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Cary v. Savings Union

ERROR to the Circuit Court for the District of California; the case being thus:

An act of Congress passed in 1864, as amended in 1866, enacted that there should be levied and collected a tax of five per centum on all dividends thereafter declared due, wherever and whenever the same should be payable to depositors as part of the earnings, income, or gains of any savings institution:

'Provided, That the annual or semi-annual interest allowed or paid to the depositors in savings banks or savings institutions shall not be considered as dividends.'

This statute being in force, Cary, collector of internal revenue at San Francisco, demanded of the Savings Union, one of the savings banks of that city, a certain sum of money which had been assessed against the company as a tax for dividends paid by it to its depositors. The company refused to pay, alleging that they had paid no 'dividends' to their depositors, and had only paid to them semi-annual interest on their deposits. The collector, however, being about to distrain for the amount, the company paid it under protest, and now brought suit as for money thus paid under duress.

The Savings Union was this sort of institution:

It had a capital stock. Its business was to receive deposits, and in the contract under which they were received, provision was made for the accumulation of a reserve fund out of the profits earned, which was to be the property of the company. The capital stock, reserve fund, and deposits were also made, by the same contract, a common fund to be lent out by the company as opportunity offered. The stock and the reserve fund formed a guarantee capital for the security of the return of the deposits to the depositors.

At the expiration of every six months the directors were required to ascertain the amount of the profits of the business, and after deducting certain salaries and expenses, and setting apart a certain proportion, not exceeding one-tenth, to the stockholders as a compensation for furnishing the capital, apportion the remainder for a dividend upon the capital stock, reserve fund, and deposits, at such monthly or yearly rates as the total amount of net profits would permit. The dividend apportioned to each account was to be in proportion to the time the several amounts represented in the account formed part of the funds of the corporation, and the rate of dividends or ordinary deposits was to be increased by twenty per cent. to form the rate upon funds remaining permanently in the hands of the corporation, including what were denominated 'term deposits.' The directors were also required to determine and make known from time to time a rate of interest to be paid to depositors who might wish to take such rate in lieu of dividends, on drawing out the balance of their accounts between one dividend day and another.

Each depositor at the time of opening his account, signed a contract printed on the first three leaves of the little passbook, which he then received. The contract was headed,

'Conditions of agreement on which deposits may be made with, and will be repaid by the San Francisco Savings Union.'

And it contained a large number of provisions in regard to the returns which the depositor expected to get for his deposit. In these 'conditions' these returns were always styled 'dividends,' as ex. gr., in the following, which was one of the conditions:

'Dividends will be payable during the six months following the half year for which they may have been declared, in preference to deposits;. . . and all dividends, not drawn within the first thirty days, will share in the next dividend.'

The question was whether the payments made to depositors, upon which the taxes now sought to be recovered, were assessed and collected, were made as interest or as dividends of profits. The court below held them to be dividends, but held also that under an act of Congress, to which it referred, and passed since the two acts above quoted, the dividends were not taxable. It accordingly gave judgment for the company, and the collector brought the case here.

The ruling of the court below as to the validity of the tax had, lately, and since the judgment, been declared by this court a wrong one; and the law declared to be that dividends were then still taxable. So that the only question now was whether the tax was laid on dividends or on interest. If on the former, the judgment was, of course, to be reversed, and a judgment entered below for the collector.

Mr. C. H. Hill, Assistant Attorney-General, for the plaintiff in error, distinguished the case of such a savings bank as this one was, from that of savings banks-such as he said there are many of-which simply take money from depositors, agreeing to pay to them a fixed rate of interest per annum; a rate for which the corporation is bound, no matter how little gain it may itself make; and for no more than which it is bound, however great its own gains may be; any surplus above the interest agreed to be paid to depositor, not belonging to him but to the corporation.

Mr. H. J. Tilden, contra, argued that what the depositor got here was really the interest which was paid by borrowers on money put by him into the bank, and that calling that interest a 'dividend' did not less make it 'interest.'

The CHIEF JUSTICE delivered the opinion of the court.

title: Cary v. Savings Union


text: Talk:Cary v. Savings Union

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

title: Talk:Cary v. Savings Union


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Cary v. Savings Union/Opinion of the Court

A distinction is expressly recognized in the act of Congress between interest and dividends, and the Circuit Court decided that the payments to the depositors were for dividends. The question is whether this decision was correct.

We think it was. The depositors contracted not for a rate of interest to be paid upon their deposits, but for a share of the profits of the business in which their money was, by agreement, to be employed. It is true that the profits of the company were principally to be derived from interest upon loans made, but they were none the less on that account profits. The interest received for the loan of each deposit was not kept by itself, and paid to the depositors after deducting a charge to cover expenses, but all was placed in a common fund, and when the net result of the business was ascertained, that was divided among the several contributors according to the value of their contributions. Such a division clearly produces a dividend according to the common understanding of that term. The parties themselves so understood it, for they gave it that name in the contracts, executed when the depositors made their deposits. They stipulated for the payment of dividends and not interest.

JUDGMENT ACCORDINGLY.


text: Talk:Cary v. Savings Union/Opinion of the Court


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House v. Mullen

APPEAL from the District Court for the Middle District of Alabama.

On the 27th of November, 1871, Eliza House filed a bill in chancery, in the court below, against Andrew Mullen and twenty-one others.

The bill set forth that on the 16th of March, 1838, the said Eliza being then a married woman, a conveyance was made by one Lawrence to a certain Gibson, for the consideration of $2700, of the half or undivided moiety of lot No. 22, in the town of Selma, Alabama; that by mistake this was recorded as a conveyance of the half of the undivided moiety of said lot; that by the terms of the conveyance the trustee was to hold the property in trust for the benefit of her the said Eliza during her natural life, after which he was to convey in fee simple to such child or children as she might have living at her death. The bill further alleged that Gibson died in 1841, and Reuben House, the husband of the complainant, in 1868; that from the date of the deed from Lawrence to Gibson, the complainant lived on the premises, or received the rents and profits, until 1846; that during this time her husband and herself removed from Alabama to Florida; that the defendants were now in possession of the lot or parts of the same, claiming the whole of it as owners, and asserting title under a deed which they alleged to have been made by the complainant and her husband in 1846 to one Walker, which deed the complainant alleged that she did not sign and seal as her voluntary act and deed, freely and without compulsion of her said husband.

The bill prayed for the appointment of a trustee in place of Gibson, who was dead. It also prayed for a partition with the defendants, for an account of rents and profits, and for such other and further relief as to equity belonged.

Before anything further was done, the complainant obtained leave to file an amended bill, and an entire new bill was accordingly filed by her and Mary Hunter, and Charles Hunter, husband of the said Mary. What interest Mr. and Mrs. Hunter had in the matter, or how either was related to anybody concerned in it, was nowhere stated. As for the rest, the same matters were alleged in the new bill as in the old. To this new bill the defendants demurred.

The grounds of demurrer set forth were—

1. That if the complainants had any rights as shown by the bill, they were separate and distinct, and could not be joined in this suit.

2. That the bill did not show any interest of Mary and Charles Hunter in the subject-matter of the litigation.

3. That the defendants were improperly joined, inasmuch as they had separate and distinct interests which could not be joined in one suit.

4. And that the claim was stale, and barred by the statute of limitations and by the long acquiescence of the complainants in the possession of the defendants as shown by the bill.

The decree ran thus:

'This cause coming on, &c.,. . . it is considered by the court that the said demurrer of the defendants. . . be sustained. It is, therefore, adjudged and decreed that the said bill of complaint of Eliza House, Mary Hunter, and Charles Hunter, be and the same is hereby dismissed out of this court.'

The reader will observe that the dismissal was general and absolute; not one for error or defect of parties or without prejudice.

From this decree the complainants appealed.

