text:
Canal Company v. Gordon

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

A statute of California gives to all persons performing labor or furnishing materials for the construction or repairs of any building a lien, jointly, upon the building which they may have constructed or repaired, or for which they may have furnished materials, to the extent of the labor done, or materials furnished, or both. And a subsequent statute extends the previous one so as to include in its provisions ditches, flumes, or aqueducts, constructed to create hydraulic power, or for mining purposes. It is provided, however, 'that no lien shall continue for a longer period than one year after the work is done or materials furnished, unless suit be brought in a proper court to enforce the same within that time.'

With this statute in force, the South Fork Canal Company was desirous of having-for those purposes of mining to which in California water-conduits contribute aid-a canal or flume from a grand reservoir near Placerville to the south fork of the American River, a distance of about twenty-five miles. Beginning at the Placerville end, and making the canal in the direction purposed, they had, after they had made it about half way, a canal, which they used with a certain advantage. But by itself, this part-a part between Placerville and Long Canon-had no supply of water for more than two or three months in the year, and these were winter months. Then certain mountain streams fed it. Extended to the American River, the supply of water it was expected would be both increased and be constant. The Company accordingly, in March, 1853, entered into a contract with two persons, named Gorden & Kinyon, for an extension of the work from the point where the already mentioned part ended, to the river to which they thought that it was desirable to bring it. This new part was divided into sections designated as sections 17 to 25.

By the terms of the contract it was stipulated that the work should be completed by July 1st, 1853. It was to be paid for monthly, however, in a way specified, as the work progressed: it being provided at the same time, that if any money due should not be paid when due, such amounts should bear interest at current rates till paid.

Under the contract Gordon & Kinyon worked till the 7th day of June, 1853, at which time, on estimate taken according to the terms of the contract, they were entitled for work done in May, to about $20,000. The money not being paid, they on that day-the date is important-gave the company notice by which, after stating that punctuality on the company's part in making its promised payments was indispensable to their (Gordon & Kinyon's) being able to pay the numerous men whom they had at work, and that they thus acted in order to avoid embarrassment and discredit to themselves, they declared the contract 'annulled and at an end,' and they themselves 'no longer parties to it.' Expressing, however, in strong terms their obligations to the officers of the company for their personal kindness, expressing also the great interest which they themselves felt in the 'noble enterprise' which they had been directing, and 'pride in the contract from the very difficultyo f its execution and its importance relatively to the whole work,' they added in a form 'strictly confidential,' and, as they said, for the purpose of allowing the company to make other arrangements without interrupting the work, that they would, for six days longer from the date of the note (June 7th), continue the work undertaken by them, at their own risk, and should 'not ask pay beyond this date unless the company choose from their own sense of honor to pay.' They added, that at the end of the six days they would discontinue work unless a new and secure financial arrangement should be made, one either satisfactory to themselves or such as two of their own directors named would pronounce to be proper.

Receiving no reply to this letter, they wrote the company on the evening of the 13th of June that no action having been taken on the letter, nor answer given to it, and the six days having elapsed at 4 P.M. of the then 13th of June, they withdrew the whole of the former note-as they said that it was competent for them to do (the offers having been voluntary)-except that part of it which declared the contract broken, annulled, and ended.

On the next day Gordon informed the company in writing that kinyon was only interested in the contract to the extent of one-third of the profits, and on the 21st of June, he and Kinyon filed a notice of their claim of a lien on the works known as the South Fork Canal for the amount which they claimed. A day or two after the delivery to the company of the note of the 7th, the amount due on the May estimate was tendered to Kinyon, who declined to accept it.

On the 23d of June, Gordon & Kinyon brought suit against the company, for the purpose of enforcing their lien.

A few days afterwards, that is to say, on the 28th, the directors, in their office at Placerville, Gordon being in the city of San Francisco, took from Kinyon a release, executed in the name of Gordon & Kinyon, of all claims against the company. The consideration paid Kinyon for this release was $2000 in money, and $3000 in the company's stock, estimated at par. The certificates for this stock were made out in the name of Kinyon's wife. The whole of this transaction was concealed from Gordon by Kinyon, who immediately after it proceeded to San Francisco, whence by the next steamer he fled the country.

On the 12th of June of the following year (1854), Gordon having discontinued the suit already brought-filed a bill in the court, setting forth the contract, and the facts of the case, as above given, alleging that the contract had been broken by the company's failure to pay, that the work had been done to the amount of $84,000, that the release was fraudulent, and praying that the release might be disregarded, and the South Canal sold to satisfy his lien. An interlocutory decree being made in his favor, and the matter referred to a master, who reported $76,589 due (less $6200 credits) on the contract for work done on the canal, and $16,250 for work preliminary to it, such as roads, saw-mills, timber-slides, and such like things, which assisted in and were indispensable to accomplish the main work. No exceptions being filed, the report was confirmed, and a decree made for the amount reported, less the credits and less the $16,250 for preliminary work, this being held by the court not a lien under the statute. And the lien was decreed to extend to the whole canal; and the whole was directed to be sold to satisfy it.

As respected the relation of the two parts of the canal, testimony in the case, it may be mentioned, stated that both parts were 'parts of the same work, and each necessary to the other;' that to disconnect the two would lessen their value greatly; the work being worth 'very little-valueless'-without the extension to the American River.

It was from this decree that the present appeal, one by the company alone, came.

Mr. Wills, for the appellant, contended—

I. That the contract in its nature was entire, and for the performance of the whole work, and that the contractors having abandoned it before completion, were not entitled to recover even for what they actually did. Any delay in the payment of the estimates by the company was to be compensated, according to an express provision of the contract, by the payment of interest thereon from the time of such non-payment until paid.

II. That the lien, if it ever attached, was lost, 1st, by the release to the company by Kinyon, one of the co-contractors; 2dly, by the voluntary and needless dismissal of the first action; and 3dly, by the failure of Gordon to institute the present suit until after the lapse of more than one year from June 7th, 1853, which failure (Mr. Wills argued, on the letter of that date and of the subsequent 13th) was plainly evident; it being clear from these letters that the contract was ended on the 7th of June, and that all work done afterwards, if any was done, was done voluntarily. The 12th of June, 1854, when the suit below was brought, was therefore more than a year after the work was finished, and the case thus was not within the statute.

III. That the lien, if attaching at all, was to be restricted to the part, branch, or division of the canal on which the work was actually done, and for which the materials were furnished, and not extended over the whole.

Mr. Botts, contra:

I. The first breach of the contract was made by the company's non-payment, and fully authorized the contractors to abandon the work and to sue on a quantum meruit for the work already done. The provision with regard to the rate of interest did not authorize, or relieve from, the breach. On the contrary, it recognized the fact that a failure to pay would constitute a breach, and provided a measure of damages for the breach other than that fixed by California statute, which, in the absence of agreement, is interest at 10 per cent. The only effect, then, was to substitute the particular for the general measure of damages.

II. The release executed by Kinyon was palpably fraudulent.

III. Was the lien proceeded on within the year? The year ran not from the time when the company received notice of Gordon's election to abandon the contract, because it is not on the contract that this action is based, but from the period of the completion of the work, the value of which constitutes the complainant's claim. Tried by this test, the action was clearly within the time.

IV. The sale of the whole canal was rightly ordered. When the part upon which labor is bestowed is in its nature capable of being used separately and distinctly from the other portions of the structure, the lien is properly restricted to that part. But where the portion constructed by one mechanic is an inseparable part of the whole, whenever the use for which the thing is intended can in no degree be attained without the co-operation of all the parts, then, the liens of all the contractors rest upon the whole structure, and are not limited to their respective portions. We go further. Although the structure may possibly be divided without totally destroying the use for which it was intended, if the sum of the values of the different parts would be greatly less than the value of the whole, the lien of each contractor will rest upon the whole, and the structure will not be divided. Or, if a particular part erected by a particular contractor is comparatively worthless unless connected with the other parts, no division will be made. The extension was part and parcel of the original plan, the object being to conduct the headwaters of the South Fork to the 'Placer' mines at Placerville. That the canal was begun at the Placerville end, and that the winter streams or arroyos were turned into the channel as the work progressed, in no manner affected the integrity of the original design. The canal is a single structure intended for a single purpose. Any division of it destroys the structure; ad if it were divided into the sections, or artificial divisions for the purpose of contract, each part in the hands of a separate owner would be comparatively useless. The value of each lien would of necessity be impaired, if not destroyed. To cut up the flume into sections and assign his portion to each contractor, would be to give some of them aqueducts which had, and could have, no water to carry.

The decree, in short, was too favorable to the appellants. It ought to have been in favor of Gordon for the entire sum claimed.

Mr. Justice SWAYNE delivered the opinion of the court.

title: Canal Company v. Gordon


text: Talk:Canal Company v. Gordon

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

title: Talk:Canal Company v. Gordon


text:
Canal Company v. Gordon/Opinion of the Court

This is an appeal in equity from the decree of the Circuit Court of the United States for the Northern District of California.

