text:
Barton v. Barbour/Dissent Miller

MR. JUSTICE MILLER dissenting.

The rapid absorption of the business of the country of every character by corporations, while productive of much good to the public, is beginning also to develop many evils, not the least of which arises from their failure to pay debts and perform the duties which by the terms of their organization they assumed. One of the most efficient remedies for the failure to pay, when it arises from inability, is to place the corporation in the hands of a receiver, that its affairs may be wound up, its debts discharged, and the remaining assets, if any there be, distributerd among its stockholders. Of the beneficial results of this remedy there can be little doubt. When it is applied with despatch, and the effects of the insolvent corporation are faithfully used to meet its liabilities and its dead body is buried out of sight as soon as possible, no objection can be made to the procedure, and all courts and good citizens zens should contribute, as far as they may, to this sesirable object.

In regard, however, to a certain class of corporations,-a class whose operations are as important to the interests of the community and as intimately connected with its business and social habits as any other,-the appointment of receivers, as well as the power conferred on them, and the duration of their office, has made a progress which, since it is wholly the work of courts of chancery and not of legislatures, may well suggest a pause for consideration. It will not be necessary to any observing mind to say that I allude to railroad corporations. Of the fifty or more who own or have owned the many thousand miles of railway in my judicial circuit, I think I speak within limits in saying that hardly half a dozen have escaped the hands of the receiver. If these receivers had been appointed to sell the roads, collect the means of the companies, and pay their debts, it might have been well enough. But this was hardly ever done. It is never done now. It is not the purpose for which a receiver is appointed. He generally takes the property out of the hands of its owner, operates the road in his own way, with an occasional suggestion from the court, which he recognizes as a sort of partner in the business; sometimes, though very rarely, pays some money on the debts of the corporation, but quite as often adds to them, and injures prior creditors by creating a new and superior lien on the property pledged to them.

During all this time he is in the use of the road and rollingstock, and performing the functions of a common carrier of goods and passengers. He makes contracts and incurs obligations, many of which he fails to perform.

The decision which has just been announced declares that for these failures he cannot be used in a court of law; that by virtue of his receivership, he and all his acts, and the business of the road, are exempted from the operation of the common law, and that all parties deal with him on the implied understanding that they abandon the right to have their complaints tried by jury or by the ordinary courts of justice, and can only obtain such relief as may be had at the hands of a master in chancery of the court which appointed him.

When a receiver appointed to wind up a defunct corporation has no power to make new contracts,-when his sole duty is to convert the property into a fund for the payment of debts, and for distribution among those who are entitled to it,-a very strong reason exists why the court which appointed him should alone control him in the performance of his duty. In such cases, the Court of Chancery has the undoubted right to protect him by injunction against parties suing him in another court, and to punish them for contempt.

Wiswall v. Sampson (14 How. 52) and Peale v. Phipps (id. 368) recognize this principle. In the former case the court decided that a sale of property under a judgment of one court, which was in the actual possession of a receiver appointed by another court, did not confer a valid title as against the sale of the same property subsequently made under an order of the court whose receiver had held possession all the time. The court did not decide that he could not be used at law for any tort committed by him as receiver.

Peale v. Phipps carries the doctrine to an extent to which it had not been carried before, but it was based upon the proposition that Peale, as the trustee under the law of Mississippi, appointed by a court of that State to close out and distribute the assets of a broken bank, could not, as such trustee, be made amenable to the jurisdiction of a court of Louisiana. The reason being that the fund, out of which alone the plaintiffs could be satisfied, was in the control of the court in Mississippi. The debt sued for was created by the bank before it was placed in the hands of the receiver. When he was appointed, the bank in effect ceased to exist, and could neither do business nor contract debts. There remained solely the duty of realizing its assets and paying its debts.

In the case before us the plaintiff sues to recover damages for a personal injury, caused by an act done by the receiver or his agents in the transaction of business as a common carrier, in which he was largely and continuously engaged. Why should the receiver not be sued like any one else on such a cause of action in any court of competent jurisdiction?

The reply is, because he is a receiver of the road on which the plaintiff was injured, and holds his appointment at the hands of a Virginia court of chancery. If this be a sufficient answer, then the railroad business of the entire country, amounting to many millions of dollars per annum, may be withdrawn from the jurisdiction of the ordinary courts having cognizance of such matters, and all the disputes arising out of these vast transactions must be tried alone in the court which appointed the receiver. Not only this, but the right of trial by jury, which has been regarded as secured to every man by the constitutions of the several States and of the United States, is denied to the person injured, and though his case has no element of equitable jurisdiction he is compelled to submit it to a court of chancery or to one of the masters of such a court.

In an action for a personal injury, which has always been considered as eminently fitted for a jury, especially in the assessment of damages, this constitutional right is denied, because the receiver of a railroad and not its owners committed the wrong.

Before I can give my assent to such a doctrine I must be well assured that the law as heretofore expounded demands it.

So far from entertaining such a conviction, I think that the doctrine is at variance with the principles which govern the relations of common-law courts and courts of equity where, as in the courts of the United States, these jurisdictions have been kept separate.

In England, in the contests between these courts it was never claimed that the court of chancery could act directly upon the court of law, or that the latter was bound in any way to follow the decisions of the former. Nor could the Chancellor direct his writ to the common-law court or its officers; but if it was determined to give any equitable relief in the matter pending before the law court, the injunction or other chancery process was directed to the suitor. Upon him alone was the power of the court exercised. In such a case as this, if the Court of Chancery was of opinion that the plaintiff was improperly interfering with the functions of the receiver, it could restrain him by injunction or punish him by attachment for contempt. If, however, the plaintiff could not be reached by that court, it is no more than the evil of many other cases where a defendant cannot be found when he is wanted in a court of justice.

But I know of no principle or precedent whereby a court of law, having before it a plaintiff with a cause of action of which it has jurisdiction, and a defendant charged with an act also within the jurisdiction, is bound or is even at liberty to deny the plaintiff his lawful right to a trial because the defendant is a receiver appointed by some other court, and to leave the suitor to that court for remedy, where it is known that some of the most important guaranties of the trial to which he is entitled, and which are appropriate to the nature of his case, will be denied him.

Whatever courts of equity may have done to protect their receivers, or the fund in their hands, it is no part of the duty of courts of law to deny to suitors properly before them the trial of their rights, which justice requires and the Constitution and the law guarantee.

These views are well sustained by the authorities collected in the brief of the plaintiff's counsel, especially in Angel v. Smith, 9 Ves. Jr. 335; Hill v. Parker, 111 Mass. 508; Chautauque County Bank v. Risley, 19 N. Y. 369; Camp v. Barney, 4 Hun (N. Y.), 373; Sprague v. Smith, 29 Vt. 421.

The doctrine is stated with admirable precision by the Supreme Court of Wisconsin in the case of Kinney v. Crocker (18 Wis. 74), in the following language: 'But in all these cases it is not a question of jurisdiction in the courts of law, but only a question whether equity will exercise its own acknowledged jurisdiction of restraining suits at law under such circumstances and itself dispose of the matter involved. It follows that although a plaintiff in such case, desiring to prosecute a legal claim for damages against a receiver, might, in order to relieve himself from the liability to have his proceeding arrested by an exercise of its equitable jurisdiction, very properly obtain leave to prosecute; yet his failure to do so is no bar to the jurisdiction of the court of law, and no defence to an otherwise legal action in the trial. There can be no room to question this conclusion in all cases where there is no attempt to interfere with the actual possession of property which the receiver holds under the order of the Court of Chancery, but only an attempt to obtain a judgment at law in a claim for damages.'

It is asserted by counsel, whose brief shows the extent of his research, that no case can be found where such a plea has been sustained in an English court. I regret to say that in my opinion the judgment just rendered is unsupported by authority and unsound in principle.

title: Barton v. Barbour/Dissent Miller


text: Page:In the Roar of the Sea.djvu/3

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

title: Page:In the Roar of the Sea.djvu/3


text: Talk:Barton v. Barbour/Dissent Miller

title: Talk:Barton v. Barbour/Dissent Miller


text:
Fort v. Roush

APPEAL from the Supreme Court of the Territory of Montana.

The facts are stated in the opinion of the court.

Mr. John F. Phillips, Mr. Thomas W. Bartley, and Mr. M. I. Southard for the appellant.

No counsel appeared for the appellees.

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

title: Fort v. Roush


text: Talk:Fort v. Roush

title: Talk:Fort v. Roush


text:
Fort v. Roush/Opinion of the Court

This record shows that, in 1871, Fort, the appellant, sued the appellees in the District Court of Lewis and Clarke County, Montana Territory, to foreclose a mortgage executed by them to him, and obtained a decree finding that there was due on the mortgage debt $2,895, and ordering a sale of the property. Under this decree an order of sale was issued and the property sold, part to Isaac W. Stoner, part to Frederick Reece, and the remainder to Fort himself. After this sale the appellees filed the present bill in the same court to set aside the sales on account of alleged fraudulent conduct of Fort. Under this bill the sales to Stoner and Reece were in all respects confirmed, but that to Fort set aside. Roush and wife then filed an amended and supplemental bill, in which they sought to charge Fort with the value of the use and occupation of the property whereof he was in possession under his purchase, and with alleged damages for waste. In this bill the claim is stated as follows:--

'And the said plaintiffs say that by reason of the premises the said Fort is chargeable with the damage done to said premises, with the value of the foregoing use and occupation, and the amount of said rents and profits, and that the same should be set off against any balance that may be due upon the said decree.'