Mr. W. W. Boyce, for the appellants:

The second ground of demurrer, and to which we will first advert, was that no interest was specifically stated to exist in Mr. and Mrs. Hunter. But Mrs. Hunter was plainly the daughter of Mrs. House. The fact was inferable from the allegations of both bills, that the trust was for Mrs. House for life and for her child afterwards; from the patent fact that the child was a party in interest and necessary; and from the amended bill in which she was brought in. The omission to state in terms the relationship was evidently one merely accidental, which should not have been visited with the heavy penalty of such a dismissal as was made-an absolute one-but if with any dismissal at all with but one giving leave to amend.

But there was no ground for any sort of dismissal. The fact of heirship being shown as above it is, as a matter inferable, the first ground of demurrer falls away. Mrs. House and Mrs. Hunter had the same title; the former being equitable tenant for life and the latter tenant in remainder. The husband was rightly added for form.

The third ground of demurrer is bad, because all the defendants are alleged to be in possession under a deed made by the complainant, Mrs. House, which was executed under duress.

As for the fourth ground, the statute of limitations, &c., the bill was filed in November, 1871. Mr. House, the husband, it is alleged in the bill and admitted by the demurrer, died only in 1868. Till 1868 the complainant, Mrs. House, was under disabilities. Every ground of demurrer, therefore, was bad.

No opposing counsel.

Mr. Justice MILLER delivered the opinion of the court.

title: House v. Mullen


text: Talk:House v. Mullen

title: Talk:House v. Mullen


text:
House v. Mullen/Opinion of the Court

The fourth ground of demurrer-that the bill shows that the claim was stale, barred by the statute, &c.-is sufficiently answered by the averment of the bill that the plaintiff, Eliza House, was a feme covert from the time she parted with the possession until the year 1868, the bill being filed in 1871.

The third ground-that the defendants are improperly joined-is equally indefensible, as the bill shows that defendants all claim through a deed from her, which deed she alleged to be void for want of her free consent in making it.

If the case should come to a hearing the contest must turn upon the validity of this deed, in which all the defendants have a common interest. Besides, she asks to have her half divided or partitioned off to her. To obtain that she is not obliged to file a separate bill against each of the twenty-two defendants, if she is entitled to a half of the whole lot on partition.

The two first causes of demurrer may be treated together.

The bill is fatally defective in joining Mary Hunter and her husband, Charles Hunter, as plaintiffs, and making no allegation or averment of any interest whatever which they have in the matter.

It is suggested by counsel for appellants that Mary Hunter is the child of Eliza House, and that the statement of this fact is omitted by a mere accident. But we have no evidence that Mary Hunter is the child of Eliza House, except the statement of appellants' brief; nor could any evidence of that fact be admitted under this bill.

The authorities are very clear that such a misjoinder, or the bringing a suit by a plaintiff who shows no interest of any kind in the suit, is fatal to the bill if taken on demurrer or answer. We must in this suit hold that they have no interest, as none is alleged, though it seems almost incredible that when this was distinctly pointed out as a ground of demurrer the counsel did not ask leave to amend, either by stating their interest or striking out their names.

The demurrer was, therefore, properly sustained and the bill dismissed, as the presumption must be that no leave to amend was asked.

But when a bill is dismissed for misjoinder of parties it settles nothing but that the suit cannot progress in that condition; and if parties will not or cannot amend so as to remove that difficulty, the court will go no further, but will dismiss the bill. It does not and cannot, in the nature of things, conclude either party upon the merits of the matter in controversy, and the plaintiffs, or any one of them, should be at liberty to bring another bill, with proper parties, in regard to the subject-matter of the first one. And the right to do this cannot be doubted when it appears plainly that the first bill was dismissed either for want of necessary parties or for a misjoinder of parties, or when by the terms of the decree the bill is dismissed without prejudice.

But neither of these things appear in the present case. There are grounds stated in the demurrer which would, if sustained, be a bar to any other suit, to wit, staleness of the claim, statute of limitations, and long acquiescence in the possession and claim of title by defendants. It does not appear by the decree, or by the order sustaining the demurrer, on which of the grounds set out in the latter it was sustained, or on what ground the bill was dismissed. As the record stands this decree might be pleaded successfully as a bar to any other bill brought by Eliza House, or by Mary Hunter, her child, in assertion of her right to this lot, though we are of opinion that the only defect in the bill is that it shows no interest in Mary Hunter, while it does show a good cause for equitable relief on the part of Eliza House. If the decree had dismissed the bill without prejudice, or had stated as the ground of dismissal the misjoinder of parties, or want of interest in two of them, we would have affirmed it, but, to prevent what may be a great injustice, we must reverse the present decree and remand the case, with directions to allow plaintiffs to amend their bill as they may be advised, and if they fail to do this within a reasonable time, to dismiss it without prejudice.

REVERSAL AND REMAND ACCORDINGLY.

title: House v. Mullen/Opinion of the Court


text: Talk:House v. Mullen/Opinion of the Court


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Jeffries v. Economical Life Insurance Company

ERROR to the Circuit Court for the Eastern District of Missouri.

Jeffries, administrator of Kennedy, sued the Economical Life Insurance Company, of Providence, Rhode Island, in the court below, alleging that on the 19th of October, 1870, the said company issued a policy of insurance upon the life of the deceased for $5000; that Kennedy died in August, 1871, and that notice had been given to the company of his death, payment of the amount of insurance demanded and refused.

The policy, which the declaration set out at length, contained the clauses following, viz.:

'This policy is issued by the company, and accepted by the insured and the holder thereof, on the following express conditions and agreements, which are part of this contract of insurance:

'1st. That the statements and declarations made in the application for this policy, and on the faith of which it is issued, are in all respects true, and without the suppression of any fact relating to the health or circumstances of the insured, affecting the interests of said company.

'6th. That in case of the violation of the foregoing conditions, or any of them,. . . this policy shall become null and void.'

The plea averred—

'That the policy was issued and accepted, on the following express conditions and agreements contained in it and made part of the contract of insurance, to wit, that the statements and declaration made in the application for the policy, and on the faith of which it was issued, were in all respects true, and without the suppression of any fact relating to the health or circumstances of the assured affecting the interests of the defendants, and upon the further condition, that in case of the violation of the aforesaid condition, among others the policy should become null and void.

'That the said Kennedy did violate the first condition in this, that the statements and declarations made by him in his application for the said policy, were not in all respects true, but were false in the following respects, to wit:

'1st. That in the application for the policy, and on the faith of which the same was issued, in answer to the question therein asked of him as to whether he was married or single, he stated that he was single, whereas, in fact, he was married, having a wife then living, as he well knew.

'2d. That in the application for the policy, and on the faith of which it was issued, in reply to the question therein asked of him, Has any application been made to any other company; if so, when? he answered No; whereas, in fact, he had, prior thereto, to wit, in April, 1870, applied for insurance upon his life, to the Mutual Life Insurance Company of New York, and had been insured therein in the sum of $10,000, as at the time of making the said answer, he well knew.'

To this plea the plaintiff demurred, but the court overruled the demurrer, and entered judgment for the company. From the judgment so entered, the present writ of error was brought.

The demurrer admitting that the statements made in the application were false, the question in the case, of course, was this: 'Was the plea bad because it did not aver also, that the false statements were material to the risk?'

Messrs. T. W. B. Crews and J. S. Laurie, for the administrator, plaintiff in error:

1. The statements contained in the decedent's application were not warranties. They are not pleaded as warranties. The plea does not allege that the statements were in writing, and if they were not, but were oral only, then, as no particular form of words is essential to make a warranty, but the question is one of intent, it should have been left to a jury to say whether there was a warranty.

The use by a pleader, of the terms 'express conditions and agreements,' does not of itself import a condition precedent or a warranty. If a warranty is relied on, it should be averred. The distinction between a warranty and a representation, is one well known, and, in insurance, vital. A misrepresentation will not vitiate a policy unless material to the risk. The materiality must be averred. It is a fact for the jury.

2. Independently of any question of defective pleadings, the plea shows on its face that no misstatement in the application could have been meant to vitiate the policy, unless the same 'affected the interest of the said company;' affected the interests of the company injuriously, of course, thereby meaning. The plea while iterating the language of the contract, yet seeks to defeat a recovery, on the ground of the misstatements, without venturing to allege that they did affect the interests of the company in any way.

