text:
Livermore v. Jenckes

THIS was an appeal from the Circuit Court of the United States for the southern district of New York, sitting in equity.

Livermore and Sexton, who filed the bill, were citizens of New York, and Jenckes, Farnum, and Waterman, citizens of Rhode Island.

The complainants claimed to set aside an assignment made on the 19th of April, 1854, by Waterman, to Jenckes & Farnum, upon the ground that the assignment was to enure to such of Waterman's creditors who should sign a release. This provision, it was admitted, was valid by the laws of Rhode Island, where the assignment was executed, but invalid by the laws of New York, where the property in question was situated. Livermore and Sexton had become judgment creditors after the assignment was made; and if it could be set aside, the property would be open to execution upon their judgments.

The defendants all answered the bill, and much evidence was taken. After the cause was heard upon the pleadings and proofs, the Circuit Court passed the following decree:

'This cause having been heretofore brought on to be heard at final hearing on pleadings and proofs, and having been argued by Mr. A. J. Willard on the part of the plaintiffs, and by Mr. T. A. Jenckes and Mr. C. A. Seward on the part of the defendants, now, on consideration thereof, it is found and decided by the court, that the property in the State of New York, assigned by the defendant Waterman to the defendants Jenckes & Farnum, by the assignment mentioned in the pleadings herein, was taken into possession by said assignees, and converted into money, and the proceeds transferred to the State of Rhode Island, prior to the filing of the bill in this cause, and that the plaintiffs have no lien on said property, and that there was no fraud in fact in the making of said assignment; and it is therefore ordered, adjudged, and decreed, that the bill in this cause be and the same is hereby dismissed, with costs to the defendants against the plaintiffs to be taxed, and that the defendants have execution against the plaintiffs for such costs, according to the course and practice of this court.'

The complainants appealed from this decree.

The cause was submitted on printed arguments by Mr. Morrell for the appellants, and Mr. Jenckes and Mr. Clarence A. Seward for the appellees.

The arguments upon both sides covered a great deal of ground.

It will be seen by the decree above recited, which was affirmed by this court, that the broad question of whether the law of Rhode Island or that of New York should govern, was not decided by either court, but that the decree was founded upon the three following circumstances:

1. That the property was converted into money, and transferred to Rhode Island.

2. That the plaintiffs had no lien on the property.

3. That there was no fraud in fact in the assignment.

In noticing the arguments upon the general proposition, whether the lex loci contractus or the lex fori should govern, the reporter can give only an outline.

The first point of Mr. Morrell was the following, viz:

FIRST POINT.-The Circuit Court erred in not deciding that the assignment from Waterman to Jenckes & Farnum was fraudulent and void as affecting the complainants below, and the other creditors of Waterman residing within the State of New York at the time of the assignment, so far at least as the assignment affected the estate of the assignor within the State of New York, at the time of its execution and delivery.

As it regards the invalidity of the assignment, the essential facts are briefly as follows:

Waterman being insolvent, and indebted, among others, to the complainants, and holding property and choses in action in the State of New York, assigned to J. & F., giving certain preferences, and directing the residue to be paid to such of his creditors at large as should release their demands within six months, reserving to himself the dividends of such creditors as should refuse to release.

We contend that such an assignment is adjudged fraudulent as to creditors, by the laws of the State of New York. That, as to property situated within the State of New York and the claims of resident creditors, the laws of the State of New York are paramount, and do not yield to the laws of the domicil of the debtor.

First. This case is one of State jurisdiction. It has arisen out of the conflict of the laws of the States of New York and Rhode Island. These laws relate to matters of internal administration, over which Congress, under the Constitution, has no control whatever. The States have not seen fit to lodge in Congress power to harmonize the conflict of their internal systems. Such a power, if lodged in the Federal Government, would necessarily involve the right to carry the laws and systems of polity prevailing in one State within the territorial limits of another. It would aim a blow at the integrity of the State sovereignties. Whatever may be thought of the necessity or wisdom of such an accession of authority to the Union, it is undisputed that no such grant has been made by the Federal Constitution.

Story's Conflict of Laws, sec. 18.

Previous to the Constitution, the States possessed the absolute dominion common to all independent sovereigns over all persons and property within their territorial limits. They determined for themselves the laws by which real and personal property within their limits should be held and transmitted. If they recognised the dispositions of property made by foreign States, it was on a principle of comity alone, and not an acknowledgment of any inherent vitality in the laws of the foreign State within their own territories.

That body of opinion called the law of nations had no practical existence or positive efficacy, except so far as it had become embodied in and formed a part of some local system of laws.

The Constitution created the Federal sovereignty, and invested it with certain specified powers; but neither by express grant nor by necessary implication has the power been conferred to communicate vitality to the laws of one State within the limits of another.

Wherever it was deemed desirable that a harmonious system should exist throughout the Union in regard to a particular subject, the Constitution, in regard to that subject, conferred supreme legislative power on Congress, in some instances excluding the States from all legislative control over the subject, and in others permitting local legislation to a certain extent, but subordinating it to the paramount authority of Congress.

The power vested in Congress to establish an uniform rule of naturalization, and uniform laws on the subject of bankruptcies, is an instance of this kind.

The system of laws adopted by Congress in such cases displace State legislation on the same subjects altogether. It was no part of the intent of the Constitution that Congress should leave the conflicting laws of the States in such cases in force, and adopt merely a system of rules by which the conflict arising out of these jarring provisions should be determined.

Such a principle would blend the national and local legislation into an inextricable maze. It would be impossible to define the limits of either. The line of demarcation once destroyed, the stronger of the antagonistic powers would gradually absorb the weaker, and the balance of the Union ultimately be destroyed.

It is not necessary to consider whether the power granted to Congress in regard to the establishment of bankrupt laws could be so exercised as to make the disposition of the estates of insolvents depend wholly and exclusively on the laws of Congress. Until Congress exercises the power, no such question can arise. The defendants rest their case upon the authority of the laws of the State of Rhode Island, and not upon those of Congress.

The power, then, of determining what disposition may be made by insolvents of their property within the State of New York, rests with that State to determine, free from any control in Congress, under existing laws.

If Congress cannot define a system of rules to determine controversies growing out of the conflict of the laws of the States, it is clear that the Federal courts cannot, independently of the States, compose and enforce such a system.

The adjudications of the Federal courts must, in every instance, rest upon the express or the implied authority of either the National or State Legislatures.

The language used by Mr. Justice Grier in Caskie v. Webster (2 Wallace, jun., 131) would, on a cursory examination, appear to imply that it was a part of the duty of the Federal courts to apply to controversies of this character a sort of modified jus gentium, adapted to harmonize with the objects and purposes of the Union of the States. He says: 'We do not think that the different States of this Union are to be regarded, as a general thing, in the relation of States foreign to each other; especially ought they not to be so regarded in regard to questions relating to the commerce of the country, which is co-extensive with the whole land, and belongs, not to the States, but to the Union.' A careful examination of that case will show that such was not his intent.

The question in that case was as to the validity, in Pennsylvania, of an assignment valid by the laws of Virginia, where it was made, in its operation upon property situated in Pennsylvania. We shall see hereafter that the case was decided in strict conformity with the laws of the State of Pennsylvania, and that the principle above cited was intended as an exposition of the liberal rules that governed the State of Pennsylvania in questions arising out of the conflict of her laws with those of other States.

The present controversy originated in the Supreme Court of the State of New York, which court had jurisdiction, not only of the subject-matter, but of the parties who had been served with process. It has been removed into this court merely in consequence of the parties being residents of different States.

This court must therefore give the same judgment which the courts of the State of New York would have been bound to give, had they adjudicated the case.

See the remarks of Chief Justice Marshall in Elmendorf v. Taylor, 10 Wheaton, 159.

title: Livermore v. Jenckes


text: Talk:Livermore v. Jenckes

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title: Talk:Livermore v. Jenckes


text:
Livermore v. Jenckes/Opinion of the Court

Second. By the laws of the State of New York, an insolvent's assignment, containing the clause requiring creditors to release or forfeit their dividends, and directing them to be paid in that case to the assignor, is fraudulent as to creditors, and is void.

The Revised States re-enact the statute of 13 Eliz., which is an affirmance of the common law.

Third. The assignment being of a nature forbidden by the laws of New York, according to the acknowledged principles governing the jurisprudence of that State, it cannot be asserted there as affecting property within that State, and as against a creditor of the assignor there resident.

We do not find that the precise point in question has been adjudicated in that State, but the principles governing the case are well settled.

[Mr. Morrell then examined the following cases: 2 Mason, 157; 12 Wheaton, 259; Ware, 232; 5 Greenl., 245; 19 Wendell, 15; 3 Dallas 375, note; 14 Martin, 93, 102; Conflict of Laws, sec. 390; 4 Term Reps., 192; 5 East., Potter v. Brown.]

These authorities go as far as authority can go to establish the principle, that it is not only within the power, but it is the duty, of a State to deny to strangers privileges not permitted to its own citizens. The wisdom of such a rule can find no better illustration than the present case. Waterman establishes himself in business in the State of New York, contracts debts due to its citizens, until, finding himself insolvent, he returns to the State of Rhode Island, and there executes an assignment, which, if executed in this State, would have been adjudged fraudulent as against his creditors. If the State of New York should allow so unequal a privilege to strangers, would she not be justly chargeable with neglecting the interests of her own citizens? Would it not, in the language of Judge Ware, be equivalent to surrendering her independence?