Fort in his answer set forth the amount he claimed to be due on his decree after the amount paid by Stoner and Reece had been credited thereon, and asked that, as the sale to him had been set aside, he might have a revival of his decree for the balance that should be found his due. On motion of Roush and wife, this part of the answer was stricken out, and leave was refused Fort to make such amendments as seemed to be necessary to meet that part of his case. The case was then sent to a referee to ascertain and report the amount for which Fort was chargeable on account of his use and occupation, and for damages by waste while in possession. His request to have the referee directed to ascertain the amount due him on his decree was refused. The referee reported, and exceptions were taken by Fort. These exceptions were in part sustained and in part overruled, the result being a personal judgment against Fort and in favor of the appellees for $1,836,31, with interest from June 30, 1877. The case was then taken to the Supreme Court of the Territory on appeal, where the judgment of the District Court was modified by striking therefrom the sum of $618.51, but in all other respects affirmed. From this action of the Supreme Court the present appeal has been taken.

The amount with which Fort was charged by the Supreme Court was exclusively for the value of the use and occupation of the property purchased by him while he was in possession under the sale, and a small amount for damages done to the freehold. While the amount charged seems to us to be somewhat large, we have on the whole concluded not to disturb the judgment on that account. Another reference might reduce the amount somewhat, but the error in that particular is not so manifest as to make it proper for us to interfere with what has been done by two courts below.

The refusal of the court, however, to apply the amount found due towards the satisfaction of the mortgage debt, we think, was erroneous. The very object of the bill of Roush and wife, as amended, was to have that done. If we understand correctly the position of the court below upon this part of the case, it is that, as Fort had not proceeded under sect. 286 of the Codified Statutes of Montana, and caused his decree to be revived after the sale to him had been set aside, the satisfaction growing out of the sale still remained in force, and there was no outstanding mortgage debt on which the application could be made. This we do not think is the law. The statute referred to is as follows:--

'SECT. 286. If the purchaser of real property, sold on     execution, or his successor in interest, be evicted therefrom      in consequence of irregularities in the proceedings      concerning the sale, or of the reversal or discharge of the      judgment, he may recover the price paid, with interest, from      the judgment creditor. If the purchaser of property at     sheriff's sale, or his successor in interest, fail to recover      possession in consequence of irregularity in the proceedings      concerning the sale or because the property sold was not      subject to execution and sale, the court having jurisdiction      thereof shall, on petition of such party in interest or his      attorney, revive the original judgment for the amount paid by      such purchaser at the sale, with interest thereon from the      time of payment, at the same rate that the original judgment      bore; and when so revived, the said judgment shall have the      same effect as an original judgment of the said court of that      date, and bearing interest as aforesaid; and any other or      after-acquired property, rents, issues, or profits of the      said debtor shall be liable to levy and sale under execution      in satisfaction of such debt: Provided, that no property of      such debtor sold bona fide before the filing of such petition      shall be subject to lien of said judgment: And provided      further, that notice of the filing of such petition shall be      made by filing a notice thereof in the recorder's office of      the county where such property may be situated, and that said      judgment shall be revived in the name of the original      plaintiff or plaintiffs for the use of said petitioner, the      party in interest.'

The question here is not whether Fort shall have execution of his decree by a resale of the property bought by him, but whether the mortgage debt, as a debt, still remains satisfied by reason of the former sale. When the sale was set aside and Roush and wife got back their land, the satisfaction of the debt caused by the sale was vacated. Fort received no money on account of his purchase. He simply took the land as and for money. So long as he kept the land the satisfaction was effectual, but when the sale was set aside and he was compelled to give back the land, the case stood, in respect to the satisfaction of the debt, precisely as it would if Roush had demanded back money he had once handed Fort to be applied on the debt, and Fort had acceded to his request. We do not decide whether, if Fort asks execution of his decree for any balance that may remain his due, he may not be compelled to proceed under the statute, and get his decree revived, but we are clearly of the opinion that, for all the purposes of this suit, the satisfaction of the mortgage debt, brought about by the sale to Fort, was vacated when the sale was set aside, and that Roush and wife cannot in this suit have a personal judgment against Fort, except for any balance that may be found due them for rents, &c., after the mortgage debt has been satisfied.

We are unable to determine from this record what amount is actually due on the original decree. The personal judgment against Fort will, therefore, be set aside and reversed, and the cause remanded with instructions to take an account of the amount due Fort on his original decree, and apply the amount which has been ascertained to be due from him for rents, profits, and damages towards the satisfaction thereof, rendering a personal judgment against him only for any balance of the ascertained rents that may remain after the mortgage debt and costs in the original suit for foreclosure have been actually satisfied.

So ordered.

title: Fort v. Roush/Opinion of the Court


text: Talk:Fort v. Roush/Opinion of the Court

title: Talk:Fort v. Roush/Opinion of the Court


text:
Insurance Company v. Railroad Company

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. John G. Chandler for the plaintiff in error.

Mr. John G. Williams, contra.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Insurance Company v. Railroad Company


text: Talk:Insurance Company v. Railroad Company


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

The cotton, for the recovery of the value of which this action was brought against the St. Louis, Vandalia, Terre Haute, and Indianapolis Railroad Company, the defendant in error, was, at the time of shipment, owned by Adolphus Meir & Co., of St. Louis, who, for a valuable consideration, have assigned to the St. Louis Insurance Company, the plaintiff in error, all their claim on account of the said loss. The parties having, by proper written stipulation, waived a jury, the case was tried by the court, and judgment given for the railroad company.

The facts set forth in a special finding, covering many pages of the printed transcript, so far as they are deemed essential to a clear understanding of the case, are as follows:-- The Erie and Pacific Despatch Company, a Kansas corporation, having agencies in different cities of the Union, and whose business it was to solicit and forward freights over trunk railroad lines between St. Louis and New York, received the cotton in question from Meir & Co., under agreements for its transportation to Liverpool, for a through rate, expressed in English money. No direction was given as to the route over which it should be carried to the seaboard, nor were any bills of lading then executed.

The St. Louis Transfer Company, having received from the despatch company the warehouse receipts, and having been engaged by it for that purpose, hauled the cotton to East St. Louis, and there delivered it, on account of that company, to the defendant, taking receipts therefor. By the dray tickets of the transfer company the cotton was consigned by the despatch company to C. G. Meir & Co., London. The defendant had not, on previous occasions, issued bills of lading for freight shipped over its line by the despatch company, nor did it do so for any part of these shipments. But, in accordance with its custom, it made a way-bill for the cotton to Indianapolis. The cotton was carried safely over the defendant's road from East St. Louis to Indianapolis; thence, pursuant to directions of the despatch company, and without change of cars, over the Pittsburg, Cincinnati, and St. Louis Railroad to Urbana, Ohio, where it was put into other cars suitable to the change of gauge at that point; and thence over the Atlantic and Great Western Railroad and the Erie Railway to Jersey City.

The cotton was destroyed by an accidental fire which occurred in Jersey City on the 21st of March, 1873.

Within the usual time after the respective shipments from East St. Louis the despatch company executed and delivered to Meir & Co., of St. Louis, bills of lading for the cotton. Each bill disclosed the quantity of cotton, its destination, the names of the consignors and consignees, the agree rates in English money, and purported to be the 'Through bill of lading of the Erie and Pacific Despatch, and the Oceanic Steam Navigation Co. from St. Louis to Liverpool, calling at Queenstown.' With the last-named company, known as the White Star Line, the despatch company had an arrangement by which it could contract for shipments from New York to Liverpool at rates given by the steamship line, the latter agreeing to receive the goods at its dock in Jersey City, and transport them to Liverpool. But the despatch company had no power to bind the steamship line for any risks incurred in the inland transportation, nor did it receive from the line any commission or other compensation. Its remuneration came exclusively from certain arrangements with railroad companies, to which we shall presently refer.

The bills of lading delivered to Meir & Co. contained, among other provisions, the following:--

'That the said Erie and Pacific Despatch and its connections     which receive said property shall not be liable. . . for     loss or damage by. . . fire. . . nor for damage to     perishable property of any kind occasioned by delays from any      cause;. . . nor for loss or damage on any article of     property whatever by fire or other casualty while in transit,      or while in deposit or in places of transshipment or at      depots or landings at all points of delivery. . ..

'It is further agreed that said Erie and Pacific Despatch and     its connections shall not be held accountable for any damage      or deficiency in packages after the same shall have been      receipted for in good order by consignees, or their agents,      at or by the next carrier beyond the point to which the bill      of lading contracts. Consignees are to pay freight and     charges upon the goods or merchandise in lots or parts of      lots as they may be delivered to them.

'It is further stipulated and agreed, that in case of any     loss, detriment, or damage done to, or sustained by any of      the property herein receipted for during such transportation,      whereby any legal liability or responsibility shall or may be      incurred, that company alone shall be held answerable      therefor in whose actual custody the same may be at the time      of the happening of such loss, detriment, or damage, and the      carrier so liable shall have the full benefit of any      insurance that may have been effected upon or on account of      said goods.

'And it is further agreed, that the amount of the loss or     damage so accruing, so far as it shall fall upon the carriers      above described, shall be computed at the value or cost of      said goods or property at the place and time of shipment      under this bill of lading.

