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Partridge v. Merchants' Mutual Insurance Company

ERROR to the Circuit Court for the District of Missouri; the case apparently having been thus:

In January, 1867, one Winslow being agent for the State of Missouri of the Phoenix Mutual Life Insurance Company of Hartford, Connecticut, in the business of soliciting persons to insure and keep insured in that company, Partridge made an arrangement with him to go into partnership with him in the agency; and Winslow having written to the company accordingly, the company in reply tell him that there was a Mr. Jones-'now the company's agent for Minnesota, and a man second to none in the West for energy and sound judgment'-who was very sanguine that he could make arrangements with him, Winslow, for a systematic and thorough 'working' of the two States, which would prove mutually beneficial. And that 'without meaning to be understood as saying one word against Mr. Partridge-on the contrary, not seeing why matters cannot be arranged so as to have him also as one of the workers for the company-the company would advise Winslow to hold on and wait a little before making any permanent arrangement.'

Jones coming to St. Louis soon after this, he, Winslow, and Partridge entered into an arrangement by which Winslow retired, leaving Jones and Partridge partners in the State agency. Jones in a short time went to Hartford, and was sent by the company on business in Iowa, &c., leaving Partridge alone in Missouri. Partridge went on as he had been going on from his first arrangement with Winslow, in soliciting people who had not previously been insured to insure themselves in the company and in getting renewals of such policies as had been made previous to his coming in and had now run out.

On all first insurances he received 20 per cent. of the premium, and on all renewals 7 1/2 per cent. About his right to these, or to his having actually received them, there was no dispute.

In September, 1867, the company having written to Partridge about persons who had applied for an agency in Missouri, he writes to the company, responding civilly to some inquiries, but says—

'I am free to confess a little surprise at your remarks, coupling the persons you speak of with the general agency of the State of Missouri. I supposed it was settled that Mr. Jones and myself were to occupy the position of State agents. And just here permit me to inquire what my status is, if the State agency is open to the trial of candidates.'

To this the company, by a letter dated September 7th, 1867, reply:

'Concerning your status in Missouri, it is simply this: You are there working up a business for yourself, and are paid the highest commissions which we pay, and in any arrangements which we may make for the State, will not overlook your interests, but we had no idea of giving you the exclusive control of a State which it will require a most experienced agent to take charge of and work up.'

'After I received this letter of the 7th of September,' said Partridge, in speaking of it, 'I understood it, and was satisfied with it, and continued on as agent, soliciting policies, collecting premiums and renewals, and reporting as required by the rules of the company.'

In December, 1867, the company sent out a Mr. Dye to St. Louis, telling Partridge that it is with a view to his procuring the company a greater amount of business out of the State; that Dye's efforts would not conflict with his, and that he, Partridge, 'can proceed in his own way on his own account.'

Difficulties, however, soon occurred in consequence of Dye's coming out, and on the 15th of February, 1868, a little more than a year after his agency began, Partridge was discharged by the company, he having at this time a sum of $1772 in his hands collected for premiums. He now brought suit in one of the State courts of Missouri against the company. The company removed the case into the Federal court, under the act of Congress of 1866, and that of 1867 amendatory thereof. These enact that after a suit removed from a State court has been entered in the Federal court, it shall proceed in the same manner as if it had been brought there by original process, and the pleadings have 'the same force and effect, in every respect, and for every purpose, as the original pleadings would have had by the laws and practice of such State if the cause had remained in the State court.'

On the trial the plaintiff admitted that he had received 20 per cent. commissions on all first premiums, and 7 1/2 per cent. commissions on all renewal premiums that had been actually collected by him, and that there was in his hands at the time of his discharge $1772 in money, the property of the company, if they were not liable to him for the value of future commissions to accrue on the policies.

