text:
Pennock v. Commissioners/Opinion of the Court

The plaintiff, Sarah a. Pennock, is an Indian, and a member, by 'birth, blood, and descent,' of the confederate tribes of Sacs and Foxes of the Mississippi. At the date of the treaties of 1859 and 1867, between those tribes and the United States, she was the wife of William Whistler, a member of the same tribe. After his death she intermarried with one Henry Pennock, a white person, a citizen of the United States, and a resident of Kansas, with whom she now lives. In May, 1871, she was the owner in fee of certain lands in Franklin County in that State, which were listed and assessed by its officers for taxes in the same way as other real property in the county. The texes and charges being unpaid, the lands were sold to pay them, and certificates of sale given. The restrain the issue of deeds to the purchasers, and to set aside the tax sale as illegal, the present suit was brought. The District Court of the county held the sale illegal, and gave a decree for the plaintiff. The Supreme Court of the State reversed the decree and rendered judgment for the defendants, and the plaintiff has brought the case, on writ of error, to this court.

It is admitted in the record that the plaintiff, though residing with her husband in Kansas, Keeps up her relations with her tribe, and the question is presented whether under these circumstances her lands in Kansas are exempt from taxation by that State. With some exceptions not applicable to them, other property within its limits, real and personal, is subject to taxation. The solution of the question depends upon the construction given to the treaties between the United States and the tribes mentioned.

By the treaty concluded with them in October, 1842, they ceded to the United States all the lands west of the Mississippi River to which they had any claim or title, or in which they had any interest. In consideration of the cession it was, among other things, agreed that the United States should pay to them an annual interest of five per cent on $800,000, and discharge certain debts which they had contracted, and that the President should assign to them a tract of land on the Missouri River, or some of its waters, suitable and convenient for Indian purposes, 'for a permanent and perpetual residence for them and their descendents.' 7 Stat. 596. Pursuant to this latter provision, the President soon afterwards assigned to them a tract of land on the Missouri River, afterwards known as their reservation, situated within what are now the limits of the State of Kansas. The lands were held by them in common until 1860. In the mean time, white settlements had sprung up around them, and they had adopted many of the habits and customs of the white people. It was by comparison of their own condition with that of their white neighbors-at least we may so infer from what subsequently occurred-that they were induced to believe that the continued ownership of their lands is common was not beneficial to them, and that their prosperity would be promoted if limited quantities were held by individuals in severalty. This consideration led to a new treaty, which was concluded on the 1st of October, 1859, and ratified in July, 1860. 15 id. 467. It recited that the tribes had more lands than were necessary for their occupancy and use, and that they were anxious to promote 'habits of industry and enterprise amongst themselves by abolishing the tenure in common' by which they held their lands, and 'by assigning limited quantities thereof in severalty to the individual members of the tribes, to be cultivated and improved for their individual use and benefit,' and it stipulated, among other things, that a portion of their reservation, amounting to 153,600 acres, should be set apart and retained for that purpose; and that out of it there should be assigned to each member of the tribes, without distinction of age or sex, a tract of eighty acres. It declared that these tracts should not be aliened in fee, leased, or otherwise disposed of by the parties to whom they were assigned, except to the United States or to members of the tribes, and then under such rules and regulations as might be prescribed by the Secretary of the Interior, and that they should be exempt from taxation, levy, sale, or forfeiture, until otherwise provided by Congress.

In order to establish the members of the tribes upon the lands thus assigned to them in severalty, by building them houses and furnishing them with agricultural implements, stock animals, and other necessary aid and facilities for commencing agricultural pursuits under favorable circumstances, the treaty further provided that the lands in the reservation of the tribes which were not thus set apart and retained should be sold, under the direction of the Secretary of the Interior, and the proceeds expended for those purposes, and to pay the debts of the tribes and of the individual members thereof.

These stipulations, which are set forth in the first five articles of the treaty, would be deemed to apply to all members of the confederate tribes, but for the special provisions contained in article 10. The latter relate exclusively to such members as were either 'mixed and half bloods,' or women, being whole-bloods, who had intermarried with white men. To each of them three hundred and twenty acres were to be assigned from that portion of the land relinquished by the treaty to the United States in trust, provided the parties desired to take such tracts. The land thus granted were to remain inalienable except to the United States or members of the tribes, and the grantees were not to participate in the proceeds of the land sold. This article operates as a limitation upon the provisions of the previous articles, and confines them to members of the tribes other than the mixed or half bloods, or the females intermarried with white men. These parties, by accepting the grant of the tenth article, were excluded from the benefits and freed from the restrictions of the other articles, except as they were repeated in it. Under it various tracts of the quantity specified were assiged to the parties coming under the classes designated, and, among others, to Mrs. Pennock,-who is of mixed and half blood,-the plaintiff in this suit, at the time the wife of William Whistler.

In February, 1867, another treaty was concluded with the Sacs and Foxes, which was ratified in October, 1868. 15 id. 495. By it they ceded to the United States all the lands in Kansas to which they had any claim, and agreed to remove to the Indian Territory, where the United States promised to give them for their future home another tract of land. The treaty provided for their removal, the payment of certain debts contracted by them, the erection of various buildings for their use, and other measures designed for their improvement and civilization. It also allowed various parties to select half and quarter sections of land, and provided for the issue of patents to them. Article 17 declared that the half-breeds and full-bloods, who were entitled to selections of land under the treaty ratified in July, 1860, and whose selections had been approved by the Secretary of the Interior, should be entitled to patents in feesimple for the lands selected, according to certain schedules annexed.

Under this treaty the tribes removed to the Indian Territory, where they now reside, and under the seventeenth article patents were issued to Mrs. Pennock, under her former name of Sarah A. Whistler, and to other parties of a like class, for the tracts of land severally assigned to them under the tenth article of the treaty ratified in July, 1860. Mrs. Pennock did not accompany her tribe, but remained with her white husband in Kansas, having an indefeasible and absolute title to the lands covered by her patent, and having acquired by purchase other tracts from parties to whom similar patents had been issued. She had renounced all claim to share in the proceeds of lands in the reservation sold by the United States, by accepting the grant under the tenth article of that treaty. Her subsequent relation to her tribe, as a member of it, if she chose to keep it up, cannot affect the jurisdiction of the State over her property for governmental purposes. She might have followed her tribe,-she can now do it; but as that tribe, under a treaty with the United States, has left the State, while she remains, and has taken, not an imperfect title, to be held under the guardianship of the Secretary of the Interior, to be disposed of only to the United States, under regulations to be prescribed by him, but a title carrying with it absolute ownership, with a right of free disposition at her will, she and her property have come under the control of the State, and are subject to its laws, entitled to its protection, and bound to bear a portion of its burdens.

The eighteenth article of the treaty does not, in our judgment, apply to the lands covered by the patent to the plaintiff, or by the patents to the other parties from whom she purchased. Its language is that 'All sales hereafter made by or on behalf of persons to whom lands are assigned in this treaty shall receive the approval of the Secretary of the Interior before taking effect or conveying title to lands so sold.' This language strictly considered would, it is true, place a limitation upon all subsequent sales, by or on behalf of persons to whom lands were assigned under the treaty; but we think the restriction was only intended to apply to the alienation of the lands thus assigned, and not to other lands which such persons may have had assigned to them by other treaties. And we are also of opinion that the restriction upon alienation only applies to lands where the sole title of the holder is by the assignment made. When the patent of the government is once issued for the lands, all restrictions upon their alienation, not expressly named, are gone. Without such designation, inability to alienate the property would be inconsistent with the perfect title which accompanies the patent.

There is nothing in the case of The Kansas Indians, reported in 5th Wallace, in conflict with these views. There the Indians resided in tribes, though their tribal organizations had been much broken in upon by their intercourse with the whites. Patents to individual members, enabling them to hold lands in severalty, were accompanied with a condition against alienation without the consent of the Secretary of the Interior. A treaty of the United States with one of the tribes stipulated that their lands should not be liable to 'levy, sale, execution, or forfeiture,'-terms which wwere held to prevent a levy and sale by officers of the State for taxes, as well as a levy and sale under judicial proceedings. And the act admitting Kansas into the Union as a State provided that the rights of the Indians in the Territory should remain unimpaired, and the general government be at liberty to make any regulation respecting them and their lands which it would have been competent to make had Kansas not been thus admitted. Their tribal organizations continuing in the State, and the United States treating with them as distinct political communities, the legislature of Kansas could not interfere with their lands or the lands of individual members of the tribes, and subject them to taxation.

Judgment affirmed.


text: Talk:Pennock v. Commissioners/Opinion of the Court

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text:
Spring Company v. Knowlton

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

This suit was brought in 1869 by Dexter A. Knowlton, a citizen of Illinois, against The Congress and Empire Spring Company, in the Supreme Court of the State of New York, to recover the sum of $13,980, with interest from Feb. 20, 1866. In 1876 he died, and the suit was revived and continued by the administrators of his estate. They are citizens of Illinois, and on their application the suit was, March 20, 1877, removed to the Circuit Court of the United States. The parties, by written stipulation, waived a jury. The court tried the case, and found the facts to be substantially as follows:--

The Congress and Empire Spring Company is a corporation organized under the statute of the State of the State of New York of Feb. 17, 1848, authorizing the formation of corporations for manufacturing, mining, mechanical, or chemical purposes, and subsequent acts amendatory thereof. Its capital stock was $1,000,000, divided into ten thousand shares of $100 each, issued in payment of property purchased by the trustees of the corporation for its use.

