other way had they become owners. On no other theory can this delay be considered lawful. It is true the policy stipulated that the acts of the insurers in preserving, securing, or saving the property insured in case of danger, or disaster, should not be considered or held an acceptance of abandonment, but this manifestly refers only to authorized acts. Retaining possession of the boat an unreasonable time, and then offering to return her unrepaired, were not authorized acts, and consequently they are unaffected by the stipulation. They must therefore be regarded as constructive acceptance of an abandonment. This is a principle asserted and well sustained by the authorities. In Peele v. The Suffolk Insurance Company, where the jury had found that the underwriters, who had taken possession of the stranded vessel, had not offered to restore her in a reasonable time, the court said, 'The underwriter has his duties as well as his rights. If he take the vessel into his possession to repair her, he must do it as expeditiously as possible, in order that the voyage, if not completed, may not be destroyed. If he delay the repairs beyond a reasonable time, he forfeits his right to return the ship, and must be considered as taking her to himself under the offer to abandon.' The principle, said the court, rests upon the very nature of the law of insurance, which is a fair and honest indemnity for loss. The same doctrine was asserted in Reynolds v. The Ocean Insurance Company, and it was also held that the underwriter's duty and liability in such a case, are not varied by a clause in the policy of insurance, stipulating 'that the acts of the assurers in recovering, saving, and preserving the property insured in case of disaster, shall not be considered an acceptance of an abandonment.' Such also was the ruling in a case between the same parties, and in Norton v. The Lexington Fire, Life, and Marine Insurance Company. It is in our judgment sustained by sound reason.

The plaintiffs in error, however, insist that the doctrine cannot be applied to the present case, because the court below found there was no right, under the facts shown on the part of the plaintiff, to abandon for a total loss, although he gave notice that he did so abandon, and that there was no acceptance by the insurers of such an abandonment. But this must be considered in connection with the other facts found. It is equally a fact in the case, that the defendants took possession of the boat, repaired her very insufficiently, and after having held her an unreasonable time, offered to return her. The legal effect of this we have seen. Taking these facts together, the finding that the defendants did not accept the abandonment which the plaintiff offered at a time when he had no right to abandon, means no more than that there was no express or avowed acceptance. This is quite consistent with the judgment, that by their failure to return the boat within a reasonable time, they made themselves liable to pay the full amount of the policy.

We cannot follow the plaintiffs in error into an examination of the evidence, in order to inquire whether it was not the fault of the assured that the boat was not repaired and tendered to him in a reasonable time. Our judgment is necessarily founded exclusively upon the finding of facts by the court. That is equivalent to a special verdict, and upon that we think the plaintiff below was entitled to the judgment which he obtained.

JUDGMENT AFFIRMED.


text: Talk:Copelin v. Insurance Company/Opinion of the Court


text:
Lionberger v. Rouse

ERROR to the Supreme Court of Missouri, the case being this:

Prior to 1857, there had been in Missouri, and there were in the State at that time, several institutions which-under the name, for the most part, of savings banks, loan institutions, saving associations, and the like, though sometimes with the title of banks only-transacted business often known as 'banking;' that is to say, which received deposits, lent money, and dealt in exchange; but which had not the privilege of issuing notes to circulate as money; not, therefore, banks of issue.

In the year just named, 1857, the State established ten banks, which, in addition to the powers of receiving deposits, lending money, and dealing in exchange, had also the power of issuing paper money; the ordinary banks of deposit, discount, and issue or circulation. There were thus in the State, 'banks' which were not banks of issue, and banks which were banks of this kind. The act establishing the ten banks of issue declared that'Each banking company (incorporated under it) agrees to pay to the State annually one per cent. on the amount of capital stock paid in by the stockholders other than the State, which shall be in full of all bonus and taxes to be paid to the State by the respective banks.'

And an act amendatory of the act of incorporation provided that this one per cent. on the amount of capital stock should be a full compensation for all taxes of every kind whatsoever.

