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Nudd v. Burrows Assignee/Opinion of the Court

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

This was an action brought by the defendant in error, as the assignee of one Norton Emmons, a bankrupt, against the plaintiffs in error, to recover the net proceeds of about eleven carloads of live-stock and dressed hogs shipped by the bankrupt to the plaintiffs in error, and one thousand dollars in money paid by him to them, which proceeds and money they had applied to the payment of his indebtedness to them, in fraud, as contended by the assignee, of the provisions of the act to establish a uniform system of bankruptcy throughout the United States, approved March 2, 1867. Judgment was rendered in favor of the assignee.

A bill of exceptions was allowed in the court below, which is in substance as follows:--

The plaintiff introduced evidence tending to show that Emmons had for a number of years been engaged in the stock business in Wisconsin, purchasing cattle, sheep, and hogs, and shipping them chiefly, but not always, to the defendants at Chicago, for sale upon commission; that about the first day of July, 1870, Emmons associated with him Richard B. Chandler and James W. Chandler, and that said parties thenceforth, under the firm name of Emmons & Chandler, continued the business, also shipping chiefly to the defendants the stock which they bought; that about the thirteenth day of December, 1870, said firm was indebted to the defendants between $4,000 and $5,000; that Emmons was then insolvent; that it was then arranged between the defendants, said Emmons and said Richard, B. and James W. Chandler, that said firm of Emmons & Chandler should dissolve; that James W. Chandler had previously gone out; that Emmons should continue the business until the first of the following January, and should at the close of the year buy a large amount of stock upon credit, which should be shipped to and sold by the defendants, and the proceeds applied to pay his indebtedness to them; that the firm of Emmons & Chandler did dissolve about the thirteenth day of December; that Emmons did in the first four days of the following January, in his own name and on his own account, ship to the defendants nine car-loads of cattle, sheep, and hogs, which were sold by them, and the proceeds held to pay the said indebtedness; that upon the sixth day of January, 1871, Emmons paid to the defendants $1,000 in money; that the net proceeds of said last shipment, so held by them, was $7,553.27; that a large part of the stock which went into the last shipment was paid for by drafts drawn by Emmons on the defendants, which were not accepted or paid by them; that the amount of drafts so drawn and unpaid was about $4,000; that a petition in bankruptcy was filed against Emmons in the District Court of the United States for the Eastern District of Wisconsin, on the eighteenth day of February, A.D. 1871, on which petition he was duly adjudicated a bankrupt; that the defendants, at the time of making the aforesaid arrangement,-to wit, on or about the thirteenth day of December, 1870,-had reasonable cause to believe said Emmons was insolvent.

As tending to show some of said matters, the plaintiff introduced in evidence a document as follows:--

'CHICAGO, Dec. 13, 1870.

'To whom it may concern:--

'This certifies that whereas Mr. R. B. Chandler has been a joint partner with Norton Emmons from the first day of July, 1870, to date, we release him from all further obligations that may be transacted between us and Norton Emmons, and look to Norton Emmons only for balance of present account and all business that may hereafter be transacted with him.

'The above release of R. B. Chandler is made by the consent of all parties.

'I. P. NUDD & Co.'

Also the ledger of the defendants, showing the account of Emmons and of the firm of Emmons & Chandler with the defendants.

The last item upon the account of Emmons & Chandler is as follows:--

'1870, Dec. 13. By balance due Nudd, $1,617.43.'

Under which is written the following:--

'The above balance we transfer to the individual account of Norton Emmons, by request of both parties.'

Immediately after and upon the same ledger page is the following, showing all the entries made subsequent to said Dec. 13, 1870:--

DR. NORTON EMMONS. CR.

1870.     1870.

Dec. 13 To balance due Nudd,

and transferred from

the ac. of Emmons &

Chandler $1,617 43  Dec. 24    By net proceeds  $1,140

" 13  To paid draft  1,500 00  " 24    " " "  4,767

" 14  "    "   "  1,500 00  " 3  " " dressed hogs  107

" 15  "    "   "  1,500 00  " 28  " " proceeds  651

" 16  "    "  E. Peterson  750 00  " 28  " "  "  766

" 21  "    "  draft  187 00  " 28  " " "  1,929

" 22  "    "   "  1,500 00  " 29  " "  "  765

" 23  "    "   "  3,500 00  " 20  E. & C., dressed hogs  1,396

" 23  "    "   "  200 00  " 29  E. & C., dressed hogs  863

" 23  "    "   "  500 00  Jan. 7  " "  " "  1,444

" 24  "    "  S. W. Montague  55 72    " 6  " "  cash rec'd   1,000

" 24  "    "  draft  1,000 00  " 10 "  net proceeds  4,002

" 24  "    "   "  400 00  " 10  " " dr. h.  1,174

" 16  "    "  Chandler  40 00  " 10    " " dr. h.  1,268

50-

" 16  "    "  Peterson  35

" 16  "    "  Johnson  5

" 3   "    "  protest fees  10

" 27  "    "  draft  300

" 28  "    "   "  600

" 31  "    "   "  4,000

" 31  "    "   "  1,000

" 31  "    "   "  750

To certain questions put to the witnesses, calling for the declarations and statements of Emmons at and before the consignment was made, the defendants objected, because said declarations, not being made in the presence of either of the defendants, nor brought to the knowledge of either, could not be used to prejudice them; which objections being overruled by the court, and the answers admitted, the defendants then and there excepted.

