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Dickerson v. Colgrove/Opinion of the Court

This is an action of ejectment brought by Dickerson and Wheeler. The latter died during the progress of the suit. The parties agreed in writing to submit the case to the court without the intervention of a jury. The court found the facts. So far as it is necessary to state them, they may be thus summarized: Micajah Chauncey owned the land in controversy. He died on the ___ day of February, 1853, leaving two children, Edmund Chauncey and Sarah Kline. They were his only heirs-at-law. He is the common source of title of all the parties in this litigation. On the 3d of March, 1853, John Kline and Sarah his wife conveyed by warranty deed the entire premises to Lowell Morton. The deed was duly recorded on the 6th of March, 1854, and on the 1st of April, 1854, Lowell Morton entered into possession of the premises. He and the defendants have ever since been in actual possession, claiming to own and hold the property as tenants in common. The latter were in possession at the commencement of this suit, claiming title through conveyances from Lowell Morton. Prior to the 1st of April, 1856, Lowell Morton learned that Edmund Chauncey was one of the children of Micajah Chauncey, and that he lived in California. Whereupon Lowell Morton procured Eleazer Morton to write to Edmund Chauncey to learn whether he made any claim to the premises. On the 1st of April, 1856, Edmund Chauncey, still living in California, addressed a letter to his sister, Sarah Kline, then living in Michigan, wherein he disavowed, in strong terms, the intention ever to assert such a claim.

The contents of this letter subsequently came to the knowledge of Lowell Morton, who thereafter conveyed to the defendants by warranty deeds. Under these deeds they have since held and claimed title, and have occupied and improved the property. On the 9th of July, 1865, Edmund Chauncey conveyed the undivided half of the premises, by quitclaim deed, to Orlando B. Dickerson and James Witherell. On the 1st of May, 1868, Witherell conveyed all his right, title, and interest to William W. Wheeler, one of the original plaintiffs. The suit was instituted on the 6th of March, 1873. Lowell Morton and the defendants had then been in possession eighteen years and eleven months. The court below held as conclusions of law that the action was barred by the Statute of Limitations of Michigan of 1863, and by an estoppel in pais, and gave judgment accordingly. The plaintiff thereupon sued out this writ of error.

Both the conclusions of law are relied upon as errors for the reversal of the judgment. Our remarks will be confined to the point of estoppel.

This defence is founded upon the letter of Edmund Chauncey. The contents of the letter of Morton, to which it refers, are not given in the finding of facts, but the subject of that letter and the inquiry which it made appear clearly in the letter of Chauncey. He said: 'Mr. Morton wrote me a letter. He wanted to know if I intended to claim any of the Conger farm' (meaning the premises in controversy). 'You can tell Mr. Morton for me, he need not fear any thing from me. Thank God, I am well off here, and you can claim all there. This letter will be enough for him. I intended to give you and yours all my property there, and more if you need it.' The phrase, 'I intended to give,' &c., implies that he knew his half of the farm had already been sold to Morton, and that he could not, therefore, give his sister, to whom the letter was addressed, any part of that property. It does not appear that there was any other property held by them as coparceners. He says further, that he intended to give her more if she needed it. All this was communicated to Lowell Morton. What was the effect upon him? He was lulled into security. He took no measures to perfect his title, nor to procure any redress from the Klines, who had conveyed and been paid for the whole of the property while they owned but the half. On the contrary, he gave thereafter deeds of warranty to all the defendants,-who are sixty-two in number,-and he and they occupied and improved the premises down to the commencement of this suit. Between that time and the date of the letter was a period of nearly seventeen years. What improvements were made and how far the property had risen in value are not disclosed, nor does it appear what stimulated Chauncey to violate his promise and commence this attack on the defendants.

The estoppel here relied upon is known as an equitable estoppel, or estoppel in pais. The law upon the subject is well settled. The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbiddden. It involves fraud and falsehood, and the law abhors both. This remedy is always so applied as to promote the ends of justice. It is available only for protection, and cannot be used as a weapon of assault. It accomplishes that which ought to be done between man and man, and is not permitted to go beyond this limit. It is akin to the principle involved in the limitation of actions, and does its work of justice and repose where the statute cannot be invoked. Here, according to the finding of the court, the time of adverse possession lacked but a year and a month of being twenty years,-when, it is conceded the statutory bar would have been complete.

In Faxton v. Faxon (28 Mich. 159), a mortgagee holding several mortgages prevailed on a son of the deceased mortgagor, then intending to remove to a distance, to remain on the premises and support the family, by assuring him that the mortgages should never be enforced. The son supported the family, and the property grew in value under his tillage. After the lapse of several years the mortgagee proceeded to foreclose. He was held to be estopped by his assurances upon which the son had acted. The court said: 'The complainant may have estopped himself without any positive agreement, if he intentionally led the defendants to do or abstain from doing any thing involving labor or expenditure to any considerable amount, by giving them to understand they should be relieved from the burden of the mortgages. In Harkness v. Toulmin (25 id. 80) and Truesdale v. Ward (24 id. 117) this principle was applied, in the former case, to the extent of destroying a chattel mortgage, and in the latter, of forfeiting rights under a land contract, where parties were led to believe they were abandoned. There is no rule more necessary to enforce good faith than that which compels a person to abstain from asserting claims which he has induced others to suppose he would not rely on. The rule does not rest on the assumption that he has obtained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be seriously prejudiced if he is allowed to fail in carrying out what he has encouraged them to expect.' Cooley, J., was inclined to doubt the sufficiency of the proof, but said, finally: 'His' (the mortgagee's) 'assurances have undoubtedly been relied upon and acted upon by the defendants, and, considering the great lapse of time without any claim under the mortgages on the part of the complainant, I am not disposed to dissent from the conclusion of my brethren.' The case before us arose also in Michigan. In Evans et al. v. Snyder et al. (64 Mo. 516), the heirs assailed an administrator's sale. No order of sale could be found. This was held to be a fatal defect. But the Supreme Court of the State held that where they stood silently by for years, while the occupant was making valuable and lasting improvements on the property, and redeeming it from the lien of the ancestor's debts, they would be estopped from afterwards asserting their claim. Here, as by Judge Cooley, stress is laid upon the lapse of time. This is also a feature of the case in hand.

Other authorities to the same effect are very numerous. They may be readily found. It is unnecessary to extend this opinion by referring to them.

We think the facts disclosed in the record make a complete case of estoppel in pais.

But it is said this objection to the plaintiff's claim is not available at law, and must be set up in equity.

'This is certainly not the common law. Littleton says: 'And so a man can see one thing in this case, that a man shall be estopped by matter of fact, though there be no writing, by deed or otherwise.' Lord Coke, commenting hereon, gives an instance of estoppel by matter in fact,-this very case of partition. Co. Litt. 356, sect. 667. And such an award has been held sufficient to estop a party against whom ejectment was brought. Doe d. Morris et al. v. Rosser, 3 East, 15.' Brown v. Wheeler, 17 Conn. 345, 353.

In City of Cincinnati v. Lessee of White (6 Pet. 431), the proprietors of the city plat, in 1789, dedicated the ground between Front Street and the Ohio River to the public for commercial and other purposes. The legal title had not then emanated from the government of the United States. In this state of things the Statute of Limitations does not run. White long subsequently acquired the legal title and brought ejectment for the premises. This court said (p. 441): 'This is a possessory action, and the plaintiff, to entitle himself to recover, must have the right of possession; and whatever takes away this right of possession will deprive him of the remedy by ejectment. Adams, Eject. 32; Starkie, part 4, 505-507.' This is the rule laid down by Lord Mansfield, in Atkyns v. Hoarde, 1 Burr. 119. 'Ejectment,' says he, 'is a possessory remedy, and only competent where the lessor of the plaintiff may enter, and every plaintiff in ejectment must show a right of possession as well as of property.' If the plaintiff in the present case was not entitled to possession, how, according to this authority, could he recover? If he had recovered, and a court of equity would have enjoined him from executing the judgment by a writ of possession, we ask, again, how could he recover in this action? Is not the concession that relief could be had in equity fatal to the proposition we are considering? In Stoddard v. Chambers (2 How. 284), it was said by this court: 'On a title by estoppel, an action of ejectment can be maintained.' We do not overlook the fact that a land-claim had been conveyed before it was confirmed by an act of Congress to the assignor and his legal representatives. It was held that on such confirmation the legal title became vested in the former, 'and inured, by way of estoppel, to his grantee and those who claimed by deed under him.' In that case, as in this, there was no formal transfer of the title. The transfer was made, as under a statute of limitations, when the bar is complete, by operation of law. Leffingwell v. Warren, 2 Black, 599. Why may not a like transfer be held to have been made in this case? The reason given for the rule of inurement and estoppel by virtue of conveyances is, that it avoids circuity of action. Does not the same consideration apply, with equal force, in cases of estoppel in pais? Why is it necessary to go into equity in one case and not in the other?