Now, it appears that of the two misstatements made in this case, neither affected the interests of the company injuriously; and, indeed, that if they affected those interests at all, they affected them beneficially.

In the first one, the company being told that the applicant was an unmarried man, asked of course, and got a higher premium than if they had been told that he was married; it being matter of notoriety, that a married man is regarded, in the parlance of insurers, as a 'better life,' than an unmarried one.

So, too, being told that no application had been made elsewhere, they necessarily made a more searching examination into the character of the applicant's health than they would otherwise have made. By his untrue answer the applicant invited medical inquiry. The question put to him on his application, was not as to what other company he had applied to; or for what amount or for what rate, but was simply, '''Has any application been made to any other company? If so, when? Had he answered truly, he would have said Application has been made to another company. It was made about six months ago''.'

The company to which he was now applying would have inquired and would have learned that he had been taken recently, and taken for a large amount, $10,000. This would have tended to show that he was a fit subject for a risk. Such prior insurance by another company would have been regarded as complimentary to the applicant; or in mercantile phrase, as an 'indorsement' of his life.

The case then, as to both misstatements, falls within the rule laid down by Mr. Parsons:

'Nor is a policy avoided by such a misstatement of a fact, which, if truly stated, would diminish the risk; for then if the insurers are deceived, it is to their own advantage.'

At all events, the second misstatement did no harm. Life insurance companies do not like over-insurances, from their tendency to produce suicide. But there is no allegation or pretence here either of suicide or of an insurance in contemplation of it.

The art with which insurers now word and hedge about contracts of insurance in favor of themselves-their adroit modes of getting answers, and their numerous 'conditions' hidden in long columns of finely printed matter-has been the subject of just reproof from this court; and the results of their contrived questions are so frequently and so grossly unjust, that the legislatures of several States, including Maine, New Hampshire, Ohio, and Missouri, have interfered, and provided by direct enactment that misrepresentations not relating to the risk, shall not vitiate a policy, and that in all cases the materiality shall be a question for the jury. The Missouri statute of March 23d, 1874, to that purport, was the immediate result of the case at bar.

Messrs. A. M. Thayer and J. La Due, contra:

Mr. Justice HUNT delivered the opinion of the court.


text: Talk:Jeffries v. Economical Life Insurance Company


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Jeffries v. Economical Life Insurance Company/Opinion of the Court

The contention in opposition to the judgment is this: that the plea does not aver that the false statements made by the assured were material to the risk assumed. Is that averment necessary to make the plea a good one?

It is contended, also, that the false answers in the present case were not to the injury of the company, that they presented the applicant's case in a less favorable light to himself than if he had answered truly. Thus, to the inquiry are you married or single, when he falsely answered that he was single, he made himself a less eligible candidate for insurances than if he had truly stated that he was a married man; that although he deceived the company, and caused it to enter into a contract that it did not intend to make, it was deceived to its advantage, and made a more favorable bargain than was supposed.

This is bad morality and bad law. No one may do evil that good may come. No man is justified in the utterance of a falsehood. It is an equal offence in morals, whether committed for his own benefit or that of another. The fallacy of this position as a legal proposition, will appear in what we shall presently say of the contract made between the parties.

We are to observe, first, the averment of the plea: That Kennedy, in and by his application for the policy of insurance, in answer to a question asked of him by the company, whether he was married or single? made the false statement that he was single'',' knowing it to be untrue; that in reply to a further question therein asked of him by the company, whether any application had been made to any other company? If so, when? answered No;' whereas, in fact, at the time of making such false statement, he well knew that he had previously made application for such insurance, and been insured in the sum of $10,000 by another company''.

We are to observe, secondly, the averment that the statements and declarations made in the application for said policy, and on the faith of which it is issued, are in all respects true, and without the suppression of any fact relating to the health or circumstances of the insured affecting the interests of the company.

We are to observe, also, that other clause of the policy, in which it is declared that this policy is made by the company and accepted by the insured, upon the express condition and agreement that such statements and declarations are in all respects true. This applies to all and to each one of such statements. In other words, if the statements are not true, it is agreed that no policy is made by the company, and no policy is accepted by the insured.

The proposition at the foundation of this point is this, that the statements and declarations made in the policy shall be true.

This stipulation is not expressed to be made as to important or material statements only, or to those supposed to be material, but as to all statements. The statements need not come up to the degree of warranties. They need not be representations even, if this term conveys an idea of an affirmation having any technical character. Statements and declarations is the expression; what the applicant states and what the applicant declares. Nothing can be more simple. If he makes any statement in the application it must be true. If he makes any declaration in the application it must be true. A faithful performance of this agreement is made an express condition to the existence of a liability on the part of the company.

There is no place for the argument either that the false statement was not material to the risk, or that it was a positive advantage to the company to be deceived by it.

It is the distinct agreement of the parties, that the company shall not be deceived to its injury or to its benefit. The right of an individual or a corporation to make an unwise bargain is as complete as that to make a wise bargain. The right to make contracts carries with it the right to determine what is prudent and wise, what is unwise and imprudent, and upon that point the judgment of the individual is subject to that of no other tribunal.

The case in hand affords a good illustration of this principle. The company deems it wise and prudent that the applicant should inform them truly whether he has made any other application to have his life insured. So material does it deem this information, that it stipulates that its liability shall depend upon the truth of the answer. The same is true of its inquiry whether the party is married or single. The company fixes this estimate of its importance. The applicant agrees that it is thus important by accepting this test. It would be a violation of the legal rights of the company to take from it its acknowledged power, thus to make its opinion the standard of what is material, and to leave that point to the determination of a jury. The jury may say, as the counsel here argues, that it is immaterial whether the applicant answers truly if he answers one way, viz., that he is single, or that he has not made an application for insurance. Whether a question is material depends upon the question itself. The information received may be immaterial. But if under any circumstances it can produce a reply which will influence the action of the company, the question cannot be deemed immaterial. Insurance companies sometimes insist that individuals largely insured upon their lives, who are embarrassed in their affairs, resort to self-destruction, being willing to end a wretched existence if they can thereby bestow comfort upon their families. The juror would be likely to repudiate such a theory, on the ground that nothing can compensate a man for the loss of his life. The juror may be right and the company may be wrong. But the company has expressly provided that their judgment, and not the judgment of the juror shall govern. Their right thus to contract, and the duty of the court to give effect to such contracts, cannot be denied.

Of the authorities in support of these views, a few only will be mentioned. In Anderson v. Fitzgerald, Fitzgerald applied to an insurance office to effect a policy on his life. He received a form of proposal containing questions required to be answered. Among them were the following: 'Did any of the party's near relatives die of consumption or any other pulmonary complaint?' and 'Has the party's life been accepted or refused at any office?' To each of these questions the applicant answered 'No.' The answers were false. F. signed the proposal and a declaration accompanying, by which he agreed 'that the particulars above mentioned should form the basis of the contract.' The policy mentioned several things, which were warranted by F., among which these two answers were not included. The policy also contained this proviso: that 'if anything so warranted shall not be true, or if any circumstance material to this insurance shall not have been truly stated, or shall have been misrepresented or concealed, or any false statement made to the company in or about the obtaining or effecting of this insurance,' the policy should be void. On the trial before Mr. Justice Ball, he charged the jury 'that they must not only be satisfied that the various false statements were false in fact, and were made in and about effecting the policy, but also that such false statements were material to the insurance.' A bill of exceptions was tendered, on the ground that the jury should have been directed 'that if the statements were made in and about effecting the insurance and such statements were false in fact, the defendants were entitled to a verdict, whether such statements were or were not material.' The exceptions were argued in the Court of Exchequer, where judgment was ordered for the plaintiff on the verdict. A writ of error was brought in the Court of Exchequer Chamber, where the judgment was affirmed by a majority of seven to three. The writ of error to the House of Lords was then brought. Mr. Baron Parke, Mr. Baron Alderson, Mr. Justice Coleridge, Mr. Justice Wightman, Mr. Justice Erle, Mr. Justice Creswell, Mr. Baron Platt, Mr. Justice Talfourd, Mr. Justice Williams, Mr. Baron Martin, and Mr. Justice Crompton attended.