The mode by which such a corporation might increase its capital stock is prescribed by sects. 21 and 22 of chapter 40 of the laws of 1848.

Sect. 21 prescribes how the notice of a meeting of the stockholders to consider the proposition to increase the capital stock shall be given, and what vote of the stockholders shall be necessary to carry the proposition.

Sect. 22 prescribes how the meeting of the stockholders, called under sect. 21, shall be organized, and declares that if a sufficient number of votes has been given in favor of increasing the amount of capital stock, 'a certificate of the proceedings, showing a compliance with the provisions of this act, the amount of capital actually paid in,. . . the whole amount of debts and liabilities of the company, and the amount to which the capital shall be increased,. . . shall be made out, signed, and verified by the affidavit of the chairman and countersigned by the secretary, and such certificate shall be acknowledged by the chairman and filed, as required by the first section of this act; and when so filed the capital stock of such corporation shall be increased. . . to the amount specified in such certificate,. . . and the company shall be entitled to the privileges and provisions, and subject to the liabilities, of this act, as the case may be.'

The corporation passed a resolution, Jan. 11, 1866, to increase its capital stock by the addition thereto of $200,000, for the purpose of building a glass factory for the manufacture of bottles and providing a working capital. It also resolved that the books of the company should be opened for subscriptions to the additional stock, and that each stockholder should be allowed to take one share of the new for every five shares he held of the original stock, and that when he had paid $80 on each share the company should issue to him a certificate as for full-paid stock.

At a meeting of the board of trustees of the corporation, held Feb. 8, 1866, a dividend of four per cent on the original stock was declared, payable Feb. 20, and it was resolved that a call of twenty per cent on the new stock should be made, payable on the latter date; that the books of the company should be at once opened for subscriptions to the new stock; that each stockholder should have the privilege of taking one share of the new for every five shares of the old stock held by him, and that on failure of any stockholder to pay, on or before that date, $20 on each share of the new stock taken by him, all his claim to such new stock should be forfeited and the same divided ratably among the stockholders who had paid the instalment of $20 per share.

In pursuance of the resolutions the trustees immediately issued a stock subscription agreement, by which the subscribers stipulated to take the number of shares set opposite their names and to pay for each share $80, in instalments, as called for by the directors; and upon failure to pay the instalments within sixty days after call, that the money already paid on the stock should be forfeited to the company. By the same agreement the company bound itself to pay interest up to Feb. 1, 1867, on all sums paid on the new stock, and on Feb. 8, 1867, to issue for every share of said new stock on which $80 had been paid a certificate to the holder as for full-paid stock; and it was provided that the holders of such stock should be entitled to vote thereon, and the same should draw dividends and be treated in all respects as full-paid stock.

This agreement was signed by one C. Sheehan, who subscribed for six hundred and ninety shares of the new stock, he being the holder of thirty-four hundred and ninety shares of the old stock.

Thereupon a contract was made between Sheehan and Knowlton, whereby the former agreed to lend the dividend on his old stock to the latter, who agreed to assume the new stock subscribed for by Sheehan, and pay all future calls thereon. Sheehan's dividend on his old stock amounted to $13,988. Knowlton, in consideration of the transfer to him of this dividend, delivered his note to Sheehan for $13,980, dated Feb. 20, 1866, payable in one year, and secured the same by a pledge of one hundred and fifty shares of the stock of the company. He paid the residue, to wit, $8, in cash.

Knowlton paid to the company, March 8, 1866, the call of twenty per cent on the new stock, subscribed by and sold to Sheehan as aforesaid, by the application thereto of Sheehan's dividend on the old stock, amounting to $13,980, for which the company gave Knowlton a receipt.

About December, 1868, Knowlton paid in full his note to Sheehan for $13,980.

Calls and personal demands were made both upon Sheehan and Knowlton more than sixty days before Jan. 25, 1867, for the payment of subsequent instalments on the stock subscribed by Sheehan, and both of them neglected and refused to pay the instalments called for; whereupon the trustees of the company passed a resolution by which they declared that the new stock subscribed by Sheehan and assumed by Knowlton should be and was forfeited.

From August, 1865, to August, 1866, Knowlton was a trustee and vice-president of the company; he advised the increase of the capital stock above mentioned, proposed the resolutions in relation thereto, moved their adoption, drew up and signed the stock subscription agreement, and advised others to sign it.

At a meeting of the stockholders of the company, held Aug. 7, 1867, it was resolved that the capital stock of the company should be reduced to the original sum of $1,000,000, and that the trustees be authorized to arrange with the holders of the new stock for retiring the same on such terms and conditions as they should deem for the interest of the company.

On the same day the board of trustees met and passed a resolution, whereby the executive committee of the board was authorized to adjust, on the best terms for the company, the claims of all persons holding receipts for payments on the new stock ordered to be retired.

The executive committee passed a resolution, March 27, 1868, that the company issue five-year coupon bonds sufficient to refund the payments made on the new stock of the company which had been retired.

No tender of these bonds was ever made to Knowlton, nor was any demand made for them by him; but he demanded repayment of the amount paid by him on his new stock, and the company refused to repay it or any part of it.

The majority of the holders of the original stock became subscribers for the new stock, and all of them except Sheehan, Knowlton, and one or two subscribers for small amounts, paid the calls made on them in respect to the new stock. The first call of twenty per cent on the new stock was paid mainly by the dividend on the old stock above mentioned, but about $3,000 were paid in cash. All the stockholders who did not subscribe for new stock were paid their part of the dividend in cash. About $86,500 of said five per cent bonds were issued by the company to retire the new stock.

As a conclusion of law from these facts, the court held that the plaintiffs, as such administrators, were entitled to judgment against the Congress and Empire Spring Company for the sum of $13,980, with interest from Feb. 20, 1866, and rendered judgment accordingly. The company sued out this writ of error.

It appears by a bill of exceptions that the defendant's counsel requested the court below to decide that the proceedings of the defendant in increasing its capital stock, and forfeiting the amount paid by the plaintiffs' intestate, were in all respects legal and valid. The court refused so to find, and ruled that the plan devised by him and the other trustees of the company was contrary to the provisions of the statute, against public policy, and a fraud upon stockholders not consenting thereto, and the public.

It further appears that the defendant's counsel requested the court to decide that, inasmuch as the intestate devised, counselled, and assisted in passing and adopting all the acts and resolutions for an increase of stock by the company, the plaintiffs were not entitled to recover. The court refused so to decide, and ruled that the intestate had a right to abandon the illegal transaction to which he was a party, and that by declining to pay further calls, and demanding repayment of the payments made before the consummation of the illegal scheme, he did abandon it, and his representatives were entitled to recover. To these refusals and rulings the defendant's counsel excepted.

The errors assigned here are that the court below erred in each of its refusals and rulings, and in deciding that the plaintiffs were entitled to recover.

1. The scheme and contract to increase the stock were in violation of the statute under which the company was organized, and against public policy. Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518. That statute expressly requires that all stock shall be paid for at its par value in money, or in such property as is necessary to enable the company to carry on its business. 2 Rev. Stat. N. Y. 507, sect. 49; id. 505, sect. 40; id. 504, sect. 38; id. 505, sect. 41. By this scheme it was stipulated and agreed that scrip for stock should be issued of the nominal or par value of $100 per share on payment of only $80 per share. The first instalment of $20 of the $80 was intended to be and was paid by applying thereto a dividend of four per cent declared on the old stock. The corporation would thus actually receive only $60 in money per share for the new stock from the subscribers thereof.

2. Knowlton was particeps criminis and in pari delicto as to the scheme and contract, by which the rights of non-assenting stockholders, creditors, and the public were to be sacrificed. The company could and did become a party thereto only by the action of its trustees and officers. He was a trustee and its vice-president when he originated, actively promoted, and participated in carrying out this scheme. An officer of a corporation who by his advice, votes, and action involves it in such schemes, and who as an individual becomes a party thereto, is at least in pari delicto with it. In fact and in law he is the criminal. Thomas v. City of Richmond, 12 Wall. 349, 356.

3. The plaintiffs were not entitled to recover.

a. Where the scheme or contract is malum in se, as in this case, and the parties to it are in pari delicto, the law refuses to aid either against the other. It leaves them where it finds them. This rule applies as fully where money has been paid and applied in part execution or performance, as where the scheme or contract has been completely executed. Smith, Contracts (3d Am. ed.), 187-191; Burt v. Place, 6 Cow. (N. Y.) 431; Nellis v. Clarke, 20 Wend. (N. Y.) 24; S.C.. 4 Hill (N. Y.), 424; Smith v. Hubbs, 10 Me. 71; Schermerhorn v. Talman, 14 N. Y. 94, 141; Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518; Howson v. Hancock, 8 T. R. 575.