Such a doctrine would give rise to great abuses. A citizen of New York, in failing circumstances, wishing to make a disposition of his property forbidden by the laws of his own State, but permitted by another, could, by taking up a residence in the latter State, successfully evade the laws of his State.

There is another view of this case still more conclusive. The law of the State of New York, which in the present instance is in conflict with the laws of Rhode Island, is a part of the insolvent system of the State. The greatest diversity exists between the insolvent systems of the different States and foreign countries; all, however, recognise, in greater or less degree, the right of the State to assume the disposition of the estates of insolvents. In some countries, the system is coercive; in others, voluntary; and in some, a mixture of both; but all unite in limiting the power of the insolvent in regard to the absolute disposition of his estate. The laws which have relation to the estates of insolvents, and tend to prevent the unequal or unjust dispositions of such estates, are a part of the insolvent system of the State.

Whatever relates to the insolvent system of the State depends exclusively upon the lex fori.

If the insolvent or bankrupt laws of a foreign country or State are not permitted to have any extra-territorial efficacy, for the reason that every State must determine for itself the best mode of administering the estates of insolvents, with how much more reason should we refuse to permit a citizen of a foreign State voluntarily to make such a disposition of his property in this State, at variance with our insolvent laws?

The cases of insolvency and of administration are similar in principle in this respect.

Let us now consider the decisions that have been made on this subject in sister States:

[Mr. Morrell then examined the following cases:

Massachusetts: 13 Mass., 146; 6 Pick., 286; 19 Pick., 281; 15 Pick., 11; 19 Pick., 105.

Connecticut: 14 Conn., 555; 9 Conn., 487.

New Jersey: 1 Green, 326.

Missouri: 6 Missouri, 302.

Pennsylvania: The precise point does not appear to be adjudicated, although there are floating dicta adverse to the principle contended for. 3 Harris, 91; 6 Harris, 185; Caskie v. Webster, Wallace, jun.

Maryland: 7 Gill, 446, where the court states the condition of the question upon the State authorities at that time (1848-'9) to be as follows:

The States which had determined against the validity of the releasing clause were stated to be New York, Ohio, North Carolina, Mississippi, Missouri, Alabama, Connecticut, and Illinois.

In favor of the validity, Pennsylvania, Virginia, South Carolina, Massachusetts, New Hampshire, and Maine.

Virginia: 8 Grattan, 457.

Since the decision in Abbert v. Winn, New Jersey has acceded to the States holding such assignments void.

Varnum v. Campbell, 1 Green, 326.

Rhode Island should be added to the States sustaining the clause. At the present time, the States whose systems of jurisprudence forbid such clauses are New York, Ohio, North Carolina, Mississippi, Missouri, Alabama, Connecticut, Illinois, Pennsylvania, New Hampshire, Maine, Maryland, and New Jersey.

On the other side stand Rhode Island and South Carolina, side by side. Virginia is bound, contrary to the opinions of her jurist, to an erroneous course of decision, and thus, on a question of authority, throws her weight against, rather than in favor of, the Rhode Island and South Carolina doctrine.]

SECOND POINT.-The assignment to J. & F. being void by the laws of the State of New York, the appellants were entitled to a decree in the court below for an account of the property, or the proceeds thereof, which came into the assignee's hands from the State of New York, such being the remedy allowed by the State of New York, and, consequently, the appropriate remedy to be allowed under their bill.

First. In a case arising exclusively under the laws of the States, and where the Circuit Court obtains jurisdiction solely through the residence of the parties to the controversy, the lex fori is carried into the Circuit Court with the case, and the same remedy is to be allowed, which, by the lex fori, is appropriate to the case.

Second. Had this case been carried to a decree in the New York courts, the appellants would have been entitled to an account against the assignees, as above stated. There are two remedies allowed in the courts of equity of that State to a judgment creditor, for the purpose of reaching the estate of his debtor, and applying it in satisfaction of his judgment.

[The other subdivisions are necessarily omitted.]

IV. The conveyance of the proceeds of this sale into the State of Rhode Island does not relieve the assignees from liability to the New York creditors.

The removal of the assigned estate beyond the jurisdiction of the courts of the State of New York was in itself an act of bad faith. If the act of Waterman in assigning was an illegal act, that of the assignees in carrying the assets of the estate to Rhode Island was equally illegal. How, then, can the assignees shelter themselves behind an act of wrong? They say that the claims of other creditors have attached to the fund; if so, it is through their wrong that the complainants have lost their remedy.

It is quite clear that this would have been no justification, had the assignees been citizens of the State of New York; nor can their citizenship of Rhode Island protect them in New York for an act of wrongful intermeddling with the estate of an insolvent in New York, in fraud of New York creditors.

It is not alleged by the respondents, that, previous to the filing of the bill, they had received of Hill, Carpenter, & Co., more than the notes representing 33 1/2 per cent. of the appraised value of the property appertaining to the mill. The presumption is, that the balance had not been paid. The presumption is, also, that the property transferred to Hill, Carpenter, & Co., consisting of the machinery, goods, and stock, at the Owasco Mills, Auburn, New York, remained in that State until the filing of the bill. These presumptions are not repelled by either allegation or proof to the contrary.

The sale to Hill, Carpenter, & Co., being, as we have seen, colorable, the property remained in the assignees, and must be presumed so to have remained at the filing of the appellant's bill.

V. The supposed equities of Rhode Island creditors, arising from the pretended transfer to that State, offer no proper answer to the appellant's demand of a decree.

The counsel for the appellees made the following points, which the reporter is obliged to give, without the arguments to sustain them.

POINT FIRST.-The assignment was valid inter partes, and the assignees legally acquired, and legally translated to Rhode Island, the property covered by it.

1. The assignment was valid lege loci. (See Point IV, 2, b.)

2. It was also valid by the law of the State of New York, until its invalidity had been judicially declared.

3. The action of the assignees in reducing the property to their possession, and removing it prior to such judicial declaration, cannot be impeached.

Henriques v. Hone, 2 Edwards Ch. R., 120.

Mills v. Argall, 6 Paige, 577.

Porter v. Williams, 5 Selden, 149, and cases there cited.

Averill v. Loucks, 6 Barb. S.C.. R., 477.

POINT SECOND.-The appellants had not, at the time of filing their bill, acquired that lien upon the estate which is an indispensable prerequisite to the granting of the relief sought.

POINT THIRD.-The relief sought by the appellants cannot be granted consistently with the rights of other creditors of Waterman, who are not now before the court.

POINT FOURTH.-A conflict between the lex fori and the lex loci does not necessarily or properly arise. The important element of a conflict of lien is wanting. The lex fori can operate upon the persons only of the defendants; the property, the subject-matter of the controversy, is not within its jurisdiction.

It is only in cases of rival claimants to property within the jurisdiction of the lex fori that such a conflict can arise.

But if the question of the construction of the assignment is necessarily before the court, then, both upon principle and authority, it should sustain the assignment.

I. The question is one of law, and not of fact. By the Revised Statutes of the State of New York, (2 R. S., 138, sec. 4,) the question of fraud in an assignment is a question of fact, and, as such, is to be decided, first upon the evidence, and secondly by the language of the instrument.

a. The question of fraud in fact does not arise. The bill is verified, and calls for an answer under oath. The answers are fully responsive to all the charges of fraud alleged in the bill, and, so far as they are responsive, are evidence for the defendants, to be taken as absolutely true, because not disproved.

Hough v. Richardson, 3 Story, 692.

Landon v. Goddard, 2 ib., 267.

b. When the question to be decided arises upon the language of the assignment, the question becomes one of law rather than of fact. Its answer determines the legal construction or effect of the instrument.

Cunningham v. Freeborn, 3 Paige, 557.

Sheldon v. Dodge, 4 Denio, 217.

Goodrich v. Downs, 6 Hill, 438.

II. The single question then presented for the decision of the court is: Is this assignment, upon its face, valid or fraudulent, within the State of New York? It must be borne in mind -1. That the assignor and the assignees were neither citizens of nor residents in New York. They were citizens of Rhode Island, and residents of Providence.

2. That the assignment was not executed in New York, but was executed in Rhode Island, the domicil of the parties.

3. That by the laws of Rhode Island it is valid.

4. That it operated upon personal property only in the State of New York.

5. That the personal property is not within the jurisdiction of the lex fori.

6. That the parties proposing the question have no lien upon the property.

a. Personal property has no locality. It follows the law of the person. The disposition and transmission of it, either by succession or the act of the owner, are subject to that law. It cannot be legally acquired by another without the actual or constructive assent of its owner-actual, if he voluntarily surrenders it; constructive, when the law deprives him of it by a proceeding to which he is an indispensable party. Unless he is thus made a party, his title to his property cannot be divested. The law, therefore, can only reach his property through him.

Sill v. Worswick, 1 H. Bl., 690.

Pipon v. Pipon, Amb., 25.

Hence it follows that a transfer of property by its owner, whether inter vivos or post mortem, valid by the law of his domicil, will, if made before the law of another country has actually attached upon the property by a proceeding against its owner, be esteemed valid within every other jurisdiction where the property may be. (Story on Conflict of Laws, secs. 380, 383, 384.) The law of the domicil regulates the succession to and the distribution of the personal property of the intestate. (Ib.; Holmes v. Remsen, 20 Johns., 267.) He has a right to make a valid distribution of it ante mortem, and the same right to rely upon the law of the domicil as sanctioning that distribution, that his administrator would have as sanctioning a distribution post mortem. The right to the protection of the law of the domicil arises from the residence of the owner of the property, not from his decease. If, then, the assignment is valid by the lex domicilii and by the lex loci contractus, it operated to pass a legal title to the assignees to the personal property in the State of New York.

b. The assignment is valid in Rhode Island. This is proved by the answer of the assignees, and by the decisions of the courts of that State.