Opinions were delivered by Mr. Baron Parke, the Lord Chancellor, Lord Brougham, and Lord St. Leonards, all concurring in reversing the judgment, on the ground that the question of the materiality of the statements should not have been submitted to the jury. This case was decided upon facts almost identical with the one before us, and presented the precise question we are considering. The counsel for the defendants asked for a ruling, that if the statements were untrue, the defendants were entitled to a verdict, whether they were or were not material. This was refused, and the judge charged that to entitle the defendants to a verdict, the statements must not only be false, but material to the insurance. This was held to be error, and the judgment was reversed.

Cazenove v. British Equitable Assurance Company, is a familiar case, and was decided in the same way. This case was affirmed in the Exchequer Chamber, in 1860.

Many cases may be found which hold, that where false answers are made to inquiries which do not relate to the risk, the policy is not necessarily avoided unless they influenced the mind of the company, and that whether they are material is for the determination of the jury. But we know of no respectable authority which so holds, where it is expressly covenanted as a condition of liability that the statements and declarations made in the application are true, and when the truth of such statements forms the basis of the contract.

The counsel for the insured insists that policies of insurance are hedged about with so many qualifications and conditions, that questions are propounded with so much ingenuity and in such detail, that they operate as a snare, and that justice is sacrificed to forms. We are not called upon to deny this statement. The present, however, is not such a case. The want of honesty was on the part of the applicant. The attempt was to deceive the company. It is a case, so far as we can discover, in which law and justice point to the same result, to wit, the exemption of the company.

JUDGMENT AFFIRMED.

Justices CLIFFORD and MILLER dissenting.


text: Talk:Jeffries v. Economical Life Insurance Company/Opinion of the Court


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Scott v. Kelly

ERROR to the Supreme Court of New York; the case being thus:

In July, 1867, three persons, Shawhan, Mendall, and Palmer, of St. Louis, advertised themselves as copartners, under the firm name of Shawhan & Co., and in the September following purchased in that city, under the name of Shawhan & Co., a quantity of flour of one Stanard, and got possession of it without paying for it. 'Shawhan & Co.' immediately failed; having shipped the flour to agents of theirs in New York, to be sold under the fictitious name and for the account of E. C. Packard & Co. Stanard thereupon, on the 2d of October, 1867, commenced an action in the Supreme Court of New York against Shawhan & Co., and attached, in the hand of the agents of Shawhan & Co., a portion of the proceeds of the flour.

Shawhan, individually, soon after his failure, and on the 28th of October, 1867, was adjudged a bankrupt in Missouri, and one Scott was appointed his assignee. The attachment was levied on the funds mentioned, on the 28th of March, 1868. The agents applied to the court for leave to pay the money into court and substitute the assignee of Shawhan, the opposing claimants of the fund, as defendant in their stead; and the assignee being summoned came in and defended the case.

On the trial, he showed that there was in reality a secret agreement between the persons composing the firm of 'Shawhan & Co.,' made when that firm was organized, that they were not to be partners in fact, but that Mendall and Palmer were really to be clerks for Shawhan, and that they received a salary as such.

This secret agreement, it was admitted, was not known to or communicated to Stanard before he sold the flour to Shawhan & Co.

The question presented was this: When Shawhan was declared bankrupt, whose was the property, as between Shawhan and the creditors of Shawhan & Co., and as between Shawhan and the creditors of Shawhan? Did it belong to Shawhan individually, or to Shawhan, Palmer, and Mendall, as copartners?

The position of the defendants was that as between Shawhan and the creditors of Shawhan & Co., the property in question belonged to Shawhan individually, and that therefore it passed to Scott, his assignee in bankruptcy, the same as would have done any other individual property of his, for the reason, as they alleged, that the advertisement by the parties of themselves as copartners was a fraud.

The Supreme Court of New York decided that the attaching creditors, who had attached the proceeds as partnership property, and who were now represented by one Kelly, should prevail.

Its view was that, had the suit been brought before Shawhan was decreed a bankrupt, Shawhan would have been estopped from denying the rights of the attaching creditor, and that this being so, his assignee was also estopped; that he had no other rights than Shawhan himself, and no rights superior to his, and was vested with the property subject to all equities against it in his hands.

From this judgment Scott, the assignee, brought the case here as within section 709 of the Revised Statutes, his counsel contending that the State courts of New York had no jurisdiction in cases of bankruptcy; that under the Bankrupt Act -which enacted in terms that 'the District Courts of the United States be and they hereby are constituted courts of bankruptcy,' and which declares that 'they shall have original jurisdiction in all matters and proceedings in bankruptcy'-the matter belonged to one of those courts, and contending further that, as plaintiff in error, he set up a title to the subject of the controversy under an assignment in bankruptcy, under an act of Congress, to wit, the Bankrupt Act, which is a 'title'. . . 'claimed under' a 'statute of'. . . 'the United States;' that such title was necessarily 'drawn in question' in the decision of the Supreme Court, and that the decision of that court was and is 'against the title' so claimed and 'set up' by the plaintiff in error.

Mr. G. W. Lubk e, for the plaintiff in error; Messrs. J. C. Perry and Lyman Tremain, contra.

The CHIEF JUSTICE delivered the opinion of the court.

title: Scott v. Kelly


text: Talk:Scott v. Kelly

title: Talk:Scott v. Kelly


text:
Scott v. Kelly/Opinion of the Court

The writ of error in this case is dismissed for want of jurisdiction.

The assignee in bankruptcy voluntarily submitted himself and his rights to the jurisdiction of the State court. Being summoned he appeared, without objection, and presented his claim for adjudication by that court. No effort was made to remove the litigation to the courts of the United States. It is now too late to object to the power of the State court to act in the premises and render judgment.

The question presented for the decision of the State court was not whether, if the bankrupt had title, it would pass to his assignee by the operation of the Bankrupt Act, but whether he had title at all. The court decided that he had not. Such a decision by a State court does not present a question of which this court can take jurisdiction upon a writ of error.

WRIT DISMISSED.

title: Scott v. Kelly/Opinion of the Court


text: Talk:Scott v. Kelly/Opinion of the Court


text:
Putnam v. Day

APPEAL from the Circuit Court for the District of Indiana; the case being thus:

In January, 1868, Putnam and others, having obtained, in the Floyd County Circuit Court of the State of Indiana, a judgment against the New Albany and Sandusky City Junction Railroad Company, filed in the court below, the Circuit Court of the United States for the District of Indiana, a creditor's bill against the city of New Albany, Indiana, one Day, and several other defendants, for the purpose of compelling them as stockholders of the said railroad company, to pay certain amounts alleged in the bill to be due and unpaid by them on their stock subscriptions to the said company, so that the amount of the judgment due to the complainants might be paid and satisfied; it being alleged in the bill that the said company was insolvent, and that all its property had been exhausted in satisfying other claims.

The city of New Albany, in its answer, set up a defence peculiar to itself, to wit, a complete settlement and compromise with the railroad company in 1857, by which the bonds issued by the city in payment of its stock subscription were surrendered, upon its assuming and paying a large amount of debts due by the company; and the city insisted that this settlement was made in good faith, and was for the benefit of the railroad company and its creditors; and that the complainants had lain by and slept on their rights too long to be permitted to disturb what was alleged to be a most proper and just arrangement.

The other defendants, with the exception of Day, set up that they were not indebted on their subscriptions, for that their stock had been taken off their hands by the city of New Albany, under a provision in the original subscription, which, if the city did take their stock, relieved them.

Day did not join these other defendants in the defence set up by them, but filed a separate answer, and a cross-bill, in which he admitted that he had subscribed stock in the railroad company to the amount of $36,100, and that $3500 thereof remained unpaid. He then stated that the other defendants, including the city of New Albany, were subscribers to a large amount, which he set forth in a list; and he asserted that they had not paid as much in proportion on their subscriptions as he had paid on his; and prayed that they might be compelled to contribute until they had paid in equal proportion to himself; in which case, he alleged, there would be money due to him instead of money due from him. His cross-bill being demurred to, was dismissed.