'This contract is executed and accomplished, and the     liability of the Erie and Pacific Despatch as common carriers      thereunder terminates, on the delivery of the goods or      property to the steamship at White Star wharf, Jersey City,      when the liability of the steamship company commences, and      not before.

*    *     *

'NOTICE.-In accepting this bill of lading the shipper, or     other agent of the owner of the property carried, expressly      accepts and agrees to all its stipulation, exceptions, and      conditions.'

The right of recovery in this case against the defendant is rested by the plaintiff in error in part, if not altogether, upon certain business relations existing at and before the time of these shipments, as well between the despatch company and the railroad companies over whose lines the cotton was carried, as between the railroad companies themselves. It is necessary, therefore, to ascertain what were the precise relations held by these several corporations to each other.

During the period covered by these transactions, and for some time prior thereto, the Erie and Pacific Despatch Company had arrangements with sundry railroads having connections terminating in New York, under which it was empowered to contract for the transportation of goods according to the tariff rates, or any special rates furnished by the respective railroad companies. It had a separate agreement with each of the railroad companies already named, in some cases oral, in others written. The agreement with the Erie Railway Company was in writing, and, among other things, provided that the despatch company should establish and maintain, at its own expense, independent and efficient agencies for soliciting and procuring freight, in the cities of New York and Boston, and in other cities, east and west, as the parties might deem necessary; that the railway company should transport all through freight secured by the despatch company, either eastward or westward bound, passing between Philadelphia, New York, Jersey City, Albany, Boston, and common or competing points in New England, and common or competing points on the line of the Erie Railway, except that on east bound freight the despatch company should not receive any commission on shipments from any station on the line of that railway; that the despatch company should issue its own bills of lading to shippers, subject, as to rates, to the current through rates of the railway company, which should at all times be as low as the rates furnished to any other party or parties; that the railway company should receive, load and unload, deliver and way-bill, and furnish daily an impression copy of each way-bill, of both eastward and westward bound freight, free of charge, to the despatch company; that the railway company agreed to assume 'all the risks of common carriers, and to pay all damage to or loss of property while on their line of road or in their possession,' and in case property was lost or damaged, and the loss and damage could not be definitely located, the railway company should pay said loss in proportion to what was received for transporting the same, subject, however, to the liability limitations contained in the bills of lading of the despatch company; that the railway company should transport all freight known as first-class freight on the fastest freight trains running over its road, and so run the same and all through freight trains so as to enable the despatch company to deliver freight between competing points, in the east or west, as quickly as it was done by any other competing line or road; that the despatch company should maintain the authorized rates of the railway company, and be governed, in the transportation of through business, by any obligations entered into by the railway company with their competing lines for the maintenance of rates; and that the railway company should give to the despatch company at all times as low rates as were given to any other line running over the road of the former, and would prorate any rate on east bound freight, made by authority of the road leading from the point, provided that road was authorized to make through rates over the Erie Railway; and that they would prorate all losses, damages, and rebates that were prorated with any other line running over that railway.

It was further stipulated in that agreement that, in consideration of the mutual benefits to be derived by the parties, the railway company should pay to the despatch company a commission on west bound freight of fifteen per cent of their gross earnings, as per their way-bills, on first, second, and third class freight, and ten per cent on their gross earnings, as per their way-bills, on fourth and special class freight from certain points to certain other designated points. On East bound freight the despatch company was to receiver from the railway company ten per cent of their gross earnings, as per their way-bills, on first, second, and third class freight, and eight per cent of their gross earnings, as per their way-bills, on fourth-class freight, from certain named places, and on freight from certain places, competing points on the Atlantic and Great Western Railroad, provided such freight originated from points off of said line; it being understood that no commission should be paid on freight originating at such stations.

With the defendant the despatch company had a parol agreement, which was the same in substance as the written one with the Erie Railway Company. It had no power, however, to contract for or fix any rate on the carriage of goods over the road of the defendant, except as authorized by the latter.

In all cases of freight, ocean bound, from the West, over the Erie Railway, shipped by or consigned to the care of the despatch company, the latter was treated as the consignee in New York, and the freight was held subject to its order. The railway company was ready to deliver the Meir cotton as it arrived in Jersey City, and as directed by the despatch company.

What were the relations which the railroad companies sustained towards each other during the same period? In the year 1873, and prior thereto, the companies owning or operating the various railroad trunk lines between St. Louis and New York had an arrangement between themselves, whereby the general freight agents of the roads terminating at St. Louis made what was called a joint tariff to New York, fixing through rates, which were divided among the several roads constituting a through line. According to an estimate of distances the goods were to be carried by each road upon the basis of the shortest line. Losses occurring on through shipments, if not located, were prorated as between the companies themselves, in the same ratio as the freight moneys; but if located, were, as between the railroad companies, to be paid by the one on whose road the losses occurred. The joint tariff was published and put into the hands of railroad agents for their guidance in making contracts, and was also distributed to shippers and to the public generally. The titlepage of that tariff was: 'Joint rates of transportation from St. Louis via Toledo, Wabash, and Western; Ohio and Mississippi; Chicago and St. Louis; St. Louis, Vandalia, Terre Haute, and Indianapolis; Indianapolis and St. Louis; St. Louis and Southeastern; and St. Louis, Bellville, and Southern Illinois Railroads.' In all cases when a through rate was contracted for, the several railroads of the connecting line participated therein according to the aforesaid arrangement for prorating through freights with each other. The railroad companies collected the freight from the consignees, divided it among themselves, and paid to the Erie and Pacific Despatch Company for its services so much per cent on the gross freights for pound freight, and sixty cents a bale on cotton, each road settling separately with that company for its dues.

It is further stated, in the special finding, that on all shipments from St. Louis to New York by the railroad companies over which the Meir cotton was carried, the defendant paid the transfer charges from St. Louis to East St. Louis, and the Erie Railway paid the lighterage at Jersey City, whether the goods were to go to New York proper, or were foreign bound. These transfer and lighterage charges were included in the through rate named by the defendant. On shipments by that route from New York to St. Louis the defendant collected the freight money from consignees, and, retaining its proportion, accounted for the residue to the next road in the line, which in like manner deducted its share and accounted in the same way to the next, and so on to the beginning of the line. On shipments from St. Louis to New York City proper the Erie Railway collected the freights from the consignees, and in like manner settled with the next preceding carrier, and so on, in the inverse order of the transportation, to the first carrier. These settlements between the roads were made periodically upon accountings between them. Upon shipments to foreign ports, the despatch company collected from the ocean steamer the full amount of the inland freight, and paid the same to the Erie Railway Company, which settled with the preceding carriers.

The general question presented by this case, as will have been observed, relates to the liability of the defendant in error for the value of certain cotton, part of shipments made in January and February, 1873, at St. Louis for Liverpool, and which having passed over its road, thence over the lines of other railroad companies, was destroyed by an accidental fire in Jersey City, while in the custody of the Erie Railway Company for delivery to an ocean steamer for further transportation.

The positions taken on behalf of the plaintiff in error are in substance these:--

That the original contracts of transportation between Meir & Co. and the despatch company were in parol, became complete when the parol agreements were made, and, consequently, for the ascertainment of the rights of the parties, reference cannot be made to bills of lading subsequently issued;

That in no event can Meir & Co. be held bound by the special conditions in the bills of lading, whereby not only the despatch company and its 'connections' were relieved from liability for loss of the cotton by fire, but all legal responsibility was limited to that company in whose actual custody it was when a loss occurred;

That the defendant, with the other companies, over whose roads the cotton passed, jointly formed a continuous and connected line, and constituted a partnership of common carriers for the route between St. Louis and Jersey City;

That the despatch company, by virtue of its relations with the railroad companies, including the defendant, was the agent of that partnership of carriers, and of each constituent member thereof, in all contracts by it made for the transportation of freight over their line, and that the delivery to it of the cotton was, in law, a delivery to that line of carriers and to each company of which it was composed;

That, consequently, the defendant was liable for the destruction of the cotton by fire while in the custody of the Erie Railway Company, one of the corporations alleged to constitute the partnership,-such liability to be determined not by the before-mentioned special conditions contained in the bills of lading, but by the general doctrines which obtain at common law, in reference to public carriers not operating under a special contract, limiting their liability; and, lastly,

That the cotton was held for an unreasonable length of time in Jersey City, without delivery to the Oceanic Steam Transportation Company for further transportation; in consequence of which delay, it is contended, the cotton was lost by the fire mentioned; in other words, had the cotton, after reaching Jersey City, been promptly delivered to the ocean steamer, it would not have been within reach of the fire that destroyed it. It is not claimed that there was negligence in any other respect.

The first question pressed upon our attention relates to the bills of lading. It appears from the special finding that, at the time the cotton was delivered to the despatch company, there was an understanding that bills of lading should be given to Meir & Co. The latter had been, prior to 1873, large shippers of cotton by that company, and had received from it numerous bills of lading. Whether they contained any special conditions whatever is not found. Nor does it appear whether the bills of lading for the shipments of 1873 were to contain special conditions relieving the despatch company and its connections from the duties and responsibilities, or any of them, annexed by law to their employment, nor whether the bills for those shipments were similar to those given in previous years. So far as disclosed by the finding, Meir & Co. when receiving the bills in question were silent as to their provisions. Neither when they received the bills of lading issued prior to 1873, nor those issued on the shipments in question, was attention called to their provisions. Nothing was said by the despatch company on either occasion, about special exemptions or exceptions for the benefit of the carriers. In fact Meir & Co., although having abundant opportunity to do so, never read any of the despatch company's bills of lading further than to see that they correctly described the cotton and accurately stated the rate, designation, and names of consignors and consignees. They were not aware, until after the loss complained of, that the bills of lading contained the special provisions under examination. And it is expressly stated in the special finding that they never 'assented to said special provisions.'

