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Dutcher v. Wright/Opinion of the Court

Transfers of property by an insolvent debtor, within four months before the filing of the petition in bankruptcy against such debtor, with a view to give a preference to any creditor, is forbidden by the Bankrupt Act; and the provision is to the effect that if any such insolvent debtor, within that period and with that view, procures or suffers his property, or any part thereof, to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, transfer, or conveyance of his property, within that period and with that view, the attachment or seizure and the payment, pledge, assignment, transfer, or conveyance shall be void, if the person receiving the same, or to be benefited thereby, had reasonable cause to believe that such debtor was insolvent, and that such attachment, payment, pledge, assignment, or conveyance was made in fraud of the provisions of the Bankrupt Act. 14 Stat. 534; Rev. Stat., sect. 5128.

Congress has also defined the meaning of certain terms employed in the Bankrupt Act, and has regulated the mode of computing time 'in all cases in which any particular number of days is prescribed by the act, or shall be mentioned in any rule or order of court, or general order which shall at any time be made under the same, for the doing of any act or for any other purpose,' the rule enacted being that the computation 'shall be reckoned, in the absence of any expression to the contrary, exclusive of the first and inclusive of the last day, unless the last day shall' be dies non within the judicial sense. Rev. Stat., sect. 5013, p. 974.

Most of the matters of fact material to the decision of the case are either admitted, or so fully proved that they may be regarded as without dispute. Peterson, being insolvent, was, on the 8th of April, 1870, adjudged bankrupt, pursuant to his own petition filed in the District Court for the District of Minnesota. Prior to that time he had long been engaged in trade, doing business as a merchant in Rochester, in that State. Sufficien appears also to show that the respondents were engaged in trade, doing business as wholesale merchants under the firm name of Dutcher, Ball, & Goodrich, at Milwaukee, in the State of Wisconsin; that the said Peterson, on the 8th of December next before the time he was adjudged bankrupt, and long before that time, was insolvent, and largely indebted to the respondents for goods, wares, and merchandise theretofore sold and delivered to the bankrupt at his aforesaid place of business; and that the bankrupt did then and there, to wit, on the said 8th of December, with the knowledge, assent, and procurement of the respondents, assign, transfer, and convey to the said respondents certain portions of his property, consisting of promissory notes, securities, mortgages, and other evidences of indebtedness, with a view to give a preference to the respondents over the other creditors of the bankrupt, and in fraud of the provisions of the Bankrupt Act.

Proof of a satisfactory character is exhibited in the record to show that the assignment, transfer, and conveyance of the said securities and property were made to the respondents with a view to secure to them a preference over the other creditors of the bankrupt; and that the respondents had reasonable cause to believe that the assignor, transferer, and grantor was then and there insolvent, and that the assignment, transfer, and conveyance of the securities and property were made in fraud of the provisions of the Bankrupt Act and to prevent the said securities and property from coming to the possession of the assignee of the bankrupt debtor for distribution among his creditors, as required by law.

What the complainant charges is, that the securities and property transferred, assigned, and conveyed to the respondents belonged to him as the assignee of the bankrupt; and he prays for an account, and that the moneys collected be paid to him as such assignee, and that the securities uncollected be turned over to him, for the benefit of the creditors of the bankrupt.

Process was served; and the respondents appeared and pleaded the following defences: 1. That the securities and property were not transferred, assigned, and conveyed within four months next before the petition in bankruptcy was filed. 2. That the respondents were not served with process within two years from the time the cause of action accrued. 3. That the District Court for the District of Minnesota had exclusive jurisdiction of the cause of action set forth in the bill of complaint.

Instead of replying to the plea, the complainant under the rule in that behalf obtained an order setting it down for hearing at the next term; and the parties at the time appointed were fully heard, and the court overruled the several defences set up in the plea.

Pursuant to leave, the respondents filed an answer to the effect following, reference being first made to the admissions which the answer contains: 1. They They admit that the insolvent debtor was adjudged bankrupt on the day alleged in the bill of complaint, and that the complainant was duly appointed the assignee of the bankrupt's estate, as therein alleged; that an assignment of his estate was in due form made to the complainant, as assignee of the bankrupt's estate, and that the same became duly vested in him as such assignee; that the bankrupt was, on that day, indebted to the respondents in the sum of $1,741.12, for goods, wares, and merchandise which their firm had previously sold to the bankrupt.

None of these facts are controverted; and it is also admitted that one of the respondents, on the same day, had an interview with the bankrupt at the office of an attorney in the town where the bankrupt resides, in relation to his indebtedness to their firm, for the purpose of adjusting his indebtedness; and that the bankrupt on that day gave the respondents' firm a note for the amount of his indebtedness to the firm, and that he assigned to the firm the notes and accounts against his customers specified in the schedule exhibited in the record, and placed the same in the hands of the said attorney for collection as collateral security for the note given to the firm, the balance, if any, after paying the note and the expense of collecting the collaterals, to be paid over to the bankrupt.

These collaterals, it is admitted, greatly exceeded the amount of the bankrupt's indebtedness to the respondents; but they allege as matter of defence that they had no reasonable cause to believe, at the time of taking the same, that their debtor was insolvent or unable to pay his debts, and aver that their partner, when he made the arrangement, acted in good faith, and in the full belief that the bankrupt had assets sufficient to pay all he owed, and leave him a surplus of $12,000 to $13,000; that he was then in the possession of a valuable stock of dry-goods and groceries; and that, from inquiries their partner made of the debtor and the attorney with whom the collaterals were deposited for collection, he, the partner, believed that the debtor had sufficient available assets to pay all his debts, and to leave him a good surplus.

Beyond all doubt, the debtor was then insolvent; and it does not appear that the respondents or the active partner made any inquiries as to his pecuniary standing, except of the national bank, where he was owing $1,700, and of the debtor and the depositary of the notes and accounts assigned as collaterals; and they admit in the answer that their partner, in order to perfect the arrangement, found it necessary to hold out the inducement to the debtor, that, if he did not pay or secure what he owed the firm, they would be obliged to sue their claim, and collect the same by due process of law. Aided by such inducements, the partner succeeded, and was permitted to take enough of the debtor's notes and accounts to pay the claim of the firm in full, and the expenses of collecting the notes and accounts, with the understanding that the excess, if any, should be delivered back to the debtor. Times became hard with the debtor early in May preceding the arrangement, as appears by the correspondence exhibited in the record, from which it may reasonably be inferred that the firm were resolved to obtain security, or to enforce payment by legal proceedings.

Insolvency, in the sense of the Bankrupt Act, means that the party whose business affairs are in question is unable to pay his debts as they become due, in the ordinary course of his daily transactions; and a creditor may be said to have reasonable cause to believe his debtor to be insolvent when such a state of facts is brought to his notice respecting the affairs and pecuniary condition of his debtor as would lead a prudent man to the conclusion that the debtor is unable to meet his obligations as they mature, in the ordinary course of his business. Buchanan v. Smith, 16 Wall. 308; Toof et al. v. Martin, 13 id. 40.

Reasonable cause for such a belief cannot arise unless the fact of insolvency actually existed; but if it appears that the debtor giving the preference was actually insolvent, and that the means of knowledge were at hand, and that such facts and circumstances were known to the creditor securing the preference as clearly ought to have put a prudent man upon inquiry, it must be held that he had reasonable cause to believe that the debtor was insolvent, if it appears that he might have ascertained the fact to be so by reasonable inquiry. Scammon v. Cole, 5 N. B. Reg. 263; Wilson v. City Bank, 17 Wall. 487.

Witnesses were examined, the parties were heard, and the court entered a decree in favor of the complainant; and the respondents appealed to this court.

Certain important findings of fact are set forth in the interlocutory decree, as follows: 1. That the debtor, on the 8th of December, 1869, was insolvent. 2. That the respondents then and there had reasonable cause to believe that he was insolvent, and that the assignment of notes and accounts set forth in the answer was made by the debtor when insolvent, and wit a view to give a preference to the respondents as his creditors, and that they then and there had reasonable cause to believe that the assignment was made in fraud of the provisions of the Bankrupt Act.

Suffice it to say that the proofs and the admissions contained in the answer are sufficient to show that the findings of the Circuit Court are correct, and that the decree there rendered should be affirmed, unless the defences set up in the plea, or some one of them, can be sustained. Defences of the kind are not waived by filing an answer to the merits. They were all presented in one plea, but they will be separately considered in the reverse order from which they are set forth in the plea.