It was then announced by him that the real point of dispute in the cause was this, viz.: that, under the facts and circumstances of his employment and service, the letters and correspondence had with him by the company, and particularly by the terms of the aforesaid letter of September 7th, 1867, and by force and virtue of a general usage existing in St. Louis at that time in regard to the business of life insurance companies and their agents, he was entitled to retain the agency, and, in case of his removal against his will, and without sufficient cause, was entitled to be paid a commutation equal to the present value of his commissions, computed by the actuarial rule for computing the present value of policies.

The defendants maintained that they were not bound by any usage except that of their own company; that the plaintiff was their agent only at the will of the company, and might be discharged at any time without cause, and was not entitled to any payment or commutation on policies solicited during his agency, except his commission actually accruing during his agency, which, as he admitted, he had received.

They pleaded further their set-off; to their pleading which no objection was made by the plaintiff.

The plaintiff then propounded to a witness the following question, the witness having first qualified himself as an expert in insurance matters, terms, and language:

'Is there in the phrase contained in the letter of defendant of September 7th, 1867, to wit—

"Concerning your status in Missouri, it is simply this: You are there working up a business for yourself, and are paid the highest commissions which we pay'--

'any peculiar or technical meaning as used by men engaged in life insurance, and as applied to the business of life insurance different from the ordinary meaning of these terms?'

In answer to which question the plaintiff offered to prove by this witness, and by many others experienced in life insurance, that the said phrase did have a peculiar meaning in that regard, well understood by men in the business of life insurance, and not well understood by those not familiar with the business; that its meaning as understood in that business was that the agent should have the right to solicit and cause policies to be issued according to the published rules and rates of the company, and should have the right during the life and force of such policies to collect all renewal premiums thereon, and have commissions on such renewals, and that if he was discharged by the company without sufficient cause he was entitled to be paid immediately, the present value of his commissions, to be computed by the actuarial rule used by such companies to value policies.

The question offered to be put was objected to by the defendant, and the objection was sustained by the court, on the ground that the language referred to was plain and intelligible, and required no explanation, and that such evidence as was offered would vary the contract between the parties. To this ruling the plaintiff excepted.

The jury found a verdict for the company, $1772 on the counter claim, and judgment was entered accordingly. The plaintiff now brought the case here.

Messrs. T. W. B. Crew and J. F. Hardin, for the plaintiff in error:

1. The question was what an agent's 'working up' the business of life insurance means? Now, on their face, have those words in connection with that business, a full, plain, unquestionable meaning, known to all who hear them? We offered to prove by persons in the business that they had not such a meaning, but contrariwise had a technical and peculiar meaning, understood only by persons in the business, and we offered moreover to show exactly what that meaning was. Yet, thus to show the true meaning of the contract, the court held would vary its true meaning, and that though we offered to prove it on its face ambiguous, it was on that same face without the possibility of two meanings.

2. The court erred in entering judgment for the $1772. Even if by the laws of the State and practice of its courts such a thing had been allowable (which we do not concede), when the company elected to remove the cause to the Federal court it abandoned all rights under the State laws and practice, and was bound to conform to the rules of practice in the Federal courts. These are common-law rules, and set-off does not prevail.

Mr. N. P. Chipman, contra.

Mr. Justice MILLER delivered the opinion of the court.


text: Talk:Partridge v. Merchants' Mutual Insurance Company

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text:
Partridge v. Merchants' Mutual Insurance Company/Opinion of the Court

The question did not arise whether the custom which the plaintiff offered to prove could have been proved as the measure of his compensation, in the absence of any express contract, because the plaintiff had introduced in evidence a letter from the defendant in reference to this compensation, under which he said he had acted in taking the policies for which he now claimed the additional commission. There was no question as to the amount, or percentage, or premium, which was to be paid under this letter. The plaintiff stated that he had retained a certain percentage, which was that allowed by the company. The testimony was not offered to show what was the highest commission paid by the company.