In 1863, these ten banks of discount, deposit, and issue, as also numerous other banks not banks of issue, but banks of the sort first above described, being in existence, Congress, by act of 25th of February, of that year, entitled 'An act to provide for a National currency,' authorized the establishment of National banks; giving power in the act to State banks to become National ones. Under this act of Congress (the State legislature also authorizing any bank, savings institution, savings association, or other corporation having banking powers and privileges in the State, under the laws thereof, to form associations for the purpose of doing a banking business under the act of Congress of February 25th, 1863), eight of the already mentioned ten banks of issue, and which had the privilege while State banks to pay the one per cent. annually in lieu of all taxes, made themselves National banks. Two, however, did not. These two remained State institutions with the privilege of the one per cent., as before. The old associations, that is to say, the banks not of issue, all of which had charters independently of the act of 1857, and which had not the privilege to pay one per cent. in lieu of all other taxes, remained State institutions.

In this state of things, Congress, on the 3d of June, 1864, passed an act regulating the right of States to tax the shares of National banks. The 41st section of this act provided:

'That nothing in this act shall be construed to prevent all the shares in any of the said associations, held by any person, from being included in the valuation of personal property of such person in the assessment of taxes imposed by or under State authority, at the place where such a bank is located, and not elsewhere, but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State.

'Provided further, that the tax so imposed, under the laws of any State, upon the shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the State where such association is located.'

These enactments, Federal and State, being in force, the legislature of Missouri, by an act of the 4th February, 1864, concerning revenue, provided that 'shares of stock in banks and other incorporated companies' should be subject to assessment as other property. The statute provided the mode of assessment as follows:

'Persons owning shares in banks and other incorporated companies, taxable by law, are not required to deliver to the assessor a list thereof; but the President or other chief officer of such corporation shall deliver to the assessor a list of all shares of stock held therein, and the names of the persons who hold the same.

'The tax assessed on shares of stock, embraced in said list, shall be paid by the corporations respectively, and they may recover from the owners of such shares the amount so paid by them, or deduct the same from dividends accruing on such shares.'

Under this act, a tax of nearly two per cent. was levied by the State on the assessed valuation of the shares of one Lionberger, a resident of St. Louis, and a shareholder in the Third National Bank of St. Louis. Payment of the tax being refused, the collector, a certain Rouse, collected it forcibly. Lionberger thereupon brought suit against him, in one of the State courts, for the alleged wrongful act; asserting that the proviso in the 41st section of the act of 1864, imposing a limitation on the power of the States, had reference to banks of issue alone; that the State had disabled itself by its contract with them to tax that sort of bank otherwise than it had contracted for (one per cent.), and that the assessment and collection, if made under color of law, were without any legal authority whatever. It was not denied that the two State banks of issue held a very inconsiderable portion of the banking capital of the State, and that the shares of all other associations in the State (of which there were many, some created after 1857, and some before), with all the privileges of banking except the power to emit bills, were taxed like the shares in National banks. The court in which the suit was brought decided adversely to the position set up, and on appeal the Supreme Court of the State-observing that the moneyed associations, saving and banking institutions of the State, were banks to all intents and purposes, and that their shareholders were taxed at the same prescribed rate as the shareholders in the National institutions affirmed the decision. The case was now brought here for review. Many shareholders in the National banks in Missouri had also refused to pay the tax laid under the State statute, and the present case was in the nature of a test case to settle its validity; more than $300,000 of such taxes, as was said, being dependent on the judgment.

Messrs. Evarts and Broadhead, for the plaintiff in error:

1. We assume, as matter of law, that the State of Missouri has disabled itself by contract with the two now existing State banks of issue from laying any tax upon them, or upon their shares, but that of one per cent. And we assume also, that no taxation by the State upon the capital of the National banks can be at present made, under any Federal legislation existing, nor any upon the shares except under the permissive and restrictive authority of the 41st section of the act of Congress of June 3d, 1864. How, then, can the tax in question, even admitting it to be a tax on shares, as distinguished from one on capital, be justified? The fact that certain State institutions-sometimes called banks, and without impropriety-are subjected to the same rate and method of taxation as are applied to the National banks is no answer to our question; for the 41st section provides, as the final condition to the validity of State taxation of the shares of National banks, that the tax so imposed 'shall not exceed the rate imposed upon the shares in any of the banks organized under the authority of the State,' where the National bank is located. But,

2. The tax is really a tax on the capital of the banks. The shares are not taxed at all. The shareholder has nothing, under the Missouri statute, to do with the matter. He makes no return of his shares. It is 'the president or other chief officer of such corporation' who delivers to the assessor the list of all the shares in the bank; and it is the corporation which, by the express words of the State statute, pays the tax. That the corporation gets it afterwards, as it can and if it can, does not change the case.