If the bill of lading constituted, as the Circuit Court held that it did, the contract of transportation with the owners of the cotton, and if the defendant is to be regarded as one of the 'connections' of the despatch company, then, manifestly, the law would be for the defendant; for the bills of lading expressly limit responsibility for loss or damage to that carrier in whose actual custody the cotton might be when lost or destroyed. But, as we have seen, the plaintiff contends that Meir & Co. were not bound by those special conditions, for the reason that the bills of lading were not delivered until after the cotton was surrendered to the despatch company for transportation, and because, also, it is expressly stated in the finding that they never assented to those special provisions. Plaintiff insists that it is the settled doctrine of this court, as announced in New Jersy Steam Navigation Co. v. Merchants' Bank (6 How. 344), Railroad Company v. Manufacturing Company (16 Wall. 318), York Company v. Central Railroad (3 id. 107), and in other cases, that a common carrier cannot resort to implication or inference, founded on doubtful and conflicting evidence, or on the silence of the shipper when receiving either a bill of lading or a notice with special conditions annexed, that the carrier, in order to obtain exemption from any of the duties imposed upon it by law, must show an express stipulation, in parol or in writing, upon the part of the shipper, assenting to such exemption; and that, in the nature of things, Meir & Co. cannot be held to have expressly stipulated for exemptions to which, the court finds, they never assented.

To this it is replied that Meir & Co. expressly stipulated for bills of lading to be given them, had abundant opportunity to examine all the provisions of those subsequently delivered, and did in fact read some portion of each one; that their failure to read all the provisions was their own fault; and, since the bill of lading contains an express notice that 'in accepting this bill of lading the shipper or other agent of the owner of the property carried expressly accepts and agrees to all its stipulations, exceptions, and conditions,' the law will not now permit Meir & Co. to plead their own negligence, or to say that its provisions were not binding upon them.

Whether the one or the other of these positions is correct it is not necessary to determine, since there are other controlling questions, touching which there is entire unanimity in the court, and upon the determination of which our decision may rest.

Waiving, therefore, any expression of opinion as to whether, upon the findings in this case, the bills of lading expressed the contract between Meir & Co. and the despatch company, or as to whether the railroad company can take shelter under the special provisions, to which reference has been made, and assuming, for the purposes of our decision,-as the plaintiff in error insists we must do,-that the defendant cannot claim the benefit of those provisions, we proceed to an examination of other grounds upon which it is sought to hold the defendant liable for the value of the cotton burned in Jersey City.

The main proposition advanced upon this branch of the case by the plaintiff's counsel is that, in these transactions, the despatch company was the agent of the defendant and of the other railroad companies over whose lines the cotton was carried. If by this is meant that the despatch company was an agent of the defendant, with general authority to bind the latter by contracts for transportation, it is sufficient to say that there is no justification in the findings for any such position. It nowhere appears that the despatch company assumed to have, or that the defendant recognized it as having, any such unlimited authority. The despatch company and the defendant had, it is true, certain business relations; but those relations did not necessarily involve an agency upon the part of the former for the latter in the making of contracts for transportation. The agreement between those companies only bound the railroad company to 'receive, load and unload, deliver and way-bill,' such freight as was sent to it by the despatch company; and at the rates established, not by the latter, but by the defendant and other railroad companies. The despatch company could not itself make a contract, or fix any rate for the carriage of goods over the defendant's road, except as authorized by the defendant. It is expressly so stated in the special finding. So far from the despatch company being authorized to impose upon the defendant obligations for the safe carriage of goods over the lines of other carriers, the agreement of the defendant with that company was, while assuming all the risks of common carriers, 'to pay all damages to or loss of property, while on their line of road or in their possession.' The contract obligation of the defendant to receive and transport the freight of the despatch company, at the established rates, did not impose upon the former an obligation to carry beyond its terminus, or subject it to liability for the negligence of other carriers. Whether the defendant should undertake for the safe transportation of goods beyond its own line was not a matter left, in any degree, for the determination of the despatch company, and was not within any authority it had. The liability of the defendant for the safe carriage of the cotton, after its delivery to the next succeeding carrier on the prescribed route to New York, must, therefore, depend upon the inquiry whether the defendant, in any form, assumed, or held itself out to the public as assuming, any such responsibility. The legal proposition involved in this inquiry was considered by this court in Railroad Company v. Manufacturing Company, supra. Speaking by Mr. Justice Davis, we there gave our sanction to the rule, adopted in most of the courts of this country, that the carrier, in the absence of a special contract, express or implied, for the safe transportation of goods to their known destination, is only bound to carry safely to the end of its line, and there deliver to the next carrier on the route This principle was subsequently recognized in Railroad Company v. Pratt (22 Wall. 123), although in that case the way-bill or receipt of the carrier was held to import an undertaking for the safe carriage of the goods as well over its own line as over the lines of other carriers. Was there, we then inquire, in the present case, a special contract or undertaking by the defendant to carry beyond its route? A careful consideration of the facts set out in the finding satisfies us that there was no such contract or undertaking. The defendant received the cotton without executing bills of lading therefor. It had never given bills of lading for goods shipped by the Erie and Pacific Despatch Company. Its custom was to make a way-bill only over its own road. That course was pursued in this case, and defendant only collected and received pay for carrying to Indianapolis. It is true the way-bills, upon their face, indicated that the cotton was consigned to C. G. Meir & Co., London. But that circumstance is not, of itself, controlling or conclusive. The reference in the way-bill to the consignees was mere description to show the ultimate destination of the cotton. Each way-bill, executed by the defendant, purported to be nothing more than a 'manifest of freight from St. Louis to Indianapolis,' and fails to show an undertaking by it to transport beyond the latter city.

A special undertaking to carry beyond its terminus cannot be implied, against the defendant, from the arrangement already referred to, between the despatch company and sundry railroad companies whose lines terminated at New York, whereby the latter, separately, agreed to carry all goods for the transportation of which the former should contract, at the established tariff rates, or at any special rates furnished by the railroad companies.

Such an arrangement did not, in our opinion, involve joint liability upon the part of the railroad companies, or make them partners either inter sese or as to third persons. Each company bore the general expenses of its own route and of all transportation over it. The division, upon the basis merely of distance, of the aggregate pay for the entire route covered by the roads of these companies gave each one no greater amount than perhaps it would have earned had the despatch company contracted with each, separately, for the transportation of the cotton. The arrangement in question was one simply of convenience both for the shipper and carrier. Under it Meir & Co. were enabled to contract, at St. Louis, for a through rate for the transportation of the cotton by the despatch company. The latter, in order to meet its obligations to the owners of the cotton, used the road of the defendant, receiving from the latter nothing more than its way-bill to Indianapolis, which showed upon its face the proportion of the aggregate pay to which the defendant would be entitled. The defendant received compensation only for transportation over its road, and settled separately with the despatch company. It undertook, and was only bound, to transport over its own line and deliver to the succeeding carrier. That duty was discharged, and the loss occurred while the cotton was held by another carrier. The mere fact that it joined with other companies in establishing a through rate from St. Louis to New York, to be divided between themselves, upon the basis, not of expenses incurred, or investment made, but of distance simply, although competent as evidence, does not, of itself, imply an undertaking to transport beyond its line, or to become bound for any default or negligence of other carriers.

In view of the conclusion thus indicated, it is unnecessary to determine the rights of the plaintiff in error as against the despatch company, or to inquire whether the detention of the cotton in Jersey City, under the circumstances disclosed in the record, was negligence upon the part either of the despatch company or of the Erie Railway Company, or of both. Nor need we inquire whether the destruction of the cotton, by an accidental fire, was, in a legal sense, the result of its detention, in Jersey City, for an unreasonable length of time without delivery to the ocean steamship. Those questions are not material upon the present issues.

Upon the whole case the law is for the defendant.

Judgment affirmed.


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


text:
Davis v. Wells

ERROR to the Supreme Court of the Territory of Utah.

The facts are stated in the opinion of the court.

Mr. James M. Woolworth for the plaintiffs in error.

Mr. Samuel Shellabarger and Mr. Jeremiah M. Wilson, contra.

MR. JUSTICE MATTHEWS delivered the opinion of the court.

title: Davis v. Wells


text: Talk:Davis v. Wells

title: Talk:Davis v. Wells


text:
Davis v. Wells/Opinion of the Court

The action below was brought by Wells, Fargo, & Co., against the plaintiffs in error, upon a guaranty, in the following words:

'For and in consideration of one dollar to us in hand paid by     Wells, Fargo, & Co. (the receipt of which is hereby      acknowledged), we hereby guarantee unto them, the said Wells,      Fargo, & Co., unconditionally at all times, any indebtedness      of Gordon & Co., a firm now doing business at Salt Lake City,      Territory of Utah, to the extent of and not exceeding the sum      of ten thousand dollars ($10,000) for any overdrafts now      made, or that may hereafter be made at the bank of said      Wells, Fargo, & Co.

'This guaranty to be an open one, and to continue one at all     times to the amount of ten thousand dollars, until revoked by      us in writing.