It appears to us, as it did to the Circuit Court, that the testimony offered would have established a new and distinct term to the contract. It would have established a contract very different from the written one introduced by plaintiff. The language of the letter was neither ambiguous nor technical. It required and needed no expert, no usage to discover its meaning. To have admitted the usage offered in evidence in this case would have been to make a contract for the parties differing materially from the written one under which they had both acted for some time.

The tendency to establish local and limited usages and customs in the contracts of parties, who had no reference to them when the transactions took place, has gone quite as far as sound policy can justify. It places in the hands of corporations, such as banks, insurance companies, and others, by compelling individuals to comply with rules established for the interests alone of the former, a power of establishing those rules as usage or custom with the force of law. When this is confined to establishing an implied contract, and the knowledge of the usage is brought home to the other party, the evil is not so great. But when it is sought to extend the doctrine beyond this, and incorporate the custom into an express contract whose terms are reduced to writing and are expressed in language neither technical nor ambiguous, and therefore needing no such aid in its construction, it amounts to establishing the principle that a custom may add to or vary or contradict the well-expressed intention of the parties made in writing. No such extension of the doctrine is consistent either with authority or with the principles which govern the law of contracts.

A question is raised in this court not raised in the Circuit Court as to the right of the defendant to recover, by way of set-off or cross-action against the plaintiff, a sum of money in his hands as agent of the plaintiff, which was admitted to be due, if plaintiff's claim was not established. The amount was admitted by plaintiff, and no objection was made to pleading it as a set-off. Therefore, none can be made here. But if the point were open to inquiry, it is settled by the case of West v. Aurora City, that defendants in the Circuit Courts of the United States can avail themselves of the laws which prevail in the State concerning the right of set-off generally. It would be a most pernicious doctrine to allow a citizen of a distant State to institute in these courts a suit against a citizen of the State where the court is held and escape the liability which the laws of the State have attached to all plaintiffs of allowing just and legal set-offs and counter claims to be interposed and tried in the same suit and in the same form.

JUDGMENT AFFIRMED.


text: Talk:Partridge v. Merchants' Mutual Insurance Company/Opinion of the Court


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Life Insurance Company v. Terry

ERROR to the Circuit Court for the District of Kansas.

Mary Terry brought an action in the court below against the Mutual Life Insurance Company of New York, to recover the sum of $2000, claimed by her as due upon a policy of insurance on the life of her husband George Terry, made and issued to her as his wife.

The policy contained a condition, of which a portion was in these words:

'If the said person, whose life is hereby insured,. . . shall die by his own hand,. . . this policy shall be null and void.'

Within the term of the policy, George Terry died from the effects of poison taken by him.

Evidence was given tending to show that at the time he took the poison he was insane. Evidence was also given tending to show that at that time he was sane, and capable of knowing the consequences of the act he was about to commit.

Thereupon the counsel for the defendant requested the court to instruct the jury thus:

'First. If the jury believe from the evidence in the case, that the said George Terry destroyed his own life; and that, at the time of self-destruction, he had sufficient capacity to understand the nature of the act which he was about to commit, and the consequences which would result from it, then, and in that case, the plaintiff cannot recover on the policy declared on in this case.

'Second. That if the jury believe from the evidence that the self-destruction of the said George Terry was intended by him, he having sufficient capacity at the time to understand the nature of the act which he was about to commit, and the consequences which would result from it, then, and in that case, it is wholly immaterial in the present case that he was impelled thereto by insanity, which impaired his sense of moral responsibility, and rendered him, to a certain extent, irresponsible for his action.'

The court refused to give either of these instructions, and charged as follows:

'It being agreed that the deceased destroyed his life by taking poison, it is claimed by defendant that he 'died by his own hand,' within the meaning of the policy, and that they are therefore, not liable.

'This is so far true that it devolves on the plaintiff to prove such insanity on the part of the decedent, existing at the time he took the poison, as will relieve the act of taking his own life from the effect which, by the general terms used in the policy, self-destruction was to have, namely, to avoid the policy.