The defendants introduced evidence tending to show that they acted as the factors of said Emmons prior to the time of his partnership with Richard B. and James W. Chandler, and for said firm of Emmons & Chandler after that time and until the closing of the account, Jan. 10, 1871; that during all this time it had been the usual course of business and the regular practice of the defendants to advance money to these parties to buy stock, relying upon the consignments to be made to them to cover such advances; that the defendants continued to make such advances after the thirteenth day of December, 1870, in the same manner as before, receiving consignments, and selling the same to cover their previous advances; that the indebtedness to the defendants at the time of the last shipments of stock was for such advances; that these advances were made by payment of drafts upon the defendants; that such drafts were drawn in the name of Emmons, as well after as before the formation of the copartnership of Emmons & Chandler; that the bank business of the firm of Emmons & Chandler was done at the First National Bank of Madison, Wis., in the name of Emmons alone, as well after as before the formation of said copartnership, and that the drafts upon the defendants usually came through said bank; that their ledger, introduced in evidence, correctly shows the sums advanced by them upon drafts since the 13th December, 1870; that such advances were made in good faith, and in the usual and ordinary course of business, and relying upon consignments to be made to the defendants to cover such advances; that there was no such arrangement for the payment of the indebtedness to the defendants made about the 13th of December, 1870, or at any other time, between the defendants, or either of them, and said Emmons, Richard B. Chandler, and James W. Chandler, or either of them, as claimed by the plaintiff; that said firm of Emmons & Chandler did not dissolve upon or about the 13th December, 1870; that said James W. Chandler did not go out before that time, but that certainly James W. Chandler, and probably Richard B. Chandler, continued to be interested in business with said Emmons subsequently to that time, and continued so interested till the time of the closing of the account with defendants, Jan. 10, 1871; that the transfer of the account on the book of the defendants from the name of Emmons & Chandler to that of Norton Emmons was made at the request of said Emmons and the Chandlers; that the reason given to defendants for such request was, that all drafts were drawn in the name of Emmons alone; their bank business of Madison, Wis., was done in his name, and they desired their account on the defendants' books to correspond; that defendants had no idea that the firm of Emmons & Chandler was dissolved, or that their dealings with said firm were thereby brought to a close, or that, by making such a change, they released either of the Chandlers, but regarded the transfer simply as a change in the manner of keeping their books; that the receipt or release to Richard B. Chandler was not given to him until about the middle of January, 1871, after the account with the defendants was closed; that it was antedated at the request of said Richard B. Chandler; that it was given by the defendants unhesitatingly, and with but little inquiry into the reasons of Chandler for wishing the same antedated, because, at the time it was actually given, their account was paid in full; that business was conducted in the same manner subsequently to the 13th December, 1870, as before that time, and the defendants supposed they were doing business with the firm of Emmons & Chandler up to the time the account was closed, and, until such time, knew of nothing from which they could infer the dissolution of said firm; that there was nothing unusual about the size or quality of the last shipments, and the same were not, nor was any part of them, sold by the defendants under any arrangement with said Emmons and the Chandlers, or either of them, that the proceeds should be used to close up the account with the defendants; that shipments continued to be made after Dec. 13, 1870, and up to the time of the closing of the account, with one or two exceptions, in the name of Emmons & Chandler, and not in the name and on account of Emmons alone; that Richard B. Chandler was worth $15,000 or $20,000; that James W. Chandler, though of small means, was solvent; that if the copartnership of Emmons & Chandler continued subsequently to the 13th December, 1870, and up to the time of closing the account, said firm was not insolvent; that the defendants did not know at any time prior to the closing of said account that said Emmons was insolvent, and that they had no reasonable cause to believe that he was. A witness for the defendants testified that the partnership between Emmons, Richard B. Chandler, and James W. Chandler, continued until some time in January of 1871. To a question in this connection as to the declarations of Richard B. Chandler after the 13th of December, respecting his being interested in the firm carried on in the name of Norton Emmons, the plaintiff objected; and, the objection being sustained by the court, the defendants duly excepted.

A witness for the defendants having testified that James W. Chandler frequently came to Chicago after Dec. 13, 1870, in charge of the consignments of stock, the defendants asked what if any thing was said respecting the sale or prices at which stock should be sold.

To which, and to the admission of any declarations of said Chandler, plaintiff objected. The court sustained the objection, and refused to admit the evidence; and the defendants excepted.

Before the charge to the jury, and in apt time, defendants' counsel requested that the court would in all respects in its charge be governed by and follow the practice of courts of record of the State of Illinois and the laws of the State applying to such matters; but the court refused so to do, and defendants' counsel then and there excepted.

Defendants' counsel then prepared and handed to the court the following instructions in writing, requesting that they be given to the jury, with permission to take them to their room:--

'First, If the jury believe, from the evidence, that either R. B. or J. W. Chandler was a partner with Norton Emmons subsequent to the 13th of December, 1870, and remained so until the settlement of the account with the defendants, and, as such partner or partners, was or were interested in the dealings with the defendants subsequent to that date, they are instructed, that, in such case, the plaintiff cannot maintain this suit.

'Second, If the jury believe from the evidence that the defendants advanced money to Norton Emmons to buy stock to be consigned to them, relying upon those consignments for the repayment of those advances, they are instructed, that, in such a case, the defendants would have a lien upon such consignments for such advances as soon as the same came to their possession, even if the defendants knew at the time of making such advances that said Emmons was insolvent.'

The court gave the first instruction, but added to and commented upon it as follows:--

'I have charged you, as requested by the defendants' counsel, that if this debt on the part of the defendants was against Emmons and the Chandlers, or either of them, the plaintiff cannot recover. . . . On the main question, which covers most of the property, I shall not occupy much time. The evidence to establish it rests in writing, under the defendants' own signature. By the defendants' books, it appears that the partnership account of Emmons & Co. was settled, and the balance transferred upon their books to the individual account of Norton Emmons on the 13th of December; that after that it was kept with him alone, and the defendants did not pay any amount to the Chandlers without an order from Emmons; and, in addition to this, they signed a receipt, release, or declaration, as follows:--

"CHICAGO, Dec. 13, 1870.

"To whom it may concern:--

"This certifies that whereas Mr. R. B. Chandler has been a joint partner with Norton Emmons from the first day of July, 1870, to date, we release him from any further obligation that may be transacted between us and Norton Emmons, and look to Norton Emmons only for balance of present account and all business that may hereafter be transacted with him.

"The above release of R. B. Chandler is made by the consent of all parties.'