1. Suits may be instituted and prosecuted to final judgment by an assignee in bankruptcy to recover the assets of the bankrupt in the Circuit or District Court in a district other than that in which the decree in bankruptcy was entered, which is all that need be said in response to the objection that the District Court, where the suit in this case was commenced, had no jurisdiction to maintain the suit. Shearman v. Bingham, 7 N. B. Reg. 490; Lathrop, Assignee, v. Drake et al., 91 U.S. 516.

2. Assignees have two years from the time the cause of action accrued within which to enforce such a claim, and, inasmuch as the suit in the court below was institutued within that time, the ples of limitation must be overruled. 14 Stat. 518.

3. Suppose that is so, still it is insisted by the respondents that the notes, accounts, and property were not assigned to them within four months before the petition in bankruptcy was filed in the District Court by the insolvent debtor. Both parties agree that the petition in bankruptcy was filed April 8, 1870, and it appears both by the bill of complaint and the plea filed by the respondents that the notes, accounts, and property were assigned by the bankrupt to the respondents the 8th of December of the preceding year. Undisputed as the facts are, the decision must turn upon the construction of the Bankrupt Act. 14 Stat. 534; Rev. Stat., sect. 5128.

Taken literally, it might be suggested that the phrase, 'four months before the filing of the petition,' would exclude the day the petition was filed, fractions of a day being forbidden in such a computation; nor would it benefit the respondents if the rule prescribed by sect. 5013 of the Revised Statutes should be applied, which is, that in all cases in which any particular number of days is prescribed in that title, or shall be mentioned in any rule or order of court, or general order, which shall at any time be made under the same for the doing of any act, or for any other purpose, the same shall be reckoned, in the absence of any expression to the contrary, exclusive of the first and inclusive of the last day.

Where the phrase to be construed does not contain any expression to the contrary, the enactment is that that rule shall apply, leaving it to be understood that the phrase to be construed may contain words prescribing its own rule in that regard, and that if it contains any inconsistent expression to the contrary, that the rule prescribed in that section shall not necessarily control the meaning of the phrase to be construed.

Apply that qualification to the rule prescribed in sect. 5013, and still it might be suggested that the meaning of the phrase, 'within four months before the filing of the petition,' is entirely consistent with that rule.

Unless the day when the notes, accounts, and property were assigned, and the day when the petition in bankruptcy was filed, are both included in the computation, the defence fails, and the complainant is entitled to an affirmance of the decree. Neither argument nor authority is found in the brief of the respondents supporting any such rule of construction, and it is believed that no decided case can be referred to, where such a theory was ever adopted. Decided cases may be found in which it is held, where an act is required by statute to be done a certain n mber of days at least before a given event, that the time must be reckoned, excluding both the day of the act and that of the event. The Queen v. The Justices, 8 Ad. & E. 173; Mitchell v. Foster, 12 id. 172; Zouch v. Empsey, 4 B. & Ald. 522.

Search has been made in vain for a decided case in which it is held that both the day of the act and the day of the event shall be included in the computation, in order to ascertain the specified period of time. Cases may be found in which it is held, that, where the computation is to be made from an act done, the day on which the act is done is to be included. Arnold v. United States, 9 Cranch, 120.

Exceptions undoubtedly exist to that rule, and it must be admitted that there are many cases in which it is held that the last day is included and that the first is excluded.

Speaking of the conflict of judicial decision upon the subject, Lord Mansfield said that the cases for two hundred years had only served to embarrass a point which a plain man of common sense and understanding would find no difficulty in construing, and he came to the conclusion that courts of justice ought to construe the words of parties so as to effectuate their deeds and not destroy them, and that 'from the date' may, in popular use and even in strict propriety of language, mean either inclusive or exclusive. Pugh v. Leeds, Cowp. 714.

Special reference was made to that decision in the case of Griffith v. Bogert, 18 How. 158, in which this court held to the effect that the general rule is to treat the day from which the period of time is to be calculated, or terminus a quo, as inclusive, and they applied that rule in the decision of that case; but they remarked in the opinion that 'every case must depend on its own circumstances.' Thirty years before that, the Supreme Court of New York decided that it was the practice of that court, where an act is to be done within a specified number of days, to consider the day on which notice is given and the day on which the act is to be done, the one inclusive and the other exclusive, without any particular designation that the one or the other shall be exclusive. Gillespie v. White, 16 Johns. (N. Y.) 120.

Three of the courts of England,-to wit, the King's Bench, the Common Pleas, and the Exchequer,-forty-five years ago, adopted the following rule to regulate the practice in those courts: 'That, in all cases in which any particular number of days, not expressed to be clear days, is prescribed by the rules or practice of the courts, the same shall be reckoned exclusively of the first day and inclusively of the last day, unless the last day shall happen to' be dies non in legal contemplation. 8 Bing. 307.

Repeated attempts have been made to settle the question, but different rules still prevail in different jurisdictions.

Due weight in every case should be given to the words of the phrase to be construed, and by so doing many of the reported cases otherwise seemingly inconsistent may be satisfactorily reconciled. Still it must be admitted that it is difficult, if not impossible, to deduce from the reported decisions any rule which will apply in all cases, nor is it necessary to make the attempt in this case, as the court is unanimously of the opinion that the day the petition in bankruptcy was filed must be excluded in making the computation, and that the decree of the Circuit Court is correct. Rev. Stat., sect. 5013.

Decree affirmed.

title: Dutcher v. Wright/Opinion of the Court


text: Talk:Dutcher v. Wright/Opinion of the Court

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


text:
Aetna Life Insurance Company v. France (94 U.S. 561)

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

The facts are stated in the opinion of the court.

Mr. Samuel C. Perkins for the plaintiff in error.

Mr. Nathan H. Sharpless, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.


text: Talk:Aetna Life Insurance Company v. France (94 U.S. 561)


text:
Aetna Life Insurance Company v. France (94 U.S. 561)/Opinion of the Court

This action was brought by David France and Lucetta P., his wife, to recover the amoun of a policy of insurance for $10,000, issued by the AEtna Life Insurance Company on the life of Andrew J. Chew, of Philadelphia, dated Sept. 13, 1865, and payable to the said Lucetta, who was Chew's sister.

The proposals for the insurance, made out upon one of the printed blanks of the company, were signed by both Chew and Mrs. France. The following is a copy of the introductory part of the policy:--

'This policy of insurance witnesseth, that the AEtna Life Insurance Company, in consideration of the sum of $243.50, to them in hand paid by Andrew J. Chew, for the benefit of Lucetta P. France, his sister, and of the annual premium of $243.50, to be paid to said company on or before the thirteenth day of September in every year during the continuance of this policy, do assure the life of Andrew J. Chew, of Philadelphia, in the county of Philadelphia, State of Pennsylvania, in the amount of $10,000 for the term of his life.

'And the said company do hereby promise and agree to and with the said assured, her executors, administrators, and assigns, well and truly to pay, or cause to be paid, the said sum insured to the said assured, her executors, administrators, or assigns, within ninety days after due notice and proof of the death of the said Andrew J. Chew, and in either case all indebtedness of the party to the company shall be deducted from the sum insured. If any notes given by the said Andrew J. Chew for any portion of the cash part of premium on the within policy for any current year shall mature and not be paid, the policy shall become void from that date, and all payments of premium thereon forfeited to said company.'

The policy, amongst other things, contained the following stipulation:--

'And it is also understood and agreed to be the true intent and meaning hereof, that if the proposal, answers, and declaration made by the said Andrew J. Chew, and bearing date the thirteenth day of September, 1865, and which are hereby made part and parcel of this policy as fully as if herein recited, and upon the faith of which this agreement is made, shall be found in any respect false or fraudulent, then and in such case this policy shall be null and void.

The trial resulted in a verdict and judgment for the plaintiffs. The defendant sued out this writ of error.

Numerous exceptions were taken, on which errors are assigned here; but they are all reducible to two heads, or grounds of defence, viz.: 1. Want of insurable interest in Lucetta P. France; 2. Misrepresentation and breach of warranty as to the age and health of said Chew. It is insisted that the rulings and charge of the court below on these points were erroneous.

First, On the question whether Lucetta P. France had an insurable interest in the life of Chew, the conceded facts are that she was his sister, as stated in the policy; that, at the time the policy was issued, she was married to the other plaintiff, David France, and in no way dependent on her brother for her support; that the latter was earning his living as a ladies' shoemaker, and was of small means. Evidence was given tending to show that Mrs. France had, at different times, loaned money to her brother to an amount of some $2,000, and lent him $400 more in September, 1865; that a provious policy of like amount with the present had been obtained of the defendant company on Chew's life for his sister's benefit in June of the same year, and that at the time of issuing the policy now in suit he was unmarried, but was engaged to be married, and was in fact married the next day. The policy, as well as the several receipts for the annual premiums, signed by the secretary of the company, and countersigned by its agent in Philadelphia, all acknowledge that said premiums were received from Chew.

