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Myer v. Car Company/Opinion of the Court

This was a bill, filed May 4, 1875, to foreclose a mortgage executed May 12, 1871, by the Davenport and St. Paul Railroad Company, to secure the payment of certain of its bonds. The mortgage was in the usual form, covering, with other property specifically set forth, the road, bridges, and superstructure of the railroad, with all branches, side-tracks, additions, turnouts, right of way, depot grounds, and other lands then owned or thereafter to be acquired by the company; all depots, car-houses, car-shops, machine-shops, and all other buildings whatsoever, then erected or thereafter to be erected; also all kinds of machinery and tools then held and owned or thereafter to be acquired by the company for use in connection with the railroad, including all cars or other rolling-stock or equipment, and all materials for use in constructing, operating, repairing, or replacing any part or parcel of said railroad or any part of its appurtenances; also all property and franchises connected with or relating to the railroad, or any part of its business in any wise whatever, which was then held or thereafter to be acquired by the company, &c.

The company subsequently entered into the following contract: -

'Articles of agreement concluded this first day of October, A.D. 1873, by and between the Western Car Company, party of the first part, and the Davenport and St. Paul Railroad Company, party of the second part, witnesseth:

'That for and in consideration of the promises and agreements of the said second party hereinafter mentioned, the said first party hereby hires to said second party ninety railroad cars, as follows, viz.: eighty box cars, Nos. 121 to 200 (inclusive), and ten stock cars, Nos. 301 to 310 (inclusive); said ninety cars having been the property of the Western Car Company Association, and by them delivered to the party of the second part at dates previous to Feb. 15, 1873, as per receipts of said second party, and the ownership of said cars having afterward been transferred to the party of the first part, all of said cars being marked X/W.

'It is understood and agreed by the parties hereto that the said ninety cars are to be used by said second party in its regular business of transportation over its own and other railroads for the term of five years from the date of this contract, which shall be renewed on the expiration of said five years on like agreements and conditions as those of this contract upon the request of either of the parties hereto, a written notice of such request to be given by the party making it on the other party not less than one year previous to the expiration of said five years. In consideration whereof the said second party hereby promises and agrees—

'First, To pay the said first party as rental for the use of each of said cars twenty dollars for each and every month during the existence of this contract and its renewal, if renewed; said payments to be made to such person on behalf of said first party as it shall designate in writing from time to time, and until otherwise so designated to the secretary of said first party; and the receipts of such payments of said person so designated, or said secretary of said first party, as the case may be, shall be the only evidence of such payments said first party shall require of said second party therefor.

'Second, In case any of said cars shall be destroyed, or so disabled by accident or otherwise as to be unfit for safe and proper use, at any time during the existence of this contract, or the renewed contract, if renewed, the said second party shall, at its own expense, immediately replace such destroyed or disabled cars with an equal number of like cars of equally good material, construction, and value, in all respects as were those so destroyed or disabled before the destruction or disabling of the same, and shall have said replacing cars numbered, lettered, and marked as were the said destroyed or disabled cars. Each and all of said replacing cars shall become and be the property of said party of the first part, the same as were the destroyed or disabled cars they shall have replaced.

'Third, The said second party shall, at its own expense, maintain and keep each and all of said ninety cars during the existence of this contract and its renewal, if renewed, in good repair and in safe and proper running order, and at its own expense furnish all the material for and make all renewals of said cars from time to time, as they shall be needed, to put and keep them in proper condition for regular use, said material to be in every respect equal in quality to the material for like purposes originally used in the construction of said cars, and at the termination of this contract or the renewed contract, if renewed, return said cars to the party of the first part in proper condition and repair for the immediate and active use thereof.

'It being understood and agreed between the parties to this contract that said second party may and hereby reserves the privilege of purchasing said cars at any time during the existence of this contract, or the renewal thereof, if renewed, by paying, or securing to be paid to said first party, to its satisfaction, the original cost thereof.

'It is understod and agreed between the parties hereto that to preserve the evidence of the ownership of said cars in the said first party they shall be severally marked or lettered as follows, viz. W, which shall be in addition to any marking or lettering of said cars said second party may make for its convenience. In case the said second party shall fail at any time during the existence of this contract, or the renewed contract, if renewed, to promptly pay the interest or the principal of any of its bonds or other liabilities when the same shall have respectively become due, the said first party may, if it so elect, terminate this contract immediately after such default, by written notice of the president of said first party to the president or secretary of said second party, personally served on said president or secretary, or sent to either of them by the United States mail, and the said second party agrees on the service of said written notice as aforesaid to deliver forthwith to said first party the actual possession as the owner thereof of each and all of said ninety cars, and those with which said second party shall have replaced the same, each and all of which cars shall, on such delivery, be in proper condition and repair for the immediate and active use thereof.

'THE WESTERN CAR COMPANY,

'By B. E. SMITH, Pres't.

'Attest:

'E. C. SMITH, Sec'y.

'THE DAVENPORT & ST. PAUL R. R. CO.,

'By GEO. H. FRENCH, Pres't.

'Attest:

'J. S.C.ONNOR, Sec'y.'

The court appointed a receiver, who took charge of the road and said cars.

The Western Car Company filed an answer and a cross-bill claiming title and right of possession to the cars, and compensation for the use of them by the receiver. The Western Car Company Association originally leased ninety cars to the railroad company, and became a corporation under the name of The Western Car Company, under a charter granted by the State of Delaware. An agreed statement was filed in the court below, setting forth the following facts: The cars were delivered to the railroad company under a conditional contract or lease with the Western Car Company Association, between Feb. 8, 1872, and Feb. 15, 1873; $22,179.02 was paid for the rent thereof prior to Oct. 1, 1873, under a similar lease or contract to that of Oct. 1, 1873; the Western Car Company was formed at or prior to Oct. 1, 1873, and the foregoing contract was executed between it and the railroad company; the words 'having been the property of the Western Car Company Association, and by them delivered' to the said railroad company, mentioned in that contract, refer to the delivery above named, and the car company claims title to and rent for the cars under the contract of Oct. 1, 1873. The trustees of the bondholders claim title under the mortgage dated May 12, 1871, which was duly recorded. The contract of Oct. 1, 1873, was never recorded. The receiver has paid no rent for the cars, and they were marked as stated in that contract.

The cars were all in use by the railroad company, and were constantly passing, in and for its business to Chicago and back, on the Chicago and Northwestern Railroad, and in carrying and earning freight for the Davenport and St. Paul road up to the time of the receiver's appointment. Some parties, in a proceeding against the Chicago and Northwestern Railroad Company, garnished the cars, and the court below made an order on that company to deliver them to the receiver. Before the order was executed, the car company applied to the court to direct a payment of rent to them by the receiver. When the court refused to do so, that company, through the same attorneys who applied for rent, replevied fifty-eight of the cars from the Chicago and Northwestern Railroad Company by writ from the Circuit Court of the United States for the Northern District of Illinois. B. E. Smith was, Oct. 1, 1873, president of the car company, and of the Davenport Railway Construction Company, and a stockholder in the Davenport and St. Paul Railroad Company. At that date, George H. French was president of the latter company, and secretary of the Construction Company.

It was further agreed that if the court decided that the car company was entitled to the cars, the amount of rent was to be fixed by a reference to such competent person as the court might select.

The court found that the said ninety cars leased by the railroad company from the Western Car Company, at all times had been and then were the property of the latter company, and that it was entitled to the immediate possession thereof. The court thereupon adjudged that the complainants' bill be dismissed as against the car company.

The court further found that of the said ninety cars fifty-six had come into the possession of the car company under and by virtue of said writ of replevin; that thirty-four of them were then, and had been since the filing of the bill, in the possession of the receiver appointed by the court, but that two of them were subject to the lien of the deed of trust under which the complainants claim. It was adjudged and decreed that the receiver immediately surrender and deliver up unto the car company the remaining thirty-two cars.

It having been stipulated by the parties that the value of the use of the said thirty-two cars, since an while they were in the possession of and in use by the receiver of the court, was $10 per car for each month since March, 1875, a period of twenty-six months, it was further adjudged and decreed that the car company do have and recover for such use the sum of $8,320; and the receiver was ordered and directed to pay over the said moneys to the said company.

Myer and Dennison, the trustees named in the mortgage, thereupon appealed to this court.

Sect. 1922 of the Revised Code of Iowa of 1873 is as follows: -

'That no sale, contract, or lease, wherein the transfer of title or ownership of personal property is made to depend upon any condition, shall be valid against any creditor or purchaser of the vendee or lessee in actual possession obtained in pursuance thereof, without notice, unless the same be in writing, executed by the vendor or lessor, acknowledged and recorded the same as chattel mortgages.'

It is a transcript of an act having for its title 'An Act requiring conditional sales of personal property to be executed, acknowledged, and recorded like mortgages of personal property, to be of any validity as against bona fide purchasers, executions, and attaching creditors.'

Mr. Joseph H. Choate and Mr. James Grant for the appellants.