A decree in the case was rendered in July, 1869, adjudging that there was due to the complainants on their judgment against the railroad company upwards of $70,000; and that there was due on the stock subscriptions of said company, from the city of New Albany, upwards of $100,000; from Day, $3500; from another defendant, $3026; which sums were directed to be paid and applied pro rata in satisfaction of the judgment. The decree against Day was made on the admissions of his answer, charging him with the $3500 admitted to be unpaid, with interest thereon. The bill was dismissed as to the rest of the defendants, it being found that the defence set up by them was true, and that they were not indebted on their subscriptions, as most of their stock had been taken off of their hands by the city of New Albany under provision for that purpose contained in the original subscription.

In January, 1870, Day filed in the court below a bill of review (the present bill) to have this decree set aside as to him. In this bill, which was a bill partly original and partly in review, he stated briefly the proceedings in the former suit; admitted the filing of the answer and cross-bill before referred to, but alleged that it was filed by his attorney, and was never seen or read or sworn to by himself; and that it did not set up truly the facts or the true grounds of his defence. He further stated that the truth was, that his stock was taken by the city of New Albany in the same manner as that of the other defendants as to whom the bill had been dismissed, except certain shares which he subscribed, payable in lands; and that he was not indebted to the railroad company for any unpaid portion of stock subscribed by him. He also insisted as a ground of review that the decree in the former suit was erroneous, and should be set aside for three reasons specified in the bill of review:

First. That the Floyd County Circuit Court, in which the judgment had been rendered, had exclusive jurisdiction of the matter.

Secondly. That the original bill did not set out sufficient facts to show a debt on his part.

Thirdly. That the complainants were guilty of gross laches and negligence in seeking equitable relief, having lain by and slept on their right to equitable relief (if they had any) for more than nine years.

Putnam and the others (complainants in the original bill) answered this bill of review, insisting upon the regularity and conclusiveness of the proceedings, and denying that Day had any defence to the original suit, or that he ever assigned his stock to the city of New Albany.

To this answer a general replication was put in.

Day was himself examined as a witness, and testified to the transfer of his stock to the city, except as stated in his bill, and to the payment of all dues thereon. He also testified as to his employment of an attorney to represent him in the original suit, and to the manner in which his answer and cross-bill were filed. His testimony on this point was to the effect that when the suit was instituted, he employed James Collins and his own nephew, Addison Day (who were partners in the practice of the law), to represent him as his counsel; and that they advised him 'to file under the bill' and ask for equitable relief, and claim a pro rata contribution among the stockholders; that he did not see the answer and cross-bill which they prepared, and had no knowledge of the allegations contained in them; that he was informed that the court had acted on his answer and cross-bill, and that he was out of court; that he relied principally on Collins, as Day was young and inexperienced; but that he never consulted Collins but once, though he saw him a second time; that he had no business in the case that needed any further explanation at the time; that Collins was sick much of the time and died in May, 1869, during the pendency of the suit; that he saw his attorney, Day, occasionally after the suit was brought, and consulted with him, and paid his expenses to Indianapolis when he went there to file the answer and cross-bill. This was all the material evidence in the case.

The Circuit Court set aside the decree against Day. It said, in its opinion—

'When this court can see by the answer of the association subscribers, and the evidence in the original case, that there was no just claim on the part of the railroad company against the Days; that they had been released from such claim, if any existed, years before the creditor's bill was filed, and even before the judgment was recovered on which it was founded, and that the court dismissed the bill as to persons equally liable with them, does the rule which has been pressed on the court by counsel,-that the proofs cannot be examined on a bill of review, apply? We think not.'

The case was now before this court on an appeal from this decision.

Messrs. S. Burke and J. A. Garfield, for the appellants, Putnam et al.; Mr. M. C. Kerr, contra.

Mr. Justice BRADLEY delivered the opinion of the court.

title: Putnam v. Day


text: Talk:Putnam v. Day

title: Talk:Putnam v. Day


text:
Putnam v. Day/Opinion of the Court

The complainant in the bill filed below failed utterly, we think, to make out a case of fraud, mistake, or want of authority on the part of his solicitors and counsel in filing the pleadings in the original suit, and taking the ground they did on his behalf. Of course fraud is not charged; but the complainant relied on the fact that he never saw the answer or cross-bill, and did not know their contents. This is no ground for allowing him to repudiate them now. It is not alleged that he would have placed his defence on any different ground had the answer and cross-bill been read by him. Indeed, they were drawn in pursuance of the advice received from his counsel and acquiesced in by him. His not having sworn to his answer, or even read it, is no excuse. It was his duty to have known its contents, if not to have verified it. If his counsel failed to make as good a defence for him as they might have done, it was his misfortune and cannot be rectified after the passing of the decree. Litigation would never come to an end if parties were permitted thus to shift their entire ground of attack or defence, after finding where the pinch of the cause lay. They must be estopped by the record, unless they can show that they were the victims of fraud or mistake.

Taking the cause, then, as it stood when the original decree was rendered, does the bill of review show any error for which it can be reversed?

It is to be remembered, that on a bill of review the proofs cannot be considered. If the decree is contrary to these, remedy must be sought by appeal. We are confined, then, to an examination of the pleadings, proceedings, and decree, and the pleading of Day himself is to have controlling effect so far as it contains admissions against his own interest. It is apparent that the decree of the Circuit Court on the bill of review was based on the answers and evidence adduced by the other defendants, which tended to show that the appellee's case was similar to theirs. Day's own answer in the case was entirely disregarded. But is it possible to ignore it? Day was not necessarily in the same category with the other defendants. All had an equal opportunity to surrender their subscriptions to the city, and it was claimed by the other defendants in their answers, and admitted and shown, by a stipulation filed in the cause, that they did surrender their subscriptions to the city, and that the city assumed them. But they do not state, and it would not be evidence for Day, if they did, that Day surrendered his subscription. On the contrary, in his own answer, which is evidence against him, he clearly admits that he was a large subscriber to the stock, and that there was due on his subscription the amount for which the decree was rendered against him. There is nothing in the bill, nor in the report of the master, nor in any other part of the record, unless it be the answers of the other defendants, inconsistent with this admission of Day himself. On the contrary, the charges of the bill and the report of the master are in entire conformity with it. As the record stands, no other decree could have been made than that which was made, unless the other errors assigned have some ground to stand on.

Those errors are not relied on by the court below. As to the first, namely, that the Floyd County Circuit Court had exclusive jurisdiction of the case, it is hardly necessary to remark upon it. Surely, a creditor's bill may be filed in a different court from that in which the creditor obtains his judgment; for, otherwise, none could have been filed when courts of law and equity were separate courts, as they still are in some of the States.

The second was clearly groundless. The bill stated the ground of the claim against Day, and the answer admitted it, and supplied the particulars if they were not sufficiently specified in the bill.

The third error assigned was that the complainants had been guilty of gross laches and negligence in preferring their claim, having waited nine years after the return of their execution unsatisfied before filing their bill. This might have been a proper defence to make to the original bill; but it was not the defence which the appellee made. He did not put himself on that ground. He admitted his liability and prayed that the other defendants might contribute their just share, which he insisted would relieve him. How could the court under such a defence as this have dismissed the bill for laches and delay? A decree has to be founded on the allegata as well as probata of the case. There is nothing in the allegata, which alone are before us, to justify a different decree from that which was made.

The court below evidently relied on its knowledge and estimation of the proofs in the cause. The learned judge in his opinion, in summing up his views of the case, says so, in so many words.