The construction given to the policy by the court below was, that it was a contract between the company and Chew for an assurance of his life, with a stipulation and agreement that the money should be paid to his sister; and the court held that such a policy is sustainable at la on account of the nearness of the relationship between the parties, and especially as Mrs. France, at the time the insurance was effected, was one of Chew's next of kin, prospectively interested in his estate as a distributee. We concur in the construction of the policy made by the court, and in the validity of the transaction. As held by us in the case of the Connecticut Mutual Life Insurance Company v. Schaefer, supra, p. 457, any person has a right to procure an insurance on his own life and to assign it to another, provided it be not done by way of cover for a wager policy; and where the relationship between the parties, as in this case, is such as to constitute a good and valid consideration in law for any gift or grant, the transaction is entirely free from such imputation. The direction of payment in the policy itself is equivalent to such an assignment.

The insurance company gave in evidence three promissory notes given by Lucetta P. France herself for part of the last three premiums paid on the policy, and requested the court to charge, that if the jury believed that the premiums on the policy were paid by Lucetta P. France, whether in cash or by her notes, there was evidence from which they could find that the application for insurance was made and the policy in question taken out by her for her own benefit; and, if such was the case, she must show an insurable interest in the life of her brother, beyond that of mere relationship, before she could recover. The court refused so to charge; and, we think, rightly. Waiving the question, whether, merely as sister of Chew, Mrs. France could have effected in her own name an insurance on his life, without its being obnoxious to the charge of a wager policy, the evidence was incompetent to prove the fact sought to be proved by it. The company, when taking the notes in question, acknowledged the premiums to have been received from Chew, and was estopped from going behind its own admission, under the circumstances of the case. The contract of insurance, as correctly construed by the court, was made with Chew; and the relationship of the parties was such as to divest the assignment of the policy or the direction of its payment to his sister of all semblance of a wagering transaction. Under the circumstances, it matters not if the money or notes required for paying the premium did come from Mrs. France; at most, it was by way of advance on her brother's account, and on his contract. He had a right to take out a policy on his own life for his sister's benefit; and she had a right to advance him the necessary means to do so. As between strangers, or persons not thus nearly connected, such a transaction would be evidence to go to the jury, from which, according to the circumstances of the case, they might or might not infer that it was mere gambling. But as between brother and sister, or other near relations, desirous of thus providing for each other, and, as said by Chief Justice Shaw, presumed to be actuated by 'considerations of strong morals, and the force of natural affection between near kindred operating often more efficaciously than those of positive law' (Loomis v. Eagle Life Ins. Co., 6 Gray, 399), the case is divested of that gambling aspect which is presented where where is nothing but a speculative interest in the death of another, without any interest in his life to counterbalance it. On this ground we hold, that where, as in this case, a brother takes out a policy on his own life for the benefit of his sister, it is totally immaterial what arrangement they choose to make between them about the payment of the premiums. The policy is not a wager policy. It is divested of those dangerous tendencies which render such policies contrary to good morals. And as the company gets a perfect quid pro quo in the stipulated premiums, it cannot justly refuse to pay the insurance when incurred by the terms of the contract.

Second, The other exceptions relate to alleged misrepresentations by Chew in the proposal for nsurance. The policy makes the proposal and the answers to the questions therein a part of the contract, and declares that if they shall be found in any respect false or fraudulent, the policy itself shall be void. Among the questions are the following, with the answers given to each respectively:--

"4. Place and date of birth of the party whose life is to be insured?' Ans. 'Born in New Jersey, in 1835.'

"5. Age and next birthday?' Ans. 'Thirty years, Oct. 28, as near as I can recollect.'

"11. Has the party ever had any of the following diseases; if so, how long, and to what extent: palsy, spitting of blood, consumption, asthma, bronchitis, diseases of the lungs, . . . rupture, convulsions, &c.?' Ans. 'None.'

"12. Is the party subject to habitual cough, dyspepsia, &c.?' Ans. 'No.'

"13. Has the party had, during the last seven years, any severe disease? If so, state the particulars, and the name of the attending physician. Ans. 'No." The answers were followed by this qualification: 'The above is as near correct as I remember.'

The defendant offered evidence tending to show that Chew, at the time of the application, would have been thirty-five or thirty-seven years old at his next birthday, instead of thirty, and that he was born Oct. 28, 1828; and that he had been ruptured from infancy, and so continued up to the date of the application, and wore a truss; and that he had had consumption, or some disease of the lungs; and that he was subject to habitual cough and dyspepsia; and had been attended by physicians for severe disease within seven years; and that he knew all of these matters at the time of the application. Counter evidence was given on the part of the plaintiffs. Among the proofs of death was an affidavit of the widow of Chew, stating that he was born Oct. 28, 1828, which defendant relied on as to the point of age. Mrs. France denied all knowledge of the papers received by defendant as proof of loss, except her own affidavit; and as to the alleged rupture, called, amongst others, Dr. Lewis, as an expert, and proposed to him the question, whether the existence of a reducible rupture in a subject of life assurance in his opinion appreciably increased the risk of the underwriters? The question was objected to, but allowed.

The defendant asked the court to charge, that if any of the answers were untrue, in whole or in part, the verdict must be for the defendant. The court charged that the truth or falsehood of the answers materially affected the risk; but added:--

'But the answers here are qualified by the words appended at the foot of the application, 'the above is as near correct as I remember,' which are applicable to all the statements made by the assured. He must be understood, therefore, as stipulating only for the integrity and approximate accuracy of his answers, and not for their absolute verity. Without this qualification, substantial error in any of his answers would avoid the policy, irrespective of his motive, because he warranted their truth; with it, the plaintiffs' right to recover will not be defeated, unless it appears that some one of the answers was consciously incorrect.

'To avoid the policy, then, the jury must be satisfied that the answers, or some of them, were untrue in any respect materially affecting the risk, and that the assured knew of their incorrectness.'

And, in particular, as to Chew's representation of his age, the court charged, 'that if he knew, or had reason to believe, that the year of his birth, as stated in the answer, did not correctly indicate his age, the policy is void, and the plaintiffs are not entitled to recover.'

We think the qualification made by the court was entirely justified by the form in which the answers were given. If the company was not satisfied with the qualified answer of the applicant, they should have rejected his application. Having accepted it, they were bound by it.

As to the diseases inquired about, the court charged substantially to the same effe t; namely, that the answers called for were material, and if untrue, and Chew knew or had reason to believe them so, the policy was void. As to the alleged rupture, in particular, the court said:--

'If, however, it appears that the rupture had been completely reduced, so that its effects had entirely passed away, and it had ceased to affect his health or impair his capacity to take fatiguing and prolonged exercise, the jury will determine whether the answer is untrue as nearly as he could remember. On the other hand, if the rupture had not been cured, it is hardly presumable that he could have forgotten it at the time of the application; and if the jury so find, it was his duty to disclose the fact that he had been afflicted with this disease, and his negative answer will avoid the policy.'

And so of the rest. We think the charge was a fair one, and gave the defendant the full benefit of any falsity contained in the answers given by the applicant. Under the charge as given, we do not see how the evidence of the physician, even if irrelevant, could injure the defendant.

Other points were raised, but it is unnecessary to discuss them. From a careful examination of the whole case, as presented, we are satisfied that there is no error in the record.

Judgment affirmed.


text: Talk:Aetna Life Insurance Company v. France (94 U.S. 561)/Opinion of the Court


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Merrill v. Yeomans

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

This is a suit by Joshua Merrill, for an infringement of letters-patent No. 90,284, issued to him May 18, 1869, for improved manufacture of two deodorized heavy hydrocarbon oils. The court below found that there was no infringement by the respondents, and dismissed the bill; whereupon the complainant appealed here.

Mr. Charles M. Reed and Mr. Chauncey Smith for the appellant.

Mr. Causten Browne, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Merrill v. Yeomans


text: Talk:Merrill v. Yeomans

title: Talk:Merrill v. Yeomans


text:
Merrill v. Yeomans/Opinion of the Court

The appellant in this case, who was complainant in the Circuit Court, obtained a patent, in May, 1869, for a new and useful invention, which relates to the heavy hydrocarbon oils; and he sued the appellees, who were defendants in that court, for an infringement of his patent.

The defendants were dealers in oils, and not manufacturers of them. If the appellant's patent was for a new oil, the product of a mode of treating the oils of that character which he describes in his application, the defendants may be liable; for they bought and sold, without license or other authority from him, an oil which is proved to be almost if not quite identical with the one which he produced. If, however, appellant's patent is only for the mode of treating these oils invented and described by him,-in other words, for his new process of making this new article of hydrocarbon oil,-then it is clear the defendants have not infringed the patent, because they never used that process, or any other, for they manufactured none of the oils which they bought and sold.