'That would seem to settle all controversy upon this question. That matter having been so carefully reduced to writing by the defendants at the time, or soon after, while the matter was fresh in their memory, it would seem most remarkable to allow them now to swear it away. The book and the release show that they agreed to deal thereafter with Emmons, and released Chandler altogether, and did so on their books. So far as Chandler and Emmons are concerned, it was an individual matter with them; but as the assignee represents Emmons's right, and is entitled to the benefits under his contract, as to him, it would be very remarkable that they could, in view of these entries and the statement or release, be allowed to set up that he was still a party in interest as to that. Written testimony is much stronger than parol. It is like a disputed case in regard to the boundaries of real estate in which a government boundary is discovered. It generally disposes of the dispute, and outweighs, ordinarily, any amount of verbal testimony depending upon the recollection of witnesses, particularly interested parties and witnesses.

'Nudd says he drew the release; but he says he did not draw it until in January, after that date. The time when it was drawn is quite immaterial. It declares the fact that they did business with Emmons alone; and, if that is so, that disposes of the defence on that ground. There is some testimony that the receipt was given to Chandler on the 13th. Emmons says he heard him say that he had a receipt when he returned home.

'If you are satisfied that the receipt was made at the time it bears date, or afterwards, with a view to furnish evidence to release Chandler from the 13th, and as stating the true condition of their affairs, I hardly think that you will be justified in finding that the transaction between the parties was not as stated in the books of the defendants and this release or declaration; and it would be unsafe to reject written evidence of that character upon the evidence of interested parties.'

To all of which modifications and comments, and to that portion of the charge, save as requested by them, the defendants then and there excepted.

The court gave the second instruction asked by the defendants, but modified and commented upon it as follows:--

'The books of account of defendants read in evidence, together with the testimony, tend to show that the defendants had been advancing the bankrupt money from time to time after the thirteenth day of December, 1870; and that on the thirty-first day of December, 1870, the time of the last item of account, the bankrupt was owing to them the sum of $8,553.87. This money it is claimed was advanced by defendants, who were stock-brokers and general commission-men in this city, engaged in the business of receiving stock, cattle, and hogs, making advances thereon, and selling for the benefit of shippers. They state that their ordinary mode of doing business was not to pay drafts drawn by their country customers or consignors until after the receipt of stock, but in this case they permitted the bankrupt to draw and obtain the money to use in buying stock. When that stock was received and sold, they credited his account with the proceeds; and such appears to have been the way they dealt with the bankrupt, so that he had overdrawn his shipments on the first day of January in the sum of $8,553.87, above stated. This being the mode of business pursued, as I understand to be stated, I think it would constitute the relation of debtor and creditor between the bankrupt and the defendants; that he, in law and fact, was owing on the first of January to the amount above stated, which was unsecured at that time; that the advances did not create a lien on such stock purchased with the money advanced or loaned for that purpose until the bankrupt had actually shipped them to the defendant.

'As I have charged you, at the request of the defendants' counsel, that the lien of the defendants did not attach until the actual receipt of the stock by the defendants, such being the law, the subsequent receipt of stock and appropriation of the avails to the payment of the debts due them would be void, as a preferential payment, provided the other facts hereinafter mentioned are found to have existed; by which I mean to be understood, that, if the transactions between the parties were as I have before stated them, they would constitute the relation of debtor and creditor, and bring their debt under the provisions of the Bankrupt Act the same as any other debt.'

To all of which defendants' counsel excepted.

The court having charged the jury upon the facts, notwithstanding the request that it would follow and be governed by the laws of the State of Illinois and the practice of her courts of record, defendants' counsel excepted thereto, as well as to its refusal to permit the jury to take to their room the written instructions given by the court, or the account-book, freight-bills, and other papers introduced in evidence, other than the depositions.

Mr. W. H. Swift and Mr. W. C. Grant, for plaintiffs in error, filed printed briefs, from which the following points are taken: 1. The declarations of J. W. Chandler should have been admitted. Phil. on Ev., vol. i. 498; Cady v. Shepherd, 11 Pick. 407; Pool v. Bridges, 4 id. 378; Richardson v. Cato, 10 Humph. 138; 1 Greenl. Ev., sect. 181.

2. The court erred in not following the practice of the courts of Illinois, and the laws of Illinois applying to such matters. Rev. Stat. U.S., sect. 914.

'The court, in charging the jury, shall only instruct as to the law of the case.' 2 Gross's Stat. Ill., ch. 83, sect. 139.

'Instructions shall be taken by the jury in their retirement, and returned by them with their verdict.' Id., sect. 142.

3. The court erred in the instruction given upon the question of copartnership.

This question of the continuance of the partnership is material. If a preference is given by a firm of which only one member goes into bankruptcy, such preference cannot be avoided by the assignee of the bankrupt partner. Forsaith v. Merritt, 3 N. B. 48; In re Shepherd, id. 172.

4. The court erred in its instruction upon the question of a factor's lien.

The bankrupt estate is in no worse condition, if the defendants are allowed to retain the proceeds of the consignments, than it would have been if the defendants had never made the advances in reliance upon these consignments. Anderson v. Clark, 2 Bing. 20; Harle v. Smith, 1 B. & P. 563; 3 Pars. on Contr. 260; Foxcroft v. Devonshire, 2 Burr. 931.

Messrs. H. W. Tenney, H. M. Lewis, and J. C. McKenney, contra.

1. As to the declarations of the bankrupt.

When a conspiracy is formed to do an illegal act, or to commit a fraud, the acts or declarations of any of the conspirators may be given in evidence. 1 Greenl., sect. 111; American Fur Co. v. United States, 2 Pet. 358.

2. The declarations of R. B. Chandler were properly excluded. He could have been called as a witness.

3. As to the objection that the court did not follow the practice of the courts of Illinois.

The court did not instruct the jury as to the facts, but only as to the law.

4. As to the lien claimed by the defendants below as factors or brokers. The indebtedness of the bankrupt to the defendants below, Jan. 1, 1871, stood upon the same footing as any other unsecured creditor. Arnold v. Maynard, 2 Story, C. C. 349; Wager et al. v. Hall, 16 Wall. 584; Story on Ag., sect. 377; Russel on Factors, 207 (Law Lib., vol. xlvi.).