'Dated, Salt Lake City, 11th November, 1874.

'In witness whereof we have hereunto set our hands and seals     the day and year above written.

'ERWIN DAVIS. [SEAL.]

'J. N. H. PATRICK. [SEAL.]

'Witness: J. GORDON.'

The answer set up, by way of defence, that there was no notice to the defendants from the plaintiffs of their acceptance of the guaranty, and their intention to act under it; and no notice after the account was closed, of the amount due thereon; and no notice of the demand of payment upon Gordon & Co., and of their failure to pay within a reasonable time thereafter. But there was no allegation that by reason thereof any loss or damage had accrued to the defendants.

On the trial it was in evidence, that this guaranty was executed by the defendants below, and delivered to Gordon on the day of its date, for delivery by him to Wells, Fargo, & Co., which took place on the same day; that Gordon & Co. were then indebted to the plaintiffs below for a balance of over $9,000 on their bank account; that their account continued to be overdrawn, Wells, Fargo, & Co. permitting it on the faith of the guaranty, from that time till July 31, 1875, when it was closed, with a debit balance of $6,200; that the account was stated and payment demanded at that time of Gordon & Co., who failed to make payment; that a formal notice of the amount due and demand of payment was made by Wells, Fargo, & Co., of the defendants below, on May 26, 1876, the day before the action was brought. There was no evidence of any other notice having been given in reference to it; either that Wells, Fargo, & Co. accepted it and intended to rely upon it, or of the amount of the balance due at or after the account was closed; and no evidence was offered of any loss or damage to the defendants by reason thereof, or in consequence of the delay in giving the final notice of Gordon & Co.'s default.

The defendants' counsel requested the court, among others not necessary to refer to, to give to the jury the following instructions, numbered first, second, third, and fifth:--

1. If the jury believes from the evidence that the guaranty sued upon was delivered by the defendants to Joseph Gordon, and not to the plaintiff, but was afterwards delivered to the latter by Joseph Gordon, or by Gordon & Co., it became and was the duty of Wells, Fargo, & Co. thereupon to notify the defendants of the acceptance of said guaranty, and their intention to make advancements on the faith of it; and, if they neglected or failed so to do, the defendants are not liable on the guaranty, and your verdict must be for the defendants.

2. If Wells, Fargo, & Co. made any advancements to Gordon & Co. on overdrafts on the faith of said guaranty, it became and was the duty of plaintiff to notify the defendants, within a reasonable time after the last of said advancements of the amount advanced under the guaranty, and if the plaintiff failed or neglected so to do, it cannot recover under the guaranty, and your verdict must be for the defendants.

3. What is a reasonable time in which notice should be given is a question of law for the court. Whether notice was given is one of fact for the jury. The court, therefore, instructs you that if notice of the advancements made under said guaranty was not given until after the lapse of twelve months or upward from the time the last advancement was made to Gordon & Co., this was not in contemplation of law a reasonable notice, and your verdict, if you so find the fact to be, should be for the defendants.

5. Before any right of action accrued in favor of plaintiff under said guaranty, it was incumbent on it to demand payment of the principal debtor, Gordon & Co., and on their refusal to pay, to notify the defendants. If the jury, therefore, find that no such demand was made, and no notice given to the defendants, the plaintiff cannot recover upon the guaranty.

The court refused to give each of these instructions, and the defendants excepted.

The following instructions were given by the court to the jury, to the giving of each of which the defendants excepted:

1. You are instructed that the written guaranty offered in evidence in this case is an unconditional guaranty by defendants, of any and all overdrafts, not exceeding in amount $10,000, for which said Gordon & Co. were indebted to the plaintiff at the date of the commencement of this suit. If the jury believe from the evidence that said guaranty was by said defendants, or by any one authorized by them to deliver the same, actually delivered to plaintiff, and that plaintiff accepted and acted on the same, such delivery, acceptance, and action thereon by plaintiff bind the defendants, and render the defendants responsible in the action for all overdrafts upon plaintiff made by Gordon & Co. at the date of said delivery of said guaranty, and since, and which were unpaid at the date of the commencement of this suit, not exceeding $10,000.

2. The jury are instructed that the written document under seal, offered in evidence in this case, implies a consideration, and constitutes an unconditional guaranty of whatever overdraft, if any, not exceeding $10,000, which the jury may find from the evidence that Gordon & Co. actually owed the plaintiff at the date of the bringing of this suit; and, further, if you believe from the evidence that an account was stated of such overdraft between plaintiff and J. Gordon & Co., then the plaintiff is entitled to interest on the amount found due at such statement, from the date thereof, at the rate of ten per cent per annum.

These exceptions form the basis of the assignment of errors.

The charge of the court first assigned for error, and its refusal to charge upon the point as requested by the plaintiffs in error, raise the question whether the guaranty becomes operative if the guarantor be not, within a reasonable time, informed by the guarantee of his acceptance of it and intention to act under it.

It is claimed in argument that this has been settled in the negative by a series of well-considered judgments of this court.

It becomes necessary to inquire precisely what has been thus settled, and what rule of decision is applicable to the facts of the present case.

In Adams v. Jones (12 Pet. 207, 213), Mr. Justice Story, delivering the opinion of the court, said: 'And the question which, under this view, is presented, is whether, upon a letter of guaranty, addressed to a particular person or to persons generally, for a future credit to be given to the party in whose favor the guaranty is drawn, notice is necessary to be given to the guarantor that the person giving the credit has accepted or acted upon the guaranty and given the credit on the faith of it. We are all of the opinion that it is necessary; and this is not now an open question in this court, after the decisions which have been made in Russell v. Clarke, 7 Cranch, 69; Edmonston v. Drake, 5 Peters' Rep. 624; Douglass v. Reynolds, 7 Peters' Rep. 113; Lee v. Dick, 10 Peters, 428; and again recognized at the present term in the case of Reynolds v. Douglass. It is in itself a reasonable rule, enabling the guarantor to know the nature and extent of his liability; to exercise due vigilance in guarding himself against losses which might otherwise be unknown to him; and to avail himself of the appropriate means in law and equity to compel the other parties to discharge him from further responsibility. The reason applies with still greater force to cases of a general letter of guaranty; for it might otherwise be impracticable for the guarantor to know to whom and under what circumstances the guaranty attached; and to what period it might be protracted. Transactions between the other parties to a great extent might from time to time exist, in which credits might be given and payments might be made, the existence and due appropriation of which might materially affect his own rights and security. If, therefore, the questions were entirely new, we should not be disposed to hold a different doctrine; and we think the English decisions are in entire conformity to our own.'

In Reynolds v. Douglass (12 Pet. 497, 504), decided at the same term and referred to in the foregoing extract, Mr. Justice McLean stated the rule to be 'that, to entitle the plaintiffs to recover on said letter of credit, they must prove that notice had been given in a reasonable time after said letter of credit had been accepted by them to the defendants, that the same had been accepted;' and he added: 'This notice need not be proved to have been given in writing or in any particular form, but may be inferred by the jury from facts and circumstances which shall warrant such inference.'

There seems to be some confusion as to the reason and foundation of the rule, and consequently some uncertainty as to the circumstances in which it is applicable.) In some instances it has been treated as a rule, inhering in the very nature and definition of every contract, which requires the assent of a party to whom a proposal is made to be signified to the party making it, in order to constitute a binding promise; in others it has been considered as a rule springing from the peculiar nature of the contract of guaranty, which requires, after the formation of the obligation of the guarantor, and as one of its incidents, that notice should be given of the intention of the guarantee to act under it, as a condition of the promise of the guarantor.

The former is the sense in which the rule is to be understood as having been applied in the decisions of this court. This appears very plainly, not only from a particular consideration of the cases themselves, but was formerly declared to be so by Mr. Justice Nelson, speaking for the court in delivering its opinion in Louisville Manufacturing Co. v. Welch (10 How. 461, 475), where he uses this language: 'He [the guarantor] has already had notice of the acceptance of the guaranty and of the intention of the party to act under it. The rule requiring this notice within a reasonable time after the acceptance is absolute and imperative in this court, according to all the cases; it is deemed essential to an inception of the contract; he is, therefore, advised of his accruing liabilities upon the guaranty, and may very well anticipate or be charged with notice of an amount of indebtedness to the extent of the credit pledged.'

And in Wildes v. Savage (1 Story, 22) Mr. Justice Story, who had delivered the opinion in Douglass v. Reynolds (7 Pet. 113), after stating the rule requiring notice by the guarantee of his acceptance, said: 'This doctrine, however, is inapplicable to the circumstances of the present case; for the agreement to accept was contemporaneous with the guaranty, and, indeed, constituted the consideration and basis thereof.'

The agreement to accept is a transaction between the guarantee and guarantor, and completes that mutual assent necessary to a valid contract between them. It was, in the case cited, the consideration for the promise of the guarantor. And wherever a sufficient consideration of any description passes directly between them, it operates in the same manner and with like effect. It establishes a privity between them and creates an obligation. The rule in question proceeds upon the ground that the case in which it applies is an offer or a proposal on the part of the guarantor, which does not become effective and binding as an obligation until accepted by the party to whom it is made; that until then it is inchoate and incomplete, and may be withdrawn by the proposer. Frequently the only consideration contemplated is that the guarantee shall extend the credit and make the advances to the third person, for whose performance of his obligation, on that account, the guarantor undertakes. But a guaranty may as well be for an existing debt, or it may be supported by some consideration distinct from the advance to the principal debtor, passing directly from the guarantee to the guarantor. In the case of the guaranty of an existing debt, such a consideration is necessary to support the undertaking as a binding obligation. In both these cases, no notice of assent, other than the performance of the consideration, is necessary to perfect the agreement; for, as Professor Langdell has pointed out in his Summary of the Law of Contracts (Langdell's Cases on Contracts, 987), 'though the acceptance of an offer and the performance of the consideration are different things, and though the former does not imply the latter, yet the latter does necessarily imply the former; and as the want of either is fatal to the promise, the question whether an offer has been accepted can never in strictness become material in those cases in which a consideration is necessary; and for all practical purposes it may be said that the offer is accepted in such cases by giving or performing the consideration.'