Gordon was the complainant, and the appellants were the defendants in that court. The record is very voluminous, but the questions presented for our determination are few in number, and their proper solution is, we think, attended with no serious difficulty.

We shall confine our opinion to the objections to the decree, taken in the argument for the appellants. According to the rule of this court, the appellee can ask nothing here but what the decree gave him. It is the appellants who complain. The questions which we are to examine are such as they present for our consideration. The position of an appellee in this court is simply defensive. It is only where both parties appeal, that a case is open here for examination as it was in the court below.

The bill was filed to enforce a particular lien given by a statute of California. The jurisdiction of the court rested upon this basis, and could extend no further.

The case was referred to a master. He reported that the defendant was indebted to the complainant in the sum of $76,589.89, with interest from the 13th of June, 1853, for work done upon the canal of the defendant, pursuant to the contract out of which this litigation has arisen: and in the further sum of $16,250.50, for what the master terms 'preliminary work,' without which, he states, the contract could not have been fulfilled. The latter work consisted of the building of saw-mills, railroads, other roads, an inclined plane, timber-slides, and other apparatus. The particulars are given in a schedule annexed to the report. He reported further that the defendant was entitled to credits amounting in the aggregate to $6200. According to the rules of the Circuit Court, the parties were allowed a certain time within which to file exceptions, and failing to do so, the amounts found by the master were to be taken as conclusive. No exceptions were filed by the appellants.

The court disallowed the amount found for the preliminary work, holding it not to be a lien. The amount of the credits was deducted from the amount found to be due for the work done upon the canal, and a decree was rendered for the balance, with interest.

The finding of the master is as conclusive here as it was in the court below. There has been no controversy upon that subject. It is not denied that the amount is correct-if the complainant had not forfeited his right to any compensation by the violations of the contract alleged to have been committed by Gordon & Kinyon. This part of the case has been argued very fully by the counsel on both sides. We have looked carefully into the evidence. The result is, that we are entirely satisfied with the report, and in this respect with the decree. We think the fault of the rupture lies wholly with the company. Gordon & Kinyon adhered to the contract, and pursued the work longer than they were bound to do. When they retired they were fully justified, and had a clear equity to be paid a fair compensation for the work they had performed.

The release given by Kinyon to the company cannot avail them. It was a gross fraud. The evidence fixes upon it, and sets in the strongest light, this character. It would be a waste of time to discuss the subject. Our minds rest upon the conclusion we have arrived at, undisturbed by a doubt.

Yet, the release is not without effect. It severed the connection of Kinyon with the contract, and extinguished any claim which he might otherwise have had to be heard in this litigation. He can have no interest in the result, whatever it may be. Complete justice can be done between the parties before us, and the whole case disposed of without his presence in the record. He is, therefore, not an indispensable party. The company are estopped to deny this proposition. His relation to the case is not unlike that of an obligee in a title bond, to a suit upon it for specific performance by an assignee, to whom the obligee has parted with all his interest in the bond. In that class of cases it is held not to be indispensable that the assignor should be a party.

The court below held that Gordon had a lien upon the entire length of the canal or flume, extending from the grand reservoir, near Placerville, to the South Fork of the American River, a distance of about twenty-five miles. When the contract with Gordon & Kinyon was entered into, the flume was completed from the reservoir to Long Canon, a distance of eleven and two-third miles. Water flowing through it was used by means of several outlets for mining purposes. It was fed from sources other than the South Fork. The contract with Gordon & Kinyon was for the extension of the canal, by the construction of sections 'from section 17 to 25 inclusive.' Their work commenced where the existing canal ended, and reached to the South Fork of the American River. The object was to make use of that stream as an additional feeder, and thus to increase the supply of water in the canal.

The two parts of the work-the one extending from the reservoir to the canon, and the other thence to the South Fork were known respectively as the lower and the upper section. The two sections were constructed by different contractors, and, as already shown, at different times. The former was completed and in use before the latter was begun. In these respects they were distinct works. The points of identity are continuity and a common object, use, and ownership.

The lien laws of California provide that all contractors, laborers, and other persons 'furnishing materials for, or employed in, the construction of any bridge, ditch, flume, or aqueduct, shall have a lien upon the structure,' which they may have constructed or repaired, or for which they may have furnished materials of any description, 'to the extent of the labor done, and materials furnished, or both.' It is further provided that the lien shall not bind the structure for a longer period than one year after the work is done or materials furnished, unless suit be brought to enforce the lien within that time.

Several objections have been taken to the decree touching the lien.

It is not denied that it became fixed by a regular compliance with the preliminary statutory conditions. But the appellants insist that it was extinguished by the release given to them by Kinyon. It would be a mockery of justice to allow an instrument so stained with turpitude to have such an effect. The subject has already been sufficiently considered.

It is said the lien was waived by the dismissal of the prior suit. The dismissal of that suit can obviously have no effect upon the rights of the parties in this litigation.

It is insisted that this suit was not brought in time to feed and preserve the lien. The evidence shows that the work was continued by the contractors down to the 13th day of June, 1853, inclusive. This bill was filed on the 12th day of June, 1854. That was within the time prescribed by the statute.

It is urged that the decree is erroneous in holding that the lien extended the entire length of the canal instead of limiting it to the upper section, where all the work was done. Is this objection well taken? Liens of this kind were unknown in the common law and equity jurisprudence both of England and of this country. They were clearly defined and regulated in the civil law. #fn-s-s Where they exist in h is country they are the creatures of local legislation. They are governed in everything by the statutes under which they arise. These statutes vary widely in different States. Hence we have found no adjudication in any other State which throws any light upon the question before us, and there has been none in California. We are, therefore, compelled to meet the case as one of the first impression.

We have already shown that the upper and lower sections were distinct works in several essential particulars, to which we need not again advert. The lower one having been finished and in use before the upper one was contracted for, if those having a lien upon the former, had insisted that it became extended over the latter, as soon as the latter was completed, no legal mind, we apprehend, could have doubted that the claim could not be sustained. If it could, Gordon's lien might have been rendered valueless. We think the converse of this proposition applies with equal force. If a lien upon the lower section could not have been extended over the upper one, upon what principle can it be maintained that Gordon's lien embraced the lower section? A lateral feeder constructed and intersecting the main line after it was completed, would certainly not be subject to a previous lien upon the main line, if such a lien existed. We can see no substantial difference between that case, and the one before us. The upper section was only an additional feeder. That it was an elongation of the main line, and not a lateral work, does not affect the principle involved. The controlling circumstances and the object in both cases would be the same.

We think the language of the statute rightly interpreted is decisive.

The lien is given to contractors and laborers upon the ditch or flume 'which they may have constructed or repaired,. . . to the extent of the labor done and materials furnished.' The work of Gordon was all done upon the upper section. He had nothing to do with the lower section. So far as he was concerned, and for all the purposes of this litigation, they were distinct and independent works. A different principle would produce confusion, and lead to serious evils. We have no difficulty in coming to the conclusion that the decree in this particular is erroneous.

It is, therefore, REVERSED, and the cause remanded to the court below with instructions to enter a decree

IN CONFORMITY WITH THIS OPINION.

Mr. Justice FIELD, dissenting.

I dissent from so much of the opinion and decision as limits the lien of the contractor to that portion of the canal which was constructed by him. I think the lien extends to the entire canal, as much so as a lien for work upon a wing of a house extends to the entire building.

MILLER and GRIER, JJ., concurred with Field, J.


text: Talk:Canal Company v. Gordon/Opinion of the Court


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United States v. Alire

APPEAL from the Court of Claims.

Julian Alire filed a petition in that court setting forth that under the acts of Congress of March 3d, 1855, and of May 14th, 1856, he had made application to the commissioner of pensions for one hundred and sixty acres of bounty land, and had conformed to the provisions of the said acts, and the rules and regulations of the pension office; that the application was rejected by the commissioner, and that, on appeal to the Secretary of the Interior, the rejection had been confirmed. Issue was taken in the Court of Claims on this petition, and the cause having been afterwards heard before it, a decree was rendered in favor of the petitioner for a bounty land warrant, to be made and delivered to him by the proper officer. It was also further ordered that the decree should be certified by the clerk of the court, under its seal, and remitted to the Secretary of the Department of the Interior.

From this decree the United States appealed, on the ground among others that the court below had no jurisdiction of the case. The soundness of this view depended, of course, on statutes organizing or regua ting that court.

The first act organizing the court was passed February 24th, 1855, and the jurisdiction conferred was 'to hear 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, which may be suggested to it by a petition filed therein, and also all claims which may be referred to said court by either house of Congress.'

The court was directed to keep a record of their proceedings, and, at the commencement of each session of Congress, and of each month during the session, report to Congress the cases upon which the court had fully acted, stating in each the material facts which they find established by the evidence, with their opinion in the case, and the reasons upon which it is founded. The court were also directed to prepare a bill in the cases determined favorably, in such form as, if enacted, will carry the same into effect.

The next act relating to the organization of the court was passed March 3d, 1863.