The lien of a factor does not attach when the possession comes to him wrongfully or by fraud. 2 Kent, Com. 638; Larupriere v. Pasley, 2 Term R. 485; Story on Ag., sects. 360, 361.

MR. JUSTICE SWAYNE delivered the opinion of the court.

The first of the assignments of error presents the question, whether the court erred in admitting in evidence the declarations of the bankrupt.

The suit was brought by the assignee to recover against Nudd and Noe for money and property which they had received from Emmons. They had applied the money and the proceeds of the property in payment of a debt which Emmons owed them. The property was live-stock, consisting of cattle, sheep, and hogs. The net proceeds were $7,553.27. The money was $1,000. The aggregate amount in controversy was $8,553.27. The assignee claimed that the stock was bought largely upon credit; that Emmons was at the time hopelessly insolvent; that Nudd and Noe knew it; and that the transaction was the fruit of a conspiracy between the parties, having for its object the giving to Nudd and Noe by Emmons a fraudulent preference over his other creditors.

Nudd and Noe received the property and money in January, 1871. The petition in bankruptcy against Emmons was filed in the following month of February. The action is founded on the thirty-fifth and thirty-ninth sections of the Bankrupt Act. The transaction was within four months before the filing of the petition. Upon the trial, the plaintiff proposed to prove what Emmons had said touching the purchase of the stock and the payment of the money to the defendants.

To each and all of the questions asked with this view the counsel for the defendants objected, 'on the ground that they called for the declarations of Emmons not made in the presence of either of the defendants, or brought to their knowledge.'

Was this ground of objection well taken?

The counsel for the defendant in error insists that they were competent as the declarations of a co-conspirator.

In general, the rules of evidence are the same in civil and criminal cases. United States v. Gooding, 12 Wheat. 469.

'Where two or more persons are associated for the same illegal purpose, any act or declaration of one of the parties in reference to the common object, and forming a part of the res gestae, may be given in evidence.' American Fur Company v. United States, 2 Pet. 365.

The bill of exceptions does not purport to give all the evidence. What proof had been given of the alleged concert and conspiracy on the part of the defendants when the declarations of Emmons were offered to be proved does not appear.

It is to be presumed it was sufficient to lay the proper foundation as to them for the introduction of the evidence. The declarations were competent to prove the whole case as against Emmons. 1 Taylor's Ev. 486.

Whether the declarations were made in the presence or brought to the knowledge of either of the defendants is immaterial. The objection as taken was confined to this point; and this is the only aspect in which it is necessary to consider it. If it were intended to rest it upon any other ground, it should have been so presented; and the court advised accordingly.

In the early part of December, 1870, Emmons and James W. and Richard Chandler were partners, under the name of Emmons & Chandler. The plaintiff claimed that the partnership was dissolved on the 13th of that month. The defendants insisted that it continued down to the close of the business in question, and that the transaction was not with Emmons alone, but with the firm of Emmons & Chandler.

They offered in evidence the declarations of the Chandlers touching the points in controversy. The court excluded the testimony, and the defendants excepted.

This ruling was correct. The declarations of a party may be evidence against him; but, except under circumstances which had no existence in this case, they cannot be received in his favor. The Chandlers might have been called as witnesses. Their declarations were merely hearsay, and, as regards this case, were res inter alios acta.

It appears by the bill of exceptions, that, in charging the jury, the judge commented upon the evidence.

Questions of law are to be determined by the court; questions of fact, by the jury. The authority of the jury as to the latter is as absolute as the authority of the court with respect to the former.

No question of fact must be withdrawn from the determination of those whose function it is to decide such issues.

The line which separates the two provinces must not be overlooked by the court. Care must be taken that the jury is not misled into the belief that they are alike bound by the views expressed upon the evidence and the instructions given as to the law. They must distinctly understand that what is said as to the facts is only advisory, and in no wise intended to fetter the exercise finally of their own independent judgment. Within these limitations, it is the right and duty of the court to aid them by recalling the testimony to their recollection, by collating its details, by suggesting grounds of preference where there is contradiction, by directing their attention to the most important facts, by eliminating the true points of inquiry, by resolving the evidence, however complicated, into its simplest elements, and by showing the bearing of its several parts and their combined effect, stripped of every consideration which might otherwise mislead or confuse them. How this duty shall be performed depends in every case upon the discretion of the judge. There is none more important resting upon those who preside at jury-trials. Constituted as juries are, it is frequently impossible for them to discharge their function wisely and well without this aid. In such cases, chance, mistake, or caprice, may determine the result.

We do not think the remarks and suggestions of the learned judge in this case exceeded the proper license.

They did not go beyond the verge of what has been often sanctioned by this and other courts. Games et al. v. Stiles, 14 Pet. 337; United States v. Fourteen Packages, Gilp. 254; 1 Taylor's Ev. 35.

The modifications of the two instructions asked for by the defendants were, we think, correct in point of law. Only the second one calls for any remarks.

There was proof tending to show that on the 13th of December, 1870, the defendants adjusted their account with Emmons & Chandler, and, by the agreement of all the parties, transferred the amount due to themselves to the separate account of Emmons, and gave the Chandlers a release. The balance found due, and so transferred, was the same with the amount in controversy, as before stated. The business of the defendants was the selling of live-stock upon commission. The balance accrued in the course of their previous business in this way with the firm of Emmons & Chandler. They claimed a factor's lien upon the money and proceeds of the property in question for the satisfaction of this demand.

The court charged, that, as the lien could not attach until the money and proceeds were received by the defendants, if the previous transactions created the relation of debtor and creditors between them and Emmons, and they could have sued Emmons for the amount, 'this would bring the debt under the Bankrupt Act the same as any other debt.'

This must necessarily be so. The lien attempted to be set up was repelled by the circumstances referred to. Such a claim occupies no better ground than would a mortgage, pledge, or power to confess judgment, given at the same time and for the same purpose; otherwise every factor might be thus secured when his debtor was in the article of bankruptcy, and this class of creditors would have a monopoly of the preferences so given. Such preference, to whomsoever given, is forbidden by the Bankrupt Law, and is a fraud upon it. Fraud destroys the validity of every thing into which it enters. It affects fatally even the most solemn judgments and decrees. Bankrupt Act, sect. 35; 1 Story's Eq., sect. 252; Freeman on Judgments, sect. 486.