It has never been held that the Statute of Frauds applies to cases of inurement, and it has been conceded that it does not affect cases of dedication. Where is the difference in principle in this respect between those cases and the one before us? But here this point cannot arise, because the promise relied upon was in writing. In City of Cincinnati v. Lessee of White (supra), this court, speaking of the dedication there in question, said, 'The law considers it in the nature of an estoppel in pais, which precludes the original owner from revoking such dedication,' and that a grant might have been presumed, 'if that had been necessary, and the fee might be considered in abeyance until a competent grantee appeared to receive it; which was as early as the year 1802, when the city was incorporated.' Here there was a grantee capable of taking the fee all the time from the date of the letter. The common law is reason dealing by the light of experience with human affairs. One of its merits is that it has the capacity to reach the ends of justice by the shortest paths.

The passage of a title by inurement and estoppel is its work without the help of legislation. We think no sound reason can be given why the same thing should not follow in cases of estoppel in pais where land is concerned.

This subject has been carefully examined in Bigelow on Estoppel, pp. 533, 537. The learned author comes to no final conclusion whether in cases like this the defence may be made at law, or whether a resort to equity is necessary. The former is our view. Whether the title passed or not, the fact that the plaintiff was not entitled to possession of the premises was fatal to the action.

Chauncey conveyed to the plaintiff in error by deed of quitclaim. He is not, therefore, a bona fide purchaser. Piatt v. Oliver, 3 How. 333; May v. Le Claire, 11 Wall. 217. Morton and the defendants were in possession. For both these reasons, he took whatever title he acquired subject to all the rights, legal and equitable, of Morton and of the defendants, who deraigned their titles from the latter.

Judgment affirmed.


text: Talk:Dickerson v. Colgrove/Opinion of the Court

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United States Code/Title 42/Chapter 85/Section 7428

§ 7428. State boards CAA § 128

(a) Not later than the date one year after August 7, 1977, each applicable implementation plan shall contain requirements that—
 * (1) any board or body which approves permits or enforcement orders under this chapter shall have at least a majority of members who represent the public interest and do not derive any significant portion of their income from persons subject to permits or enforcement orders under this chapter, and
 * (2) any potential conflicts of interest by members of such board or body or the head of an executive agency with similar powers be adequately disclosed.

A State may adopt any requirements respecting conflicts of interest for such boards or bodies or heads of executive agencies, or any other entities which are more stringent than the requirements of paragraph (1) and (2), and the Administrator shall approve any such more stringent requirements submitted as part of an implementation plan.


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County of Cass v. Gillett

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

This action was brought against the county of Cass, Missouri, on certain interest coupons or warrants detached from bonds purporting to be issued by the county court of that county. The following is a copy of one of the bonds and of a coupon thereto annexed:--

'UNITED STATES OF AMERICA.

'$1,000.]

[County Bond No. 66 'COUNTY OF CASS, STATE OF MISSOURI.

'Interest ten per cent per annum, payable on the first days of August and February, in New York.

'Know all men by these presents, that the county of Cass, in the State of Missouri, acknowledges itself indebted and firmly bound to the Tebo and Neosho Railroad Company, to the use and benefit and in the name of the Clinton and Kansas City Branch of the Tebo and Neosho Railroad, in the sum of $1,000, which sum the said county, for value received, hereby promises to pay to the Tebo and Neosho Railroad Company, or bearer, to aid in building the said branch railroad, at the National Park Bank, in the city of New York, in the State of New York, on the first day of February, A.D. 1891, redeemable, however, at the option of the county court of said county at any time after the lapse of five years after the date hereof, together with interest thereon from the first day of February, 1871, until paid, at the rate of ten per centum per annum, which interest shall be payable semi-annually, on the first days of August and February of each year, on presentation and delivery at said bank of the coupons of interest hereto severally attached. This bond is issued under and in pursuance of an order of the county court of the county of Cass, in the State of Missouri, and in pursuance of and by authority of an act of the General Assembly of the State of Missouri, entitled 'An Act to incorporate the Tebo and Neosho Railroad Company,' approved Jan. 16, 1860, and of an act of the General Assembly of the State of Missouri, entitled 'An Act to aid in the building of branch railroads in the State of Missouri,' approved March 21, A.D. 1868. In testimony whereof, the said county of Cass has executed this bond, by the presiding justice of the county court of Cass County, under the order of said court, signing his name hereto, and by the clerk of said court, under the order thereof, attesting the same and affixing the seal of said court, at the town of Harrisonville, county of Cass, aforesaid, this first day of February, A.D. 1871.

'JEHIEL C. STEVENSON,

'Presiding Justice of the County Court of Cass County, Missouri.

'Attest:

[SEAL OF CASS COUNTY COURT.]

'C. H. DORE,

'Clerk of the County Court of Cass County, Missouri.

'$50.] Harrisonville, Cass County, Missouri, Feb. 1, 1871. [$50.

'The County of Cass acknowledges itself to owe and promises to pay to the bearer fifty dollars, on the first day of August, 1873, at the National Park Bank, in the city and State of New York, being semi-annual interest on bond No. 66.

'C. H. DORE,

'Clerk of Cass County Court, Missouri.'

The Tebo and Neosho Railroad Company mentioned in the bond was incorporated Jan. 16, 1860, by an act of the General Assembly of Missouri (Acts of Mo., 1860, p. 402), the eighth section of which reads as follows: 'The 8th, 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, and 22d sections of an act entitled 'An Act to incorporate the Osage Valley and Southern Kansas Railroad Company, approved Nov. 21, 1857,' are hereby re-enacted, and declared to be applicable to the company hereby incorporated; and all powers therein contained are extended to the Missouri, Tebo, and Neosho Railroad Company.' The charter of said Osage Valley, &c., Railroad Company is set forth in the acts of that State for 1857, p. 50, and its fourteenth section provides that 'it shall be lawful for the county court of any county in which any part of the route of said railroad or its branches may be, or any county adjacent thereto, to subscribe to the stock of the company; and, for the stock subscribed in behalf of the county, may issue the bonds of the county to raise the funds to pay the same.' The act of incorporation authorizes the company to construct a road between certain points, and 'to extend branch railroads into and through any counties that the directors may deem advisable.'

The fourteenth section of the eleventh article of the Constitution of Missouri, adopted in 1865, declares that 'the General Assembly shall not authorize any county, city, or town to become a stockholder in, or to loan its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent thereto.'

The act of March 21, 1868, recited in said bonds in connection with the act of Jan. 16, 1860, as the authority for issuing them, is set forth in the case of County of Henry v. Nicolay, 95 U.S. 619.

Proceeding under its charter and the provisions of the branch railroad act, the directory of the Tebo and Neosho Railroad Company adopted, on the 6th of June, 1870, a resolution establishing a branch, to be known as the 'Clinton and Kansas City Branch,' designating its point of intersection with the main line and its general course. A copy of it was filed with the Secretary of State. At the same time, a committee was appointed to take charge of the construction of the branch, and authorized to solicit subscriptions in the name of the company to the use of the branch.

On the 11th of October, 1870, the Tebo and Neosho Railroad Company entered into a contract with the Missouri, Kansas, and Texas Railway Company, organized and doing business under the laws of the State of Kansas, by the terms of which the former company sells and conveys to the latter 'all its privileges, rights, powers, franchises, real estate, and other property, the whole or a part of which is in this State, excepting only such as belong to the extension of the Tebo and Neosho line, north from Sedalia via Boonville,' &c., 'and doth consent to a merger of the same with the franchises, property, and rights of said party of the second part; and the said Missouri, Kansas, and Texas Railway Company, party of the second part, shall have, exercise, and enjoy all the rights, powers, privileges, and immunities of the original charter of the Tebo and Neosho Railroad Company, and of the several amendments thereto, in the same manner and to the same extent as has heretofore been exercised and enjoyed by the said party of the first part, or by the several shareholders in said company, whose stock shall be exchanged as herein provided, either or both; and the said party of the second part does hereby accept the terms and conditions of the within instrument.' The contract was filed and recorded in the office of the Secretary of State on the 4th of January, 1871.

On the 28th of February, 1871, upon the application of the committee appointed by the resolution of June 6, 1870, the county court of Cass County, by an order of record, subscribed for 'three thousand shares of the capital stock of the Tebo and Neosho Railroad Company (now in part the Missouri, Kansas, and Texas Railway Company), in the name of and for the use and benefit of the Clinton and Kansas City Branch of the Tebo and Neosho Railroad, and to aid in the construction thereof, each share being of the denomination of $100, and amounting in the aggregate to the sum of $300,000,' &c.

The remaining facts are set forth in the opinion of the court. The case was tried by the court, which made a special finding of the facts. A judgment was rendered for the plaintiff below, and the county then sued out this writ.

The following are the errors assigned:--

1. The charter of the Tebo and Neosho Railroad Company did not authorize the county court of Cass County to issue the bonds in question, in the absence of the assent of two-thirds of the qualified voters of said county, and the court below erred in holding that such power existed.

2. The act of the Missouri legislature of Jan. 14, 1860, required as a condition precedent to the subscribing of stock to a railroad company, and the issue of bonds to pay therefor, that an election should be held in the county to test the sense of the tax-payers of the county, on the question of making the subscription and issuing the bonds, and the court erred in holding otherwise.

3. Said company, at the time of the subscription by Cass County to the stock of the branch road, had sold all its interest in and control over the alleged branch road, and had no authority to receive subscriptions of stock for such branch road, or to contract for the issue of bonds on account of such subscription, nor could the branch road receive such subscriptions or make such contract; and the court erred in holding otherwise.