The second section of this act conferred substantially the same jurisdiction as to cases before the court as in the first section of the previous act; but jurisdiction, in addition, was conferred over set-offs, counter-claims, &c., & c., on the part of the government against the petitioner.

The fifth section provided, that either party might appeal to the Supreme Court of the United States from any final judgment or decree which might thereafter be rendered in the Court of Claims, wherein the amount in controversy exceeded three thousand dollars.

The seventh section, that in all cases of final judgment by said court, or on appeal by the Supreme Court, where the same was affirmed in favor of the claimant, the sum due thereby shall be paid out of any general appropriation made by law for the payment of private claims, on presentation to the Secretary of the Treasury of a copy of said judgment, &c. And in cases where judgment appealed from is in favor of said claimant, or the same is affirmed by the Supreme Court, interest at the rate of five per cent. shall be allowed from the date of its presentation to the Secretary of the Treasury for payment, but no interest shall be allowed subsequent to the affirmance unless presented for payment to the Secretary of the Treasury as aforesaid, with a proviso that no interest shall be allowed on any claim up to the time of the rendition of the judgment by said Court of Claims, unless on a contract expressly stipulating for interest.

The thirteenth section enacted that all laws, and parts of laws, inconsistent with the provisions of this act, were thereby repealed.

Mr. Norton, solicitor for the Court of Claims, contended that the fifth and seventh sections of the act of 1863 showed that the Court of Claims could give no judgments against the United States for anything but money.

Messrs. Hughes, Denvers, and Peck, with Mr. Watts (by brief filed), argued, contra, that the jurisdiction was, by the previous act of 1855, expressly given where the claim was founded on any act of Congress; and that confessedly the claim was here so founded.

Mr. Justice NELSON delivered the opinion of the court.

title: United States v. Alire


text: Talk:United States v. Alire

title: Talk:United States v. Alire


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

The only question presented in the record, which we shall examine, is whether or not the court below had jurisdiction of the cause.

It will be seen by reference to the two acts of Congress on this subject, that the only judgments which the Court of Claims are authorized to render against the government, or over which the Supreme Court have any jurisdiction on appeal, or for the payment of which by the Secretary of the Treasury any provision is made, are judgments for money found due from the government to the petitioner. And, although it is true that the subject-matter over which jurisdiction is conferred, both in the act of 1855 and of 1863, woud admit of a much more extended cognizance of cases, yet it is quite clear that the limited power given to render a judgment necessarily restrains the general terms, and confines the subject-matter to cases in which the petitioner sets up a moneyed demand as due from the government.

This view is confirmed by the judgment of this court in the case of Gordon, Adm'r, v. United States, in which the court denied any jurisdiction over the case on account of the power of the executive department over its judgment by the fourteenth section of the act of 1863. That section was repealed by the first section of the act of March 17th, 1866.

The decree, or judgment, in the present case is, that the claimant recover of the government a military land warrant for one hundred and sixty acres of land, and that it be made out and delivered to the said Julian Alire by the proper officer, and the decree to be certified and remitted to the Secretary of the Interior. We find no provision in any of the statutes requiring a judgment of this character, whether in this court or in the Court of Claims, to be obeyed or satisfied. Nor does either court possess any authority to render such a judgment, as is apparent from a perusal of the seventh section of the act of 1863, and which is the only one providing for the rendition of a judgment or decree in any case before the court below.

Even if the first section of the act of 1855 and the second of 1863 could be construed as giving a jurisdiction in cases other than money demands against the government, no judgment could be rendered by the court below, and, of consequence, the carrying into effect their finding must depend on the act of 1855. But we are of opinion that it was intended by the several provisions of the act of 1863 that the cases to be heard were to pass into a judgment as prescribed in the seventh section of the latter act, and hence they must be such in their nature and character as may admit of a judgment or decree in conformity with its provisions.

Our conclusion is, the court below had no jurisdiction of this case, and that the decree must be reversed, and the cause remanded to the court with directions to enter a decree dismissing the petition.

A motion was subsequently made on the part of the United States to reinstate on the docket this cause, dismissed as above stated at this term (on the ground that it did not appear that the amount in controversy exceeded $3000), and to remand it to the Court of Claims with a view to an amended or special appeal under the fifth section of the act of March 3d, 1863, which provides 'that when the judgment or decree will affect a class of cases or furnish a precedent for the future action of any executive department of the government in the adjustment of such class of cases,. . . and such facts shall be certified to by the presiding justice of the Court of Claims, the Supreme Court shall entertain an appeal on behalf of the United States, without regard to the amount in controversy.'

Mr. Justice NELSON delivered the opinion of the court.

The case involves the right of the claimant to a military bounty land warrant under the acts of Congress passed March 3d, 1855, and May 14th, 1856, which claim had been rejected by the commissioner of pensions, and the rejection confirmed by the Secretary of the Interior. The case would seem to fall within the provision providing for a special appeal on behalf of the government. We see no valid objection to the motion, and therefore direct the cause to be reinstated on the docket, and the record remanded back to the Court of Claims for such further proceedings as may seem fit and proper in the cause as it respects the appeal prayed for.

REMANDED ACCORDINGLY.


text: Talk:United States v. Alire/Opinion of the Court


text:
Roberts v. Graham

ERROR to the Circuit Court for the Northern District of California.

Mr. Brady, for the plaintiff in error; Messrs. Carlisle and McPherson, contra.

Mr. Justice SWAYNE stated the case and delivered the opinion of the court.

title: Roberts v. Graham


text: Talk:Roberts v. Graham

title: Talk:Roberts v. Graham


text:
Roberts v. Graham/Opinion of the Court

This is a writ of error to the Circuit Court of the United States for the Northern District of California.

Graham was the plaintiff in the court below. The complainant sets forth a contract, whereby Roberts agreed to transport him and his wife and child as first cabin passengers from New York to San Francisco, by the Panama route, and to furnish them with suitable accommodations, provisions, and supplies on the way.

Among other breaches, it is alleged that the defendant did not furnish them with first cabin fare, but that the child was furnished with only second cabin fare of the poorest quality; that he did not furnish them with suitable and proper accommodations, provisions, and supplies, but that on the contrary he overloaded the steamer Moses Taylor, on which they were conveyed from Panama to San Francisco, 'with a number of passengers, wholly out of proportion to her size, and much greater than she could suitably accommodate, and that by reason thereof, the plaintiff and his wife and child were subjected to great inconvenience and injury.'

In the course of the plaintiff's testimony he gave evidence tending to prove his illness, and that it was caused by exposure, in his not having sufficient bed or berth clothing on the Moses Taylor; 'that bed-clothing had been furnished him, but that he was compelled to deprive himself of it, in order to supply his child, which child had not been furnished with a berth or bed-clothing.'

The evidence being closed, the defendant's counsel asked the court to instruct the jury, that in assessing the damages by reason of the sickness of the plaintiff himself during the voyage, they must exclude from consideration sickness arising from the want of sufficient bed-clothing on the Moses Taylor, because 'there is no allegation in the complaint on which to base a recovery for such injuries, and because the allegation is, that the plaintiff's sickness was caused by exposure and detention at Panama, before the arrival there of the Moses Taylor.'

This instruction the court refused to give. 'And the said judge thereupon charged the jury that if they found from the evidence that the plaintiff's sickness and consequent injuries was caused by x posure by reason of not being furnished with a sufficient quantity of bed-clothing on the steamer Moses Taylor, then they must estimate the damages to plaintiff caused by such exposure and want of sufficient clothing or covering for his berth, and by his illness consequent thereon, and include such damages in their verdict.'

To this refusal to instruct, and to the instruction given, the defendant excepted.

It is objected that the plaintiff was allowed to recover for a special damage not alleged in the complaint. As a general proposition, that cannot be done. Special damage, whether resulting from tort or breach of contract, must be particularly averred, in order that the defendant may be notified of the charge, and come prepared to meet it.

Special, as contradistinguished from general damage, is that which is the natural, but not the necessary, consequence of the act complained of. In this connection, in the case before us, two questions are presented for our consideration: Was the sickness of the defendant, alleged to have been induced by his exposure on the Moses Taylor, special damage, within the rule of pleading on that subject? and if so, was the right of the defendant to object to a recovery upon that ground waived by his conduct at the trial?

The complaint avers that the defendant, by this breach of the contract, 'was subjected to great inconvenience and injury.'

It does not appear that the defendant objected to the admission of the testimony, that he moved to have it ruled out, or that he made any allusion to the subject until he asked the court, at the close of the argument, to instruct the jury, as shown by the bill of exceptions.

In Ward v. Smith, the suit was upon a lease. The declaration averred that the defendant refused, 'on request, to permit the plaintiff to take possession and have the use of the premises, whereby the plaintiff had sustained loss, and had been obliged to hire other premises at great cost and expense for rent and charges.'

The plaintiff proved on the trial that the premises had been taken for his wife's business, who was a milliner, were advantageously situated for that trade, 'and that by not being suffered to occupy them, he sustained considerable loss by the passing by of a profitable part of the year for that business in the meantime.' The plaintiff recovered. It was urged by the defendant, upon a motion for a new trial, 'that there was no special damage averred in the declaration, for that there were no particular customers named therein as having withdrawn their custom from the defendant's wife; and further, that there was no averment of the business of the wife, or that the plaintiff had sustained any loss in her business.'

