text:
Neslin v. Wells/Opinion of the Court

This is a suit of an equitable nature, brought by Wells, Fargo, & Co., against Neslin and Smith, in the District Court of the Third Judicial District of the Territory of Utah, to foreclose a mortgage of real estate, made by Smith to Kerr, and by the latter assigned to them. Neslin claimed to be a prior mortgagee of the same land, and to be entitled to a lien preferable to that of the complainants.

A decree for the complainants was rendered in the District Court, establishing their mortgage as the first and best lien. A motion for a new trial was made by Neslin. On that motion, a statement in writing, agreed upon as correct, was signed by the attorneys for both parties, and filed and made part of the record. It embraces the proceedings on the trial, including all the testimony, and also the findings of the court, as to matters of fact, and its conclusions of law, specially and separately stated, together with the decree.

The motion for a new trial was overruled, and Neslin appealed to the Supreme Court of the Territory, from the order overruling the motion and from the decree. The Supreme Court affirmed the decree, to reverse which Neslin prosecutes this appeal.

Under the second section of the act of Congress of April 7, 1874, c. 80 (18 Stat., pt. 3, p. 27), concerning the practice in territorial courts and appeals therefrom, as explained in Stringfellow v. Cain (99 U.S. 610), the present appeal rightly brings into review the decree of the Territorial Supreme Court, affirming the decree of the District Court; but we are not at liberty to consider anything as embraced in the statement of facts, required by the statute, except the special findings of the District Court, adopted by the Supreme Court in its general judgment of affirmance. This excludes the consideration of the exceptions taken in the District Court in the course of the trial, and noted in the statement filed in that court as the basis of the motion for a new trial, and leaves as the sole question for determination here, whether the facts as found justify the decree sought to be reversed.

The facts thus found and stated are as follows: Smith being indebted to Wells, Fargo, & Co. in the sum of $17,107.10, executed and delivered to them his promissory note for that amount, dated July 5, 1873, having, upon an agreement to indemnify John W. Kerr, procured him to indorse the note as surety. In pursuance of that agreement Smith made and delivered to Kerr, Sept. 27, 1873, his promissory note for $13,000, secured by mortgage on land in Salt Lake City, and Kerr assigned it to Wells, Fargo, & Co. as collateral security for the note of Smith held by them. In consideration whereof, Wells, Fargo, & Co. gave to Kerr additional time for payment of the note. It was then overdue, and no part of it has been paid. Neither Kerr nor Wells, Fargo, & Co. had any notice, actual or constructive, of any prior liens on the land at the time when they respectively received the mortgage. It was recorded in the records of Salt Lake County, Sept. 29, 1873, at 8 o'clock, A.M.

On July 5, 1873, and prior thereto, Smith was in possession of the mortgaged premises. He continued in possession until after the maturity of the note for $13,000, when he surrendered them to the complainants.

On Nov. 27, 1872, Smith executed and delivered to Neslin a note for $7,000, and a mortgage to secure the same on the same premises described in the mortgage to Kerr, being for the unpaid purchase-money therefor, the same having been sold and conveyed by Neslin to Smith by deed duly executed and delivered. This mortgage to Neslin was recorded in the records of Salt Lake County, on Sept. 29, 1873, at twenty-five minutes past noon. No part of this mortgage debt has been paid.

As a conclusion of law, the court found that the lien of the mortgage to Kerr was entitled to priority over that of the mortgage to Neslin.

This conclusion, which is assigned as error, we are now to examine.

It presents the single question whether, under the laws of Utah in force at the time of the transaction, a junior mortgage taken without notice of a prior mortgage, actual or constructive, and first recorded, is to be preferred in its lien to a mortgage prior in execution but subsequently recorded.

Prior to the organization of the territorial government of Utah, which was effected by an act of Congress approved Sept. 9, 1850, the people dwelling there, who had set up a government under the name of the State of Deseret, passed an ordinance providing for the election of county recorders. It made it their duty to provide themselves with good and well-bound books, suitable for the purposes, and record therein all transfers or conveyances of land or tenements, and all other instruments of riting and documents suitable, necessary, and proper to be recorded, in a fair and legible manner; and also books for the purpose of recording town and city plats, and plats of all surveys of land, roads, and surveys of public works, whenever the same shall be permanently located; and these books of record were required to be indexed in alphabetical order, and were declared to be 'free to the examination of all persons,' and upon the filing of any paper for record the recorder was required to indorse upon the back thereof the time of receiving it. Comp. Laws of Utah, 130.

A law on the same subject and in similar terms was passed by the territorial legislature Jan. 19, 1855. Comp. Laws of Utah, 131.

The settlement of the Territory by inhabitants having preceded the establishment by Congress of the legal organization of the territorial government, and the survey and opening to sale of the public lands, early provision was made for ascertaining and defining the possessory rights of those who, unable to obtain title as against the government, nevertheless had appropriated and improved portions of land. By a territorial law passed June 18, 1855 (Laws of Utah, 1851-70, p. 93), a form was prescribed for the transfer and conveyance of these land claims, as they were called, and it was declared that, to be valid, a transfer must be witnessed by two or more competent persons; be acknowledged before some person authorized to take acknowledgments; be recorded, and the record, page and book, be certified thereon by the recorder in the county where the property is located. It is also therein provided that other property than land claims, when disposed of by gift, must be transferred substantially in the same manner, and by specification of kind and number or amount, but unless required the details may be omitted.

The Civil Practice Act of Feb. 17, 1870, sects. 272 and 273, provides that on the hearing of a case for the partition of real property the plaintiff shall produce to the court the certificate of the recorder of the county where the property is situated, showing whether there were or not any outstanding liens of record upon the property, or any part thereof, at the time of the commencement of the action; and if by such certificate, or by the verified statement of any person who may have searched the records, that there were such liens of record at the time of the commencement of the action, and the persons holding them have not been made parties thereto, it is made the duty of the court either to order such persons to be made parties, by an amendment to the pleadings, or to appoint a referee to ascertain whether such liens or incumbrances have been paid, or if not, what amount remains due thereon, and the order in which they are severally held by such persons and the parties to the action. Those two become parties, if they claim a lien by mortgage, judgment, or otherwise, are required to set forth among other particulars the amount and date of the same; and provision is made for notice to those not made parties to appear before the referee and make proof of their claims. It is also provided that no persons who have or claim any liens upon the property, by mortgage, judgment, or otherwise, need be made parties to the action, unless such liens be matters of record; and immediately after filing his complaint the plaintiff is required to file with the recorder of the county a notice of the pendency of the action, containing the names of the parties, the object of the action, and a description of the property to be affected thereby, which, from the time of the filing, it is declared shall be deemed notice to all persons. In case of a sale for purposes of partition, it is also provided (sect. 299) that the conveyance shall be recorded in the county where the premises are situated, and that it shall be a bar against all persons interested, parties to the action.

These are all the statutory provisions in force within the Territory at the time of the transaction involved in this suit; and they cont nued so to be until the passage of an act on Feb. 20, 1874, concerning conveyances, which regulates the whole subject, and specifically provides 'that every conveyance of real estate within this Territory hereafter made, which shall not be recorded as provided in this act, shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate, or any portion thereof, when his own conveyance shall be first duly recorded.' This, however, cannot affect the rights of the parties in this controversy, for they had been fixed by the law previously in force.

The legislation on the subject prior to 1874, it will be observed, did not require that a mortgage should be recorded in order to be valid, and did not in terms declare what should be the legal effect of recording or omitting to record it.

That legislation cannot, however, be assumed to be without significance, and its precise meaning must be determined, not only by what it expresses, but by what it necessarily implies.

There can be no reasonable doubt, we think, that the records which the county recorder is bound to keep, which private persons are authorized to employ for recording their instruments and evidences of title, and which the public have a right to inspect, have all the qualities that attach to public records. Such books are mentioned by Greenleaf (1 Greenl. Ev., sect. 484) as of that description which are recognized by law, because they are required by law to be kept, because the entries in them are of public interest and notoriety, and because they are made under the sanction of an oath of office, or, at least, under that of official duty; and 'books of this public nature, being themselves evidence, when produced, their contents may be proved by an immediate copy, duly verified;' it being a rule, considered as settled, 'that every document of a public nature, which these would be an inconvenience in removing, and which the party has a right to inspect, may be proved by a duly authenticated copy.'

