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The Elgee Cotton Cases/Opinion of the Court

These cases have been elaborately and very ably argued, touching both the legality and the construction of the contracts under which the different parties claim. But in the view which we take of the merits of the controversy it is unnecessary to do more than to examine the contracts themselves, and to determine what is their true meaning.

The fundamental question, in all the cases, is whether Elgee parted with the ownership by either of the contracts found by the Court of Claims to have been made by him, or for him by his agent, Gordon. It is the owner alone who has any standing in the Court of Claims under the Captured and Abandoned Property Act. In regard to such property, only such suits can be brought as are authorized by the statute. That statute furnishes a complete system for the prosecution of claims under it, and defines the extent of the rights which those who claim an interest in the proceeds of property captured or abandoned during the civil war, may assert against the government. According to the wellknown rules of statutory construction, the system is exclusive of all others, and the rights defined are the only ones which can be enforced in any judicial proceeding. The language of the act makes it plain that no one is allowed to sue in the Court of Claims for the proceeds of captured or abandoned property unless he can prove to the satisfaction of the court three things: first, his ownership of the property seized; secondly, his right to the proceeds thereof; and, thirdly, that he never gave aid or comfort to the rebellion. The third, it is true, has been ruled by this court to be no longer necessary since the amnesty proclamations, but the ownership of the property at the time of the seizure, and the right to the proceeds thereof, are still indispensable to any standing in court as a claimant for the proceeds of property captured, which have been paid into the treasury of the United States.

We are, then, to inquire whether either Woodruff & Co., or Haller Nutt had acquired the ownership of the cotton prior to its seizure by the agent of the United States, on the 2d of April, 1864; for if either of these parties had become the owner and entitled to the proceeds of its sale before that date, that party is entitled to a judgment for the sum remaining in the treasury, after the deductions are made provided by the statute. If, on the other hand, neither of those parties has shown that Elgee parted with his title; if the ownership remained in Elgee until after the seizure, and until his death, his representatives are the only persons that are authorized to sue for the proceeds of the cotton in the Court of Claims, for they only are the owners, whatever equities may exist in favor of the parties who contracted to buy.

We come, then, at once to the question whether Woodruff & Co. acquired the ownership of Elgee. If they did, it was mediately through C. S. Lobdell. They made no contract with Elgee, but Lobdell did, and they purchased Lobdell's contract. The contract between Lobdell and Elgee appears in the findings of the Court of Claims.

At the time when the contract was made the baled cotton was stored under a covering of boards at some place not certainly designated. A portion equal to about twenty bales unabaled was in a gin-house on Buffalo Bayou, at a place known as 'The Rocks,' or 'Felter's Plantation,' about ten miles from the Mississippi River. At this latter place Lobdell and the agent of Elgee met. Whether it was the same place where the bulk of the cotton was lying does not distinctly appear. Immediately after the contract Lobdell employed Morris, living near where the cotton was stored, 'to watch and take care' of it, and paid him therefor, and Morris continued his care until the cotton was seized by the agent of the United States. But it does not appear that the possession was surrendered to Morris, or that there was any change of possession. At this time, the region where the parties were was greatly disturbed by the war, and the cotton was in danger of being burnt by the Confederate forces, and of being captured by the United States. Under these circumstances, what ought it to be concluded was intended by the contract between Gordon and Lobdell? Was it intended to pass the property in the cotton to the purchaser, or was it in legal effect only an agreement to sell?

It must be admitted there is often great difficulty in determining whether a contract is itself a sale of personal property so as to pass the ownership to the vendee, or whether it is a sale on condition, to take effect or be consummated only when the condition shall be performed, or whether it is a mere agreement to sell. It is, doubtless, true that whether the property passes or not is dependent upon the intention of the parties to the contract, and that intention must be gathered from the language of the instrument. There are, however, certain rules for the construction of such contracts, which are well settled in England, and, we think, also in this country. Mr. Justice Blackburn, in his work on sales, states two of them, and Mr. Benjamin, in his treatise, adds a third. They are as follows: First. 'When, by the agreement, the vendor is to do anything to the goods for the purpose of putting them into that state in which the purchaser is bound to accept them, or, as it is sometimes worded, into a deliverable state, the performance of those things shall, in the absence of circumstances indicating a contrary intention, be taken to be a condition precedent to the vesting of the property.'

Second. 'Where anything remains to be done to the goods for the purpose of ascertaining the price, as by weighing, measuring, or testing the goods, where the price is to depend on the quantity or quality of the goods, the performance of these things shall also be a condition precedent to the transfer of the property, although the individual goods be ascertained and they are in the state in which they ought to be accepted.'

Third. 'Where the buyer is by the contract bound to do anything as a consideration, either precedent or concurrent, on which the passing of the property depends, the property will not pass until the condition be fulfilled, even though the goods may have been actually delivered into the possession of the buyer.'

These may be regarded as rules for ascertaining the intention of the parties. They are in most cases held to be conclusive tests. Though not supported by all the decisions, they certainly are generally accepted in England, and by most of the courts in this country. And they are the rules which are applicable to contracts for the sale of specific chattels, contracts which define the articles which are the subjects of agreement, either single articles or aggregates separated from others, as the grain in a bin, the hides in a specified vat, &c., &c., or such a case as the present, all the cotton at a designated place. A considerable number of the numerous authorities which justify these rules are collected by Mr. Benjamin in his Treatise on Sales. Applying them to the contract now under consideration, we think it cannot be maintained that the parties intended the contract should pass the ownership of the cotton at once to the buyer, without any ascertainment of the whole price by weighing, without its complete preparation for delivery, without any delivery, and without payment. This is not the case of an unconditional sale of a specific chattel for an ascertained price. Its subject was the crops of cotton then lying in Wilkinson County. The contract was a cash contract. No credit was intended. An ascertainment of the price by weighing was contemplated, though it is not stated where the weighing should be done. The vendor undertook to deliver at Fort Adams. He was to deliver it in bales. Yet all the property was not in a deliverable state. Part was unginned, unbaled, and unbagged. The vendor was to prepare it for delivery by ginning, baling, and bagging it, and Lobdell was to furnish the necessary bagging, rope, and twine. This was to put the cotton into the condition in which he was bound to receive it, for he was not bound to receive any unless the whole was ginned, baled, and bagged. The contract was entire. And the vendor was not bound to put the cotton into a deliverable state unless Lobdell furnished the necessary materials. Besides, it was stipulated that the cotton should be received by Da Silva & Co.

Our conclusion does not rest merely on the ground that the cotton was not weighed or delivered. It is unnecessary to decide that weighing the cotton was in this case a prerequisite to the transmission of the property, though that appears to be the law in England, when by the contract the goods are to be weighed by the vendor, or by him concurrently with the vendee. In the leading case of Hanson v. Meyer, where it appeared that under a contract of sale a vendee agreed to purchase all the starch of the vendor, then lying at the warehouse of a third person, at so much per hundred weight, by bill at two months, and the starch was in papers, but the exact weight was not then ascertained, and was to be ascertained afterwards, and fourteen days were to be allowed for the delivery, and where the vendor gave a note to the vendee, addressed to the warehouse-keeper, directing him to weigh and deliver to the vendee all his starch, it was decided that the absolute property in the starch did not pass to the vendee before the weighing, which was to precede the delivery and to ascertain the price. And this, though a part had been weighed and delivered, and though a credit was given. Nothing was wanting to specify the subject of the contract. It was all the vendor's starch in the warehouse. So in Simmons v. Swift, where the contract was, 'I have this day, October 23d, sold the bark stacked at Redbrook, at 9 5s. per ton of twenty-one hundred weight, to Hezekiah Swift, which he agrees to take and pay for on the 30th of November,' and some of the bark was weighed and delivered, it was held that the property in the residue did not vest in the purchaser until it had been weighted. In Logan v. Le Mesurier, the sale was by the following contract: 'Hart, Logan & Co., of Montreal, sell, and Le Mesurier, Routh & Co., of the same place, buy a quantity of red-pine timber, the property of Thomas Durell, of Hull, L. C., but under the control of the sellers, now lying above the rapids, near the Chaudiere Falls, Ottowa River, and stated by the said Thomas Durell to consist of 1391 pieces, measuring 50,000 feet, more or less, deliverable at Quebec on or before the 15th of June next, and payable by the purchasers' promissory notes, at ninety days from this date, at the rate of 9 1/2d. per foot, measured off. Should the quantity turn out more than above stated, the surplus to be paid for by the purchaser at 9 1/2d. per foot on delivery, and should it fall short, the difference to be refunded by the sellers.' It was held that by the terms of the contract the sale was not complete until the measurement and delivery of the timber was made, and that the transfer of the property was postponed until the measurement at the delivery. Here the timber was fully specified by the description, and by the place where it lay. A statement of the estimated quantity was given; the time and place of delivery was designated, as was the price per foot, measured off. Credit was also stipulated for. It was the case of selling ascertained chattels for an ascertainable sum. If this stood alone the contract would have passed the property, but it was controlled by the provisions for the possession, carriage, and delivery, as well as the measurement and readjustment of the price. Many other English cases to the same effect might be cited. We do not understand that there is any disposition to depart from the doctrine of these cases, or that of Mr. Blackburn's first and second rules. Of course, when nothing remains for the seller to do, when the weighing or measurement stipulated for is incumbent upon the buyer, or when the parties have provisionally agreed that a certain sum shall be taken for the price, subject to future correction, the contract is not within the rules. Turley v. Bates has sometimes been thought a departure from the earlier cases, but we think without reason. It was the case of the sale of an entire heap of fire-clay at two shillings per ton. The buyer was to cart it away and weigh it. He weighed, removed, and paid for a part, and refused the rest. It was held the property of the whole heap had passed to him. But here the seller had nothing to do with the weighing or delivery. He had performed all he was required to do, either for ascertaining the quantity or the price. Besides, the jury had found as a fact that the sale was of the whole heap. The case of Kershaw v. Ogden is in substance the same. In each of these cases the contract was in parol, and what it was, necessarily for a jury.