Richards, Chief Baron, said: 'As to the objection of evidence of special damage having been admitted, there was, in fact, no special damage, as such, proved. The object of the witness's testimony was to show that the plaintiff had sustained inconvenience.' Baron Graham said, that no special damage had been proved. He added: 'Loss of customers and general damage occasioned thereby, however, may have been given in evidence under this declaration; for it charges general loss, without specifying any particular individuals whose custom had been lost, and it was competent for the plaintiff to show certain damages sustained by breach of the agreement in this action, without stating his loss more specially in the declaration.'

It would not be easy to distinguish that case, as to the point under consideration, from the one before us. It is of undoubted authority, and is conclusive.

The objection of variance not taken at the trial, cannot avail the defendant as an error in the higher court, if it could have been obviated in the court below; nor can it avail him on a motion for a new trial. If parol evidence be received without objection, to prove the contents of a record, it is sufficient for that purpose. In McMicken v. Brown, the defendant made no objection to the introduction of the testimony, but prayed the court to instruct the jury that it was insufficient to warrant a verdict against him. The jury found for the plaintiff. It was held by the appellate court that he should have objected to the admission of the evidence, and that not having done so, he was concluded by the verdict. The judgment was affirmed.

In the case before us the plaintiff was entitled to be apprised of the objection if it were intended to be relied upon, at an earlier period in the progress of the trial. The court would doubtless have permitted an amendment if deemed necessary, upon such terms as the interests of justice might seem to require.

The defendant's right to make the objection was waived and concluded by the delay. He could not make it at the time and in the manner it was presented.

Upon both grounds we hold that the rulings of the Circuit Court were correct.

JUDGMENT AFFIRMED.

title: Roberts v. Graham/Opinion of the Court


text: Talk:Roberts v. Graham/Opinion of the Court


text:
The Wren

APPEAL from the District Court for the Southern District of Florida, condemning as prize of war the Wren.

The steamship Wren, a merchant vessel, left the port of Havana on the 12th of June, 1865, for Liverpool, via Halifax, Nova Scotia, with a crew of about thirty-five persons, who, on the morning of the next day, mutinied, confined the officers in their quarters, carried the vessel into the port of Key West, and delivered her as prize to the acting admiral commanding at that station. The seizure was in pursuance of secret arrangements with the United States consul at Havana, before the vessel left that port. A libel was filed against the vessel by the United States District Attorney, before the judge of the Southern District of Florida, as prize of war. The master, one Stiles, put in a claim in behalf of John Laird, a British subject, as owner.

This Stiles had been an officer in the navy of the United States. The record also disclosed this answer of his to the standing interrogatory as to the papers of the vessel:

All the letters and papers of which he has any knowledge of having been on board on the present voyage were taken by the asserted captors with the exception of one letter to himself from the agent of the vessel, Mr. Helms, at Havana, which was destroyed, and an order in favor of this deponent from Mr. Helms for the payment of £40, payable on delivery of the ship at Liverpool.

After hearing the proofs, including those hereafter mentioned, the court condemned the vessel on the ground that she was the property of the enemies of the United States. Laird appealed.

In this court it was insisted, that the vessel was liable to be condemned—

1. For breach of blockade on the voyage next preceding that on which she was captured.

2. As being enemies' property.

1. As respected the breach of blockade. It appeared that the vessel had been engaged in running the blockade of the port of Galveston, Texas, from the port of Havana, and that a shourt time before she entered on the present voyage she had successfully entered Galveston, discharged her cargo, and taken on one of cotton, and returned in safety to Havana.

2. As it respected the ownership. On the side of the claimant, it appeared from the registry of the vessel that the 'Wren,' her registered name, was a British ship, built at Birkenhead, in Chester County, England, by Messrs. Laird Brothers, in 1864; that she belonged to John Laird, the younger, of Birkenhead, ship-builder, as owner; that William Raisbeck was, at the date of the registry, master of the ship; that Liverpool was her port of registry; and that she was of 267 tons registry tonnage. The registry bore date the 24th December, 1864.

John Duggan, one of the crew examined in preparatorio, and who resided in Liverpool, testified that he shipped in the vessel at Liverpool, in December, 1864, on the voyage to Havana, and continued one of her crew while she was engaged in running the blockade, and down till her seizure by the crew, the 13th June, 1865. He stated that she was British built, called The Wren, and never had any other name; and that he knew nothing as it respected any bill of sale. Other witnesses examined on this subject of a sale agreed with this witness. Shipments addressed to him as master, dated Havana, 15th March, 1865, showed that Rais beck, the registered master of the vessel, came out with her to Havana. Stiles was appointed master afterwards.

On the other hand, the material evidence, to prove that the vessel at the time of seizure was enemies' property, was as follows: The answers of the purser of the ship, McGahan, to the fourteenth interrogatory were thus:

'He believes that Frazer, Trenholm & Co., of Liverpool, are the owners of the vessel, and were so at the time she was seized; has no personal knowledge as to who are the owners; he has heard Major Helms, at Havana, and Mr. Lafitte also, at Havana, speak of Frazer, Trenholm & Co., as owners.'

So Duggan, one of the crew, in reply to the fifth interrogatory:

'He does not know to whom the vessel belonged, but has heard Captain Moore, one of her former masters, with whom he sailed in said vessel in former voyages, say that she was owned by the Confederate government.'

Another item of proof relied on was, that Major Helms, a Confederate agent at Havana (and who had been connected in some way with the voyages of the vessel while running the blockade), appointed Stiles to the command of the vessel for the voyage from Havana to Liverpool. McGahan, the purser already mentioned, testified that the master was appointed to command, as he understood, by Major Helms, at Havana; he did not know who delivered possession of the vessel; he believed that the master took possession by the authority of Major Helms. Duggan, one of the crew, stated that the name of the master was Stiles; that he was appointed to the command of the vessel by Major Helms, at Havana.

McGahan was again examined, among others, on an order for further proofs, in which examination he says that he did not know who appointed Stiles to the command of the Wren at the time of leaving Havana; he believed that Major Helms appointed him; he arrived at the conclusion from hearing Major Helms speak of the resignation of the former captain.

It appeared, however, from the testimony of Stiles himself, and of Long, his first officer, that he was appointed to the command by a Mr. Ramsey, who shipped the crew at Havana for the voyage to Liverpool, and thus seemed to have had some agency of the vessel.

The first officer stated, also, that when he needed anything for the use of the vessel, he was generally sent by Captain Stiles to Ramsey to obtain it.

Mr. Pierrepont, for the appellant, contended—

On the 1st point: That the vessel having run the blockade and completed her return voyage, ceased to be in delicto.

On the 2d point: That there was no sufficient evidence whatever-it being, at best, but slight and loose hearsay-of enemy property, even if war had not ceased before the capture, and made prize of war impossible. But the war had ceased. This capture was on June 16th. It was matter of public history, and one of which the court would take judicial notice, that Lee had surrendered 9th April, Kirby Smith and Johnson in the same month, and h at Davis was captured on the 13th May. Independently of this, that the capture was by a band of mutineers while the vessel was on a peaceful voyage, which took from the case every aspect of capture jure belli.

Mr. Ashton, special counsel of the United States, contra, argued—

1. That the last voyage before the capture having been one in breach of blockade, this subjected the vessel to lawful capture on the present voyage.

2. That the register was a mere cloak for rebel title, that the Lairds were not novi hospites in this court. They were notorious as builders of the Alabama and other piratical cruisers of the rebel combination. Mr. Trenholm, of the firm of Frazer, Trenholm & Co., was a citizen of the rebel confederacy. The character of all these parties, and of rebel ship-building interests, was established by the judicial records of Great Britain and the diplomatic history of the late contest, and were facts of which this court would take cognizance, and to which it would give due effect in a case of asserted ownership by these firms or any of their members, of a vessel found in any way employed or navigated in the interest of their rebel patrous. Moreover, Helm was an agent of the confederacy. Stiles had been an officer of its marine forces. And the spoliation of papers was the crowning proof. The capture was made nondum cessante bello, and though effected by non-commissioned persons, yet being adopted by the government, the property became on condemnation one of its droits, as it became, independently of capture, as part of the assets of the extinct confederation.

Mr. Justice NELSON delivered the opinion of the court.

title: The Wren


text: Talk:The Wren

title: Talk:The Wren


text:
The Wren/Opinion of the Court

The court below condemned the vessel on the ground that she was the property of the enemies of the United States. And this is the only question in the case. For, although it was insisted on the argument that the condemnation might have been placed on the ground that the vessel was taken in contemplation of law in delicto, for violating the blockade of the port of Galveston, Texas, the position is founded in a clear misapprehension of the law. The doctrine on this subject is accurately stated by Chancellor Kent. 'If a ship,' he observes, 'has contracted guilt by a breach of blockade, the offence is not discharged until the end of the voyage. The penalty never travels on with the vessel further than to the end of the return voyage; and, if she is taken in any part of that voyage, she is taken in delicto. This is deemed reasonable, because no other opportunity is afforded to the belligerent force to vindicate the law.' And the modern doctrine is now well settled, that the only penalty annexed to the breach of a blockade is the forfeiture of vessel and cargo when taken in delicto. The earlier doctrine was much more severe, and inflicted imprisonment and other personal punishment on the master and crew.