It is a mere corollary from this datum that these records are, by construction of law, notice to all persons of what they contain. Their contents are matters of public knowledge, because the law requires them to be kept, authorizes them to be used, and secures to all persons access to them, in order that the knowledge of them may be public, and, therefore, imputes to all interested in it that knowledge the opportunity to acquire which it has provided. The law assumes the fulfilment and not the defeat of its own ends. It will not permit its policy to be gainsaid, not even by a plea of personal ignorance of its existence or extent. It will not allow, therefore, any man to say that he does not know that of which the law itself says it has informed him. The provisions of the law in reference to these records either have no purpose at all,-which we have no right to assume,-or their purpose was, that the public might have knowledge of the titles to real estate of which they are the registers. It would utterly defeat that purpose not to presume with conclusive force that the notice which it was their office to communicate had reached the party interested to receive it; for, if every man was at liberty to say he had failed to acquire the knowledge it was important for him to have, because he had not taken the trouble to search the record which the law had provided for the express purpose of giving it to him, then the ignorance which it was the public interest and policy to prevent would become universal, and the law would fail because it refused to make itself respected.

In this country, differing in that respect from the ruling of the English courts, it is uniformly held that the registration of a conveyance operates as constructive notice to all subsequent purchasers of any estate, legal or equitable, in the same property. The doctrine is founded on the obvious policy of the registry acts, the duty of the purchaser under such circumstances to search for prior incumbrances, the means of which search are within his power, and the danger of letting in parol proof of notice or want of notice of the actual existence of the conveyance. Story, Eq. Jur., sect. 403.

And the principle applies as well in cases where the conveyances are merely authorized as where they are required by law to be registered.

In Pepper's Appeal (77 Pa. St. 373, 377), decided under a statute of Pennsylvania declaring that assignments of mortgages may be recorded in the office for the recording of deeds, &c., and that the record of such instrument shall be as good evidence as the original, it was held that, although the recording of an instrument was discretionary, the record is nevertheless notice to a subsequent assignee. After reviewing various statutes of the State on the subject, the court say: 'Thus it appears that the language of the Acts of Assembly providing for the recording of written instruments has not generally been mandatory. When recorded, however, we do not understand the effect thereof is in any respect lessened by the absence of an imperative command to record. It is optional whether or not to record. When the election is made, and an instrument authorized by law to be recorded is actually recorded, all the incidents and force of a public record attach to that record. It is an early and well-recognized principle that one great object in spreading an instrument of writing on a public record is to give constructive notice of its contents to all mankind.' It is a further inference which we are judicially bound to make, that records so carefully provided by law, and so useful, were in fact the common resort of the community whose dealings in real estate they were meant to register; that the practice of recording conveyances and incumbrances of the title to land, for the purposes of evidence and of information to those who might be affected by them, and the habit of searching the records in order to obtain that knowledge, was general and usual; that such practice and habit had become so common, that men of ordinary prudence in the management of important concerns affecting their own interests would expect to conform to it themselves, and would act upon the expectation that others of that character would do so likewise. In point of fact this presumption is verified in the present case, the majority of the judges in the court below declaring in their opinion that, at the times when the mortgages in question were executed, it was a common thing, and of public notoriety, to record mortgages and other conveyances.

The statutes under consideration, it is true, do not in express terms make it obligatory upon one taking a conveyance of or incumbrance upon real estate to record it. The recording is not made essential to its validity as between the parties; nor is it declared that the failure to record shall postpone its operation in favor of a subsequent bona fide purchaser for value without notice. And yet the implication is very strong that the latter effect must be intended by it. Otherwise what valuable and sufficient purpose is there in construing the record to be constructive notice of its contents, except to protect such a purchaser? If, without recording, the conveyance is not only valid between the parties, but good also as against the world, with or without notice, of what public value or use is the provision for keeping such a record and declaring it to be public, open to the examination of all persons? On that supposition its only purpose would be, in the private interest of proprietors, to furnish a convenient and cheap mode of supplying proof, by certified copies, in case of the loss or destruction of title-papers. But even that purpose is not expressly declared. It is only an inference based on the nature of the record as public, and the objects which, under the system of registration adopted in this country, in colonial times, and which has since prevailed universally in all the States, have been sought to be attained by it. The chief of these is to secure that publicity in r spect of the transfer of titles which, in the earlier history of the common law, was effected by livery of seisin, and, later, by the substituted enrolment of conveyances by way of bargain and sale; and which had in view, as its principal purpose, the protection of innocent purchasers from frauds which might be practised by means of secret conveyances.

To hold otherwise would be to declare that land should cease generally to be the subject of sale; for no amount of diligence on the part of a purchaser would insure his title. He would, of course, demand of the vender an inspection of his title-deeds. From them he would learn the chain of title. A production and examination of the deeds made in the common form would show by their recitals that none of the preceding owners could have any claim for unpaid purchase-money, for the receipt of it, in each instance, is usually contained in the deed. He would, therefore, reasonably deem it unnecessary to make any personal inquiry, and in respect to supposed incumbrances in favor of strangers he would be compelled to rely upon the statements of the vendor. Who would be willing, or could afford, to purchase under such circumstances, if after every reasonable effort to inform himself of possible incumbrances a mortgagee holding an incumbrance of prior date, and whose failure to give such public notice of the fact as the law had furnished the means of giving had betrayed him into the purchase, chase, should nevertheless be permitted to supersede his title, by asserting a paramount lien? Certainly there would be no injustice, and we think no violation of legal principle, in such circumstances, in preferring over his claim that of the innocent party, who otherwise would suffer loss, occasioned by a fraud which his laches alone had made effective.

But coupling together the obvious purposes of the recording acts in question, and the necessary implications arising thereon, with the general and notorious practice of the people of the territory under them, we have no hesitation in deciding that, under the circumstances of this case, there arose a duty on the part of Neslin, the vendor, to record his purchase-money mortgage, towards all who might become subsequent purchasers for value in good faith, a breach of which, in respect to Kerr, the subsequent mortgagee, without notice, constituted such negligence and laches as in equity requires that the loss, which in consequence thereof must fall on one of the two, shall be borne by him by whose fault it was occasioned.

An apposite illustration of the principle involved in this conclusion is found in Ellis & Morton v. ''Ohio Life Ins. & Trust Co.'', 4 Ohio St. 628. It was there held that, while ordinarily money paid by a banker in payment of a forged check purporting to be drawn upon him by a depositor, to a holder for value, cannot be recovered back, as paid under a mistake of fact, because he is supposed to know the signature of his own customers, yet that the rule does not apply when, either by an express agreement, or a settled course of business between the parties, or a general custom of the place, the holder takes upon himself the duty of exercising some material precaution to prevent the fraud, and by his negligent failure to perform it has contributed to induce the drawee to act upon the paper as genuine, and to advance the money upon it. In that case, a custom was proved whereby a bank, to whom was offered a check, drawn upon another, by a stranger, was expected and required not to receive it, without requiring the party offering to identify himself as the true owner.

It was decided that the existence of that custom imposed upon the defendants in that case a duty towards the plaintiff, which the latter was entitled to rely upon as performed; and that a breach of that duty constituted negligence, which, if it resulted in a loss to another, the law would cast upon the party in fault. In delivering the opinion of the court, Ranney, J., said: 'Nor is it anything remarkable or unusual that such an obligation shou d arise from a settled course of business between the parties, or be established by the proof of a custom; or that the holder, for his negligent failure to regard it, be deprived of rights which he would otherwise be entitled to demand. . . . When the defendants purchased this check, they knew full well that it deprived the plaintiffs of the ability to make this part of the investigation, and that it would be paid to them without any examination whatever; and if the custom really exists, they must have known equally well that in afterwards passing upon the genuineness of the paper the plaintiffs would have a right to rely, as an important element in forming a conclusion, upon the supposition that the defendants had made the investigation and were satisfied with the result.'

Similar effect was given to the existence of a known custom, in creating an obligation, in Whitbread v. Jordan (1 You. & Coll. 303), where Lord Lyndhurst held that the creditor of a publican in London, who took from the latter a legal mortgage, knowing that he was indebted to his brewers, and was aware of the ordinary practice in London of publicans depositing their leases with their brewers by way of mortgage, must be postponed to the security of a brewer who had obtained the title-papers by way of equitable mortgage, on the ground that the existence of the custom put him on inquiry, so as to constitute constructive notice of the prior equity.