The counsel for appellant here maintain that his patent is for the new article, and is not for the process, though he describes it fully, by which that article is produced. The appellees insist, with equal earnestness, that the patent is exclusively for the process by which the new oil is made.

The issue thus presented must be decided solely upon a correct construction of the plaintiff's patent, and the accompanying specifications, in which, as required by the act of Congress, he makes the statement of his invention.

No such question could have arisen if appellant had used language which clearly and distinctly points out what it is that he claims in his invention.

We use the word 'claim' as distinct from 'description.' It must be conceded that the appellant's specification describes with minuteness and precision both the instrumentality and the process by which he makes the oil in question. And in regard to a part of the apparatus which he uses, he makes a distinct claim for its invention; and that is not in dispute here. He also describes with fulness and accuracy the process of distillation by which he produces this oil. He gives the temperature to be used, the mode of heating, the degree of rapidity or delay to be used in distilling, the introduction, and the advantage of that introduction, of superheated steam into contact with the oils to be distilled during the process.

He also describes, though in short terms, the article produced, the main feature of which he declares to be its freedom from the offensive odor which, before his invention, seemed to be an inseparable quality of those oils; and he mentions some of the more important uses to which this deodorized oil is applicable in the arts.

It is fairly to be inferred from this statement, that, if all which is described as new in these specifications is really so, the inventor has a right to a patent for three inventions:--

1. For a modification or improvement in the distilling apparatus.

2. For a new process or mode of distilling heavy hydrocarbon oils, by which they are deprived of their offensive odors.

3. For the product of this new process of distillation; namely, the deodorized heavy hydrocarbon oils fitted for use in the arts.

When a man supposes he has made an invention or discovery useful in the arts, and therefore the proper subject of a patent, it is, nine times out of ten, an improvement of some existing article, process, or machine, and is only useful in connection with it. It is necessary, therefore, for him, in his application to the Patent Office, to describe that upon which he engrafts his invention, as well as the invention itself; and, in cases where the invention is a new combination of old devices, he is bound to describe with particularity all these old devices, and then the new mode of combining them, for which he desires a patent. It thus occurs that, in every application for a patent, the descriptive part is necessarily largely occupied with what is not new, in order to an understanding of what is new.

The act of Congress, therefore, very wisely requires of the applicant a distinct and specific statement of what he claims to be new, and to be his invention. In practice, this allegation of the distinct matters for which he claims a patent comes at the close of the schedule or specification, and is often accompanied by a disclaimer of any title to certain matters before described, in order to prevent conflicts with pre-existing patents.

This distinct and formal claim is, therefore, of primary importance, in the effort to ascertain precisely what it is that is patented to the appellant in this case.

In this part of his application he makes two separate claims, the second of which relates to a modification of the distilling apparatus, and is not in dispute here. Turning our attention to the first claim, we are compelled to say that the language is far from possessing that precision and clearness of statement with which one who proposes to secure a monopoly at the expense of the public ought to describe the thing which no one but himself can use or enjoy, without paying him for the privilege of doing so. It is as follows:--

'I claim the above-described new manufacture of the deodorized heavy hydrocarbon oils, suitable for lubricating and other purposes, free from the characteristic odors of hydrocarbon oils, and having a slight smell like fatty oil, from hydrocarbon oils, by treating them substantially as is hereinbefore described.' The word 'manufacture' in this sentence is one which is used with equal propriety to express the process of making an article, or the article so made. 'The manufacture of hydrocarbon oils' means primarily the making of hydrocarbon oils. It may mean the thing made also. Are there other words in the sentence calculated to throw light on the meaning of this one?

'I claim the above-described new manufacture of hydrocarbon oils,. . . by treating them substantially as hereinbefore described.' It seems to us that the most natural meaning of these words is, that 'I claim this new mode of manufacturing hydrocarbon oils, by treating them as hereinbefore described.' This is the meaning which would first suggest itself to the mind. If the product is meant, the words 'by treating them substantially as hereinbefore described' are useless. They are not only useless, but embarrassing; for, by the well-settled rules of construing all instruments, some importance must be attached to them; and, if they are to be regarded at all, they must either refer to the process of making the oils for which the applicant is claiming a patent, or they are intended to limit his claim for a patent for the product to that product only, when produced by treating the oils in the manner before described.

The counsel for appellant disclaim this latter construction, and allege that the patent covers the oil described, by whatever mode it may be produced. It is necessary to insist on this view, because it is made to appear in the case that the oils sold by defendants were produced by a process very different from that described by appellant.

We can see no reason why the applicant for the patent, if he had in his mind a claim for the article produced, should have intended so to limit his claim. If the article was the discovery which he sought the exclusive right to make, use, and sell, he was entitled to that monopoly, however produced.

If, however, he had in his own mind only a claim for the process of manufacture by which the article was made, then his reference to the mode of treating the oils from which it came was evidently proper and intelligible.

But the language in the specifications aids us in construing the claim. In the sentence next preceding this claim, he says: 'It will also be evident to those skilled in the art that my invention will be used, if the above-mentioned process be worked, to produce the deodorized heavy oils above described from distilled hydrocarbon oils,' &c. It is very clear that what he here calls his invention is a thing which produces the deodorized oils, and not the oil itself. So again he says: 'From the above it will be obvious that my invention consists in producing heavy hydrocarbon oils, suitable for lubricating and other purposes, and free from the characteristic odor, by distilling from them the volatile matter from which objectionable odors arise.' Again he says: 'In carrying on my new manufacture of deodorizing heavy oils with this apparatus, I place the oil to be deodorized in the still, and heat it by the fire beneath to the required temperature to commence the operation, the steam being shut off from the coil, and the outlet cock being opened to admit of the expulsion of any water from within the coil.' Here the word 'manufacture' is used in the sense of the word 'process,'-a word which could be substituted for it, without a shade of change in the meaning. As it can here mean nothing else but process, we have a definition of the meaning to be attached to it in other parts of the same paper, if that meaning were otherwise doubtful.

But, apart from these verbal criticisms,-all of which are just, and tend strongly to show what was the invention claimed by appellant,-it is impossible to read the four printed pages of specifications, in which appellant minutely describes his invention, without observing that they are almost wholly directed to the apparatus, the mode of using it, and the peculiar process of distillation, by which the more volatile parts of the heavy oils, which contain the offensive odors, are separated from the main body of the oil, pass over in that process, and leave the remainder free from this great drawback in its use in the arts. Why should this be so, if the applicant for the patent was only looking to the products as his invention,-the deodorized heavy hydrocarbon oils? If the oil alone was to be patented, by whatever process made, this elaborate description of one particular process was unnecessary.

A strong appeal is made by counsel to give the appellant the benefit of a liberal construction in support of the patent. Cases are cited in which this court has held that, rather than defeat a patent where it appears that a valuable invention has really been made, this court, giving full effect to all that is found in the application on which the Patent Office acted, will uphold that which was really invented, and which comes within any fair interpretation of the patentee's assertion of claim.

We are not disposed to depart from this rule in the present case. There is no question here but that the patent is good for the second claim,-for the superheating coil, with its steam-pipe, &c.; and we are all of opinion that it is good for the process of distillation described in the specifications, by which the heavy hydrocarbon oils are deodorized. It is, therefore, a valid patent for two important matters, well set forth and described. If the patentee is also entitled to a patent for the product of this distillation, and has failed, as we think he has, to obtain it, the law affords him a remedy, by a surrender and reissue. When this is done, the world will have fair notice of what he claims, of what his patent covers, and must govern themselves accordingly.

The growth of the patent system in the last quarter of a century in this country has reached a stage in its progress where the variety and magnitude of the interests involved require accuracy, precision, and care in the preparation of all the papers on which the patent is founded. It is no longer a scarcely recognized principle, struggling for a foothold, but it is an organized system, with well-settled rules, supporting itself at once by its utility, and by the wealth which it creates and commands. The developed and improved condition of the patent law, and of the principles which govern the exclusive rights conferred by it, leave no excuse for ambiguous language or vague descriptions. The public should not be deprived of rights supposed to belong to it, without being clearly told what it is that limits these rights. The genius of the inventor, constantly making improvements in existing patents,-a process which gives to the patent system its greatest value,-should not be restrained by vague and indefinite descriptions of claims in existing patents from the salutary and necessary right of improving on that which has already been invented. It seems to us that nothing can be more just and fair, both to the patentee and to the public, than that the former should understand, and correctly describe, just what he has invented, and for what he claims a patent.