If the guaranty is made at the request of the guarantee, it then becomes the answer of the guarantor to a proposal made to him, and its delivery to or for the use of the guarantee completes the communication between them and constitutes a contract. The same result follows, as declared in Wildes v. Savage (supra), where the agreement to accept is contemporaneous with the guaranty, and constitutes its consideration and basis. It must be so wherever there is a valuable consideration, other than the expected advances to be made to the principal debtor, which, at the time the undertaking is given, passes from the guarantee to the guarantor, and equally so where the instrument is in the form of a bilateral contract, in which the guarantee binds himself to make the contemplated advances, or which otherwise creates, by its recitals, a privity between the guarantee and the guarantor; for in each of these cases the mutual assent of the parties to the obligation is either expressed or necessarily implied.

The view we have taken of the rule under consideration, as requiring notice of acceptance and of the intention to act under the guaranty, only when the legal effect of the instrument is that of an offer or proposal, and for the purpose of completing its obligation as a contract, is the one urged upon us by the learned counsel for the plaintiff in error, who says, in his printed brief: 'For the ground of the doctrine is not that the operation of the writing is conditional upon notice, but it is that until it is accepted, and notice of its acceptance given to the guarantor, there is no contract between the guarantor and the guarantee; the reason being that the writing is merely an offer to guarantee the debt of another, and it must be accepted and notice thereof given to the party offering himself as security before the minds meet and he becomes bound. Until the notice is given, there is a want of mutuality: the case is not that of an obligation on condition, but of an offer to become bound not accepted; that is, there is not a conditional contract, but no contract whatever.'

It is thence argued that the words in the instrument which is the foundation of the present action-'we hereby guarantee unto them, the said Wells, Fargo, & Co., unconditionally, at all times,' &c.-cannot have the effect of waiving the notice of acceptance, because they can have no effect at all except as the words of a contract, and there can be no contract without notice of acceptance. And on the supposition that the terms of the instrument constitute a more offer to guarantee the debt of Gordon & Co., we accept the conclusion as entirely just.

But we are unable to agree to that supposition. We think that the instrument sued on is not a mere unaccepted proposal. It carries upon its face conclusive evidence that it had been accepted by Wells, Fargo, & Co., and that it was understood and intended to be, on delivery to them, as it took place, a complete and perfect obligation of guaranty. That evidence we find in the words, 'for and in consideration of one dollar to us paid by Wells, Fargo, & Co., the receipt of which is hereby acknowledged, we hereby guarantee,' &c. How can that recital be true, unless the covenant of guaranty had been made with the assent of Wells, Fargo, & Co., communicated to the guarantors? Wells, Fargo, & Co. had not only assented to it, but had paid value for it, and that into the very hands of the guarantors, as they by the instrument itself acknowledge.

It is not material that the expressed consideration is nominal. That point was made, as to a guarantee, substantially the same as this, in the case of Lawrence v. McCalmont (2 How. 426, 452), and was overruled. Mr. Justice Story said: 'The guarantor acknowledged the receipt of the one dollar, and is now estopped to deny it. If she has not received it, she would now be entitled to recover it. A valuable consideration, however small or nominal, if given or stipulated for in good faith, is, in the absence of fraud, sufficient to support an action on any parol contract; and this is equally true as to contracts of guaranty as to other contracts. A stipulation in consideration of one dollar is just as effectual and valuable a consideration as a larger sum stipulated for or paid. The very point arose in Dutchman v. Tooth (5 Bingham's New Cases, 577), where the guarantor gave a guaranty for the payment of the proceeds of the goods the guarantee had consigned to his brother, and also all future shipments the guarantee might make in consideration of two shillings and sixpence paid him, the guarantor. And the court held the guaranty good, and the consideration sufficient.'

It is worthy of note that in the case from which this extract is taken the guaranty was substantially the same as that in the present case, and that no question was made as to a notice of acceptance. It seems to have been treated as a complete contract by force of its terms.

It does not affect the conclusion, based on these views, that the present guaranty was for future advances as well as an existing debt. It cannot, therefore, be treated as if it were an engagement, in which the only consideration was the future credit solicited and expected. The recital of the consideration paid by the guarantee to the guarantor shows a completed contract, based upon the mutual assent of the parties; and if it is a contract at all, it is one for all the purposes expressed in it. It is an entirety, and cannot be separated into distinct parts. The covenant is single, and cannot be subjected in its interpretation to the operation of two diverse rules.

Of course the instrument takes effect only upon delivery. But in this case no question was or could be made upon that. It was admitted that it was delivered to Gordon for delivery to the plaintiffs below, and that he delivered it to them.

But if we should consider that, notwithstanding the completeness of the contract as such, the guaranty of future advances was subject to a condition implied by law that notice should be given to the guarantor that the guarantee either would or had acted upon the faith of it, we are led to inquire, what effect is to be given to the use of the words which declare that the guarantors thereby 'guarantee unto them, the said Wells, Fargo, & Co., unconditionally, at all times, any indebtedness of Gordon & Co., &c., to the extent and not exceeding the sum of ten thousand dollars, for any overdrafts now made, or that hereafter may be made, at the bank of said Wells, Fargo, & Co.'

Upon the supposition now made, the notice alleged to be necessary arises from the nature of such a guaranty. It is not and cannot be claimed that such a condition is so essential to the obligation that it cannot be waived. We do not see, therefore, what less effect can be ascribed to the words quoted than that all conditions that otherwise would qualify the obligation are by agreement expunged from it and made void. The obligation becomes thereby absolute and unqualified; free from all conditions whatever. This is the natural, obvious, and ordinary meaning of the terms employed, and we cannot doubt that they express the real meaning of the parties. It was their manifest intention to make it unambiguous that Wells, Fargo, & Co., for any indebtedness that might arise to them in consequence of overdrafts by Gordon & Co., might securely look to the guarantors without the performance on their part of any conditions precedent thereto whatever.

It has always been held in this court that, notwithstanding the contract of guaranty is the obligation of a surety, it is to be construed as a mercantile instrument in furtherance of its spirit and liberally, to promote the use and convenience of commercial intercourse.

This view applies with equal force to the exceptions to the other charges and refusals to charge of the court below. These exceptions are based on the propositions,--

1. That if Wells, Fargo, & Co. neglected to notify the defendants below of the amount of the overdraft within a reasonable time after closing the account of Gordon & Co.; and,

2. That if they failed within a reasonable time after demand of payment made upon Gordon & Co., to notify the defendants of the default, the plaintiffs could not recover upon the guaranty.

For if the necessity in either or both of these contingencies existed to give the notice specified, it was because the duty to do so was, by construction of law, made conditions of the contract.

But by its terms, as we have shown, the contract was made absolute, and all conditions were waived.

It is undoubtedly true, that if the guarantee fails to give reasonable notice to the guarantor of the default of the principal debtor, and loss or damage thereby ensues to the guarantor, to that extent the latter is discharged; but both the laches of the plaintiff and the loss of the defendant must concur to constitute a defence.

If any intermediate notice, at the expiration of the credit, of the extent of the liability incurred is requisite, the same rule applies. Such was the express decision in Louisville Manufacturing Co. v. Welch, supra. An unreasonable delay in giving notice, or a failure to give it altogether, is not of itself a bar.

There was a question made at the trial as to the meaning of the word 'overdrafts,' as used in the guaranty. It was contended that it would not include the debit balance of account charged to Gordon & Murray, and assumed by Gordon & Co., as their successors, before the guaranty was made, nor charges of interest accrued upon the balances of Gordon & Co.'s account, which were entered to the debit of the account. The reason alleged was, that no formal checks were given for these amounts. The point was not urged in argument at the bar, and was very properly abandoned. The charges were legitimate and correct, and the balance of the account to the debit of Gordon & Co. was the overdraft for which they were liable. There could be no doubt that it was embraced in the guaranty.

We find no error in the record.

Judgment affirmed.

title: Davis v. Wells/Opinion of the Court


text: Talk:Davis v. Wells/Opinion of the Court


text:
Porter v. Graves

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

The facts are stated in the opinion of the court.

Mr. Henry J. Scudder for the plaintiff in error.

Mr. Francis Kernan, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Porter v. Graves


text: Talk:Porter v. Graves

title: Talk:Porter v. Graves


text:
Porter v. Graves/Opinion of the Court

This action was commenced by Jennie L. Graves in the Supreme Court of New York, and was, on the application of Porter, removed into the Circuit Court of the United States.