In Luch's Appeal (44 Pa. St. 519), it was decided, overruling some remarks of Gibson, C. J., to the contrary, in McLanahan v. Reeside (9 Watts (Pa.), 508), that although the registry laws of Pennsylvania did not expressly prescribe that deeds and mortgages should be recorded in separate sets of books for each class or conveyance, that, nevertheless, a division of subjects and books of record had become legalized by necessity and practice upon the registry system, so as to render it available to present and future generations; and that, consequently, the record of a mortgage in a book kept for the record of deeds was not notice to a subsequent purchaser. The court, after reviewing the history of the practice, said: 'It is clear, therefore, from uniform practice, going back so far as to be equivalent in this country to an immemorial usage, that mortgages are and must be recorded in mortgage books, and are of course not properly recorded in any other species of book where they cannot be found by means of the mortgage indexes.'

And conversely it was held in Colomer v. Morgan (13 La.Ann. 202), that a record of a deed in a book of mortgages, 'does not convey the information required by the statute,' and is, therefore, not effectual notice.

The rule to be applied here is merely an extension of that declared by Lord Chancellor Macclesfield in Savage v. Foster (9 Mod. 35, 37),-'When anything in order to a purchase is publicly transacted, and a third person knowing thereof, and of his own right to the lands intended to be purchased, and doth not give the purchaser notice of such right, he shall never afterwards be admitted to set up such right to avoid the purchase; for it was an apparent fraud in him not to give notice of his title to the intended purchaser; and in such case infancy or coverture shall be no excuse;. . . neither is it necessary that such infant or feme covert should be active in promoting the purchase, if it appears that they were so privy to it, that it could not be done without their knowledge.'

When the public records of conveyances operate as notice of the state of the title to all intending purchasers, it must be that their existence and common use is notice as well to all prior purchasers and incumbrancers, that others will rely upon it as well as themselves; and that to withhold from the record conveyances or incumbrances in their own favor is a waiver of their right, and equivalent to a representation that they do not exist, in favor of innocent subsequent purchasers, who otherwise would be wrongfully affected by them. It is a case for the application of the maxim, idem est non esse et non apparere.

It applies to cases of negligence as well as of fraud, for the injurious consequences of both are not distinguishable. It was stated by Lord Romilly, Master of the Rolls, in Briggs v. Jones (Law Rep. 10 Eq. 92, 98), in this comprehensive form: 'A person who puts it in the power of another to deceive and raise money must take the consequences. He cannot afterwards rely on a particular or a different equity.' It was applied by Vice-Chancellor Kindersley in Rice v. Rice (2 Drew. 73, 83), as between a vendor, asserting his equitable lien for unpaid purchase-money, and a subsequent equitable mortgagee by deposit of title-deeds. In deciding the case he said, what is very pertinent in the present: 'The vendors, when they sold the estate, chose to leave part of the purchase-money unpaid, and yet executed and delivered to the purchaser a conveyance by which they declared, in the most solemn and deliberate manner, both in the body of the deed and by a receipt indorsed, that the whole purchase-money had been duly paid. . . . Thus they voluntarily armed the purchaser with the means of dealing with the estate as the absolute legal and equitable owner, free from every shadow of incumbrance or adverse equity. . . . The defendant, who afterwards took a mortgage, was in effect invited and encouraged by the owners to rely on the purchaser's title. They had, in effect, by their acts, assured the mortgagee that, as far as they (the vendors) were concerned, the mortgagor had an absolute title both at law and in equity.'

See also Waldron v. Sloper, 1 Drew. 193; Dowle v. Saunders, 2 Hem. & M. 242; Perry Herrick v. Attwood, 2 De G. & J. 21; Darnell v. Hunter, Law Rep. 11 Eq. 292; s. c. Law Rep. 7 Ch. Ap. 75.

The rule applies in favor of the superior equity of a junior mortgagee, even in cases where the prior mortgage conveys the legal estate. Ordinarily the priority between incumbrances is determined by their quality, as each successive conveyance passes only what title remains after satisfying those which precede it. The first mortgage conveys the legal estate; the second, merely an equity of redemption; and as equity follows the law, and the owner of the legal title, by means of it, has a legal right, after condition broken, to the possession and a remedy at law for acquiring it, he is entitled to priority. A mortgage, however, in equity, at the present day, has almost ceased to be regarded as a conveyance of an estate, and is considered rather as merely a lien upon the estate of the mortgagor, the tendency of the modern law being to look upon it simply as a security for the payment of a debt or duty. Such, indeed, is an express statutory provision in Utah, sect. 260 of the Civil Practice Act of Feb. 17, 1870, enacting that 'a mortgage of real property shall not be deemed a conveyance, whatever its term, so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure and sale.' Under this provision all mortgages, without respect to their relative dates, are legal liens, and priority cannot attach to the earlier in date by reason of the superior dignity of the estate conveyed. The rule, therefore, that gives preference to the legal title has no application, and the priority among them must be determined by purely equitable considerations.

The only circumstance on which the appellant can rest the claim of his mortgage to a preference over that of the appellee, is that it is prior in date. But the maxim quoted in support of this claim-qui prior est tempore potior est jure-only applies in cases in which the equities are equal. That, we have already decided, is not this case. Here equity cannot be satisfied otherwise than by subjecting the appellant to the loss, which has to be suffered by one of the two solely in consequence of his own fault.

Some question was made in argument as to whether the appellees were holders of the m rtgage to Kerr for a valuable consideration. But the findings of the court, which are conclusive as to the facts, leave no room for doubt upon the legal conclusion.

We find no error in the decree, and it is accordingly

Affirmed.

title: Neslin v. Wells/Opinion of the Court


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

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


text:
Vigel v. Hopp

APPEAL from the Supreme Court of the District of Columbia.

The facts are sufficiently stated in the opinion of the court.

Mr. Saul S. Henkle for the appellant.

There was no opposing counsel.

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

title: Vigel v. Hopp


text: Talk:Vigel v. Hopp

title: Talk:Vigel v. Hopp


text:
Vigel v. Hopp/Opinion of the Court

This is a suit in equity begun by the appellee to set aside a deed executed by her to the appellant, on the ground that the deed, though absolute on its face, was intended only as security for a debt, which has since been paid in full. There are numerous allegations of fraud, but the whole scope and purpose of the suit is to establish a trust, and get back the property in that way. The answer denies every allegation of fraud and trust, and insists that the deed was intended as an absolute conveyance, and not as security. This is responsive to the bill, and before the relief can be granted which is asked, these denials must be overcome by the satisfactory testimony of two witnesses, or of one witness corroborated by circumstances which are equivalent in weight to another. 2 Story, Eq., sect. 1528. The appellee is the only witness in support of the bill, and the corroborating circumstances are not, in our opinion, sufficient to overcome the answer. It will serve no useful purpose to enter into analysis of the testimony.

Decree reversed, and cause remanded with instructions to dismiss the bill.

title: Vigel v. Hopp/Opinion of the Court


text: Talk:Vigel v. Hopp/Opinion of the Court

title: Talk:Vigel v. Hopp/Opinion of the Court


text: Dictionary of National Biography, 1885-1900/Green, John (1706?-1779)


text:
Bradley v. United States (104 U.S. 442)

APPEAL from the Court of Claims.

Certain sugars imported in the year 1869 and seized for the owner's alleged violation of the revenue laws, were duly libelled, condemned, and sold. In the District Court, where the proceedings were had, no party appeared praying for an informer's share of the net proceeds, or for the distribution of them. They were paid into the treasury, and by the Secretary of the Treasury in part distributed, that is to say, one-half to the United States, which was covered into the treasury, and one-fourth in equal shares to the collector, the surveyor, and the naval officer of the port. Those officers claimed also the remaining fourth. Bradley and others, each claiming as informer or seizing officer, asserted a right thereto. Bradley brought this suit therefor, April 27, 1872. On May 9 of that year the Secretary ordered that the one-fourth so undistributed be paid in equal parts to those officers, but that each of them should first give a bond with surety for his returning to the treasury, on demand, the money so paid to him, should the Court of Claims, or this court on appeal, decide that any other claimant was entitled to the fund. The required bond was given and the money paid.

The United States took the depositions of Dillingham, the collector of the port, and Sheldon, the surety on his bond. Bradley moved to suppress them, on the ground that the deponents were interested in the event of the suit. The court overruled the motion.

The court expressed 'no final opinion on the subject' of its jurisdiction; but, holding that on the merits the claimant had no cause of action, dismissed his petition, and he appealed.

Mr. Charles E. Hovey and Mr. Alexander Porter Morse for the appellant.

The Solicitor-General, contra.