In consistency with these views, we are of opinion that the appellant in this case has described and claimed a patent for the process of deodorizing the heavy hydrocarbon oils, and that he has not claimed as his invention the product of that process.

Decree affirmed.

title: Merrill v. Yeomans/Opinion of the Court


text: Talk:Merrill v. Yeomans/Opinion of the Court


text:
Relief Fire Insurance Company of New York v. Shaw

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

Mr. J. G. Abbott for the plaintiff in error.

Mr. E. F. Hodges, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.


text: Talk:Relief Fire Insurance Company of New York v. Shaw


text:
Relief Fire Insurance Company of New York v. Shaw/Opinion of the Court

The principal question in this case is, whether a parol contract of insurance, made on behalf of the plaintiff in error by its agent in the city of Boston, was valid.

That a contract of insurance can be made by parol, unless prohibited by statute, or other positive regulation, has been too often decided to leave it an open question. That it is not usually made in this way is no evidence that it cannot be so made. To avoid misunderstandings in a contract of such importance and complexity, it is undoubtedly desirable that it should always be in writing; and such is the requi ement of many codes of commercial law. But the very existence of the requirement shows that it was deemed necessary to make it. The question came before the Supreme Judicial Court of Massachusetts in 1860, on a contract made under circumstances very nearly similar to those of the present case; and it was adjudged that a parol contract of insurance can be made. Sanborn v. Firemen's Insurance Co., 16 Gray, 448. The court in that case says:--

'No principle of the common law seems to require that this contract, any more than other simple contracts made by competent parties upon a sufficient consideration, should be evidenced by a writing. No statute of Massachusetts contains such a requirement. Upon principle, therefore, we can find no authority in courts to refuse to enforce an agreement which the parties have made, if sufficiently proved by oral testimony.'

This decision being directly in point, and being made by the highest court of the State where the present contract was made, is entitled to the highest consideration. The Court of Appeals of New York held the same doctrine in 1859, in the case of The Trustees of the First Baptist Church v. Brooklyn Fire Insurance Co., 19 N. Y. 305. Judge Comstock, delivering the opinion of the court, after briefly and accurately stating the history of policies of insurance, in regard to this point, says:--

'The contract, as I have said, had its origin in mercantile law and usage. It has, however, become so thoroughly incorporated into our municipal system, that a distinction which denies the power and capacity of entering into agreements in the nature of insurances, except in particular modes and forms, rests upon no foundation. The common law, with certain exceptions, having regard to age, mental soundness, &c., concedes to every person the general capacity of entering into contracts. This capacity relates to all subjects alike, concerning which contracts may be lawfully made, and it exists under no restraints in the mode of contracting, except those which are imposed by legislative authority. There is nothing in the nature of insurance which requires written evidence of the contract. To deny, therefore, that parol agreements to insure are valid would be simply to affirm the incapacity of parties to contract where no such incapacity exists, according to any known rule of reason or of law.' See also May on Insurance, sects. 14-23, and Kelly v. Commonwealth Insurance Co., 10 Bosw. 82.

We have been referred to the case of Cockerill v. Insurance Company, 16 Ohio, 148, in which it is held that a parol contract of insurance is not recognized as valid by the commercial law, but must be expressed in a written policy. We have also been referred to Duer on Insurance, p. 60, and to Millar on Insurance, p. 30, which are to the same purport as the Ohio case. On examination of the books on maritime law, on which these authorities rely, we find that the requirement of a written policy, though almost if not quite universal in maritime codes, is always by positive regulation; and we find those regulations as far back as the subject of insurance is discussed or legislated upon. But whilst this is true, the considerations referred to by Judge Comstock, in the New York case last cited, are unanswerable. And the numerous cases in which a parol contract for a policy of insurance has been sustained are conclusive that there is nothing in the nature of the subject which renders it insusceptible of a parol agreement. And whilst a statutory regulation requiring a writing may be very expedient, in the absence of such a statute it cannot be held that a parol insurance is void.

It is contended, however, that the present case is subject to, and is to be governed by, certain express relations, which take it out of the general rule of the common law. The charter of the defendant company is referred to as restraining its power to enter into contracts of insurance in any other manner than by a written instrument. The company was forme in 1856, under the General Fire Insurance Companies Act of New York, passed in 1853, by which any association proposing to be organized under its provisions was required to file a copy of its charter in the office of the comptroller, and therein 'set forth the name of the company, the place where its business should be located, the mode and manner in which the corporate powers granted by the act are to be exercised, &c.' The company in this case filed such a charter, by the first article of which it was declared as follows:--

'The name of this company shall be the Relief Fire Insurance Company. The principal office for the transaction of its business shall be in the city of New York. Its purpose and business shall be by instrument, under seal or otherwise, to make insurance on dwelling-houses, stores, and all other kinds of buildings, and upon household furniture and other property, against loss or damage by fire,' &c.

By art. 5 it is declared that 'the president or other officer appointed by the board of directors, for the purposes aforesaid, shall be authorized, in the name and behalf of the company, and in and by policy of insurance in writing to be signed by the president or other officer and secretary of the company, to make contracts of insurance with any person or persons, or body politic or corporate, against loss or damage by fire,' &c. It is insisted that these articles are the company's law of existence, and that it would be ultra vires for it to make parol contracts of insurance. But it is manifest that the article last quoted is merely affirmative as to what may be done by the officers in the usual course, and contains no negative clause that an insurance made otherwise than by a written policy shall be void. And the clause in the first article, which declares that the company's 'purpose and business shall be by instrument, under seal or otherwise, to make insurance,' admits of a wider construction than that contended for. The words, 'by instrument, under seal or otherwise,' may as well mean 'by sealed instrument or otherwise,' as to mean 'by instrument, either under seal or otherwise.' The substantial power given by law to an association organized under it, is to make insurance against loss and damage by fire. The mode and form in which it shall make its contracts is not prescribed as an essential part of its being or mode of action. The expressions referred to are not of that character. They indicate, in language chosen by the company itself, and not by the legislature, the ordinary mode of conducting its business. After having, by its officers and agents, made a parol contract of insurance, and induced the insured party, acting in good faith, to rely on its engagements, it cannot be permitted to shelter itself behind any such ambiguous expressions in its charter, and claim to have a special statute of frauds for its own benefit. Substantially similar provisions to those now relied on were contained in the charter of the Firemen's Insurance Company in the case Sanborn; but the court held that they were merely enabling in their character, and not restrictive of the general power to effect contracts in any lawful and convenient mode. 'We cannot think,' said Judge Hoar, delivering the opinion of the court, 'that a provision in the charter of an insurance company, authorizing contracts authenticated by the signature of a particular officer, and without any words of restriction, should generally be construed to limit the powers of the company, and to prevent them from making contracts within the ordinary scope of their chartered powers. On the contrary, the phraseology of those statutes respecting the executing of policies should be regarded as consisting simply of enabling words, not restraining the power which they confer to make contracts, of which the policies are the evidence.' 16 Gray, 454.

Substantially the same views were expressed by the Court of Appeals of New York, in the case of First Baptist Church v. Brooklyn Fire Insurance Co., 19 N. Y. 309-31.

But, besides all this, it is not perceived how the insured can be affected by these verbal minutiae in the charter of the company, without their being brought to his knowledge. The charter is a document on file in the office of the comptroller of New York, in the city of Albany. A person dealing with the company, in Massachusetts cannot be expected to know its precise terms. It holds itself out to be an insurance company, authorized to take risks against losses by fire, and by its officers and agents assumes to act in the same manner as other insurance companies do. However it may expose itself to be questioned by the government which created it, for exceeding the precise limits of the powers granted, it is estopped from eluding its obligations, incurred towards those who, in ignorance of these limits, contract with it in good faith, and upon the basis of the powers assumed by its recognized agents to exist.

It is contended, however, that there is a statute of Massachusetts which, in effect, requires that all contracts of insurance shall be in writing; namely, c. 196, sect. 1, of the acts of Massachusetts for 1864, which provides as follows:--

'In all insurance against loss by fire hereafter made by companies chartered or doing business in this Commonwealth, the conditions of insurance shall be stated in the body of the policy; and neither the application of the insured nor the by-laws of the company shall be considered as a warranty, or a part of the contract, except so far as they are incorporated in full into the policy, and appear on its face before the signatures of its officers.'

It is evident that the object of this statute was, not to prohibit parol contracts of insurance, but to prohibit the practice of referring to a set of conditions not contained and set out in the policy, but embodied in some other paper or document. The statute was passed for the benefit of the insured, in order that they might not be entrapped by conditions to which their attention might never be called, and which they might inadvertently overlook and disregard, if they were not embraced in their policies. It applies in terms only to policies, that is, to written contracts of insurance; and has no application whatever to parol insurances. It does not prohibit them, nor affect them in any way.