In the views there expressed, we think the court erred. We think the rule to be well established, and a wholesome one, that (as before stated) the proofs cannot be looked into on a bill of review. This was so expressly held in Whiting v. Bank of the United States. It is true that in our practice the final decree does not contain a summary of the facts as it did in the English practice-which summary was examinable on a bill of review; but to countervail this absence of statement in the decree, we have adopted the practice of looking back of the decree into the whole record of the pleadings and proceedings, including orders, master's report, &c., together constituting what is generally regarded as the record in the cause, and necessary to be examined in order to a proper understanding of the decree itself. This makes a record similar to that of a common-law action, the decree being the judgment of the law upon the allegations of the parties, and the conclusion which the court deduces from the proofs. But the conclusions of fact deduced from the proofs are not spread upon the record in extenso, unless through the medium of a report made by a master or commissioner.

The eighty-sixth rule in equity, adopted by this court, has abolished the recital of the pleadings and proceedings in the decree, and has prescribed the form in which it shall be couched, as follows: 'This cause came on to be heard at this term, and was argued by counsel; and thereupon, in consideration thereof, it was ordered, adjudged, and decreed, as follows, viz.:' here inserting the decree or order. The decree, it is true, may proceed to state conclusions of fact as well as of law, and often does so for the purpose of rendering the judgment of the court more clear and specific.

The record thus made up constitutes the basis of examination on a bill of review, but it never contains the proofs adduced in the cause.

An examination of the record in this case does not, in our judgment, afford any ground for setting aside the decree made against Day in the original cause.

DISMISS THE BILL.

The CHIEF JUSTICE did not sit. Mr. Justice DAVIS dissented.

title: Putnam v. Day/Opinion of the Court


text: Talk:Putnam v. Day/Opinion of the Court

title: Talk:Putnam v. Day/Opinion of the Court


text:
Ritchie v. Franklin County

APPEAL from the Circuit Court for the Eastern District of Missouri; in which court one Ritchie filed a bill against Franklin County, in the said State, and various persons, holders of its bonds, such as are hereinafter described, to enjoin the county from collecting a special tax levied to pay the interest on the said bonds, and to compel the holders of them to surrender them for cancellation; he, Ritchie, the complainant, alleging that by the constitution of Missouri the same were unconstitutional and void.

The case was thus: The constitution of Missouri ordains,

'Article 1. No law retrospective in its operation can be passed.

'Article 4. The General Assembly shall not pass special laws,. . . establishing, locating, altering the course or affecting the construction of roads, or the repairing or building of bridges; or legalizing, except as against the State, the unauthorized or invalid acts of any officer.

'The General Assembly shall pass no special law for any case for which provision can be made by a general law; but shall pass general laws providing, so far as it may deem necessary, for the cases enumerated in this section, and for all other cases where a general law can be made applicable.

'Inferior tribunals, to be known as County Courts, shall be established in every county for the transaction of all county business.'

These provisions of the State constitution being in force as fundamental law, the General Assembly, February 16th, 1865, passed an act empowering and authorizing the County Courts, for the purpose of opening and keeping in repair roads, and in order to raise the necessary funds to pay the expenses of any or all of said improvements, to borrow money on the credit of the county, and to issue bonds of the same, 'but,' said the act, 'the said bonds shall not bear interest at a higher rate than six per cent., unless by agreement between the parties, nor shall said bonds, or any of them, be sold or disposed of at less than par value, that is to say, the amount called for on their face.'

The act proceeded:

'SECTION 3. The said bonds may be made transferable in such a manner as the County Court by its order may direct, and the courts shall be authorized to levy a sufficient amount of revenue annually to pay the accruing interest on said bonds, and for that purpose may, if it should be necessary, levy a special tax.

'SECTION 4. Before any expenditure shall be made by the County Courts for the purposes contemplated by this act, the County Courts may, for the purpose of information, submit the amount of the proposed expenditure to the voters of the respective counties, and if a majority of the voters shall approve of such proposed appropriation, then the court may proceed and improve the roads as herein contemplated. If a majority shall vote against such an appropriation, then nothing further shall be done therein within twelve months,' &c.

Another act, having provisions in words of the same effect, was passed in 1866. In consequence of the act of 1865 declaring that the submission to the people of the amount of the proposed expenditure was 'for the purpose of information,' the County Court of Franklin construed the provision as leaving it to their discretion whether they would submit any such question to the people. And being now engaged in a general scheme for macadamizing the roads of the county and bridging the streams in it, the County Court issued a quantity of bonds without submitting the matter to the people in any way. The validity of the bonds being denied, the question whether they were valid or not, came before the Supreme Court of Missouri, in the case of The Leavenworth and Des Moines Railroad Company v. The County Court of Platte, where it was decided that the bonds were void.

Thereupon, the road having been now built, the Assembly, on the 21st of March, 1868, passed a new act to authorize County Courts to issue bonds for the purpose of paying for the building of bridges and macadamized roads heretofore contracted for and built.

This act thus enacted:

'SECTION 1. In all cases where County Courts have heretofore laid out, surveyed, and commenced the building, and have built macadamized or other roads, or have. . . built bridges, or other necessary work in their respective counties, the County Courts are hereby authorized to borrow money on the credit of the county, and to issue bonds of the county with coupons attached, &c.; but said bonds shall not. . . bear interest at a higher rate than ten per cent., for the purpose of paying for the work done and contracted for in their respective counties.

'SECTION 2. Said bonds may be made transferable in such manner as the County Court may direct, and the courts shall be authorized to levy a sufficient amount of revenue annually to pay the accruing interest on bonds authorized by this act; and for that purpose may, if it be necessary, levy a special tax.

'SECTION 3. All acts or parts of acts inconsistent with this act are hereby repealed.'

And on the 23d of March, of the same year, it passed a new road law, in the main like the old one, but with some modifications, and making it plainly peremptory on the County Courts to take a vote of the people before issuing bonds.

After the passage of the act of March 21st, 1868, the County Court of Franklin County entered an order on its records to issue bonds to the contractors to pay for the work done on the road in question, and thereupon the former bonds were surrendered and cancelled, and a like number issued and purchased by the defendants in due course of business. These new bonds were made payable to the bearer, and purported on their face to have been issued by the County Court of Franklin County, in pursuance of the act last above mentioned. Roads similar to the one for which these bonds were issued were building by the contractors who were building it, at the same time for the same county; and the defendants had no means of knowing whether the bonds they held were issued to pay for the particular road in controversy. They bought them in good faith for value without notice of any infirmity of title. The court below, holding the act of 21st of March constitutional, dismissed the bill.

The question of the constitutionality of the act, it may be here added, had been before the Supreme Court of Missouri in a case between other parties; and that court held that the act conferred 'original power' to issue the bonds without reference to previous or contemporary laws, and also that it was 'curative' and legalized the unauthorized action of the County Court and validated the new bonds issued.

The case came here on exceptions to the answer, and the question to be passed on was whether there was authority to issue the bonds in controversy.

Mr. T. W. B. Crews, for the appellants:

I. The bonds in controversy purport to have been issued under authority of the act of March 21st, 1868.

They cannot exist under that act.

1. The act gave no original power. This is evident from its terms. Of itself, it was incomplete. It made no provision for the payment of the principal of the bonds, and it expressly recognized the binding force of all acts and parts of acts, under which roads may have been contracted for and built, except so far as they conflicted with its own provisions. Nothing in the act has the effect to authorize the issue of bonds without the vote of the people.

The act of 1865, requiring a vote before expenditures should be incurred, was in force when the act of March 21st, 1868, was passed, and the whole law was re-enacted at the same session, with some modifications, and among others a provision, making it plainly peremptory on the County Courts, in terms, to take a vote of the people before issuing any bonds for the purposes expressed in the act. So far from relaxing, the legislature evidently intended to adhere more rigidly to the policy previously declared on that subject, and meant to restrain within narrower limits the power of County Courts.

The several enactments of the acts of 1865 and 1868 should be construed to be in pari materi a. Their several provisions can stand together and can be consistently reconciled. There is nothing express or implied that would lead to the conclusion that the one abrogated or was designed to abrogate the other.

The purpose of the act of March 21st, 1868, was to authorize the issue of bonds ''bearing ten per cent. interest'', and the sale or negotiation of the same below the par value thereof; neither of which was allowable under the previous law; and in these particulars only was the law changed by this act. Moreover, the act can properly apply only to work legally done, and legally contracted for. No other sort of contract is known to the law. And such contract could not have been made but by virtue of and in pursuance of some previous existing legal authority. The general law of 1865 and 1866 conferred such authority, and it was the only law that did confer it.