It is true there are some American decisions, especially in New York, that are not in entire harmony with those we have cited. There are at least some dicta in Crofoot v. Bennett, tending to show that specification of the subject in a contract for sale is sufficient to pass the property, though the vendor has the duty still of ascertaining the entire price by weighing or measuring before delivery. And in Kimberly v. Patchin, and Russell v. Carrington, it seems to have been ruled that the sale of a specified quantity of grain, part of a larger bulk, with a receipted bill of sale and an order for the grain, passed the title without any actual separation of delivery of the property. These decisions, we think, are not in accordance with the authorities generally in this country. They are in conflict with later decisions in New York. In Kein v. Tupper, the English rule was strictly accepted. There, it was said by Chief Justice Church, that when anything remains to be done by the vendor to ascertain the identity, quantity, or quality of the property, no title passes. That was the case of a sale of a certain number of bales of cotton, described by marks, at so much per pound, and the court said, as the cotton was to be weighed by the vendors to ascertain the quantity, and sampled by both parties to ascertain the quality, no title passed until these acts were done. We do not care, however, to review the decisions on this subject farther, for the stipulation in the contract now under consideration, that the cotton should be paid for when weighed, was only one of several provisions tending to the conclusion that the intention of the parties was not to effect an immediate passing of the property.

We have already noticed that no sale upon credit was intended. There was, therefore, no reason why the vendor should part with anything before the purchase-money was paid or tendered. The possession was certainly retained. The vendors undertook to deliver at Fort Adams. To enable them to carry, and thus deliver, possession was indispensable. The contract also provided that the cotton should be received by Da Silva & Co. This agreement to carry and deliver at Fort Adams on the Mississippi, where it was obviously intended the contract should be consummated by the receipt of the cotton and the payment of its price, concurs with other circumstances in indicating a purpose of the parties that the property was not intended to be changed until the weighing, delivery, receipt, and payment took place. So it was regarded in Logan v. Le Mesurier. Indeed, assuming, as the contract warrants, that the sellers were to carry the cotton to a designated place, and to ascertain its quantity and aggregate price by weight before delivery, and assuming that it was then to be received, and that payment for the whole was to be concurrent with the delivery, it is hard to find any intention that the owners intended to part with their ownership while the cotton lay at Felter's plantation.

Added to this is, we think, a very significant circumstance. The contract shows that a portion of the cotton was not in a condition for delivery. True, it was relatively but a small portion, sufficient, as found by the court, to make about twenty bales. But, as we have noticed, the contract was entire. It was for all the crops. The purchaser was under no obligation to take less than the whole. The subject of the contract was baled cotton, and Lobdell bargained for that. Nothing in the contract, indeed, shows clearly how much of the cotton was unginned, and how much was unbaled, but it reveals that a portion was, and certain it is it was considered essential that all which had not been ginned and baled and bagged, should be put into that condition before the vendee was required to accept it. And this the sellers were required to do. So much is clearly implied in the contract. If, then, it be, as asserted in Mr. Blackburn's first rule, that when anything remains to be done by the seller for the purpose of putting the goods into that state in which the purchaser is bound to accept them, or, in other words, into a deliverable condition, the property does not pass, it cannot be held that there was any intention of Gordon, or his principals, to transmit to Lobdell the ownership of the cotton before its delivery and before the payment of its stipulated price. We do not deny that a person may buy chattels is an unfinished condition and acquire the right of property in them, though possession be retained by the vendor, in order that he may fit them for delivery. But in such a case the intention to pass the ownership by the contract cannot be left in doubt. The presumption is against such an intention.

It should also be noticed that Lobdell undertook by the contract to furnish the necessary bagging, rope, and twine to put the unginned and unbaled cotton in a deliverable state. Obviously this was to be done before the sellers were bound to deliver. It was, therefore, a condition precedent upon which the vendee's right depended. With this condition there was no compliance, and thus neither the vendors nor the vendee did all that it was contemplated and agreed they should do preparatory to the acceptance of the goods, or to bring the cotton to the condition in which it was understood it should be to entitle the sellers to the price stipulated.

On the other side it has been argued with much earnestness, that the provision in the contract, the cotton from the date thereof should be at the risk of Lobdell, exhibits an intention of the parties that the property should pass. It must be admitted that when a contract of sale has transmitted the property in its subject to the buyer, the law determines, in the absence of agreement to the contrary, that the risk of loss belongs to him. This is a consequence of his ownership, though undoubtedly the property may be in one and the risk in another. But it needs no agreement that the buyer shall take the risk, if it is intended the ownership shall pass to him. Hence the stipulation that the cotton should be at the risk of Lobdell after the date of the contract, instead of showing an intention of the parties that the right of property should pass to him, seems rather to indicate a purpose that the ownership should remain unchanged. Else why introduce a provision totally unnecessary? Such was the inference drawn from the introduction of a similar clause in a contract considered in Martineau v. Kitching. There it was stipulated that the goods should remain at the risk of the sellers, and Lord Cockburn asked 'if the property in the goods had not passed to the buyers why it was said the goods should remain at the risk of the sellers?' adding further, 'what would be the necessity, what would be the object and purpose of such a stipulation if the property still remained in them? Of course it would be at their risk.' It may be asked what then was the object of stipulating that the cotton should be at Lobdell's risk if it was not intended to evidence a transmission of the title? No doubt some purpose existed, and we think it may be found in the circumstances in which the parties stood when they contracted. The cotton was in a disturbed region of the country. It was in danger of destruction by the Confederate forces, and of capture by the United States forces. The sellers undertook to carry and deliver it at the landing at Fort Adams. Such a delivery might be rendered impossible by the vicissitudes of the war, and hence it was a reasonable provision that Lobdell should bear the risk, that the sellers should not be answerable in damages in case of Confederate burning or Federal capture. To us this is a sufficient explanation of the assumption of the risk by Lobdell, without regarding it as a mutual recognition of a change of ownership.

It is hardly necessary to add that the receipt of $30 'in order to confirm the contract,' can have no bearing upon the question whether the property passed. The confirmation of the contract and its effect are distinct matters. Whatever may have been thought by some old writers respecting the effect in the transmission of property, of giving and receiving earnest-money, it is now considered of no importance, or of the smallest importance. The subject is discussed in Benjamin on Sales, and the conclusion is reached that the true legal effect of earnest is simply to afford conclusive evidence that a bargain has been actually completed, with mutual intention that it should be binding on both; and that the inquiry whether the property has passed in such cases is to be tested not by the fact that earnest is given, but by the true nature of the contract concluded by giving the earnest. The author says further, 'No case has been found in the books in which the giving of earnest has been held to pass the property in the subject-matter of the sale, where the completed bargain, if proved in writing, or in any other sufficient manner, would not equally have altered the property.'

In our judgment, therefore, the contract of July 31st, 1863, must be regarded as only an agreement to sell, and not as effecting a transfer of the ownership. It left the property in Elgee, where it was before.

We are the better satisfied with this conclusion because it works substantial justice, and because it accords with what appears to have been the subsequent understanding of the parties. The bargain was for cash, yet no steps were taken to consummate it until after the cotton was seized in April, 1864. Never indeed. No tender of the price was made, the cotton was neither weighed, delivered, nor received, and, throughout, both parties appear to have treated the agreement as merely executory.

The result of what we have said is that neither Lobdell, nor Woodruff & Co., who claim under him, had any such ownership of the cotton as to entitle them or either of them to sue in the Court of Claims for its proceeds.

We come next to the claim of Mrs. Nutt, executrix of Haller Nutt, deceased. A very vigorous argument has been made to us in support of this claim, but we think it cannot be sustained. Assuming that Nutt's contract with Elgee, made in October, 1863, was not illegal, that it was not in violation of the non-intercourse laws, it still was not such a contract as passed the property in the cotton. The finding of the court is, that in October, 1863, Truman Holmes, as the agent of Dr. Nutt, contracted with Elgee for the sale from him of so much of the 2100 bales of cotton stowed at Felter's plantation as he (Holmes) should get out in safety to a market, for the price of 15 per bale, to be paid in Liverpool. The risk of the cotton till got out to be on Mr. Elgee. That this was but an executory contract is very plain. Its subject was indefinite. It was not necessarily the 2100 bales; not certainly any of them. It was simply so much of them as Holmes should get out in safety to a market. The agreement contemplated that he might never get out any. If so nothing was agreed to be sold. In fact he never did get out a bale. Whatever else may be dispensed with, it is certain that there can be no sale of personal chattels without a specific identification of the thing sold. Which of the whole number of bales could the purchaser say was his? For which of them could he have been compelled to pay? And there is no evidence that Holmes ever received the cotton or any part of it, or asserted any possession, though the sale was on credit, and if the property was his principal's he was entitled to remove it at once to a market.