2. As respects the ownership. The certificate of registry, under the English acts, must specify the name, occupation, and residence of the owner, the name of the ship, the place to which she belongs, her tonnage, the name of the master, the time and place of the built, name of the surveying officer, together with a particular description of the vessel. This act has been fully complied with in the present case. And the certificate shows that the claimant is the builder of the vessel and owner, and the proofs show with reasonable certainty that his registered master brought the vessel to Havana, and was there engaged in command of her within three months after she was launched and fully equipped for the voyage, and which was within three months of the time when she was seized, as prize, by her crew. It is quite apparent, therefore, upon the proofs, that the claimant not only built the vessel, but put his master in command in this, her first voyage, and the presumpi on would seem very strong, if not irresistible (nothing else in the case), that he continued the owner for the short period of six months, which elapsed after she was built, and before the seizure took place. In addition to this, she was in the command of a master claiming to represent Laird as owner. These acts, in connection with the registry, afford strong evidence that the title of the vessel was in the claimant.

Now, most of the proofs relied on to disprove this evidence are wholly inadmissible, and incompetent as testimony in a court of justice. We cannot think that it needs any argument to show that they do not rise to the character or dignity of testimony in any court that respects the law of evidence.

We agree that in the facts and circumstances surrounding and attending the history and operations of this vessel, and of the individuals connected with her, there are matters for well-grounded suspicion and conjecture as it respects the purpose and intent with which the vessel was originally built and sent to Havana; and, as she entered immediately in furnishing supplies to the enemy and receiving cargoes of cotton in return, it is not unnatural or unreasonable to suspect that the so-called Confederate States, or their agents, had some connection, if not interest in her. But this alone is not evidence upon which to found a judgment in the administration of justice. The facts that the master, Stiles, who was put in command of her for the voyage home, from Havana to Liverpool, was an officer in the enemies' naval service, and had belonged to the United States navy; and Helms, who was in some way, not explained, connected with her voyages in running the blockade, and who was the agent of the enemy at Havana, might well be entitled to consideration and weight on the question if there had been any legal proof in the case laying a foundation for such a conclusion. So, also, would the evidence that Stiles destroyed at the time of the capture a letter from Helms, agent of the ship, as he calls him, to himself, and an order for the payment to him for £40 on the delivery of the ship at Liverpool. But in the view we have taken of the case there is no foundation of legal proof of the ownership of the vessel in the Confederate States on which these circumstances can rest, or be attached, as auxiliary considerations to influence the judgment of a court.

Our conclusion is, that the decree below must be REVERSED, and the vessel

RESTORED, BUT WITHOUT COSTS.

title: The Wren/Opinion of the Court


text: Talk:The Wren/Opinion of the Court

title: Talk:The Wren/Opinion of the Court


text:
Stearns v. United States

APPEAL from the District Court for the Northern District of California. The case being one of fact merely.

Messrs. Carlisle and Cushing, for the appellant; Mr. Stanbery, A. G., and Mr. Browning, contra.

Mr. Justice SWAYNE delivered the opinion of the court; stating the case.

title: Stearns v. United States


text: Talk:Stearns v. United States

title: Talk:Stearns v. United States


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

This case was instituted originally before the 'Board of Commissioners to ascertain and settle Private land Claims in the State of California.' The decision of the board was adverse to the claim. The case was thereupon removed, pursuant to law, to the District Court of the United States for the Northern District of California. The decree there also was adverse, and the claimant has brought the case before this court by appeal.

Two objections were taken in the argument at the bar in behalf of the United States.

First. That the papers upon which the claim rests, were antedated, and were, in fact, executed after the 7th of July, 1846; and,

Second. That the boundaries specified were so indefinite, that they render the claim void for uncertainty.

The paper title produced by the claimant consists of a grant by Pio Pico to Joseph Andrade, dated May 6th, 1846, and the expediente, found in the archives. The latter is made up of the petition of Andrade, dated May 4th, 1846, a marginal order by the governor, dated May 5th, 1846, directing the title to issue, and the o rrador of the titulo issued to the interested party. Andrade transferred his claim to Stearns, the claimant and appellant, on the 9th of August, 1846. The petition, marginal order, and concession, all bear date at Los Angeles. The petition is in the handwriting of Vicente Gomez, signed by Andrade, and witnessed by Cota and Enrigues. The concession is in the handwriting of Benito Diaz, and signed by Pico as governor, and Jose Matias Moreno as secretary.

The conquest of Upper California by the arms of the United States is regarded as having become complete on the 7th of July, 1846. Monterey was captured on that day. They then held military possession of a large part of the country. The Mexican forces were in full retreat to Lower California. But a few weeks elapsed until the surrender of Los Angeles, and the establishment of a territorial government by the invaders. The 7th of July has been fixed upon as the point of time at which terminated the authority of the Mexican governor to make alienations of the public domain within the conquered territory. All grants made after that time are void.

The forces under General Castro fell back from Monterey on the 7th of July, and reached Los Angeles the latter part of that month. Andrade, Vicente Gomez, and Benito Diaz, were all soldiers in his army, and reached Los Angeles with the rest of the troops.

The counsel for the United States insist that the papers were prepared at this time, and not at the prior times when they bear date.

All the parties whose writing or signatures appear in them were at Los Angeles the last of July. This fact is too clear for controversy, and there is none upon the subject. Were they there on the 4th, 5th, and 6th days of the preceding month of May? This inquiry is the hinge of the controversy between the parties as to this part of the case.

Pico, the governor, and Moreno, the secretary, testify that the dates are correct, but it is admitted that their characters are so deeply affected by fraud and perjury in other cases that no weight can safely be given to their testimony. It does not appear that Andrade was examined as a witness. After reading carefully the testimony of Ambrosio Gomez, Chaves, Montenegro, De la Guerra, and Padilla, it is difficult to resist the conclusion that he was in Monterey and not at Los Angeles upon the days when the papers bear date. This conviction is fixed in our minds. The testimony of Cota and Serrano, taken by the claimant, is insufficient to remove it.

Vicente Gomez says in his deposition that the date of the petition is 'surely' correct; but he says further that he went from Monterey to Los Angeles with the army of General Castro; that he wrote the petition at Los Angeles upon that occasion, and that he was not there at any other time during the year 1846. The fact last mentioned, if true, is conclusive. But the character of this witness is admitted to be upon a level with those of Pico and Moreno. His testimony, therefore, needs corroboration to entitle it to belief. This the United States have supplied by the monthly customhouse balance-sheet, in the handwriting of Gomez, and approved by Manuel Castro, dated at Monterey, May 1st, 1846, produced from the Spanish archives, and by the deposition of his brother, Ambrosio Gomez, of Castro, of De la Guerra, and of Montenegro. This testimony, without that of Vicente Gomez, and indeed in contradiction to it, would be sufficient to establish the fact that he was at Monterey, and could not have been at Los Angeles upon the days of May in question. This point seemed hardly to be controverted in the argument for the claimant. The proof is conclusive. Benito Diaz testifies that the concession is in his handwriting, that it was not written at its date, and that it was written at Los Angeles in July or August, after his arrival there with General Castro. His character is subject to the same infirmity as that of Gomez, and his testimony equally reu ires support from other sources. The custom-house exhibits produced and identified by Hopkins, and the testimony of De la Guerra, Chaves, Pinto, Fernandez, and Rodrigues, leave no room for doubt that he was not at Los Angeles in the early part of May. He was clearly then at Monterey, and in the performance of his duties there as an employe in the custom-house.

The explanations submitted by the counsel for the claimant are ingenious and plausible, but neither they nor the testimony adduced by the claimant are sufficient to countervail the weight of the evidence to which we have referred.

There was no informe and no diseno. None were submitted when the concession was applied for. The petition was not presented through the prefect. The latter was required by the established orders both of Alvarado and Pico, upon the subject. It does not appear that judicial possession was ever given or attempted to be given. On the 8th of May, 1846, forty-five expedientes were sent to the departmental assembly for approval. The one in question in this case was not among them. If then in existence, why was it not transmitted with the others? The omission is unaccounted for.