Other points were taken by the plaintiff in error, to the effect that there was no evidence that the agent ever had authority to make other than a written contract, or that a completed oral contract was ever made as stated in the declaration, or that the insurance company ever authorized its agent to delegate to another the power to make insurance. An examination of the bill of exceptions shows that it does not contain all the evidence which was adduced. Whether the omitted portions would furnish any light on these points, we are unable to say. But we think that the evidence which is spread upon the record was sufficient to go to the jury, and we see no error in the charge of the court in this behalf. The agent who acted in this case had been accredited as the general agent of the company in the Commonwealth of Massachusetts from the beginning of 1870, and had, during all that time, been transacting the business of the company as such agent in the city of Boston. His mode of doing business was not materially different from that of other agents or companies. He had, during all that period, been assisted by a clerk or clerks, who attended to the business in his absence, which the company must have known. These and other facts, sufficiently shown by the evidence, entirely justify the charge of the court, and the finding of the jury is conclusive.

We see no error in the record.

Judgment affirmed.


text: Talk:Relief Fire Insurance Company of New York v. Shaw/Opinion of the Court


text:
Seitz v. Mitchell

APPEAL from the Supreme Court of the District of Columbia.

The facts are stated in the opinion of the court.

Mr. A. G. Riddle and Mr. Francis Miller for the appellant.

Mr. R. Ross Perry, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Seitz v. Mitchell


text: Talk:Seitz v. Mitchell

title: Talk:Seitz v. Mitchell


text:
Seitz v. Mitchell/Opinion of the Court

The complainant in the court below sought to subject two pieces of real property in the city of Washington to the payment of several judgments recovered by the firm, of which he is the surviving partner, against George Seitz, one of the defendants. His bill alleges the recovery of those judgments, one on the ninth day of June and the other on the fourteenth day of December, 1868, the issue of executions thereon, and returns of nulla bona made by the marshal. It alleges further, that George Seitz, on the thirteenth day of January, 1870, purchased from one Kendall lot No. 61 in square 448, in the city of Washington; and, knowing of the judgments obtained against him, conspired with his wife, Mary E. Seitz, the other defendant, to delay and hinder the judgment creditor, by procuring the deed from Kendall to be made to the wife. The bill then charges that the deed was so made; that the purchase-money for the lot was paid by George Seitz with money earned by himself, to which his wife had no title whatever; and that a deed of trust was given to Kendall to secure a balance of unpaid purchase-money, which deed was subsequently released to George Seitz and Mary E. Seitz. The entire purchase-money was $6,500.

The bill sets forth that the other lot, part of lot No. 1 in square 343, was purchased on the eighteenth day of October, 1872, by George Seitz, from one William F. Mattingly, for the sum of $6,000, and that it was also conveyed to Mary E. Seitz. The purchase-money was paid, it is alleged, with money borrowed from the Arlington Fire Insurance Company, and secured by deed of trust of both properties, which money, the bill charges, George Seitz, and not Mary E. Seitz, is bound to pay.

This second conveyance is also averred to have been made to the wife, with intent in hinder, delay, and defraud the husband's creditors; and the prayer of the complainant is that both lots may be subjected to the lien of the complainant's judgments, and that a trustee may be appointed to sell the property for the satisfaction of said liens out of the proceeds of the sale, after paying all expenses thereof, and all prior liens.

Such is the case made by the bill. No discovery is asked and no interrogatories are propounded.

The answer admits the recovery of the judgments as charged, but denies that George Seitz purchased the property or paid for the same, or owned or advanced any money to pay for the same, and denies also all fraud. It avers, on the contrary, that Mary E. Seitz, in her own right, and in her own name, and for her sole and separate property, purchased the Kendall lot, and took the deed in her own name; that she paid the purchase-money, to wit, $1,000 in hand and the balance on deferred time, all out of her own means and money earned and procured wholly by herself, and not from the said George, nor by or through him or his exertions; and that he signed the notes for the deferred payments and joined in the deed of trust at the request of the vendor, and not because he had any interest in the transaction.

The answer further states that the property bought from Mattingly was purchased by the wife for herself in her own name and in her own right; that she negotiated the loan with the Arlington Fire Insurance Company; that the whole transaction was hers, and not that of her husband; that he had nothing to do with it except as her agent, or to express his assent for the satisfaction of other parties. To this answer a general replication was put in, and evidence has been taken on behalf of the complainant. The defendants have rested on their answer alone.

The general rule of equity practice is, that when a defendant has, by his answer under oath, expressly negatived the allegations of the bill, and the testimony of one person only has affirmed what has been negatived, the court will not decree in favor of the complainant. There is then oath against oath. In such cases there must be two witnesses, or one with corroborating circumst nces, to overbear the defendant's sworn answer. The reason for this is, that the complainant generally calls upon the defendant to answer on oath; and he is, therefore, bound to admit the answer, so far as he has called for it, to be prima facie true, and as worthy of credit as the testimony of any other witness. This rule, however, does not extend to averments in the answer not directly responsive to the allegations of the bill, for the complainant has not called for them. It is always to be considered, therefore, when the rule is attempted to be applied, how far the averments of the answer are responsive to what is alleged in the bill. In the case before us, the defendants' answer denies that George Seitz purchased the Kendall lot, or paid for the same, or owned or advanced any money to pay for the same. So far it is responsive to the complainant's allegations. But the answer furnishes no evidence that the wife had any separate property, or any means or money of her own with which to pay the purchase-money of the lot conveyed to her. Nor do the proofs taken exhibit any such evidence. George Seitz and Mary his wife lived together. He carried on a bakery, and she attended to the duties of the house. There were four or five boarders in the house, paying monthly from $20 to $30 each. There is nothing to show that the wife had any opportunity for obtaining money except from her husband. Purchases of either real or personal property made by the wife of an insolvent debtor during coverture are justly regarded with suspicion, unless it clearly appears that the consideration was paid out of her separate estate. Such is the community of interest between husband and wife; such purchases are so often made a cover for a debtor's property, are so frequently resorted to for the purpose of withdrawing his property from the reach of his creditors and preserving it for his own use, and they hold forth such temptations for fraud, that they require close scrutiny. In a contest between the creditors of the husband and the wife there is, and there should be, a presumption against her which she must overcome by affirmative proof. Such has always been the rule of the common law; and the rule continues, though statutes have modified the doctrine that gave to the husband absolutely the personal property of the wife in possession, and the right to reduce into his possession and ownership all her choses in action. Authorities to this effect are very numerous. In Gamber v. Gamber, 18 Penn. St. 306, a case where a wife claimed personal property against the insolvent estate of her deceased husband, it was said by the court: 'In the case of a purchase after marriage, the burden is upon the wife to prove distinctly that she paid for it [viz., the property purchased by her] with funds which were not furnished by the husband.' In Keeny v. Good, 21 id. 349, where the contest was between a wife and her husband's creditors, it was ruled that mere evidence that she purchased the property during the coverture is not sufficient to give her title; that it must satisfactorily be shown that the property was paid for with her own separate funds, and that, in the absence of such evidence, the presumption is a violent one, that the husband furnished the means of payment; and it was held that this rule applies to real as well as to personal estate. So in Walker v. Reamey, 36 id. 410, a contest respecting real estate, where the purchase was made by a wife in her name, and where the money paid upon the contract, so far as payment was shown, was paid by her, it was held that a married woman, claiming, in opposition to her husband's creditors, property purchased after marriage, must show that she had received money 'by will or descent, conveyance or otherwise, and had invested it in the property claimed.' It was also said not to be enough that she was seen in the frequent possession of money after the passage of the married-woman's act of the State, for in such case the presumption is that it was the husband's money. So in arvin v. Capewell, 9 Wright, 89, it was decided that the mere possession of money by a wife is no evidence of her title in an action by a creditor of the husband, and when there is no evidence save possession, the jury should be instructed to find for the creditor. Vide also Bradford's Appeal, 5 Casey, 513, and Aurand v. Shaeffer, 7 Wright, 363. So property purchased by a married woman on credit, or with her earnings, has been held to be subject to the levy of an execution against her husband. Robinson v. Wallace, 3 id. 129 All these decisions were made after the enactment of a statute giving to married women rights of property as against the husband and his creditors, at least as broad as any which exist in the District of Columbia. And similar decisions have been made in other States where like statutes have been enacted. Switzer v. Valentine, 4 Duer (N. Y.), 96; Glann v. Younglove, 27 Barb. (N. Y.) 480; Woodbeck v. Havens, 42 id. 66; Rider v. Hulse, 24 N. Y. 372; Connors v. Connors, 4 Wis. 131; Elliott v. Bentley, 17 id. 610; Edson v. Hayden, 20 id. 682; Duncan v. Roselle, 15 Iowa, 501; Cramer v. Redford, 17 N. J. Eq. 367. Many of these cases relate to the ownership of the wife's earnings; and nowhere, so far as we are informed, has it been adjudged that her earnings or the product of them, made while she is living with her husband and engaged in no separate business, are not the property of the husband when the rights of his creditors have been asserted against them. Certainly the acts of Congress respecting the rights of married women in this District do not assure such property to the wife. Sect. 727 of the Revised Statutes relating to the District of Columbia is as follows:--

'In the District, the right of any married woman to any property, personal or real, belonging to her at the time of marriage, or acquired during marriage in any other way than by gift or conveyance from her husband, shall be as absolute as if she were unmarried, and shall not be subject to the disposal of her husband, nor be liable for his debts.'