Our attention has been called to the letter dated October 8th, 1863, and addressed by Elgee to Holmes afterwards, which it is argued was itself a sale. This letter was not found by the court to have been the contract between the parties. It refers to the former agreement, and evidently it was intended as a direction where to pay the price of the cotton, if any should be got out, and if any purchase-money should become due. It had no other purpose. It was not even a delivery order. Much less can it be regarded as a bill of sale. And there is no finding that it was accepted. The only contract, therefore, respecting the sale of the cotton to Holmes upon which the executrix of Dr. Nutt can rely, is that found by the court to have been made; a contract for the sale of so much of the 2100 bales as Holmes should get out in safety to a market, and that contract passed no property in the cotton.

This disposes of the whole case. The property in the cotton was in Elgee, and neither of the contracts proved divested him of his ownership. The result is that his personal representatives are entitled to a judgment for the entire proceeds of the cotton held in trust for the owner.

JUDGMENT REVERSED, and the record is remitted with instructions to dismiss the petitions of Woodruff & Co., and Mrs. Nutt, executrix, and to enter a judgment in favor of the personal representatives of Elgee, for the sum found in the treasury, the net proceeds of the sale of cotton.

Dissenting, Justices BRADLEY and HUNT.


text: Talk:The Elgee Cotton Cases/Opinion of the Court

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Fretz v. Stover

APPEAL from the District Court for the Eastern District of Virginia; the case being thus:

For several years prior to February 25th, 1861, a litigation had been waged by Fretz and wife, residents of Pennsylvania, against Stover, a resident of Fauquier County, Virginia; a certain Chilton, a lawyer in embarrassed circumstances, and resident in the same county, being the counsel of the former. The suit was for property claimed by the wife. On the said 25th of February, 1861, a compromise was effected between the parties, and it was agreed that Stover should give his bond to Fretz and wife, secured by a deed of trust to Chilton, as trustee, of a valuable farm, specified, for $2366, payable on or before the 1st of March, 1863. Fretz and his wife now returned to their home in Pennsylvania, leaving their attorney, Chilton, to see that the compromise was properly carried out, and that all details necessary for its completion were attended to. Chilton did thus accomplish matters; and Stover having, on the 8th of April, 1861, executed his bond, payable on or before March 1st, 1863, to Fretz and his wife, and transferred to Chilton by deed of trust for Fretz and his wife the farm to secure it, both instruments were delivered in form to Chilton. Of all this Fretz was informed. At the time when the compromise was made the country was in a disturbed condition with the Southern issues; but intercourse between all parts of it was still common, and as yet no war existed. On the 12th of April, 1861, Sumter was fired on by rebels, and civil war became flagrant. All communication ceased between Pennsylvania and that part of Virginal in which Chilton and Stover lived.

In 1864, intercourse being restored between Fauquier County, Virginia, and Pennsylvania, Chilton wrote Fretz saying 'that the papers were all safe, and that he would keep them safe, as he could collect nothing but Confederate money.' In the autumn of 1865 Fretz went to Fauquier County, where he saw Chilton, and Chilton then told him that he had received nothing on account of the bond; showed him a letter from Stover offering to pay it in Confederate money, which money Chilton said that he had not taken because it would have been of little use to him, Fretz. In 1866, that is to say, after the war was ended, Fretz learned accidentally that the bond had been paid in December, 1862, not wholly in notes of the Confederate States, but partly in them and partly in notes of Virginia banks; the security for the payment of which latter was bonds of the Confederacy; and the bonds and all the notes, of course, becoming worthless alike with the fall of the Confederacy itself. Chilton was alive at this time, but soon after (1867) died in solvent, and Fretz now (August 9th, 1869) filed a bill in the court below (his wife not being a party) against Stover to set up and have enforced the deed of trust; the ground of the bill being that Chilton had no authority to receive payment in paper such as he did receive it in, nor Stover the right to make it. The bill set forth the general history of the transaction, alleged 'that the said bond and the deed of trust securing the sum of money specified in the bond were left with the said Chilton as the attorney at law of the complainant, the deed of trust for record and the bond for collection at its maturity.' It charged actual fraud between Chilton and Stover in this, that Stover, taking advantage of Chilton's great pecuniary necessities, induced him to receive the Confederate and Virginia paper money at par in payment and discharge of the bond.

After the filing of the bill, Mrs. Fretz, the wife, was by consent of counsel made a party to it.

Stover filed his answer, admitting the settlement and execution of the bond and deed of trust, and the payment in Virginia bank notes and Confederate treasury notes as charged, but denied that these payments were the result of an unlawful and fraudulent combination between the respondent and Chilton. He insisted, however, that they were in law a full discharge and satisfaction of the debt and trust deed, but if this were not so, that to the extent of the compensation due by Fretz to Chilton for professional services, he should not be compelled to pay a second time.

After this answer was filed, the deposition of Fretz, the husband, was taken by the complainants, which was the only evidence in the cause. Fretz swore that Chilton had no authority over the bond and deed of trust, except to take charge of them and keep them safely, and to have the deed recorded, all which he promised to do; and that he, Fretz, had never given any authority to Chilton to receive payment in any kind of currency; that the subject of payment of the instruments had never been spoken of between the parties.

Fretz further testified that at the time of Chilton's death, Chilton was indebted to him on another account, over and above any fees due for professional services; and that these had been paid.

Subsequently Stover died, and a bill of revivor was filed to make his brother, who was his sole devisee and legatee, as also the executor of his will, a party defendant. The brother appeared and answered, admitting the character imputed to him by this bill, but setting up new defences founded on alleged ratification of Chilton's acts by silence and acquiescence after they came to the complainant's knowledge; defences not made in the answer of Stover to the original bill. The record did not show any replication made either to the original answer or to the answer of the executor.

On the hearing the bill was dismissed, and this appeal was brought to revise that decree.

Mr. John Sergeant Wise, for the appellants, contended that the decree was erroneous; because,

1st. Chilton never was, by express appointment or implication, the attorney at law or in fact of Fretz to collect said bond at all.

2d. If he was authorized at the time he received the bond to collect it when due, his appointment was made in ignorance of and without reference to the contingency of war, and in its very nature revoked by its breaking out.

3d. If he was agent or attorney with power to collect, and the breaking out of war did not revoke and terminate his agency, he had no right or power to take, and Stover had no power to pay anything but gold and silver.

4th. Granting to Chilton every power which Stover contends he had, the power he did exercise, in view of the mode in which and time it was exercised, was in collusion with Stover, to the destruction of his principal's debt, without possibility of benefit to any one but Stover and himself.

Mr. W. Willoughby, contra:

I. We raise a preliminary point.

There being no replication either to the original answer of Stover or to that of his executor answering the bill of revivor, both are by settled chancery practice to be taken as conclusively true 'in all points,' whether responsive to the bill or not; the reason of this being that the plaintiff, by not replying, has excluded the defendant from the opportunity of proving his averments.

II. Passing to the main case.

1. The bill was filed August 9th, 1869, for the purpose of setting up a deed of trust that had been paid and satisfied in December, 1862, nearly seven years before, on the ground that payment had been made in Virginia bank notes and Confederate money, to an agent, without authority. It admits that the deed of trust was left with Chilton, as the attorney at law of the complainant, for record, and the bond, which it was given to secure, 'for collection at its maturity.' Chilton died in 1867. The complainant did not disavow, or object to such payment, before the death of Chilton; nor did he do so at all before the commencement of the suit, at least two years after he had full knowledge of the fact and manner of payment.

2. Chilton, who received the payments and satisfied the deed of trust, had authority to receive payment. The whole case shows this. The bill itself states so. He was the trustee in the deed of trust.

3. It is contended that if there was an agency, it was put an end to by the fact of Chilton's being in an enemy's country during the war. But this is not true. 'A person may have an agent in the enemy's country to collect debts due to him, and to preserve his property there.' The fact that it may have been illegal to remit, did not make it so to receive. In addition, Chilton was trustee as well as agent. He was not only the proper person to satisfy the deed of trust, but he was the only one who could do so.

4. But, it is denied that Chilton had authority to receive in payment Virginia bank notes or Confederate currency.

In Hale v. Wall, payment of bonds in Confederate currency and Virginia State bank notes, to an agent, under circumstances similar to those of this case, was held to be a good payment, 'in the absence of instructions from the principal, not to receive such money.'

The peculiar circumstances of this case have an important bearing upon the rule of law as to such payments. In Fauquier County, Virginia, such currency was, at that time, the only currency in circulation. It was in constant use; and by that standard contracts were made, and all the business of society carried on. Payments were constantly made in such currency; and, in this respect, it was like the notes of banks, with which all business had been carried on, and which were always regarded as good payments, unless objected to at the time.