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

title: Bradley v. United States (104 U.S. 442)


text: Talk:Bradley v. United States (104 U.S. 442)


text:
Bradley v. United States (104 U.S. 442)/Opinion of the Court

Sect. 1079 of the Revised Statutes provides that no claimant suing the United States in the Court of Claims, nor any person from or through whom such claimant derives his alleged title, claim, or right, nor any person interested in any such title, claim, or right, shall be a competent witness in supporting the same, but under sect. 1080 the United States may make a claimant a witness.

We a ree with the court below that this does not prevent the United States from using as a witness to defeat the claim one whose interest is adverse to the claimant, and that, too, when a judgment in favor of the United States may have the effect of establishing the right of the witness to the same claim.

The objections urged against the competency of the witness under the provisions of sect. 858 of the Revised Statutes are disposed of by Potter v. National Bank, 102 U.S. 163.

Judgment affirmed.


text: Talk:Bradley v. United States (104 U.S. 442)/Opinion of the Court


text:
Wells v. Nickles

ERROR to the Supreme Court of the Territory of Utah.

The facts are stated in the opinion of the court.

Mr. J. G. Sutherland and

Mr. J. G. Sutherland and Mr. J. R. McBride for the plaintiff.

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

MR. JUSTICE MILLER delivered the opinion of the court.

title: Wells v. Nickles


text: Talk:Wells v. Nickles

title: Talk:Wells v. Nickles


text:
Wells v. Nickles/Opinion of the Court

Nickles brought replevin in the District Court of the Third Judicial District of Utah to recover possession of a large amount of sawed lumber, laths, and logs, of which he claimed to be the owner. The defendants, Wells and others, denied this, and set up ownership in themselves. The court, at the request of the plaintiff, gave the following instruction to the jury:--

'To make a case entitling plaitniff to recover, it is only necessary for him to show, by a preponderance of testimony, that the logs in question, and the logs from which the lumber in question was made, were cut on government lands, seized by the timber agents, and sold to him, and that the defendants detained the logs and timber from him.' The jury found a verdict for the plaintiff, as there was no doubt that all the logs had been cut on government lands, and that he bought them of a timber agent. Judgment was rendered accordingly. This was affirmed by the Supreme Court of the Territory, where the soundness of this instruction was the main question to be decided, as it is here.

One of the defences set up by Wells and his co-defendants, was that this same lumber had been seized and taken out of his possession by timber agents, under order of Oliver A. Patton, and V. M. C. Silva, register and receiver of the land-office within whose district the timber was cut; that he brought a suit against them for that seizure, in the progress of which a compromise was effected, which was reduced to writing and signed by the attorneys of the parties, and that according to its terms the lumber was delivered to Wells.

The paper is as follows:--

'In the District Court for the Third Judicial District of the     Territory of Utah.

'DANIEL H. WELLS

v.

OLIVER A. PATTON, V. M. C. SILVA, J. J. HEFFERMAN, and     WILLIAM MCKAY, Timber Agents of the United States for the      Territory of Utah. *

'It is hereby stipulated by said parties as follows: In     consideration of the bond to be executed by said plaintiff as      below stated and his stipulation herein, said defendants      hereby release the property from seizure mentioned in the      complaint filed in this action, and will discontinue the      publication of the notice of sale thereof, and will not      hereafter meddle with said property or interfere with      plaintiff's use thereof for his own benefit; said plaintiff,      in consideration of the above, hereby agrees that he will not      discontinue this suit without the defendants's consent, but      will prosecute the same with diligence to final judgment, and      will now give bond, with sufficient surety, to pay such sum      as he shall be adjudged to pay by final judgment on the      merits of this action. The plaintiff also agrees to advance     the money to pay the costs of the seizure mentioned in the      complaint, and all the costs connected therewith, including      advertising, and if the plaintiff shall not be found liable      to pay such costs and charges, so paid by such advance, the      money so paid shall be deducted from the amount otherwise      awarded, if anything, against him by such final judgment.

'SUTHERLAND & BATES,

'MARSHALL & ROYLE & HEMINGRAY,

'Att'ys for Def'ts.

'Rec'd of Daniel H. Wells three hundred and twelve dollars     for the expenses of seizure mentioned in the last paragraph      of the foregoing stipulation.

'SALT LAKE CITY, July 10, 1875.

'MARSHALL & ROYLE & HEMINGRAY,

'Att'ys for Def'ts.'

The Oliver A. Patton who made this agreement in that suit is the same man who, as register of the land-office, directed the subsequent seizure of the property, and sold it to Nickles. It is under that sale alone that Nickles asserts a title to the property.

It appears that, in addition to paying the costs of suit and the expenses of the seizure, Wells gave the bond required by the stipulation, and that after this the defendants demurred to his complaint. Their demurrer was sustained, and that suit dismissed. It does not appear that any attempt was made to assess their damages or the value of the timber delivered by them to him, nor that any suit was brought on his bond, or that it was delivered up to him or cancelled.

It would seem to be undeniable that if all the rights thus contested were those of private persons, the transaction above detailed would bar the present suit. Apparently conceding this to be so, as far as we can gather from the opinion of the Supreme Court of the Territory, both courts denied the sufficiency of these facts as a bar, on the ground that the property belonged to the United States, and that the parties to the former suit had no authority to make the compromise which is relied on.

That the lumber when first seized by the timber agents was the property of the United States is not denied. It was, therefore, held by them as agents of the government at the time Wells sued not to replevy it, but to enjoin them from selling it, and to determine his right to it. If, as he maintained, they were seizing and attempting to sell and deliver as public property that which was lawfully his, we know of no principle of law which forbade him to bring them before a legal tribunal. Their authority to act for the government, and the ownership of the property which they asserted a right to seize, were questions eminently proper to be decided by a court, especially a court of the United States. If it were otherwise, all the property of the citizens of this vast country would be held at the pleasure of any one bold enough to assert that it is government property and he a government agent.

The effort we have made to ascertain and fix the authority of these timber agents by any positive provision of law has been unsuccessful.

The Department of the Interior, under the idea of protecting from depredation timber on the lands of the government, has gradually come to assert the right to seize what is cut and taken away from them wherever it can be traced. In aid of this, the registers and receivers of the land-offices have, by instructions from the Secretary of the Interior, been constituted agents of the United States for these purposes, with power to appoint special agents under themselves. If any authority from Congress to do this was necessary, it may be fairly inferred from appropriations made to pay for the services of these special timber agents.

But neither in these acts of Congress, nor in the instructions from the department, are the powers of these special agents well defined. Fortunately that point is not material to the decision of the question before us, for the sale under which Nickles succeeded in obtaining his verdict was made by the same register of the land-office with whom Wells made the compromise whose validity is disputed. The action of the other agents may, therefore, be disregarded in the consideration of these questions. It would seem, in the absence of any express limitation of his authority, that the general power to deal with lumber or timber of this character by suit at law, or by such seizure as would subject him to an action, must also authorize the agent to do whatever could be properly done in the conduct of such a suit.

But these officers were not left without instruction and authority on this point. In a lett r from the Commissioner of the Land-Office, dated Nov. 4, 1870, to the land-officers at Salt Lake City, one of whom was Patton, the following language is used: 'You will discharge with energy the duty devolved upon you by the enclosed circular, having due regard, however, to the right of homestead and pre-emption settlers, and to the circumstances of the community requiring a supply of timber, for mining, manufacturing, and other business pursuits. In cases where timber may be cut from the public lands and extenuating circumstances exist, you are authorized to compromise with the parties committing the trespass, on their paying all expenses incurred, and a reasonable stumpage to be fixed by you according to the condition of the markets, and not to fall below the minimum rate of $2.50 per M. feet. When objection is made to the rate fixed under this rule, the matter may be submitted to the judges of the Supreme Court of the Territory, in which case you will be governed by their decision as to the stumpage to be exacted.' The circular so enclosed was a general one, to all registers and receivers, of Dec. 24, 1855, by Thomas A. Hendricks, Commissioner of the Land-Office, directing them to be vigilant in preventing persons cutting timber on public lands, and to seize such timber when cut, and sell it to the highest bidder. These instructions are repeated without the limitation to $2.50 per M. feet, in orders from the commissioner of the dates of July 8, 1874, Sept. 8, 1874, and June 21, 1875, the latter of which, after referring to the circular of 1855, and the other letters just mentioned, adds: 'When circumstances justify so doing, you may settle with the parties on their paying any expenses incurred, and a reasonable stumpage for the timber. But you are to regard this as a compromise justified by existing circumstances, and not as the granting of permission to cut the timber, which is forbidden by law.'