'It is not every kind or degree of insanity which will so far excuse the party taking his own life as to make the company insuring liable.

'To do this, the act of self-destruction must have been the consequence of the insanity, and the mind of the decedent must have been so far deranged as to have made him incapable of using a rational judgment in regard to the act which he was committing.

'If he was impelled to the act by an insane impulse which the reason that was left him did not enable him to resist, or if his reasoning powers were so far overthrown by his mental condition that he could not exercise his reasoning faculties on the act he was about to do, the company is liable. On the other hand, there is no presumption of law, prim a facie or otherwise, that self-destruction arises from insanity, and if you believe from the evidence that the decedent, although excited, or angry, or distressed in mind, formed the determination to take his own life, because, in the exercise of his usual reasoning faculties, he preferred death to life, then the company is not liable, because he died by his own hand within the meaning of the policy.'

The cause came to this court on exceptions to the refusal of the court to give the instructions requested by the insurance company, and to the charge which was actually given.

The case was submitted on briefs; where it was elaborately argued on principle and precedents by Messrs. H. E. and J. T. Davies, for the plaintiff in error: the English case of Borradaile v. Hunter being referred to as the leading one, where the rule, it was said, was early settled in England against the pretensions of cases like the present, and settled in accord with what the counsel maintained was a just construction of the words of the contract; a case, it was urged, which had been supported by the weight of authorities both in England and with us; as Clift et al. v. Schwabe, Dufaur v. Professional Life Insurance Co., Cooper v. The Massachusetts Mutual Life Insurance Co., Nimick et al. v. Mutual Life Insurance Co., and Gay v. Union Mutual Life Insurance Company of New York.

Mr. W. W. Nevison, contra, relied on Breasted v. The Farmers' Loan and Trust Co., Barrett v. Buxton, State v. Felter, and submitted that the charge of the court below was in truth sustained by the Circuit Court for Connecticut, in Gay v. Union Mutual Life Insurance Co., relied on by the other side.

Mr. Justice HUNT delivered the opinion of the court.

title: Life Insurance Company v. Terry


text: Talk:Life Insurance Company v. Terry

title: Talk:Life Insurance Company v. Terry


text:
Life Insurance Company v. Terry/Opinion of the Court

The request for instructions made by the counsel of the insurance company, proceeds upon the theory that if the deceased had sufficient mental capacity to understand the nature and consequences of his act, that is, that he was about to take poison, and that his death would be the result, he was responsible for his conduct, and the defendant is not liable; and the fact that his sense of moral responsibility was impaired by insanity, does not affect the case.

The charge proceeds upon the theory that a higher degree of mental and moral power must exist; that although the deceased had the capacity to know that he was about to take poison, and that his death would be the result, yet, if his reasoning powers were so far gone that he could not exercise them on the act he was about to commit, its nature and effect, or if he was impelled by an insane impulse which his impaired capacity did not enable him to resist, he was not responsible for his conduct, and the defendant is liable.

It may not be amiss to notice that the case does not present the point of what is called emotional insanity, or mania transitoria, that is, the case of one in the possession of his ordinary reasoning faculties, who allows his passions to convert him into a temporary maniac, and while in this condition, commits the act in question. This case is expressly excluded by the last clause of the charge, in which it is said that anger, distress, or excitement, does not bring the case within the rule, if the insured possesses his ordinary reasoning faculties.