It was brought to recover the purchase price of a portable saw-mill, which she, acting as administratrix of Cyrus Graves, deceased, alleged she had sold to J. Morton Poole, William T. Porter, and W. G. Norwood, who were at the time partners in the business of sawing and manufacturing lumber and timber, and of procuring, owning, and operating a saw-mill for that purpose, at or near Homerville, Ga. Though all the partners were sued, Porter only appeared or was served. His answer raised several issues, which were submitted to a jury under the charge of the court. The exceptions to this charge, and to the refusal to grant the instructions prayed by his counsel, with some exceptions in regard to evidence, constitute the errors on which he relies to reverse the judgment in favor of the plaintiff.

The evidence tended to show that the plaintiff, who resided in New York, made a visit to Georgia, and while there had negotiations with Norwood concerning the sale of the saw-mill; that her right to sell without an order of the probate court of the proper county being considered doubtful, Norwood said that if she would get the necessary authority to sell he would, for the firm of J. Morton Poole & Co., give $5,000 for the mill; that, having been duly appointed administratrix of the estate of the deceased by the surrogate of Cortland County, New York, she procured an order of sale from the probate judge of the county of Georgia, in which the mill was situated; and that after a due advertisement the mill was sold to Norwood, as one of the partners of J. Morton Poole & Co., for $5,000.

The first point we shall examine relates to the existence of this partnership. The judge, in his charge to the jury, said that this was conceded by the parties. To this an exception was taken at the time.

We have already given the language of the declaration alleging the existence of this partnership. The answer of Porter on that subject is as follows: 'And defendant admits that he and the defendants Poole and Norwood were interested together in the business of sawing and manufacturing lumber at the time mentioned in the complaint, and contemplated and intended to procure by lease or purchase, or erect, a saw-mill in the neighborhood of Homerville, aforesaid; but said defendant denies that the defendants or either of them applied to the plaintiff to purchase the saw-mill described in the complaint, and alleged to have been the personal property of said Cyrus Graves in his lifetime, or to buy any personal property.'

We think this is a concession or admission of the alleged partnership; and when it is further proved without contradiction that the mill, at the time of sale, was in the prossession and use of those gentlemen, the instruction of the court was justified.

Poole and Porter resided in Delaware, and Norwood was a citizen of North Carolina. In a letter dated Wilmington, Delaware, and signed J. Morton Poole & Co., written to Mrs. Graves, in Cortland County, before she went to Georgia, in which the subject of the purchase and price of the mill and her power to sell it are considered, it is said: 'We do not think your price is unreasonable, and though Mr. Norwood is a partner and must be consulted, we say now, as Mr. Pusey said to you personally, that we are the responsible parties in the concern and control all the decisions.' This is relied on to show the error of the court in the statement that the existence of the partnership was conceded. But as the statement of this letter is positive that Norwood was a partner, and as the partnership was then negotiating for the purchase of this mill, we are of opinion that it proves the soundness of the charge on that point. The effect of private arrangements between the partners as to the relative influence and responsibility of each in deciding questions arising in the course of their business is a very different thing from disproving the existence of the partnership.

Another point on which error is assigned arises out of instructions asked by the defendant as to the validity of the sale.

It was in evidence that, by correspondence and otherwise between Mrs. Graves and the defendants, she had agreed that she would sell the mill to them for $5,000, which they did not think too much. But it was found necessary that she should proceed in the sale according to the laws of Georgia, and she accordingly went there and obtained from the probate court an order of sale. While this was going on she had several interviews with Norwood, who was then running the mill under some arrangement with parties who had leased it from her intestate. The advertisement states that the mill was to be sold to perfect a contract for sale to J. Morton Poole & Co., and it was so announced at the time of sale by the auctioneer. On this evidence the defendant prayed the court to instruct the jury as follows:--

'That the attempted sale at public outcry to perfect a previous private sale is contrary to the law and public policy of the State of Georgia, and therefore void.

'That the private sale of the property in question being illegal, no concerted attempt by the parties thereto to validate it by the forms of a public sale under an order of the ordinary can be effectual.

'No agreement of the parties or united request on their part to secure a formal compliance with the law in aid of a previous illegal private sale will render the latter valid.

'The formal public sale of the mill made expressly to perfect a title to the same to the defendants, in accordance with the terms of a private sale made of said property to them, is a mere form and an evasion of the statute, and hence illegal.'

All these requests were refused.

That they were founded on a sound general principle is undeniable. When the law requires a sale of property, real or personal, to be made at public auction, after due notice, it is for the purpose of inviting competition among bidders that the highest price may be obtained for what is sold. To make a private bargain beforehand between the party who wishes to buy and the person authorized to sell, as to the price and other incidents of the contract, and then invoke the forms of a public sale with competition to give effect to the private bargain is a course of procedure well calculated to defeat the purpose for which the public sale is required. There can be no doubt that, at the instance of the heirs, devisees, or creditors interested in having the property bring its full value, such a sale would be set aside, either by a court of chancery, if it were real estate, or by the probate court having jurisdiction.

But it may be doubted whether this may be done at the instance of one who was purchaser at both the public and private sale. And it is still more questionable whether such purchaser, after having received and used the personal property for a long time, can set up such a defence to a suit for the purchase-money.

Such was the case here. As it is not clear from the evidence that there was a private contract of sale, and as the defendants bid what the jury have found to be a fair price, took the mill and used it afterwards as long as its use was profitable, and have never returned it to the plaintiff, we think the court was justified in refusing the instructions asked by them on this point. See Nutting v. Thomason, 46 Ga. 34.

Another point raised by Porter is, that the sale was void under the Statute of Frauds, because no memorandum in writing was signed by the party charged.

To this it is answered that the defendants took possession of the mill under the sale, and thus brought the case within the exception of the statute. This is denied, and the possession of the defendants is alleged to be a mere continuation of that which they had at the time of the sale under the former lessee.

But the sale took place at the mill. Norwood, the man who bid it off, was then in possession. It nowhere appears that after this he paid any money or acknowledged any relation to the former lessee. The court left it to the jury to say whether he had possession under the sale, and we think this was right.

It is insisted that the mill was real estate, and no title passed to defendants by the sale, as no deed was made, and no title was in the plaintiff to the land on which it was situated. It was what is known as a portable saw-mill, capable, as the name implies, of being removed from one locality to another, as the exhaustion of the timber by use of the mill required. It was properly left to the jury, under sound instructions, to say what the character of the mill in that respect was, and of this plaintiff here cannot complain.

Several errors are assigned on exceptions to the ruling of the court in regard to the admission of evidence. We have examined these carefully, and find no error in them. We cannot, in the pressure of the business of the court, give our reasons for this in detail.

Judgment affirmed.

title: Porter v. Graves/Opinion of the Court


text: Talk:Porter v. Graves/Opinion of the Court


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Mining Company v. Cullins

ERROR to the Supreme Court of the Territory of Utah.

The facts are stated in the opinion of the court.

Mr. Walter H. Smith for the plaintiff in error.

Mr. Samuel Shellabarger and Mr. Jeremiah M. Wilson, contra.

MR. JUSTICE WOODS delivered the opinion of the court.

title: Mining Company v. Cullins


text: Talk:Mining Company v. Cullins

title: Talk:Mining Company v. Cullins


text:
Mining Company v. Cullins/Opinion of the Court

Cullins brought suit against the Flagstaff Silver Mining Company of Utah, in a district court of the Territory of Utah, to recover wages alleged to be due to him from the company for services rendered, and to subject its property to a lien therefor which he claimed attached by virtue of the statute of the Territory. The statute declared as follows:--

'Any person or persons who shall perform any work or labor     upon any mine or furnish any materials therefor in pursuance      of any contract made with the owner or owners of such mine or      of any interest therein, shall be entitled to a miner's lien      for the payment thereof upon all the interest, right, and      property in such mine by the person or persons contracting      for such labor or materials at the time of making such      contract. Said lien may be enforced in the same manner and     with the same effect as a mechanic's lien, as provided by the      laws of Utah.' Compiled Laws of Utah, sect. 1221.

The answer of the company denied that anything save a small balance was due, and that the statute gave him a lien on its property therefor.

The case was submitted to the court upon the issues of fact as well as of law.

The court found that the company, a corporation organized under the laws of Great Britain, was, at the time the services were rendered, the owner of and engaged in working a mine called the Flagstaff Mine, situate in that Territory, and that one J. N. H. Patrick was the general agent and manager of the company's mining and smelting business in America; 'that on or about the fourteenth day of December, 1873, the said company, by said J. N. H. Patrick, its agent, for that purpose duly authorized, employed the plaintiff for an indefinite time thereafter to direct the work in its said mine, and with authority to employ and discharge miners, and procure and purchase supplies for working said mine; that it was the duty of the plaintiff, by virtue of said employment, to plan, oversee, and direct the work in said mine, direct the shipping of ore, and generally to control and direct the actual working and development of the mine; that the plaintiff, while in the employment of said company, performed said duties, and in the performance thereof did some manual labor;' and that, at the commencement of the suit, there was due to the plaintiff from the mining company $1,530 for wages earned by him under said employment. The court gave judgment for that sum, and declared it to be a lien upon the mine.

From this judgment an appeal was taken to the Supreme Court of the Territory, by which it was affirmed.

The company prosecutes this writ of error, and alleges that the courts below erred in declaring the judgment in favor of Cullins to be a lien on the mine. The precise question presented is, whether his services for the company were such 'work and labor' as under the statute entitled him to a lien therefor upon the mine.