4. The county court had no authority to issue the bonds in question, because, by the judgment of a court of competent jurisdiction, they have been restrained from issuing said bonds; and the court below erred in holding otherwise.

5. It does not appear from the finding of the facts by the court that the county court of Cass County made any valid contract with said company, or any other person or company, for the issue of stock to said county, nor that there was, in fact, any valid subscription by said county court to the stock of any company; and the court therefore erred in rendering judgment for the plaintiff below, on the special finding of facts.

The case was argued by Mr. James O. Broadhead for the plaintiff in error, and by Mr. Thomas K. Skinker for the defendant in error.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: County of Cass v. Gillett


text: Talk:County of Cass v. Gillett

title: Talk:County of Cass v. Gillett


text:
County of Cass v. Gillett/Opinion of the Court

This case is almost precisely similar to that of County of Henry v. Nicolay (95 U.S. 619), the authority for issuing the bonds being claimed under the same charter (that of the Tebo and Neosho Railroad Company), and being pursued under the same general act of March 21, 1868, as in that case; and the same defence (amongst others) being set up, to wit, that the subscription to the capital stock of the company was made and the bonds were issued by the act of the county court alone, without a vote of the people, as required by the Constitution of 1865. This is the ground relied on in the first assignment of error.

The only material difference between the present case and that of Henry County, in reference to the point in question, arises from the circumstance that in this case the order of the county court for making the subscription was not adopted until after the assignment by the Tebo and Neosho Railroad Company of a portion of its franchises to the Missouri, Kansas, and Texas Railway Company; whilst in the Henry County case the order for a subscription was prior in date to the said assignment. But we do not regard this difference as material. In both cases, the branch railroad was authorized to be constructed by a resolution of the board of directors of the Tebo and Neosho Railroad Company before the assignment, and a committee was appointed to take charge of its construction and solicit subscriptions therefor; and in both cases the bonds of the county were issued after the said assignment. The authority of the Tebo and Neosho Railroad Company to establish independent branches under its charter, and pursuant to the provisions of the act of March 21, 1868, entitled 'An Act to aid in the building of branch railroads in the State of Missouri,' was considered in the Henry County case, and need not be again discussed. The resolution for establishing the branch road, to aid which the bonds now in question were given, was adopted on the 6th of June, 1870, and was as follows:--

'Resolved, by the board of directors of the Tebo and Neosho Railroad Company, that it is the desire of this company to build a branch railroad from a point on the main line of the road of said company, at or near the town of Clinton, Henry County, northwestwardly in the general direction of Kansas City, to a point either on the Pacific Railroad easterly of said city, or to a point at said city on the line of road lately known as the Cameron and Kansas City Railroad, said branch railroad to be designated and known as the Clinton and Kansas City Branch of the Tebo and Neosho Railroad, and that the same is designated and established under the provisions of the charter of this company and the act of the General Assembly of Missouri, entitled 'An Act to aid in the building of branch railroads in the State of Missouri,' approved,' &c.

The findings also show that the Tebo and Neosho Railroad Company authorized a committee to take charge of the construction of said branch road, and to use the name of the company, and to solicit subscriptions in its name to the use of said branch. As far, therefore, as depended upon the Tebo and Neosho Railroad Company proper, its powers were exerted, before the assignment of its franchises, in the establishment and organization of the branch road. The branch being thus organized and set in operation, became invested with the powers and privileges conferred by the charter of the company, to enable it to lay out and construct its road, and to procure the requisite means of accomplishing these objects; and the counties through which it was located thereupon became authorized to subscribe stock in aid of its construction. These powers, having thus been brought into existence, were not extinguished by the subsequent partial assignment of its franchises by the parent company to the Missouri, Kansas, and Texas Railway Company. Whether the application to the county for aid was made before or after said assignment could make no difference. As stated in the Henry County case, the Tebo and Neosho Railroad Company still continued in existence, invested with a large portion of its franchises.

The county of Cass thus having the power to subscribe capital stock in aid of the branch road, the county court, on application made to it for that purpose, on the 28th of February, 1871, did order and adjudge 'that the county of Cass do subscribe for and agree to take three thousand shares of the capital stock of the Tebo and Neosho Railroad Company (now in part the Missouri, Kansas, and Texas Railway Company), in the name of and for the use and benefit of the Clinton and Kansas City Branch of the Tebo and Neosho Railroad, and to aid in the construction thereof, each share being of the denomination of $100, and amounting in the aggregate to the sum of $300,000, under and by virtue of the authority in the charter of the Tebo and Neosho Railroad Company contained, and under the act of the General Assembly of the State of Missouri, entitled 'An Act to aid the building of branch railroads in the State of Missouri,' approved March 21, 1868, and in accordance with the resolutions and orders of the board of directors of said Tebo and Neosho Railroad Company establishing said branch railroad and authorizing subscriptions to said capital stock to aid in the construction thereof, adopted on the sixth day of June, 1870; the said stock to be paid for by the issue and delivery to the committee appointed to construct said branch railroad, or to their successors in office, of the coupon bonds of the county of Cass of the denomination of $1,000 each, bearing date the first day of February, 1871, with interest at the rate of ten per cent per annum, payable semi-annually,' &c.

The order then prescribed certain conditions as to the time and circumstances under which the bonds were to be delivered, which are not relevant to the point under consideration.

In pursuance of this order, the bonds were signed by the officers of the county, and were issued in August, 1871; and the court finds that the plaintiff is an innocent holder for value of the coupons sued on.

We think that the case is entirely within the decision in County of Henry v. Nicolay (supra), and that the constitutional provision does not apply to it.

But the defendant, in its second assignment of error, relies on the act of the Missouri legislature passed Jan. 14, 1860, which required as a condition precedent to the subscription of stock to a railroad company, and the issue of bonds to pay therefor, that an election should be held in the county to test the sense of the tax-payers on the question of subscription.

The same objection was raised in County of Schuyler v. Thomas (98 U.S. 169), and we overruled it on the authority of Smith v. The County of Clark, 54 Mo. 58. We see no reason to change that opinion. The act of 1860 was an amendment to the general railroad law, and is held not to apply to companies having special charters, in which special power is given to counties and townships to subscribe stock in aid thereof.

The third assignment of error relates to the supposed effect of the assignment by the Tebo and Neosho Railroad Company of its franchises to the Missouri, Kansas, and Texas Railway Company, which has already been sufficiently discussed.

The fourth assignment is based on the fact that the bonds were issued pending and in violation of an injunction of the Circuit Court of the county of Cass, directed to the justices of the county court; and it is argued that this was notice to all the world of the objections to the regularity and validity of the bonds. It seems that the bonds were in the keeping of the National Park Bank of the city of New York, which was not made a party to the injunction suit. It also appears by certain proceedings of the county court of Cass County, had on the twenty-fifth day of September, 1871, and set forth in the findings of fact, that the bonds were delivered to the construction committee of the branch railroad; but under what circumstances they were delivered is not shown. The coupons subsequently came into the hands of the plaintiff as an innocent purchaser for value. The question of lis pendens as applicable to negotiable securities was fully considered by us in the case of County of Warren v. Marcy (97 U.S. 107), and we there held that a bona fide purchaser before maturity is not affected with constructive notice of a suit respecting such paper. That decision applies to the present case, and the objection cannot prevail to invalidate the plaintiff's title.

To the fifth and last assignment of error it may be answered, that it does appear that the county court on behalf of the county made an order to subscribe to the capital stock of the Tebo and Neosho Railroad Company for the use of the Clinton and Kansas City branch; that it dealt with the construction committee of the branch road, and that the bonds in question were issued to the said committee in payment of said stock. That this was a transaction which entitled the county to the amount of stock subscribed cannot be doubted. An actual manual subscription on the books of the company was not necessary to entitle the county to the stock, or to bind it as a subscriber thereto. In County of Moultrie v. Rockingham Ten Cent Savings Bank (92 U.S. 631), where the board of supervisors of the county ordered that a subscription to the stock of a railroad company be made by the county, and that bonds should be issued in payment thereof; and the order was recorded in the minutes of the board, and bonds were actually issued to the railroad company in pursuance thereof, though no subscription to the stock was actually made on the books of the company,-we held that, whether the action of the board was in substance and legal effect a subscription, or only an undertaking to subscribe, accepted by the company, a valid contract existed between the county and the company. The committee of construction in the present case represented the branch railroad as a separate interest from that of the parent company, and the acts of the committee were, as to the branch, the acts of the company which the latter could not control or gainsay. The stock subscribed, or agreed to be subscribed, for the use of the branch, was separate stock, not under the control of the parent company, but under the control of the committee. As the dealings of the county court were with the committee, though the name of the company was used, the transaction was complete without any confirmatory action of the company, and the county was entitled to its stock whether certificates therefor were actually issued or not. We think that this assignment of error cannot be sustained.

Judgment affirmed.

MR. JUSTICE HARLAN dissented.


text: Talk:County of Cass v. Gillett/Opinion of the Court


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Railroad Company v. Collector (100 U.S. 595)

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

This is a suit by the Michigan Central Railroad Company against Charles W. Slack, collector of internal revenue for the third collection district of Massachusetts, to recover a tax or duty of $860.33, paid to him, under protest, on the twenty-eighth day of February, 1870; which tax was assessed on or about the 19th of that month on sterling bond interest paid by said company in London in gold, in the previous month of January, by cashing certain coupons which then fell due.