The scheme was, however, actually carried into effect as to the money which the plaintiffs seek to recover. Their intestate had no locus penitentioe as to the dividend of four per cent on the old stock, payable February 20, and amounting exactly to $13,980, the percentage on the new stock, payable at the same time and place. The dividend was then applied to the payment and satisfaction of that percentage which Knowlton was to pay on the new stock.

b. Had Knowlton paid or advanced moneys to the company, his right of recovery, if it could be enforced at all, would be solely by virtue of his original title to them. But as he did not advance them, there is no promise or obligation, expressed or implied, on the part of the company to pay him.

4. The record presents no Federal question. This suit, after the court of last resort in New York had reversed the judgment in favor of Knowlton, and ordered a new trial, was, on his death, revived and continued in the court of original jurisdiction, in the name of his administrators. It was subsequently removed therefrom to the Circuit Court, upon the ground of the citizenship of the parties. The questions involved relate to the statutes under which the company was organized, and to the public policy and law of New York. The Commission of Appeals of that State adjudged and determined, after full argument and consideration, that Knowlton was not entitled to recover. As the decision was made in this suit between the same parties and on the facts now presented, it would be held on a retrial in the courts of New York to be res judicata.

It is submitted that this court, in accordance with its established rule, should follow that decision. Jefferson Branch Bank v. Skelly, 1 Black, 436; Elmendorf v. Taylor, 10 Wheat. 152; Township of Elmwood v. Marcy, 92 U.S. 289; Fairfield v. County of Gallatin, 100 id. 47; Scipio v. Wright, 101 id. 665.

Mr. Francis Kernan and Mr. Charles S. Lester for the plaintiff in error.

Mr. H. M. Ruggles, contra.

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

title: Spring Company v. Knowlton


text: Talk:Spring Company v. Knowlton

title: Talk:Spring Company v. Knowlton


text:
Spring Company v. Knowlton/Opinion of the Court

The plaintiff in error claims that the plan adopted by it to increase its capital stock, by which certificates as for full-paid stock were to be issued on the payment of eighty per cent thereof, was against the law and public policy of the State of New York, and was, therefore, void; that Knowlton, having been an active party in devising this scheme, and having paid his money in part execution of it, his legal representatives cannot recover the sum so paid.

It is conceded by the defendants in error that the plan adopted by the company to increase its stock was in violation of the law of New York, and therefore void. It has been so held, in effect, by the Court of Appeals of the State of New York, in the case of Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518.

We are, then, to consider whether, upon the hypothesis that the plan for the increase of the stock was illegal, there can be a recovery upon the facts of the case as found by the Circuit Court.

We think it clear that there was only a part performance of the illegal contract between the company and Knowlton in reference to the new stock, for which Sheehan subscribed and which he agreed to transfer to Knowlton.

The company, in fact, created no new stock. It only proposed to do so. To increase the stock of the company it was not only necessary that the meeting of the stockholders should be called, as prescribed by the law, and a vote of two-thirds of all the shares of stock should be cast at the meeting in favor of the increase, but that there should be a certificate of the proceedings, showing, among other things, a compliance with the provisions of the law, and the amount of the increase of the stock, signed and verified by the affidavit of the chairman of the meeting at which the increase was voted, and countersigned by the secretary, and such certificate should be acknowledged by the chairman and filed, as required by the first section of the act. And the law declared that 'when so filed the capital stock of such corporation shall be increased to the amount specified in such certificate.'

It does not appear from the findings of the Circuit Court that any such certificate was ever made or filed. Consequently it does not appear that the steps necessary, under the law, to an increase of the stock were ever taken. Neither does it appear that any scrip or certificates were ever issued to the subscribers to the new stock. So that all that was done amounted only to a proposition by the company, on the one hand, to increase its stock, and an agreement by Knowlton to take certain shares of the new stock when issued, and the payment by him of an instalment of twenty per cent thereon. There was no performance of the contract whatever by the company, and only a part performance by Knowlton.

It is to be observed that the making of the illegal contract was malum prohibitum and not malum in se. There is no moral turpitude in such a contract, nor is it of itself fraudulent, however much it may afford facilities for fraud.

The question presented is, therefore, whether, conceding the contract to be illegal, money paid by one of the parties to it in part performance can be recovered, the other party not having performed the contract or any part of it, and both parties having abandoned the illegal agreement before it was consummated.

We think the authorities sustain the affirmative of this proposition.

Their result is fairly stated in 2 Comyn on Contracts, 361, as follows:--

'Where money has been paid upon an illegal contract, it is a     general rule that if the contract be executed and both      parties are in pari delicto, neither of them can recover from      the other the money so paid, but if the contract continues      executory and the party paying the money be desirous of      rescinding it, he may do so and recover back by action of      indebitatus assumpsit for money had and received. And this     distinction is taken in the books that where the action is in      affirmance of an illegal contract, the object of which is to      enforce the performance of an engagement prohibited by law,      clearly such an action can in no case be maintained, but      where the action proceeds in disaffirmance of such a      contract, and instead of endeavoring to enforce it presumes      it to be void and seeks to prevent the defendant from      retaining the benefit which he derived from an unlawful act,      then it is consonant to the spirit and policy of the law that      the plaintiff should recover.'

Mr. Parsons, in his work on Contracts, vol. ii. p. 746, says: -

'All contracts which provide that anything shall be done     which is distinctly prohibited by law, or morality, or public      policy, are void, so he who advances money in consideration      of a promise or undertaking to do such a thing, may at any      time before it is done rescind the contract and prevent the      thing from being done and recover back his money.'

To the same effect see 2 Addison, Contracts, sect. 1412; Chitty, Contracts, 944; 2 Story, Contracts, sect. 617; 2 Greenl. Evid., sect. 111.

The views of the text-writers are sustained by a vast array of authorities, both English and American.

A few will be cited. Taylor v. Bowers (1 Q. B. D. 291) was an action to recover property assigned for the purpose of defrauding creditors. A verdict was rendered for the plaintiff, with leave to move to enter a verdict for the defendant. A rule was obtained on the ground that the plaintiff could not by the allegation of his own fraud get back the goods from the defendant. The Queen's Bench sustained the verdict, the Chief Justice, Cockburn, delivering the opinion. The defendant then appealed to the Court of Appeals, where the judgment was affirmed. Both courts agreed that an illegal contract partially performed might be repudiated and the money paid upon it recovered.

Lord Justice Mellish, in the Court of Appeals, said: 'If the illegal transaction had been carried out, the plaintiff himself, in may judgment, could not afterwards have recovered the goods. But the illegal transaction was not carried out; it came wholly to an end. To hold that the plaintiff is entitled to recover does not carry out the illegal transaction, but the effect is to put everybody in the same situation as they were before the illegal transaction was determined upon, and before the parties took any steps to carry it out. That, I apprehend, is the true distinction in point of law. If money is paid or goods delivered for an illegal purpose, the person who had so paid the money or delivered the goods may recover them back before the illegal purpose is carried out; but if he waits till the illegal purpose is carried out, or if he seeks to enforce the illegal transaction, in neither can he maintain an action; the law will not allow that to be done.'

The same rule substantially is laid down in the following English cases: Lowry v. Bourdieu, 2 Doug. 452; Tappenden v. Randall, 2 Bos. & Pul. 467; Hastelow v. Jackson, 8 Barn. & Cress. 221; Bone v. Ekless, 5 H. & N. 925; Lacaussade v. White, 7 T. R. 531; Cotton v. Thurland, 5 id. 405; Mount v. Stokes, 4 id. 561; Smith v. Bickmore, 4 Taunt. 474.

In Morgan v. Groff (4 Barb. (N. Y.) 524), it was held that money paid on an illegal contract, which remains executory, can be recovered back in an action founded on a disaffirmance, and on the ground that it is void.

To the same effect are the following cases: Utica Insurance Co. v. Kip, 8 Cow. (N. Y.) 20; Merritt v. Millard, 4 Keyes (N. Y.), 208; White v. Franklin Bank, 22 Pick. (Mass.) 181; Lowell v. Boston & Lowell Railroad Corporation, 23 id. 24.

In Thomas v. City of Richmond (12 Wall. 349) this court cites with approval the note of Mr. Frere to the case of Smith v. Bromley (2 Doug. 696), to the effect that a recovery can be had as for money had and received when the illegality consists in the contract itself, and that contract is not executed; in such case there is a locus penitentioe; the delictum is incomplete; the contract may be rescinded by either party.

The rule is applied in the great majority of the cases, even when the parties to the illegal contract are in pari delicto, the question which of the two parties is the more blamable being often difficult of solution and quite immaterial. We think, therefore, that the facts of this case present no obstacle to a recovery by Knowlton's administrators of the sum paid by him on the stock which had been subscribed for by Sheehan.

The law of New York does not in express terms forbid a corporation from issuing certificates for full-paid stock when the stock has not been fully paid. The illegality of such an issue is deduced from several sections of the law under which the Congress and Empire Spring Company was organized, namely, sects. 38, 40, 41, and 49. We think it is fairly inferable from the record that the trustees of the company, one of whom was Knowlton, did not know that the plan adopted by them for the increase of the stock was illegal, and that when they discovered that it was forbidden by the law, and before any harm was done or could have been done, the scheme was abandoned. Under such circumstances, the rule which would prevent the recovery of the money paid to carry on the illegal plan would be a very harsh one, not founded on any law or public policy.