The case of Borradaile v. Hunter, reported in 5th Manning & Granger, is cited by the insurance company. The case is found also in 2 Bigelow, Life and Accident Insurance Cases, and in a note appended are found the most of the cases upon the subject before us. The jury found in that case that the deceased voluntarily took his own life, and intended so to do, but that at the time of committing the act he was not capable of judging between right and wrong. Judgment went for the defendant, which was sustained upon appeal to the full bench. The counsel for the company argued that where the act causing death was intentional on the part of the deceased, the fact that his mind was so far impaired that he was incapable of judging between right and wrong did not prevent the proviso from attaching; that moral or legal responsibility was irrelevant to the issue. The court adds: 'It may very well be conceded that the case would not have fallen within the meaning of the condition had the death of the assured resulted from an act committed under the influence of delirium, or if he had, in a paroxysm of fever, precipitated himself from a window, or, having been bled, removed the bandages, and death in either case had ensued. In these and many other cases that might be put, though, strictly speaking, the assured may be said to have died by his own hands, the circumstances clearly would not be such as the parties contemplated when the contract was entered into.' In delivering the opinion of the court Erskine, J., says: 'All that the contract requires is, that the act of self-destruction should be the voluntary and wilful act of a man having at the time sufficient powers of mind and reason to understand the physical nature and consequences of such act, and having at the time a purpose and intention to cause his own death by that act, and the question whether at the time he was capable of understanding the moral nature and quality of his purpose, is not relevant to the inquiry further than as it might help to illustrate the extent of his capacity to understand the physical character of the act itself.' Chief Justice Tindal dissented from the judgment. In speaking of the verdict he says: 'It is not, perhaps, to be taken strictly as a verdict that the deceased was non compos mentis at the time the act was committed, for if this latter is the meaning of the jury, the case would then fall within that description mentioned in the argument to be without the reach of the proviso, namely, the case of death inflicted on himself by the party whilst under the influence of frenzy, delusion, or insanity.'

This authority was followed in Clift v. Schwabe, where it was substantially held that the terms of the condition included all acts of voluntary self-destruction, and that, whether the party is a voluntary moral agent, is not in issue.

These decisions expressly exclude the question of mental soundness. They are in hostility to the tests of liability or responsibility adopted by the English courts in other cases from Coke and Hale onwards. Coke said, 'A little madness deprives the lunatic of civil rights or dominion over property, and annuls wills.' But, to exempt from responsibility for crime, he says 'complete ignorance of the knowledge of right and wrong must exist.' Lord Mansfield holds the legal test of a sound mind to be the knowledge of right and wrong, of good and evil; of which the converse is ignorance of knowledge of right and wrong, of good and evil. Lord Lyttleton held the test to be the state called compos mentis or sound mind. Lord Erskine defined it to be the absence of any practicable delusion traceable to a criminal or immoral act. In Pritchard, on the Different Forms of Insanity, will be found the somewhat lengthy definition of insanity by Lord Lyndhurst.

The English judges refuse to apply to the act of the insured in causing his death the principles of legal and moral responsibility recognized in cases where the contract, the last will, or the alleged crime of such person may be in issue.

In Hartman v. Keystone Insurance Co., the doctrine of Borradaile v. Hunter was adopted, with the confessedly unsound addition that suicide would avoid a policy, although there were no condition to that effect in the policy.

In Dean v. Mutual Life Insurance Co. the courts of Massachusetts held substantially the doctrine of Borradaile v. Hunter.

In Kentucky, in St. Louis Life Insurance Co. v. Graves, the court were divided upon the question of the soundness of Borradaile v. Hunter, but held unanimously that, where the suicide was committed during an uncontrollable passion caused by intoxication, the condition was broken and the policy avoided.

In Cooper v. Massachusetts Life Insurance Co. the doctrine of Dean v. American Life Insurance Co. was affirmed; the plaintiff offering to prove that the deceased was insane at the time he committed the act; that he acted under the influence and impulse of insanity, and that his act of self-destruction was the direct result of his insanity.

In Nimick v. Insurance Company, McKennan, Circuit Judge of the United States for the Western District of Pennsylvania, held that if the assured comprehended the physical nature and consequences of the act, and intended to destroy his life, the policy was void, although he did not comprehend the moral nature of the act.

On the other hand, in Eastabrook v. Union Insurance Co., the judge at the trial instructed the jury 'that if the insured was governed by irresistible or blind impulse in committing the act of suicide, the plaintiff would be entitled to recover.' This decision was sustained by the Supreme Court of the State of Maine.