Messrs. Blair and Dick, contra:

1. The Supreme Court of Missouri has decided that the two institutions organized under the act of 1857, are not the only 'banks' in the State, but on the contrary, that the banking institutions organized under the laws of the State which confer banking privileges without the power of issuing paper, are banks; and this is in harmony with the ruling of this court in the case of The Bank for Savings v. The Collector, which says:

'Banks, in the commercial sense, are of three kinds, to wit: 1st, of deposit; 2d, of discount; 3d, of circulation; all or any of these functions may be and frequently are exercised by the same association; but there are still banks of deposit, without authority to make discounts, or issue a circulating medium.'The revenue laws of Congress also recognize banks without circulation as 'banks' for the purposes of taxation.

The meaning given by the plaintiff to the State statute, assumes that the word 'banks' means, always, 'banks of issue,' which it does not always mean.

2. The bank is made by the State statute the agent of each individual shareholder, and acts merely as such. This is a convenience to him as also to the State; and is not unlawful.

Mr. Justice DAVIS delivered the opinion of the court.

title: Lionberger v. Rouse


text: Talk:Lionberger v. Rouse

title: Talk:Lionberger v. Rouse


text:
Lionberger v. Rouse/Opinion of the Court

This case has received the careful consideration of the court, as well on account of the principle involved, as of the large amount of money dependent on the decision of the suit.

It is no longer an open question in this court, since the decision in the case of Van Allen v. The Assessors, that the shareholders in a National bank are subject to State taxation, although the entire capital of the bank be invested in the bonds of the United States, which cannot be taxed by State authority. The difficulties which have arisen since that decision do not relate to the abstract right of taxation, but grow out of the supposed conflict of State legislation with the provisions of the act of Congress on the subject. The forty-first section of the act of Congress of 3d of June, 1864, placing these shares within the reach of the taxing power of the States, annexed two conditions to the exercise of the power. The State was forbidden to tax them higher than it taxed other moneyed capital in the hands of its own citizens, or to impose on them a tax exceeding the rate imposed upon the shares in any of the banks organized under State authority. If there was no discrimination in these particulars the State could lawfully tax shares in the National banks. It is conceded the tax exacted from the plaintiff in error was not greater than was assessed on other moneyed capital belonging to individuals or corporations, but it is claimed that it is higher than the rate paid by the State banks.

And this brings us to the consideration of the main question in the case. It is contended that the tax in question is invalid, because the two State banks chartered in 1857, which did not, like the remaining eight, become National banks, cannot be taxed more highly than one per cent., while the assessment of the shares of the plaintiff in error equals nearly two per cent. It is not denied that these two banks hold a very inconsiderable portion of the banking capital of the State, and that the shares of all other associations in the State (there being many), with all the privileges of banking except the power to emit bills, are taxed like the shares in National banks, but it is claimed the proviso in the forty-first section of the National banking act, imposing a limitation on the power of the States, has reference alone to banks of issue. To ascertain the sense in which the word bank is used in the proviso to this section, it is necessary to recur to the mischief which Congress desired to guard against. The National banks were established to provide a National currency, at a time when the State banks furnished the entire paper circulation of the country. In providing a system by which the States, where National banks were located and did business, could tax their shares, it was important, as their notes came in competition with State bank paper, that there should be no unfavorable discrimination against them. It was easy to see that an unfriendly State could legislate so as to drive them out of circulation, and this consideration induced Congress to limit the State power of taxation in two particulars. In declaring that National bank shares should be taxed like other moneyed capital, and that no burdens should be imposed on them from which State banks were exempt, all was done that the necessity of the case required. There was nothing to fear from banks of discount and deposit merely, for in no event could they work any displacement of National bank circulation. It seems, therefore, clear, that the proviso to the forty-first section was meant by Congress to apply to banks of issue. It is proper in this connection to observe, that the changed condition of the banking interests of the country, has been the occasion of further legislation by Congress on this subject, and that now the power of State taxation over the shares of National banks is subject only to the restriction that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens.