By the true and fair construction of its terms, the statute of Iowa applies to this case. In invalidates the title or right of recovery of the lessor, as against the prior mortgagees, and makes their title as creditors superior to that of the actual owner.

a. The title of the original act does not control the enacting clause. The latter is free from all ambiguity, and secures the benefit of its provisions to 'any creditor.' Potter's Dwarris on Statutes, pp. 265-270; Mace v. Cadell, Cowp. 232; Sedgwick, Statutes, pp. 50-52.

b. Although United States v. New Orleans Railroad (12 Wall. 362) holds that, as a general rule of equity, the mortgagee in such a mortgage must take after-acquired property cum onere, the express terms of this statute create a clear exception to that rule. United States Wind Engine Co. v. Burlington, & c. Railway Co., 4 Dill. 580.

c. The contract in question comes directly within those terms. It is 'a contract or lease wherein the transfer of title or ownership of personal property is made to depend upon a condition,' and the 'lessee or vendee was in actual possession, obtained in pursuance thereof without notice' to creditors.

The condition, on which the transfer of title is made to depend, is the payment of the original cost. At any time during the lease, by performing this condition, the lessee is to become the owner of the cars.

The purposes of the statute are to be considered. Like all similar legislation which aims at prohibiting the separation of the apparent or reputed title from the real ownership, it is to be construed for the prevention of fraud upon creditors and others, who rely upon the apparent ownership, which the possession and use of chattels indicate. Had an actual purchaser bought and paid for the cars, there can be no question that his title would be sustained as against the real owner, and the statute expressly puts 'any creditor' in the same position.

The principle of such statutes is that a divorce of the apparent ownership, manifested by possession, from the actual ownership, shall not avail as against creditors who rely upon the possession.

In Twyne's Case (3 Co. 87), it was resolved that such statutes made against fraud must be liberally and beneficially expounded, and that the whole instrument must be taken together to ascertain its meaning.

The statute of Iowa does not contemplate a consummated sale and purchase, but a contract or lease whereby the transfer of title is made to depend upon a condition. This exact feature is found in this contract. Whenever the lessee pays or secures the original cost of the cars, they are to be its property. This is an executory agreement binding on the lessor during the whole term of the lease. The statute dispenses in favor of creditors of the lessee with the performance of the condition, if the contract, as in this case, be not recorded.

Leases wherein payment of rent to the amount of a fixed purchase-price is stipulated for have frequently been held to be within the statute. Sewing-Machine Company v. Holcomb, 40 Iowa, 33; Mosely v. Shattuck, 43 id. 540; Lucas v. Campbell, 88 Ill. 447; Latham v. Sumner, 89 id. 233; Hervey v. Rhode Island Locomotive Works, 93, U.S. 664. The distinguishing feature of these cases is that the rent for which the lessee is bound is paid and received as part of the purchase-money, and that when he, by paying the whole amount, has performed the condition on which the transfer of title is made to depend, the property becomes his.

The statute of Iowa covers not only that case, but every case where the contract under which possession is taken contains a condition on the performance of which the title is to pass to the party in possession, although he may not be bound to perform the condition.

A conditional sale does not require a mutual and binding agreement of sale and purchase. It means an agreement of sale, provided the contemplated purchaser performs the prescribed condition. Horn v. Baker, 9 East, 215; Strong v. Taylor, 2 Hill (N. Y.), 326 Herring v. Willard, 2 Sardf (N. Y.) 418.

The court cannot, to palliate the supposed hardships of a particular case, annul the express provisions of the statute of Iowa. This it would do if it held that Myer and Dennision were not 'creditors' in the sense of that statute.

d. The lease provides that the lessee may at any time during its continuance become the owner of the cars on payment of the original cost. Is not some light shed upon this singular provision by the stipulation filed in the court below showing that the actual value of the rent of them was just one-half of that reserved by the lease? Doubtless, therefore, long before the receiver took possession, the lessor had received in excessive rent their full original cost, and the plea of hardship in losing them wholly fails.

Mr. Robert G. Ingersoll and Mr. John M. Butler, contra.

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

We consider it unnecessary to decide in this case whether a lease of personal property at a specified rent, with an option in the lessee to buy for a fixed price, is in legal effect a conditional sale; because, even if it be, the decree below is in our opinion right. In Fosdick v. Schall (99 U.S. 235), a case which came up from Illinois, we decided that such a contract of sale, if not recorded in accordance with the requirements of the chattel-mortgage acts, was legal and valid as between the parties, and that under a mortgage reaching after-acquired property the mortgagee would take such property subject to all the conditions with which it was incumbered when it came into the hands of the mortgagor. The statute we were then considering was as follows:--

'That no mortgage, trust-deed, or other conveyance of     personal property, having the effect of a mortgage or lien      upon such property, shall be valid as against the rights and      interests of any third person, unless possession thereof      shall be delivered to and remain with the grantee, or the      instrument shall provide for the possession of the property      to remain with the grantor, and the instrument is      acknowledged and recorded as hereinafter directed; and every      such instrument shall, for the purposes of this act, be      deemed a chattel mortgage.' Rev. Stat. Ill., 1874, p. 711.

Under this statute the courts of Illinois have uniformly held that contracts of conditional sale are in effect, so far as the chattel-mortgage acts are concerned, the same as though a formal bill of sale had been executed and a mortgage given back to secure the purchase-money. So that the question we were then called on to decide was whether one holding as a mortgagee of after-acquired property was a 'third person' within the meaning of that law.

The statute of Iowa which is involved in the present case is as follows:--

'That no sale, contract, or lease, wherein the transfer of     title or ownership of personal property is made to depend      upon any condition, shall be valid against any creditor or      purchaser of the vendee or lessee, in actual possession      obtained in pursuance thereof, without notice, unless the      same be in writing, executed by the vendor or lessor,      acknowledged and recorded the same as chattel mortgages.'      Code of 1873, sect. 1922, p. 356; Acts of Fourteenth General     Assembly, c. 63, p. 69.

It will thus be seen that the statutes of the two States are substantially alike, unless a different meaning is given the term 'third person,' used in the one, from that of 'creditor or purchaser,' found in the other. If these terms are the same in legal effect, the principal question involved in this case has already been settled here.

In Fosdick v. Schall we held that a mortgagee whose mortgage embraced property to be acquired in the future was in no sense a purchaser of such property. His rights were not granted after the property was bought by the mortgagor. He got nothing by this provision in his mortgage except what the mortgagor himself had acquired. He paid nothing for his new security. He took as mortgagee just such title as the mortgagor had; no more, no less. The code of Iowa, sect. 1283, authorized mortgages of property afterwards to be acquired, and made them as valid and effectual as if the property were in possession at the time of the execution thereof; but this does not change the case. The question still is, what property has been acquired to which the mortgage can attach.

We think, therefore, that the word 'purchaser' in the Iowa statute gives the appellants no rights other than those to which they would be entitled under like circumstances in Illinois.

Every mortgagee is necessarily a creditor. A mortgage is in general but an incident to the debt it secures, and the mortgagee is nothing more than a creditor secured by mortgage. These appellants are mortgagees; but, as has just been seen, their mortgage gives them no rights to the property in dispute against the car company, the lessor, or conditional vendor. Their claim is only such as belongs to creditors of the railroad company, the lessee, or conditional vendee. So far as any rights they have as simple creditors are concerned, the railroad company could do with the property just what it pleased. It might have been surrendered to the car company or sold to another. The car company, too, could have taken possession under its lien, and held against any proceeding these creditors might afterwards commence as mere creditors. Unless a creditor is in a condition to prevent the vendee from controlling his property, he is powerless, and the vendor and vendee may contract with each other as they please without consulting him. It follows that although the word 'creditor' appears in the statute, it must have been used with some limitation. This makes it necessary to inquire what that limitation was.

The statute as we now find it is part of the code of Iowa adopted in 1873. This code, like the Revised Statutes of the United States, was in reality only a convenient compilation or codification of laws before that time in force. In the brief of counsel for the appellants, it is stated in terms that the particular section of the code now in question (sect. 1922) is a copy of chapter 63 of the acts of the Fourteenth General Assembly.