The bill of complaint is framed upon the theory that the payment, made as it was, was the result of conspiracy between Stover and Chilton to defraud Fretz. This is denied by the answer, and there is no proof in support of the charge. The circumstances under which such payment was made show entire good faith. Mr. Chilton was an upright lawyer, as is shown, primarily by the fact that implicit confidence had been placed in him by Fretz himself.'

The only testimony in the case is that of Fretz, the husband, a party to the case, and a party embittered by long-waged litigation. Such testimony is really of little value. If Chilton were alive, and we could have the benefit of his testimony, a very different state of facts might appear from that attempted to be made by Fretz, and on his making of which his only hope of recovery depends.

Mr. Justice DAVIS delivered the opinion of the court.

title: Fretz v. Stover


text: Talk:Fretz v. Stover

title: Talk:Fretz v. Stover


text:
Fretz v. Stover/Opinion of the Court

At the outset of this case we are met with the objection that there is no replication in the record; but this objection, on the authority of Clements v. Moore, should have been made in the court below. Not having been made there, it will be considered as having been waived. It would work great injustice in this case to allow it to be taken here for the first time, for manifestly the submission was not on bill and answer, for proofs were taken, and it is to be presumed, in the absence of anything in the record to the contrary, that they were considered by the court in the disposition of the cause.

So far as the answer to the bill of revivor was concerned, no formal replication was required to avoid its effect as evidence in the cause. Nothing could be brought into the litigation by the bill of revivor besides the mere question whether the brother, brought in on the bill of revivor, was the executor of the will of Stover, and his legatee and devisee, for Catharine Fretz had been made a party to the original suit before answer was made to it. The new defences, therefore, set up in the answer to the bill of revivor, were not pertinent to it, and cannot be considered in the case.

We are brought, therefore, directly to the question whether the payments by Stover to Chilton were, under the circumstances surrounding the parties, of any validity.

It is argued by the appellants that the bond was not left with Chilton for collection at all, but only for safe keeping until it matured; but the bill avers the fact to be otherwise, and, naturally, it must have been so. Chilton had been the attorney of Fretz and wife through a protracted and angry litigation, and, as the evidence shows, assisted at the compromise of it. This compromise was effected in February, 1861, and contemplated several transactions which could not be completed until after Fretz's return to Pennsylvania. Among these was the execution of the bond and deed of trust in question. As Fretz could not in person see that the papers were properly drawn, he intrusted that duty to Chilton, and the additional duty of having the deed recorded. It was undoubtedly expected at the time that before the bond matured Fretz would hold frequent communications with Chilton, and this may account for nothing being said on the subject of collecting the bond. There was no necessity for it, as the bond had a long time to run, and, besides, no trouble was anticipated about the collection of it. It is, however, fairly to be inferred from the relation between the parties that Chilton had authority to collect and transmit, in the absence of any specific directions on the subject. And if war had not intervened, and he had not been told to collect the bond in legal currency alone, he would have been authorized to receive payment in current bank bills which passed at their par value in business transactions at the place where the contract was to be performed. But if this rule holds good when the country is at peace and undisturbed by civil commotion, it has no application in a state of war like that of the late rebellion. That rebellion effected a change in the status of the parties to this contract, and in the relations between the appellants and Chilton. Although the country was unquiet when these parties, in February, 1861, settled their differences, yet it would be a violent presumption to suppose that they anticipated the changed condition of things which soon after occurred. They doubtless acted on the belief that the difficulties which threatened the peace of society would be adjusted, and the monetary affairs of the country remain as they were. On this theory they concluded their agreement, and Fretz repaired to his home in Pennsylvania, leaving Chilton to see that Stover performed his part of it. It may be that it was not expected that the bond which Chilton obtained from Stover would be paid in specie, but at least it was expected that it would be paid in current bank notes, redeemable on presentation at the counter of the banks issuing them. At any rate, it was executed with reference to the standard of value then existing in the United States.

The war occurred, and Fretz was prohibited by the law of the government under which he lived from holding communication with Virginia. If some persons did take the risk and cross the line in order to save their property, certainly Fretz, who did not choose to break the law and encounter the danger, cannot be held responsible for not going to Virginia and withdrawing the bond and deed of trust from the hands of Chilton. When, in 1864, he first heard from Chilton, he was told his papers were safe and would be kept so, as nothing but Confederate money could be collected, which was valueless. And not until 1866 did he learn the truth, although after the war closed he had frequent personal interviews with Chilton. This conduct of Chilton's shows his consciousness that he had attempted to wrong his principals and his unwillingness to disclose his culpability. But it is of no importance what he attempted to do, for his principals are not bound by his wrongful acts. If he was authorized when he received the bond to collect it when due, in bank bills which were current in Virginia at the time, this authority was conferred in ignorance of, and without reference to, the contingency of war, and in the nature of things was revoked when war broke out. The authority to collect was based on the power to remit, and this it was impracticable, as well as unlawful, to do. Besides this, the authority to receive bank bills at all, in the collection of debts, only rests on the theory that they pass as money at their par value by the common consent of the community, and can be used by the principal where he lives in the common transactions of life. But when this is not the case, and war has disturbed the country to that extent that the paper used in Virginia to pay debts is of no value in Pennsylvania, there is no longer any authority to take it by an agent living in Virginia in discharge of a debt due a citizen of Pennsylvania. If it were otherwise, then, as long as the war lasted, every Northern creditor of Southern men was at the mercy of the agent he had employed before the war commenced. And his condition was a hard one. Directed by his government to hold no intercourse with his agent, and therefore unable to change instructions which were not applicable to a state of war, yet he was bound by the acts of his agent in the collection of his debts the same as if peace prevailed. It would be a reproach to the law if creditors, without fault of their own, could be subjected to such ruinous consequences.

If Chilton could not receive payment of the bond in Confederate paper and Virginia bank notes, neither had Stover the right to pay them. It was a void act on his part to attempt to discharge his debt in this way, as well as a fraud in Chilton to suffer him to do so. His obligation when the bond fell due was to pay it in the legal currency of the United States, and yet he tries to discharge it in paper worthless to Fretz, and with knowledge that, worthless as it was, it could not be sent to him. If it be true that he did not represent Fretz, still he had no right to do an act of gain to himself, but of no benefit to Fretz. Besides, what ground had he for supposing that Fretz gave authority to Chilton to make such a sacrifice? As a sensible man he must have known that this could not be so, especially as the debt was secured by a deed of trust on a valuable farm. It is impossible to escape the conviction that there was collusion between Chilton and Stover in the transaction, but whether this be so or not, the transaction itself was invalid.

In recognition that this might be the judgment of the court, Stover asks that his payments may be applied towards the debt for professional services due Chilton from the appellants. Without stopping to inquire whether this could be done, if the appellants owed Chilton anything, it is enough to say that the evidence shows that the indebtedness is the other way.

It is claimed that the Virginia bank notes at least should be treated as payment pro tanto, but, as we are advised, the difference between their market value and that of Confederate bonds and notes was merely nominal during the war, and when it ended the bank notes were worthless, being only secured by Confederate bonds. Apart from this, the evidence shows they were, when paid, equally with Confederate paper valueless in Pennsylvania.

The views taken of this case accord with Ward v. Smith, and are supported by the Court of Appeals of Virginia in Alley et al. v. Rogers. It follows, from what has been said, that the bond given by Charles Stover to Isaac Fretz and Catharine his wife has not been paid, or any part of it, and that the deed of trust to secure it is still a subsisting security in full force and effect.

DECREE REVERSED AND THE CAUSE REMANDED, with instructions to enter a decree for Catharine Fretz, survivor of her husband, in conformity with this opinion.

REVERSAL AND REMAND ACCORDINGLY.

title: Fretz v. Stover/Opinion of the Court


text: Talk:Fretz v. Stover/Opinion of the Court


text:
Sweeney v. Lomme

ERROR to the Supreme Court of the Territory of Montana.

The case was thus:

The Civil Practice Act of the Territory of Montana thus enacts:

'Every action shall be prosecuted in the name of the real party in interest.'

'In an action to recover possession of personal property judgment for the plaintiff may be for the possession; OR the value thereof in case a delivery cannot be had, and damages for the detention of it.'

This enactment being in force, Lomme and B. & C. Kintzing, in one of the District Courts of the said Territory, as partners, to recover a debt, and in that suit issued an attachment, under which the sheriff seized certain personal property, alleged to belong to the Kintzings, as security for the satisfaction of any judgment that might be recovered against them.

In this state of things one Watson brought replevin against the sheriff, to recover possession of this property; and-two persons, Sweeney and Holter, entering as sureties into a written undertaking to the sheriff, in $5000, conditioned 'for the return of the property to him, if return thereof should be adjudged, AND for the payment to him of such sum as might be recovered against Watson'-the property was delivered to Watson.

In this action of Watson against the sheriff the jury found a verdict 'for the defendant,' on which the court entered a judgment to the effect that the sheriff 'recover from the plaintiff, Watson, the possession of the property replevied in this action,' and his costs.

The jury did not find the value of the property replevied, nor was any alternative judgment entered against Watson, as required by the already quoted section of the Civil Practice Act, for the value of the property in case a return could not be had.

No execution was ever issued on this judgment for the return of the property; nor was it ever returned or offered to be returned to the sheriff, by either Watson or his sureties.