Having determined that Congress, in imposing conditions on the power of the State to tax, had reference to banks of circulation, the question arises whether the tax in this case was invalid because of the status of the two banks left in Missouri. According to the words of the law the tax was not warranted, but did Congress intend that the law should have such an effect? Did it contemplate that the shares of National banks should escape taxation, if the State complied, so far as it had the ability to do so, with the requirements of the forty-first section of the National Banking Act? In our opinion the answers to these inquiries must be in the negative. It is a universal rule in the exposition of statutes that the intent of the law, if it can be clearly ascertained, shall prevail over the letter, and this is especially true where the precise words, if construed in their ordinary sense, would lead to manifest injustice.

It is very clear that Congress, in conceding to the States the right to tax, adopted a measure which it was supposed would operate to restrain them from legislating adversely to the interests of the National banks. The measure itself had reference to prospective legislation by the States, and its object was accomplished when the States conformed, as far as practicable, their revenue systems to it. Exact conformity was required, if attainable, but the law-making power did not intend such an absurd thing, as that the power of the State to tax should depend on its doing an act, which it had obliged itself not to do. It was well known at the time, and Congress must be supposed to have legislated on this subject with reference to it, that States, by contract with individuals or corporations, could grant away the right of taxation, and that this power had been frequently exercised. It was equally within the knowledge of Congress that the policy on this subject varied in different States; while some of them retained in their own hands the power of taxation over all species of property, except such as were devoted to religious or charitable purposes, others had parted with it to interests of a purely business character, like banks and railroads. Can it be supposed that Congress, in this condition of things in the country, meant to confer a privilege by one section of a law which by another it made practically unavailable? If the construction contended for by the plaintiff in error be allowed, then a State so unfortunate as to have a single bank, whose shareholders are exempt by contract from taxation in the manner provided by Congress, can derive no benefit from the power given to tax the shares of National banks. And this further consequence would follow, that the shareholders of National banks located in one State would escape all taxation, while those whose property was invested in banks in a different locality, would have to contribute their full share of the public burdens. This court will not impute to Congress a purpose that would lead to such manifest injustice, in the absence of an express declaration to that effect. Without pursuing the subject further, it is enough to say, in our opinion, Congress meant no more by the second limitation in the proviso to the forty-first section of the National Banking Act, than to require of each State, as a condition to the exercise of the power to tax the shares in National banks, that it should, as far as it had the capacity, tax in like manner the shares of banks of issue of its own creation.

Testing the case in hand by this rule it is apparent that the tax complained of was properly assessed and collected. Missouri has complied, so far as it had the ability to do it, with the demands of the law.

The legislature, as soon as the National banking system was created, passed a law enabling the ten banks of issue in the State to wind up their business, in order that their shareholders could, if they chose, transfer their interests to the new system. Eight of these banks availed themselves of the privilege, surrendered their charters as State corporations, and became National bank associations. Two of them declined the proposition tendered by the State, and are still doing business in St. Louis. There is no way the State could compel them to relinquish their charters, nor has it the power to tax their stockholders on their shares of stock. Having contracted with these banks to accept from them annually, in lieu of all taxes, one per cent. on their paid-in capital stock, it cannot turn round and assess a tax on the shareholders. As the State did all that it could to conform its legislation to the requirements of the law, it was therefore in a condition to impose the tax in question on the shares of stock held by the plaintiff in error.

It is objected that the mode of assessment provided by the general revenue law of the State, is inconsistent with the provisions of the act of Congress of June 3d, 1864, as it requires the tax assessed on the shares of stock, to be paid by the corporations respectively instead of the individual shareholders. This was one of the questions in the case of the National Bank v. Commonwealth, decided at this term, and it was there held that this mode of assessment was not inconsistent with the terms of the law, but in all respects unobjectionable. It is unnecessary to repeat the argument presented in that case, or to consider the point further, as we see no reason to question the soundness of that decision.