In the State of New York the question arose in Breasted v. Farmers' Loan and Trust Co. In an action upon the policy the defendants pleaded that the deceased committed suicide by drowning himself in the Hudson River, and died by his own hand. To this the plaintiff replied that the assured was 'of unsound mind and wholly unconscious of the act.' The defendants demurred. The Supreme Court overruled the demurrer, holding that the reply afforded a sufficient answer to the plea. The case afterwards came before the Court of Appeals of that State, when it was held that the provision in the policy had reference to a criminal act of self-destruction, that the self-destruction of the insured while insane, and incapable of discerning between right and wrong, was not within the provision.

In the case of Gay v. The Union Mutual Life Insurance Co., it was held that if the deceased was conscious of the act he was committing, if he intended to take his own life, and was capable of understanding the nature and consequences of it, the policy was void, but if the insured destroyed himself while acting under an insane delusion, which overpowered his understanding and will, or if he was impelled to the act by an uncontrollable impulse, the case did not fall within the proviso of the policy. This decision, it is stated by Bigelow, was the result of a careful deliberation between Judges Woodruff and Shipman at a Circuit Court of the United States held by them jointly.

In his work on Insurance, Mr. Phillips, after citing the cases, closes thus: 'And I take our law to be that any mental derangement which would be sufficient to exonerate a party from a contract would render a person incapable of occasioning the forfeiture of a policy under this condition.'

There is a conflict in the authorities which cannot be reconciled.

The propositions embodied in the charge before us are in some respects different from each other, but in principle they are identical. They rest upon the same basis,-the moral and intellectual incapacity of the deceased. In each case the physical act of self-destruction was that of George Terry. In neither was it truly his act. In the one supposition he did it when his reasoning powers were overthrown and he had not power or capacity to exercise them upon the act he was about to do. It was in effect as if his intellect and reason were blotted out or had never existed. In the other, if he understood and appreciated the effect of his act, an uncontrollable impulse caused by insanity compelled its commission. He had not the power to refrain from its commission, or to resist the impulse. Each of the principles put forth by the judge rests upon the same basis,-that the act was not the voluntary intelligent act of the deceased.

The causes of insanity are as varied as the varying circumstances of man.

-'Some for love, some for jealousy, For grim religion some,     and some for pride, Have lost their reason; some for fear of      want, Want all their lives; and others every day, For fear of      dying, suffer worse than death.'

When we speak of the 'mental' condition of a person, we refer to his senses, his perceptions, his consciousness, his ideas. If his mental condition is perfect, his will, his memory, his understanding are perfect, and connected with a healthy bodily organization. If these do not concur, his mental condition is diseased or defective.

Excessive action of the brain whereby the faculties become exhausted, a want of proper action whereby the functions become impaired and diminished, the visions, delusions, and mania which accompany irritability, or the weakness which results from an excess of vital functions, indigestion and sleeplessness, are all the result of a disturbance of the physical system. The intellect and intelligence of man are manifested through the organs of the brain, and from these, consciousness, will memory, judgment, thought, volition, and passion, the functions of the mind, do proceed. Without the brain these cannot exist. With an injured or diseased brain, their powers are impaired or diminished.

We have not before us the particular facts on which the questions of the sanity of Terry were presented. We may assume that proof was given upon which the propositions of the charge were based. We do not know whether he was sleepless, unduly excited, or unnaturally depressed; whether he had abandoned his accustomed habits and pursuits and adopted new and unusual ones; from a quiet, orderly man, had become disorderly, vicious, or licentious;-that his fondness for his wife and children changed to dislike and abuse; that jealousy, pride, the fear of want, the fear of death had overtaken him. He may have realized the state supposed by the counsel in arguing Borradaile v. Hunter, viz., that his death might have resulted from an act committed under the influence of delirium, or that in a paroxysm of fever he might have precipitated himself from a window, or having been bled, he might have torn away the bandages. Whether he swallowed poison or did the other insane acts, might result from the same condition of body and mind.