In relation to the Revised Statutes of the United States, we held, in United States v. Bowen (100 U.S. 508), that 'when it becomes necessary to construe language in the revision which leaves a substantial doubt as to its meaning, the original statute may be resorted to for the purpose of ascertaining that meaning.' The same rule is applicable to the Iowa code, and there is a substantial doubt here as to what the word 'creditor' means. Looking then to the original act, we find the text the same as the code; but the title, omitted in the codification, is as follows: 'An Act requiring conditional sales of personal property to be recorded like mortgages of personal property to be of any validity as against bona fide purchasers, execution and attaching creditors.' In cases of doubt the title might always be resorted to for the purpose of ascertaining the meaning of the body of the act; but especially is this true in States like Iowa, where the constitution provides that 'every act shall embrace but one subject and matters properly connected therewith; which subject shall be expressed in the title. But if any subject shall be embraced in an act which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be expressed in the title.' Art. 3, sect. 29. This leaves no doubt, and clearly confines the operation of the text to such creditors as have by suit perfected a right to impeach the transaction. Such has always been the rule in respect to conveyances made to hinder and delay creditors. Until suit was commenced, the parties were at liberty to deal as they pleased with the property conveyed, and the rights of creditors were determined by the condition in which the property was when they interfered. It is clear, therefore, that these appellants, as creditors at large, had acquired no such special interest in the property, when their bill to foreclose their mortgage was filed, as would give them the right to contest the validity of the car company's title. As against them, in the condition they were, the lien created by the conditional sale was to all intents and purposes valid and subsisting when the receiver, on his appointment, took possession of the property; and his possession, as we said in Fosdick v. Schall, was for the benefit of whomsoever in the end it should be found to concern. The rights of the parties were fixed at the moment the property was taken by the court through its receiver into its own possession. At that time these appellants were not either execution or attaching creditors. They had not then, neither have they since, sued as any other than mortgage creditors endeavoring to enforce their mortgage lien. We conclude, therefore, that the statute of Iowa has a no more extended operation, so far as the circumstances of this case are concerned, than that of Illinois, and that under our former decision the appellants stand precisely where the railroad company would in a controversy with its vendor. To our minds it is unimportant that under the railroad mortgage laws of Iowa 'the rolling-stock and personal property of the company, properly belonging to the road and appertaining thereto, shall be deemed a part of the road,' for the purposes of a mortgage. Such personal property is still 'loose property, susceptible of separate ownership and separate liens,' and it is only such interest as 'properly belongs' to the company that the authorized mortgage reaches. The evident purpose of the act was to do no more than prevent confusion growing out of any difference there might be between recording acts having reference to personal property and those affecting real estate. This disposes of the principal question in the case.

The money recovery below was only for the use of the cars by the receiver during the receivership, and the amount was substantially agreed on. In other words, it is in effect admitted that the use of the cars was worth to the court while operating the road under the trust created by the appointment of a receiver, at the instance of these appellants, just what has been decreed. There can be no doubt that it is the duty of a court to pay from the trust fund it has in possession all the debts it incurred in its judicial capacity while administering the trust assumed, pending the litigation, in behalf of the litigating parties. The objection here is not that the fund in hand did not incur the debt, the payment of which has been ordered, but that the railroad company, while operating the road before the receivership, paid the car company too large a sum for the use of its cars, and that the debt of the fund should be reduced by the amount of this improvident and excessive payment. There is nothing in the case as it has been brought here by the appeal which will enable us to determine whether the car company ought to contribute anything to the fund in court on this account or not. It is sufficient for our purposes on this appeal that an authorized officer of the court has in a legitimate way charged the fund in hand with the debt, the payment of which has been ordered, and that it has not been proved that the car company owes the railroad company for over-payments made before the receivership was created.

It is impossible for us to determine from anything now here whether the receiver is indebted to the car company for the use of the cars is question after the decree below, or whether the purchaser of the railroad property under the mortgage has used the cars pending the appeal, or that he can, in this suit, be required to make compensation therefor. All those questions will properly come before the court below for determination on the law and the facts when the case goes down.

Decree affirmed.


text: Talk:Myer v. Car Company/Opinion of the Court

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Railroad Company v. National Bank

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

This was an action by The National Bank of the Republic of New York against The Brooklyn City and Newtown Railroad Company.

The case, as made by an agreed statement of facts, is this:--

The company, a corporation organized under the laws of New York, executed, at Brooklyn, in that State, May 9, 1873, its promissory note for the sum of $5,000, payable four months after date to the order of William V. LeCount, its treasurer, at the Atlantic State Bank of Brooklyn. It was indorsed in blank, first by him, and then by Palmer & Co., a firm composed of Thomas Palmer, Jr., and Anson S. Palmer, the former being the president and the latter the financial agent of the company, and together owning the larger portion of its stock. It was made for the purpose only of raising money thereon for the company. Neither LeCount nor Palmer & Co. received any consideration for their respective indorsements. The note thus indorsed was, with others, placed by the company in the hands of Hutchinson & Ingersoll, a firm of note-brokers in Wall Street, for negotiation and sale.

Prior to the execution of the note Hutchinson & Ingersoll had frequently borrowed money from the bank. They, however, kept no account, and had no transactions with it, other than those to which reference will now be made.

In the month of October, 1872, the bank first made them a call loan at seven per cent interest, of $25,000, on collaterals. Subsequently, in 1873, it made to them other call loans on collaterals, at the same rate of interest, as follows: March 11, $15,000; March 15, $10,000; April 11, $10,000; May 16, $10,000; May 20, $20,000; May 23, $10,000; June 4, $15,000; June 6, $12,000; June 12, $10,000; June 19, $36,000; and July 11, $10,000. Each of these loans was a separate one, upon a particular and distinct lot of collaterals. Hutchinson & Ingersoll were in the habit of borrowing money from various banks and from individuals or firms upon specific lots of collaterals.

The loan of $36,000 on 19th June, 1873, was upon several notes as collateral security, among them the above-described note for $5,000, executed May 9, 1873. All the loans by the bank, prior to the one of $36,000, had been paid off before that loan was made.

The loan of $10,000 on 11th July, 1873, was upon the following notes as collateral security: Two notes of Howes, Hyatt, & Co. for $2,605.98 and $3,540.15, and two of H. L. Ritch & Co. for $3,320.17 and $2,146.92.

On the 22d of July, 1873, Howes, Hyatt, & Co. having become insolvent, Hutchinson & Ingersoll executed and delivered to the bank, at its request, antedated to June 19, 1873 (which was the date of the $36,000 loan), a written instrument, whereby they agreed with the bank 'that all securities, bonds, stocks, things in action, or other property or evidences of property whatsoever, which have been or may at any time hereafter be deposited or left by us or on our account, with said bank, whether specifically pledged or not, may be held by said bank, and shall be deemed to by and are hereby pledged as security for the payment of any and every indebtedness, liability, or engagement on our part, held by said bank, and that on the non-payment, when due and payable, of any sum or sums of money which have been or may hereafter be by said bank lent, paid, or advanced to or for the account or use of us, or for which we are or may become in any way liable or indebted to said bank, the said bank, or its president or cashier, may immediately thereupon, or at any time thereafter, sell, &c.,. . . and apply the net proceeds of sale to the payment of any sum or sums due and payable from us to said bank, and hold any surplus of such net proceeds, together with any and all remaining securities, property or evidences of property, then held by said bank and not sold, as security for the payment of any and all other of our then existing and remaining liabilities and engagements to said bank.'

When that writing was executed, no agreement was made to extend the loan, or to refrain from calling it in.

The bank knew that Hutchinson & Ingersoll were note-brokers, but until Aug. 8, 1873, had no knowledge or information of the connection of the Palmers with the railroad company, or of the circumstances attending the making or indorsement of the note in suit, or of the purpose thereof, or of any relations, dealings, or communication between Hutchinson & Ingersoll, and the parties to the note (except that they knew Hutchinson & Ingersoll to be note-brokers), or that the note was anything else than ordinary business paper, or that there was any question as to the right of said Hutchinson & Ingersoll to pledge or negotiate it. Nor did the railroad company know or suspect that the firm had parted with or hypothecated said note until Aug. 15, 1873.

The company, by reason of certain advances made to its use, by Hutchinson & Ingersoll, became indebted to the latter, on the 8th of August, 1873, in the sum of $600. On the fifteenth day of August, 1873, it tendered that sum to the firm, and demanded a return of the $5,000 note. During the same month it made a like tender to the bank, and demanded the note.

The $36,000 loan was paid in full out of the collaterals given to secure its payment, as they respectively matured, without resorting to the note in suit, the first payment of $4,580 being July 22, 1873, and the last payment being April 4, 1874, leaving the $5,000 note in the bank's possession.

Hutchinson & Ingersoll are insolvent. The collaterals collected exceeded the $36,000 loan by $2,403.61.

On the $10,000 loan of July 11, 1873, there was a balance due the bank, Nov. 21, 1876, of $5,136.68 after exhausting all collaterals in its possession which had been specially pledged to secure that loan, and crediting the amount, with interest collected, of a certain judgment to be now referred to.

In 1874, the bank sued Palmer & Co., as indorsers upon the note in suit, in the Supreme Court of New York. The case was sent to a referee, who rendered judgment in favor of the bank for $601, which seems to be the amount due from the railroad company to Hutchinson & Ingersoll. That judgment, with the costs, was satisfied.

The present action is by the bank against the railroad company to recover the amount of the $5,000 note executed by the latter on the 9th of May, 1873, and placed in the hands of Hutchinson & Ingersoll for sale for the benefit of the company. It was agreed that, if the company is liable to the bank upon that note, the amount would be as of Nov. 21, 1876, $5,136.68.

The court below gave judgment for the bank, and the company sued out this writ.

Mr. William Dorsheimer for the plaintiff in error.