Whenever fraud is perpetrated by one party to the injury of another, the offender is liable. Paisley v. Freeman, 3 T. R. 51; Benton v. Pratt, 2 Wend. 385. Here the jury have found the facts charged by the assignee. This is conclusive against the defendants with respect to any claim upon the fund.

The last assignment relates to alleged errors of the court in matters of practice. Before the judge began his charge to the jury, the counsel for the defendants requested him, in giving it, to conform in all things to the practice of the courts of record and the law of the State. This he refused to do. He also refused to allow the jury to take with them to their room the written instructions he had given them, and likewise the accountbook, bills of lading, and additional papers, which had been introduced in evidence, other than the depositions. To each of these refusals the defendants excepted.

The Practice Act of Illinois provides that the court, in charging the jury, shall instruct them only as to the law of the case; that no instruction shall be given, unless reduced to writing; that instructions asked shall not be modified by the court, except in writing; that the instructions shall be taken by the jury in their retirement, and returned with the verdict; and that papers read in evidence, other than depositions, may be carried from the bar by the jury. 1 Gross's Stat. 289.

It is declared by the act of Congress of June 1, 1872 (17 Stat. 197, sect. 5), 'that the practice, pleadings, and forms and modes of proceeding, in civil causes, other than equity and admiralty causes, in the circuit and district courts, shall conform as near as may be' to the same things 'existing at the time in the courts of record of the State within which such circuit and district courts are held.'

The purpose of the provision is apparent upon its face. No analysis is necessary to reach it. It was to bring about uniformity in the law of procedure in the Federal and State courts of the same locality. It had its origin in the code-enactments of many of the States. While in the Federal tribunals the common-law pleadings, forms, and practice were adhered to, in the State courts of the same district the simpler forms of the local code prevailed. This involved the necessity on the part of the bar of studying two distinct systems of remedial law, and of practising according to the wholly dissimilar requirements of both. The inconvenience of such a state of things is obvious. The evil was a serious one. It was the aim of the provision in question to remove it. This was done by bringing about the conformity in the courts of the United States which it prescribes. The remedy was complete. The personal administration by the judge of his duties while sitting upon the bench was not complained of. No one objected, or sought a remedy in that direction.

We see nothing in the act to warrant the conclusion that it was intended to have such an application.

If the proposition of the counsel for the plaintiff in error be correct, the powers of the judge, as defined by the common law, were largely trenched upon.

A statute claimed to work this effect must be strictly construed. But no severity of construction is necessary to harmonize the language employed with the view we have expressed. The identity required is to be in 'the practice, pleadings, and forms and modes of proceeding.' The personal conduct and administration of the judge in the discharge of his separate functions is, in our judgment, neither practice, pleading, nor a form nor mode of proceeding within the meaning of those terms as found in the context. The subject of these exceptions is, therefore, not within the act as we understand it.

There are certain powers inherent in the judicial office. How far the legislative department of the government can impair them, or dictate the manner of their exercise, are interesting questions; but it is unnecessary in this case to consider them. Houston v. Williams, 13 Cal. 24.

Judgment affirmed.


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United States v. McKee

APPEAL from the Court of Claims.

The court below allowed the claim, with interest thereon from the time it accrued, and, among other facts, found that 'no rules and regulations have heretofore been adopted by the United States in the settlement of like cases, except such as may be inferred from the policy of Congress when passing private acts for the relief of various persons. When passing such private acts, Congress has allowed interest upon the claim up to the time that the relief was granted.'

The facts are stated in the opinion of the court.

The case was submitted on printed arguments by Mr. Solicitor-General Phillips for the United States, and by Mr. William Penn Clarke, for the claimants.

Only so much of their argument as relates to the allowance of interest can be here given.

The Solicitor-General submitted, that, so far as he knew, this was the first case in which interest had been allowed for so long a period. The court below had allowed it from March the 20th, 1779, to the day when judgment was entered, although this court, in Gordon v. United States, had expressly declared that it did not sanction the allowance of interest on claims against the government. The right of the claimants to interest must turn entirely upon the wording of the act of 1872 referring this case to the Court of Claims, inasmuch as, under the general law, that court has no authority to allow interest in such a case. Rev. Stat., sect. 1091. Undoubtedly Congress has the power to order that interest shall be paid; but no such order was given by that act. The words relied on by the other side are, 'And, in making such adjustment and settlement, the said court shall be governed by the rules and regulations heretofore adopted by the United States in the settlement of like cases; giving proper consideration to official acts, if any have heretofore been had in connection with this claim, and without regard to the Statute of Limitations.' Referring to the specific finding of the Court of Claims upon this point, it seems,--

First, That 'rules and regulations,' in the above connection, refer to the action of the departments under general principles governing 'like cases,' and not to the exceptional dealing evidenced by special acts of Congress. Prior legislation for special cases is not included in these words. They are well known to refer to the quasi legislation by heads of departments, &c., in reference to matters ordinarily coming before them.

Second, Also that the court will sua sponte inform itself of the action of the United States by rules and regulations in such cases.

Third, Therefore that the above finding of the Court of Claims appears to be inadvertent, inasmuch as it can be seen that 'rules and regulations' have been heretofore adopted by the United States in the settlement of like cases, and that these rules exclude interest, unless given in terms by an act of Congress.

The Solicitor-General inserted in his brief the following note from the First Comptroller of the Treasury:--

'FIRST COMPTROLLER'S OFFICE, NOV. 13, 1875.

'SIR,-In answer to your inquiry, I have to state, that in the adjustment and settlement of claims for services rendered by officers of the United States during the Revolutionary war, or for supplies furnished the troops in that war, the rules and regulations heretofore adopted by the United States prohibit the payment of interest, unless authority to pay is expressly given by act of Congress in special cases.