The coupons were attached to certain sterling bonds issued by said company, to the amount of 95,700, and negotiated by their agents in London in 1852, or early in 1853. The bonds were due in July, 1872, and paid at maturity, in gold, in London.

So far as the company know, not one of them was ever held by any person in the United States, or by other than non-resident aliens, and the interest accruing was regularly paid in gold in full in London, without rebate or reservation of the United States internal-revenue tax.

Appeal was duly made to the Commissioner of Internal Revenue before this suit was brought.

The court below found for the defendant, whereupon the company brought the case here, and assigns for error that the court below erred in finding that Congress had power to impose the tax in controversy, and that, upon the facts, judgment must be for the defendant.

Mr. Francis W. Palfrey for the plaintiff in error.

It is a conceded proposition that the United States has not the power to tax non-resident aliens directly. As persons, they are not liable to our taxation. But it is alleged that their property was within our jurisdiction, and therefore taxable. The reply to this proposition is:--

1. That it is settled law in this court that the internal-revenue taxation on coupon interest is a tax on income, and so a tax on persons.

2. That the money set apart by the railroad company to pay the coupon interest due to its non-resident alien bondholders was not taxable property within the jurisdiction of the United States.

In support of the first proposition, it can hardly be necessary to do more than to cite Haight v. Railroad Company, 6 Wall. 15; Railroad Company v. Jackson, 7 id. 262, 269; Barnes v. The Railroads, 17 id. 294; United States v. Railroad Company, id. 322; Stockdale v. Insurance Companies, 20 id. 323, 330, 337; Railroad Company v. Rose, 95 U.S. 78.

And in support of the second: State Tax on Foreign-held Bonds, 15 Wall. 300, 324, 325; Murray v. Charleston, 96 U.S. 432; Caruthers v. Humphrey, 12 Mich. 270; Van Husan v. Kanouse, 13 id. 303; Union Bank v. The State, 9 Yerg. (Tenn.) 490; Oliver v. Washington Mills, 11 Allen (Mass.), 268, 273.

The Solicitor-General, contra.

MR. JUSTICE MILLER delivered the opinion of the court.


text: Talk:Railroad Company v. Collector (100 U.S. 595)


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Railroad Company v. Collector (100 U.S. 595)/Opinion of the Court

As the sum involved in this suit is small, and the law under which the tax in question was collected has long since been repealed, the case is of little consequence as regards any principle involved in it as a rule of future action.

The tax was assessed under sect. 122 of the internal-revenue law, as amended by the act of 1866. What is pertinent to this case reads as follows:--

'Any railroad, canal, turnpike, canal-navigation, or slack-water company, indebted for any money for which bonds or other evidence of indebtedness have been issued, payable in one or more years after date, upon which interest is stipulated to be paid, or coupons representing the interest, or any such company that may have declared any dividend in scrip, or money due or payable to its stockholders, including non-residents, whether citizens or aliens, as part of the earnings, profits, income, or gains of such compnay, and all profits of such company carried to the account of any fund, or used for construction, shall be subject to and pay a tax of five per centum on the amount of all such interest or coupons, dividends or profits, whenever and wherever the same shall be payable, and to whatsoever party or person the same may be payable, including non-residents, whether citizens or aliens; and said companies are hereby authorized to deduct and withhold from all payments on account of any interest, or coupons, and dividends due and payable, as aforesaid, the tax of five per centum; and the payment of the amount of said tax so deducted from the interest, or coupons, or dividends, and certified by the president or treasurer of said company, shall discharge said company from that amount of the dividend or interest, or coupon on the bonds, or other evidences of their indebtedness so held by any person or party whatever, except where said companies have contracted otherwise.' 14 Stat. 138.

The agreed statement on which the case was tried shows that the tax was for interest paid by the company on sterling bonds in London, which bonds were issued long before the internal-revenue law was enacted, and it is perhaps fairly to be inferred from the statement that the bonds were held at the time by foreigners.

It is on this latter feature of the case that resistance to the tax is founded. It is urged that it is a tax on the property if property it may be called-of persons not subject to the jurisdiction of this government, and therefore beyond the power of Congress to levy or enforce.

That the tax was actually collected without resistence, and the present suit is brought to recover it back, is sufficient answer to the assertion that it could not be enforced.

Whether Congress, having the power to enforce the law, has the authority to levy such a tax on the interest due by a citizen of the United States to one who is not domiciled within our limits, and who owes the government no allegiance, is a question which we do not think necessary to the decision of this case.

The tax, in our opinion, is essentially an excise on the business of the class of corporations mentioned in the statute. The section is a part of the system of taxing incomes, earnings, and profits adopted during the late war, and abandoned as soon after that war was ended as it could be done safely. The corporations mentioned in this section are those engaged in furnishing road-ways and water-ways for the transportation of persons and property, and the manifest purpose of the law was to levy the tax on the net earnings of such companies. How were these 'earnings, profits, incomes, or gains' to be most certainly ascertained? In every well-conducted corporation of this character these profits were disposed of in one of four methods; namely, distributed to its stockholders as dividends, used in construction of its roads or canals, paid out for interest on its funded debts, or carried to a reserve or other fund remaining in its hands. Looking to these modes of distribution as the surest evidence of the earnings which Congress intended to tax, and as less liable to evasion than any other, the tax is imposed upon all of them. The books and records of the company are thus made evidence of the profits they have made, and the corporation itself is made responsible for the payment of the tax.

Manifestly such a mode of ascertaining the net earnings of the company would not be complete unless the sums paid as interest on their bonded debts were taken into the account.

Of course it was competent for Congress to tax only the earnings after deducting this interest paid on their debt, or to treat the sum so paid as part of the net earnings, and paid out of them as dividends were. It adopted the latter policy.

It results from this course of observation that the tax was not laid on the bondholder who received the interest, but on the earnings of the corporation which paid the interest.

It is very true that the act went further, and declared that, except when the company had contracted otherwise, it might deduct this tax from the amount due the bondholders. And where the bondholder was subject to congressional legislation, by reason of citizenship, residence, or situs of the property taxed, it was within the lawful power of Congress to do so. Whether, as a question of international law, this declaration would relieve the corporation from the obligation to pay its foreign bondholder the full sum for which it contracted, we need not discuss; for this court, on all such subjects, is bound by the legislative and political departments of its own government. The tax is laid by Congress on the net earnings, which are the results of the business of the corporation, on which Congress had clearly a right to lay it; and being lawfully assessed and paid, it cannot be recovered back by reason of any inefficiency or ethical objection to the remedy over against the bondholder.

Judgment affirmed.


text: Talk:Railroad Company v. Collector (100 U.S. 595)/Opinion of the Court


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Jones v. Blackwell

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

This action was brought by Blackwell against Stockdale, collector of internal revenue for the first collection district of Louisiana, and, on his death, revived against Jones, his executrix.

Judgmeht having been rendered against her, she sued out this writ of error.

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

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

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

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Jones v. Blackwell


text: Talk:Jones v. Blackwell

title: Talk:Jones v. Blackwell


text:
Jones v. Blackwell/Opinion of the Court

The tobacco described in the petition was shipped by Blackwell, the plaintiff below, in bond, from the manufactory in Virginia to the port of New Orleans, and was there entered in bond in an export bonded warehouse on June 13, 1872. On the 1st of July next thereafter he, by his agents, applied to the collector of internal revenue for the first collection district of Louisiana, including the city of New Orleans, to withdraw the tobacco for sale or consumption, offering to pay a tax on the same at the rate of twenty cents per pound, as prescribed in the act of June 6, 1872. 17 Stat. 249. The collector refused to permit its withdrawal unless a tax at the rate of thirty-two cents per pound was first paid, as prescribed by the act of July 20, 1868. 15 id. 152.

Upon the trial in the court below the jury were instructed, among other things, that, on and after July 1, 1872, and prior to March 3, 1873, the only tax imposed by law upon manufactured tobacco was twenty cents per pound. The principal question before us is as to the correctness of that instruction.

By the first section of the act of July 20, 1868, a tax of thirty-two cents per pound was imposed upon all manufactured tobacco. The same act provided for a system of export bonded warehouses, to be designated and established by the Commissioner of Internal Revenue, at any port of entry in the United States, 'for the storage of manufactured tobacco and snuff in bond intended for exportation.' Manufactured tobacco, after being removed in bond from the manufactory to an export bonded warehouse, could, however, be withdrawn, upon payment of tax, for sale or consumption.