The matter is res judicata, for there was a determination, by the Supreme Court of New York, upon the same subject-matter in a controversy between the same parties or their privies. It is true that the defendants there were not the makers of the note. Although makers and indorsers may have independent interests, yet they, in this instance, are privies. The note never had any valid inception. The making and indorsing were alike without consideration. Neither the maker nor the indorsers could incur any liability on the note, except such as might arise from the unauthorized action of Hutchinson & Ingersoll in pledging it to the bank.

The term 'privies' is not confined to persons interested in real estate (3 Tomlin, Law Dict. 218; 2 Bouv. 382), nor is it true that only the same parties, eo nomine, are bound by a judgment. Green v. Clark, 5 Den. (N. Y.) 497; s. c. 13 Barb. (N. Y.) 57; Kent v. Hudson River Railroad Co., 22 id. 278; Taylor v. Spader, 48 N. Y. 664. The expression 'parties' is not confined to the parties to the record. It includes all those who have a direct interest in the subject-matter of the suit. Bates v. Stanton, 1 Duer (N. Y.), 87; Ehle v. Bingham, 7 Barb. (N. Y.) 494.

Even if the judgment be not construed as res judicata, in the strict sense, the bank is estopped from proceeding further with this action. It selected its own tribunal, abided by the judgment there rendered, and entered satisfaction of it, after accepting the money which the court determined to be the whole amount due upon the note. The claim was extinguished by that acceptance and satisfaction. Woodworth v. Spofford, 2 McLean, 168; Sedam v. Williams, 4 id. 51; King v. Hoare, 13 Mees. & W. 449; Farrell v. Hibbard, 3 N. H. 318.

This case was tried upon similar pleadings, and the same state of facts as that, with the single exception of the paper signed July 22, 1873, which would not have varied the result there, and in no way strengthens the case here. It was signed long after both loans had been made, was without consideration, and no action was taken upon it. The bank did not agree to extend the loan, nor did it refrain from calling it in. It must be conceded that, under the adjudications in New York, the bank was not in that case entitled to recover more than the sum awarded, unless it had a lien upon all the securities of Hutchinson & Ingersoll, which was termed in the decision a 'banker's lien.' Its relations with them were not those of banker and customer, and such a lien could not, therefore, attach. They were not depositors or dealers with the plaintiff, and kept no account there. In the cases where the question of such a lien has arisen, the party asserting it was a banker quoad the person from whom the security had been acquired. In some of them, the lien was claimed under special circumstances, as on a pledge, but no banker's lien can arise, unless the relation of banker and customer exists. The banker in England is the general financial agent of the customer. Even there the lien would not apply to a case like this, though the parties did actually occupy the legal relation of banker and customer. Davis v. Bowsher, 5 T. R. 488; Brandas v. Barnett, 12 Cl. & Fin. 787; Jones v. Peppercorn, 1 John. 430; Bolland v. Bygrave, 1 Ry. & M. 271; In re European Bank, Agra Bank Claim, Law Rep. 8 Ch. 41.

Outside of the question as to the asserted specified lien of a 'banker' the plaintiff cannot recover. Ocean Bank v. Scott, 23 N. Y. 293; Clarke v. Lawrence, 36 id. 118; McBride v. Farmers' Bank, 26 id. 450; s. c. 25 Barb. (N. Y.) 657; Van Namee v. Bank of Troy, 8 id. 312; West v. American Exchange Bank, 44 id. 175; American Exchange Bank v. Corlies, 46 id. 19; Farrington v. Franklin Bank, 24 id. 559; Neponset Bank v. Leland, 5 Metc. (Mass.) 259; Story, Agency, sect. 381; Commercial Bank v. Marine Bank, 3 Keyes (N. Y.), 337; Bay v. Coddington, 5 Johns. (N. Y.) Ch. 54; s. c. 20 Johns. (N. Y.) 637.

These decisions all affirm this doctrine, and it may be now considered as the settled law of the State of New York.

The plaintiff relied upon Swift v. Tyson, 16 Pet. 1.

1. An examination of that case will show that the acceptance sued upon was, with another, transferred in payment of a promissory note, which was given up when they were received. All that was there decided is, that an innocent third party may acquire a title to a note if he takes it in payment of a pre-existing debt, as well as if he makes an immediate advance upon it.

2. But conceding, for the purposes of the argument, that a party receiving a note as additional security to an existing claim takes it free from the equities between antecedent parties, this is not such a case. The note was given as such security for a loan, which has been since paid. The right of recovery cannot extend to a subsequent and independent loan made upon different collaterals.

3. The cases in the English books relied upon below were those of continuing loans or balances. In other words, the party holding the notes had done, or omitted to do, some act on the faith thereof.

Here there was no agreement to extend the second loan.

An examination of Swift v. Tyson shows that the point was taken on the argument that 'the acceptance of the bill of exchange by the defendant having been given in New York, the contract was to be regulated by the laws of that State.' The reporter says: 'This question was not brought before the court by the certificate of division.'

In the case at bar the question is clearly presented. Inasmuch as these parties are both residents of New York, and the contract was made there, and the plaintiff resorted to her tribunals for the assertion of its rights, and obtained a judgment upon which it received payment, and gave satisfaction, the case should be determined by the lex loci contractus; and this court, it is submitted, should accept the decisions of the courts of that State as governing this case.

''Mr. Thomas II. Rodman, contra''.

The doctrine in Swift v. Tyson (16 Pet. 1) is explicit and decisive in favor of the plaintiff. It was reaffirmed and enforced in McCarty v. Roots (21 How. 432), and has been adopted and applied in the State courts. Quinn v. Hard, 43 Vt. 375; Russell v. Splater, 47 id. 273; Atkinson v. Brooks, 26 id. 569; Fisher v. Fisher, 98 Mass. 303; Stoddard v. Kimball, 6 Cush. (Mass.) 469; Roberts v. Hall, 37 Conn. 205; Bank of Republic v. Carrington, 5 R. I. 515; Williams v. Little, 11 N. H. 66; Bowman v. Millison, 58 Ill. 36; Manning v. McClure, 36 id. 490; Payne v. Bensley, 8 Cal. 260; Giovanovich v. Citizens' Bank, 26 La. Ann. 15; Smith v. Isaacs, 23 id. 454; Allaire v. Hartshorne, 21 N. J. L. 665; Armour v. McMichael, 36 id. 92; Maitland v. Citizens' National Bank of Baltimore, 40 Md. 540; Robins v. Lair, 31 Iowa, 9; Bonaud v. Genesi, 42 Ga. 639.

If the pledge of June 19, 1873, had not been made, the plaintiff, organized and doing business as a national banking association, would have had the right to hold the note in suit for the deficiency on the second loan. Hutchinson & Ingersoll were in the habit of borrowing money of the plaintiff on collaterals. A banker has a lien for a general balance (In re European Bank, Agra Bank Claim, Law Rep. 8 Ch. 41), and it is not excluded by a special contract, unless the latter be inconsistent therewith.

The defence of a former recovery is not tenable. The judgment was not rendered in a suit between the same parties, and there is no privity between maker and indorser to which the doctrine of estoppel applies. Bigelow, Estoppel, 75. A judgment against the indorser of a note does not discharge the maker. ''Russell & Erwin Manuf. Co. v. Carpenter, 5 Hun (N. Y.), 162; Pritchard v. Hitchcock'', 6 Man. & G. 151.

The plaintiff's claim was not satisfied by the payment of the judgment against the indorsers for a part of the debt. Part payment by, and release of, the indorser does not discharge the maker. Story, Promissory Notes, sect. 422, note 2; Commercial Bank v. Cunningham, 24 Pick. (Mass.) 270.

Mr. JUSTICE HARLAN, after stating the facts, delivered the opinion of the court.

title: Railroad Company v. National Bank


text: A Book of the Cevennes/The Camisards

title: A Book of the Cevennes/The Camisards


text: Talk:Railroad Company v. National Bank

title: Talk:Railroad Company v. National Bank


text:
Railroad Company v. National Bank/Opinion of the Court

The first proposition of the plaintiff in error is that there has been a final determination by a court of competent jurisdiction, between the same parties of their privies, upon the same subject-matter as that here in controversy. This contention rests upon the judgment of the Supreme Court of New York, in the action instituted by the bank against Palmer & Co., as the indorsers of the note in suit.

The judgment in the State court clearly constitutes no bar to the present action. Personal judgments bind only parties and their privies. The railroad company was not a party to the separate action against Palmer & Co., nor did it receive notice from the latter of the pendency of that suit. It was, therefore, in no manner affected by the judgment. Had the company received such notice in due time, it would, perhaps, although not technically a party to the record, have been estopped, at least as between it and it accommodation indorsers, from saying that the latter were not bound to pay the judgment, if obtained without fraud or collusion. Being, however, an entire stranger to the record, it had no opportunity or right, in that proceeding, to controvert the claim of the bank, to control the defence, to introduce or cross-examine witnesses, or to prosecute a writ of error to the judgment.