Going back now to the original suit. In that suit, Lomme obtained, October 27th, 1870, judgment against the Kintzings for $4954, with interest at 10 per cent. and costs, about $1300 of which was got on execution.

Thereupon he sued Sweeney and Holter, as sureties in the undertaking given to the sheriff in the replevin suit brought against him by Watson for the property attached by the sheriff at the instance of Lomme, as the property of the Kintzings; the object of this suit being to recover from the sureties the value of the property replevied, or so much thereof as might be necessary to satisfy the balance of the amount due upon the judgment obtained by Lomme against the Kintzings.

On the trial the plaintiff, Lomme, gave no evidence of the assignment, or of the delivery, of the replevin bond to him by the defendant in the action of Watson v. The Sheriff; and was permitted to prove the value of the property attached, at the time it was replevied by Watson, this value being fixed by witnesses at from $7000 to $10,000.

At the conclusion of the plaintiff's case, the defendant moved for a non-suit, on the ground that Lomme could not sue in his own name on the bond given to the sheriff. The court refused the non-suit, holding that the bond having been for the use of Lomme, and he being the real party in interest, he could so sue.

The evidence being all in, the defendants requested the court to charge:

That the only interest which the plaintiff could claim in the goods was just the interest which the Kintzings had at the time of the levy of the attachment on them, and that he could recover no greater amount from the defendants than the value of the interest of the Kintzings in them, at the said time, if he recovered at all.

That unless a writ de retorno habendo (that is to say, for the return of the property claimed in the complaint) had been issued to the proper officer previous to the commencement of this action, then that the verdict should be for the defendants.

That the undertaking sued on fixed the value of the property replevied at $2500 at the time the same was replevied, and the jury could not fix the value thereof to be any greater sum.

The court refused to give any one of these charges, though it did charge that the $1300 which Lomme had recovered on his suit from the Kintzings was to be deducted from what the jury might find.

The court charged that the plaintiff's damages should be assessed at such amount as the jury might find remained unsatisfied upon his judgment against the Kintzings, with interest, and his costs expended in Watson's suit against the sheriff, if they found that the value of the property replevied by and delivered to Watson at the time it was so delivered, and not returned to the sheriff or placed in subjection to the plaintiff's judgment against the Kintzings, was equal to the balance of the judgment and the amount of the costs; and if the property was not equal to the said balance and costs, that the jury should assess the plaintiff's damages at the amount they should find the said property was worth at the time of its delivery to Watson, and the amount of plaintiff's costs in Watson's suit against the sheriff, with interest on such amounts at ten per cent. per annum.

That the only question for the jury to determine was, whether possession of the property delivered to Watson was ever returned to Roberts, and to determine the value of the property so delivered to Watson and not so returned.

The jury found, November 10th, 1871, in favor of the plaintiff for $5000. The record as it came up to the court omitted to show, by the usual sort of entry, that judgment had been entered accordingly. However, there was in the record a notice by the defendant's counsel to the counsel of the plaintiffs, 'that the defendants appealed to the Supreme Court of the Territory from the judgment made and entered in the District Court of the Territory, in favor of the plaintiff and against the defendants.' And also an order by the Supreme Court of the Territory that the cause of Lomme v. Sweeney et al., 'coming on for judgment on the appeal herein,' it was ordered 'that the judgment entered herein by order of the court below be affirmed with costs.'

This the counsel of the plaintiffs in error had regarded as a sufficient evidence of the entry of a judgment for $5000 in the District Court, and an affirmance of it in the Supreme Court, and so brought the case here. The errors assigned were:

1. That Lomme was allowed to sue in his own name.

2. That the verdict in the replevin suit was in violation of the provision in the Civil Practice Act, since it did not find the value of the property, and there was no alternative judgment for that value, OR the return of the property.

3. That proper instruction had been refused.

4. That wrong ones had been given.

Mr. J. Hubley Ashton, for the plaintiffs in error, and Mr. Robert Leech, contra; the latter gentleman in his brief calling attention to the peculiar form of the evidence of the judgments in the District Court, which he suggested was no evidence of what judgment, if any, had been given; and Mr. Ashton informing the court that the peculiarity was due to a mere clerical error, that would be remedied by certiorari, if the court saw fit now to order one, and would suspend its judgment till one could issue and be returned. The court directed the argument to proceed, and a certiorari to issue.

[A certiorari having thus issued and been returned, showed the error to have been a mere clerical one, as alleged by Mr. Ashton.]

Mr. Justice MILLER delivered the opinion of the court.

title: Sweeney v. Lomme


text: Talk:Sweeney v. Lomme

title: Talk:Sweeney v. Lomme


text:
Sweeney v. Lomme/Opinion of the Court

1. The first error assigned and mainly relied on is that the bond on which the suit is brought having been given to the sheriff, this action cannot be maintained by Lomme, the party for whose benefit it was really given.

This question has been decided differently by different State courts under precisely the same code of practice.

In several of these it has been held that the real party in interest is always the proper plaintiff, while in others it is held that the suit must be brought by the obligor in the bond for the use of the party in interest.

Without expressing any opinion of our own on the question, we hold that as it is one which arises under their own code of practice, we should, in this conflict of authority, adopt the ruling of the Supreme Court of Montana in the consideration of it. This assignment of error is, therefore, not well taken.

2. The next objection is that the verdict in the replevin suit did not find the value of the property, and that there was no alternative judgment for that value or the return of the property.

On this question also conflicting authorities are produced as to what judgment should have been rendered under codes precisely similar to the Montana code in regard to actions of replevin. And in the case of Boley v. Griswold, in a direct appeal, we have held that a judgment in replevin may be good though the alternatives are not expressed. But we are not now considering whether that judgment was erroneous or not. No writ of error to that judgment is pending in this court. As the jury found for the defendant, the sheriff, and the court rendered judgment for a return of the property to him in a suit in which it had jurisdiction to render that judgment, it is not void because it did not add something else which it might have added.

The undertaking of the plaintiffs in error was 'for the prosecution of said action (of replevin), for the return of said property, if return thereof be adjudged, and for the payment to the said defendant of such sum as may from any cause be recovered against said plaintiffs.' The judgment, therefore, which is valid until reversed, established one of the conditions on which the plaintiffs in error agreed to be liable, and as the property was not returned, either by them or by Watson, they are liable to an action on their contract.

3. Nor do we think the court erred in refusing to instruct the jury that Lomme could only recover the value of the interest of the Kintzings in the property. This would have been to try the action of replevin over again. If Watson had no right to the property he had no business to interfere, and if he thought some person not yet before the court had a paramount interest in it he should have returned the property and left such person to assert his own rights. Having replevied the property and failed to establish his own right to it in the suit thus provoked by him, he is but a trespasser in holding possession afterwards.

4. Nor do we think that it was necessary that an execution should have been issued to retake the property under the judgment in the action of replevin before the liability of the plaintiffs in error in the replevin bond accrued. They undertook, themselves, in express terms, that they would be liable if a judgment for return of the property was had, and not on condition that it could not be had on execution. This question was before us in the recent case of Douglas v. Douglas, in which it was held that the judgment of de retorno habendo rendered the party liable on a replevin bond.

5. The bill of exceptions shows that the goods, at the time they were replevied, were worth from $7000 to $10,000. The verdict of the jury was for $5000, the penalty of the bond. As there is nothing in the record to show that there was not due to Lomme on his judgment against the Kintzings, including interest and costs, and for the costs and expenses of defending the replevin suit, the sum of $5000, all these elements of damages being before the jury, we cannot say that the verdict was for too much or that the judgment rendered on it was erroneous.

6. A point was made in the defendant's brief that there was no judgment found in the record, and an inspection of it showed that while the judgment of the Supreme Court of the Territory merely in terms affirmed the judgment of the District Court, the judgment of the District Court was not in the record, and, in fact, no judgment was to be found in the record which we could either reverse or affirm.

Under these circumstances, as the defendants in error had made no objection, by motion to dismiss the writ, or otherwise, before the hearing, the court heard the argument, and of its own motion gave the plaintiffs time to perfect the record by certiorari, if it could be done. The proper judgment has since been certified to this court, and it is now

AFFIRMED.

title: Sweeney v. Lomme/Opinion of the Court


text: Talk:Sweeney v. Lomme/Opinion of the Court


text: Bailey v. Magwire

title: Bailey v. Magwire


text: Talk:Bailey v. Magwire

title: Talk:Bailey v. Magwire


text:
Bailey v. Magwire/Opinion of the Court

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

Bailey and others, foreign stockholders, in the Pacific Railroad Company, a corporation existing and organized under different special acts of the State of Missouri, filed a bill in the court below against a certain Magwire, collector of State, county, school, and city taxes for the county and city of St. Louis, Missouri, to enjoin his collection of such taxes assessed for the year 1869, on the said railroad company under the general tax law of the State; the ground of the application being that by acts of the Missouri legislature governing the said railroad company, and which acts, as the company asserted, made a contract with it, the company—

1st. Was not liable for any county, school, or city taxes at all.

2d. Was not liable for State taxes under the act in virtue of which they had been assessed, but was liable for them only under another act; a special act relating to itself, and prescribing a manner for assessment, &c., different from the manner which had here been followed.