These instructions contain ample authority for the compromise made with Wells. It was made July 10, 1875, and the latest of the letters of the commissioner, from which we have cited, is dated June 21, 1875.

The compromise appears to have been framed in conformity with the language of the letter of Nov. 4, 1870. Wells agreed to pay, and did pay, the expenses of seizure and the costs of suit, and nothing remained but for the judge who decided the demurrer to fix the amount of the stumpage and give judgment therefor against Wells. He had given bond to pay what was so ascertained. The case was settled in precise accordance with the instructions of the commissioner, and we think the settlement bound the United States, whose agent made the compromise.

The authority to make this settlement is quite as clear as the authority of the same officer to sell to Nickles; so that his right to sue depends upon the same authority on which Wells had the property delivered to him, on paying all costs and expenses and giving a bond, with surety, for the damages.

The instruction of the District Court held this settlement to be of no validity. The Supreme Court held the same view; and the register who made the sale to Nickles evidently disregarded his own compromise and sold the property to Nickles under the same idea. All this, we think was erroneous.

We have been shown a letter of April 5, 1877, from the Secretary of the Interior to the Commissioner of the Land-Office, in which he says, 'No agent employed by you will be permitted to make any compromise for depredation on the public lands.' But whether this order is limited to the agents specially employed to look after such depredations, or be held to include the registers and receivers also, is immaterial in the present case, for this recall of the power to compromise was nearly two years after the one under consideration was made and a considerable sum of money paid under it.

All the letters from the department to its officers above referred to, except the one last mentioned, are in this record, and are made part of the case on which the Supreme Cou t of the Territory decided.

We are of opinion that the instruction to the jury, which we have given in full, and the whole theory on which the effect of the stipulation of compromise was decided, is erroneous, and that the judgment of each of the courts below must be revered, with directions to set aside the verdict and grant a new trial; and it is

So ordered.

title: Wells v. Nickles/Opinion of the Court


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


text:
Hawes v. Oakland

APPEAL from the Circuit Court of the United States for the

District of California.

The facts are stated in the opinion of the court.

Mr. Charles N. Fox for the appellant.

Mr. Henry Vrooman for the appellees.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Hawes v. Oakland


text: Talk:Hawes v. Oakland

title: Talk:Hawes v. Oakland


text:
Hawes v. Oakland/Opinion of the Court

This is an appeal from a decree in chancery dismissing the copmlainant's bill, wherein he, a citizen of New York, alleges that he is a stockholder in the Contra Costa Water-works Company, a California corporation, and that he files it on behalf of himself and all other stockholders who may choose to come in and contribute to the costs and expenses of the suit.

The defendants are the city of Oakland, the Contra Costa Water-works Company, and Anthony Chabot, Henry Pierce, Andrew J. Pope, Charles Holbrook, and John W. Coleman, trustees and directors of the company.

The foundation of the complaint is that the city of Oakland claims at the hands of the company water, without compensation, for all municipal purposes whatever, including watering the streets, public squares and parks, flushing sewers, and the like, whereas it is only entitled to receive water free of charge in cases of fire or other great necessity; that the company comply with this demand, to the great loss and injury of the company, to the diminution of the dividends which should come to him and other stockholders, and to the decrease in the value of their stock. The allegation of his attempt to get the directors to correct this evil will be given in the language of the bill.

He says that "on the tenth day of July, 1878, he applied to the president and board of directors or trustees of said water company, and requested them to desist from their illegal and improper practices aforesaid, and to limit the supply of water free of charge to said city to cases of fire or other great necessity, and that said board should take immediate proceedings to prevent said city from taking water from the works of said company for any other purpose without compensation; but said board of directors and trustees have wholly declined to take any proceedings whatever in the premises, and threaten to go on and furnish water to the extent of said company's means to said city of Oakland free of charge, for all municipal purposes, as has heretofore been done, and in cases other than cases of fire or other great necessity, except as for family uses hereinbefore referred to;  and your orator avers that by reason of the premises said water company and your orator and the other stockholders thereof have suffered, and will, by a continuance of said acts, hereafter suffer, great loss and damage."

To this bill the water-works company and the directors failed to make answer; and the city of Oakland filed a demurrer, which was sustained by the court and the bill dismissed. The complainant appealed.

Two groups of demurrer were set out and relied on in the court below, and are urged upon us on this appeal. They are:- 1. That appellant has shown no capacity in himself to maintain this suit, the injury, if any exists, being to the interests of the corporation, and the right to sue belonging solely to that body.

2. That by a sound construction of the law under which the company is organized the city of Oakland is entitled to receive, free of compensation, all the water which the bill charges it with so using.

The first of these causes of demurrer presents a matter of very great interest, and of growing importance in the courts of the United States.

Since the d cision of this court in Dodge v. Woolsey (18 How. 331), the principles of which have received more than once the approval of this court, the frequency with which the most ordinary and usual chancery remedies are sought in the Federal courts by a single stockholder of a corporation who possesses the requisite citizenship, in cases where the corporation whose rights are to be enforced cannot sue in those courts, seems to justify a consideration of the grounds on which that case was decided, and of the just limitations of the exercise of those principles.

This practice has grown until the corporations created by the laws of the States bring a large part of their controversies with their neighbors and fellow-citizens into the courts of the United States for adjudication, instead of resorting to the State courts, which are their natural, their lawful, and their appropriate forum. It is not difficult to see how this has come to pass. A corporation having such a controversy, which it is foreseen must end in litigation, and preferring for any reason whatever that this litigation shall take place in a Federal court, in which it can neither sue its real antagonist nor be sued by it, has recourse to a holder of one of its shares, who is a citizen of another State. This stockholder is called into consultation, and is told that his corporation has rights which the directors refuse to enforce or to protect. He instantly demands of them to do their duty in this regard, which of course they fail or refuse to do, and thereupon he discovers that he has two causes of action entitling him to equitable relief in a court of chancery; namely, one against his own company, of which he is a corporator, for refusing to do what he has requested them to do; and the other against the party which contests the matter in controversy with that corporation. These two causes of action he combines in an equity suit in the Circuit Court of the United States, because he is a citizen of a different State, though the real parties to the controversy could have no standing in that court. If no non-resident stockholder exists, a transfer of a few shares is made to some citizen of another State, who then brings the suit. The real defendant in this action may be quite as willing to have the case tried in the Federal court as the corporation and its stockholder. If so, he makes no objection, and the case proceeds to a hearing. Or he may file his answer denying the special grounds set up in the bill as a reason for the stockholder's interference, at the same time that he answers to the merits. In either event the whole case is prepared for hearing on the merits, the right of the stockholder to a standing in equity receives but little attention, and the overburdened courts of the United States have this additional important litigation imposed upon them by a simulated and conventional arrangement, unauthorized by the facts of the case or by the sound principles of equity jurisdiction.

That the vast and increasing proportion of the active business of modern life which is done by corporations should call into exercise the beneficent powers and flexible methods of courts of equity, is neither to be wondered at nor regretted; and this is especially true of controversies growing out of the relations between the stockholder and the corporation of which he is a member. The exercise of this power in protecting the stockholder against the frauds of the governing body of directors or trustees, and in preventing their exercise, in the name of the corporation, of powers which are outside of their charters or articles of association, has been frequent, and is most beneficial, and is undisputed. These are real contests, however, between the stockholder and the corporation of which he is a member.

The case before us goes beyond this.

This corporation, like others, is created a body politic and corporate, that it may in its corporate name transact all the business which its charter or other organic act autho izes it to do.

Such corporations may be common carriers, bankers, insurers, merchants, and may make contracts, commit torts, and incur liabilities, and may sue or be sued in their corporate name in regard to all of these transactions. The parties who deal with them understand this, and that they are dealing with a body which has these rights and is subject to these obligations, and they do not deal with or count upon a liability to the stockholder whom they do not know and with whom they have no privity of contract or other relation.

The principle involved in the case of Dodge v. Woolsey permits the stockholder in one of these corporations to step in between that corporation and the party with whom it has been dealing and institute and control a suit in which the rights involved are those of the corporation, and the controversy is one really between that corporation and the other party, each being entirely capable of asserting its own rights.

This is a very different affair from a controversy between the shareholder of a corporation and that corporation itself, or its managing directors or trustees, or the other shareholders, who may be violating his rights or destroying the property in which he has an interest. Into such a contest the outsider, dealing with the corporation through its managing agents in a matter within their authority, cannot be dragged, except where it is necessary to prevent an absolute failure of justice in cases which have been recognized as exceptional in their character and calling for the extraordinary powers of a court of equity. It is, therefore, always a question of equitable jurisprudence, and as such has, within the last forty years, received the repeated consideration of the highest courts of England and of this country.