If, in the action against Palmer & Co., the bank had obtained judgment for the full amount of the note, and, being unable to collect it, had sued the railroad company, the latter would not have been precluded by the judgment in that action, to which it was not a party, and of the pendency of which it had not been notified, from asserting any defence it might have against the note. This being so, it results that the company cannot plead the judgment in the State court as a bar to this action. An estoppel, arising out of the judgment of a court of competent jurisdiction, is equally conclusive upon all the parties to the action and their privies. It may not be invoked or repudiated at the pleasure of one of the parties, as his interest may happen to require.

The liability of the maker and indorsers was not joint, but several, and, therefore, a judgment in an action against the indorsers, upon the contract of indorsement, could not bar a separate action by the bank against the maker,-certainly not, where the maker was without notice from the indorsers of the pendency of the action against them.

The next proposition involves the right of the railroad company to show, as against the bank, that the note was executed and delivered to Hutchinson & Ingersoll for the purpose only of raising money upon it for the company, and that, consequently, they had no authority to pledge it as collateral security for their own indebtedness to the bank. It will have been observed, from the statement of facts, that the note in suit was among those pledged to the bank as security for the call loan of $36,000, made June 19, 1873; that Howes, Hyatt, & Co., whose notes had been pledged of $10,000, made June 19, 1873, of $10,000, made June 19, 1973, having become insolvent, Hutchinson & Ingersoll, July 22, 1873, at the request of the bank, executed the writing, dated June 19, 1873, whereby they pledged all securities, bonds, stocks, things in action, or other property theretofore deposited with the bank, whether specifically or not, as security for the payment of any and every indebtedness, liability, or engagement held by the bank, for which they were, or should become, in any way liable. Although, therefore, the call loan of $36,000 was extinguished, without resorting to the note in suit, that note, under the agreement made July 22, 1873, stood pledged as collateral security, also, for the $10,000 call loan of July 11, 1873.

The bank, we have seen, received the note, before its maturity, indorsed in blank, without any express agreement to give time, but without notice that it was other than ordinary business paper, or that there was any defence thereto, and in ignorance of the purposes for which it had been executed and delivered to Hutchinson & Ingersoll. Did the bank, under these circumstances, become a holder for value, and as such entitled, according to the recognized principles of commercial law, to be protected against the equities or defences which the railroad company may have against the other parties to be note?

This question was carefully considered, though, perhaps, it was not absolutely necessary to be determined, in Swift v. Tyson, 16 Pet. 1. After stating that the law respecting nogotiable instruments was not the law of a single country only, but of the commercial world, the court, speaking by Mr. Justice Story, said: 'And we have no hesitation in saying that a pre-existing debt does constitute a valuable consideration in the sense of the general rule already stated as applicable to negotiable instruments. Assuming it to be true (which, however, may well admit of some doubt from the generality of the language) that the holder of a negotiable instrument is unaffected with the equities between antecedent parties, of which he has no notice, only where he receives it in the usual course of trade and business for a valuable consideration, before it becomes due, we are prepared to say that receiving it in payment of or as security for a pre-existing debt is according to the known usual course of trade and business. And why, upon principle,' continued the court, 'should not a pre-existing debt be deemed such a valuable consideration? It is for the benefit and convenience of the commercial world to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass not only as security for new purchases and advances, made upon the transfer thereof, but also in payment of and as security for pre-existing debts. The creditor is thereby enabled to realize or to secure his debt, and thus may safely give a prolonged credit, or forbear from taking any legal steps to enforce his rights. The debtor, also, has the advantage of making his negotiable securities of equivalent value to cash. But establish the opposite conclusion, that negotiable paper cannot be applied in payment of or as security for pre-existing debts, without letting in all the equities between the original and antecedent parties, and the value and circulation of such securities must be essentially diminished, and the debtor driven to the embarrassment of making a sale thereof, often at a ruinous discount, to some third person, and then by circuity to apply the proceeds to the payment of his debts. What, indeed, upon such a doctrine would become of that large class of cases where new notes are given by the same or by other parties, by way of renewal or security to banks, in lieu of old securities discounted by them which have arrived at maturity? Probably more than one-half of all bank transactions in our country, as well as those of other countries, are of this nature. The doctrine would strike a fatal blow at all discounts of negotiable securities for pre-existing debts.'

After a review of the English cases, the court proceeded: 'They directly establish that a bona fide holder, taking a negotiable note in payment of or as security for a pre-existing debt, is a holder for a valuable consideration, entitled to protection against all the equities between the antecedent parties.'

The opinion in that case has been the subject of criticism in some courts, because it seemed to go beyond the precise point necessary to be decided, when declaring that the bona fide holder of a negotiable note, taken as collateral security for an antecedent debt, was protected against equities existing between the original or antecedent parties. The brief dissent of Mr. Justice Catron was solely upon that ground, which renders it quite certain that the whole court was aware of the extent to which the opinion carried the doctrines of the commercial law upon the subject of negotiable instruments transferred or delivered as security for antecedent indebtedness. In the judgment of this court, as then constituted (Mr. Justice Catron alone excepted), the holder of a negotiable instrument, received before maturity, and without notice of any defence thereto, is unaffected by the equities or defences of antecedent parties, equally whether the note is taken as collateral security for or in payment of previous indebtedness. And we understand the case of McCarty v. Roots (21 How. 432) to affirm Swift v. Tyson, upon the point now under consideration. It was there said' 'Nor does the fact that the bills were assigned to the plaintiff as collateral security for a pre-existing debt impair the plaintiff's right to recover.' p. 438. 'The delivery of the bills to the plaintiff as collateral security for a pre-existing debt, under the decision of Swift v. Tyson, was legal.' p. 439.

It may be remarked in this connection that the courts holding a different rule have uniformly referred to an opinion of Chancellor Kent in Bay v. Coddington (5 Johns. (N. Y.) Ch. 54), reaffirmed in Coddington v. Bay, 20 Johns. (N. Y.) 637. There is, however, some reason to to believe that the views of that eminent jurist were subsequently modified. In the later editions of his Commentaries (vol. iii. p. 81, note b), prepared by himself, reference is made to Stalker v. McDonald (6 Hill (N. Y.), 93), in which the principles asserted in Bay v. Coddington were re-examined and maintained in an elaborate opinion by Chancellor Walworth, who took occasion to say that the opinion in Swift v. Tyson was not correct in declaring that a pre-existing debt was, of itself, and without other circumstances, a sufficient consideration to entitle the bona fide holder, without notice, to recover on the note, when it might not, as between the original parties, be valid. But Chancellor Kent adds: 'Mr. Justice Story, on Promissory Notes, p. 215, note 1, repeats and sustains the decision in Swift v. Tyson, and I am inclined to concur in that decision as the plainer and better doctrine.' Of course it did not escape his attention that the court in Swift v. Tyson declared the equities of prior parties to be shut out as well when the note was merely pledged as collateral security for a pre-existing debt, as when transferred in payment or extinguishment of such debt.

According to the very general concurrence of judicial authority in this country as well as elsewhere, it may be regarded as settled in commercial jurisprudence-there being no statutory regulations to the contrary-that where negotiable paper is received in payment of an antecedent debt; or where it is transferred, by indorsement, as collateral security for a debt created, or a purchase made, at the time of transfer; or the transfer is to secure a debt, not due, under an agreement express or to be clearly implied from the circumstances, that the collection of the principal debt is to be postponed or delayed until the collateral matured; or where time is agreed to be given and is actually given upon a debt overdue, in consideration of the transfer of negotiable paper as collateral security therefor; or where the transferred note takes the place of other paper previously pledged as collateral security for a debt, either at the time such debt was contracted or before it became due,-in each of these cases the holder who takes the transferred paper, before its maturity, and without notice, actual or otherwise, of any defence thereto, is held to have received it in due course of business, and, in the sense of the commercial law, becomes a holder for value, entitled to enforce payment, without regard to any equity or defence which exists between prior parties to such paper.

Upon these propositions there seems at this day to be no substantial conflict of authority. But there is such conflict where the note is transferred as collateral security merely, without other circumstances, for a debt previously created. One of the grounds upon which some courts of high authority refuse, in such cases, to apply the rule announced in Swift v. Tyson is, that transactions of that kind are not in the usual and ordinary course of commercial dealings. But this objection is not sustained by the recognized usages of the commercial world, nor, as we think, by sound reason. The transfer of negotiable paper as security for antecedent debts constitutes a material and an increasing portion of the commerce of the country. Such transactions have become very common in financial circles. They have grown out of the necessities of business, and, in these days of great commercial activity, they contribute largely to the benefit and convenience both of debtors and creditors. Mr. Parsons, in his treatise on the Law of Promissory Notes and Bills of Exchange, discusses the general question of the transfer of negotiable paper under three aspects,-one, where the paper is received as collateral security for intecedent debts. We concur with the author, 'that, when the principles of the law merchant have established more firmly and unreservedly their control and their protection over the instruments of the merchant, all of these transfers (not affected by peculiar circumstances) will be held to be regular, and to rest upon a valid consideration.' 1 Parsons, Notes and Bills (2d ed.), 218.