Up to Nov. 21, 1871, on which day the Commissioner submitted his annual report of the operations of the internal-revenue system for the fiscal year ended June 30, 1871, there had been established and were in operation sixteen of such export bonded warehouses. They were located in Massachusetts, New York, Pennsylvania, Maryland, Virginia, Louisiana, California, and Oregon. From the report of the Commissioner, of which we may take judicial notice, it appears that during that fiscal year 10,621,183 pounds were withdrawn for exportation from the several export bonded warehouses, while the quantity withdrawn from them for consumption during the same period was 11,499,659 pounds, showing that less than one-half of the tobacco and snuff received in bond from the manufactory was actually exported. The Commissioner stated that from the eight bonded warehouses, established at the several ports of Philadelphia, Baltimore, New Orleans, San Francisco, and Portland, Oregon, in which were stored during the fiscal year ended June 30, 1871, 9,437,257 pounds of manufactured tobacco, only 437,495 pounds during that period were withdrawn for exportation, while 8,480,656 pounds were withdrawn for consumption. 'The practical operation,' said he, 'of this system of bonded warehouses hitherto has been to give to a few individuals and firms, more particularly the proprietors of the warehouses, the same facilities for storing tobacco, without the prepayment of tax, as were given by the former system of class B, bonded warehouses, abolished by the act of July 20, 1868.' He therefore recommended the abolition of the system of export bonded warehouses, as required by the best interests both of the government and of the manufacturer. The benefits to result from such abolition were that 'a large portion of the expenses now [then] incurred by the manufacturers in exporting their goods would be saved, the government would receive the taxes on all goods when removed from the place of manufacture, all jobbers and dealers in manufactured tobacco would be placed on the same footing with regard to the traffic in tax-paid goods, and the special privileges and advantages enjoyed by a few individuals and firms would be removed.'

It was doubtless because of these official recommendations from the head of the internal revenue system that Congress made the numerous amendments of the act of July 20, 1868, which appear in the act of June 6, 1872.

The contention of the defendant in error is, that while all manufactured tobacco stored in export bonded warehouses and withdrawn for sale or consumption before the first day of July, 1872, was subject to the tax prescribed by the act of July 20, 1868, all found stored in such warehouses on the 1st of July, 1872, without regard to the date of its deposit therein in bond, was subject, upon withdrawal on and after that date, for sale or consumption, to the reduced tax prescribed by the act of June 6, 1872. To this construction of the statute we cannot yield our assent.

It is true that the act of June 6, 1872, which took effect on the 1st of August, 1872, 'except where otherwise provided,' declares 'that on and after the first day of July next,' that is, July 1, 1872, there shall be assessed and collected on manufactured tobacco a tax of twenty cents per pound. But the section (sect. 31) which so declares must be interpreted in connection with other provisions of the act, and with reference to the reasons which caused the radical changes made by that act in the internal-revenue system as previously established. We have already seen that the attention of Congress was called to the evils which had grown up under the system of export bonded warehouses, and to the necessity of its abolition. The act of June 6, 1872, gave effect to the recommendations of the Commissioner, and made such provisions as would enable him to dispense with such warehouses altogether. But a specific provision was made as to tobacco which had been previously placed in export bonded warehouses under the act of June 20, 1868. It was declared, 'All tobacco and snuff now stored in any export bonded warehouse shall, on and after July 1, 1872, be subject to the same tax as is provided by this act, and shall, within six months after the passage of this act, be withdrawn from such warehouse upon payment of the tax, or for export, under the regulations of the Commissioner of Internal Revenue now in force concerning withdrawals of tobacco or snuff from bonded warehouses. And any tobacco or snuff remaining in any export bonded warehouse for a period of more than six months after the passage of this act shall be forfeited to the United States, and shall be sold or disposed of for the benefit of the same in such manner as shall be prescribed by the Commissioner of Internal Revenue, under the direction of the Secretary of the Treasury.' We entertain no doubt as to the object of this provision. It evidently refers only to tobacco stored in export bonded warehouses at the date of the passage of the act, and not, also, as claimed by the defendant in error, to that stored in such warehouses after that date, and before the 1st of July, 1872. If Congress intended that all manufactured tobacco, whether at the manufactory or in an export bonded warehouse, should, on the 1st of July, 1872, have the benefit of the reduced tax of twenty cents, there would have been no necessity for a special declaration that tobacco 'now'-that is, at the passage of the act stored in export bonded warehouses should, on and after July 1, 1872, be subject to the tax prescribed by the act of June 6, 1872. The necessity for such declaration lay in the fact that unless tobacco, deposited in export bonded warehouses prior to that act, was, in express terms, given the benefit of the reduced tax, it would be liable to the tax of thirty-two cents imposed by the act of July 20, 1868. This will become perfectly clear when attention is given to the regulations which the Commissioner of Internal Revenue had prescribed, and which were then in force, in reference to the shipment of tobacco in bond from the manufactory to an export bonded warehouse. Before any shipment could take place, it was necessary that an inspector should inspect, weigh, and mark each package of tobacco proposed to be shipped to an export bonded warehouse. His report of inspection indicated the marks and numbers of each package, the number of packages and their contents, the number of pounds, the rate and amount of tax. All these items were carried into the transportation bond which the shipper was required to execute. They appeared also in the report of inspection when the tobacco reached its destination; and, finally, when the tobacco was received by the storekeeper at the export bonded warehouse, the shipper was required to execute bond, with surety, binding him to pay 'the amount of taxes due and owing' on the tobacco, the rate and amount of tax due thereon being described on the face of the bond, and being the same as that shown in the certificate of the inspector. So that as to all tobacco in export bonded warehouses on 6th June, 1872, the government then held bonds obligating the parties thereto to pay the tax, as to rate and amount, which appeared on all the official documents connected with the transportation from the manufactory to the bonded warehouse. Hence the specific provision giving the owners of tobacco, stored in export bonded warehouses on 6th June, 1872, the benefit, on and after the 1st of July, 1872, of the reduced tax, as well as the privilege of keeping it there for six months without removal or payment of tax.

But when Congress declared that tobacco stored in such warehouses, at the date of the passage of the act of June 6, 1872, should be subject to the tax provided by that act, it does not at all follow that tobacco stored in export bonded warehouses after the passage of that act, and before July 1, 1872, when the reduced tax took effect, was entitled to the benefit of the reduction. Such a construction of the act would be inconsistent with the policy which dictated the abolition of the system of export warehouses, as well as with the necessary implications arising from the specific provision as to tobacco stored in such warehouses at the date of the act. It deprives the word 'now' in the clause we have quoted of all meaning. If the tobacco in question had remained in the manufactory until July 1, 1872, it would have been subject to a tax of only twenty cents; but it could not on that day, and under the act of June 6, 1872, have been removed therefrom for sale or consumption except upon payment of the tax. If, however, Blackwell chose not to wait until that date, when the reduction would take effect as to all tobacco in the manufactory, but preferred to ship it in bond to an export bonded warehouse, between June 6, 1872, and July 1, 1872, he must abide by the terms of the bond given at the time his tobacco was deposited in such warehouse. His bond, upon its face, recites-if the statute was complied with-the rate and amount of tax prescribed by the law in force when the bond was executed. He could not satisfy its terms except by paying the amount it called for. That Congress gave the owners of tobacco stored in bonded warehouses on 6th June, 1872, the benefit of the reduced tax constitutes no reason why such reduction should be applied to tobacco stored in such warehouses after that date, when the owner had, prior to July 1, 1872, given bond covering the tax due under the then existing law. If the act of June 6, 1872, had prescribed an increase of tax to take effect on the first day of July thereafter, no one would contend that such increase would have applied to tobacco stored in an export bonded warehouse between June 6, 1872, and July 1, 1872. That Congress reduced, rather than increased, the tax, to be assessed and collected on and after July 1, 1872, does not authorize the court to relieve Blackwell from the obligations of his bond, given prior to that date, to pay the tax as ascertained and fixed by the law in force when it was executed; especially, since the act of June 6, 1872, did not go into effect before July 1, 1872, as to the reduced tax, except as to tobacco stored in export bonded warehouses on 6th June, 1872.

It results from what has been said that the collector rightly demanded a payment of thirty-two cents per pound on Blackwell's tobacco, when, on July 1, 1872, he applied to withdraw it for sale or consumption.

Nor was the collector responsible for any damage to the obacco resulting from the delay in obtaining the necessary stamps after Blackwell's demand in August, 1872. The collector was then, it is true, without the necessary stamps, but he made requisition for them upon the proper authorities at Washington. In view of the refusal of the appellee to pay the tax upon the first application for withdrawal on 1st July, 1872, the collector was justified in believing that appellee would not pay the required tax, and he was, therefore, under no obligation to keep stamps constantly in readiness for him.

We perceive in the evidence no just ground upon which to rest a verdict against the plaintiff in error. The jury should have been instructed to find in her favor.

The judgment will be reversed, with directions for further proceedings in conformity with this opinion; and it is

So ordered.

title: Jones v. Blackwell/Opinion of the Court


text: Talk:Jones v. Blackwell/Opinion of the Court


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Shaw v. Railroad Company Same

These cases present the following facts:--

By an act approved Feb. 9, 1853 (10 Stat. 155), Congress granted lands to the State of Arkansas to aid in building a railroad. Power was given the State to sell them only as the road was completed in sections of twenty miles each. If the road was not finished in a specified time, all lands not sold were to revert to the United States. A part of the lands thus donated by Congress were granted by the State to the Little Rock and Fort Smith Railroad Company.