It is suggested by counsel for the plaintiff in error that the Court of Appeals of the State of New York has in this identical suit, upon the same state of facts, adjudicated the rights of the parties, and that this court ought to consider the questions raised in this case as res judicata.

The reply to this suggestion is that it nowhere appears in the record that this case was ever before the Court of Appeals, or that it was ever decided by any court except the United States Circuit Court for the Northern District of New York, from which it has been brought to this court on error. We cannot consider facts not brought to our notice by the record.

Judgment affirmed.

MR. JUSTICE HARLAN dissenting.


text: Talk:Spring Company v. Knowlton/Opinion of the Court


text:
Spring Company v. Knowlton/Dissent Harlan

MR. JUSTICE HARLAN dissenting.

This action was commenced in the Supreme Court of the State of New York. The present transcript is imperfect in that it does not contain all the proceedings in the courts of the State up to the removal of the case into the Circuit Court of the United States. It is, however, conceded, in the briefs of counsel, that Knowlton recovered in the Supreme Court a judgment which, upon a writ of error from the Commission of Appeals, was reversed upon the grounds stated in Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518. The learned district judge who tried the case commences his opinion, which is incorporated in the transcript, with the statement that 'this case comes here by removal from from the State court, after a decision adverse to the plaintiff by the Commission of Appeals, reversing the judgment of the Supreme Court in favor of plaintiff, and ordering a new trial. 57 N. Y. 518.' He then proceeds to determine it upon principles of law different from those announced in that decision. Had it been again tried in the Supreme Court, judgment must have been rendered against these defendants in error, because the reversal was upon such grounds as precluded any recovery whatever by them. That decision should, in my opinion, have been accepted as the law of this case, although the proceedings in the Commission of Appeals are not set forth in the transcript. The reported case shows, beyond question, that it is the identical case now before us; at any rate, that it was between these parties and involved the same issues. We know that the adjudication of that court was long prior to the removal of this case, and that the questions arising upon this record have been once determined by a court of competent jurisdiction in a suit between the same parties touching the subject-matter now in controversy. All this plainly appears by that decision, the legal effect of which, the defendants in error should not be permitted to escape by removing the case into the Circuit Court.

Upon these grounds, and without expressing my own views upon the propositions of law discussed in the opinion of the court, I dissent from the judgment just rendered.


text: Talk:Spring Company v. Knowlton/Dissent Harlan


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Mitchell v. Overman

ERROR to the Circuit Court of the United States for the Southern District of Ohio.

The facts are stated in the opinion of the court.

Mr. Rufus King and Mr. Lawrence Maxwell, Jr., for the plaintiff in error.

Mr. Stanley Matthews and Mr. William M. Ramsey for the defendant in error.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Mitchell v. Overman


text: Talk:Mitchell v. Overman

title: Talk:Mitchell v. Overman


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Mitchell v. Overman/Opinion of the Court

Conrad Stutzman brought suit, July 26, 1866, against Robert Mitchell and others, in the District Court for the county of Webster, a court of general jurisdiction, in the State of Iowa. Two of the defendants, although duly served with process, failed to appear, and a decree pro confesso against them was rendered by the court, at its October Term, 1868. As to all the other parties, the plaintiff and the defendants being present in person, or by counsel, 'the cause' (as appears by the recitals in the record) 'was submitted upon the pleadings and proofs on file; and, after argument of counsel, the cause was then finally submitted, and taken under advisement by the court, the decree herein to be rendered as of the term of said trial and submission.' At the October Term, 1870, Mitchell 'asked leave to amend his answer, which was granted, at the May Term, 1871, upon terms.' At the October Term, 1872, that 'amendment was stricken from the files for noncompliance with such terms;' and thereupon the court, at the last-named term, to wit, on Nov. 10, 1872, rendered a decree in favor of Stutzman against Mitchell for the sum of $3,395.58, with interest thereon at the rate of six per cent per annum, from Oct. 16, 1868, and for the costs. It was further ordered that the decree be 'entered now [then], as of the sixteenth day of October, 1868, the last day of the October Term of this court, 1868, and shall take effect as of that date.'

It appears that on the 10th of November, 1869, while the case was held under advisement, Stutzman died intestate. No suggestion of his death was entered of record, nor was the suit revived in the name of his personal representative, to whom, under the laws of Iowa, the right of action survived. Indeed, letters of administration upon his estate were not issued until Nov. 26, 1872.

At the time the decree was rendered, Mitchell and his attorney were ignorant of Stutzman's death, but the fact was known to Stutzman's attorney of record, who drafted and procured the entry of the decree. It is, however, found by the court below, to which this cause was submitted upon a written stipulation, waiving a jury, that there was no fraud in obtaining the decree.

Upon the decree, Overman, administrator of Stutzman, on the 15th of September, 1873, commenced this action against Mitchell. A recovery is resisted on the ground that the decree is absolutely void, inasmuch as it was in fact rendered after the death of Stutzman. Judgment was rendered against Mitchell for the full amount of the decree. He sued out this writ, and assigns for error that the facts found do not authorize the judgment.

The common law was in force in Iowa during the whole period from the commencement to the conclusion of the suit in the State court, except as modified by sects. 3469, 3470, 3472, 3473, 3477, and 3478 of the Iowa Code of 1860, and by the act of April 8, 1862. The latter act-of which, as well as of the State code, we must take judicial notice-substitutes for one of the sections of the code the following provision: 'Actions, either ex contractu or ex delicto, do not abate by the death, marriage, or other disability of either party, nor by the transfer of any interest therein, if from the legal nature of the case the cause of action can survive or continue. In such cases the court may, on motion, allow the action to be continued by or against his legal representative or successor in interest; but in case of the death of the defendant, a notice shall be served upon his representative, under the direction of the court.' Laws of Iowa, 1862, p. 229. These statutory provisions prescribe the manner in which actions may be revived, and the time within which such revivor must take place. But it is clear that they do not provide for a case like the one before us. The question here is, whether the State court was wholly without jurisdiction to enter the decree against Mitchell as of, or make it take effect from, the last day of the term at which the cause, during the lifetime of Stutzman, was finally submitted for determination. We are not informed by any decision, to which our attention has been called, that the Supreme Court of Iowa has passed upon it. The cases cited from that court do not, in our opinion, meet it in the exact form in which it is here presented. It must, therefore, be determined by the rules of practice which obtain in courts of justice in virtue of the inherent power they possess.

The adjudged cases are very numerous in which have been considered the circumstances under which courts may properly enter a judgment or a decree as of a date anterior to that on which it was in fact rendered. It is unnecessary to present an analysis of them, some of which are cited in a note to this opinion. We content ourselves with saying that the rule established by the general concurrence of the American and English courts is, that where the delay in rendering a judgment or a decree arises from the act of the court, that is, where the delay has been caused either for its convenience, or by the multiplicity or press of business, either the intricacy of the questions involved, or of any other cause not attributable to the laches of the parties, the judgment or the decree may be entered retrospectively, as of a time when it should or might have been entered up. In such cases, upon the maxim actus curioe neminem gravabit,-which has been well said to be founded in right and good sense, and to afford a safe and certain guide for the administration of justice,-it is the duty of the court to see that the parties shall not suffer by the delay. A nunc pro tunc order should be granted or refused, as justice may require in view of the circumstances of the particular case. These principles control the present case. Stutzman was alive when it was argued and submitted. He was entitled at that time, or at the term of submission, to claim its final disposition. A decree was not then entered because the case, after argument, was taken under advisement. The delay was altogether the act of the court. Its duty was to order a decree nunc pro tunc, so as to avoid entering an erroneous decree.

We attach no consequence to the fact that, while the cause was under advisement, Mitchell asked leave to amend his answer, which was granted upon terms. As they were not complied with, his amendment was stricken from the files. The question must, therefore, be determined as if no amendment had been attempted.

It is scarcely necessary that we should extend this opinion by any comments upon the numerous cases cited in the printed argument of appellant's counsel. In many of them, although the death occurred after the submission of the cause or after verdict, the judgment was, in fact, entered as of a time subsequent to the death. They manifestly have no bearing on this case, where the decree was entered as of a time when the party was alive, and to take effect from the date when it would have been entered but for the act of the court, induced by causes beyond the control of the parties.

It seems to us to be entirely clear that the State court had the power, upon well-settled rules of practice, both in courts of law and of equity, to enter the decree as of the term when, in the lifetime of Stutzman, the cause, after argument, was finally submitted for decision.

Judgment affirmed.