Stewart v. Spencer, 1 Curtis R., 157.

Dockerry v. Dockerry, 2 R. I. Rep., 547.

Haydock v. Stanhope, 1 Curtis R., 471.

c. This court should interpret the assignment as it would be interpreted by the courts of Rhode Island, not only in compliance with authority, nor upon principles of comity only, but upon principles of justice. Contracts are to be interpreted by the lex loci to which the parties had reference when the contract was made. The integrity of the instrument where, as here, there is no fraud in fact, is to be tried by the law of the place of its execution. The universality of this rule, and its every-day application, render, in the case of an ordinary instrument, citations of authority unnecessary. Authority, however, is not wanting to show that the rule is equally applicable to the construction of voluntary assignments. In Brashear v. West, 7 Peters, 608, the assignment was made in Pennsylvania, and was attached in Kentucky, because it contained, among other things, a stipulation for a release by the creditors. Marshall, C. J., in his opinion, said: 'But whatever may be the intrinsic weight of the objection, it seems not to have prevailed in the courts of Pennsylvania. The construction which the courts of that State have put upon the Pennsylvania statute of frauds must be received in the courts of the United States.' So, also, in the case of Dundas v. Bowler, 3 McLean, 397, Mr. Justice McLean says: 'The assignment, having been made in Pennsylvania, is governed by the laws of that State.' And so this point is not open for discussion. The rule is too well established to be now shaken or disturbed.

Speed v. May, 17 Penn. St. Rep., 5 Harris, 91.

Adams v. Storey, 1 Paine's C. C. Rep., 100.

Bank of Augusta v. Earle, 13 Peters, 519.

Rainsdyke v. Kane, 1 Gall., 371.

Leroy v. Crowninshield, 2 Mason, 151.

d. If, therefore, this court shall construe the assignment as it would be interpreted in Rhode Island, it should affirm its validity, and protect the assignees in their possession of the property against the claims of the plaintiffs in this suit. The question of the construction of the assignment is not embarrassed by the presence of fraud in fact in its execution. The evidence and the decision of the court below are conclusive upon this point. The only remaining question, therefore, is upon the interpretation of the instrument itself, without reference to evidence, either of the acts of the parties or to the statute of Elizabeth as re-enacted in New York. That re-enactment makes the question of fraud in an assignment a question of fact; and, inasmuch as that fact is, upon the evidence, and upon the decision of the court below, eliminated from the case, the only possible question remaining is, by what law shall the assignment be interpreted?

1. In England, effect is given to the claims of foreign assignees as against creditors resident there, and this, whether the assignment be involuntary or in invitum.

Locke on Foreign Attachments, 36.

Sill v. Worswick, 1 H. Bl., 390.

Story on Conflict of Laws, secs. 408, 409.

2. The rule is not recognised to an equal extent in the United States. A distinction obtains here between bankruptcy in invitum and a voluntary assignment. Any extra-territorial effect is almost universally denied to an assignment made compulsorily under foreign bankrupt laws, while, to an assignment voluntarily made, ex mero motu, by a failing debtor, effect is or is not given, as the authorities of each particular State may require. These authorities are of course numerous, and, it is to be admitted, conflicting. Numerically, they uphold the assignment, and, in so doing, support the elementary principle already stated, and affirm the justness of the law which accords to a failing debtor the right to make such legal disposition of his property among his creditors as he may elect. The rule sustaining the lex domicilii and the assignment, to which all the authorities refer, is thus stated by Story in his Conflict of Laws, sec. 111: 'It is therefore admitted that a voluntary assignment by a party, made according to the law of his domicil, will pass the personal estate, whatever may be its locality, abroad as well as at home.' The distinction is also alluded to in the case of The Watchman, Ware, 240: 'The law separates that which is derived from the public power from that which comes from the will of the party. Tried by this principle, if the assignment of the debtor in the present case is valid in Massachusetts, it is valid everywhere, and operated a transfer of his property wherever situated, for the transfer was made by the simple will of the owner, and not by virtue of the public power, as in the case of bankruptcy.'

The counsel then cited the following authorities:

New Hampshire: Sanders v. Williams, 5 N. H. Rep., 213; Sanderson v. Berford, 10 N. H., 260.

New Jersey: Frazier v. Fredericks, 4 Zab., 162.

Massachusetts: 19 Pick., 105, where an assignment was held valid, notwithstanding the courts of Maine, in Fox v. Adams, (5 Greenleaf, 245,) had decided that an assignment in Massachusetts did not debar a Maine creditor from attaching property of the estate in Maine.

Connecticut: Atwood v. Protection Insurance Company, 14 Conn., 555.

New York: Holmes v. Remsen, 4 John. Ch. Rep., 460; Same v. Same, 20 John. Rep., 266; 3 Wend., 566; 23 Wend., 87, following Judge Platt's decision, but recognising the distinction between voluntary and involuntary bankruptcy; 3 Sandford S.C.. R., 316; 1 Selden, 353; unreported case of Carnley v. Tuckerman, N. Y. Sp. Tr. 1 Judicial District.

Pennsylvania: Milne v. Morton, 6 Binney, 353; Speed v. May, 17 Penn. St. Rep., 5 Harris, 91; Law v. Mills, 6 Harris, 186.

South Carolina: Green v. Mowry, 2 Bailey, 163.

Louisiana: The U.S. v.. Bank U.S., 8 Rob. L. Rep., 262, 413; Richardson v. Leavitt, 1 Lou. Am. Rep., 430.

Wisconsin: 6 Law Register, 737.

Courts of the United States: The Watchman, Ware, 232, the court felt constrained to carry out the doctrine in Fox v. Adams, 5 Greenleaf, 245; 3 McLean, 397; Caskie v. Webster, 2 Wallace, 132.

Supreme Court of the U.S.: 12 Wheat., 213, where the court recognises the doctrine in 5 Cranch, 298; 7 Peters, 608; 13 Peters, 519; 3 Howard, 483.

None of the authorities cited by the appellants authorize the granting of the relief prayed for by them. Ingraham v. Geyer (13 Mass., 146) turned upon the point that the attaching 'creditor had actually seized the debt before it was paid over to the assignees.' As the complainants here have no lien, the principle of this decision, if there by any in it, does not apply. Blake v. Williams, 6 Pick., 285, reffirmed the distinction between voluntary assignments and those made in invitum, and decided nothing beyond such reaffirmance. The court, commenting upon Ingraham v. Geyer, says that a decision against the operation of an assignment in invitum does not draw after it the inference that an assignment made by the debtor himself, lawful in the place where made, would be unavailing. And the case of Le Chevalier v. Lynch (Doug., 161) affirms the necessity of an attachment before the assignees have acquired possession. The Fall River Works v. Croade (15 Pick., 11) decides, that if creditors elect to become parties to the assignment, and their debts amount to as much as the assigned property, this will complete the intended consideration, render the conveyance effectual even against other creditors, and vest in the assignees the whole property. This rests upon the principle that an insolvent debtor has a legal right to convey his estate to whom he pleases for a valuable consideration, although it may benefit some and prejudice others of his creditors. The answer of the assignees states that, with one exception, all the creditors of Waterman residing in Rhode Island, and many of the creditors residing out of that State and in New York and elsewhere, have complied with the conditions of said assignment, and become parties thereto by releasing Waterman; and that the claims of such releasing creditors, and the dividends to which they are entitled, far exceed in amount the sum which the said assignees now hold, and the claims also exceed the value of all the assets of the assigned estate.

Varnum v. Camp (1 Green, 326) recognises the necessity of a positive law to defeat the assignment, and relies upon the statute of New Jersey, which declares an assignment like the one in that case to be absolutely void. The statute of New York vitiates an assignment for fraud only, and leaves the instrument valid inter partes until declared void. There is no fraud in fact in this case, and no 'positive statute law' like that of New Jersey, and so the assignment is good, unless avoided for fraud law, necessarily to be presumed from its language. This cannot be presumed in this case, because the instrument is to be interpreted lege loci, and by that law it is valid.

In the case of Fox v. Adams, (5 Greenleaf, 245,) the first point decided by the court is, that the debt sought to be trusteed had not passed to the assignees under the assignment, and all the law of the case adverse to the defendants here is disposed of in a paragraph of a dozen lines, and solely upon the authority of Ingraham v. Geyer.

Brown v. Knox (6 Mo., 302) decides nothing upon principle, and refers to no previous authority. The case is eminently unsatisfactory, from the absence of any reason for the decision of the court. In this case, also, the property was in Missouri, and was attached by the plaintiff.

Breine v. Patten, (17 La. Rep.,) as explained by the case of the United States v. The Bank U.S., (supra,) turned upon two points: First. It did not appear that the assignment was valid lege loci. Second. It was not clear that the property was in the possession of the assignees.

The examination of all these cases discloses:

First. That in no case have the claims of the assignees been disregarded, when the property covered by the assignment has become vested in them, and they have transmitted it beyond the jurisdiction of the court whose aid is invoked by the attaching creditor, before he has acquired any lien upon it.