The earliest English case in which this subject received any very careful consideration is Foss v. Harbottle (2 Hare, 461), where Vice-Chancellor Wigram gave a very full and able opinion. The case was decided in 1843 on a demurrer to the bill, which was brought by Foss and Turton, two shareholders in an incorporation called the Victoria Park Company, on behalf of themselves and all other stockholders, except those who were made defendants, against the directors and one shareholder not a director, and against the solicitor and architect of the company. The bill charged that the defendants concerted and effected various fraudulent and illegal transactions, whereby the property of the company was misapplied, aliened, and wasted; that there had ceased to be a sufficient number of qualified directors to constitute a board;  and that the company had no clerk or office. It prayed for the appointment of a receiver and for a decree against the defendants to make good the loss. After showing that the case was one in which the right of action was in the company, the Vice-Chancellor says: "In law the corporation and the aggregate members of the corporation are not the same thing for purposes like this;  and the only question can be, whether the facts alleged in this case justify a departure from the rule which prima facie would require that the corporation should sue in its own name and in its corporate character, or in the name of some one whom the law has appointed to be its representative." Again, after pointing out that cases may arise where the claims of justice would be found superior to the technical rules respecting the mode in which corporations are required to sue, he adds: "But, on the other hand, it must not be without reasons of a very urgent character that the established rules of law and practice are to be departed from,-rules which, though in a sense technical, are founded on the general principles of justice and convenience; and the question is, whether a case is stated in this bill entitling the plaintiffs to sue in their private characters." He then, in an elaborate argument, holds that the bill is fatally defective because it does not aver that there is no acting or de facto board of directors who ight have ordered the bringing of this suit;  and, secondly, that it was the duty of the plaintiffs-the two shareholders who complain of what had been done-to have called a meeting of the shareholders or attended at some regular annual meeting, and obtained the action of a majority on the matters in issue. The majority, he says, may have been content with what was done, and may have ratified the action of the board, in which case the whole body would have been bound by it.

The demurrer was sustained and the bill dismissed.

In the subsequent case of Mozley v. Alston (1 Ph. 790), decided in 1847, Lord Chancellor Lyndhurst says that "the observations of the Vice-Chancellor in Foss v. Harbottle correctly represent what is the principle and practice of the court in reference to suits of this description."

These cases have been referred to again and again in the English courts as leading cases on the subject to which they relate, and always with approval.

In Gray v. Lewis, decided in 1873, Sir W.M. James, L.J., said: "I am of opinion that the only person, if you may call it a person, having a right to complain was the incorporated society called Charles Lafitte & Co.  In its corporate character it was liable to be sued and was entitled to sue;  and if the company sued in its corporate character, the defendant might allege a release or a compromise by the company in its corporate character, a defence which would not be open in a suit where a plaintiff is suing on behalf of himself and other shareholders.  I think it is of the utmost importance to maintain the rule laid down in Mozley v. Alson and Foss v. Harbottle, to which, as I understand, the only exception is where the corporate body has got into the hands of directors, and of the majority, which directors and majority are using their power for the purpose of doing something fraudulent against the minority, who are overpowered by them, as in Atwood v. Merryweather, where Vice-Chancellor Wood sustained a bill by a shareholder on behalf of himself and others, and there it was after an attempt had been made to obtain proper authority from the corporate body itself in a public meeting assembled." Law Rep. 8 Ch.App. 1035.

But perhaps the best assertion of the rule and of the exceptions to it are found in the opinion of the court by the same learned justice in MacDougall v. Gardiner, in 1875, 1 Ch.D. 13. "I am of opinion," he says, "that this demurrer ought to be allowed. I think it is of the utmost importance in all these controversies that the rule which is well known in this court as the rule in Mozley v. Alston, and Lord v. Copper Miners' Company, and Foss v. Harbottle, should always be adhered to;  that is to say, that nothing connected with internal disputes between shareholders is to be made the subject of a bill by some one shareholder on behalf of himself and others, unless there be something illegal, oppressive, or fraudulent;  unless there is something ultra vires on the part of the company Qua company, or on the part of the majority of the company, so that they are not fit persons to determine it, but that every litigation must be in the name of the company, if the company really desire it.  Because there may be a great many wrongs committed in a company,-there may be claims against directors, there may be claims against officers, there may be claims against debtors;  there may be a variety of things which a company may well be entitled to complain of, but which, as a matter of good sense, they do not think it right to make the subject of litigation;  and it is the company, as a company, which has to determine whether it will make anything that is a wrong to the company a subject-matter of litigation, or whether it will take steps to prevent the wrong from being done."

The cases in the English courts are numerous, but the foregoing citations give the spirit of them correctly.

In this country the case outside of the Federal courts are not numerous, and while they admit the right of a stockholder to sue in cases where the corporation is the proper party to bring the suit, they limit this right to cases where the directors are guilty of a fraud or a breach of trust, or are proceeding ''ultra vires. Marsh v. Eastern Railroad Co., 40 N.H. 548; Peabody v. Flint,'' 6 Allen (Mass.), 52. In Brewer v. Boston Theatre (104 Mass. 378), the general doctrine and its limitations are very well stated. See also Hersey v. Veazie, 24 Me. 9; and Samuel v. Holladay, 1 Wollw. 400.

The case of Dodge v. Woolsey, decided in this court in 1855, is, however, the leading case on the subject in this country.

And we do not believe, notwithstanding some expressions in the opinion, that it is justly chargeable with the abuses we have mentioned. It was manifestly well considered, and the opinion is unusually long, discussing the point now under consideration with a full reference to the decisions then made in the courts of England. The suit-a bill in chancery-was brought in the Circuit Court for the District of Ohio, by Woolsey, a stockholder of the Commercial Bank of Cleveland, and a citizen of Connecticut, against that bank, its managing directors, and Dodge, tax-collector of the county in which the bank was situated, citizens of Ohio. The bill alleged that Dodge had levied upon property of the bank to make collection of a tax, which, by the Constitution of the State of Ohio, the bank was bound to pay; that in that respect the Constitution, then recently adopted, impaired the obligation of the contract of the State with the bank, contained in its charter. It appeared in the case that Woolsey had, by letter directed to the board of directors, requested them to institute proceedings to prevent the collection of this tax; but the board, by a resolution, declined to take any such action, while expressing their opinion that the tax was illegal. In the opinion of the court, reciting the circumstances which justified its interposition at the suit of the stockholder, the allegation of the bill is adverted to, that if the taxes are enforced it will annul the contract with the State concerning taxation, and that the tax is so onerous upon the bank that it will compel a suspension and final cessation of its business. The following extract from Angell & Ames on Corporations is cited with approval:  "Though the result of the authorities clearly is that in a corporation, when acting within the scope of, and in obedience to, the provisions of its constitution, the will of the majority, clearly expressed, must govern, yet beyond the limits of the act of incorporation the will of the majority cannot make the act valid, and the power of a court of equity may be put in motion at the instance of a single shareholder, if he can show that the corporation are employing their statutory powers for the accomplishment of purposes not within the scope of their institution. Yet it is to be observed that there is an important distinction between this class of cases and those in which there is no breach of trust, but only error and misapprehension or simple negligence on the part of the directors." And the court adds:  "It is obvious from this rule that the circumstances of each case must determine the jurisdiction of a court of equity to give the relief sought."

A very large part of the opinion is devoted to the consideration of the high function of this court in construing the Constitution of the United States, and it is impossible not to see the influence on the mind of the writer of that opinion of the fact that the only question on the merits of the case was one which peculiarly belonged to the Federal judiciary, and especially to this court to decide; namely, whether the Constitution of the State of Ohio violated the obligation of the contract concerning taxation found in the charter of the bank.

As the law then stood there was no means by which the bank, being a citizen of the same State with Dodge, the tax-collector, could bring into a court of the United States the right which it asserted under the Constitution, to be relieved of the tax in question, except by writ of error to a State court from the Supreme Court of the United States.

That difficulty no longer exists, for by the act of March 3, 1875, c. 137 (18 Stat., pt. 3, p. 470), all suits arising under the constitution or laws of the United States may be brought originally in the Circuit Courts of the United States without regard to the citizenship of the parties. Under this statute, if it had then existed, the bank, in Dodge v. Woolsey, could undoubtedly have brought suit to restrain the collection of the tax in its own name, without resort to one of its shareholders for that purpose.