Stearns lived in California before and at the time of the conquest. In the spring of 1847, Col. J. D. Stevenson, an officer of the United States, was placed in command of the southern military district of California, and charged particularly with the duty of investigating the land grants which had been made by the Mexican authorities within the limits of his command. He says: 'Soon after I got my district in order I began to make inquiries as to who were the civil officers under Pico, and learned from A. Stearns and others, that he (Stearns) was either the prefect or sub-prefect, and an intimate and confidential friend of Pico, and from him and others I learned that grants were made after it was known that the Americans had taken possession of California, which were antedated, and especially those made in this section of country from San Jose this way, and that a very large portion of them were signed by Pico on the day and night preceding his start for Mexico, which was about the 8th or 9th August, 1846; Stearns told me that he was present on the day and night referred to, especially the night those grants were executed, and that Pico left him (Stearns) in charge as next officer in command. These grants were frequently the subject of conversation; and on one occasion a party, to whom a valuable grant was made, confessed to me that the grant was executed that night, and he knew nothing of it until he was sent for to accept the grant. I availed myself of every opportunity to obtain information about these grants, both by conversation and otherwise.' The credibility of this witness, and the truth of his statements, are undisputed.

It has been pressed upon our attention with zeal and ability that it could not have been known by the Mexican authorities, even as late as the 9th of August, that the country would be held permanently by the United States, and that hence there was no inducement to antedate the papers in the case before us. That like papers belonging to other expedientes were antedated about that time cannot be denied. The reasons and object in all the cases were doubtless the same. It is frequently difficult to unveil the heart and find the motive which animated the guilty act. Where the guilt is doubtful, the inquiry is important, and the result may be decisive. Where the guilt is otherwise clear, the inquiry is of no moment. Whatever the result, it cannot affect the grasp which the previous conviction holds upon the mind. The state of the evidence before us presents a case of the latter character.

But it is not difficult to imagine an adequate motive for the imputed fraud. The United States were substantially in possession of the country. The military power of their adversary was destroyed. The indications were unmistakable, that it was their intention to appropriate and absorb the country. If the dominion of Mei co were not to be restored, the earlier her grants, the more likely they were to be sustained by the succeeding government. It could not be expected that those would be recognized which were made after her authority was overthrown. The antedated grants cost her nothing. Her officers gave only what was already lost, and thereby rewarded her friends and injured her enemy.

Our conclusion upon this branch of the case renders it unnecessary to consider the subject of the boundaries.

AFFIRMED.


text: Talk:Stearns v. United States/Opinion of the Court


text:
Society for Savings v. Coite

ERROR to the Supreme Court of Connecticut; the case being thus:

The legislature of Connecticut, in 1863, enacted that the several savings banks in the State should make annual return to the comptroller of public accounts, of the total amounts of all deposits in them respectively, on the first day of July in each successive year; and that each should annually pay to the treasurer of the State, 'a sum equal to three-fourths of one per cent. on the total amount of deposits' in such savings bank, on the days aforesaid. The statute declared that this tax should be in lieu of all other taxes upon savings banks or their deposit.

With this statute in existence, the 'Society for Savings'-one of the savings banks of Connecticut, and as such empowered by its charter to receive deposits of money, and improve them for the benefit of its depositors, but having no capital stock or stockholders-had on the 1st July, 1863, $500,161 of its deposits invested in securities of the United States, which, by the act of Congress authorizing their issue, were declared to be exempt from taxation by State authority, 'whether held by individuals, corporations, or associations.' Upon the amount of their deposits thus invested, the society refused to pay the sum equal to the prescribed percentage.

On a suit brought by Coite, treasurer of the State, for the purpose of recovering the tax thus withheld, the Supreme Court of Connecticut decided that the tax in question was not a tax on property, but on the corporation as such, and rendered judgment accordingly for the plaintiff.

The correctness of the judgment was the point now here on error.

Mr. Chamberlin, for the plaintiff in error:

The question is, whether the statute of Connecticut, as sought to be enforced by the State treasurer, imposed a tax upon securities of the United States? If so, it is confessedly illegal.

The language lays a tax based upon property. It is even more directly upon the 'property,' than the statute of New York which received construction in the Bank Tax Case.' That provided for a tax upon a valuation equal to the amount of capital stock,' &c.; this for a tax on the total amount of deposits, &c. The first is on a valuation equal to the amount; the second on the amount, &c. That case goes far to conclude this. In that case the court says, that in making up a tax under the law, 'the commissioners need only look into the condition of the bank in order to ascertain the amount of the capital stock paid in or secured to be paid in, and this sum in the aggregate will constitute the basis,' &c. The New York legislature probably meant to impose a tax which should be construed as a tax upon franchise and privilege irrespective of property; but the court inquire, what is the basis of the tax? In New York the basis is found to be the amount of 'capital paid in or secured,' &c.; in Connecticut it is equally clear that 'the amount of deposits' is the basis. Deposits for all the purposes of this case sustain the same relation to this institution which capital sustains to a bank. Each represents money received by the corporation to be managed for the benefit of the owners; each is properly classe among the liabilities of the corporation; each constitutes the principal fund from which investments are made, and the difference consists in the fact that 'capital' remains with the corporation, while deposits in this institution may be withdrawn.

Where is the difference between a tax upon property, and a tax upon a person measured by the amount of his property? In either case the property is the foundation and moving cause of the tax. If a person has no property he has no tax. If he has small or large possessions his tax is small or large in proportion. Suppose a person should invest the sum of $1000 in United States securities, and the legislature of the State should say to him in the form of a law, 'Inasmuch as we cannot tax you for the money lent to the general government, you as an individual shall pay a sum equal to the tax on $1000, vested in taxable securities.' Would such a law be valid? Certainly not. But why not? The law does not tax the sum lent; it imposes the tax upon the individual. But the intent is too obvious. It is in form a tax upon the individual, but in substance a tax upon the sum lent. And so in the case under consideration. It is the duty of courts to look through the shadow to the reality.

The tax, if not upon property as such, is measured by the extent of the property-the amount of the deposits being the measure. A tax upon 'faculty' or 'franchise,' estimating its value by the money it has secured, is the same thing in substance as taxing the money secured; and a tax upon the money secured-or with reference to it as a basis-is substantially the same thing as a tax upon the securities for which it has been exchanged. Such a tax cannot be laid while a portion of the property, the amount of which is so adopted 'as the standard of taxable liability,' is so invested as, under the protecting power of a higher authority, to be exempt. The privilege of exemption from taxation of so much property as may have been lent to the United States, ought not to depend upon the mode of estimating the property of an individual or a corporation.

A tax unpaid upon a franchise of a corporation, the power and authority of which is limited to holding, managing and investing money entirely for the benefit of depositors, and which has no corporate property distinct from that which they so hold in special trust, which has no stockholders or members interested in its profits or who can receive dividends from its earnings, necessarily operates as an assessment on the property of those for whose use the franchise is exercised. The parties for whose use the franchise is exercised being distinct from the corporation and sustaining no other than a property relation to the corporation-it becomes in its essence and operation a direct tax upon 'property,' the burden falling and resting directly and only there.

Let each individual and corporation throughout the State be required to state the amount of the cost of the personal property owned by him on the first day of January in each year, and pay three-fourths of one per cent. on such amount, and you get a tax quite similar to the one in question.

Messrs. Hubbard and McFarlane, contra:

We assume—

1. That a State legislature may impose taxes on the exercise of a franchise created by itself.

2. That it may measure the tax by the measure of exercise.

3. That it may measure the exercise by an arbitrary standard, as a fixed sum, or by a more equitable standard, as the amount of money received in the exercise of the franchise, or even by the value on an appraisal of the earnings or property (including Federal stocks) owned by the possessor of the franchise.

Now the statute in this case does not impose a tax on the property of the Savings Bank, but on the corporation as such; in other words, it imposes a tax or excise on the privilege or franchise of the corporation.

The standard fixed b the statute disregards all reference to actual assets, modes of investment, accumulations, losses, profits, or valuations. If the bank have earned by use or investment of its deposits a surplus, no matter how large, above the amount of its deposits, this surplus is not taxable. Its taxes do not increase. On the other hand, if such investment has been wholly lost or destroyed, the taxes would not be diminished. Thus it is seen that the law has no reference to a valuation of assets, but to the fixed arithmetical standard of 'the total amount of all deposits.' Now to say that the corporation is entitled to a reduction of taxes because some of its assets happen for the time being to be non-taxable, and that it is not entitled to a reduction when a portion of these assets become worthless or non-existing, is absurd.

The phraseology of the act is consistent with this view. The requirement is not that the banks shall pay a tax of one-half of one per cent. on their deposits, but 'a sum equal to one-half of one per cent. on the total amount of deposits in such institution.'

A tax of a similar character to this is imposed by a Connecticut statute of 1862, on agents of foreign insurance companies, who are required to pay to the treasurer of the State two per cent. on the gross amount of premiums and assessments annually received by them. What is this tax? Obviously an excise tax on a foreign corporation, through its agent, for the privilege of doing business. What is the extent of the tax? Precisely in proportion to the business done. Would it make any difference with the amount of the tax that the foreign corporation, or the agent, had invested the year's premiums and assessments in Federal securities? Clearly not! So in the case at bar, the tax is not imposed on the property of the savings bank, but on the corporation. The extent of the tax is measured in each year by the amount of its business, the extent to which it exercises its franchise, or in other words, by 'the total amount of its deposits.'