Second. That when the assignment it proved to be valid by the lex loci, principle and the weight of authority require that it should be sustained; the cases refusing to sustain it proceeding rather upon the ability of the court to make the decision, than upon the general principle before cited, or in conformity with the weight of previous adjudication.

POINT FIFTH.-Our argument has thus far proceeded upon the ground that the presence of the stipulation for a release in the assignment ipso facto rendered the instrument void. But it is not intended to be conceded that such is the effect of that stipulation.

1. The English cases do not hold such an assignment void.

Jackson v. Lomas, 4 T. R., 166.

The King v. Watson, 3 Price, 6.

2. There is a conflict in the decisions of the local courts of the several States, as to the effect upon an assignment of a clause requiring a release.

In Massachusetts, New Hampshire, (Hawes v. Richardson, 5 N. H., 113, before the statute of that State,) Pennsylvania, Virginia, South Carolina, Alabama, and Rhode Island, the assignment is held valid; and in New York, Ohio, Missouri, Connecticut, Maine, and Illinois, it is held to be void. (1 Am. Lead. Cas., 94, 95, and cases there cited.)

In Pierrepont v. Graham, (4 Wash. C. C. R., 232,) the assignment was upheld, and the decision in this case was followed by Judge Story in Halsey v. Whitney, (4 Mason, 206;) and in the case of Brashear v. West, (7 Peters, 608,) where the assignment excluded from the benefit of its provisions all creditors who should not within ninety days execute a release, the court, after stating the many reasons why such a stipulation is not pro se evidence of an intent to hinder, delay, and defraud creditors, and how inefficacious it would be if such were the intent, decide, as we have already shown, that the construction which the courts of the State in which the assignment was made have given to the instrument must govern the construction to be given to it by the courts of the United States.

3. If, therefore, looking at it as an original question, the court is satisfied that the assignment is not upon its face void, it must, in the absence of evidence of fraud in fact, affirm its validity; but if, on the other hand, the court is of opinion that the question of the construction of the assignment is not an open question, but is to be decided by reference to local law, the court then must follow the decision in Brashear v. West, and adopt the construction given by the courts of Rhode Island, and thus, also, the assignment must be sustained.

Mr. Justice WAYNE delivered the opinion of the court.

This bill was filed by the appellants in the Circuit Court of the United States for the southern district of New York, as judgment creditors of the respondents, Waterman & Samuel Harris, to avoid an assignment made by Waterman to the respondents, Jenckes & Farnum, in trust for the payment of the creditors of Harris & Waterman, and of Waterman individually.

The appellants seek to avoid the assignment, on the ground that it was voidable, from its tending to hinder, delay, and defraud creditors; because there is a reservation in it to the assignee of the dividends of such creditors as should refuse to become parties to it, and to release their demands in consideration of the dividends they might receive. It appears that a large amount of the property conveyed was in the State of New York; that the appellants resided there, and that they were then creditors of Harris & Waterman. The trusts in the deed were, first, to pay the expenses of the assignment; secondly, to pay the debts of several preferred creditors of Harris & Waterman, and of Waterman individually; and, thirdly, to pay all the residue of the debts of Waterman individually, and as a member of the firm of Harris & Waterman. The assignment contained the following proviso: 'Provided, That none of my said creditors named in the third class of this assignment shall be entitled to receive any dividend or benefit under the deed of assignment, unless they shall execute and deliver to my said assignee, within six months from the date hereof, a full release and discharge, under seal, of all their claims and demands against me, the assignor; but the dividends on the claims and demands of the creditors who shall not execute such release shall be paid over to me, the said assignor, or to such person as I shall appoint.'

It appears that Harris, the copartner of Waterman, had given to the latter a bill of sale of all their partnership property; that the firm was then dissolved; that Waterman had the possession of it, and that he afterwards made the deed of assignment to Jenckes & Farnum. Now, Jenckes & Farnum received and held the property under the assignment, as well that which was in New York as all that was elsewhere. A part of the copartnership property was the Owasca Lake mill, situated at Auburn, Cayuga county, State of New York, and it is admitted that it exceeded in value the debt due by Harris & Waterman to the complainants. As to that property, James Fitton was a copartner; but it appears that he joined with Harris & Waterman in dissolving the copartnership, and in authorizing Waterman to 'settle up' its business, having on the same day agreed that Harris should convey to Waterman the bond and mortgage which he had given to Harris & Waterman for the purchase-money due by him for an undivided fourth part of the Owasca Lake mill. Thus Waterman was made the sole owner of it. He supposed himself at that time to be solvent, and that he could carry on the business of the mill, and worked it for some time; but finding himself unable to do so, he conveyed it to Jenckes & Farnum, with all the other property of the late concern which had become his, with the intention that they should, as his assignees, make an equitable distribution of it among his creditors; and, in his answer to the bill of the complainants, he declares he did so without any fraudulent intent to hinder, delay, or defraud creditors. Waterman had been, was then, and was when he made the assignment, a citizen of the State of Rhode Island. The property assigned was in different States. Jenckes & Farnum accepted the trusts of the assignment. Waterman ceased to have any control over it, and, for aught that appears, the assignees have executed their trust unimpeachably. After the assignment was made, the complainants obtained, in the Supreme Court of New York, a judgment upon their demand against Harris & Waterman.

They have now brought their bill as judgment creditors against Waterman and Jenckes & Farnum, the assignees, to avoid the assignment; alleging that they have a lien upon the property in New York, or its proceeds, as creditors of Harris & Waterman, because Waterman's assignment to Jenckes & Farnum contained a reservation to the assignor, which, by the laws of New York, was fraudulent. And so it would have been, had the assignment been made in that State, by persons residing there. But the assignment was made in the State of Rhode Island, by a person and to persons residing there, and is in every particular just such a one as, by the laws of that State, merchants and others in failing circumstances, residing there, are allowed to make in favor of creditors within that State and those residing elsewhere, wherever the property of the assignor may be. We see no cause for thinking it was fraudulently made. The respondents deny it upon their oaths, as responsively to the charge made by the complainants as that can be done. The latter have not sustained their charge by any proof whatever. For that cause alone, if there was no other, we should concur with the circuit judge in the decree given by him in this case. And we also concur with him, that the complainants never acquired nor ever had any lien upon the property in New York, so as to subject it legally or equitably to their demand against Harris & Waterman, either before or after it was carried into judgment in the Supreme Court of New York. Deeming the grounds stated decisive of this controversy, we abstain from a discussion of other points learnedly and ably argued by the counsel in the cause in their respective printed briefs. They were appropriate to the cause, but we do not deem them necessary for the decision of it.

We direct the affirmance of the decree given in the court below.


text: Talk:Livermore v. Jenckes/Opinion of the Court


text:
Barreda v. Silsbee

THIS case was brought up by writ of error from the Circuit Court of the United States for the district of Maryland.

On the 11th of April, 1854, a charter-party was executed by B. H. Silsbee, acting owner of the ship Shirley, and F. L. Barreda & Brother, residing in Baltimore, acting as agents for the Pervian Government. The charter-party provided that the ship should 'proceed to Callao, from Australia, where she is at present bound,' and take in a cargo of guano at the Chincha Islands. The freight to be paid was at the rate of twenty-five dollars in full per ton of 20 cwt. net, guano, custom-house weight.

At the conclusion of the charter-party, there was the following stipulation:

'The ship to have the benefit of any advance on the guano freights made by the charterers in the United States before she finishes loading at the islands. It is understood the ship is to be laden as deep as prudent, without regard to the clause restricting her to one-third above her register tonnage.'

The principal question in the case was upon the construction of this clause, and whether chartering other vessels, under the circumstances mentioned in the opinion of the court, brought the case of the Shirley within its operation.

The opinion of the court also contains the instructions given by the Circuit Court to the jury, together with the exception to evidence.

The case was argued by Mr. Wallis and Mr. Nelson for the plaintiffs in error, and by Mr. Brune and Mr. Johnson for the defendants in error.

At the trial in the court below, both parties, plaintiffs and defendants, applied to the court for instructions to the jury; but the court rejected those offered on both sides, and gave instructions of its own. In the argument here, all these propositions were necessarily discussed, and it would not be possible to report these arguments without stating also the prayers to the court below, which it is not considered necessary to do. But the exception to the admissibility of the parol testimony stands in a different situation, and, with respect to that, the points made by the respective counsel were as follows:

For the plaintiffs in error, it was contended:

3. That parol evidence was not admissible to affect the construction of the subsequent charters in question, or to show any intentions or views of the plaintiffs in error and the other contracting parties in making them, because it is not pretended, and there is no evidence professing to show, that there was any outside contract or understanding in reference to any one of them, varying or qualifying the written stipulations in any way, or that any intentions or views of the plaintiffs in error, or of the other parties, were embodied on carried out otherwise than in and through the writings themselves, by which, and which only, all parties agreed to be and held themselves bound.

This point was in conflict with the court's second instruction, and was raised by the sixth prayer of the plaintiffs in error.

Shankland v. The Corporation of Washington, 5 Peters, 394.

Sprigg v. Bank of Mt. Pleasant, 14 Peters, 200.

Selden v. Myers, 20 Howard, 509.