Statutes giving liens to laborers and mechanics for their work and labor are to be liberally construed. Davis v. Alvord, 94 U.S. 545. The finding of the District Court makes clear the character of the services rendered by the defendant in error. He was not the general agent of the mining business of the plaintiff in error. That office was filled by Patrick. He was not a contractor. His services were not of a professional character, such as those of a mining engineer. He was the overseer and foreman of the body of miners who performed manual labor upon the mine. He planned and personally superintended and directed the work, with a view to develop the mine and make it a successful venture. His duties were similar to those of the foreman of a gang of track hands upon a railroad, or of a force of mechanics engaged in building a house. Such duties are very different from those which belong to the general superintendent of a railroad, or the contractor for erecting a house. Their performance may well be called work and labor; they require the personal attention and supervision of the foreman, and occasionally in an emergency, or for an example, it becomes necessary for him to assist with his own hands. They cannot be performed without much physicla exertion, which, while not so severs as that demanded of the workmen under his control, is nevertheless as really work and labor. Bodily toil, as well as some skill and knowledge in directing the work, is required for their successful performance. We think that the discharge of them may well be called work and labor, and that the District Court rightfully declared the person who performed them entitled to a lien under the law of the Territory.

We have examined all the cases cited by the plaintiff in error. None of them seem to be inconsistent with the views we have expressed. They decide that an architect and superintendent of a building; that a person employed to cook for men engaged in constructing a reservoir; that a contractor for the building of a railroad or the erection of a house; that the assistant chief engineer of a railroad company; that agents employed to disburse money and pay off the hands who are building a house,-are not, under laws similar to the statute of Utah, entitled to a lien for their services. Foushee v. Grigsby, 12 Ky. 75; McCormack v. Los Angelos Water Co., 40 Cal. 185; Aikin v. Wasson, 24 N. Y. 482; Blakey v. Blakey, 27 Mo. 39; Caldwell v. Bower, 17 id. 564; Brockway v. Innes, 39 Mich. 47; Peck v. Miller, id. 594.

The case which comes nearer supporting the contention of the plaintiff in error than any other is Smallhouse v. ''Kentucky, &c. Co.'', 2 Mon. T. 443. But in that case the court says, that 'from the nature of the plaintiff's employment, as averred by himself, it does not appear that he was an architect or laborer, or that he labored directly in the construction of the buildings, but rather that he was employed by the corporation at a fixed salary to manage and superintend its affairs at the place named.' That case is fairly distinguishable from the one now under consideration; but even if it fully supported the contention of the plaintiff in error, it is entitled to no more weight than the decision of the Supreme Court of Utah in the present case.

Views similar to those we have expressed were declared by Williams, C. J., in Willamette Falls Transportation & Milling co. v. Remick (1 Oreg. 169), and by the Supreme Court of Nevada in Capron v. Strout, 11 Nev. 304.

It is somewhat difficult to draw the line between the kind of work and labor which is entitled to a lien, and that which is mere professional or supervisory employment, not fairly to be included in those terms. Some courts have held, under laws similar to those of Utah, that an architect who furnishes plans and superintends the erection of a building acquires a lien thereon as for work and labor. Stryker v. Cassidy, 76 N. Y. 50; Mutual Benefit Life Insurance Co. v. Rowand, 26 N. J. Eq. 389; Jones v. Shawhan, 4 Watts & S. (Pa.) 257; Bank of Pennsylvania v. Gries, 35 Pa. St. 423; Knight v. Morris, 13 Minn. 473.

It is not necessary in this case to go so far as these decisions would warrant. But we are clearly of opinion that, upon the facts found by the District Court, the defendant in error, under the statute of Utah, was entitled to a lien upon the mine to which his services were applied. The judgment of the Supreme Court of Utah must, therefore, be

Affirmed.


text: Talk:Mining Company v. Cullins/Opinion of the Court


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The Woodland

APPEAL from the Circuit Court of the United States for the Southern District of New York.

The facts are stated in the opinion of the court.

Mr. James Ridgway and Mr. William R. Beebe for the appellants.

Mr. Henry J. Scudder, contra.

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

title: The Woodland


text: Talk:The Woodland

title: Talk:The Woodland


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The Woodland/Opinion of the Court

This is a suit in admiralty to recover of the back 'Woodland' and her freight the amount of two drafts drawn by the master of the vessel at St. Thomas, W. I., on her owners, one for the payment of $2,000, and the other for the payment of $2,606.40, in New York, to the order of J. Niles & Co., merchants in St. Thomas, ten days after sight. The facts found by the Circuit Court, which, in our opinion, are conclusive of the case, are as follows:--

The 'Woodland' was a British bark owned by the claimants, residents of St. John, New Brunswick. In November, 1870, while on a voyage from Montevideo to New York with a cargo, being in distress, she put into the Danish port of St. Thomas for repairs, which were necessary before she could safely proceed on her voyage. J. Niles, who carried on business under the name of J. Niles & Co., attended to the affairs of the vessel at St. Thomas, landed the cargo, and sold a portion of it, on which he received an amount sufficient to reimburse all the moneys expended; but he charged for commissions and insurance $6,875. As to the insurance, none was actually effected, and the commissions were on an excessive valuation. The master approved all the bills, and drew drafts on his owners for a balance of $6,106.24, which expressed on their face that they were 'recoverable against the vessel, freight, and cargo.' Two of these drafts the libellants discounted, and this suit was brought for their recovery. The third, for $1,500, was given by Niles to the master upon a corrupt understanding that it was to be his share. The two drafts have not been accepted or paid, and the libellants are the owners thereof, having advanced money upon them in good faith and without any knowledge of the fraudulent acts of Niles and the master.

The drafts did not themselves create a line on the vessel. Unless the debt for which they were given bound the vessel, the drafts, notwithstanding what is expressed on their face, did not. If the owners owed Niles nothing under his contract with the master for the repairs and supplies which had been furnished, he had no lien on the vessel, which he or any one else could enforce in admiralty. For the purposes of this suit the libellants occupy no better position than Niles; and if he could not recover, they cannot. Having advanced their money in good faith, they may not be affected, so far as their remedies against the parties to the drafts are concerned, by the fraudulent character of the transactions between Niles and the master; but if the vessel owed Niles nothing, it does not own them.

Now, we think it clear that if Niles were here as appellant instead of these libellants, he would not be entitled to the reversal of this decree upon the findings as they stand. The findings sent here under the act of 1875 furnish the only evidence of the facts which we can consider. It is incumbent on the libellants to prove a debt from the vessel to Niles, and its amount. Until this proof is made they cannot recover. If the settlement between the master and Niles had not been impeached, that would have been enough, for the master is the agent of the owner for all such purposes. But it had been impeached. The court has expressly found that, although insurance was charged for and allowed, none was ever effected, and that the commissions were calculated on an excessive valuation. It has also found that there was a corrupt understanding between the master and Niles, under which the master was given one of the drafts which he drew on his owners, as 'his share.' Under these circumstances it is clear that the approval of the accounts by the master amounts to nothing as evidence of what was actually due, and without that there is nothing to show that Niles is entitled to anything. His advances were all paid by sales of the damaged cargo, and while there was $6,875 allowed him for commissions and insurance, the balance due to him on the accounts as stated was only $6,106.24. Thus it appears that in addition to his expenditures he must have received $768.76 on account of commissions. In the absence of anything to show what his services were reasonably worth, we cannot say from the findings that anything is honestly due Niles on his accounts.

It is insisted, however, that there was no evidence in the case to establish the corrupt understanding between Niles and the master, because a deposition bearing on that subject was ruled out in the Circuit Court.

It is true such a deposition was excluded, but without it there is abundant evidence in the testimony of Niles tending at least to support the finding. His account as stated by himself can be properly abstracted as follows:--

Bill of supplies....................... $216

Labor, loading and unloading cargo, wharfage, &c. 1,832

Paid captain for himself and crew...... 768

Sundry bills for repairs............... 2,582

--

Total expenditures...................... 5,399

Receipts from sale of damaged cargo.... 7,035

---

Receipts over actual expenditures...... $1,635

Com's charged on bills of supplies ....$10 81.

Com's charged on bills of labor, &c.. 91

Com's charged on payments to master. 38

Com's charged on bills for repairs. 129

Com's 2 1/2 per cent on receiving, storing, and

shipping cargo.............. 3,125

Storage, 2 per cent on valuation of cargo. 2,500

Insurance, 1 per cent on valuation. 1,250

Paid 2 1/2 per cent discount on drafts. 152

Com's for indorsing and negotiating. 91

-

---

Balance............................... $6,106

The same witness also testified that the drafts were all drawn in the same form by the master on the owners to the order of Niles & Co., payable in New York at ten days' sight, and that the draft for $1,500 was indorsed by Niles & Co. and delivered to the master. The cargo consisted of hides, sheep-skins, kip-skins, horse and cow hair, and shin-bones, and the vessel was detained in St. Thomas about two months.

Without considering any of the other important and interesting questions which have been urged on our attention in the argument, we affirm the decree.

Decree affirmed.

title: The Woodland/Opinion of the Court


text: Talk:The Woodland/Opinion of the Court

title: Talk:The Woodland/Opinion of the Court


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The S. S. Osborne

MOTION for a writ of certiorari to the Circuit Court of the United States for the Northern District of Ohio.

The facts are stated in the opinion of the court.

Mr. Albert G. Riddle in support of the motion.

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

title: The S. S. Osborne


text: Talk:The S. S. Osborne

title: Talk:The S. S. Osborne