NOTE.-Bank of United States v. Weisiger, 2 Pet. 481; Clay v. Smith, 3 id. 411; Griswold v. Hill, 1 Paine, 484; Gray v. Brignardello, 1 Wall. 627; Campbell v. Misier, 4 Johns. (N. Y.) Ch. 342; Vroom v. Ditmas, 5 Paige (N. Y.), 528; Wood v. Keyes, 6 id. 418, 478; Perry v. Wilson, 7 Mass. 393; Currier v. Lowell, 16 Pick. (Mass.) 170; Stickney v. Davis, 17 id. 169; Springfield v. Wooster, 2 Cush. (Mass.) 62; Hess v. Cole, 3 Zabr. (N. J.) 166; Cumber v. Wane, 1 Stra. 426; Astley v. Reynolds, 2 id. 915; Tooker v. Duke of Beaufort, 1 Burr. 746; Trelawney v. Bishop of Winchester, 2 id. 219; Davies v. Davies, 9 Ves. Jr. 461; Belsham v. Percival, 8 Hare, 157; 2 Coop. 176; Green v. Cobden, 4 Scott, 486; Lawrence v. Hodgson, 1 Y. & J. 368; Freeman v. Tranah, 12 C. B. 406; Collinson v. Lister, 1 Jurist, N. S. 835; 20 Beav. 355; Blaisdell v. Harris, 52 N. H. 191; 2 Daniell, Ch. Pr. (5th Am. ed.) pp. 1017, 1018; Tidd's Pract. (4th ed. with American notes) 952; 1 Barb. Ch. Pr. (2d rev. ed.) 341; Freeman, Judgments, sect. 57, and other authorities cited by those authors.


text: Talk:Mitchell v. Overman/Opinion of the Court


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Stout v. Lye

APPEAL from the Circuit Court of the United States for the Northern District of Ohio.

The facts are stated in the opinion of the court.

Mr. John Hutchins for the appellants.

Mr. John E. Richie, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Stout v. Lye


text: Talk:Stout v. Lye

title: Talk:Stout v. Lye


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Stout v. Lye/Opinion of the Court

This record discloses the following facts: On the 10th of November, 1873, Francis J. Lye executed to the First National Bank of Delphos a mortgage on certain real estate situate in the village of Delphos, Allen County, and within the northern judicial district of the United States in the State of Ohio, to secure his note to the bank for $6,000, dated Nov. 1, 1873, and payable Jan. 1, 1874, which was given to take up in part his old note to the bank then past due. The mortgage was duly recorded in the records of the county, November 10, at which time, under the laws of the State, it took effect. Rev. Stat. Ohio (1880), sect. 4133.

On the 29th of December, 1875, the present appellants, John W. and Jacob O. Stout, brought suit in the Circuit Court of the United States for the Northern District of Ohio, against Lye and Philip Walsh, who were partners, to recover a judgment for $5,106.36 and interest. The first day of the January Term, 1876, of that court was January 4, and process was served on Lye & Walsh, in the suit of the Stouts, January 3. On the 15th of January, 1876, the bank commenced suit against Lye in the Court of Common Pleas of Allen County to foreclose its mortgage. Process was served on Lye in that action January 20. The Stouts were not made parties, the bank having then no actual notice of the pendency of their suit in the Circuit Court.

On the 31st of January the Stouts recovered judgment in their action in the Circuit Court against Lye & Walsh for the full amount of their claim and costs, and on the same day caused an execution to be issued, which was, on the first day of February, duly levied on the lands covered by the bank mortgage. The effect of the judgment, without this levy, was to bind the lands of the defendant for the satisfaction thereof from the first day of the term of the court at which it was rendered, January 4. Id., sect. 5375. On the 23d of February the Stouts commenced this suit in the Circuit Court of the United States for the Northern District of Ohio, making the bank a defendant, in which they sought to set aside the mortgage as illegal for want of authority to take it, or if that could not be done, to have certain alleged payments of usurious interest applied to reduce the debt. The bank was served with subpoena on the 25th of February, and required to appear on the first Monday in April.

The February Term of the Court of Common Pleas of Allen County began on the 7th of February, and on the 7th of March, during that term, a judgment was rendered in the suit of the bank against Lye for the full amount of his note and interest, and for a foreclosure of the mortgage by a sale of the mortgaged property. The bank answered the suit of the Stouts, setting up the foregoing facts, which being proved by the agreed statement of the parties, the bill was dismissed. From that decree this appeal was taken.

The first question to be decided is whether the appellants are concluded by the judgment of the State court finding the amount due the bank and establishing the lien of its mortgage. If they are, they concede that the decree below is right.

There cannot be a doubt that the State court bad jurisdiction of the suit instituted by the bank, and, as was said by Mr. Justice Grier, speaking for the court in Peck v. Jenness, 'It is a doctrine of law too long established to require a citation of authorities, that, where a court has jurisdiction, it has a right to decide every question which occurs in the cause, and whether its decision be correct or otherwise, its judgment, till reversed, is regarded as binding in every other court; and that where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right cannot be arrested or taken away by proceedings in another court.' 7 How. 612, 624. The mere fact, therefore, that the Stouts commenced this suit in the Circuit Court before judgment was rendered in the State court in favor of the bank is of no importance. The point to be decided is whether the judgment in the State court binds the Stouts, they not having been parties to the suit in which it was rendered. The rule is, that where suits between the same parties in relation to the same subject-matter are pending at the same time in different courts of concurrent jurisdiction, a judgment on the merits in one may be used as a bar to further proceedings in the others.

It is also an elementary rule that 'if, pending a suit by a mortgagee to foreclose the equity of redemption, the mortgagor makes a second mortgage, or assigns the equity of redemption, an absolute decree of foreclosure against the mortgagor will bind the second mortgagee or assignee of the equity of redemption.' Mitf. p. 73; Story, Eq. Pl., sect. 351. Acting on this rule in Eyster v. Gaff (91 U.S. 521), we held that an assignee in bankruptcy, appointed pending a foreclosure suit, was barred by a decree against the mortgagor. In this we may have gone somewhat beyond the rulings of the English courts, and of Chancellor Walworth in an anonymous case (10 Paige (N. Y.), 20), but to our minds, under the late bankrupt law, an assignee stands as any other grantee of the mortgagor would stand who acquired title after the commencement of the suit to foreclose the mortgage.

That the suit of the bank was one to foreclose a mortgage, and that it was actually pending when the judgment lien of the Stouts was acquired, are conceded facts. When the suit was begun, Lye, the mortgagor, represented the entire equity of redemption. He had parted with no portion of it voluntarily; and if the Stouts had failed to get their judgment during the January Term, 1876, of the Circuit Court, no one would claim they were not bound by the decree of foreclosure, although not parties to the suit. Neither could it with any propriety be claimed, we think, that they would not be bound if their lien had only taken effect from the date of their judgment. It is true the lien followed by operation of law from a judgment in an adversary proceeding against the mortgagor, and was not created directly by his own voluntary act, but it was the legitimate result of his failure to pay a debt he had incurred, and reached only the equity of redemption that was being foreclosed in the pending suit. It was in legal effect no more and no less than an incumbrance of the equity of redemption by the mortgagor under the operation of the judicial proceedings which had been instituted against him to enforce the payment of a debt he owed. As this incumbrance was created pendente lite, there can be no question that it comes within the rule just stated as governing such transfers, unless the rights of the parties are changed because the lien, when created, bound the property from January 4 as against other liens and conveyances made by the mortgagor. The inquiry is not as to the extent or validity of the lien, but whether the holder is any less an incumbrancer pendente lite, because, although his incumbrance was actually created while the suit was pending, it bound the land, for certain purposes, from an earlier date. Confessedly the lien of the bank, if its mortgage was valid, was in any event superior to that of the judgment. The only point in controversy is as to the necessity of making such an incumbrancer a party to a pending suit in order to cut off by a foreclosure his interest thus acquired in an equity of redemption. No doubt the Stouts, as soon as their judgment was rendered, had a lien on the mortgaged property, which for some purposes antedated the foreclosure suit; but until they had secured their lien they would not have been heard to contest the validity of the bank's mortgage, or the amount that was due on the mortgage debt. If they had been made parties when the suit was begun, they could have done nothing by way of defence to the action until they had acquired some specific interest in the mortgaged property. As creditors at large they were powerless in respect to the foreclosure proceedings, but when they obtained their judgment, not before, they were in a position to contest in all legitimate ways the validity and extent of the superior lien which the bank asserted on the property, in which, by the judgment, they had acquired a specific interest. They might have appeared in the Common Pleas and asked to be admitted to defend the bank's suit, or for some other appropriate relief, or they might do what they in fact did,-commence this suit in the Circuit Court in aid of their execution. By this suit, however, they could not deprive the Common Pleas of the jurisdiction it had acquired in the bank's suit, nor take away from the bank its right to prosecute that suit to the end. The two suits related to the same subject-matter, and were in fact pending at the same time in two courts of concurrent jurisdiction. The parties also were in legal effect the same, because in the State court the mortgagor represented all who, pending the suit, acquired any interest through him in the property about which the controversy arose. By electing to bring a separate suit the Stouts voluntarily took the risk of getting a decision in the Circuit Court before the State court settled the rights of the parties by a judgment in the suit which was pending there. Failing in this, they must submit to the same judgment that has already been rendered against their representative in the State court. That was a judgment on the merits of the identical matter now in question, and it concluded the 'parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.' Cromwell v. County of Sac, 94 U.S. 351, 352. It is true the mortgagor did not set up as a defence that the bank had no right to take the mortgage, or that he was entitled to certain credits because of payments of usurious interest, but he was at liberty to do so. Not having done so, he is now concluded as to all such defences, and so are his privies.