4. That even if parol evidence had been admissible at all, under the circumstances stated in the preceding point, the particular parol proof especially objected to by the plaintiffs in error was not, because it consisted exclusively of statements made by agents of the plaintiffs, not only without authority, but in direct opposition to the written instructions, which constituted their special and only authority. It was not offered on behalf of a party to whom the alleged representations were made, nor to show that any such party was induced, by such representations, to enter into a contract by which he did not intend and agree, knowingly, to be bound. It was the naked offer of the unauthorized statements of agents-made while negotiating contracts, which they were authorized to and did negotiate-produced in evidence, neither to contradict nor to qualify the written stipulations agreed on, nor to avoid the instruments themselves, but merely to show the existence of fraudulent intentions, which, if they existed at all, were not otherwise carried out than by the writings, and the imputation of which is perfectly grantuitous.

This point was raised by the first exception of the plaintiffs in error, and was in conflict with the court's second instruction, also.

2 Starkie's Evidence, 34.

Farlie v. Hastings, 10 Ves. jun., 126, 127.

Betham v. Benson, 1 Gow., 45.

5. That the imputation of fraud, on the part of the plaintiffs in error, was not only gratuitous, but unnecessary. The utmost that could be made out of the charters with the $5 clause, by the aid of all possible parol proof, would be, that they were contracts for the use of vessels, out to the Chincha Islands and back to the United States, at $30 per ton of guano delivered. Let them be as fradulent as could be desired, they could amount to nothing worse than that. If that establishes an 'advance' on the Shirley's freight, it is quite clear that a single charter-party, with provisions equivalent to that, must make out the case of the defendants in error as effectually as fifty. Now, all the charter-parties with the $5 clause, negotiated by Nesmith & Sons, are actually, in terms, to that identical effect, without the assistance of parol proof. All of the vessels so chartered were to proceed 'direct' from New York or the other ports in the United States where they were. The owners elected to do so, in the very act of making the contracts, and the language of the charters was altered accordingly. The case of the defendants in error could not be bettered, therefore, by showing that the Boston charters, with the aid of parol testimony, amounted to what was patent on the New York charters, without it. Hence the parol proof in controversy was as superfluous as it was in opposition to what are believed to be the established rules of evidence.

The counsel for the defendants in error contended:

2. Parol testimony of the declarations and statements of Nesmith & Brown, the agents of F. L. Barreda & Bro., made by them in respect to the charter-parties which they were negotiating, prior to and at the time of the execution thereof, are admissible and competent evidence to explain the meaning and purpose of unusual provisions, to inform the ship-owners whether the plaintiffs in error meant to avail themselves of privileges reserved in the charters, or would waive them, as well as to show the true character of the transaction, that there was in fact a rise in freights, to the benefit of which the defendants in error were entitled, and that it was the object of the plaintiffs in error to disguise and conceal such rise by the form of the charter-parties executed by them.

U.S. v. Gooding, 12 Wh., 469, 470.

American Fur Co. v. U.S., 2 Pet., 364.

Stokes v. Saltonstall, 13 Pet., 183, 186, 194.

Wood v. U.S., 16 Pet., 360.

Wescot v. Bradford, 4 Wash. C. C. R., 500.

Hayes v. Rutter, 24 Pick., 245.

Hammett v. Emerson, 27 Maine, 332, 335.

Franklin Bank v. Steward, 37 ib., 524.

Wilson v. Hart, 7 Taun., 303.

Crocker v. Lewin, 3 Sumner, 1, 6, 10.

Jasigi v. Brown, 17 How., 183.

1 Greenleaf's Ev., sec. 285.

2 Cowen Phillips's Ev., (3d Amer. Ed.,) 354, 368, 369.

Note 290, p. 587.

2 Starkie's Ev., (7th Amer. Ed.,) 765, 766, 790, 791.

Gresley's Eq. Ev., 288.

Powell on the Law of Evidence, 144, 147.

96 Law Library, 100, 102.

Duvall v. Medtart, 4 H. and I., 15.

Byer v. Etnyre, 2 Gill, 160.

The U.S. v. The Amistad, 15 Pet., 594.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Barreda v. Silsbee


text: Talk:Barreda v. Silsbee

title: Talk:Barreda v. Silsbee


text:
Barreda v. Silsbee/Opinion of the Court

This case comes before the court upon a writ of error to the Circuit Court of the United States for the district of Maryland. It is an action of indebitatus assumpsit, and was brought in the court below by the defendants in error, who were the original plaintiffs, to recover the freight earned by the ship Shirley on a charter of the ship made by the plaintiffs to the original defendants for the transportation of guano from the Chincha Islands to the United States. At the date of the charter-party, the defendants were the agents of the Peruvian Government, and, as such, had been for some time in the habit of chartering vessels to bring guano to the United States for sale. Its exportation from the islands is a Government monopoly, in which none except those employed by the Government are permitted to engage, and the defendants are the sole agents of that Government in the United States. They reside in Balitimore, and have agents in New York and Boston, duly authorized to negotiate for vessels, and, after the charters are signed by the owners, to transmit them to the defendants for their approval and signature. Their agents in Boston negotiated the charter of the Shirley, and, after it was executed in behalf of the owners, it was accordingly transmitted and signed by the defendants. It is dated Boston, April 11, 1854, and recites, among other things, that the Shirley was them lying at New York, and that she was to proceed to Callao, from Australia, where she was then bound, and from thence with all convenient dispatch to the Chincha Islands, to take in her cargo of guano. She was to be at Callao ready to load in the course of January and February, 1855, or sooner, and ninety running days were allowed for loading. After completing her loading, she was to proceed direct to Hampton Roads, her place of destination, to receive orders from the defendants or their agents to discharge at any safe port not south of Hampton Roads or north of Cape Ann. Freight was to be paid at the rate of twenty-five dollars per ton, custom-house weight, and the ship was to have the benefit of any advance in the guano freights made by the charterers in the United States before she finished loading at the islands.

She sailed from New York the first of May, 1854, with a full cargo on owners' account, which she discharged at Australia, and sailed thence, in pursuance of her charter, to Callao and the Chincha Islands. Her cargo of guano was loaded between the first day of January and the ninth day of March, 1855, and on the following day she sailed for Callao, and thence to her place of destination for orders. On her arrival at Hampton Roads, she received orders to go to Baltimore, which she accordingly did, and was there unloaded between the first and the twenty-fifth day of July, 1855, having brought home fourteen hundred and fifty-nine tons of guano. Some correspondence, however, had taken place between the parties before the Shirly arrived. On the eighth day of June, 1855, the plaintiffs wrote to the defendants, referring to that clause in the charter providing for an advance, and suggesting that they had been induced to make the charter at the solicitation of their agents, upon the assurance that they should receive every advantage from any rise in freight, and expressing their astonishment at learning that they did not intent to pay more than at the rate of twenty-five dollars per ton, and signifying at the same time their willingness to listen to any fair proposition the defendants had to make. To that letter the defendants replied, under date of the eleventh of June, 1855, to the effect that the guano freights had remained at the same rates since the Shirley was chartered, admitting, however, that they had since taken up certain vessels with the privilege of using them outwards, and saying that they had done so in several instances, and that in such cases they had allowed the vessels a compensation for that use, but that such additional compensation had nothing to do with the rates of guano, as would appear by referring to those charters. Other correspondence took place between the parties, or their counsel, which it is not necessary to notice at the present time. After the cargo of the Shirley was discharged, the defendants rendered an account of the voyage to the plaintiffs, showing a balance in their favor of twenty-one thousand nine hundred and forty-three dollars and eighty-nine cents, calculating the freight at twenty-five dollars per ton, without any allowance for a rise under the advance clause of the charter, which was not satisfactory to the plaintiffs. They claimed a further sum under the advance clause, equal to five dollars per ton upon the whole freight brought home. Seven other vessels were chartered by the defendants between the eleventh day of April and the twenty-seventh day of May, 1854, for the transportation of guano from the Chincha Islands to the United States. All of those charters were introduced by the plaintiffs, subject to objection, and they are substantially the same with that of the Shirley, and contain a similar clause, giving the vessels the benefit of a subsequent rise in the guano freights. On the first day of June, 1854, after these charters were executed, the defendants wrote to their agents in New York and Boston, enclosing a pro forma charter-party for vessels out and home, and authorized and instructed them to take up as many vessels as they could under such charters, without allowing the least deviation from its terms, and directing them in the same communications to keep former rates, without benefit of advance, for home charters. It recites that the vessel taken up shall proceed to Callao, from a port in the Indian or Pacific oceans, 'where she is at present bound,' and thence with all convenient dispatch to the Chincha Islands to take in her cargo, and that the vessel shall be ready to load in the course of January, 1855, and shall thence proceed to Hampton Roads for orders and to discharge, as is provided in the charter of the Shirley. Freight was to be be paid on charters conforming to those instructions at the rate of twenty-five dollars per ton, custom-house weight, and the charters were to contain the following stipulation:

'It is further agreed, that within one week from the date hereof, the owners of the vessel may, if they see fit, elect to dispatch her direct to Callao and the Chincha Islands, to load, as hereinbefore provided; and in case the owners shall so elect, the charterers shall be entitled to all her earnings for such outward voyage, and shall further have the privilege of shipping by her such outward cargo, not exceeding two hundred tons, as they may desire, provided they shall do so within ten days after the owners shall have announced their election. The charterers, on the arrival of the vessel at the home port, to pay, in full satisfaction for such earnings and privilege, and of all outward freight, such gross sum as shall be equivalent to five dollars per ton on the return cargo delivered.'