And this same statute, while enlarging the jurisdiction of the Circuit Courts in cases fairly within the constitutional grant of power to the Federal judiciary, strikes a blow, by its fifth section, at improper and collusive attempts to impose upon those courts the cognizance of cases not justly belonging to them. It declares, if at any time in the progress of a case, either originally commenced in a Circuit Court, or removed there from a State court, it shall appear to said court "that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said Circuit Court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said Circuit Court shall proceed no further, but shall dismiss the suit or remand it to the court from which it was removed."

It is believed that a rigid enforcement of this statute by the Circuit Courts would relieve them of many cases which have no proper place on their dockets.

This examination of Dodge v. Woolsey satisfies us that it does not establish, nor was it intended to establish, a doctrine on this subject different in any material respect from that found in the cases in the English and in other American courts, and that the recent legislation of Congress referred to leaves no reason for any expansion of the rule in that case beyond its fair interpretation.

We understand that doctrine to be that to enable a stockholder in a corporation to sustain in a court of equity in his own name, a suit founded on a right of action existing in the corporation itself, and in which the corporation itself is the appropriate plaintiff, there must exist as the foundation of the suit-

Some action or threatened action of the managing board of directors or trustees of the corporation which is beyond the authority conferred on them by their charter or other source of organization;

Or such a fraudulent transaction completed or contemplated by the acting managers, in connection with some other party, or among themselves, or with other shareholders as will result in serious injury to the corporation, or to the interests of the other shareholders;

Or where the board of directors, or a majority of them, are acting for their own interest, in a manner destructive of the corporation itself, or of the rights of the other shareholders;

Or where the majority of shareholders themselves are oppressively and illegally pursuing a course in the name of the corporation, which is in violation of the rights of other shareholders, and which can only be restrained by the aid of a court of equity.

Possibly other cases may arise in which, to prevent irremediable injury, or a total failure of justice, the court would be justified in exercising its powers, but the foregoing may be regarded as an outline of the principles which govern this class of cases.

But, in addition to the existence of grievances which call for this kind of relief, it is equally important that before the shareholder is permitted in his own name to institute and conduct a litigation which usually belongs to the corporation, he should show to the satisfaction of the cou t that he has exhausted all the means within his reach to obtain, within the corporation itself, the redress of his grievances, or action in conformity to his wishes. He must make an earnest, not a simulated effort, with the managing body of the corporation, to induce remedial action on their part, and this must be made apparent to the court. If time permits or has permitted, he must show, if he fails with the directors, that he has made an honest effort to obtain action by the stockholders as a body, in the matter of which he complains. And he must show a case, if this is not done, where it could not be done, or it was not reasonable to require it.

The efforts to induce such action as complainant desires on the part of the directors, and of the shareholders when that is necessary, and the cause of failure in these efforts should be stated with particularity, and an allegation that complainant was a shareholder at the time of the transactions of which he complains, or that his shares have devolved on him since by operation of law, and that the suit is not a collusive one to confer on a court of the United States jurisdiction in a case of which it could otherwise have no cognizance, should be in the bill, which should be verified by affidavit.

It is needless to say that appellant's bill presents no such case as we have here supposed to be necessary to the jurisdiction of the court.

He merely avers that he requested the president and directors to desist from furnishing water free of expense to the city, except in case of fire or other great necessity, and that they declined to do as he requested. No correspondence on the subject is given. No reason for declining. We have here no allegation of a meeting of the directors, in which the matter was formally laid before them for action. No attempt to consult the other shareholders to ascertain their opinions, or obtain their action. But within five days after his application to the directors this bill is filed. There is no allegation of fraud or of acts ultra vires, or of destruction of property, or of irremediable injury of any kind.

Conceding appellant's construction of the company's charter to be correct, there is nothing which forbids the corporation from dealing with the city in the manner it has done. That city conferred on the company valuable rights by special ordinance; namely, the use of the streets for laying its pipes, and the privilege of furnishing water to the whole population. It may be the exercise of the highest wisdom to let the city use the water in the manner complained of. The directors are better able to act understandingly on this subject than a stockholder residing in New York. The great body of the stockholders residing in Oakland or other places in California may take this view of it, and be content to abide by the action of the directors.

If this be so, is a bitter litigation with the city to be conducted by one stockholder for the corporation and all other stockholders, because the amount of his dividends is diminished?

This question answers itself, and without considering the other point raised by the demurrer, we are of the opinion that it was properly sustained, and the bill dismissed, because the appellant shows no standing in a court of equity-no right in himself to prosecute this suit.

Decree affirmed.

title: Hawes v. Oakland/Opinion of the Court


text: Talk:Hawes v. Oakland/Opinion of the Court


text:
Rosenblatt v. Johnston

APPEAL from the Circuit Court of the United States for the Eastern District of Missouri.

This is a bill in equity, filed Sept. 30, 1880, by Rosenblatt, collector of the city of St. Louis, against Johnston, receiver of the National Bank of the State of Missouri.

The bank was duly incorporated pursuant to the act of Congress of June 3, 1864, c. 106 (13 Stat. p. 99), and the acts amendatory thereof, and had its situs in that city. It suspended payment June 9, 1877. Shortly thereafter Johnston was, by the Comptroller of the Currency, appointed suc receiver. He then took possession of its assets, and disposed of them in the settlement of its liabilities. The bill avers that while in his hands the assets were subject to taxation under the laws of that State for the support of the State government, the government of the city, and the public schools, in like manner and to the same extent and effect as all other taxable personal property in the city during the same period; that the assessment of taxes for the years 1877 and 1878 was duly made; that the fund in his hands in sufficient to pay them; and that the shares of the bank since his appointment have been absolutely worthless. It prays for an order upon him to pay the taxes out of that fund, and for general relief.

The court sustained a demurrer to the bill, and Rosenblatt appealed.

Mr. Leverett Bell for the appellant.

Mr. J. M. Krum and Mr. C. H. Krum for the appellee.

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

title: Rosenblatt v. Johnston


text: Talk:Rosenblatt v. Johnston

title: Talk:Rosenblatt v. Johnston


text:
Rosenblatt v. Johnston/Opinion of the Court

The single question in this case is, whether the personal assets and personal property of an insolvent national bank in the hands of a receiver appointed by the Comptroller of the Currency, in accordance with the provision of sect. 5234 of the Revised Statutes, are exempt from taxation under State laws, and we have no hesitation in saying that in our opinion they are. Such property and assets, in legal contemplation, still belong to the bank, though in the hands of a receiver, to be administered under the law. The bank did not cease to exist on the appointment of the receiver. Its corporate capacity continues until its affairs are finally wound up and its assets distributed. Bank of Bethel v. Pahquioque Bank, 14 Wall. 383; Kennedy v. Gibson, 8 id. 498; Bank v. Kennedy, 17 id. 19. If the shares have any value, they are taxable in the hands of the holders or owners, under sect. 5219 of the Revised Statutes; but the property held by the receiver is exempt to the same extent it was before his appointment.

Decree affirmed.


text: Talk:Rosenblatt v. Johnston/Opinion of the Court


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Murphy v. United States (104 U.S. 464)

APPEAL from the Court of Claims.

Murphy entered into a written contract with the United States for excavating a portion of the pit for a dry dock, and was paid at the contract price for all the work which he performed.

He subsequently presented to the Navy Department a claim for damages suffered by reason of certain alleged violations of the contract, and for extra work. The department adopted a basis of adjustment, to which he agreed; and there was paid to him a certain sum, which, upon full information as to the principles upon which it was awarded, he accepted, and gave a receipt in full.

He some time thereafter brought suit in the court below for the same claim, adding, however, a further item, of which there was no proof.

The court dismissed the petition, and he appealed.

Mr. James W. Denver and Mr. Luther H. Pike for the appellant.

The Solicitor-General and Mr. John S. Blair for the United States.

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

title: Murphy v. United States (104 U.S. 464)


text: Talk:Murphy v. United States (104 U.S. 464)


text:
Murphy v. United States (104 U.S. 464)/Opinion of the Court

We are clearly of the opinion that the acceptance by the claimant, without objection, of the amount allowed by the Secretary of the Navy, in his adjustment of the account presented to him, was equivalent to a final settlement and compromise of all the items of the present claim included in that account. There is nothing in the findings of the court below to warrant a judgment in favor of the claimant upon the only item included in the petition in this case which was not mentioned specifically in the account presented to the Secretary of the Navy and passed on by him in the adjustment he made.