Delirium, fever, tearing away the bandages for preserving the life, the taking of poison, in a case like that before us, are all results of bodily disease. If bodily disease in these or other forms overthrew Terry's reasoning faculties, in other words, destroyed his consciousness, his judgment, his volition, his will, he remained the form of the man only. The reflecting, responsible being did not exist. In the language of the successful counsel in Borradaile v. Hunter, 'In these and many other cases, though, strictly speaking, the assured may be said to have died by his own hands, the circumstances clearly would not be such as the parties contemplated when the contract was entered into.'

That form of insanity called impulsive insanity, by which the person is irresistibly impelled to the commission of an act, is recognized by writers on this subject. It is sometimes accompanied by delusions, and sometimes exists without them. The insanity may be patent in many ways, or it may be concealed. We speak of the impulses of persons of unsound mind. They are manifested in every form,-breaking of windows, destruction of furniture, tearing of clothes, firing of houses, assaults, murders, and suicides. The cases are to be carefully distinguished from those where persons in the possession of their reasoning faculties are impelled by passion, merely, in the same direction.

Dr. Ray, cited by Fisher, approves the charge of the judge in Haskell's case, where he says: 'The true test lies in the word power. Has the defendant in a criminal case the power to distinguish right from wrong, and the power to adhere to the right and avoid the wrong?'

The question of sanity has usually been presented upon the validity of an agreement, the capacity to make a will, or upon responsibility for crime. If Terry had made an agreement under the circumstances stated in the charge, a jury or a court would have been justified in pronouncing it invalid. A will, then, made by him, would have been rejected by the surrogate if offered for probate. If upon trial for a criminal offence, upon all the authorities, he would have been entitled to a charge, that upon proof of the facts assumed, the jury must acquit him.

We think a similar principle must control the present case, although the standard may be different.

We hold the rule on the question before us to be this: If the assured, being in the possession of his ordinary reasoning faculties, from anger, pride, jealousy, or a desire to escape from the ills of life, intentionally takes his own life, the proviso attaches, and there can be no recovery. If the death is caused by the voluntary act of the assured, he knowing and intending that his death shall be the result of his act, but when his reasoning faculties are so far impaired that he is not able to understand the moral character, the general nature, consequences, and effect of the act he is about to commit, or when he is impelled thereto by an insane impulse, which he has not the power to resist, such death is not within the contemplation of the parties to the contract, and the insurer is liable.

In the present instance the contract of insurance was made between Mrs. Terry and the company; the insured not being in form a party to the contract. Such contracts are frequently made by the insured himself, the policy stating that it is for the benefit of the wife, and that in the event of death the money is to be paid to her. We see no difference in the cases. In each it is the case of a contract, and is to be so rendered as to give effect to the intention of the parties. Nor do we see any difference for this purpose in the meaning of the expressions, commit suicide, take his own life, or die by his own hands. With either expression, it is not claimed that accidental self-destruction, death in endeavoring to escape from the flames, or the like, is within the proviso.

JUDGMENT AFFIRMED.

Mr. Justice STRONG dissented.


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


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Brown v. Kennedy

ERROR to the Circuit Court of the United States for the District of Kansas; the case being thus:

An act of Congress of July 17th, 1862, 'to seize and confiscate the property of rebels,' provided, that if any persons in the then rebel States being engaged in armed rebellion against the government of the United States, or aiding or abetting such rebellion, shall not, within a time specified, cease to aid, countenance, and abet such rebellion, and return to his allegiance to the United States, 'all the estate, property, money, stocks, and credits of such persons, shall be liable to seizure as aforesaid,' and it was made the duty of the President to seize and use them as aforesaid, or the proceeds thereof. The statute further enacted, 'that to secure the condemnation and sale of any such property, proceedings in rem shall be instituted in the name of the United States,' in the District Court; and that the proceedings shall conform as nearly as may be to proceedings in admiralty and revenue cases; 'and if said property, whether real or personal, shall be found to have belonged to a person engaged in rebellion, or who has given aid or comfort thereto, the same shall be condemned as enemies' property.'