'Executive document No. 42, vol. ii., second session Twenty-fifth Congress, contains a synopsis of the legislation of Congress on Revolutionary claims up to 1837, showing the cases in which interest has and has not been allowed.

'Very respectfully,

'R. W. TAYLOR, Comptroller.

'Hon. S. F. PHILLIPS, Solicitor-General.'

And referred to the opinion of Mr. Whittlesey when first comptroller in regard to a claim for interest upon a Revolutionary debt preferred by the heirs of one John Campbell:--

'The rules of settlement of the treasury do not permit the allowance of interest, except where it is specially provided for in cases of contracts, or expressly authorized by law. Consequently, the item of interest charged by said claimant has been deemed inadmissible.'The act which made it the duty of the Treasury Department to audit and adjust that claim required that this should be done upon principles of equity and justice. Upon this point Mr. Whittlesey says,--

'Suppose the act had directed the account to be settled and paid, and had said nothing more: interest could not have been computed without violating the principles which have controlled the settlement of accounts and claims from the commencement of the government; and, as I have said before, the discretion to settle the claim on the principles of 'justice and equity' does not confer the power to allow interest.' P. 53.

title: United States v. McKee


text: Talk:United States v. McKee

title: Talk:United States v. McKee


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

Mr. Whittlesey, in confirmation of his opinion, cites a former decision upon the same question by Richard Harrison, first auditor, and Joseph Anderson, first comptroller; also an opinion of Mr. Hagner, first auditor for many years after the organization of the government, against the allowance of interest upon Revolutionary claims, except where specially given by an act of Congress. Ex. Doc. H. R., No. 260, First Sess. 26th Congress, vol. vii.

As the 'rules and regulations' of the United States refuse interest unless specially given by some act of Congress, and as the present act refers the question of interest entirely to the 'rules and regulations,' and otherwise is silent thereupon, it seems that the claimants are, at all events, entitled to no interest.

Mr. Clarke, contra.

By the following acts of Congress, interest was allowed; viz.:--

Act of Jan. 14, 1793, in case of Return J. Meigs and the legal representatives of Christopher Greene, deceased. 6 Stat. 11.

Act of May 31, 1794, in case of Arthur St. Clair. Id. 16.

Act of Feb. 27, 1795, in case of Angus McLean. Id. 20.

Act of Jan. 23, 1798, in case of General Losciusko. Id. 32.

Act of May 3, 1802, in case of Fulwar Skipwith. Id. 48.

Act of Jan. 14, 1804, in case of John Coles. Id. 51.

Act of March 3, 1807, in case of Oliver Pollock. Id. 65.

Act of March 3, 1807, in case of Stephen Sayre. Id. 65.

Act of April 25, 1810, in case of Moses Young. Id. 89.

Act of Jan. 10, 1812, in case of John Burnham. Id. 103.

Act of July, 1812, in case of Anna Young. Id. 110.

Act of Feb. 25, 1813, in case of John Dixon and John Murray; also the second section of same act, in case of John Murray. Id. 117.

Act of April 13, 1814, in case of Joseph Brevard. Id. 134.

Act of April 26, 1816, in case of heirs of Alexander Roxburgh. Id. 167.

Act of April 14, 1818, in case of John Thompson. Id. 208.

Act of May 11, 1820, in case of Samuel B. Beall. Id. 249.

Act of May 15, 1820, in case of Thomas Leiper. Id. 252.

Act of May 7, 1822, case of the legal representatives of John Guthry, deceased. Id. 269.

Act of same date, in case of John Crute. Id. 276.

Act of March 3, 1823, in case of the legal representatives of James McClung. Id. 284.

Act of May 5, 1824, in case of Amasa Stetson. Id. 298.

Act of May 20, 1826, in case of heirs of John W. Baylor. Id. 351.

Act of March 3, 1827, in case of B. J. V. Valkenburg,-a case in which the government paid interest upon interest. Id. 365.

Act of May 19, 1828, in case of the legal representatives of Patience Gordon. Id. 378.

Act of May 24, 1828, in case of Ward & Brothers. Id. 386.

Act of May 31, 1830, in the same case. Id. 450.

Act of May 29, 1830, in case of Benjamin Wells. Id. 447.

Act of March 2, 1831, in case of Lucien Harper. Id. 457.

Act of May 19, 1831, in case of Richard G. Morris. Id. 486.

Acts of July 4, 1832, in cases of Aaron Snow, id. 503; and W. P. Gibbs, id. 504.

Two acts of July 14, 1832,-one in case of Gertrude Gates, id. 521; and the other in case of John Peck, id. 524.

Act of same date, in case of John Laurens. Id. 514.

Four acts of March 2, 1833, in cases of Archibald Watt, id. 537; Eleanor Courts, id. 542; and in cases of two officers in the army of the Revolution, id. 543, 544.

Act of June 19, 1834, in case of Dr. John Berrien. Id. 565.

Act of June 27, 1834, in case of the legal representatives of Christian Ish. Id. 570.

Three similar acts. Id. 574. 576.

Act of June 30, 1834, in case of John Peck, id. 582. Act of same date in case of Captain George Hurlburt, id. 589.

And act of July 2, 1836, in case of the same of Captain George Hurlburt. Id. 674.

Act of March 3, 1847, in case of the legal representatives of Simon Spaulding, id. 694.

Act of Aug. 18, 1856, in case of Thomas H. Baird, administrator of the estate of Absalom Baird. 11 id. 467.

Mr. Clarke referred further to the following acts of Congress, authorizing settlements and payment of accruing interest in cases where money had been advanced for the United States, or where drafts drawn by its disbursing officers had been protested for non-payment; viz.:--

Act of July 14, 1832, in case of the widow and children of E. T. Warren. 6 id. 513.

Act of July 14, 1832, in case of Hartwell Vick. Id. 523.

Act of Feb. 27, 1833, in case of Riddle, Becktle, Headington, & Co. Id. 537.

Act of July 7, 1838, in case of Richard Harrison. Id. 734.

Act of Aug. 3, 1846, in case of Felix St. Vrain. Id. 658.

Act of Aug. 10, 1846, in case of Abraham Horbach. 9 id. 677.