Sect. 729 gives a married woman power to contract, to sue and be sued in her own name in all matters having relation to her sole and separate property. No other power to contract is given to her. Her earnings while cohabiting with her husband are not made her property. She can have them only by the gift of her husband, and such a gift is not protected against his creditors.

Applying the principles settled by the authorities we have cited to the pleadings and proofs in the present case, it is free from doubt. The answer does not aver that Mrs. Seitz paid for either of the lots conveyed to her out of her separate property. It does not aver that she had any separate property, nor does the proof show that she had any. The entire purchase-money of the lot obtained from Mattingly was paid with money borrowed from the Arlington Fire Insurance Company, for which George Seitz and his wife gave their notes, accompanied by a deed of trust of that lot, and of the one obtained from Kendall. For the payment of those notes, George Seitz is personally liable, and his wife is not. It is not averred or proved that she has paid out of her own means, or in any way, even one cent of that debt.

And in regard to lot No. 61, purchased from Mr. Kendall, the proof is that the negotiation for the purchase was commenced by the husband. He called upon the vendor, and obtained information of the price and of the terms. A month afterwards, the husband and wife went to the vendor's office, and the bargain was there consummated and the deed was given. One thousand dollars, part of the purchase-money, was paid by Mr. Seitz in the presence of her husband; four promissory notes, notes, each for $600, and one for $3,100, were given for the remainder. All these notes were signed by the husband and the wife; and a deed of the lot in trust, signed also by the husband and wife, was given to secur the payment of the notes. No evidence has been submitted to show that the first thousand dollars, the down money, was not the property of the husband; while the law presumes that it was, in the absence of proof to the contrary, beyond her having possession of the money. And it does not appear that Mrs. Seitz ever paid any portion of the notes given for the remaining purchase-money. They have all been paid, except a small balance of about $100; and the proof by two witnesses is, that the payments were principally, if not wholly, made by George Seitz himself. The allegation of her answer that she paid the purchase-money is, therefore, disproved. But, were it true, it would not avail her, unless she paid it with her own separate property. She avers that she paid it with means and money earned and procured wholly by herself. Of that there is no proof, nor attempt to adduce proof; though, if the fact were so, the means of proving it must have been peculiarly within her knowledge and power, and we have already observed that money procured by her earnings belonged to her husband, and was not her separate property. To hold that conveyances thus taken and thus paid for are sufficient to protect the property against creditors of an insolvent husband would be making fraud both profitable and easy.

Decree affirmed.

title: Seitz v. Mitchell/Opinion of the Court


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


text:
Maclay v. Sands

ERROR to the Supreme Court of the Territory of Montana.

Mr. L. M. Saunders and Mr. W. F. Saunders for the plaintiff in error.

Mr. R. T. Merrick, contra.

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

title: Maclay v. Sands


text: Talk:Maclay v. Sands

title: Talk:Maclay v. Sands


text:
Maclay v. Sands/Opinion of the Court

This case presents the single question whether, under the civil practice act of Montana, judgment can be entered against a defendant, as upon default for want of issues to be tried, when there is on file in the cause an answer denying specifically all the allegations in the complaint, but in which the denial is based upon information and belief only, if it appears that the facts in controversy were not within the personal knowledge of the defendant, and that the information upon which he based his belief came from his agents employed to transact the business out of which the litigation arose.

Sects. 56 and 63 of the Practice Act are as follows:--

'SECT. 56. The answer of the defendant shall contain a specific denial to each allegation in the complaint intended to be controverted by the defendant. . . . In denying any allegation in the complaint, not presumptively within the knowledge of the defendant, it shall be sufficient to put such allegation in issue for the defendant to state that, as to any such allegation, he has not and cannot obtain sufficient knowledge or information upon which to base a belief.'

'SECT. 63. All complaints, answers, and replications shall be verified as provided in this section. . . . The affidavit of verification shall state that the facts stated in the pleading are true to the knowledge of the person making it, except as to those matters which are therein stated on his information and belief, and as to those matters, that he believes it to be true. Such verification shall be made by the party, or, if there are several parties united in interest or pleadings, by one at least of such parties acquainted with the facts, if such party is in the county and capable of making the affidavit.'

The verification in this case was in the proper form, and it further stated, 'that the defendants' said business at Corinne, Utah, was performed by agents, from whom affiant's information, upon which he based said belief, is derived.' These facts are not controverted. The business of the defendants, in respect to which they were sued, was that of common carriers, and must necessarily have been conducted to a considerable extent through agents. Under such circumstances, their knowledge as to many of their transactions would properly come from information. If the facts had been such as must have been within their personal k owledge, a denial upon information and belief might perhaps have been properly treated as evasive; but here any presumption of personal knowledge has been overcome by the statements in the verification, and unless parties under such circumstances are permitted to qualify their denials, they will be compelled to swear positively to that which they only believe to be true because they have information to that effect.

We do not think that parties, upon a fair construction of the statute, are driven to that extremity. The denial, when made, must be specific; but is none the less specific because based on information and belief. Provision is made for an issue by a formal denial, where sufficient knowledge or information upon which to base a belief cannot be obtained. This implies that, if the necessary information can be obtained, a statement must be made predicated upon that; and, if it is to be made, we cannot see what harm can result from adding the grounds on which it is based. It is the same for all the purposes of an issue whether the qualification is given or not, and the issue is the material thing to be attained.

But sect. 63 seems to us to be conclusive upon the propriety of the practice. There provision is made for one form of verification if the statement is upon personal knowledge, and another if upon information and belief. Why this, if information and belief in a proper case were not sufficient to justify an averment? But unless the pleading shows that the statement is founded upon information, &c., the form of the oath prescribed would be of no avail, because that contemplates a positive verification in all cases where it does not appear in the body of the pleading that a qualification is intended. In some States, the practice acts require a verification only to the effect that the party believes his statements to be true. In such cases there is no necessity for qualifying the averments in the pleading, because the oath prescribed establishes all the limitation that is necessary. In Montana, however, the qualification must be made in the pleading.

This view of the practice is sustained in Hackett v. Richards, 3 E. D. Smith, 13; Sayre v. Cushing, 7 Abb. Pr. 371, note; Edwards v. Lent, 8 How. Pr. 28. The cases of Thorn & Maynard v. New York Central Mills, 10 How. Pr. 19, and Blake v. Eldred, 18 id. 244, cited in opposition, involved only the question of what might be denied under the allegation of 'want of sufficient knowledge or information to form a belief,' and all that was said beyond that was not necessary to the decision.

We think, therefore, that the denial upon information and belief was sufficient to present an issue for trial, and that the court erred in deciding otherwise.

Cause remanded, with instructions to reverse the judgment of the District Court and to direct that court to proceed, in accordance with this opinion, as law and justice may require.

title: Maclay v. Sands/Opinion of the Court


text: Talk:Maclay v. Sands/Opinion of the Court


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Clapp v. Mason

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

The facts are stated in the opinion of the court.

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

Mr. George Putnam, Jr., contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Clapp v. Mason


text: Talk:Clapp v. Mason

title: Talk:Clapp v. Mason


text:
Clapp v. Mason/Opinion of the Court

The plaintiffs below brought their action against the collector of internal revenue to recover back a tax paid to him to avoid distraint. The facts are these:--

William P. Mason, the plaintiff's testator, died Dec. 4, 1867. By his will, the real estate upon which the tax in question was levied was devised to his widow for her life, or until she should cease to occupy the same as a place of residence, and upon her death, or ceasing so to occupy the same, to the plaintiff.

The widow occupied the said real estate as her residence until her death, June 17, 1872.

The tax in question was assessed on the 15th of May, 1873, by the assessor of said district, and on the 31st of May, 1873, the plaintiff paid the defendant the said tax under protest, to avoid distraint or other forcible process to collect the same.