Another ground upon which some courts have declined to sanction the rule announced in Swift v. Tyson is, that upon the transfer of negotiable paper merely as collateral security for an antecedent debt nothing is surrendered by the indorsee,-that to permit the equities between prior parties to prevail deprives him of no right or advantage enjoyed at the time of transfer, imposes upon him no additional burdens, and subjects him to no additional inconveniences.

This may be true in some, but it is not true in most cases, nor, in our opinion, is it ever true when the note, upon its delivery to the transferee, is in such form as to make him a party to the instrument, and impose upon him the duties which, according to the commercial law, must be discharged by the holder of negotiable paper in order to fix liability upon the indorser.

The bank did not take the note in suit as a mere agent to receive the amount due when it suited the convenience of the debtor to make payment. It received the note under an obligation imposed by the commercial law, to present it for payment, and give notice of non-payment, in the mode prescribed by the settled rules of that law. We are of opinion that the undertaking of the bank to fix the liability of prior parties, by due presentation for payment and due notice in case of nonpayment,-an undertaking necessarily implied by becoming a party to the instrument,-was a sufficient consideration to protect it against equities existing between the other parties, of which it had no notice. It assumed the duties and responsibilities of a holder for value, and should have the rights and privileges pertaining to that position. The correctness of this rule is apparent in cases like the one now before us. The note in suit was negotiable in form, and was delivered by the maker for the purpose of being negotiated. Had it been regularly discounted by the bank, at any time before maturity, and the proceeds either placed to the credit of Hutchinson & Ingersoll, or applied directly to the discharge, pro tanto, of any one of the call loans previously made to them, it would not be doubted that the bank would be protected against the equities of prior parties. Instead of procuring its formal discount, Hutchinson & Ingersoll used it to secure the ultimate payment of their own debt to the bank. At the time the written agreement of July 22, 1873, was executed, by which this note, with others, was pledged as security for any debt then or thereafter held against them, the bank had the right to call in the $10,000 loan, that is, to require immediate payment. The securities upon which that loan rested had become, in part, worthless, and it is evident that but for the deposit of additional collateral securities the bank would have called in the loan, or resorted to its rightful legal remedies for the enforcement of payment. It was, under the circumstances, the duty of the debtors to make such payment, or to secure the debt. It was important to them, and was in the usual course of commercial transactions, to furnish such security. If the bank was deceived as to the real ownership of the paper, or as to the purposes of its execution and delivery to Hutchinson & Ingersoll, it was because the railroad company intrusted it to those parties in a form which indicated that the latter were its rightful holders and owners, with absolute power to dispose of it for any purpose they saw proper.

Our conclusion, therefore, is that the transfer, before maturity, of negotiable paper, as security for an antecedent debt merely, without other circumstances, if the paper be so indorsed that the holder becomes a party to the instrument, although the transfer is without express agreement by the creditor for indulgence, is not an improper use of such paper, and is as much in the usual course of commercial business as its transfer in payment of such debt. In either case, the bona fide holder is unaffected by equities or defences between prior parties, of which he had no notice. This conclusion is abundantly sustained by authority. A different determination by this court would, we apprehend, greatly surprise both the legal profession and the commercial world. See Bigelow's Bills and Notes, 502 et seq.; 1 Daniel, Neg. Inst. (2d ed.) c. 25, sects. 820-833; Story, Promissoty Notes, sects. 186, 195 (7th ed.), by Thorndyke; 1 Parsons, Notes and Bills (2d ed.), 218, sect. 4, c. 6; and Redfield & Bigelow's Leading Cases upon Bills of Exchange and Promissory Notes, where the authorities are cited by the authors.

It is, however, insisted that, by the course of judicial decision in New York, negotiable paper transferred merely as collateral security for an antecedent debt, is subject to the equities of prior parties existing at the time of transfer; that the bank being located in New York, and the other parties being citizens of the same State, and the contract having been there made, this court is bound to accept and follow the decision of the State court, whether it meets our approval or not. This contention rests upon the provision of the statute which declares that 'the laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply.'

It is undoubtedly true that if we should apply to this case the principles announced in the highest court of the State of New York, a different conclusion would have been reached from that already announced. That learned court has held that the holder of negotiable paper transferred merely as collateral security for an antecedent debt, nothing more, is not a holder for value, within those rules of commercial law which protect such paper against the equities of prior parties.

The question here presented is concluded by our former decisions.

We remark, at the outset, that the section of the statute of the United States already quoted is the same as the thirty-fourth section of the original Judiciary Act.

In Swift v. Tyson (supra), the contention was that this court was obliged to follow the decisions of the State courts in all cases where they apply. But this court said: 'In order to maintain the argument, it is essential, therefore, to hold that the word 'laws' in this section includes within the scope of its meaning the decisions of the local tribunals. In the ordinary use of language it will hardly be contended that the decisions of courts constitute laws. They are, at most, only evidence of what the laws are, and are not of themselves laws. They are often re-examined, reversed, and qualified by the courts themselves, whenever they are found to be either defective, or ill-founded, or otherwise incorrect. The laws of a State are more usually understood to mean the rules and enactments promulgated by the legislative authority thereof, or long-established local customs having the force of laws. In all the various cases which have hitherto come before us for decision this court have uniformly supposed that the true interpretation of the thirty-fourth section limited its application to State laws strictly local; that is to say, to the positive statutes of the State, and the construction thereof adopted by the local tribunals, and to rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intra-territorial in their nature and character. It has never been supposed by us that the section did apply, or was designed to apply, to questions of a more general nature, not at all dependent upon local statutes or local usages of a fixed and permanent operation: as, for example, to the construction of ordinary contracts or other written instruments, and especially to questions of general commercial law, where the State tribunals are called upon to perform the like functions as ourselves; that is, to ascertain upon general reasoning and legal analogies what is the true exposition of the contract or instrument, or what is the just rule furnished by the principles of commercial law to govern the case. And we have not now the slightest difficulty in holding that this section, upon its true intendment and construction, is strictly limited to local statutes and local usages of the character before stated, and does not extend to contracts and other instruments of a commerial nature, the trun interpretation and effect whereof are to be sought, not in the decisions of the local tribunals, but in the general principles and doctrines of commercial jurisprudence. Undoubtedly, the decisions of the local tribunals upon such subjects are entitled to and will receive the most deliberate attention and respect of this court; but they cannot furnish positive rules, or conclusive authority, by which our own judgments are to be bound up and governed.'

In Carpenter v. The Providence Washington Insurance Co. (16 Pet. 495), decided at the same term with Swift v. Tyson, it was necessary to determine certain questions in the law of insurance. The court said: 'The questions under our consideration are questions of general commercial law, and depend upon the construction of a contract of insurance which is by no means local in its character, or regulated by any local policy or customs. Whatever respect, therefore, the decisions of State tribunals may have on such a subject, and they certainly are entitled to great respect, they cannot conclude the judgment of this court. On the contrary, we are bound to interpret this instrument according to our own opinion of its true intent and objects, aided by all the lights which can be obtained from all external sources whatsoever; and if the result to which we have arrived differs from these learned State courts, we may regret it, but it cannot be permitted to alter our judgment.'

In Oates v. National Bank (100 U.S. 239), we had before us the precise question now under consideration. That was an action by a national bank, located in Alabama, against a citizen of that State, upon a promissory note there executed and negotiated. It was contended that the decision of the Supreme Court of Alabama should be accepted as the law governing the rights of parties. We, however, held-referring to some of our previous decisions-that the Federal courts were not bound by the decisions of the State courts 'upon questions of general commercial law. . . . We have already seen that the statutes of Alabama placed under the protection of the commercial law promissory notes payable in money at a certain designated place; but how far the rights of parties here are affected by the rules and doctrines of that law is for the Federal courts to determine, upon their own judgment as to what these rules and doctrines are.'

To this doctrine, which received the approval of all the members of this court when first announced, we have, as our decisions show, steadily adhered. We perceive no reason for its modification in any degree whatever. We could not infringe upon it, in this case, without distrubing or endangering that stability which is essential to be maintained in the rules of commercial law. The decisions of the New York court, which we are asked to follow in determining the rights of parties under a contract there made, are not in exposition of any legislative enactment of that State. They express the opinion of that court, not as to the rights of parties under any law local to that State, but as to their rights under the general commercial law existing throughout the Union, except where it may have been modified or changed by some local statute. It is a law not peculiar to one State, or dependent upon local authority, but one arising out of the usages of the commercial world. Suppose a State court, in a case before it, should determine what were the laws of war as applicable to that and similar cases. The Federal courts, sitting in that State, possessing, it must be conceded, equal power with the State court in the determination of such questions, must, upon the theory of counsel for the plaintiff in error, accept the conclusions of the State court as the true interpretation, for that locality, of the laws of war, and as the 'law' of the State in the sense of the statute which makes the 'laws of the States rules of decision in trials at common law.' We apprehend, however, that no one would go that far in asserting the binding force of State decisions upon the courts of the United States when the latter are required, in the discharge of their judicial functions, to consider questions of general law, arising in suits to which their jurisdiction extends. To so hold would be to defeat one of the objects for which those courts were established, and introduce infinite confusion in their decisions of such questions. Further elaboration would seem to be unnecessary.