The case of Portland Bank v. Apthorp, which arose in the State of Massachusetts, in 1815, is akin to this. The Constitution of Massachusetts provides that the legislature 'may impose and levy proportionate and reasonable assessments, rates, and taxes upon all the inhabitants of, and estates lying within, the commonwealth; and also to impose and levy reasonable duties and excises.' With this provision in force, the State, in 1812, enacted that all its banks should pay, at times stated by the commonwealth, a tax of one-half of one per cent. on the amount of the original stock of said banks respectively actually paid in. The validity of the statute was called in question, as being repugnant to the constitutional provision for the taxation of property. The court held that the assessment was not a tax on the stock, but an excise duty on the franchise of the corporation, and as such warranted by the constitutional provision in respect to excise taxes.

But the recent case of The Commonwealth v. Five Cents Saving Bank is in every respect parallel. That case was thus: Massachusetts, in 1862, enacted:

'That every savings bank incorporated under the laws of this commonwealth, shall pay [at times specified by the statute] to the treasurer of the commonwealth, a tax on account of its depositors, of one-half of one per cent. per annum on the amount of its deposits, to be assessed, one-half of said annual tax on the average amount of its deposits for the six months preceding the first day of May, and the other on the average amount of its deposits for the six months preceding the first day of November.'

Payment of the tax under this statute was resisted on the same ground as it was resisted on in the former case. The court sustained the validity of the law for the same reasons as before. It says:

'It appears to us that the assessment imposed by the provisions of the statute under consideration, must be regarded as an excs e or duty on the privilege or franchise of the corporation, and not as a direct tax on money in its hands belonging to depositors. . . .. In the next place, the manner in which the amount of the assessment is to be ascertained clearly indicates that the tax is designed to be a corporate charge. It is not a tax levied on each deposit at a certain rate in proportion to its amount, but it is assessed on the amount of all the deposits in the bank, ascertained and fixed by the average sums which it has had in its hands during the six months preceding a specific day. It is the extent to which the corporation has exercised the franchise conferred on it by law, of receiving deposits during a certain period, that is made the basis on which to estimate the sum which is to be paid for the enjoyment of the privilege.'

But more than all, these views have been declared anew in that same State in Commonwealth v. Provident Institution for Savings, a case involving the issue now at bar.

The Bank Tax Case, so much relied on, has no application. There, this court had decided that an act of New York, passed in 1857, and laying a tax, did not include the Federal securities held by banks. Subsequently (A.D. 1863), the same State passed an act providing in terms for 'a valuation.' The law directed the mode of valuation. It was to be composed of two things. 1. The capital originally contributed. 2. The surplus on hand earned by that capital. In other words, the bank was not allowed to show that its capital was impaired. Accordingly this court, under the special circumstances of the case, on a question of construction of the act of 1863, in comparison with the act of 1857, and with full knowledge that the former act was passed for the purpose of avoiding the decision of this court, held that the act in question was intended to impose a tax on property, by a new and specified mode of valuation.

Reply:

1. When, under the authority given by the Federal Constitution to 'borrow money on the credit of the United States,' Congress puts that credit into the market, and by express enactment, as part of the contract of borrowing, declares that the securities held by 'corporations' shall be exempt from taxation by or under State authority; it exempts from taxation by or under that authority, the franchise or privilege which such corporations had of lending to the United States, upon the faith of such contract, and of the securities so to be issued. The power to tax the franchise or privilege of lending or investing in a given case, retards, impedes, and burdens the power to borrow in that case. The position of the other side is, that the States may tax against corporations existing under and in pursuance of their laws and enjoying their protection, the privilege or franchise of lending money to the United States. If 'the power to tax implies the power to destroy,' is not this holding that the States may prohibit all persons, natural and artificial, existing under and enjoying the protection of their laws, from lending to the United States?

Suppose the tax in this case be not nominally a tax upon property if it be a tax upon the power to lend, without the exercise of which the United States can not borrow-is it not necessarily a tax or burden upon 'the power to borrow?' Does it not come within the inhibition stated by this court in Weston v. Charleston: 'the right to tax the contract to any extent when made, must operate upon the power to borrow before it is exercised, and have a sensible influence upon the contract.' Is not the contract made by Congress, that this plaintiff (a 'corporation') shall not be taxed on account of these securities, violated, if the amount it has invested in them is included in the 'measure of taxable liability?' Do not the opposite counsel then assume too much in assuming that over a tax imposed on a franchise, however the quantum of the tax may be measured, limited, or ascertained, this court has no control.

We say that whatever be the source from which the power to lend to the United States is derived, it is alike under the protection of the paramount authority of the borrower, and is beyond the power of State nullification, either legislative or judicial.

2. Most if not all the positions set up and advocated by the defendant in error, were discussed on behalf of the Tax Commissioners, in The Bank Tax Case. It was then argued that the tax was not on the property of the bank, but on the corporation specifically. That the corporation was created by the State and ought to pay for the valuable franchise which it enjoyed. That the purpose of the act was to compel payment therefor. That the reference in the statute to 'a valuation equal to the amount of their capital stock,' &c., was only for the purpose of fixing the amount the corporation ought annually to pay for their franchise. That it had no regard to the actual capital owned by the bank, or to the securities, or to the value of the securities held by it. That the corporations being created by the State, and dependent upon the State for continued existence, could properly be compelled to aid in bearing the State burdens, as the price of their existence. But the court declared that the positions were not true.

3. The cases cited from the State courts of Massachusetts are not authority here. The case most relied on, the last of the three cited, is now here on error.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Society for Savings v. Coite


text: Talk:Society for Savings v. Coite

title: Talk:Society for Savings v. Coite


text:
Society for Savings v. Coite/Opinion of the Court

Savings banks, and societies for savings, in the State of Connecticut are required by the law of the State to pay annually to the State treasurer for the use of the State a sum equal to three-fourths of one per cent. on the total amount of deposits in such institution on the first day of July in each year. Preparatory to such an assessment the treasurer of every such institution is required, within the first ten days of July in each year, to make out under oath, and deliver to the comptroller of public accounts, a correct statement of the total amount of all such deposits on that day in their respective institutions. Payment of the tax is required to be made in semi-annual instalments, and the provision is that the tax, so levied, shall be in lieu of all other taxes on said institutions and the deposits therein.

Institutions called savings and building associations are also embraced in the same provision, but the clauses of the section having respect to such associations are omitted, as they are not in any view material in this investigation. They are stock associations of a novel and peculiar character, organized under a general law, and are quite distinct from savings banks and societies for savings, which are merely banks of deposit and loan, having no stock, and which were created under special charters from the legislature of the State.

Such institutions are banks of deposit, but they have no capital stock or stockholders, and are without any authority to make discounts or issue any circulating medium. Money in limited amounts may be deposited in such banks for safekeeping and be withdrawn at the pleasure of the owner, under such regulations as the charter and by-laws may prescribe. Authority is vested in the corporation by its charter to receive such deposits in trust for the owner, and to loan, use, and improve the same, and to apply and divide the net income and profits thereof in just proportions among the persons making such deposits, subject to certain reasonable deductions as therein provided.

Like other corporations they may choose their own officers and may admit new members; and the charter also provides that they may sue and be sued, that they may take and hold real estate,o ther than such as is conveyed as security or in payment of debts, to a limited amount, and may vest their funds in the stock of the State banks or other public stock of the State or of the United States, and may dispose of the same from time to time in such amounts as will meet the demands for the deposits made in such institution.

Whole amount of deposits in the defendant bank on the first day of July, 1863, was $4,758,273.37, of which the sum of $500,161 was then invested and held in securities of the United States, declared by act of Congress to be exempt from taxation, as appears by the return of the treasurer of the bank to the comptroller of public accounts and by the agreed statement in the record. Prompt payment of the first instalment of the tax, as required by law, was made by the bank, less the prescribed percentage upon the amount of the deposits invested in government securities, which they refused to pay, insisting that the tax to that extent was unauthorized and illegal. Due proceedings were accordingly instituted by the plaintiff, as the treasurer of the State, to recover of the bank the balance of the tax so withheld. Judgment in the court below was rendered for the plaintiff, and the defendants sued out this writ of error.

1. Payment is required to be made to the treasurer of the State, for the use of the State, of a sum equal to three-fourths of one per cent. on the total amount of deposits in such institution, on the first day of July in each year, and the question is whether, by the true construction of that provision, the assessment is properly to be regarded as a tax on property or as a tax on the privileges and franchises of the defendant corporation. Viewed as a tax on property the assessment, so far as respects the amount in controversy, would be illegal, as it is well settled by repeated decisions of this court that the States cannot tax the securities of the United States, declared by act of Congress to be exempt from taxation, for any purpose whatever. Congress has power to borrow money on the credit of the United States, and the people, by making the government supreme, have shielded its action in the exercise of that power from every species of unfriendly State legislation. Undoubtedly the States may tax all subjects over which the sovereign power of the State extends, but they are not authorized to tax the instruments of the Federal government nor the means employed by Congress to carry into effect the enumerated powers of the Constitution, or any other power vested by the fundamental law in the government of the United States. Such were the early doctrines of this court upon the subject, and those doctrines have been reaffirmed and enforced in the recent decisions of the court.