Had it been intended to authorize the expenditures without a vote, this purpose would have been indicated in either the title or the body of the act. If the omission to take a vote of the people was a defect, and such a one as needed further legislation, certainly the legislature would have pointed to this defect in some appropriate and intelligible language or terms.

2. Nor can the act of March, 1868, be construed to be 'curative' or 'confirmatory.'

It is conceded that up to the time of the approval of the act, the bonds then issued were absolutely void. The County Court had broken down the barriers which the law had raised, had disregarded the authority which had called them into being, and had usurped a power which belonged only to the people. Can we conclude that the legislature, in this general way, proposed to cure or confirm their proceedings, and to authorize the issue of bonds to pay for work done or to be done without the sanction of the people? The act does not purport to be curative. The aim of a curative act is always special and particular. Although it may be general in its application to a class of things or objects, it is pointed and distinctive as to the cause or the supposed necessity of it.

The theory of the act of March 21st, 1868, as maintained by the respondents is that the County Court had acted without authority in incurring such expenditures and issuing bonds as a means of paying them. If they had not, then there was no necessity for this act, beyond the purpose of regulating the rate of interest and the authority to sell the bonds for what they would bring in the market, in the class of cases specified in the act. If it were necessary or expedient in this class of cases to authorize the issue of bonds with a higher rate of interest, and without the restrictions imposed by previous laws-matters merely incidental and subordinate-then it was surely of greater importance in the estimation of the lawgiver, that there should have been adequate authority to issue the bonds; that the bonds themselves should have the required sanction to give them validity.

II. The act in question as construed by the other side is void under the State constitution.

1. It was plainly retrospective.

2. It affected the construction of roads and was designed to legalize the invalid and unauthorized acts of county officers. Though expressed in general terms it must have been framed with a view to meet this case. Its generality was an attempt on the part of the legislature to evade the provisions of the constitution, which ordains that 'the General Assembly shall not pass special laws. . . affecting the construction of roads,' and to accomplish by indirect means that which it was forbidden to do directly.

Mr. J. O. Broadhead, contra.

Mr. Justice DAVIS delivered the opinion of the court.

title: Ritchie v. Franklin County


text: Talk:Ritchie v. Franklin County

title: Talk:Ritchie v. Franklin County


text:
Ritchie v. Franklin County/Opinion of the Court

The acts of the General Assembly of Missouri of 1865 and 1866 gave authority to the County Courts to borrow money and issue bonds for road purposes where 'the amount of proposed expenditure had been submitted to a vote of the people.' The County Court of Franklin County construed the provision on the subject of this submission as discretionary and not mandatory. Although this construction was wrong, the language used by the legislature gave color to it.

To declare that a court 'may, for the purpose of information,' submit its proposed action to the people, is not the best nor the usual way of instructing the court not to do the thing proposed unless the taxpayers approved it. Such language is well calculated to mislead any one unaccustomed to the construction of statutes, and it cannot be a matter of surprise that this County Court treated the provision requiring a vote for information as discretionary. In doing this it doubtless acted as other County Courts in the State had done under like circumstances. That this election clause should cause litigation was natural enough, and we therefore find it presented for adjudication in the case of The Leavenworth and Des Moines Railroad Company v. The County Court of Platte County.

In that case it was held that the power conferred upon the County Courts could not be exercised unless the proposed expenditure was approved by the voters. This decision of necessity alarmed contractors, who had in good faith constructed roads, and equally so the holders of bonds issued for the purpose of paying the contractors for their work.

To relieve these persons from the predicament in which they were placed the legislature passed a curative act. This act, on account of special legislation being forbidden by the constitution of the State, had to be general in its language, and without reference to any particular county. It was eminently just that it should be passed. The value of good roads for the common use of every one can hardly be over-estimated. As a general thing, in this country, they are within the control and supervision of the township, county, or other local authorities. Ordinarily they are improved and kept in repair by means of local taxation, but this mode will not suffice when the wants of the community require that they should be macadamized. Especially is this true of a new State like Missouri. It seems that the County Court of Franklin engaged in a general scheme for macadamizing the roads of the county and bridging the streams in it. It is fair to presume that this enterprise was undertaken in obedience to a public sentiment on the subject, although the sense of the voters was not actually taken in conformity with the directions of the statute. This is the more probable on account of the well-known mania of the people to run in debt for public improvements. The taxpayers saw the large expenditures that were being made, and yet they took no steps to arrest them. Not until the works were completed and the securities had passed into the hands of bon a fide purchasers did they move in the matter. If they had been incited to action as soon as the contract was made, they would have been saved a heavy debt, and innocent persons would not have suffered. In this state of the case the legislature interposed and passed an act to authorize County Courts to issue bonds for the purpose of paying for the building of bridges and macadamized roads which had been contracted for and built. This act refers to past transactions, and two days after its passage a new road-law was passed couched in such language that no one could mistake the character of the powers conferred.

Thus it will be seen the legislature intended to cure past errors, but left no room for future ones. In this way it was enabled to relieve the hardship caused by the construction placed on the imperfect language of a former legislature, and at the same time to put an end to expenditures like those made by Franklin County, unless a majority of the voters should approve of them. In many cases retroactive laws, although intended to effect a good purpose, have features of injustice about them. This is not that case. The bonds here were issued under a supposed authority, and no one interposed an objection. The taxpayers rested until the mischief was done and then tried to get relief. It is certainly not unjust to them that the legislature should say, 'you must pay for an expenditure which you saw incurred and could have prevented, but did not.' If the County Court had acted wholly outside of its duties the aspect of the case might have been different. But the most that can be said is that the court mistook the nature of the powers conferred upon it, and that this mistake would never have occurred if the legislature had used language appropriate to the purpose.

There is no provision in the constitution of Missouri restraining the General Assembly from conferring on counties the authority to borrow money to improve their roads without asking the consent of the voters. If so, why cannot the legislature confer on counties the power to borrow money to pay for debts already contracted for this purpose?

We agree with the Supreme Court of Missouri, that the act in question, being an authority to do a particular thing, may be construed as an original power. But whether it be treated as an original power or as curative and confirmatory legislation, it is equally valid, and this is the view taken of the subject by that court.

If the act was valid, the court had the power to take up the bonds and issue others in lieu thereof.

These bonds purport on their face to have been issued under the order of the County Court of Franklin County, made in pursuance of the authority conferred on the court by the act of Assembly in question, and as the defendants claim to be innocent holders, and this is true for the purpose of the exception, the complainant has no standing in a court of equity.

DECREE AFFIRMED.


text: Talk:Ritchie v. Franklin County/Opinion of the Court


text:
Haycraft v. United States

APPEALS from the Court of Claims; the case being thus.

By an act of March 3d, 1863, relating to the Court of Claims, it was enacted that—

'The said court shall have and determine all claims founded upon. . . any contract, express or implied, with the government of the United States.'It was further enacted:

'SECTION 10. That every claim against the United States, cognizable by the said court, shall be forever barred unless the petition setting forth a statement of the claim be filed in the court. . . within six years after the claim accrued.'

This statute relating to the Court of Claims being in existence, the act of March 12th, 1863, relative to captured and abandoned property was passed. That act enacts:

'SECTION 1. That it shall be lawful for the Secretary of the Treasury. . . to appoint a special agent or agents to receive and collect all abandoned or captured property in any State or Territory designated as in insurrection, &c.; Provided, That such property shall not include any kind or description which has been used or which was intended to be used for waging or carrying on war against the United States, such as arms, ordnance, ships, steamboats, or other water craft, and the furniture, forage, military supplies, or munitions of war.

'SECTION 2. That any part of the goods or property received or collected. . . may be appropriated to public use on due appraisement and certificate thereof, or forwarded to any place of sale within the loyal States, as the public interests may require; and all sales of such property shall be at auction to the highest bidder, and the proceeds thereof shall be paid into the Treasury of the United States.