The charter of the Pacific Railroad Company was granted in 1849, and counties, cities, and towns along its line were authorized to subscribe to it; but it contained no provision exempting its property from taxation.

By an act of 1851, amendatory of the charter, it was enacted that the capital stock, together with all their works and other property, and all profits which should arise from the same should be vested in the respective shareholders of the company forever, in proportion to their respective shares, and that the same should be deemed personal estate and be exempt from all public charge or tax whatsoever, for the term of five years from the passage of the act. This exemption, of course, would have expired in 1856.

At the time of the passage of this act, as before and since, there existed in Missouri, under its public statutes, a general scheme of taxation of all property in the State; this scheme embracing all property of corporations over and above their capital stock, as well as the property of citizens in the counties where it was situated.

In this state of things, the exemption given by the act of 1851 not having yet expired, the legislature of Missouri, on the 25th of December, 1852, passed another act amendatory of the charter. This act lent its credit to the company by issuing to it State bonds to the amount of $1,000,000, to be used after the expenditure of a like sum raised from other sources; and it gave to the company a large body of lands which Congress had given to the State.

By a twelfth section it made the following enactment as to taxation:

'SECTION 12. The said Pacific Railroad shall be exempt from taxation until the same shall be completed, opened, and in operation, and shall declare a dividend, when the road-bed, buildings, machinery, engines, cars, and other property of such completed road, at the actual cash value thereof, shall be subject to taxation at the rate assessed by the State on other real and personal property of like value.

'And for the purpose of ascertaining the value of the same, it shall be the duty of the president of said company, on the first day of February in each year, after such road is completed, opened, and put in operation, and declares a dividend, to furnish to the auditor of the State a statement under his oath, of the actual value of the road-bed, buildings, machinery, engines, cars, and other property appertaining to such completed road; and from said statement, the auditor shall charge said company with the amount appearing to be due to the State, according to the statement furnished by the president of the company.

'And in case said company shall fail to pay into the State treasury, within thirty days after the first day of December in each year, the amount charged against said company as aforesaid, said company shall forfeit and pay to the State of Missouri, in addition to the sum with which said company may stand charged by the auditor, ten per cent. per month, after the expiration of said thirty days, on the amount charged to said company; which sum charged against said company, together with the ten per cent. per month hereinbefore specified, may be recovered in the name of the State of Missouri, by civil action, in any court of competent jurisdiction; and should the president of said company fail to make out and furnish to the auditor of the State a statement as herein required, said company shall forfeit and pay to the State $10,000 for such failure, which may be recovered in the name of the State of Missouri, in any court of competent jurisdiction.

'Provided, That if said company shall fail for the period of two years after said roads respectively shall be completed and put in operation to declare a dividend, then the said company shall no longer be exempt from the payment of the said tax, nor from the forfeitures and penalties in this section imposed.'

This act of 1852 was accepted by the company, and the rights given by the act of 1851 were thus surrendered.

The road was completed in April, 1866; and after April, 1868, and in each year since that time-the company not having yet made any dividend-the president of the company made returns of its taxable property in the manner required by the twelfth section of the act of 1852; but not in any other manner.

At the time when the road was completed $3,614,500 of stock had been subscribed; of which $2,500,000 had been subscribed by the counties and towns along the line of it.

In 1866 the legislature of Missouri passed an act relating to the collection of revenue generally throughout the State. The mode prescribed for ascertaining the value of property of corporations generally, was different from that prescribed by the twelfth section of the act of 1852, for ascertaining the value of the property of the Pacific Railroad. But the act of 1866 did not in terms nor by any plain implication repeal the twelfth section of the act of 1852. Whether it did so by any kind of implication was a question that came before the Supreme Court of Missouri, A.D. 1873, in The Pacific Railroad Company v. Cass County, in which case the court decided that the act of 1866 did not repeal the said twelfth section in any way.

In August, 1871, this decision not then having been made by the said Supreme Court, the assessors for St. Louis County, acting under the provisions of the act of 1866, assessed a tax for State, county, school, and city purposes on the property of the Pacific Railroad Company, and seized upon its property, advertising it for sale. Thereupon the present bill was filed; by which various foreign stockholders in the company-the company itself declining to act, and remaining passive-sought to enjoin the collection of the tax.

1st. That the twelfth section of the act of 1852, respecting the taxation of the road, was and remained a contract between the State of Missouri and the railroad company; that it specifically provided for the whole subject of the taxation of the road, and that in virtue of it the general revenue laws of the State were not intended to and did not apply to this particular company.

2d. That the said section accordingly exempted the company from taxation for county, school, and all other purposes except those mentioned in it.

3d. That if this were not all so, thus broadly stated, and if the section were not a contract as to all taxes, and did not, as such contract, furnish the only authority and rule by which this particular company was to be taxed, yet that until repealed it was the law governing the subject of taxation for State purposes; that, as was shown by the decision in the Pacific Railroad Company v. Cass County, it had never yet been repealed, and therefore that certainly, as to the taxes for State purposes, the collector was to be enjoined.

The positions of the collector, on the other hand, were—

1st. That after the time limited in the twelfth section-that is to say, as things turned out, after April, 1868-the property of the railroad company became subject to taxation, as any other property in the State, to State, county, municipal, and school taxation, and through any mode which the legislature of the State might see fit to prescribe.

2d. That the provisions of the said twelfth section constituted no contract in favor of the company as against the right of the State (after the time had elapsed during which the company was to be exempt from taxation) to provide by law for the taxation of the property of the company in any manner it should see fit, and for the general purposes for which any other property in the State was subjected to taxation; and finally,

3d. That in point of fact the said twelfth section had been repealed, impliedly, by the general purpose of the act of 1866, so that even as to taxation for State purposes, it no longer applied.

The court below sustained the defendant in everything excepting as to city taxes (which, for reasons not necessary here to be stated, it deemed illegally laid); decreeing, of course, that the defendant might lawfully collect not only the county and school taxes, as he proposed to do, but also, in the same way, the State taxes. The bill to enjoin him from so doing was accordingly dismissed, and from the decree dismissing it this appeal was taken.

It may be well enough to mention that in a case which was in effect one between these same parties, and lately before this court, it had been decided that the twelfth section of the act of 1852 created a contract between the parties, exempting the railroad from taxation until it was completed, and for two years afterwards, if it did not pay a dividend before the expiration of these two years.

Messrs. James Baker and G. F. Edmunds, for the stockholders, appellants:

I. It has been already decided by this court that the twelfth section, under consideration, makes a 'contract' between the State of Missouri and the railroad company, that the company should be exempt by it from all taxation, until the road was completed and a dividend paid, or until two years after its completion. The two years having passed, the only question now to be considered, under the first of the points raised by the case, is as to the extent to which the road may be taxed, and the manner of taxation. What is the extent of that contract?

The language of the act, leaving out such words as do not affect the meaning, so far as this question is concerned, is:

'The Pacific Railroad shall be exempt from taxation until the same shall be completed and in operation, and shall declare a dividend, when it shall be subject to taxation at the RATE assessed by the State on other property of like value.'

The taxation to which the road is to be subject, after the happening of the events mentioned, is to be at a certain rate, that is, at the rate assessed by the State on other real and personal property of like value. No other or greater rate is authorized, nor is any other taxation than that provided by the act, contemplated. It is not a mere declaration, that after the payment of a dividend the property shall be subject to taxation in the manner and at the rate specified. The language employed is different. The property is first declared to be exempt from all taxation. This is to continue until the road is completed and declares a dividend, after which it is to be subject to a specified kind and amount of taxation. Does not this sentence, taken together, preclude the idea of any other or greater taxation? Is it not plain that the exemption is to continue as to all taxations except that particularly specified? It is not said that after these things take place it shall be no longer exempt. There are no negative words used. Were it not for the language which restores it, the total exemption would still continue. The limitation of the time of the total exemption and of the amount of the subsequent taxation are obviously one sentence, and must be taken together. The clause should not be divided into separate and distinct subjects, so that it may be argued that the exemption granted is to cease when a dividend is declared, and by the process of division and argument, a new subject of the remainder of the sentence made, which shall provide what shall take place afterwards. The whole must be taken together, the latter part as limiting or qualifying the former. The extent and manner of subsequent taxation provided for is as much a limitation of the exempting words as is the completion of the road and the payment of a dividend.

That the whole subject of the future taxation of this road was intended to be provided for, appears by an examination of the whole section. The mode of assessing and collecting the tax mentioned is specifically provided with great particularity. A return of the property is to be made. The character of the return, the kinds of property to be returned, the person by whom, and the officer to whom, and the duties of the officer in charging the taxes, and of the officer who is to collect the same, and many other particulars are specifically set out. The tax is to be paid to the State treasurer. No mention is made anywhere in the act of any other taxation for county or other purposes. In the proviso, at the close of the section, it is declared 'that if said company shall fail, for the period of two years after said roads respectively shall be completed and put in operation, to declare a dividend, that then said company shall no longer be exempt from the payment of said tax,' &c. What tax? Clearly the tax specifically provided for after the total exemption ceased. It is not taxes but tax. The total exemption is from taxes for all purposes, while that authorized is a tax only, and is to be paid to the treasurer of the State, and that is plainly the tax from which the company is no longer to be exempt. Both the obvious meaning and the well-known rule, that the last antecedent should be referred to when the meaning is obscure, indicate that it is the tax provided for. If it was the purpose of the act to leave the property subject to other taxation than that provided for, its authors would have employed language in this proviso that would embrace all taxation. The word said,' preceding and limiting the word tax,' points to the fact that the tax provided for is the one from which the company is no longer to be exempt.