On the 22d of December, 1869, the railroad company executed a mortgage on its railroad, completed and to be completed, to Henry W. Paine and Samuel T. Dana, as trustees, to secure an issue of bonds amounting in the aggregate to $3,500,000, payable Jan. 1, 1890, with interest semi-annually at six per cent per annum, and on the 20th of June, 1870, it executed another mortgage on its land-grant, earned and to be earned, to Paine, Dana, and William B. Stevens, to secure another issue of bonds for $5,000,000, payable April 1, 1900, with interest semi-annually at seven per cent per annum. Each of the mortgages contained this clause:--

'In case default shall be made in the payment of any halfyear's interest on any of the said bonds, at the time and in the manner in the coupon issued therewith provided, the said coupons having been presented and the payment of the interest therein specified having been demanded, and such default shall continue for the period of three months after said coupons shall have become due, and been demanded as aforesaid, then and thereupon the principal of all the said bonds shall, at the election of the trustees, become immediately due and payable.'

On the 12th of May, 1874, all the bonds provided for in both these mortgages had been put out and one hundred miles of the road built. About sixty miles remained to be completed, and the company was without funds or credit. All interest on the bonds falling due Jan. 1, 1871, and thereafter, was in arrear and unpaid. Thereupon Paine, a citizen of Massachusetts, at that time the only trustee of the mortgage of the railroad, and Paine, Stevens, and Charles W. Huntington, all citizens of Massachusetts, then the trustees of the land-grant mortgage, commenced suits in the Circuit Court of the United States for the Eastern District of Arkansas to foreclose their respective mortgages. In each of the bills the necessary averments of fact were made to entitle the parties to a decree of sale, and the trustees elected to treat the principal of the bonds as due. All the necessary defendants, including certain judgment creditors, were made, and there was nothing at that time in the citizenship of the parties to interfere with the jurisdiction of the court. The first of these cases is the suit upon the railroad mortgage, and the second that on the land grant. Afterwards changes in the trustees were made, so that Charles W. Huntington and Samuel H. Gookin represented the railroad mortgage, and Huntington, Gookin, and Samuel Atkins the land grant. The proper substitutions were made on the record, the new trustees all being citizens of Massachusetts.

Subsequently, on the 3d of October, 1874, an amendment was made to the bill for the foreclosure of the railroad mortgage, by which Atkins, one of the trustees of the land-grant mortgage, and other persons, citizens of Massachusetts, were brought in as defendants to that suit. The object of this amendment was to obtain the appointment of a receiver of the property with a view to raising money on receiver's certificates to complete the road and save the unearned land grant. No such appointment was made, however, and nothing was done under the amendment. On the 6th of November, a decree was entered in each of the cases, finding that the mortgage sued on was a valid and subsisting lien on the mortgaged property; that the whole amount of the bonds in each case had been issued, and, with the interest thereon, was due and unpaid; and ordering the mortgaged property to be sold unless the debt, principal and interest, was paid on or before the 10th of December than next. Provision was also made in each case for a distribution of the proceeds of the sales among the bondholders.

After this decree was rendered, a public meeting of the holders of both classes of bonds was called in Boston on full notice, and, as the result of that meeting, George O. Shattuck, Francis M. Weld, and George Ripley were appointed by parties representing in the aggregate $6,097,000 of the bonds, to purchase the mortgaged property for the benefit of the bondholders. They accordingly appeared at the sale, and became the purchasers of the railroad for $50,000, and the land grant for the same amount. The sale was duly reported to the court on the 19th of December, when the purchasers appeared and declared in open court, and desired to have it recorded, that it was their intention to organize a corporation under the laws of Arkansas, to own, hold, and manage the property bought at the sales, and that the holder of any of the bonds secured by either mortgage might, within sixty days from the time of the organization of the corporation, transfer to it his bonds and his right to the proceeds of the sale, and become entitled to his proportional interest in the stock of the new corporation upon the same terms and stipulations as any other holder of the bonds; but this was not to prevent the new corporation from requiring from any and all bondholders the payment of his proportion of the expenses attending the sales and purchases, and such other sums not exceeding five per cent of the principal of the bonds as it might deem for its interests to require as a condition on which the stock should be delivered, provided that the same requirement should be made of all the other holders of bonds, and provided further, that this stipulation should not limit the power of the purchasers to organize the corporation without notice, or of the corporation so organized to mortgage its property, or to reserve for its own use an amount of its capital stock, not exceeding ten per cent thereof. At the same time, the several trustees appeared in court and consented to a confirmation of the sales upon the agreement that the stipulations of the purchasers thus given be embodied in the decrees approving and confirming the sales. Thereupon appropriate orders of confirmation containing the required stipulations were entered, and the proper conveyances made. In the order confirming the sale under the land-grant mortgage, it was provided that the new corporation should, as part of the consideration for the conveyance, compromise or pay such claims against the old company as Huntington, Ripley, and Henry A. Whitney might within one year approve, and upon such terms and in such manner as they should prescribe.

On the 22d of February, 1875, Charles H. Richardson, Frank Shaw, and David S. Greenough, of Boston, representing themselves to be holders of a large amount of the bonds, filed their petition in court, asking that the decree of confirmation might be modified by striking out the clause requiring payment of the claims against the railroad company, and that the provisions of the decrees relating to the exchange of bonds for stock in the new corporation might be extended until the question of modification should be decided. As one of the grounds of this application, it was alleged that Weld and Atkins were creditors of the railroad company. This petition was answered by the several trustees explaining the facts. On the 13th of April, the time for exchanging bonds for stock in the new corporation was extended for sixty days, and the order for the payment of claims against the railroad company so modified as to make the approval of a claim by the court necessary before it could be paid, and providing for notice to Richardson, Greenough, and Shaw whenever a claim was presented for allowance.

On the 6th of July, 1875, Greenough, as owner of $58,000 of the bonds, and Shaw, as owner of $11,000, filed in the Circuit Court, in each of the cases, what is denominated a bill of review, in which they ask that the decrees be reviewed and reversed, and they placed in the same situation they would have been if the decrees had not been rendered. The errors complained of relate to the sufficiency of the allegations in the original bills; the confirmation of the sales, by the consent of the trustees, upon the terms stipulated for; a want of jurisdiction in the court, as the complainants and many of the defendants were citizens of the same State; and the rendition of a decree against the railroad company, without service of subpoena, after filing the amended bill. It was also alleged that Gookin and Atkins, trustees of the mortgages, were holders of bonds secured by the respective trusts. Demurrers to both bills were filed, which the court below sustained, and dismissed the suits. Shaw and Greenough thereupon appealed.

Mr. B. C. Brown, for the appellants, cited Clearwater v. Meredith, 1 Wall. 25; Vose v. Bronson, 6 id. 452; Jackson v. Ludeling, 21 id. 616; Thomas v. Brockenborough, 10 Wheat. 146.

Mr. C. W. Huntington, contra, cited Whiting v. Bank of the United States, 13 Pet. 6-15; Crawshay v. Soutter et al., 6 Wall. 739; Galveston Railroad v. Cowdrey, 11 id. 459; Twin Lick Oil Co. v. Marbury, 91 U.S. 587; Kerrison, Assignee, v. Stewart et al., 93 id. 155; Buffington v. Harvey, 95 id. 99; Sage v. Central Railroad Co., 99 id. 334; West et als. v. Davis, 4 McLean, 241; Smith v. Chicago & Northwestern Railroad Co., 18 Wis. 17; Carpenter v. Catlin, 44 Barb. (N. Y.) 75; Hill. Trustees, 152, note and cases cited.

MR. CHIEF JUSTICE WAITE, after stating the facts, delivered the opinion of the court.

title: Shaw v. Railroad Company Same


text: Talk:Shaw v. Railroad Company Same

title: Talk:Shaw v. Railroad Company Same


text:
Shaw v. Railroad Company Same/Opinion of the Court

We think it clear that the appellants are not entitled to the relief they ask. They were not parties to the original suits, except through their trustees, against whom they make no charges. Indeed, their counsel says in his brief, 'It is probable that they [the trustees] believed that they were doing the best possible for their beneficiaries.' The trustee of a railroad mortgage represents the bondholders in all legal proceedings carried on by him affecting his trust, to which they are not actual parties, and whatever binds him, if he acts in good faith, binds them. If a bondholder not a party to the suit can, under any circumstances, bring a bill of review, he can only have such relief as the trustee would be entitled to in the same form of proceeding. To avoid what the trustee has done in his behalf, he must proceed in some other way than by bill of review. All the errors complained of in these bills of review, as occurring before the confirmation of the sale, are such as affect only the railroad company injuriously. If, in fact, they are errors at all, they were in favor of the trustees and those they represent, and not against them. Of these the trustees could not complain. As no relief was granted under the amendment to the bill in the foreclosure of the railroad mortgage, the court clearly had jurisdiction of that case for the purposes of the decree as rendered.