Judgment affirmed.

MR. JUSTICE MILLER and MR. JUSTICE FIELD dissented.

MR. JUSTICE CLIFFORD and MR. JUSTICE BRADLEY, concurring in the judgment, delivered the following opinions:--


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


text:
National Bank v. Dayton

ERROR to the Supreme Court of Wyoming Territory.

The facts are stated in the opinion of the court.

Mr. Samuel Shellabarger and Mr. Jeremiah S. Wilson for the plaintiff in error.

Mr. William A. Maury for the defendant in error.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: National Bank v. Dayton


text: Talk:National Bank v. Dayton

title: Talk:National Bank v. Dayton


text:
National Bank v. Dayton/Opinion of the Court

This was replevin by the Wyoming National Bank against Thomas J. Dayton. The latter, as sheriff of Albany County, Wyoming Territory, had, by virtue of several attachments against the property of one W. S. Bramel, levied upon a number of cords of wood. The bank, claiming to be the owner of the wood at and before the time when the writs were issued and levied, brought this action to recover it, and damages for the detention thereof.

In the court of original jurisdiction a verdict was returned in favor of the defendant, and judgment thereon entered. From the judgment of affirmance by the Supreme Court of the Territory the present writ of error is prosecuted.

Upon the question of the ownership of the wood, at the date of the respective levies, the evidence was conflicting, and presented a case peculiarly within the province of the jury to determine, under proper guidance as to the law governing it. Without attempting to set forth the whole case, it is sufficient to remark that there was evidence to establish the following facts:--

Bramel was engaged in the business of bringing wood down the Big Laramie River to Laramie City. He had a contract with the Union Pacific Railroad Company for the delivery to it, at its yard in that city, by a specified date, of five hundred cords of wood at $5 per cord. In the necessary preparations for that engagement, he had, prior to Oct. 30, 1873, received from the bank about $2,100, which its president testified had been advanced to him at different times on this same wood. For these advances the bank held his notes. On the day last named he applied to the president of the bank for a further advance of money. His application was denied. He then proposed that the bank should buy all the wood he had, some of which was then in the yard of the company, but not received by it, some on the bank of the river, and some in the river. This proposition was at first declined; but, after further conversation between him and the president of the bank, it was agreed that the bank should take the five hundred cords at $5 per cord, to be paid for in the debt of $2,100, then held by the bank, and $400 in cash, upon the condition that the company would receive the wood from the bank upon like terms. It was a part of the arrangement that Bramel should, in that event, put the wood into the yard of the company, and use the $400 for that purpose. In order to ascertain whether the company would assent to this arrangement, the bank cashier and Bramel, by direction of the president of the bank, visited Mr. Shankland, who had the control of all such business for the company. They returned together and reported that Shankland approved the arrangement, and would make out the vouchers for the wood to the bank. The cashier then paid $400 to Bramel, taking his note therefor, bearing interest at three per cent per month; and the latter went on putting the wood into the yard of the company. He had delivered at that place about three hundred and seventy-five cords, and had a few cords on the river-bank, when it was all seized by the defendant in error, under the attachments against Bramel's property. None of the wood had then been actually received by the company. Bramel's notes, to which we have referred, were held by the bank at the commencement of this action. They were taken, as the bank claimed and proved by its president, more as memoranda than anything else, and had not been surrendered to Bramel because he had not called at the bank for them.

Such was, substantially, the case of the bank. We do not say that the jury should have found that it was made out, even by a decided preponderance of the evidence, but only that there was evidence tending to show that the contract and acts of the parties were such as the foregoing statement sets forth.

Looking at the case in the light of these facts, it seems that the transaction between the bank and Bramel was something more than a mere agreement as to the disposition of the money to be obtained from the company. It constituted a sale to the bank of all the wood which he delivered at the yard of the company. The absolute title to it passed to the bank upon his depositing it there, with the intention or for the purpose of more remained to be done by him. His contract bound him to deliver the wood, not to the company, but at its yard only. In legal contemplation, it then came into the possession and control of the bank, and was not thereafter subject to be reached by his creditors, upon the mere ground that the title had not passed, or that a complete delivery had not been made. The delivery in execution of the contract, at a specified place not belonging to him, was such as accorded with the nature of the property. When placed in the yard of the company, in pursuance of the agreement, the acts of the parties united with the previous verbal contract, resulting in a consummated obligatory agreement, depriving the seller of all further control of the property, and putting it under the exclusive dominion of the buyer, with a perfected title thereto.

From that moment, the indebtedness of the seller to the bank to the extent of the contract price of the wood actually delivered at the designated place was discharged, and the property was thenceforward at the risk of the buyer. Actual manual possession of the bank by its agents was, under the circumstances and regarding the nature of the property, both impracticable and unnecessary to a complete delivery. These conclusions are abundantly sustained by authority. Benjamin, Sales, bk. 1, pt. 2, p. 134; Hilliard, Sales, c. 7, pp. 124-130; Browne, Statute of Frauds, c. 15, p. 323.

The instructions were not in accordance with these views, The court failed to state distinctly and clearly the principles of law by which the jury were to be governed. Taking all the instructions together, it is evident that the deposit of the wood at the yard of the company, in pursuance of the previous agreement between the bank and Bramel that it should be put there for ultimate delivery to the company, was not regarded by the court as such a change of possession as would, in law, pass the title to the bank as against the creditors, whose attachments were subsequently issued and levied.

That we do not misinterpret the instructions is quite clear, from the opinion of the Supreme Court, which declared that 'the record shows that the full and absolute control and possession of the same was publicly and privately retained by Bramel, after the alleged unconditional sale.' In view of the pleadings and evidence this could not be the case, unless the court below not only disregarded the evidence in behalf of the bank, but was, further, of opinion that the delivery of the wood at the yard was insufficient to pass the title, and change the control and possession of the property from the seller to the buyer. But that position, as we have seen, is unsound both upon principle and authority. We repeat that, if Bramel agreed to sell and the bank agreed to buy the wood at a fixed price per cord, the seller to remove the wood from the river and put it in the yard of the company, for sale or delivery to the latter by the bank, which was to receive the vouchers, and if the wood was so deposited in pursuance of that sale and agreement, then, in legal contemplation, the title and possession of the property passed to the bank from the moment it reached the yard. If after being placed there and before its receipt by the company the wood had been destroyed or stolen, the loss would have been that of the bank. It is immaterial, under the circumstances, that the company had not, when the attachments were levied, expressly or formally recognized the bank's ownership of the wood.

Some stress was laid upon the fact that the bank took the note of Bramel for the $400 advanced to him. That act, it is claimed, was inconsistent with the theory of an absolute purchase by the bank. There was, however, evidence conducting to show that the bank took the note by way only of precaution, and to meet the possible contingency of the non-delivery of the wood at the yard of the company. But it was for the jury to say what weight should be given to that fact in determining, upon the whole case, whether there was an actual sale of the wood, or only an agreement as to the disposition of the proceeds after it should be received by the company.

The judgment will be reversed, with directions to require the judgment of the court of original jurisdiction to be set aside and a new trial granted, and for such further proceedings as may be in conformity with this opinion; and it is

So ordered.


text: Talk:National Bank v. Dayton/Opinion of the Court


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United States v. Peck

APPEALS from the Court of Claims.

Peck, the claimant, entered into a contract with the proper military officer to furnish and deliver a certain quantity of wood and hay to the military station at Tongue River, in the Yellowstone region, on or before a specified day. He furnished the wood, but failed to furnish the hay, which was furnished by other parties at an inereased expense. The accounting officers of the government claimed the right to deduct from the claimant's wood account the increased cost of the hay. Whether this could lawfully be done was the principal question in the cause.

The court, upon an examination of the contract and of the surrounding circumstances of the case, were of opinion that the contracting parties, in stipulating relating to hay, contemplated hay to be cut in the Yellowstone valley, and specially at the Big Meadows near the mouth of Tongue River,-which was, indeed, the only hay which the claimant could have procured within hundreds of miles, and which it was known he relied on. The government officers, fearing that the claimant would not be able to carry out his contract, and it being absolutely necessary that the hay should be had, allowed other parties to cut the hay at Big Meadows, and therewith to supply the Tongue River station. The claimant complained of the double injury: first, of giving the hay which he relied on to other parties; and, secondly, of charging him for the increased expense of getting it. The question was whether the surrounding circumstances could be taken into consideration in the claimant's excuse, although the contract made no mention of the source from which he was to procure the hay to be supplied by him to the government.

Mr. Assistant Attorney-General Smith for the United States.

Mr. John B. Sanborn, contra.