The Circuit Court held that the tax was illegally imposed, and gave judgment that the party paying it should recover back the amount with interest. The collector appeals.

The relationship, if any, between the deceased and the devisees does not appear. The identity of names is suggestive upon the point, but no facts in relation to it are contained in the record.

It is conceded that under the United States statute of 1864 the tax would have been a proper one. The statute of July 14, 1870, repealed the taxes imposed by the act of 1864 on legacies and successions after the first day of August, 1870. 16 Stat. 261, sect. 17.

The Repealing Act contained the following proviso:--

'And all acts and parts of acts relating to the taxes herein repealed, and [that] all the provisions of said acts shall continue in full force for levying and collecting all taxes properly assessed or liable to be assessed, or accruing under the provisions of former acts, or drawbacks, the right to which has already accrued, or which may hereafter accrue, under said acts, and for maintaining and continuing liens, fines, penalties, and forfeitures incurred under and by virtue thereof; and this act shall not be construed to affect any act done, right accrued, or penalty incurred under former acts, but every such act is hereby saved.'

The collector insists that the tax upon the succession in question had accrued before the repeal of the act of 1864; to wit, that it accrued upon the death of the testator in 1867. The devisees contend that the tax did not accrue until they came into the possession of the land, and that before this occurred the statute authorizing the tax was repealed. The question is, when did the right to this tax accrue,-at the death of the testator, or at the death of the widow, when the plaintiff became entitled to the possession of the land?

By the statute of 1864, as a part of a system of taxation made necessary by the existence of a civil war, a tax was imposed upon the 'succession to real estate.' 13 Stat. 287. The term 'real estate' was defined to include all lands, tenements, and hereditaments, corporeal and incorporeal; and a 'succession' was declared to denote 'the devolution of title to any real estate.' Sect. 126.

By sect. 127 it is provided that any disposition by will, or deed, or descent, by reason whereof any person shall become beneficially entitled in possession or expectancy to any real estate or any interest therein upon the death of any person, shall be deemed to confer a succession. The argument made upon this section by the plaintiff in error, that the will of Mason conveyed an estate to William P. Mason and Charles H. Parker, and that, although they were not entitled to immediate possession, they had a vested estate, and that the succession to such an estate was made taxable, we readily admit. We agree, further, that vested estates not only, but estates which are not vested,-those in expectancy merely,-are within the statute. Wimple v. Forda, 2 Johns. (N. Y.) Ch. 288. The admission, however, does not aid us in deciding the point before us, as the question of time still arises,-when is this vested estate taxable?

Sect. 133 enacts that the duties there provided for shall be as follows, viz.: Where the successor is a lineal descendant or a lineal ancestor, at the rate of one per cent upon the value; where the successor is a brother or sister, or a descendant of a brother or sister, at the rate of two per cent upon the value;. . . where the successor shall be a stranger in blood to the testator, at the rate of six per cent upon the value.

The next section provides, that it by reason of death the succession shall pass to another person before the first taker shall have become entitled to the possession, then one duty only shall be paid; and such duty shall be due from the successor first entitled to possession, and shal be at the highest rate which either successor would have been liable to pay.

Thus, in the case before us, if we may suppose that the testator devised his real estate to his wife during her life or her occupancy, and after her death or ceasing to occupy to his son William P. Mason, and to his nephew Charles Henry Parker, jointly, and in another contingency to one who bore no relationship to him, the rate of duty chargeable upon succession by the first-named person, if he stood alone, would be that of one per cent, and upon the succession of Parker, that of two per cent, upon the value. If before becoming entitled to the possession of the estate by either of the contingencies mentioned, the estate should pass to the stranger in blood to the testator, the succession would be chargeable with a duty at the rate of six per cent upon its value.

The statute contemplates the payment of one succession duty only upon the death of an owner of real estate, and it contemplates the exaction of the highest of the rates prescribed, which has become payable upon the principles stated, before the successor is entitled to enter into the enjoyment of the estate. It would be difficult to carry out this system in any other manner than by the provision that the succession should not be deemed taxable until such time as the successor should be entitled to its possession.

We find, therefore, as perfecting the plan, that sect. 137 prescribes that period as the time when the duty is to be paid.

'SECT. 137. And be it further enacted, that the duty imposed by this act shall be paid at the time when the successor, or any person in his right or his behalf, shall become entitled in possession to his succession, or to the receipt of the income or profits thereof.'

The act of 1864 contains no statement or intimation that this duty creates any lien upon the land, or that any obligation arises, or that any right accrues at a period earlier than that fixed for the payment of the duty. See sects. 133, 137.

By the statute of 1866 the duty becomes a lien on the succession 'from the time when such tax shall become due and payable.' 14 Stat. p. 140. By the same statute an assessment is to be made within thirty days from the time the party becomes entitled to the possession of the estate. Id. 140, 141.

It is manifest that the right does not accrue until the duty can be demanded, that is, when it is made payable; in other words, at the end of thirty days after becoming entitled to possession.

The provision of a subsequent section (sect. 144) in relation to estates in expectancy, that is, where the estate of the successor is not a vested one, is upon the same theory. In that case the commissioner of internal revenue is authorized to commute the duty presumptively payable for a sum certain to be presently paid, ascertaining the present value of such presumptive duty upon principles laid down. It is not certainly known in either class of cases who will be the party liable to pay the duty, upon what value it shall be paid, nor what will be its rate, until the arrival of the time of enjoyment.

In the case we are considering, the successor did not become entitled to the possession or enjoyment of the estate until the death of the widow, which occurred on the seventeenth day of June, 1872. The duty imposed extended only to successions accruing prior to Aug. 1, 1870. The saving clause, therefore, does not reach the case. May v. Slack, 16 Int. Rev. Rec. 134, is cited, but it has no bearing upon the question.

We are satisfied that the statute was correctly construed by the Circuit Court.

Judgment affirmed.

title: Clapp v. Mason/Opinion of the Court


text: Talk:Clapp v. Mason/Opinion of the Court


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Connecticut Mutual Life Insurance Company v. Schwenk

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

This action was upon a life policy, dated March 26, 1867, procured by Anthony A. McDonough from the Connecticut Mutual Life Insurance Company, in the name and for the sole use and benefit of his wife, Mary D. McDonough. In case she died before him, the amount of the insurance was payable to her children, for their use, or, if they were under age, to their guardians, ninety days after notice and proof of his death. He died on the twelfth day of April, 1869, and she on the sixteenth day of April, 1868, leaving two children by him, and two by a former husband, who, by their guardians, brought this suit.

The application for insurance was signed by Mary D. McDonough and Anthony A. McDonough, at Reading, March 25, 1867. To the question, 'Place and date of birth of person whose life is proposed to be insured,-giving month and day?' the following answer was given: 'Ireland, Aug. 11, 1805.' 'Age next birthday?' 'Sixty-two.'

The declaration contains the common counts in assumpsit, setting forth the policy, the application, interrogatories, and answers. The defendant filed fifteen pleas. The first two put in issue the execution of the policy and alleged performance; the third, that the said Anthony A. McDonough was not born in the year 1805. The remaining pleas set up misrepresentations and false allegations in the application as to the health and habits of the insured. The pleas were traversed by replications.

At the trial, the plaintiffs put in evidence the policy, proofs of death, and, by request of defendant's counsel, the application for insurance, and then called Adam Schwenk, who swore that, within sixty days after the death of said Anthony, he gave all the proofs of it to Tilden, the agent of the company, who did not object to any matter of form.

The defendant having asked for a nonsuit on the ground that the affidavit of one Nolan, furnished with the proofs of death, showed that the deceased was between sixty-six and seventy years of age at the time of his death, the court, notwithstanding the objection of the defendant, that it had not prior to the trial received notice that such evidence would be offered, permitted the plaintiffs to call Nolan as a witness. He testified, in substance, that he had no positive knowledge of the age of the deceased, but that the age fixed by him in his affidavit was a mere impression, founded upon the appearance of the deceased. To the admission of this evidence the defendant excepted.

In the course of the trial, the defendant, in order to prove that the age of the deceased was different from that stated in his application, offered in evidence a certain entry or statement, dated Sept. 6, 1845, contained in the minute-book of Bernville Lodge of Odd Fellows, of which deceased was a member, and at one time secretary. The court refused to admit the evidence, and the defendant duly excepted. The jury found all the issues in favor of the plaintiffs, and, a judgment having been rendered in their favor, the defendant sued out this writ of error.

Mr. Michael Arnold for the plaintiff in error.

The court declined hearing counsel for the defendants in error.

MR. JUSTICE STRONG delivered the opinion of the court.


text: Talk:Connecticut Mutual Life Insurance Company v. Schwenk