But if the bills, as filed, are original in their character, to set aside the decrees complained of and not for review only, the appellants are in no better condition. The trustees had an undoubted right to commence these suits when they did, and it is apparent from the whole record that all their proceedings, both before and after the sale, were in the interest of their beneficiaries generally, since one hundred and eighty in number, representing in the aggregate eight million out of the eight million five hundred thousand dollars of bonds outstanding, accepted the result and exchanged their bonds for stock in the new corporation. To allow a small minority of bondholders, representing a comparatively insignificant amount of the mortgage debt, in the absence of any pretence even of fraud or unfairness, to defeat the wishes of such an overwhelming majority of those associated with them in the benefits of their common security, would be to ignore entirely the relation which bondholders, secured by a railroad mortgage, bear to each other. Railroad mortgages are a peculiar class of securities. The trustee represents the mortgage, and in executing his trust may exercise his own discretion within the scope of his powers. If there are differences of opinion among the bondholders as to what their interests require, it is not improper that he should be governed by the voice of the majority, acting in good faith and without collusion, if what they ask is not inconsistent with the provisions of his trust. This company and these trustees were peculiarly situated. The road was unfinished, and the land grant, to a large extent, unearned. While the mortgages, as they stood, were first liens, there was great danger that their value would be seriously impaired unless more money could be raised. The attention of both the trustees and bondholders was called to that fact, and at first it seems to have been thought that the end might be accomplished through the instrumentality of a receiver and receiver's certificates. This necessarily contemplated the creation of a lien on the mortgaged property superior to that which then existed. Although the mortgages were separate, and on separate properties, the value of each depended, to a large extent, on the ability of the railroad company to finish its road.

For some reason the idea of a receiver and receiver's certificates seems to have been abandoned, and what, to our minds, was a much more desirable plan adopted. The power of the courts ought never to be used in enabling railroad mortgagees to protect their securities by borrowing money to complete unfinished roads, except under extraordinary circumstances. It is always better to do what was done here whenever it can be; that is to say, reorganize the enterprise on the basis of existing mortgages as stock, or something which is equivalent, and by a new mortgage, with a lien superior to the old, raise the money which is required without asking the courts to engage in the business of railroad building. The result, so far as incumbering the mortgage security is concerned, is the same substantially in both cases, while the reorganization places the whole enterprise in the hands of those immediately interested in its successful prosecution.

The bare fact that some of the trustees were holders of bonds secured by their trust is not sufficient of itself to make them incompetent to consent to such a decree as was rendered. From the whole case it is apparent that from the beginning their conduct was governed by the wishes of a very large majority of bondholders. If there was anywhere the slightest evidence of fraud or unfaithfulness, their conduct would be carefully scrutinized. The acts of trustees when personally interested should always be open and fair. Slight circumstances will sometimes be considered sufficient proof of wrong to justify setting aside what has been done. But when every thing is honestly done, and the courts are satisfied that the rights of others have not been prejudiced to the advantage of the trustee, the simple fact of interest is not sufficient to justify the withholding of a confirmation of his acts.

Here the name of Gookin, one of the trustees, appears in the list of bondholders appointing the committee to make the purchase at the sale as the holder of two hundred thousand dollars of the bonds. Associated with him in the list were others representing near six millions of dollars. His name openly appeared on the paper when the court was asked to confirm the sale on the conditions agreed to. Certainly this is not sufficient to defeat the plan to which he and his associates gave their consent. Atkins, another trustee, was a creditor of the company, whose debt came within the provision made in the decree for payment by the new corporation. All this was fully explained to the court when the modification of the decree in this particular was asked for, and since no claim can now be paid except with the approval of the court after notice to the appellants, we see no reason why what has already been done is not sufficient for the protection of all concerned.

On the whole, we see no reason for interfering with the decrees below, and they are each, therefore,

Affirmed.


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


text:
Insurance Company v. Gridley

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

The facts are stated in the opinion of the court.

Mr. Edward Salomon for the plaintiff in error.

Mr. Robert Sewell, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: Insurance Company v. Gridley


text: Talk:Insurance Company v. Gridley

title: Talk:Insurance Company v. Gridley


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

This is an action upon a policy of insurance insuring the life of Fayette R. Gridley in the sum of $10,000, for the benefit of his wife, the defendant in error.

The policy sets forth that it was issued 'in consideration of the representations made in the application therefor and of the premium,' &c. It sets forth, further, that 'if any of the statements or declarations in the application for this policy, and upon the faith of which it is issued, shall be found in any material respect untrue, then. . . this policy shall be null and void.'

The application was signed by the assured in behalf of himself and his wife. The first clause is as follows: 'An answer to each of the following questions is required from persons proposing to effect insurance in this company, which answers form the basis of this contract.' It concluded with the declaration 'that the above are the applicant's own fair and true answers to the foregoing questions. . . . And it is hereby agreed that these statements with this declaration shall form the basis of the contract for assurance, and that any untrue or fraudulent answers, any suppression of facts in regard to the person's health, habits, or circumstances,-material to the risk,. . . shall vitiate the policy and forfeit all payments made thereon.'

The application contained, among others, the following question: 'Have the person's (whose life is to be assured) parents, uncles, aunts, brothers, or sisters been afflicted with consumption, scrofula, insanity, epilepsy, disease of the heart, or any other hereditary disease?' The applicant answered: 'No; except one brother temporarily insane six months since. Causes, domestic and financial troubles, followed by hard drinking and excessive use of opium and morphine. Recovery followed reformed habits. No hereditary taint of any kind in family on either side of house, to my knowledge.'

It was proved on behalf of the company that Abraham Gridley, an uncle of the assured, was insane for more than a year preceding his death, and that he died in the Bloomingdale Insane Asylum upwards of twenty years before the application for the insurance here in question was made.

The testimony being closed, the counsel for the company asked the court to instruct the jury to find a verdict for the defendant. This was refused. The court thereupon instructed the jury to return a verdict for the plaintiff. The jury found as directed. The defendant duly excepted to the instruction given and to that refused, and sued out this writ.

The only question argued before us is whether the court erred in instructing the jury to find for the plaintiff. The solution of that question depends upon the construction and effect to be given to the interrogatory and the answer to which our attention was called by the counsel for the plaintiff in error.

It is a recognized rule in the construction of statutes, that 'a thing which is within the intention of a statute is as much within the statute as if it were within the letter; and a thing which is within the letter of the statute is not within the statute unless it be within the intention of the makers.' People v. Utica Insurance Co., 15 Johns. (N. Y.) 358.

This proposition is equally applicable to other written instruments. The object of all symbols is to convey the meaning of those who use them, and when that can be ascertained, it is conclusive. The intent of the law makers is the law, and here the intent of the parties is the contract.

It was material to the risk, and hence important to the insurers, to know whether either of the maladies named or any serious malady not named was hereditary in the family of the applicant. If the question were answered in the affirmative, it might be a reason for declining to issue the policy. On the other hand, if either of such maladies existed in a member of the family other than the applicant, but was not hereditary, and, on the contrary, existed, according to the family history, for the first time in the person affected, and in that case was the effect of known contemporaneous causes, then it was not material to the risk, was of no interest to insurers, and it is fairly to be presumed they did not care to be advised upon the subject.

This may be illustrated by the case of insanity mentioned in the answer of the applicant. He says his brother was afflicted in that way. 'Causes, domestic and financial troubles, followed by hard drinking and excessive use of opium and morphine.' He adds: 'Recovery followed reformed habits.' This explanation took the subject wholly out of the scope and purpose of the inquiry by the company, and made it, as it were, res inter alios acta.

The last sentence of the answer is, 'No hereditary taint on either side of the house, to my knowledge.'

The affirmation was restricted and narrowed down to what the applicant himself personally knew touching the subject. It has this extent; no more.

The company might have refused to insure unless the qualification were withdrawn. Having failed to do this, such is the contract of the parties.

To make out the defence sought to be established by the insurers, three things were, therefore, necessary to be shown: that the alleged insanity of the uncle had existed; that it was hereditary; and that both these things were known to the applicant when he answered the question.

The first point was clearly proved. In relation to the second and third, there was no proof whatever. What was proved, without what was not proved, was of no account. The defence, therefore, wholly failed. It follows that the instruction complained of was properly given.

The subject of questions and answers in cases like this was fully considered by this court in National Bank v. Insurance Company, 95 U.S. 673.

It is unnecessary to go over the same ground again, or to add any thing to what is there said.

Judgment affirmed.


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


text:
Kidd v. Johnson

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

The facts are stated in the opinion of the court.

Mr. M. F. Morris for the appellant.

Mr. E. M. Johnson, contra.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Kidd v. Johnson


text: Talk:Kidd v. Johnson

title: Talk:Kidd v. Johnson


text:
Kidd v. Johnson/Opinion of the Court

The question presented in this case relates to the ownership of a trade-mark used by the complainants on packages and barrels containing whiskey manufactured and sold by them in Cincinnati, and arises out of the following facts:--

In 1849, one S. N. Pike, doing business in that city as a wholesale dealer in whiskey, adopted as a trade-mark for his manufacture the words, 'S. N. Pike's Magnolia Whiskey, Cincinnati, Ohio,' enclosed in a circle, which he placed on packages and barrels containing the liquor. Between that date and 1863 he was in partnership with different persons doing business there under the name of S. N. Pike & Co. In 1863, having dissolved his connection with others, he took as partners two of his former clerks, Tilney and Kidd, continuing the original firm name, and soon afterwards opened a branch house in New York City. The same trade-mark was used by the new firm as it had been by the preceding firm, without any change. At this time, and subsequently until its sale in 1868, the real property in Cincinnati, upon which the business was conducted, and the distillery, with its fixtures and appurtenances, belonged to Pike individually. In 1868, the firm removed its entire business to New York City, and Pike sold the real property in Cincinnati, and the stills, tubs, engines, boilers, tubing, and all apparatus in his distillery, for the consideration of $125,000, to the firm of Mills, Johnson, & Co., who were also engaged in the manufacture and sale of whiskey at that place. At the same time, Pike executed and delivered to the purchasers a separate instrument, stating that, having sold his premises to them, he extended to them and their successors the use of all his brands formerly used by him in his Cincinnati house.