All subjects over which the sovereign power of a State extends are, as a general rule, proper objects of taxation, but the power of a State to tax does not extend to those means which are employed by Congress to carry into execution the powers conferred in the Federal Constitution.

Unquestionably the taxing power of the States is very comprehensive and pervading, but it is not without limits. State tax laws cannot restrain the action of the national government, nor can they abridge the operation of any law which Congress may constitutionally pass. They may extend to every object of value within the sovereignty of the State, but they cannot reach the administration of justice in the Federal courts, nor the collection of the public revenue, nor interfere with any constitutional regulation of commerce.

True reason for the rule is that the Constitution of the United States and the laws of Congress made in pursuance thereof are the supreme law of the land, and the express provision is that the judges in every State court shall be bound thereby, anythin in the constitution or laws of any State to the contrary notwithstanding.

2. None of these principles are denied by the original plaintiff. On the contrary, he admits that the States do not possess the power, by taxation or otherwise, to retard, impede, burden, or in any manner to control the operation of the constitutional laws passed by Congress to carry into execution the powers vested in the Federal government. Conceding all this, he still denies that the tax in this case is in any proper sense subject to any such objection, but insists that in any and every point of view it is a tax on the privileges and franchises of the defendant corporation, which was created by the legislature of the State, and which, by all the authorities, it is entirely competent for the State to tax, with the other property of the citizens, for the support of the State government.

Power to tax is granted for the benefit of all, and none have any right to complain if the power is fairly exercised and the proceeds are properly applied to discharge the obligations for which the taxes were imposed. Such a power resides in government as a part of itself, and need not be reserved when property of any description, or the right to use it in any manner, is granted to individuals or corporate bodies.

Unless exempted in terms which amount to a contract, the privileges and franchises of a private corporation are as much the legitimate subject of taxation as any other property of the citizens which is within the sovereign power of the State. Repeated decisions of this court have held, in respect to such corporations, that the taxing power of the State is never presumed to be relinquished, and consequently that it exists unless the intention to relinquish it is declared in clear and unambiguous terms.

Corporate franchises are legal estates vested in the corporation itself as soon as it is in esse. They are not mere naked powers granted to the corporation, but powers coupled with an interest which vest in the corporation upon the possession of its franchises, and whatever may be thought of the corporators, it cannot be denied that the corporation itself has a legal interest in such franchises.

Nothing can be more certain in legal decision than that the privileges and franchises of a private corporation, and all trades and avocations by which the citizens acquire a livelihood, may be taxed by a State for the support of the State government. Authority to that effect resides in the State independent of the Federal government, and is wholly unaffected by the fact that the corporation or individual has or has not made investment in Federal securities.

Private corporations engaged in their own business and pursuing their own interests according to their own will are as much subject to the taxing power of the State as individuals, and it cannot make any difference whether the tax is imposed upon their property, unless exempted by some paramount law, or the franchise of the corporation, as both are alike under the protection and within the control of the sovereign power.

Recurring to the language of the act, it is necessary to bear in mind that the defendant corporation belongs to a class of savings banks having deposits and assets, but which have no capital stock or stockholders. Such a corporation as a savings and building association, it seems, was unknown in that State at the time when the first act was passed requiring savings banks and savings associations to pay annually into the treasury of the State a sum equal to a prescribed percentage upon the total amount of deposits in their respective institutions ona given day in each year.

The original act was passed in 1851, more than ten years before the present securities of the United States were issued and put into the market. Charters were subsequently granted by the State to savings and building associations, which are stock companies, and the Tax Act of 1857 was so modified as to include the stock of those corporations.

Savings and building associations, as they are called, are also included in the act under consideration as well as savings banks, and societies for savings. Hence it is that stock as well as deposits is mentioned in the provision, but it is clear that the word stock applies solely to the former class of corporations, and not to the latter, as the latter have not, and never had any capital stock.

Amount of the tax required to be paid by the defendant corporation is a sum equal to three-fourths of one per cent. on the total amount of deposits in the institution on the first day of July in each year. Reference is evidently made to the total amount of deposits on the day named, not as the subject-matter for assessment, but as the basis for computing the tax required to be paid by the corporation defendants. They enjoy important privileges, and it is just that they should contribute to the public burdens.

Views of the defendants are, that the sums required to be paid to the treasury of the State, is a tax on the assets of the institution, but there is not a word in the provision which gives any satisfactory support to that proposition. Different modes of taxation are adopted in different States, and even in the same States at different periods of their history. Fixed sums are in some instances required to be annually paid into the treasury of the State, and in others a prescribed percentage is levied on the stock, assets, or property owned or held by the corporation, while in others the sum required to be paid is left indefinite, to be ascertained in some mode by the amount of business which the corporation shall transact within a defined period.

Experience shows that the latter mode is better calculated to effect justice among the corporations required to contribute to the public burdens than any other which has been devised, as its tendency is to graduate the required contribution to the value of the privileges granted, and to the extent of their exercise. Existence of the power is beyond doubt, and it rests in the discretion of the legislature whether they will levy a fixed sum, or if not, to determine in what manner the amount shall be ascertained.

Irregularity of taxation is a fruitful source of complaint, and it is but right to say that the mode prescribed in this provision, of computing the sum to be paid, is well calculated to distribute the burdens in equal and just proportions. Arbitrary sums are almost necessarily unequal, as the legislature cannot foresee the varying circumstances of the future which may surround the business of a corporation, and which may abridge or augment its receipts and increase or diminish its profits.

Satisfactory inducements may be suggested as having prompted the mode of taxation adopted by the legislature without imputing any such motives as are supposed by the defendants. Common justice requires that taxation, as far as possible, should be equal, and the language of the provision in this case supports no other inference than that the legislature in framing it was governed solely by that consideration.

Deposits are not capital stock in any point of view, and they are not even investments in the sense in which the word is employed in that provision. Where the deposit is general and there is no special agreement proved, it is doubtless true that the title of the money deposited in a bank passes to the bank, and the bank becomes liable to the depositor for the amount as a debt. Regarded entirely as a transaction between the bank andt he depositor, it would be correct to say that the money deposited became the assets of the bank, and it may also be conceded that all such assets, unless invested in property or securities exempted from taxation, might be required to contribute to the support of the State government as the property of the bank, but it is obvious that the word deposits, as employed in that provision, is not used by the legislature in any such sense. Whenever the law imposes a tax on property in that State, it makes provision that the value of the property shall be ascertained by appraisement, and the requirement is that the tax shall be assessed on the appraised value of the property. Taxpayers are required to furnish to the assessors of the town in which they reside a schedule, under oath, of all their taxable property, and it is made the duty of the assessors to appraise the same, and enter the value thereof on the appropriate lists. Municipal corporations as well as the State may levy taxes on the taxable property of the citizens, but all taxes, State and municipal, are collected by the collectors of the towns. Joint stock companies, and all chartered corporations, except banking, insurance, railroad, and savings corporations, &c., are subject to these regulations.

Attention to those regulations, even for a moment, will show that none of them have any application to the assessment described in the provision under consideration. Instead of a list furnished to the assessors of the town the requirement is that a return shall be made to the comptroller of public accounts, and the assessment as required to be made is wholly irrespective of value or of profit or loss. Town collectors have nothing to do in collecting the amount, and the tax, when paid, is in lieu of all other taxes on the institution. Other corporations in the State, with certain exceptions, are taxed upon a valuation 'in the same manner and to the same extent as if such property was owned by an individual resident in this State.' But the corporation defendants are only required to pay to the treasurer of the State a sum equal to three-fourths of one per cent. on the total amount of their deposits on the first day of July in each year. They pay nothing for municipal and local taxes, either to the cities, towns, or districts in which they are located, and they are expressly exempted from all other taxation. Much weight is also due to the fact that the taxes are imposed directly by the legislature, without regard to investment or value, and if the amount was fixed by law, all, we think, would agree that the assessment was a tax upon the corporation, and not upon its property as contended by the defendants.

Neither investment nor the value of the deposits being mentioned in the provision, it seems clear that they are unimportant in this investigation, as the amount of the tax is the same whether the deposits, on the day named, have or have not been invested, and whether they are above the par value or of no value at all. Moneys received constitute deposits in the sense in which the word is used in that provision, and the total amount of such deposits on that day furnishes the true basis of computation, wholly irrespective of their market value or of the disposition made of the funds by the defendants.

Looking at the case in any point of view, we are of the opinion that there is no error in the record.

JUDGMENT AFFIRMED WITH COSTS.

The CHIEF JUSTICE, GRIER, J., and MILLER, J., dissented; on the ground that the tax was a tax on the property and not upon the franchises and privileges of the plaintiff in error.

[See the next case.-REP.]


text: Talk:Society for Savings v. Coite/Opinion of the Court


text: Provident Institution v. Massachusetts

title: Provident Institution v. Massachusetts


text: Talk:Provident Institution v. Massachusetts