Judgment affirmed.


text: Talk:Murphy v. United States (104 U.S. 464)/Opinion of the Court


text: Dictionary of National Biography, 1885-1900/Green, John (fl.1842-1866)


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Lamar v. Micou (104 U.S. 465)

MOTION to dismiss an appeal from the Circuit Court of the United States for the Southern District of New York.

Mr. S. P. Nash in support of the motion.

Mr. Edward N. Dickerson an Mr. Charles J. Beaman, Jr., contra.

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

title: Lamar v. Micou (104 U.S. 465)


text: Talk:Lamar v. Micou (104 U.S. 465)

title: Talk:Lamar v. Micou (104 U.S. 465)


text:
Lamar v. Micou (104 U.S. 465)/Opinion of the Court

This is an appeal by the defendant below from a decree against him for less than $5,000. There is no claim of sef-off or counter-claim, except to reduce the amount of the recovery. In no event can he get any money decree in his favor. All he seeks to do is to defeat the claim of the appellee. Consequently the amount in controversy, so far as this appeal is concerned, is fixed by the decree. Thompson v. Butler, 95 U.S. 694; Sampson v. Welsh, 24 How. 207. In effect he insists that, under the rule of liability established against him in the court below, the decree should have been for more than $5,000, and that for this reason he is entitled to an appeal, so that he may show he is not liable at all. This, we think it clear, is not the law.

The case is not changed by the fact that if, under an appeal which is pending in another suit, it shall be found the appellant was credited in this suit with an amount which properly belonged to that, the decree in that suit will be reduced, while the one in this cannot be correspondingly increased. The appellee is satisfied with this decree, and has not appealed. The appellant cannot eomplain if it turns out in the end that, but for a mistake which was made in his favor, the appellee might have recovered a larger amount.

Appeal dismissed.


text: Talk:Lamar v. Micou (104 U.S. 465)/Opinion of the Court


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People v. Commissioners

ERROR to the Supreme Court of the State of New York.

The facts are stated in the opinion of the court.

Mr. H Charles Ulman for the plaintiff in error.

Mr. J. A. Beall, contra.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: People v. Commissioners


text: Talk:People v. Commissioners

title: Talk:People v. Commissioners


text:
People v. Commissioners/Opinion of the Court

The only question presented upon the writ of error is, whether an assessment made by the board of tax commissioners for the city and county of New York, of the personal estate of Hanemann, the relator of the plaintiff in error, was in violation of the Constitution of the United States. The statute, under the authority of which it was made, provides that 'all lands and all personal estate within this [that] State, whether owned by individuals or by corporations, shall be liable to taxation,' subject to certain exemptions thereinafter specified. 1 Rev. Stat. N. Y., c. 13, tit. 1, sect. 1. It also declares that 'the terms 'personal estate' and 'personal property,' whenever they occur in this chapter, shall be construed to include all household furniture; moneys; goods; chattels; debts due from solvent debtors, whether on account, contract, note, bond, or mortgage; public stocks; and stocks in moneyed corporations. They shall also be construed to include such portion of the capital of incorporated companies, liable to taxation on their capital, as shall not be invested in real estate.' Id., sect. 3.

Hanemann, being a resident of the city, county, and State of New York, was assessed for taxation, as of Jan. 1, 1876, upon his personal estate, exclusive of bank stock, to the amount of $60,000. He made application, supported by affidavit, for the reduction or remission of such assessment, upon these grounds: That the value and amount of all his personal estate, on the first day of January, 1876, and during the period covered by the assessment, did not exceed $125,000, of which $4,500 was invested in railroad bonds, and $1,000 in household furniture; that the remainder was 'continuously employed in the business of exporting cotton from the United States of America to foreign countries, through the Customs Department of the United States aforesaid, and that said employment consists in purchasing and paying for the cotton in different States of the United States, and actually exported by deponent in said business, and for the payment of all the expenses of shipping the same as such exports,' and that the only portion of his estate upon which he is liable to be assessed and taxed is the sum of $5,500. In his examination before the tax commissioners, up n the occasion of his application for reduction or remission, he further stated that 'his said capital is invested uniformly and continuously in cotton, the product of, and having a situs in, various States outside of New York, and in transit to the port of New York, and other Atlantic ports, for the sole purpose of exportation, and no portion of such cotton is intended to be, or is, sold in New York, or any other United States market; that deponent purchases cotton largely upon credit, and that of his capital as much as $115,000 is continuously invested in cotton of the growth of the United States, which has been cleared at a custom-house, and is on shipboard in course of exportation to some foreign State or country.'

The reduction and remission were both denied. Upon writ of certiorari the proceedings of the tax commissioners were affirmed in the Supreme Court of the State, and its judgment was affirmed by the Court of Appeals.

The assessment in excess of $5,500, it is claimed by plaintiff in error, was in violation as well of art. 1, sect. 10, and clause 2, as of art 1, sect. 8, clause 3, of the National Constitution. The main propositions advanced by his counsel are that products of the United States which have passed the Customs Department, and are on shipboard in the course of exportation to a foreign market, have become exports, and are no longer within the taxing power of the State; that to tax money invested in such products is, in effect, laying an impost or duty on exports; that a tax on capital invested in the products of the United States, in transit from one State to another for purposes of exportation, or on money used and employed in exporting such products, is an unauthorized interference by the State with the regulation of commerce.

Although these propositions are deemed by counsel to be very easy of solution, we do not feel obliged to determine them in this case. The plaintiff in error was assessed, upon his personal property, as of Jan. 1, 1876. If the capital, which he claims was uniformly and continuously employed in the business of purchasing cotton for exportation from the United States to foreign countries, through the Customs Department, was, in fact, in money on the first day of January, 1876, he could not escape a subsequent assessment of that money upon the ground that, at the time the assessment was made, it was invested in cotton for exportation to foreign countries. Neither in his affidavit nor in his examination before the tax commissioners does he distinctly claim (and, perhaps, could not) that the capital which he thus employed in the business of purchasing cotton for exportation was, in fact, so invested on the first day of January, 1876. His capital may have been, in a business or mercantile sense, continuously so employed, and yet it may not have been, if fact, so invested at the date to which the assessment, whenever made, relates. We have no occasion, therefore, in the present case, to consider or determine the questions of constitutional law discussed by counsel. It will be time enough to consider them when they come before us in such form as to require their determination.

Judgment affirmed.

NOTE.-This cause was decided and the opinion delivered at the last term.


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


text: Dictionary of National Biography, 1885-1900/Green, John Richards


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Louisville v. Savings Bank

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

This was an action brought by the Portsmouth Savings Bank against the township of Louisville, Clay County, Illinois, upon coupons detached from bonds issued Jan. 5, 1871, by the supervisor and town clerk to the Springfield and Illinois Southeastern Railway Company, which was formed in February, 1870, by the consolidation of the Illinois Southeastern Railway Company with the Pana, Springfield, and Northwestern Railroad Company. The bonds, fifteen in number, bear date April 1, 1870, and each recites that it 'is one of a series of bonds issued by said township to aid in the construction of t e Illinois Southeastern Railway, in pursuance of the authority conferred by an act of the General Assembly of the State of Illinois, entitled 'An Act to incorporate the Illinois Southeastern Railway Company,' approved Feb. 25, 1867, and an act amendatory thereof, approved Feb. 24, 1869, and an election of the legal voters of the aforesaid township, held on the tenth day of November, 1868, under the provisions of said act.'

The inhabitants, legal voters of the township, pursuant to notice, duly and lawfully issued, met July 2, 1870, at 9 A.M., for the purpose of deciding by vote 'whether a special tax be levied for the payment of the sum of $15,000, donated by said town to the Illinois Southeastern Railway Company, or that bonds be issued for the payment of said donation.'

Fifty-two votes were cast for bonds and two for a special tax.

The supervisor filed, Jan. 9, 1871, the requisite sworn certificate of that date with the State auditor, who thereupon registered in his office the bonds, each being for $1,000. The bonds were delivered to the company after the first coupon had been cut from each and destroyed. The plaintiff was a bona fide holder for value of them without notice of anything impairing their validity other than what appears upon the face of them, or in the Constitution and laws of Illinois. The remaining facts are stated in the opinion of the court. Judgment was rendered for the plaintiff, and the township sued out this writ of error.

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

Mr. Shelby M. Cullom for the defendant in error.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Louisville v. Savings Bank


text: Talk:Louisville v. Savings Bank

title: Talk:Louisville v. Savings Bank