'SECTION 3. That the Secretary of the Treasury. . . shall also cause a book or books of account to be kept showing from whom such property was received, the cost of transportation, and proceeds of transportation.

'And any person claiming to have been the owner of any such abandoned or captured property may at any time within two years after the suppression of the rebellion prefer his claim to the proceeds thereof in the Court of Claims; and on proof to the satisfaction of the said court of his ownership of said property, of his right to the proceeds thereof, and that he has never given any aid or comfort to the present rebellion, receive the residue of such proceeds,' &c.

All these provisions of the two statutes being in existence, one Haycraft, of Mississippi, a person who had given aid and comfort to the late rebellion, was the owner of a quantity of cotton in the State just named, which in April, 1863, during the rebellion, the United States had seized as abandoned property, and sold; the proceeds ($27,000) being now in the treasury.

Haycraft having been, as just above said, disloyal to the United States, and unable to give all the proofs which the Captured and Abandoned Property Act required, was precluded by the terms of the act, as things stood at the time of its passage, from suing under it.

However, on the 8th December, 1863 (that is to say within less than nine months from the passage of the act), the President issued a proclamation offering full pardon and restoration of property to all insurgents (certain classes excepted), provided they would take an oath to support, protect, and defend the Constitution and Union, abide by and support all acts of Congress, and all proclamations of the President made during the rebellion, with reference to slaves.

Lee surrendered April 9th, 1865; Joseph Johnston on the 26th. On the 10th of May Jefferson Davis was captured, and on the 26th Kirby Smith gave up the remnant of the rebel army.

On the 29th of May pardon and restoration was offered to all (certain classes excepted) who would simply take an oath of allegiance, and keep it.

The war in Mississippi was, by proclamation, legally ended April 2d, 1866.

On the 7th of September, 1867, another proclamation was made offering pardon and restoration of property to all (except certain classes more limited than before), who would take an oath of allegiance.

The latest of all these proclamations of pardon, it will be observed, was within two years after the war was legally ended.

On the 25th of December, 1868,-this being, however, more than two years after the war was ended, even legally viewed,-a final proclamation was issued by President Johnson, by which 'a full pardon and amnesty for the offence of treason against the United States, or of adhering to their enemies during the late civil war, with restoration of all rights, privileges, and immunities under the Constitution and the laws which have been made in pursuance thereof,' was proclaimed and declared 'unconditionally and without reservation to all, and to every person who directly or indirectly participated in the late insurrection or rebellion.'

In the United States v. Klein, this court (December Term, 1874) decided that the restoration of captured and abandoned property became the absolute right of persons pardoned, as much as of loyal people; suit being brought for it in the Court of Claims within two years from the close of the war.

In this state of enactments and pardons, Haycraft, already mentioned, on the 30th of July, 1872, six years and more after the close of the war, filed his petition in the Court of Claims, and without so much as alleging that he had been within one of the classes excepted from the benefit of those different proclamations which preceded the last, sought to recover the proceeds of his cotton.

The petition was in the nature of an implied assumpsit for the value of the cotton. It alleged that during the rebellion the voluntary residence of the petitioner was in Mississippi, where, for some time during his said residence, the rebel force held sway; that he did give aid and comfort to persons engaged in the rebellion, and was, therefore, precluded from redress by suit in the Federal courts, and especially from the remedy afforded to claimants under the provisions of the act of Congress approved March 12th, 1863; the Captured and Abandoned Property Act.

It further averred that he was entitled to and had received the benefit of the 'full pardon and amnesty, duly granted by the authority of the United States, on the 25th day of December, A.D. 1868, whereby his civil disabilities were removed, and his right of redress by suit in the United States courts was restored,' together 'with restoration of all his rights, privileges, and immunities under the Constitution and laws of the United States.'

The petition went on:

'Your petitioner further states that his property aforesaid having been taken possession of by the United States government, and appropriated by it, and the money arising from the sale of said property being now held by the government, an implied contract has arisen on its behalf to make petitioner just compensation therefor, according to what it was reasonably and fairly worth at the time and place at which it was so taken from him as aforesaid, and accordingly to pay over to him the net proceeds of the sale of said cotton.'

Finally, it alleged the cotton to have been at the time and place of its seizure as aforesaid, reasonably worth $27,000, being the amount of the net proceeds of the sale thereof, which amount under the implied contract aforesaid, the claimant alleged himself entitled to receive from the United States.

The United States demurred, and the Court of Claims dismissed the petition; placing the dismissal upon the grounds—

1st. That no action for proceeds of captured and abandoned property would lie except under the provisions of the act of March 12th, 1863.

2d. That such action to be maintainable must be brought within two years after the suppression of the rebellion.

From this ruling the claimant allealed, alleging that the Court of Claims erred,

1st. In holding that the only right of action for such proceeds was exclusively under the act of March 12th, 1863.

2d. In holding that it had not jurisdiction, because the suit had not been brought within two years after the suppression of the rebellion.

3d. In holding further that this limitation was available to defeat the claimant's action, though he was debarred by an act of Congress from bringing or maintaining such an action.

Messrs. J. Casey and J. W. Bartley, for the appellant:

I. The right of suit for these proceeds was not exclusively under the act of March 12th, 1863.

The radical error of the Court of Claims consists in supposing that the jurisdiction to hear and decide these cases is a special one. But what is the truth? The act provides that where a loyal man's property has been taken and sold by the United States, he may, within two years after the war, bring suit to recover the proceeds; that is to say, the United States have taken his property, which they had no right to take at all, and have converted it into money, and they hold it as a trustee for him, as the Supreme Court has declared in United States v. Padelford, United States v. Klein, and in other cases. Then he brings an action for money had and received to his use, on the implied promise; and that is the whole of this action. This is the essence of the act.

Of all such actions, the Court of Claims has had jurisdiction ever since it has existed. Under the acts constituting it,

'The said court shall have and determine all claims founded upon any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the government of the United States.'

Now the Captured and Abandoned Property Act remitted claimants to that court, under the general powers and faculties of the court, as therefore defined by law. Such has been the construction uniformly given to this act by this court.

In United States v. Anderson, the counsel for the United States contended that the powers of the Court of Claims in these cases were defined and limited exclusively by the act of March 12th, 1863; and that the court could not render a judgment for a specific sum, because the act did not provide for that. But this court rejected this narrow view, and held that the authority conferred by this special act of March 12th, 1863, was to be exercised by the court, under the general powers of the court.

So in the case of United States v. Padelford. The same strict and narrow construction was again urged upon the court by the counsel for the United States; and that actual, personal, and continual loyalty was a jurisdictional prerequisite to enable to the Court of Claims to entertain the suit at all. But this court rejected the position of counsel.

So in United States v. Zellner, where the Court of Claims had decided that the act of March 12th, 1863, did not give the right of appeal; and where Congress, recognizing the same view, passed the act of June 25th, 1868, to confer that right on the United States. But this court held that the claimant could appeal under the general provisions contained in the act of March 3d, 1863.

This court, by Nelson, J., says:

'The Court of Claims was organized as a special judicial tribunal to hear and render judgment in cases between the citizen and the government; the subjects of its jurisdiction were defined in the act, and generally the mode of conducting its proceedings, subject, of course, to such alterations and changes as Congress, from time to time, might see fit to make. The subject of its jurisdiction might be enlarged or diminished, but this would not disturb or in any way affect the general plan or system of its organization.'

II. The difference in legal status of loyal and disloyal persons, affected differently, too, the property of such persons respectively, seized under the Captured and Abandoned Property Act, and of course affected differently its proceeds.

There was no legislation of Congress that authorized any officer of the United States, civil or military, to seize and sell the property of a loyal man. But knowing that mistakes as to the true status of persons had been and would be made, Congress provided for loyal men in this act. As to the proceeds of the disloyal person's property, it remained in the treasury subject to the policy which the legislative or executive branches of the government should adopt.

In United States v. Klein, Chase, C. J., for the court, says:

title: Haycraft v. United States


text: Talk:Haycraft v. United States

title: Talk:Haycraft v. United States