Mills, Johnson, & Co. continued for some years the manufacture and sale of whiskey on the premises thus purchased, using, without objection from any one, the brands previously used by S. N. Pike & Co. They were succeeded in business by the complainants, who, it is admitted, are entitled to all the rights which they possessed in the trade-mark in question. S. N. Pike died in 1872, and his surviving partners formed a new partnership, under the name of George W. Kidd & Co., which was subsequently dissolved, and to its business Kidd, the appellant in this case, succeeded.

The complainants finding that whiskey bearing this trade-mark, manufactured by the firm of Tyra, Hill, & Co., of St. Louis, was sold in large quantities by dealers in New Orleans, filed the present bill to enjoin the dealers from selling or trafficking in whiskey contained in packages thus marked. By an amendment to the bill the defendant Kidd was made a party. He filed an answer and cross-bill, asserting title to the trade-mark as surviving partner of the firm of S. N. Pike & Co., and setting forth that Tyra, Hill, & Co. were acting under a license from him.

The principal question for determination is whether the complainants, claiming under the sale of Pike to their predecessors, or the defendant Kidd, claiming as survivor of S. N. Pike & Co., have the exclusive right to the trade-mark mentioned. The court below decided that the complainants possessed the exclusive right, and our judgment approves of the decision.

It is admitted that Pike was the owner of the trade-mark when he took two of his clerks into partnership and formed the firm of S. N. Pike & Co. He did not place his interest in the trade-mark in the concern as a part of its capital stock. He allowed the use of it on packages containing the whiskey manufactured by them; but it no more became partnership property from that fact than did the realty itself, which he also owned, and on which their business was conducted. He was engaged in the same business before the partnership as afterwards, and taking his clerks into partnership changed in no respect, beyond its terms, their relation to his individual property. Their subsequent conduct, moreover, plainly shows that they claimed no interest in the trade-mark. They knew of his conveyance of its use to Mills, Johnson, & Co. on the 1st of October, 1868, when they removed their own business to New York, and made no objection to the transfer. Their subsequent correspondence discloses beyond question their knowledge of the transfer and recognition of his power to make it. That transfer was plainly designed to confer whatever right Pike possessed. It, in terms, extends the use of the trade-mark to Mills, Johnson, & Co. and their successors. Such use, to be of any value, must necessarily be exclusive. If others also could use it, the trade-mark would be of no service in distinguishing the whiskey of the manufacture in Cincinnati; and thus the company would lose all the benefit arising from the reputation the whiskey there manufactured had acquired in the market. The right to use the trade-mark is not limited to any place, city, or State, and, therefore, must be deemed to extend everywhere. Such is the uniform construction of licenses to use patented inventions. If the owner imposes no limitation of place or time, the right to use is deemed coextensive with the whole country, and perpetual.

The claim of Kidd to the trade-mark as survivor of the partners in the firm of S. N. Pike & Co. is without any merit. Pike, in his lifetime, repudiated any ownership in the trade-mark after his sale, and Kidd knew that fact, and never even pretended that the firm had any such right until after Pike's death.

As to the right of Pike to dispose of his trade-mark in connection with the establishment where the liquor was manufactured, we do not think there can be any reasonable doubt. It is true, the primary object of a trade-mark is to indicate by its meaning or association the origin of the article to which it is affixed. As distinct property, separate from the article created by the original producer or manufacturer, it may not be the subject of sale. But when the trade-mark is affixed to articles manufactured at a particular establishment and acquires a special reputation in connection with the place of manufacture, and that establishment is transferred either by contract or operation of law to others, the right to the use of the trade-mark may be lawfully transferred with it. Its subsequent use by the person to whom the establishment is transferred is considered as only indicating that the goods to which it is affixed are manufactured at the same place and are of the same character as those to which the mark was attached by its original designer. Such is the purport of the language of Lord Cranworth in the case of Leather Cloth Company v. American Leather Cloth Company, reported in 11th Jur. N. S. See also Ainsworth v. Walmesley, 44 L. J. 355, and Hall v. Barrows, 10 Jur. N. S. 55.

The present case falls within this rule.

Decree affirmed.

title: Kidd v. Johnson/Opinion of the Court


text: Talk:Kidd v. Johnson/Opinion of the Court


text:
Wills v. Russell

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

This was an action brought by Willis, Edmands, & Co., against Thomas Russell, a former collector of customs for the port of Boston, to recover certain duties paid under protest upon an importation from India of jute rejections, made in September, 1872. A duty of ten per cent ad valorem, assessed under sect. 24 of the Tariff Act of March 2, 1861 (12 Stat. 196), and five dollars per ton under sect. 11 of the Tariff Act of July 14, 1862 (id. 554), had been paid; and this action was for the five dollars per ton.

The plaintiffs, after proving their payment of the duties alleged to the defendant, put in evidence the following protest for the purpose of showing that they had complied with sect. 14 of the act of June 30, 1864, c. 171. 13 Stat. 214.

'BOSTON, Oct. 7, 1872.

'SIR,-We desire respectfully to protest against your action in assessing and exacting a duty of fifteen dollars per ton upon an importation made by us into this port of 125 bales of jute rejections, weighing 37,500 pounds, or about, per ship 'Melrose,' from Calcutta, and entered for consumption, on the 18th of September, claiming that under existing laws this duty cannot be legally imposed upon this merchandise. Jute rejections are not enumerated in any tariff act in force, consequently can only be subjected to duty as a non-enumerated article. Jute rejections are unmanufactured. They are raw material, and have not passed through any process of manufacture before being imported into the United States. Being non-enumerated and unmanufactured, we claim that upon importation they should be classified and subjected to a duty of ten per cent ad valorem, under the twenty-fourth section of the act of March 2, 1861.

'Should it be determined that, because of the process which this merchandise passes through in being prepared for shipment, it is manufactured or partially manufactured, we then claim that it should be classified as a non-enumerated manufactured or partially manufactured article, under the section and act above referred to, and subjected to a duty of twenty per cent ad valorem.

'We pay this duty, amounting to two hundred and fifty-one dollars and six cents ($251.06) gold, in order to obtain possession of our property, and shall hold you and the government responsible for its exaction.

'Yours very respectuflly,

'WILLS, EDMANDS, & CO.

'To Hon. THOMAS RUSSELL, Collector.'

One of the plaintiffs having testified in chief to the payment of the duties and to the protest and appeal, but not as to what jute rejections were, or as to the contents of the protest, the defendant claimed upon cross-examination the right to examine him with a view of showing that jute rejections were a vegetable substance, within the eleventh section of the Tariff Act of July 14, 1862.

The plaintiffs objected, upon the ground that the witness had not testified in chief upon the subject inquired of; but the court overruled the objection, and permitted him to be examined as to whether jute rejections were a vegetable substance similar to the enumerated articles in the second clause of said sect. 11, what they were, and how jute was grown. To this ruling the plaintiffs excepted. The plaintiffs claiming that the vegetable substances not enumerated, named in said second clause, were limited to those used for cordage, offered to show that in 1862 jute, Sisal grass, sun hemp, and coir were so used, and that jute rejections were not then, never have been, and cannot be, so used. This profert of evidence being objected to, was rejected by the court as immaterial, and the plaintiffs excepted. They asked the court to instruct the jury as follows:--

First, That sect. 15 of the act of March 2, 1861, and sect. 11 of the act of July 14, 1862, and the provision in schedule C, sect. 2504 of the Revised Statutes of the United States, must be construed together, and full effect be given to the words 'used for cordage' as restrictive in the application of sect. 11 of the act of July 14, 1862, in the assessment of duties.

Second, That the words 'used for cordage' by necessary implication of law are to be implied in sect. 11 of the act of July 14, 1862.

Third, That the provision in schedule C, sect. 2504 of the Revised Statutes of the United States, as follows, 'vegetable substances used for cordage,' was a legislative declaration, on the first day of December, 1873, that such was the state of the law, and it is necessarily a construction of sect. 11 of the act of July 14, 1862, in connection with sect. 15 of the act of March 2, 1861. It was the declared purpose of Congress to collate all the statutes as they were at that date, and not to make any change in their provisions.

Fourth, If the jury shall find that commercially jute rejections were not used for cordage, then they were not liable to the duty imposed by the defendant under sect. 11 of the act of July 14, 1862, and their verdict must be for the plaintiffs.

The court declined so to instruct the jury; but instructed them that it was for them to find whether or not jute rejections were of a class of non-enumerated vegetable substances similar to the enumerated articles in sect. 11 of the act of July 14, 1862. If they were, then the duty was properly assessed; if not, then their verdict must be for the plaintiffs. The jury returned a verdict for the defendant; and judgment having been rendered thereon, the plaintiffs sued out this writ of error.

Mr. Charles Levi Woodbury for the plaintiffs in error.

Mr. Assistant Attorney-General Smith, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Wills v. Russell


text: Talk:Wills v. Russell

title: Talk:Wills v. Russell