Act of Feb. 5, 1859, in case of Thomas Laurent. 11 id. 558.

It might be contended that Revolutionary claims of this class are not entitled to bear interest until they have been settled, and certificates of final settlement issued. Many of the statutes cited disprove such a position, and show that Congress authorized the payment of interest from the date of the rendition of the services, or the furnishing of the supplies. In further elucidation of this point, the following acts of Congress are referred to; viz:--

Act of July 14, 1832, in case of the heirs of Thomas Davenport. 6 id. 518.

Act of July 14, 1832, in case of John J. Jacobs. Id. 516.

Also act of July 14, 1832, in case of the heirs of Colonel Robert H. Harrison. Id. 437.

It is submitted that the act of Congress under which this suit was brought authorizes the Court of Claims, in the settlement and adjustment of the claim, to allow interest, and that it was the purpose of Congress to treat this case as other Revolutionary cases had been treated. By no other construction can effect be given to the words, 'And, in making such adjustment and settlement, the said court shall be governed by the rules and regulations heretofore adopted by the United States in the settlement of like cases.' If Congress had intended that only the face of the draft should be paid, it could have said so in much fewer words; in fact, it would most probably have made a direct appropriation for the payment of that sum. However much the decisions of the accounting officers in other cases may be respected, they cannot be regarded as binding, in face of the expressed will of Congress, and the whole scope of legislation governing 'like cases.'

MR. JUSTICE MILLER delivered the opinion of the court.

The claim of the State of Virginia to dominion over that region of country called the Territory North-west of the Ohio River, which is now filled with a population of many millions and divided into five States of the Union, was not undisputed in the days when that State was a province of Great Britain. The French had numerous settlements there; and the government of Great Britain claimed, both by the acquisition of Canada and by settlement, a large part of that loosely defined country. They had their military posts there, as well as peaceful villages. The Indians also denied all right of the Colony of Virginia to rule over them; and some of the most warlike tribes of that race were known to occupy, with claim of exclusive right, the largest part of the country.

During the Revolutionary war, General George Rogers Clarke, acting under a commission from the State of Virginia, fitted out a warlike expedition, and starting from the falls of the Ohio, new called Louisville, made his appearance suddenly before the military post of Kaskaskia, then held by the British, and captured it and several other posts, and, in the course of one of the most romantic campaigns which the history of that region down to this day affords, effectually settled the right of Virginia to supremacy in that quarter.

General Clarke was not very vigorously supported by Virginia in this enterprise; for it occurred during the war of the Revolution, and that Commonwealth, as she now called herself, was engaged in more pressing affairs. It seems, however, that the State had in New Orleans an agent on whom Clarke drew several drafts for funds to aid him in the matter, most of which were paid.

In the year 1778 he drew one of these drafts in favor of Francis Vigo for $8,616, which was not paid for want of funds. This draft was given for supplies furnished to Clarke's regiment, and has never yet been paid. It does not appear that the State of Virginia ever denied the justice of this debt; but by the finding of the Court of Claims, from which this record comes to us on appeal, it does appear that an officer of that State, called the Commissioner of Revolutionary Claims, examined into this one in the year 1835, and adjusted it, including interest, at $32,654.85.

In the course of the negotiation for the relinquishment of title by the States to their outlying territories, one of the resolutions passed by the Continental Congress Oct. 16, 1780 (6 Jour. of Cong. 213), was, that, when so ceded, 'the necessary and reasonable expenses which any particular State shall have incurred since the commencement of the present war, in subduing any British post, or in maintaining forts or garrisons within and for the defence, or in acquiring any part, of the territory that may be ceded or relinquished to the United States, shall be reimbursed.'

The debt represented by this draft comes directly within the language of this resolution, which was repeated by the Virginia legislature in the act of cession.

But by the act of Aug. 5, 1790, by which Congress constituted a board of commissioners to adjust all claims of the several States against the United States, there was a provision that no claim of a citizen of a State should be admitted as a claim against the United States which had not been allowed by the State before the twenty-fourth day of September, 1788. As the claim of Vigo, on account of this draft, had not then been allowed by the State of Virginia, this proviso has remained as a perpetual bar to its payment or allowance by those commissioners, or by any other officer of the government.

Congress, however, by many private acts, has authorized the payment of other claims similarly barred. This claim has been constantly pressed upon the attention of Congress by the heirs of Vigo; until finally the case was, by the act of June 8, 1872, referred to the Court of Claims in the following language;--

'The claim of the heirs and legal representatives of Colonel Francis Vigo, deceased, late of Terre Haute, Ind., for money and supplies furnished the troops under command of General George Rogers Clarke in the year 1778, during the Revolutionary war, be, and the same hereby is, referred, along with all the papers and official documents belonging thereto, to the Court of Claims, with full jurisdiction to adjust and settle the same; and, in making such adjustment and settlement, the said court shall be governed by the rules and regulations heretofore adopted by the United States in the settlement of like cases, giving proper consideration to official acts, if any have heretofore been had in connection with this claim, and without regard to the statutes of limitations.'

We entertain no doubt that the claim was a just claim in the hands of Vigo against the State of Virginia, and that, under the resolutions of the Congress of the United States and the State of Virginia, it belonged to that class of claims which Congress had assumed on receiving from that State the cassion of the territory north-west of the Ohio. The wisdom of the act of Congress of 1790 in fixing a date after which the States could not make allowances of claims which should bind the United States is apparent; and nothing could be more just or honorable than that Congress, when appealed to for a relaxation of this salutary general rule of exclusion in favor of the private citizen who had a meritorious case, should grant relief. It seems clear to us, that, in the act of 1872, Congress did mean to remove this bar of the lapse of time, and to authorize the Court of Claims, if they found the claim to be a just one, to settle and allow it.

That the allowance of the principal sum was right, we think is beyond question; but the allowance of interest admits of discussion.

It has been the general rule of the officers of government, in adjusting and allowing unliquidated and disputed claims against the United States, to refuse to give interest. That this rule is sometimes at variance with that which governs the acts of private citizens in a court of justice would not authorize us to depart from it in this case. The rule, however, is not uniform; and especially is it not so in regard to claims allowed by special acts of Congress, or referred by such acts to some department or officer for settlement.