The case of the Raleigh and Gaston Railroad Company v. Reid, in this court-a case from North Carolina-is much in point. There an act had been passed by the legislature of North Carolina in these words:

'The said railroad, and all engines, cars, and machinery, and all the works of said company, together with all profits which shall accrue from the same, and all the property thereof, of every description, shall be exempt from any public charge or tax whatsoever, for the term of fifteen years, and thereafter the legislature may impose a tax not exceeding twenty-five cents per annum, on each share of the capital stock held by individuals, whenever the annual profits shall exceed eight per cent.'

Subsequently to this act being passed-within the fifteen years, and the annual profits not yet exceeding eight per cent-the legislature of the State passed an act taxing the franchise of the road.

'The only way in which the property of this company could be reached for taxation at all, was after the limitation of the fifteen years had expired. The legislature was then at liberty to tax the individual shares of the stockholders, whenever their annual profits exceeded eight per cent. When a statute limits a thing to be done in a particular mode, it includes a negative of any other mode. It was the manifest object of the legislature which incorporated this company to invite the investment of capital in the enterprise of building this road, and no means better adapted for the purpose could have been devised short of total immunity from taxation. As long as the capital was unproductive it contributed nothing to the support of the government, and even after it became remunerative its contribution was fixed by the terms of the charter, and could not, in any event, exceed twenty-five cents on the share of stock. The impolicy of this legislation is apparent, but there is no relief to the State, for the rights secured by the contract are protected from invasion by the Constitution of the United States.'

The North Carolina act and the one we are considering are similar in principle. Neither in direct words negatives the right to impose a greater or different rate of taxation.

A similar doctrine is laid down in the New York and Erie Railroad v. Sabine, in the Supreme Court of Pennsylvania.

These cases do but afford modern application of old law; law perfectly settled in the days of Hobart and Plowden. The former declares that affirmatives in statutes that introduce a new rule imply a negative of all else; as the latter had declared before him, that when a statute limits a thing to be done in a particular mode it includes a negative of any other mode.

II. The objection to which acts giving exemption from taxation by States are ordinarily and justly subject-the objection, namely, that by such exemptions the legislature of a State might render the State government powerless to carry on the affairs of the State, by taking away all power to raise funds for that purpose-does not apply here. The State is at liberty to tax the property in question at the same rate, and, consequently, to as great an extent as it does other property. The exemption contended for is from county and other local taxation. The State may appropriate all the tax it is at liberty to impose to its own uses. Counties, cities, and other municipalities, possess no power of taxation, except what is granted to them by the legislature of the State, and it may, if it sees fit, withhold such power to any extent. They are frequently not permitted to tax all the property the State does.

III. In the history of the Pacific Railroad, we find a support to our interpretation of the twelfth section under consideration.

By the charter of the road counties, cities, and towns along the line of the road were authorized to subscribe to the capital stock of the company. The legislature was anxious to secure the construction of the road; a matter of plain importance to the State and to the public. By loans of its bonds, conditioned on subscription, by gifts of lands and otherwise, the State stimulated and encouraged subscriptions by counties and towns along the road. In view of this earnest desire to secure the construction of the road thus manifested by the State and by the municipalities, and the people along the line of the road; and of the fact that the counties and incorporated towns were themselves the principal stockholders, and consequently the proprietors of the road, and hence would have to pay the taxes themselves, who can question that an exemption from local taxation was proper, and was intended? The State might well claim and reserve to itself the right to tax the road after its completion, after it was able to pay dividends on its stock, and at the same time grant an immunity from municipal taxation.

IV. Finally. If the act in question is not a contract, and is subject to repeal, it has in fact not been repealed. This is adjudged in the case of The Pacific Railroad Company v. Cass County, by the tribunal most to be respected in a decision on the meaning of the statute. The assessment, therefore, as to State taxes, at least, is made in a wrong way.

Messrs. B. A. Hill and H. A. Clover, contra.

Mr. Justice DAVIS delivered the opinion of the court. It is contended on behalf of the appellants that the twelfth section of the act of 1852, provides for the whole subject of the taxation of the road, that it exempts the road from all taxes except State taxes, and furnishes the only rule and authority by which these taxes can be ascertained and collected.

It was held by this court, in the case of The Pacific Railroad v. Magwire, that this section created a contract between the State and the railroad company, exempting the road from taxation until it was completed, and for two years thereafter if it did not pay a dividend before the expiration of these two years.

The inquiry is whether this contract goes further and exempts the road, after it has been completed for two years, from all other than State taxation, and whether the State is precluded from providing another mode of valuation for State taxes.

It is manifest that legislation, which it is claimed relieves any species of property from its due proportion of the general burdens of government, should be so clear that there can be neither reasonable doubt nor controversy about its terms. The power to tax rests upon necessity, and is inherent in every sovereignty, and there can be no presumption in favor of its relinquishment. While it were better for the interest of the community that this power should on no occasion be surrendered, this court has always held that the legislature of a State, unrestrained by constitutional limitation, has full control over the subject, and can make a contract with a corporation to exempt its property from taxation, either in perpetuity or for a limited period of time. If, however, on any fair construction of the legislation, there is a reasonable doubt whether the contract is made out, this doubt must be solved in favor of the State. In other words, the language used must be of such a character as, fairly interpreted, leaves no room for controversy.

The present claim is of perpetual exemption from county and municipal taxation, quite as essential to the wants of the people as taxation for State purposes.

It is conceded that this exemption is not granted in express terms, but it is argued that, taking the whole section together, it arises by necessary implication. We do not think so. Immunity from all taxation was given until the road was built and in operation two years, but after this it is declared 'that the road-bed, buildings, machinery, engines, cars, and other property of such completed road, at the actual cash value thereof, shall be subject to taxation at the rate assessed by the State on other real and personal property of like value.' This is a declaration that the taxation imposed upon the property of this company shall not be different from the taxation imposed upon other similar property, which conforms to the constitutional requirement, 'that all property subject to taxation shall be taxed in proportion to its value.' If other property is charged with the payment of county, school, and municipal taxes, why not the property of this company? In no other way can the principle of equality in taxation, so essential to good government, be secured. If the legislature intended to apply a different rule in this case, it were easy to have said that the property of this company shall be subject to taxation 'for State purposes.' Instead of this it is declared to be 'subject to taxation.' This obviously means general taxation-such taxation as other property of like value is subjected to. No words of limitation are used, and none can be implied against the interests of the State. It is never for the interest of the State to surrender the power of taxation, and an intention to do so will not be imputed to it unless the language employed leaves no other alternative.

The motive for temporary exemption is apparent enough, because until the road was able to earn something taxation might bear heavily upon it. But with the completion of the road the reason for the exemption ceased, and it is difficult to see what inducement there was for the State to grant perpetual immunity from local taxation. In the original charter of the company, granted in 1849, there was no exemption from taxation. It is true the amendment of 1851 altered this so that the road was relieved of any public charge or tax for the period of five years, but this privilege expired in 1856, and the provisions of the act of 1852 on this subject were more favorable to the company. Besides receiving under this act a large body of lands, donated by Congress to the State to aid in the construction of railroads, it was enabled to complete its entire road and run it for two years without paying any tax whatever. By this means it secured immunity from taxation until 1868, and any further immunity in this direction, if conceded by the State, would have been a mere gratuity. In view of all the legislation on this subject, it would seem quite clear that the General Assembly of Missouri, while recognizing in behalf of this road the propriety of temporary exemption from taxation, had no purpose to continue these exemptions indefinitely.

But it is said the section covers the whole subject of taxation, and as it provides for State taxes only it excludes any other. If in the declaratory part of it the road had been subject to 'State taxation,' there would have been plausibility in the argument, to say the least, that the legislature intended to waive other taxation. But the provision is that after the temporary exemption from all taxation ceases, by its own limitation, the property of the road shall be subject 'to taxation' at the same rate as other property in the State. There is no restriction in this language, nor is there any rule of law by which a word can be imported to limit its meaning. It is true special provision is only made for the ascertainment and payment of a State tax, and nothing is said about the manner of ascertaining and paying other taxes. But this does not prove an intentional abandonment of all but State taxes. It proves nothing more than that the legislature thought proper, in the particular of State taxes, to modify the general revenue law so far as this corporation is concerned, leaving the provisions of this general law operative upon local taxation.

It would be a hard rule to apply to the legislation of a State to hold that the circumstance of making in the amendment to a charter of a railroad corporation special provision for ascertaining the tax due the State (nothing being said about the manner of ascertaining other taxes), works an exemption of the property of the corporation from all taxation not levied for State purposes. Silence on such a subject cannot be construed as a waiver of the right of the State in this regard. There must be something said which is broad enough to show clearly that the legislature intended to relieve the corporation from a part of the burdens borne by other real and personal property. This was not done in this case, and the claim of exemption from local taxation cannot be sustained.