Decree affirmed.

title: Stout v. Lye/Opinion of the Court


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Page:Works of John C. Calhoun, v6.djvu/16

2 The Special Committee to whom the above Resolution was referred, beg leave to Report the following Exposition and Protest—

The committee have bestowed on the subjects referred to them the deliberate attention which their importance demands; and the result, on full investigation, is a unanimous opinion that the act of Congress of the last session, with the whole system of legislation imposing duties on imports,—not for revenue, but the protection of one branch of industry at the expense of others,—is unconstitutional, unequal, and oppressive, and calculated to corrupt the public virtue and destroy the liberty of the country; which propositions they propose to consider in the order stated, and then to conclude their report with the consideration of the important question of the remedy.

The committee do not propose to enter into an elaborate or refined argument on the question of the constitutionality of the Tariff system. The General Government is one of specific powers, and it can rightfully exercise only the powers expressly granted, and those that may be necessary and proper to carry them into effect, all others being reserved expressly to the States or the people. It results, necessarily, that those who claim to exercise power under the Constitution, are bound to show that it is expressly granted, or that it is necessary and proper as a means to some of the granted powers. The advocates of the Tariff have offered no such proof. It is true that the third section of the first article of the Constitution authorizes Congress to lay and collect an impost duty, but it is granted as a tax power for the sole purpose of revenue,—a power in its nature essentially different from that of imposing protective or prohibitory duties. Their objects are incompatible. The prohibitory system must end in destroying the revenue from imports. It has been said that the system is a violation of the spirit, and not the


text: Talk:Stout v. Lye/Opinion of the Court

title: Talk:Stout v. Lye/Opinion of the Court


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United States v. Hough

ERROR to the Circuit Court of the United States for the Western District of Tennessee.

The facts are stated in the opinion of the court.

Mr. Assistant Attorney-General Simith for the appellant.

Mr. Philip Phillips and Mr. W. Hallett Phillips, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: United States v. Hough


text: Talk:United States v. Hough

title: Talk:United States v. Hough


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United States v. Hough/Opinion of the Court

Rule Hough, collector of internal revenue for the first district of Tennessee, was furnished by the Commissioner of Internal Revenue with a large amount of revenue stamps, and on the sixteenth day of September, 1864, he gave, with sureties, bond to the United States in the sum of $25,000, conditioned for the payment of the money received by him for such stamps, and a faithful return of those not sold, whenever required so to do. Suit was brought on this bond. Treasury transcripts were offered in evidence by the plaintiff, showing a statement of his account in reference to revenue stamps, dated, Sept. 30, 1870, by which he was found to be indebted to the United States on that account in the sum of $6,093.78. Evidence was offered by the defendants tending to show a balance of $6,434.75 due to him for salary, commissions, and expenses as disbursing agent, which he, before the institution of the suit, had instructed the accounting officer to convey to the credit of this stamp account, and which was sufficient to satisfy it.

Evidence was also offered tending to show a sum due from Hough to the United States for money received as collector of internal revenue, much larger than the amount of his credit for salary and commissions as disbursing agent.

The case was tried by a jury. There was a verdict for the defendants, on which judgment was rendered. The United States sued out this writ.

The main assignments of error relate to the charge of the court to the jury, and the refusal of the court to charge as requested by counsel for the United States.

With reference to the charge given by the court, while it is found in the bill of exceptions, there is clearly no exception shown to that charge. The bill, after reciting the charge, is immediately followed by the statement that 'the district attorney moved the court for a new trial, which motion was overruled by the court, to all which the district attorney excepted, and tenders this his bill of exceptions,' &c. No mention is made to any exception or any objection to the charge of the court, and none can be considered here.

Before this, however, the district attorney had asked of the court to give a charge, consisting of four propositions, which are set out, and 'which instructions, says the bill, 'the court refused to give, and the district attorney excepted.'

According to the well-settled rule of this court, if either of these four propositions was erroneous, or, in other words, if all the charge thus asked was not sound law, the court did right in refusing the prayer which presented them as a whole. See Johnston v. Jones, 1 Black, 209; Harvey v. Tyler, 2 Wall. 328; Lincoln v. Claflin, 7 id. 132; Beaver v. Taylor, 93 U.S. 46; Worthington v. Mason, 101 id. 149.

One of the propositions so asked was that, under the bond sued on in this case, the sureties of Hough are liable for all amounts of stamps which the proof shows came to his hand as stamp agent, both before and since the execution of the bond, unless the same had been properly accounted for.

It is true that one condition of the bond is to make a faithful return, whenever so required, of the moneys received by him for such stamped vellum, parchment, or paper, and adhesive stamps, as have been or may hereafter be delivered to him; but it is also a part of the condition of the bond describing the stamps for which they shall be liable, and that they were stamps delivered and to be delivered under 'the act of Congress to provide internal revenue for the support of the government, approved March 3, 1863,' pursuant to the sixteenth section of that act. Now, that act, and especially the sixteenth section of it, was repealed by the act of June 30, 1864, which enacts its own provisions on this subject. The act of March 3, 1863, was, therefore, no longer in existence when the bond was taken which binds the sureties for stamps received under its provisions, and, as the obligation of sureties cannot be extended beyond what they have in terms assumed, they cannot be held liable for stamps furnished under the act of 1864. The date of the bond, be it remembered, was Sept. 16, 1864. The act of 1863 had then been repealed more than two months. Stamps undoubtedly had been delivered, before the repeal of the act of 1863, to Hough which had not been accounted for when the bond was given, and it was competent for the government to take a bond covering the stamps advanced to him under that act.

It was also competent for the sureties to limit their liabilities to stamps received under the act of 1863; and the record shows that they did. The court below told the jury that the sureties were only liable for stamps received by Hough prior to the 30th of June, 1864, the date of the repealing act; and to this no exception was taken. As we think the court was right in this, the charge asked by the district attorney was properly rejected.

The difficulty seems to have grown out of the use of a form of bond framed under a statute which had been repealed.

Objection is made to the admission of two pieces of evidence designed to show that Hough had applied the credit due him as disbursing agent to the estinguishment of the balance due from him as stamp agent. The objection is not made to the pertinency of the evidence, but to the fact that it was not presented for allowance as a credit to the proper accounting officer of the treasury and rejected, as provided in sect. 951, Revised Statutes.

The answer to this is that the claim itself had been allowed by the proper accounting officer of the treasury, and the point in issue was as to the application of the sum so allowed to one of two distinct claims of the government against him. To such a case the section has no application.

Though there may have been many errors committed in the trial of this case, there are none so presented by the record that we can correct them.

Judgment affirmed.


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


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Wall v. County of Monroe

 * 1) A county in Arkansas, when sued on its warrants by a bona fide holder thereof for value, may set up any defence to which they were subject in the hands of the original payee.
 * 2) The same rule is applicable where the warrants are issued to the payee, in lieu of others in his favor cancelled by the county court, after it found them to be just claims against the county.
 * 3) Neither the order directing the issue of the original warrants, nor that cancelling them and substituting others in their place, has the force of a judicial determination concluding either the payee of them or the county.

ERROR to the Circuit Court of the United States for the Eastern District of Arkansas.

This is an action upon the warrants of the county of Monroe, Arkansas, which were drawn by the clerk of the county [p75] upon its treasurer, in favor of one Frank Gallagher, and transferred by him to the plaintiff.

The following is a copy of one of them. The others are of like tenor and effect, though some of them are for only $20.

They were renewal warrants, drawn in lieu of others which, under the laws of Arkansas, had been called in by the county court for examination, registration, and reissue. The called-in warrants, having been found to be just and legal claims against the county, were cancelled by order of the court, and the clerk was directed to issue new warrants in lieu thereof to the original payee, Frank Gallagher.

The new warrants were purchased in good faith for a valuable consideration by the plaintiff, who, on the refusal of the treasurer to pay them on demand, instituted this action. The answer sets up as a defence that said Gallagher was, at the time the warrants were issued to him, indebted to the county as surety on the official bond of one Ambrose Gallagher, tax-collector of the county, in a sum larger than the amount sued for; that since then the county has recovered a judgment against the said Frank Gallagher for a much larger amount than the warrants in suit; that the judgment was recovered before the transfer of the warrants to the plaintiff, and has not been reversed or modified, and is still in full force and unsatisfied; and it asks that the judgment may be set off against the warrants. The plaintiff demurred to the answer, alleging as the cause of demurrer that its allegations were not sufficient to constitute a defence at law.

Upon the argument of the demurrer the following questions arose:—

First, Is the defendant estopped by the reissue of the war- [p76] rants to set up a defence known to have been existing at the time they were reissued in lieu of the original warrants surrendered to the county court, and by its order cancelled?

Second, Can the claim set up in the answer, if held by the county against the original payee when the warrants were issued or while they were still in his possession, be set up as defence of set-off in a suit by a holder of them for value, who had not notice of such defence when he acquired them?

On which questions the opinions of the judges were opposed, and the demurrer having been overruled, final judgment was rendered for the defendant.

Whereupon, upon motion of the plaintiff, the points on which the disagreement happened were stated under the direction of the judges, and certified to this court for final decision.

Mr. M. T. Sanders for the plaintiff in error.

Under the law of Arkansas, the warrants which are the foundation of this suit are negotiable instruments. Rev. Stat., sects. 602, 603, 605; Crawford County v. Wilson, 7 Ark. 214; Carnall v. Crawford County, 11 id. 604; Gunn v. Pulaski County, 3 id. 427; Adamson v. Adamson, 9 id. 26; Brem v. Arkansas County Court, id. 241; Reiff v. Conner, 10 id. 241; Jefferson County v. Hudson, 22 id. 595.