The counsel for claimant has, in a careful brief, collected with much labor numerous cases in which interest has been allowed by Congress in the adjustment of disputed claims. The fifth section of the act of Aug. 5, 1790, already referred to, directed the commissioners, who under that act were to settle the claims of the States against the General Government, to allow interest; and, but for the bar of time in that act, this case would have come under that statute. The act under which the Court of Claims took jurisdiction of this case directed it to be 'governed by the rules and regulations heretofore adopted by the United States in settlement of like cases.' This is a like case to those in which interest was to be allowed by the act of 1790.

The bill of exchange drawn by Clarke in favor of Vigo is an instrument, which, by the commercial usage of all nations, bears interest after it becomes due. It also evidences the claim as a liquidated sum. There had never been any dispute about the amount due, if the claim was legal; and though the United States is not directly bound by the instrument, yet, if they choose to remove the bar of time, as the act of 1872 does in express terms, and it is found that the claim is one which the government has by law agreed to pay, we see no reason why it should not be paid in full, with all its legal incidents, as the State of Virginia should and would have paid it, had not the liability been assumed by the United States when she received the cession of that immense country,-a consideration ample enough for this and all other obligations she assumed in that contract.

The judgment of the Court of Claims is affirmed.

MR. JUSTICE DAVIS did not hear the argument in this case, and took no part in its decision.

MR. JUSTICE CLIFFORD, with whom concurred MR. JUSTICE HUNT, dissenting.


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


text:
United States v. McKee/Dissent Clifford

MR. JUSTICE CLIFFORD, with whom concurred MR. JUSTICE HUNT, dissenting.

I dissent from so much of the opinion of the court as allows interest to the claimant. Unless where the contract is express to that effect, the United States are not liable to pay interest. Interest should never be allowed on old claims, where payment has been deferred because the accounting officers of the treasury were of the opinion that further legislation was necessary to authorize their allowance, unless the new law clearly provides for the payment of interest as well as principal.

title: United States v. McKee/Dissent Clifford


text: Talk:United States v. McKee/Dissent Clifford


text:
Townsend v. Todd

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

Mr. John S. Beach for the appellant.

Mr. Simeon E. Baldwin, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Townsend v. Todd


text: Talk:Townsend v. Todd

title: Talk:Townsend v. Todd


text:
Townsend v. Todd/Opinion of the Court

The validity of the mortgage of $50,000 is attacked on the ground that it is in violation of the spirit and policy of the statutes and recording system of the State of Connecticut. The district and the circuit judge, each familiar with the statutes and decisions of that State, sustained this proposition. The precise objection to the mortgage is, that it does not truly describe the debt intended to be secured. The mortgage by its terms was given to secure the payment of a note $50,000, dated April 12, 1873, executed by George T. Newhall to the order of James M. Townsend, payable on demand, with interest at the rate of seven per cent, payable semi-annually in advance. The bill alleges, and it is found by the district judge to be true, that Newhall was not at the date of the mortgage, and when the same was recorded, indebted to Townsend in any sum whatever which was secured by said note. The understanding was that Townsend would endeavor to borrow money or available securities to furnish to Newhall's creditors in satisfaction of his debts, and the mortgage was to stand as security for the repayment of the values thus advanced. The mortgage and note were to be placed in the hands of one White; and, if Townsend was unable to render this pecuniary aid, the sum of $40,000 was to be indorsed upon the note and mortgage by White, and the mortgage was to stand as security for the Chapman mortgage of $7,500, and a debt of $2,500 due to Townsend, also secured by another mortgage. Townsend did not obtain or borrow money or securities from any third person on the faith of this mortgage; but, in reliance upon the security of the mortgage, he did indorse notes for Newhall, and pay money to an amount exceeding $6,000. The struggle on the part of Townsend is to hold his mortgage for this sum of $6,000.

The question depends upon the recording acts of the State of Connecticut; and we are bound to follow the decisions of the courts of the State in their construction of those acts, if there has been a uniform course of decisions respecting them. Allen v. Massey, 17 Wall. 354; Swift v. Tyson, 16 Pet. 1; Chicago City v. Robbins, 2 Black, 428.

The cases of Pettebone v. Griswold, 4 Conn. 158; Shepard v. Shepard, 6 id. 37; North v. Belden, 13 id. 383; Hart v. Chalder, 14 id. 77; Merrils v. Swift, 18 id. 257; Bacon v. Brown, 19 id. 30; and several others,-are clear and decisive against the validity of the mortgage in question. In Brown v. Mix, 20 Conn. 420, and Potter v. Holden, 31 id. 385, the Supreme Court of that State held to its principles in words, but in effect considerably relaxed the rule. If those cases stood alone, or if there was no later case, there would be some room for doubt what the rule should be. The very recent case, however, of Flood v. Bramhall, 41 Conn. 72, fully and distinctly reasserts the rule laid down in the earlier cases. It is there held that the mortgage must truly describe the debt intended to be secured, and that it is not sufficient that the debt be of such a character that it might have been secured by the mortgage had it been truly described.

In most of the States, a mortgage like the one before us, reciting a specific indebtedness, but given in fact to secure advances or indorsements thereafter to be made, is a valid security, and would be good to secure the $6,000 actually advanced before other incumbrances were placed upon the property. 11 Ohio St. 232; 12 id. 38; 34 N. Y. 307; 35 id. 500; 22 id. 380; 2 Sand. Ch. 78; 6 Duer, 208.

We should be quite willing to give the appellant the benefit of this principle to the extent of his actual advances; but the contrary rule seems to be so well settled in Connecticut, that we are not at liberty to do so. The decree below vacating and cancelling the appellant's mortgage, being in conformity with that rule, is

Affirmed.

title: Townsend v. Todd/Opinion of the Court


text: Talk:Townsend v. Todd/Opinion of the Court


text: Grand Trunk Railroad Company v. Richardson


text: Talk:Grand Trunk Railroad Company v. Richardson