Mr. JUSTICE BRADLEY, after stating the case, delivered the opinion of the court.

title: United States v. Peck


text: Talk:United States v. Peck

title: Talk:United States v. Peck


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United States v. Peck/Opinion of the Court

We think that the facts of the case clearly bring it within the rules allowing the introduction of parol evidence: first, for the purpose of showing, by the surrounding circumstances, the subject-matter of the contract, namely, hay to be cut and gathered in the region where it was to be delivered; secondly, for the purpose of showing the conduct of the agents of the defendants by which the claimant was encouraged and led on to rely on a particular means of fulfilling his contract until it was too late to perform it in any other way; and then was prevented by these agents themselves from employing those means. The supply of hay which he depended on, and which under the circumstances he had a right to depend on, was taken away by the defendants themselves. In other words, the defendants prevented and hindered the claimant from performing his part of the contract.

That the subject-matter of a contract may be shown by parol evidence of the surrounding circumstances, see Bradley v. Washington, Alexandria, & Georgetown Steam Packet Co., 13 Pet. 89; Thorington v. Smith, 8 Wall. 1; Maryland v. Railroad Company, 22 id. 105; Reed v. Insurance Company, 95 U.S. 33; 1 Greenl. Evid., sect. 277; Taylor, Evid., sect. 1082. And that the conduct of one party to a contract which prevents the other from performing his part is an excuse for non-performance, see Addison, Contracts, sect. 326; Fleming v. Gilbert, 3 Johns. (N. Y.) 527. In the case last cited, the defendant was sued on a bond obliging him by a certain time to procure and cancel a mortgage of the plaintiff and deliver the same to him. The defendant was allowed to prove by parol that he procured the mortgage, and, having inquired of the plaintiff what he should do with it, was directed to place it in the hands of a third person. This was held to be an excuse for not having fully performed the condition. Judge Thompson said: 'It is a sound principle that he who prevents a thing being done shall not avail himself of the non-performance he has occasioned. HAD NOT THE PlaIntiff dispensed with a further compliance with the condition of the bond, it is probable that the defendant would have taken measures to ascertain what steps were requisite to get the mortgage discharged of record, and would have literally complied with the condition of the bond.' So when A. gave to B. a bond to convey certain premises, but they subsequently agreed by parol to rescind the contract, and A. thereupon sold the premises to a third person, it was held that though the bond was not cancelled or given up, nor any of the papers changed, yet by the parol agreement and the acts of the parties under it the bond was discharged. Dearborn v. Cross, 7 Cow. (N. Y.) 48; and see 2 Cowen & Hill's Notes to Phillips on Evid., 605. The principle involved in these cases is applicable to the present.

Judgment affirmed.

NOTE.-The other points involved in the foregoing case were of minor importance, and, at the suggestion of the justice who delivered the opinion, are omitted.


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Page:A book of the Cevennes (-1907-).djvu/258

180 "Repent; do penance for having attended Mass." And the thrilled congregation fell on the ground, screaming out, "Pardon, Lord, O pardon!"

At this very time it was that the Revolution occurredin England, when James II. fled and the nation summoned William of Orange to the throne. William, it must be remembered, drew his title from the Principality of Orange, which he held, and this adjoined Dauphiné, where the prophetic afflatus had first been felt. It was concluded as certain that William would come to the aid of his afflicted co-religionists. Astier was so confident, that he ventured to predict the day on which William would arrive at the head of an army of a hundred thousand men, led by an exterminating angel. Then all the levelled temples would sprout up, built without hands, and the Catholic churches which had replaced them would go off in a puff of smoke. A star would fall from heaven on Babylon and consume the papal chair. He assured his hearers that God had made them invulnerable, so that neither sword nor ball could hurt them. Another prophet, named Palette, made the same assurances to the Calvinists, and as he and his congregation came upon a Captain Tirbon with his soldiers, they rushed on them, flinging stones, and killed the captain and nine of his soldiers, but not till some of the elect had fallen.

This event alarmed Colonel Folleville, in command of the troops in the province.

M. de Broglie, brother-in-law of Bâville, intendant of Languedoc, went to Porchères where he heard that a religious assembly was to be held. In this hamlet lived a poor old man named Paul Béraut, who had for long resisted the Spirit; but one day he heard his children


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


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Casey v. Adams

ERROR to the Supreme Court of the State of Louisiana.

This was a proceeding instituted in the Fifteenth Judicial District Court, parish of La Fourche, Louisiana, by Adams & Co., against sundry parties, among whom was Nicholas W. Casey, receiver of the New Orleans Banking Association, which was organized under the act of Congress and established at New Orleans.

It appears that, by virtue of executory process issued out of that court, a certain parcel of land in the parish, whereon Adams & Co. held a mortgage, was sold, they becoming the purchasers for less than their debt. 'The sheriff refused to complete the adjudication' unless they paid certain mortgage claims of the banking association and other creditors. Adams & Co. then obtained a rule against the creditors, the sheriff and the recorder to show cause why the mortgages appearing in the names of the creditors should not be cancelled and erased, and upon the sheriff further to show cause why he should not 'complete the adjudication' and put the purchasers in possession.

Casey alone appeared. He pleaded to the jurisdiction upon the ground that a national bank cannot be sued in a State court, except in the county or parish in which it is located, and that its rights cannot be determined on a rule to show cause.

The court made the rule absolute, and the Supreme Court, on appeal, affirmed that judgment. Casey thereupon removed the case here.

Mr. Charles Case, Mr. John D. Rouse, and Mr. William Grant for the plaintiff in error.

Mr. Thomas J. Durant and Mr. Charles W. Hornor, contra.

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

title: Casey v. Adams


text: Talk:Casey v. Adams

title: Talk:Casey v. Adams


text: The New Student's Reference Work/Gutta-Percha


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Casey v. Adams/Opinion of the Court

The Federal question in this case is whether a national bank can be sued in a State court in a local action in any other county or city than that where the bank is located. By sect. 5198, Rev. Stat., it is provided that 'suits, actions, and proceedings against any association under this title [The National Banks] may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.' This, we think, relates to transitory actions only, and not to such actions as are by law local in their character. Sect. 5136 subjects the banks to suits at law or in equity as fully as natural persons, and we see nowhere in the Banking Act any evidence of an intention on the part of Congress to exempt banks from the ordinary rules of law affecting the locality of actions founded on local things. The distinction between local and transitory actions is as old as actions themselves, and no one has ever supposed that laws which prescribed generally where one should be sued, included such suits as were local in their character, either by statute or the common law, unless it was expressly so declared. Local actions are in the nature of suits in rem, and are to be prosecuted where the thing on which they are founded is situated. To give the act of Congress the construction now contended for would be in effect to declare that a national bank could not be sued at all in a local action where the thing about which the suit was brought was not in the judicial district of the United States within which the bank was located. Such a result could never have been contemplated by Congress.

The proceeding in this case was clearly local in its nature. It related to property in the parish of La Fourche, which had been seized and sold under process from the District Court of that parish. The proceeds of the sale were in that court, and could not be distributed until 'a conflict of privileges' arising between creditors was settled. No personal claim was made against the bank. Nothing was wanted except to 'class the privilege' of the bank on the property seized 'according to its rank.' Whethere, under the laws of Louisiana, the form of proceeding instituted for that purpose was appropriate, is not a question for us. The decision of the Supreme Court of the State as to that matter is conclusive.

Judgment affirmed.

title: Casey v. Adams/Opinion of the Court


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Page:Folk-lore - A Quarterly Review. Volume 5, 1894.djvu/64

 56 able to sift the evidence it supplies without our aid, and I much doubt if they would have noted the significance of the part played by broken men at all if it had not been pointed out by folk-lorists.

Let me turn next to the relationship between the tribe and the village community.

Before the village community came under scientific observation, the chief factor in human organisation, as it appeared to the student, was the tribe; now that attention has centred upon the village community, the tribe has been lost sight of, and the family has taken its place.

Sir Henry Maine has stated the case for both sides of the question with his usual vigour, his bias being in favour of the theory of the growth of tribes from families, and he claims both Plato and Aristotle among ancient writers, and Darwin among later writers, as advocates of this theory. Personally I do not agree with Sir Henry Maine's interpretation of the evidence afforded by these great authorities. I only state the fact now to remind the meeting of Sir Henry Maine's view. He writes in opposition to McLennan and Morgan, who held the reverse view, namely, that the tribal organisation preceded the family, and also the village community. Recently, my own researches have compelled me to argue on the side of McLennan and Morgan.

The interest of this subject to the folk-lorist is of twofold importance: (1) As an element in the early history of institutions; (2) As an element in the early history of belief and ritual.

In this latter part of the subject some facts have recently appeared which are worth attention. In such a carefully written book as Col. Ellis's Ewe-Speaking People (p. xiv), we have the following passage: "It will hardly be disputed that as the village community is necessarily antecedent to the tribe, the village god must be an earlier conception than the tribe god." The premiss in this argument is one that, as I have briefly shown, is by no means generally


text: Talk:Casey v. Adams/Opinion of the Court