Twenty-five vessels were subsequently taken up under charter-parties substantially conforming to that stipulation, all bearing date prior to the thirtieth day of July following that instruction. Sixteen were negotiated by the agents of the defendants residing in New York, five by the defendants themselves, and the remaining four by their agents in Boston. In many of these charters, the clause prescribing the port from which the vessel was to proceed to Callao, as contained in the pro forma charter-party, was omitted, and another substituted in its place, as 'from where she was bound,' or 'from Amsterdam, where bound,' or from New York direct to Callao. These deviations, however, from the form of a charter furnished by the defendants must have been approved by them, as all the charters subsequently negotiated by their agents were duly transmitted to Baltimore, and received their signatures, before they went into operation. Some other deviations from the pro forma charter-party, of minor importance, were introduced into one or more of these charters, which it is not important to notice in this investigation, as they all contained the stipulation above mentioned, which is the principal subject of controversy in this suit. Under that stipulation, the owner might elect, within a week from the date of the charter-party, to dispatch the vessel direct to Callao and the Chincha Islands; and in that event, the charterers had the privilege to ship the outward cargo for their own benefit, not exceeding two hundred tons, provided they elected so to do within ten days after the owner announced his decision to send the vessel direct; and in cause the owner so elected and sent the vessel, no matter whether the charterers freighted her out or not, the owner was entitled in all events to demand five dollars per ton on the return eargo of guano, in addition to the twenty-five dollars agreed to be paid in the general clause of the charter-party already stated.

Whether the vessel carried out much or little freight, or none at all, was entirely immaterial to the owner, so far as respected the earnings of the vessel, as the additional compensation in any event was to be estimated and ascertained, not upon the outward freight, but upon the return cargo; and it made no difference in respect to time, as the owner contracted that the vessel, whether freighted or not, should be at Callao ready to load in the course of January, under the penalty of twelve thousand dollars.

That stipulation, whatever might have been its object, resulted in no material pecuniary advantage to the defendants. They did not furnish any outward cargo, except in a single instance, and then only to a small amount, consisting of seven or eight boxes of cigars. In another instance, they offered to ship two iron boilers for Callao, but the owners refused to take them as deck load, alleging that it would be dangerous, and the dispute led to a cancellation of the contract by mutual consent. Except in those two cases, the defendants never attempted to avail themselves of the benefits secured by that provision, either by furnishing the freight directly or by advertising the vessels. Their counsel insist that the additional compensation was paid for the privilege thus secured; and that it makes no difference whether it was exercised or not, inasmuch as they had the right to avail themselves of it if they saw fit, and found it to be for their advantage. All or nearly all of the vessels proceeded directly from the United States, carrying out no freight for the defendants, and on their return were paid the additional five dollars for every ton of guano brought home. How much that additional compensation amounted to does not appear, nor are there any data in the record from which it can be definitely ascertained. According to the charter of the Shirley, she was a ship of nine hundred and ten tons burden, and it appears that she brought home fourteen hundred and fifty-nine tons of guano, reckoned at customhouse weight. Eleven of the charters of the other vessels give their tonnage, showing that their measurement, on an average, is a fraction more than eight hundred tons. Assuming that the average of the eleven, whose tonnage is given, is the true average of the whole number chartered containing that provision, and that each brought home cargo in proportion to the Shirley, it would show that the amount of the additional compensation allowed to those vessels under that clause could not have been much less than one hundred and fifty thousand dollars. Whatever the sum was, whether more or less than the amount supposed, it must be assumed, on the theory of the defendants, that it was allowed and paid by the charterers, in consideration of the privilege secured to load the vessels outward for their own benefit, which privilege the case shows they never exercised to an extent to enable them to realize therefrom more than the sum of fifty dollars. It was insisted by the plaintiffs in the court below that this stipulation was inserted in those charters, as a device to avoid the effect of the advance clause in the charter of the Shirley and other vessels, which had gone out under similar charters, and that the real contract was one to give thirty dollars per ton for the transportation of the guano to the United States, and consequently showed that the charters, within the period specified, had made an advance in the guano freights equal to the amount of such additional compensation.

They also offered parol proof in support of their view of these transactions, which was received by the court, subject to objection.

Such brief portions only of the testimony as are necessary to a proper understanding of the legal questions to be decided will here be reproduced.

In respect to the vessels whose charters required that they should proceed from some port in the Indian or Pacific ocean, the plaintiffs proved that the vessels proceeded direct to Callao, and that the owners, at the time the charters were made, did not and had not contemplated any such indirect voyage, and elected, in the act of executing the charters, to send the vessels direct, and, in some instances, were told immediately, by the agents of the defendants, who negotiated the charters, that they might proceed at once, as there was no outward cargo for them. Those charters from which the above clause had been stricken out still contained the stipulation in question, allowing the election to the owners as to the course of the voyage; and in such cases, the vessels went out in ballast direct to Callao, and on their return from the Chincha Islands with a cargo of guano were paid the additional compensation.

Another class of testimony was to the effect that the agents of the defendants in New York and Boston offered thirty dollars per ton for the charter of the vessels to go direct, and, after the offers were accepted by the owners, that the charters were drawn up, containing this stipulation; and that the owners, when the charters were presented for execution, inquired why they were so drawn, and were told that it was because they had made charter-parties at twenty-five dollars per ton, and consequently did not wish that these charters should show more than that sum; and in one instance, the answer to the inquiry was, that they did not wish these charters to conflict with former charter-parties, which provided for a freight of twenty-five dollars per ton, with the benefit of a rise. These declarations of the agents of the defendants were proved by the owners of the vessels who made the charters. It was proved by the defendants that their agents never had any authority in respect to such charters, except what was conferred by the letters of instruction of the first of June, 1854; and those agents, upon being called as witnesses, denied that they had ever made the declarations ascribed to them by the witnesses called by the plaintiffs.

Further explanatory and rebutting testimony was introduced by the defendants; but, as it does not give rise to any legal question for the consideration of the court, it is omitted.

After the testimony was concluded, the counsel of the defendants requested the court to exclude from the consideration of the jury all the declarations and statements of those agents given in evidence by the plaintiffs, respecting the terms, conditions, or purposes, of the charter-parties negotiated by them, varying from the authority and powers conferred on them by their written instructions; which the court refused to do, so far as regarded the declarations and statements made at the time the charters were executed, and ruled and determined that all such declarations and statements were admissible and competent evidence. To which refusal and ruling the defendants excepted, and their exception was allowed by the court.

Prayers for instruction were then made by both parties-first by the plaintiffs, and then by the defendants. Those presented by the defendants were made the subject of exception. They are eight in number, including the one embraced in the third bill of exceptions; but inasmuch as we have come to the conclusion that the instructions given by the court cover the whole controversy between the parties, they will not be specifically examined; and for the further reason, that their separate consideration would be tedious and unprofitable.

The instructions given by the court are to the effect that, in addition to the balance proved on the account rendered, 'the plaintiffs are entitled to recover such further sum, if any, as the jury may find to have been the advance on the freights agreed to be paid by the defendants to any one for bringing guano from the Chincha Islands to the United States in charters executed here between the eleventh day of April, 1854, and the day the jury shall find the Shirley finished loading at the Chincha Islands.

2. 'That in ascertaining whether any contract for advanced freight was made, the jury are not confined to the consideration alone of the charter-parties executed after the eleventh day of April, 1854, but are to consider them in connection with all the evidence in the case; and if they find that the real contract, in some one or more of the charter-parties, was a contract to bring guano here and deliver it at thirty dollars per ton, and that the five-dollar clause was added to avoid any responsibility under the advance clause in the charter of the Shirley, then the five dollars advance is an advance freight, within the meaning of the first instruction.'

Under these instructions, the jury returned a verdict for the plaintiffs in the sum of thirty thousand nine hundred and forty-four dollars and sixty-two cents. Whereupon, the defendants brought a writ of error to this court.

1. They now insist, among other things, to the effect that the advance clause in the charter-party of the Shirley must be interpreted to refer only to homeward voyages from the Chincha Islands to the United States.

2. That the charter-parties introduced by the plaintiffs to show an advance in the guano freights are on their face for voyages of a different character from that of the Shirley, and afforded no evidence to maintain the action.

3. That the parol evidence introduced by the plaintiffs was not admissible, and should have been rejected.

4. That even if the parol evidence were admissible, and it were competent to treat the charters under consideration as stipulations for a round voyage out and home, they would still furnish no evidence of an advance in the guano freights over the charter of the Shirley, unless it were shown that the earnings of the Shirley out, and the twenty-five dollars per ton home, were less than the thirty dollars per ton stipulated to be paid under that construction of these charters.

I. All of these propositions except one involve, directly or indirectly, the construction of the advance clause in the charter of the Shirley. Under that clause, the Shirley was to have the benefit of any advance in the guano freights made by the charterers in the United States, before she finished loading at the islands. She was chartered on the eleventh day of April, 1854, and finished loading on the eighth day of March, 1855; and consequently her owners where entitled, by the express words of the contract, to claim the benefit of any advance in such freights made by the defendants in the United States between those dates.