JUDGMENT AFFIRMED.


text: Talk:Lionberger v. Rouse/Opinion of the Court


text:
The City v. Lamson

ERROR to the Circuit Court for the District of Wisconsin, the case being thus:

The 3d section of the 11th article of the Constitution of Wisconsin ordains that

'It shall be the duty of the legislature to provide for the organization of cities and incorporated villages, and to restrict their power of borrowing money, contracting debts, and loaning their credit, so as to prevent abuses in contracting debts by such municipal corporations.'

With this provision in force as fundamental law, the legislature of the State, on the 2d March, 1857, by an act which amended and consolidated the several acts relating to the city charter, authorized the common council of the city of Kenosha to 'borrow, on the corporate credit of the city, any sum of money, for any term of time, at any rate of interest, and payable at any place deemed expedient, issuing bonds or scrip therefor.' The city accordingly did borrow $100,000 to aid in the construction of the Kenosha and Rockford Railroad, and it issued bonds in sums of $500 and $1000 each for payment. They were headed,

Issued according to law to the Kenosha and Rockford Railroad Company, to aid in the construction of their railroad;

and were made payable twenty years from date, at the People's Bank, in the city of New York, with interest, at the rate of ten per cent. per annum, to be paid semi-annually, upon the presentation of the proper coupons for said interest. For the payment of the bonds and interest, the faith of the city was declared to be pledged. The bonds were certified by the mayor and city clerk to have been issued under an act of the legislature, passed March 2d, 1857, giving authority to the city to lend its credit, for the sum specified; and also, in pursuance of a vote of the freeholders of the city, taken for the purpose of the loan of the $100,000 to the railroad company.

Attached to each bond were a series of coupons, like those now usually attached to railroad bonds, for the semi-annual interest as it should become due in each year. The following was the form of those on the bonds for $500:

$25. The city of Kenosha, Wis., will pay to the bearer twenty-five dollars on the 1st day of September, 1860, at the People's Bank, in the city of New York, on presentation of this coupon, being the interest due on the day on the bond of said city, numbered 1, dated this 1st day of September, 1857.

G. H. PAUL, Mayor.

H. T. WEST, Clerk.

Subsequent to the issue of the bonds the name of 'The Kenosha and Rockford Railroad Company' was changed to 'The Kenosha, Rockford and Rock Island Railroad Company;' and a statute of 1859 provided that 'the common council of the city of Kenosha should have generally the charge and control of all interest the city of Kenosha now has, or may hereafter have in that railroad.' The act then provided that the common council should appoint a railroad commissioner, that when duly appointed he should be ex officio a member of the board of directors of the railroad; and a statute of 1862 authorized the city 'to issue new bonds, in exchange for the bonds and scrip heretofore issued by said city, on railroad account, now outstanding and unredeemed, for the purpose of compromising the indebtedness of said city on such terms as may be agreed upon between the city and its creditors.'

One Lamson having one hundred and seventy-two coupons for the interest due on the bonds in 1860 and 1861, and unpaid, brought suit against the city to recover it. The declaration recited in very general terms, the several bonds to which the coupons that the plaintiff held had been originally annexed, setting forth that these bonds themselves had been sold and disposed of, to bon a fide purchasers, and had since passed from hadn to hand in the stock market, like other negotiable securities, so that the plaintiff could not produce them to the court; that the interest had accrued on the same; that the city had neglected and refused to pay it at the time and place designated; and that the interest and coupons were owned by the plaintiff, and that he brought the coupons into court to be cancelled.

The defendant pleaded, 1st, nil debet; 2d, that the several supposed causes of action had not accrued to the plaintiff within six years from the commencement of the suit; the statute of limitations. The plaintiff took issue on the first plea, and demurred to the second, which demurrer was sustained.

From the bill of exceptions, it appeared that the plaintiff gave in evidence the one hundred and seventy-two coupons, his doing which was objected to, but that the objection was overruled. It was admitted that all the coupons, with the exception of four, which were annexed to a bond produced, were coupons of different bonds of the same issue, but the bonds were not given in evidence. It was admitted also that more than six years had elapsed since the interest accrued on them.