Sect. 27, art. 7, of the Constitution of the State gives to the county court exclusive original jurisdiction in the local concerns of the county. It is a court of record. Its judgment allowing demands against the county, and directing the issue of a warrant for their payment, merges them and all preexisting equities between the parties, and cannot be collaterally impeached.

The transferee of the warrants sued on must be treated as the assignee of the judgment pursuant to which they were issued. A defence which might have been made available against the original claim cannot be set up in an action on the judgment. Noble v. Merrill, 48 Me. 140; Guinard v. Heysinger, 15 Ill. 288; Flint v. Sheldon, 13 Mass. 443; Ellis v. Clarke, 19 Ark. 420.

The defence here does not arise out of the transaction in which the warrants, all of which bear date in 1875, were issued. It rests upon a claim of the county against the original payee, [p77] who was a surety of the defaulting county tax-collector for the year 1872. Conceding that they are of no higher grade than bills of exchange or promissory notes negotiated after maturity, the county could not avail itself of the defence set up.

The indorsee of an overdue negotiable note takes it subject to all the equities which attached to it in the hands of the payee, if they are connected with the note itself, but not to such as grow out of distinct and independent transactions. National Bank of Washington v. Texas, 20 Wall. 72, 89; Oulds v. Harrison, 10 Exch. Rep. 572; Burrough v. Moss, 10 Barn. & Cress. 558; Renwick v. Williams, 2 Md. 356.

Mr. Augustus H. Garland, contra.

MR. JUSTICE FIELD delivered the opinion the court.

title: Wall v. County of Monroe


text: Talk:Wall v. County of Monroe

title: Talk:Wall v. County of Monroe


text:
Wall v. County of Monroe/Opinion of the Court

MR. JUSTICE FIELD delivered the opinion of the court.

The warrants in suit are evidences of indebtedness by the county of Monroe, issued by that branch of its government to which is intrusted, by the laws of the State, the examination and approval of claims against the county. They are orders upon the treasurer of the county to pay out of its funds for county purposes, not otherwise appropriated, the amounts specified. They establish, prima facie, the validity of the claims allowed and authorize their payment. But they have no other effect. Their issue determined nothing as to other demands of the payee against the county, or of the county against him. Had there been other claims to be adjusted and settled between the parties, these warrants, if lawfully issued, would have been taken as approved items in the account—nothing more.

The warrants being in form negotiable, are transferable by delivery so far as to authorize the holder to demand payment of them and to maintain, in his own name, an action upon them. But they are not negotiable instruments in the sense of the law merchant, so that, when held by a bona fide purchaser, evidence of their invalidity or defences available against the original payee would be excluded. The transferee takes them subject to all legal and equitable defences which existed to them in the hands of such payee.

There has been a great number of decisions in the courts of the several States upon instruments of this kind, and there is [p78] little diversity of opinion respecting their character. All the courts agree that the instruments are mere prima facie and not conclusive evidence of the validity of the allowed claims against the county by which they were issued. The county is not estopped from questioning the legality of the claims; and when this is conceded the instruments conclude nothing as to other demands between the parties. The cases will be found collected in notes to the fourteenth chapter of Dillon on Municipal Corporations. The law respecting these instruments is also fully stated by this court in Mayor v. Ray, reported in the 19th of Wallace. That case was upon warrants of a city and not of a county, a circumstance which does not affect the doctrine. The court, speaking through Mr. Justice Bradley, said: "Vouchers for money due, certificates of indebtedness for services rendered, or for property furnished for the uses of the city, orders or drafts drawn by one city officer upon another, or any other device of the kind, used for liquidating the amounts legitimately due to public creditors, are, of course, necessary instruments for carrying on the machinery of municipal administration, and for anticipating the collection of taxes. But to invest such documents with the character and incidents of commercial paper, so as to render them in the hands of bona fide holders absolute obligations to pay, however irregular or fraudulently issue, is an abuse of their true character and purpose." And again: "Every holder of a city order or certificate knows that, to be valid and genuine at all, it must have been issued as a voucher for city indebtedness. It could not be lawfully issued for any other purpose. He must take it, therefore, subject to the risk that it has been lawfully and properly issued. His claim to be a bona fide holder will always be subject to this qualification. The face of the paper itself is notice to him that its validity depends upon the regularity of its issue. The officers of the city have no authority to issue it for any illegal or improper purpose, and their acts cannot create an estoppel against the city itself, its taxpayers, or people. Persons receiving it from them know whether it is issued, and whether they receive it for a proper purpose and a proper consideration. Of course they are affected by the absence of these essential ingredients; and all [p79] subsequent holders take cum onere, and are affected by the same defect." These observations apply equally to the county warrants in suit, as to the city warrants there considered. And the same reasons which deny to them negotiability in the sense of the law merchant, allow any matter of set-off to them which the county held against the original parties.

The case of Crawford County v. Wilson, in the Supreme Court of Arkansas, is cited as showing that a different rule prevails in that State. The language of the opinion, that county warrants are endowed with the properties of negotiable instruments, must be read in connection with the point involved, which was whether county warrants were transferable by mere delivery, so as to vest the legal interest in the holder. To this extent they may be called negotiable, but no court of Arkansas has held that they were negotiable in the sense of the law merchant, so as to shut out, in the hands of a bona fide purchaser, inquiries as to their validity, or preclude defences which could be made to them in the hands of the original parties. The law is not different there from that which obtains in other States.

The cancellation of the warrants originally issued and the substitution of others in their place did not change their charter. Neither that proceeding nor the original auditing of the claims of Gallagher had the force of a judicial determination, concluding either him or the county. There was no litigation on the subject between adversary parties which could give to the result any greater efficacy than the award of an ordinary board authorized to audit claims against a municipal body. Shirk v. Pulaski County, 4 Dill. 209.

We answer, therefore, the first question certified to us in the negative, and the second in the affirmative, and accordingly affirm the judgment.

Judgment affirmed.


text: Talk:Wall v. County of Monroe/Opinion of the Court


text:
Allen v. Louisiana

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

The facts are stated in the opinion of the court.

Mr. S. T. Glover and Mr. John R. Shepley for the plaintiff in error.

Mr. James O. Broadhead, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Allen v. Louisiana


text: Talk:Allen v. Louisiana

title: Talk:Allen v. Louisiana


text:
Allen v. Louisiana/Opinion of the Court

Art. 10, sect. 14, of the Constitution of Missouri, adopted in 1865, is as follows:--

'The General Assembly shall not authorize any county, city,     or town to become a stockholder in, or to loan its credit to,      any company, association, or corporation, unless two-third of      the qualified voters of such county, city, or town, at a      regular or special election to be held therein, shall assent      thereto.'

The charter of the city of Louisiana, approved March 12, 1870, contained the following sections as sects. 8 and 9 of art. 3, and sect. 14 of art. 7:--

'SECT. 8. The bonded or funded debt of the city for all     purposes, including one hundred thousand dollars subscribed      (or to be lawfully subscribed) to railroads terminating at or      passing through the city of Louisiana, shall not exceed the      sum of two hundred thousand dollars: Provided, however, that      said debt may be increased to a sum not exceeding two hundred      and fifty thousand dollars in all, by ordinance or ordinances      properly passed and submitted to an election under the authority of the city council of all      resident taxpayers of the city, that is to say, of all adult      persons who shall have been assessed and actually paid a tax      on real or personal property for the year or the year      previous to the year in which such election shall be held,      and at such election the judges holding the same shall      require proof of the payment of such tax before recording      vote of any person offering to vote at such election, and a      majority of all the legal votes cast at said election shall      determine the question for or against such ordinance.

' SECT. 9. The city shall have power to subscribe to stock in     any incorporated railroad company connecting with the city of      Louisiana, or give a bonus to any institution of learning by      submitting an ordinance making the appropriation or      authorizing the issue of bonds for any such purpose to a vote      of the qualified voters (as provided by section 8) of the      city, at any general election held in the city, or any      special election expressly ordered, at which election a      majority of the votes cast shall be for such ordinance.'

'SECT. 14. The city shall not at any time become a subscriber     for any stock in any corporation, except as authorized by      this or some other act of the General Assembly, but said city      may by ordinance appropriate money to aid in opening any road      leading to the city, or in other inprovements within the      city, or in building any bridge within two miles of the city,      and which may be deemed of general public benefit to the      inhabitants of the city: Provided, however, that no      appropriation shall be made for any improvement beyond the      limits of the city, unless a vote be taken on such      appropriation at some general election or special election      ordered for that purpose, and a majority of all votes polled      be cast in favor of that appropriation.'

Under the authority of these provisions of the charter the city council, on the 10th of August, 1871, passed an ordinance, sect. 1 of which is as follows:--

'There shall be an election held at the several places in     each ward for the holding general election in the city of      Louisiana on the fifth day of September, 1871, on the      proposition to take stock in the Clarksville and Western      Railroad Company, or in the Quincy, Alton, and St. Louis      Railroad Company: Provided, the said Quincy, Alton, and St. Louis Railroad Company shall cross the Mississippi River and     make its southern terminus within the corporate limits of the      said city of Louisiana, at such place as may be agreed upon by the officers of said Quincy, Alton, and St.      Louis company and the city council of Louisiana, to an amount      not to exceed fifty thousand dollars ($50,000); said election      to be conducted by the same judges and at the same places as      the general election held on the Tuesday after the first      Monday in March, 1871, and the returns to be made and      certified to the city council in the same manner as that of      any general election.'