Such an advance in guano freights could only be made by the defendants, as they were the only persons in the United States who were authorized by their Government to contract for its transportation. They could raise the price of transportation or reduce it, if the owners of vessels would accept their terms; and if not, they could refuse to contract; and if no contracts for an advance were made by them within the period specified in the charter of the Shirley, then her owners would have no claim for additional compensation. Their right to such compensation was not referred to the state of the market, but to the subsequent contracts made by the defendants for the transportation of guano from the Chincha Islands to the United States. Freights in general might rise ever so much, and it would not benefit the plaintiffs unless the defendants yielded to its influence, and made contracts to give higher rates for the transportation of guano. They might engage in any other branch of commerce, and give what rates of freight they pleased, and yet if they did not make any advance in the guano freights in the United States, it would not confer any benefit upon the plaintiffs. Any other advance in freights, however great and by whomsoever made, were not to be taken into account in determining the question whether the plaintiffs were entitled to additional compensation. In order to avail the plaintiffs in that behalf, it must be an advance made by the defendants, and one paid, or agreed to be paid, as the price for the transportation of guano to the United States; and it must appear that the contract for such payment was made within the period specified in that clause of the charter of the Shirley. Looking, therefore, to the plain import of thae language of the parties, and applying that language to the subject-matter of the contract, as described in the contract itself, it is clear that the word 'freight,' as qualified by the word 'guano,' was used in a special sense, and refers solely to the price paid, or agreed to be paid, by the defendants, within the prescribed time for the transportation of guano from the Chincha Islands to the United States. According to the terms of the contract, the parties agreed that the subsequent transactions of the defendants in the same trade should furnish and constitute the standard or criterion by which their rights and duties towards each other growing out of that clause in the charter-party should be ascertained and determined. Their agreement was to the effect that the plaintiffs contracted unconditionally to perform the service mentioned, for which they were in all events to receive the sum specified in the general clause of the charter-party; and in case the defendants paid or contracted to pay other persons a preater sum for the like service before the Shirley finished loading, then the plaintiffs were entitled to an additional compensation under this special clause, equal to the excess so paid or contracted to be paid to such other parties. They chartered their vessel early in the season, as appears from the date of the charter-party, and it may fairly be inferred from the nature of the transaction and the surrounding circumstances, independently of the correspondence, that some such stipulation was regarded as necessary to protect their interests in the contingency of a rise in freights as the season advanced. Such contingent agreements are of frequent occurrence between merchants and ship-owners, and are entitled to receive a liberal interpretation, as they are in furtherance of trade and equal justice between the parties. They are, perhaps, more frequently based upon the future state of the markets, and not, as in this case, upon the transactions of the merchant in the particular trade. Parties, however, have the right to select what criterion they please; and where their contracts are fairly made, they must receive a reasonable construction, so as to carry their intention into effect, and in general that intention must be gathered from the language employed, the surrounding circumstances, and the subject-matter. Our attention has been drawn to the case of Gether v. Capper, (80 Eng. C. L., 695,) as asserting a contrary doctrine. On a careful examination of the facts of that case, and the opinions of the judges, we have come to the conclusion that it is not opposed to the views here expressed. It was an action for freight upon a charter-party. Under the general clause, a given rate of freight was to be paid in all events, as in this case; and it contained a special clause, which stipulated that the plaintiff 'was to receive the highest freight which he could prove to have been paid for ships on the same voyage, when the vessel passed Elsinore.' At the trial, the plaintiff was unable to prove that any other vessel had made the voyage referred to in the charter-party. Failing in that attempt, he then offered proof that a higher rate had been paid for vessels about that time from Lundswall, or an adjacent port, to London, which is a very different voyage. Whereupon a verdict was taken for the plaintiff, reserving leave to the defendant to move to enter a verdict in his favor, or to reduce the damages, as the court should think fit. A rule to show cause was accordingly granted, and after argument it was made absolute. Separate opinions were given on the occasion by the judges, to the effect that the owner could not entitle himself to the additional compensation by proving that other vessels had been chartered at higher rates from Lundswall to London, that being a different voyage, and not within the fair intendment of the charter-party. Every one of the judges present placed the decision expressly upon the words of the charter-party, and the failure of the plaintiff to bring his case within their intendment. His right to additional compensation was made to depend, by the express words of the contract, upon his being able to prove that other vessels at the time specified received or were to receive higher rates of freight for the same voyage. He failed to exhibit the proof, and, of course, was not entitled to recover. His contract prescribed the criterion by which his claim to additional compensation was to be ascertained and determined, and he had no right to go out of the contract and select a new standard, to which the other contracting party had not consented. It is far otherwise with the plaintiffs in the case under consideration. Their case rests upon somewhat different grounds. They have proved the state of facts on which their right to recover depends. According to the verdict of the jury, and the instructions of the court, their case is brought within the legal intendment of the contract, leaving nothing for the consideration of this court, except the legal questions presented in the bills of exception. Their ship was to have the benefit of any advance in the guano freight made by the charterers in the United States before she finished loading. They contracted to bring guano from the Chincha Islands to the United States for a given rate per ton, and the defendants stipulated to pay that rate, and if they paid or contracted to pay other vessels a higher rate before the Shirley finished loading, then they agreed to give the plaintiffs an additional compensation equal to that excess; and for that excess of rate per ton the plaintiffs were entitled to recover, together with the balance of the account rendered, which was admitted to be correct by the defendants. These suggestions lead necessarily to the conclusion that there is no error in the charge of the Circuit Court, so far as respects the construction of the contract, as the instruction in that particular was in strict conformity to the views here expressed. It was to the effect that if the jury found that the defendants had agreed to pay others more than twenty-five dollars per ton for bringing guano from the Chincha Islands to the United States under charter-parties executed here between the dates before mentioned, then they were authorized to find a verdict in favor of the plaintiffs for that excess. All of the charters relied on by the plaintiffs as tending to show that such was the fact, were substantially of the same character, so that if one had that tendency, then all had, and that was conceded in the argument, and must have been so understood by the jury.

II. In the next place, it is insisted that the declarations and statements of the agents of the defendants, made at the time those charters were executed, were improperly admitted as evidence, and two grounds are assumed in support of the proposition. First, that they were made without authority, and therefore were not admissible to affect the interest of the defendants; and, secondly, that they were admitted in violation of the well-known rule that parol evidence is not admissible to explain, vary, or contradict, a written instrument. All such declarations and statements made subsequently to the execution of the charters were properly rule out and excluded from the consideration of the jury.

1. Some brief reference to the facts of the case becomes necessary, in order to test the correctness of the first ground assumed under this last proposition. Full authority had been conferred upon those agents to negotiate for the vessels whose charters were introduced by the plaintiffs. Those declarations and statements were made by their agents in respect to the subject-matter of the negotiation, and at the time the charters were presented to the owners of the vessels for execution. After they were executed by the owners, they were forwarded to the defendants and received their signatures, and every assurance given by the agents to the owners of the vessels was subsequently made good by the defendants. They were told there was no outward cargo for them, and that they might proceed immediately; and they were allowed to do so, without objection or remonstrance. The vessels carried out no freight, and, on their return, the owners were paid thirty dollars per ton on the return cargo, without hesitation or complaint. Accompanying those explanations were others to the effect that the stipulation in question had been inserted in the charters, so that they might not conflict with those previously made pro viding for a rise in freight; and the circumstances fail to dis close any other substantial purpose for which it was done.

Parties do not usually contract heavy pecuniary obligations without some object in view; and as no substantial one is disclosed, except the one assigned by the plaintiffs, it is impossible to say, as matter of law, that the charters in question and the surrounding circumstances had no tendency to maintain the issue for the plaintiffs. Where the fact of agency has been proved, says Mr. Starkie, either expressly or presumptively, the act of the agent, co-extensive with the authority, is the act of the principal, whose mere instrument he is, and then, whatever the agent says, within the scope of his authority, the principal says; and evidence may be given of such acts and declarations, as if they had been actually done and made by the principal himself. That principle was directly sanctioned by this court in United States v. Gooding, 12 Wheat., 470, where the views of the author, as above quoted, where cited and approved (2 Star. Ev., 45.) Whatever the agent does in the lawful prosecution of the business intrusted to him by the principal, is the act of the principal; and there, says Mr. Greenleaf, his representations, declarations, and admissions, respecting the subject-matter, will also bind him, if made at the same time, and constituting a part of the res gestae, and they are of the nature of original evidence, and not hearsay; and Judge Story, in his valuable Treatise on the Law of Agency, maintains the same doctrine. (1 Greenl. Ev., 35; 113 Story on Ag., sec. 134.) Acts and declarations of an agent are admissible under such circumstances, upon the ground that, whatever an agent does or says in reference to the business in which he is at the time employed, and within the scope of his authority, is done or said by the principal, and consequently may be proved in like manner as if the evidence applied personally to the principal. (American Fur Co. v. The United States, 2 Pet., 364.) On the whole case, we are of the opinion that the evidence of original authority in the agents was sufficient to warrant the court in submitting their declarations and statements to the jury.

In the same connection, it was also denied at the argument that there is any sufficient evidence in the case to show that the agents of the defendants had any authority to make deviations from the pro forma charter-party furnished to them on the first day of June, 1854. A recurrence to the evidence, however, will show that the suggestions are not well founded. They commenced negotiating for vessels under those instructions shortly after they were received, and continued the business till nearly the close of July. All the charters, after they were executed by the owners, were forwarded to the defendants, and received their signatures. One bears date as early as the fifth day of June, and others as late as the twenty-ninth day of July, showing that they were approved as they were forwarded, and at different times. These facts present strong presumptive evidence of authority, fully warranting the court in submitting the question to the jury.