It is claimed, however, that even if this be so the State is inhibited from altering the special provision on the subject of State taxation. This provision prescribes a mode for ascertaining the tax due the State. The president of the company is required to furnish to the auditor a statement, under oath, of the actual cash value of the property to be taxed, on which the company is directed to pay the tax due the State, within a certain time, to the treasurer, under penalties. And the claim is that the State legislature is prohibited from passing any law to assess the property of the company for taxation for State purposes in a different manner. It is not so written in the statute, nor, indeed, can any proper inference be drawn from what is written that the legislature intended to contract with the corporation in this particular. It would be strange indeed if it were so, for the mode of assessment might not work well, and yet, if it formed the subject of a contract, it could not be changed. The principal thing in which the State and company were interested was the actual cash value of the property to be charged. This value was the basis of taxation, and it could not be a matter of moment how it was fixed, provided it were done correctly. In this result both the State and corporation had an equal interest. Both were interested in the means adopted only so far as they were efficient to secure the contemplated object. The exigency of the State required the revenue on the basis of actual value, and this, it is to be presumed, the corporation was willing to accord. At any rate it was the duty of the State, in justice to other property-owners, to use the appropriate means to ascertain this value. The ordinary method of doing this is by the instrumentality of officers appointed for the purpose, but the State asked the railroad, through its president, to make the valuation, to which the corporation assented. This way of reaching the result was less expensive to the State, but more expensive to the corporation than the usual mode in which taxes are assessed. The president of the company could not make a true valuation without the expenditure of time and labor, and this repeated, year by year, as values of property constantly fluctuate. There is no presumption that he would not do it, conscientiously, according to his best judgment, but still it was a favor to the State for him to do it at all, and certainly no one can contend that a State cannot waive at any time a provision for its own benefit. Apart from this view of the subject, the provision in question was simply a mode for ascertaining the true value of the property to be taxed, and if, on trial, it should turn out not to be the best mode for the purpose, surely the legislature has a right to change it and adopt another. This no one will question, unless the legislature has surrendered its power over the subject by contract, which, in our opinion, has not been done in this case.

But, until the legislature appoints another mode for assessing and collecting the revenue due the State from this corporation, it must proceed in conformity with the provisions contained in the act of 1852.

The whole subject we have discussed recently came before the Supreme Court of Missouri in the case of The Pacific Railroad Company v. Cass County. The assessor of Cass County had levied taxes for both State and county purposes on the property of the company in the county, and the question was whether these levies were authorized. The court held that the taxes for county purposes were rightfully assessed, under the general revenue laws, but that the taxes for State purposes were unauthorized, because section twelve of the act of 1852 had not been repealed either by an express provision of a subsequent law or by necessary implication, and being in force, State taxes could only be collected in the way pointed out in that section.

As it is the peculiar province of the highest court of a State to decide whether or not the method pursued in the assessment and collection of taxes is in conformity with the law of the State, this decision is controlling.

It was not made until after this suit was instituted, and, doubtless, not promulgated until the rendition of the decree. The assessors of St. Louis County, in this case, imposed taxes for State, county, school, and city purposes. The bill charged that the whole proceeding was illegal, and sought to restrain the entire levy. On demurrer the Circuit Court held that the city taxes were wrongfully levied, and issued the proper order restraining them, and dismissed the bill so far as it related to State, county, and school taxes. The court should have included State taxes in the restraining order. On this account the decree must be reversed and cause remanded, with directions to enter an order enjoining the collection of the State tax in the bill mentioned. In all other respects the decree is right.

DECREE REVERSED AND REMANDED.

title: Bailey v. Magwire/Opinion of the Court


text: Talk:Bailey v. Magwire/Opinion of the Court


text:
French v. Hay (89 U.S. 231)

APPEAL from the Supreme Court of the District of Columbia; the case being thus:

In 1855, James French and Walter Lenox, of Alexandria, Virginia, obtained from the legislature of Virginia a charter for a railroad between Alexandria and Washington, to be called the Alexandria and Washington Railroad Company. The two persons just named, with a third (a relative of French), owned all the stock; French owning three-fourths of the whole. The capital paid in being inadequate to make and equip the road, the company borrowed $60,000 and gave a deed of trust on the road to secure payment of the debt. The company soon afterwards and before 1859 incurred other debts, which were not secured by mortgage.

In this condition of things Alexander Hay, of Philadelphia, in 1859 advanced to French $5000, and French in the year just named and in the winter and spring of 1860 bought in $31,000 of these unsecured debts. Having reduced them to judgment he assigned the judgments to Hay. And Hay, on the 24th of August, 1860, executed to French these two papers; the first, a transfer, whose character (whether executory or executed) was the chief matter of contest in this case; and a power of attorney whose meaning was not disputed: THE AGREEMENT TO TRANSFER.

'For and in consideration of the sum of $5000, with interest from this date, I hereby assign and transfer to James French, of Alexandria, Virginia, all the judgments, notes, or claims which I hold against the Alexandria and Washington Railroad Company, or against said railroad company, indorsed by the said French and Walter Lenox, or by either of them, to be held by the said French, his heirs and assigns, as his individual property, upon his payment to me of the above-named sum of $5000, with interest from this date.

'Given under my hand and seal this 24th of August, 1860.

'A. HAY.

'Witness,

'THOMAS HAY.'

THE POWER OF ATTORNEY.

'To all whom it may concern: Be it known, that I, Alexander Hay, of the city of Philadelphia, do hereby constitute and appoint James French, Esq, of Alexandria, Virginia, my true and lawful attorney, for me and in my name, to make such disposition as he may deem proper of all the judgments, notes, or claims which I hold against the Alexandria and Washington Railroad Company, or against said company, indorsed by said French and Walter Lenox, or by either of them, to take all necessary steps for collecting the same, or pledge or hypothecate the same, or compromise or sell the same, on such terms as he shall deem proper, and do with them whatever he shall choose, as fully as if they were his individual property; and I do hereby, by these presents, ratify and confirm the same as fully as if I were present acting in person.

'Given under my hand and seal this 24th of August, 1860.

'A. HAY. [SEAL.]

'Witness,

'THOMAS HAY.'

No part of the $5000 was ever paid by French to Hay.

In May, 1861, French went south and joined the rebels, Lenox going with him.

In April, 1862, the trustees in the deed of trust sold the road with the franchises, to pay the mortgage on it, and Hay bought it, paying for it $12,500. Immediately afterward Hay, under the code of Virginia, formed a new company, called the Washington, Alexandria, and Georgetown Railroad Company, and issued new stock. A part of this new stock was allotted to Hay. He subsequently sold it; selling it for more than enough to satisfy the judgments which he held, by French's assignment of them to him, against the old road. He did accordingly satisfy those judgments.

In May, 1865, the rebellion being now suppressed, French and Lenox returned to their homes, in Alexandria, and caused a suit to be brought in the name of the old corporation, for which they had procured a charter, against the new company organized by Hay, to recover bank the road and old franchises, on the ground that the sale to Hay was void. This suit was decided in favor of the old corporation. The sale was set aside and the old corporation reinstated in its possessions as of ancient and former right.

French now (July, 1868) filed a bill-the bill in this case against Hay. It recapitulated several of the facts above mentioned, charging that in 1859 Hay agreed to advance to the complainant the necessary money to purchase the outstanding debts of the Alexandria and Washington Railroad Company, and that he did advance the $5000 for that purpose; that in pursuance of the arrangement the complainant, in 1859, and in the winter and spring of 1860, bought up the debts of the company to the amount of $31,000; that the debts thus bought were reduced to judgment and assigned to Hay; that in the purchase the complainant employed and paid out of the money advanced by the defendant something less than $5000, and that all the money over and above the said sum of $5000 paid out in purchase of said debts (a list of which was attached to the bill) was furnished and paid out of his own proper money and resources, in the expectation that the same would be repaid or otherwise satisfactorily accounted for by the defendant on a settlement. The bill then averred that on the 24th of August, 1860, the defendant, by the written assignment and power of attorney already quoted, transferred and assigned to the complainant all the said claims so purchased, reserving the repayment of $5000 to cover the advances made, and charged that notwithstanding the said assignment the defendant afterwards collected all the said judgments and claims, and appropriated the proceeds thereof to his own use.

Upon these averments an account was prayed for of all the judgments and claims, and a decree that the defendant pay to the complainant all sums of money arising therefrom, with interest, after deducting the said sum of $5000, with any interest due thereon, so as aforesaid advanced to the complainant.

The answer admitted the execution of the transfer and power, but asserted that they were to take effect only on payment of the $5000; that French on the outbreak of the rebellion had joined it and abandoned Alexandria; that the defendant was not bound to wait the issue of the rebellion and to see if French would ever return.

The answer alleged also that independently of all this, French had a complete remedy at law; and that the bill was demurrable.

The court below dismissed the bill and French appealed.

Mr. F. P. Stanton, for the appellant; Messrs. J. B. Stewart and A. G. Riddle, contra.

Mr. Justice STRONG delivered the opinion of the court.

title: French v. Hay (89 U.S. 231)


text: Talk:French v. Hay (89 U.S. 231)

title: Talk:French v. Hay (89 U.S. 231)