After the plaintiff rested, the counsel for the defendant prayed the court to charge the jury, 1st, that the bonds declared on, as well as the coupons, should have been produced, in order to sustain the declaration under the issue; and 2d, that the city of Kenosha had no authority to issue the bonds. Both prayers were refused.

The jury found a verdict for the plaintiff on the first issue to the amount of the several coupons, and judgment having been given accordingly the city brought the case here.

Mr. Cary for the city of Kenosha, plaintiff in error:

1. If the declaration was upon the coupons, the plea of actio non accrevit infra sex annos should have been sustained and the plaintiff's demurrer thereto overruled, for all the coupons recovered upon were more than six years past due. If the declaration counts upon the bonds, then the plea of nil debet not having been demurred to put in issue every fact necessary to the plaintiff's recovery, and required them to be proved. Certainly no recovery could be had upon the bonds without producing them, when they were counted upon as the cause of action and their existence denied by the plea. There was no proof that any such bonds had ever been made.

2. The only pretence of authority in the city to issue these bonds, rests in an act which is in plain repugnance to the constitution of the State. It is difficult to conceive a more absolute grant of power, or one that would more completely subject the whole property of the city to the wild and reckless schemes of the city council, for fancied improvements, than that act gives. It would be the duty of this court, under any circumstances, to hold the act unconstitutional and void. But the act has already been declared void by the Supreme Court of the State of Wisconsin, which is the proper tribunal to determine its validity under the constitution of Wisconsin, and the decision of that court on this question, is conclusive upon this court.

Messrs. Carpenter and Lynde, contra.

Mr. Justice NELSON delivered the opinion of the court.

title: The City v. Lamson


text: Talk:The City v. Lamson

title: Talk:The City v. Lamson


text:
The City v. Lamson/Opinion of the Court

We agree that if this were an action upon the bonds to recover instalments of interest that had accrued thereon, although such instalments had been duly assigned to the plaintiff, there would be great difficulty in maintaining it in his name, as well as without producing the bonds, as the proper evidence that interest was due. The plaintiff, under such circumstances, doubtless, would have a remedy for withholding the interest; but it is not necessary or material to stop and point it out in the present case; for we do not regard the action as founded upon the bonds, but upon the coupons. The bonds are recited in very general terms, it is true, in the declaration; but, it is by way of explaining and bringing into view the relation which the coupons originally held to the bonds; and which, in an important sense, they still hold, though distinct as it respects ownership, as they represent the interest that had become due upon them. The relation we refer to is, that these coupons are not received, or intended to have the effect of extinguishing the interest due on the bonds; as this collateral security, or rather, this evidence of the interest, upon well-settled principles, cannot have that effect without an express agreement between the parties. Besides, the coupons are given, simply as a convenient mode of obtaining payment of the interest as it becomes due upon the bonds. There is no extinguishment till payment.

The recital is by way of inducement, as is familiar to special pleaders at common law, which Mr. Chitty says is in the nature of a preamble, stating the circumstances under which the contract was made, or to which the consideration has reference. The officer of an inducement is explanatory, and does not, in general, require exact certainty. Thus, says Mr. Chitty, when an agreement with a third person is stated only as an inducement to the defendant's promise, which is the principal cause of action, it is considered, in general, sufficient to state such agreement without certainty of name, place, or person, and where the matter is unnecessarily stated by way of inducement, and might be struck out as surplusage, and, as we shall show hereafter, may be said of that in the present case, the failure to make proof of the statement is not material.

The action, then, being founded upon the coupons, the material question arising on this branch of the case is whether or not the plea of the statute of limitations constitutes a good defence. It is admitted that more than six years have elapsed since the interest accrued on the coupons, and, if barred by this lapse of time, the defence is complete, and the court below erred in sustaining the demurrer.