2. The second ground assumed by the defendants, under this proposition, is, that the declarations and statements of their agents ought to have been excluded, for the reason that parol evidence is not admissible to explain, vary, or contradict, a written contract. That principle, as a general rule applicable to parties and privies, and their representatives, and those claiming under them, is undeniable, and is not disputed by the counsel of the plaintiffs. They contended, however, in the court below, and still insist, that the right of the plaintiffs to demand additional compensation in this case was made to depend, by the express words of the contract, upon the subsequent transactions of the defendants in the same trade, and that the stipulation in the subsequent charters is so framed that it covers up and conceals the real nature of the contracts between the parties. They went farther in the court below, and still insist that the real contract was one to pay thirty dollars per ton to bring guano from the Chincha Islands to the United States, and that the stipulation was framed in the form in which it appears, graduating five dollars on the outward and twenty-five dollars on the home voyage, for the express purpose of relieving the defendants from the responsibility which they had incurred to the plaintiffs, under the charter of the Shirley, and the jury have found all these alleged facts in favor of the plaintiffs. Whether the jury were warranted in so finding or not, is not a question for an appellate tribunal. That question cannot be re-examined by this court. For the purposes of any examination of the case which it is competent for this court to make under the Constitution of the United States and the laws of Congress, it must be assumed that the facts of the case have been correctly found by the jury. Repeated decisions of this court have affirmed the doctrine, which is but a repetition of the constitutional provision upon the subject, that no fact tried by a jury shall be otherwise re-examinable in any court of the United States than according to the rules of the common law; and it is well known that the only modes known to the common law of re-examining the facts of a case, after they have been found by a jury, are the granting of a new trial by the court where the issue was tried, or to which the record was properly returnable, or by the award of a venire facias de novo by an appellate court, for some error of law which intervened in the proceedings.

Parsons v. Bedford et al., 3 Pet., 447.

United States v. King et al., 7 How., 845.

Richardson v. Doane, 3 Dall., 102.

United States v. Eliason, 16 Pet., 301.

Phillips v. Preston, 5 How., 289.

Whether the evidence, when offered, is admissible, is a question for the court; but when admitted, the question whether it is sufficient or not is for the jury, and it is their province to draw from it all such inferences and conclusions as it conduces to prove, and which, in their judgment, it does prove; and their finding is conclusive, unless a new trial is awarded by the court in which the case is tried, or in the appellate tribunal, for some error of law. Guided by these principles, it must be assumed, in the further examination of this question, that the facts are as they have been found to be by the jury. It then appears that the real contract in these charters was one to pay thirty dollars per ton for bringing guano from the Chincha Islands to the United States, and that the stipulation in question was inserted in the charters to cover up and conceal the real nature of the contract, in order to enable the defendants to relieve themselves from the responsibility which they had incurred in their previous contract with the plaintiffs; and the question is, whether the parol evidence was properly admitted to prove those facts. When the plaintiffs offered to prove those facts in the court below, the question was then presented to the Circuit Court precisely as it is here stated. Evidence, when offered at the trial, must be assumed to exist, and to be true, for the purpose of determining the question of its admissibility. Proof, such as was offered and received in this case, could only be rejected upon one of two grounds-first, that the evidence of the facts was not admissible; and, secondly, that if the facts were proved, they would have no tendency to maintain the action. That they would maintain the action if proved, no one can doubt; so that the only question is, whether they were admissible.

One further explanation is necessary, in order to present the question in its true light. It is not pretended that the parol evidence conflicts in any manner with the written contract on which the suit was brought. On the contrary, the objection is directed solely to its effect upon the charter-parties subsequently executed by the defendants with the owners of the other vessels. Those charters were introduced by the plaintiffs as evidence in the cause, to show their right to recover. They also relied on the circumstances attending the transactions, and the declarations and statements of the agents who negotiated them, and the subsequent conduct of the defendants in respect to the same subject-matter. At the trial, the charters were submitted to the jury as evidence, and the jury were told, in effect, that they were not confined to the charters alone, but were at liberty to consider them in connection with all the other evidence in the case, in order to ascertain what the real contracts were between those parties.

Where the effect of a written agreement collaterally introduced as evidence, as in this case, depends, not merely on the construction and meaning of the instrument, but upon extrinsic facts and circumstances, the inferences of fact to be drawn from it must be left to the jury. It was so held by this court in Etting v. The Bank of the United States, 11 Wheat., 75, and we think the principle is correct. In that case, the testimony consisted of various communications and reports made to the bank, of their own transactions, and of the admissions of the parties or their agents, and it was insisted, on the part of the bank, that the jury were not at liberty to draw inferences of fact from the written evidence; to which objection, Marshall, Ch. Jus., replied, that 'were the fact as alleged, and were it true that all the testimony is in writing, the consequence drawn from it cannot be admitted.' Other cases have been decided by this court, applying the same doctrine as in Iasigi v. Brown, 17 How., 182. That was an action brought to recover damages against the defendant for a false representation respecting the pecuniary standing of a third party, whereby the plaintiff had been induced to sell goods, and had incurred loss. Letters were introduced, and facts and circumstances connected with them proved; and this court held that it was for the jury to say, after examining the letters in connection with the facts and circumstances, whether they were calculated to inspire, and did inspire, a false confidence in the pecuniary responsibility of the party, to which the defendant knew he was not entitled.

Another view of the question is also very properly invoked by the plaintiffs. Their claim to additional compensation, by the express words of the contract, was made to depend upon their being able to exhibit proof that the defendants had paid other parties a higher rate than twenty-five dollars per ton for the same service. Oral proof to that effect, if credible, was as good as written. They were at liberty to rely upon the one or the other, or upon both combined, as circumstances might indicate it to be for their interest or convenience. Beyond question they might introduce those charters for that purpose, if they saw fit; or, if they had the means, and preferred to do so, they might prove their case by other evidence; and it cannot be maintained that their right to do so was in any manner impaired after those charters were introduced. They were not parties to those contracts, nor did they in any legal sense claim under them. Their rights being made to depend upon the subsequent transactions of the defendants with third parties, it was clearly proper to admit proof to show what those transactions were.

Several courts and text writers have stated the principle much broader than it is here laid down. The rule excluding parol proof in such cases, says Mr. Greenleaf, cannot affect third persons; who, if it were otherwise, might be prejudiced by things recited in the writings contrary to the truth, through the ignorance, carelessness, or fraud, of the parties, and who therefore ought not to be precluded from proving the truth, however contradictory to the written instruments of others. In Krider v. Lafferty, (1 Whar., 314,) it is held, that the rule is applicable only in suits between parties to the agreement, and their representatives and those claiming under them, and not to strangers. It is also held in England, in several cases, that the rule is not applicable to strangers. (King v. Inhabitants of Cheadle, 3 Barn. and Ad., 833; 2 Taylor's Ev., sec. 827, and cases cited; Wilson v. Hart, 7 Taun., 294; Overseers of Berlin v. Norwich, 10 John., 229; Poth on Obl., by Evans, n. 766; 2 Cow. and H., notes, 354, 368; Reynolds v. Magness, 2 Ired., 26; 1 Greenl. Ev., sec. 279.)

Parol testimony is always admissible in matters of contract, to show fraud, notwithstanding its effect may be to contradict what is in writing. That principle is too well established and too generally acknowledged to require any confirmation. Parties have the right to make their own contracts; and, in general, when they are satisfied, that is sufficient, and others have no right to complain. Cases, however, occasionally arise, where a contract, though bona fide between those who made it, may operate as a fraud upon third parties; and in this case, assuming the facts to be as they have been found by the jury, and as the evidence tends to prove, that the stipulation in question was inserted in those charters for the purpose of enabling the defendants, by that device, to avoid their responsibility to the plaintiffs, whether the owners of the vessels knew the purpose or not, the act so far partakes of the nature of a fraud between the parties to this suit as to authorize the introduction of parol evidence, to show what the truth was in regard to those transactions.

For these reasons, we are of the opinion that the instructions given by the Circuit Court were correct, and that there is no error in the record.

The decree of the Circuit Court therefore is affirmed, with costs.

Mr. Justice WAYNE, Mr. Justice CATRON, and Mr. Justice GRIER, dissented.

title: Barreda v. Silsbee/Opinion of the Court


text: Talk:Barreda v. Silsbee/Opinion of the Court


text:
United States v. Sutter

THIS was an appeal from the District Court of the United States for the northern district of California.

It was a claim made by Sutter for land in California, under two different grants.

1. A claim for eleven leagues of land, alleged to be granted to him by Alvarado, on the 18th of June, 1841.

2. A claim for an additional quantity of twenty-two leagues, alleged to be granted to him and his son, John A. Sutter, by Micheltorena, on the 5th of February, 1845.

The board of commissioners confirmed both claims, and this decree was affirmed by the District Court. The circumstances of the case are so fully related in the opinion of this court, that it is unnecessary to repeat them.

It was argued by Mr. Black (Attorney General) and Mr. Hull for the United States, and by Mr. Crittenden, Mr. Butler, and Mr. Walker, for the defendant in error. The points made in the argument are mentioned in the opinion of the court, together with remarks upon them, which render it unnecessary to state the points more particularly.

Mr. Justice CAMPBELL delivered the opinion of the court.

title: United States v. Sutter


text: Talk:United States v. Sutter

title: Talk:United States v. Sutter