Other sections provided for the payment of the subscription in bonds, and for the form of the ballots. Sect. 4 peovided that if on counting the votes if appeared that two-thirds of the legal votes cast at the election were in favor of the proposition a subscription might be made, and sect. 5 made provision for a registration of the voters prior to the day of the election.

The Quincy, Alton, and St. Louis Railroad Company was an Illinois corporation, one terminus of whose road was on the bank of the Mississippi River, in the State of Illinois, opposite the city of Louisiana. Before the day of election a full registration of the voters of the city was made, from which it appeared peared that there were three hundred and fifty-six qualified voters then in the city. On the day appointed an election was held, at which there were three hundred and thirty-six votes cast in favor of the subscription and ten against it. Afterwards the stock was subscribed to the Quincy, Alton, and St. Louis company, and the company having complied with the terms and conditions of the subscription, the bonds were delivered by the city, amounting in the aggregate to $50,000, in the following form:--

'Know all men by these presents, That the city of Louisiana,     in the State of Missouri, is indebted to _____, or bearer, in      the sum of one thousand dollars, lawful money of the United      States of America, which the said city of Louisiana promises      to pay on the second day of October, 1891, at the treasurer's      office in the city of Louisiana, Mo., with interest thereon      at the rate of eight per cent per annum, payable annually on      the first day of January in each year, upon presentation and      surrender of the annexed coupons, as they severally become      due and payable. This bond is issued by the city of     Louisiana, under authority of the General Assembly of the      State of Missouri, entitled 'An Act to amend and reduce into      one the several acts incorporating the city of Louisiana,'      approved March 25, 1870; also an ordinance of the city council of the      city of Louisiana, No. 628, passed Sept. 26, 1870.

'In witness whereof, the city of Louisiana has caused its     seal to be hereto affixed, and the same to be signed by the      mayor, and countersigned by the clerk of the city council, at      the city of Louisiana, Mo., the fourth day of November, in      the year of our Lord eighteen hundred and seventy-one.

[SEAL.]

'WM. PARKER,

'Mayor of City of Louisiana.

Countersigned,

'N. H. GRIFFITH,

'Clerk City Council.'

The city paid without objection the first instalment of interest as it fell due, but since that time has been in default. This suit was brought on seventy-nine coupons, past due, of which the plaintiff's intestate was a purchaser for yalue before maturity without notice.

Upon this state of facts the Circuit Court gave judgment for the defendant, and to reverse that judgment this writ of error has been brought.

The question which lies at the foundation of this case is whether the legislature of Missouri has, by a valid law, authorized the city of Louisiana to subscribe to the capital stock of the Quincy, Alton, and St. Louis Railroad Company, an Illinois corporation. It is conceded that if there was no such law the judgment below was right. It is also conceded that such a subscription could not be made on the vote of a majority of the taxpayers of the city, because the General Assembly is prohibited by the Constitution from granting authority for that purpose except upon the assent of two-thirds of the qualified voters. Neither is it contended that the qualified voters, whose vote is to be taken under sect. 9 of the charter, are not the resident taxpayers specified in sect. 8; but the claim is that, if this unconstitutional provision is disregarded, enough can be found in the other parts of the sections to authorize the subseription.

It is an elementary principle that the same statute may be in part constitutional and in part unconstitutional, and that if the parts are wholly independent of each other, that which is constitutional may stand while that which is unconstitutional will be rejected. 'But,' as was said by Chief Justice Shaw, in Warren v. Mayor and Aldermen of Charlestown (2 Gray (Mass.), 84), 'if they are so mutually connected with and dependent on each other, as conditions, considerations, or compensations for each other as to warrant a belief that the legislature intended them as a whole, and that, if all could not be carried into effect, the legislature would not pass the residue independently, and some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected must all with them.' The point to be determined in all such cases is whether the unconstitutional provisions as so connected with the general scope of the law as to make it impossible, if they are stricken out, to give effect to what appears to have been the intent of the legislature.

It is contended that, with a proper application of these principles, sufficient authority for this subscription can be found either in sects. 8 or 9, art. 3, or sect. 14, art. 7.

As to sect. 8. This section provides, in substance, that the bonded or funded debt of the city, including $100,000 subscribed or lawfully to be subscribed to railroads terminating at or passing through the city, shall not exceed $200,000 without the assent of a majority of the resident taxpayers, but that with the assent of the taxpayers, given in the way pointed out, the debt may be increased to $250,000. It authorizes no subscription to railroad corporations, but recognizes the fact that under certain circumstances such a subscription may be lawfully made, and limits the permanent debt to be incurred for that and other purposes to $200,000, without the consent of the taxpayers, and to $250,000, with their consent. In other words, it is charter provision against incurring a bonded debt beyond the prescribed amounts. That is the whole scope and effect of this section.

As to sect. 9. This, when taken in connection with the requirements of the Constitution, cannot be construed as being of itself a grant of authority to subscribe, because it makes a subscription dependent on a majority vote of the resident taxpayers, while the Constitution requires the assent of two-thirds of the qualified voters. In the construction of a statute, every word is, if possible, to be given some effect. Nothing is to be stricken out if it can be avoided. It is not to be presumed that the legislature intended any part to be without meaning. In the light of these maxims of interpretation, the substantial object of this section evidently was to limit to a greater extent than had been done by the Constitution the power to subscribe to the stock of railroad companies connecting with the city. Under the Constitution, a two-thirds vote of the qualified voters, taken under the authority of law, would be enough; but under the charter, the two-thirds vote of the qualified voters required by the Constitution, and a majority vote of the taxpayers, were both necessary. The charter limitation could be repealed. It was in the nature of a legislative regulation which could be dispensed with whenever, in authorizing a particular subscription or otherwise, the legislature should so declare. As it stands, it operates as a charter protection to the taxpayers against the imposition of burdens of this kind by the qualified voters alone, but of itself it authorizes no subscription.

Had there been no constitutional restriction put on the legislature in matters of this kind, the language employed might have been susceptible of a different meaning; but with the Constitution as it is, the entire provision as to the majority vote of the taxpayers, to which the legislature evidently attached special imporance, must be stricken out, and that of the Constitution as to the two-thirds vote of the qualified voters inserted by implication, before it can be said that what now sppears to be a limitation was, in fact, a positive grant of power. We are clearly of the opinion that this cannot be done consistently with the evidence purpose of the law, and, as a consequence, that no authority for the subscription can be found in this section of the charter.

As to sect. 14, art. 7. This clearly gives no affirmative power to subscribe. It is, in effect, nothing more than a provision that no subscription shall be made unless expressly authorized by law, which is but an enactment of what had before become a well-established rule of decision. It authorized appropriations of money for the purposes specified, on a majority vote of the qualified voters at a general or special election, and it recognized the fact, which is no longer disputed, that the legislature might authorize the city, in a proper way, to become a subscriber to stock in some corporations. This is the full extent of the operation of that section.

These, so far as we can discover from the record, were the only provisions of law relied on in the court below to sustain the subscription for the payment of which the bonds now in question were issued. In this court, however, it is contended that power to make the subscription may be found in sect. 17, chap. 63, of the General Statutes of Missouri, of 1865, taken in connection with an amendment to that chapter, adopted as additional sect. 52, March 24, 1870. Session Acts, pp. 89, 90. Upon this point it is sufficient to say that the Quincy, Alton, and St. Louis company was an Illinois corporation, and under sect. 17 authority was only given to subscribe to the stock of companies organized under the laws of Missouri. By the amendment of 1870 (sect. 52), under certain circumstances, railroad companies of other States might extend their roads into Missouri, 'and for that purpose. . . possess and exercise all the rights, powers, and privileges conferred by the general laws of this State [Missouri] upon railroad corporations organized thereunder;' but this did not make them corporations 'organized under the laws of Missouri.' If, as is argued, the foreign corporation got, as one of the privileges conferred on it by this law, the right to receive municipal subscriptions, it was of no practical value as a privilege until the power to subscribe was in some form given to the municipalities.

It is of no importance that two-thirds of the qualified voters of the city gave their assent to the subscription at the election which was called. It has been uniformly held that until the legislature authorizes an election, a vote of the people cannot be taken which will bind the municipality or confer upon the municipal authorities the power to make such a subscription. The legislative authority to obtain the popular assent is as essential to the validity of the election as it is to the subscription.

Judgment affirmed.

title: Allen v. Louisiana/Opinion of the Court


text: Talk:Allen v. Louisiana/Opinion of the Court


text:
Jones v. Van Benthuysen

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

The facts are stated in the opinion of the court.

Mr. Assistant Attorney-General Smith for the plaintiff in error.

Mr. John D. Rouse and Mr. William Grant, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Jones v. Van Benthuysen


text: Talk:Jones v. Van Benthuysen

title: Talk:Jones v. Van Benthuysen