As we have seen, the coupons were made contemporaneously by the city with the bonds for the accruing interest thereon. This appears on their face. The city of Kenosha, on the first September, &c., will pay twenty-five dollars at the People's Bank, &c., on presentation of this coupon, being the interest due that day on the bond of said city, numbered one, dated 1st September, 1857, which bond itself contains a covenant for the same interest. The coupon is not an independent instrument, like a promissory note for a sum of money, but is given for interest thereafter to become due upon the bond, which interest is parcel of the bond, and partakes of its nature; and the bond, being of a higher security than a simple contract debt, is not barred by lapse of time short of twenty years; and, as we have seen, this contemporaneous coupon does not operate as an extinguishment of the interest, unless there has been an express agreement to that effect. These coupons are, substantially, but copies from the body of the bond in respect to the interest, and, as is well known, are given to the holder of the bond for the purpose, first, of enabling him to collect the interest at the time and place mentioned without the trouble of presenting the bond every time it becomes due; and, second, to enable the holder to realize the interest due, or to become due, by negotiating the coupons to the bearer in business transactions, on whom the duty of collecting them devolves. This device affords great convenience to all persons dealing in these securities, especially to the holders in foreign countries, who otherwise would be obliged to forward the bond to the place of payment of the interest each time it became due, or trust them to the hands of their correspondents in the country where the payment is made.

This convenience in the collection by the use of coupons, as is apparent, very much facilitates the negotiation of these securities abroad, and enhances their value in the foreign market. And any decision that would have the effect to lessen or impair the higher security for the interest as found in the bond, by the use of these coupons, would necessarily, to that extent, defeat the purpose for which they were designed. As we have seen, there is nothing in the contract between the parties that would lead to the conclusion the nature or character of the security by the bond for the interest was to be changed or lessened by the issue of the coupons, but the contrary; for if any such change had been intended, it should have been in some way indicated in the body of them. There was but one contract, and that evidenced by the bond, which covenanted to pay the beares five hundred dollars in twenty years, with semi-annual interest at the rate of ten per cent. per annum. The bearer has the same security for the interest that he has for the principal. The coupon is simply a mode agreed on between the parties for the convenience of the holder in collecting the interest as it becomes due. Their great convenience and use in the interests of business and commerce should commend them to the most favorable view of the court; but, even without this consideration, looking at their terms, and in connection with the bond, of which they are a part, and which is referred to on their face, in our judgment it would be a departure from the purpose for which they were issued, and from the intent of the parties, to hold, when they are cut off from the bond for collection, that the nature and character of the security changes, and becomes a simple contract debt, instead of partaking of the nature of the higher security of the bond, which exists for the same indebtedness. Our conclusion is, that the cause of action is not barred by lapse of time short of twenty years. Recurring again to the declaration, we have said that the preamble, or inducement, was unnecessary, and might well be rejected as surplusage. As we have seen, it recites, in very general terms, the bonds to which the several coupons in suit were annexed. Now, each coupon itself contains substantially, on its face, all this information. It is issued for interest due at a certain day and place on a bond, giving its number and date. Another form adds the amount, but this is unimportant, as the bond is sufficiently identified without it. The production of the coupon, therefore, at the trial, will show the relation it bears to the bond, and, if our opinion is sound, that in this connection it cannot be legally severed from it till the interest is paid, a count upon the coupon is all that can be material.

The only remaining question in the case is as to the authority of the city of Kenosha to issue bonds to which the coupons were annexed.

The act of 1857 of the legislature which amends and consolidates the several acts relating to the charter of the city, confers full authority upon the common council to borrow on the corporate credit of the city any sum of money for any term of time, at any rate of interest, and payable at any place deemed expedient, issuing bonds or scrip therefor. It is admitted this authority would be sufficient, but it is insisted that the statute exceeds the authority of the legislature under the third section of the eleventh article of the State constitution, which, it is asserted, requires the legislature to limit or restrict the amount of money to be raised by the city. Without inquiry into this question, it is sufficient to say that, after the city had passed the ordinance lending its credit to the railroad company to the amount of $100,000, the legislature ratified it. This was equivalent to an original limit of this amount.

It is urged also that the Supreme Court of Wisconsin has held that the act of the legislature conferring authority upon the city to lend its credit, and issue the bonds in question, was in violation of the provision of the constitution above referred to. But, at the time this loan was made, and these bonds were issued, the decisions of the court of the State favored the validity of the law. The last decision, cannot, therefore, be followed.

JUDGMENT AFFIRMED.

Dissenting, Mr. Justice MILLER.

title: The City v. Lamson/Opinion of the Court


text: Talk:The City v. Lamson/Opinion of the Court