This act had now three times been before this court for construction. It came up once in Pelham v. Rose, where the court took a distinction between a promissory note, the evidence of a credit and the credit itself; and held that when the debtor had given to his creditor a promissory note, and that note was in existence, and was the thing proceeded against, it was necessary to the legal service of any monition that the marshal should seize and take it into his possession and control. The corollary was, that when the note, at the commencement of and during the pendence of proceedings to confiscate, was beyond the jurisdiction of the marshal, there was no due service and no confiscation.

The statute came up for consideration at a later date in Miller v. United States.

In that case a libel had been filed under the act to confiscate railroad stocks belonging to a rebel, and the notice, instead of being served on the owner, was served on the officers of the railroad company.

The court held that the service was good. It said that 'the act of Congress made it the duty of the President to cause the seizure of all the estate, property, money, stocks, credits, and effects of the persons described, and in order to secure the condemnation and sale of such property after its seizure, directed judicial proceedings in rem to be instituted. It contemplated that every kind of property mentioned could be seized effectually in some mode. It had in view not only tangible property, but that which is in action. It named stocks and credits; but it gave no directions respecting the mode of seizure. It was, therefore, 'the court said, 'a fair conclusion that the mode was intended to be such as was adapted to the nature of the property directed to be seized, and in use in courts of revenue and admiralty. And it was a legitimate,' the court added, 'in certain proceedings in courts of admiralty, to attach credits and effects of such an intangible nature that they cannot be taken into actual possession by the marshal, and the mode of attachment was by notice, dependent upon statutory enactment.'

The court accordingly held that the confiscation and sale had made a valid transfer of the stock.

The act came up a third time, in Pelham v. Way, reported in an earlier part of this volume, where the court said 'that undoubtedly a debt or credit was capable of seizure under the confiscation acts, and of subsequent condemnation and sale;' though the court there held that the proceeding not having been against the debt or credit, but only against the material evidence of it, and that material evidence having been out of the marshal's jurisdiction, and not having been seized, no confiscation of anything had taken place.

The statute thus above explained being in force, an information was filed by the district attorney in the District Court of the United States for the District of Kansas against a bond, dated May 28, 1860, executed by Lawrence Kennedy to Edward S. Brown, and secured by mortgage made and acknowledged by said Lawrence and Eliza his wife, on the same day, and on it recorded. The information prayed that process might issue against the bond and mortgage, and against 'the estate, property, claim, credits, and rights thereto and therein belonging to said Edward S. Brown, to enforce the forfeiture thereof.' Following this information a warrant was issued on the 28th of March, 1863, to the marshal of the district, commanding him to 'attach said bond and mortgage, and the estate, property, claim, credits, and rights thereto and therein belonging to the said Edward S. Brown,' and to retain the same in his custody to await the further order of the court, giving notice to all persons claiming the same to appear on the 20th of April, 1863, and show cause, if any they had, why the property should not be condemned as forfeited. To this warrant the marshal made return that he had attached the 'bond, mortgage, and credit,' and had cited Lawrence Kennedy and Eliza Kennedy (the obligors and mortgagors), and all other persons having, or pretending to have, any right, title, or interest therein, as he was commanded. Then followed the decree of the court, entered May 5th, 1863, which, after reciting the marshal's return that he had attached the bond and mortgage, credits, and property, and given due notice, after reciting also that proclamation had been made, and that default had been entered, ordered that 'the said bond, mortgage, and credit' be condemned and declared forfeited to the United States. The decree also ordered Kennedy, one of the obligors and mortgagors, to pay the debt into the court for the use of the United States, and in pursuance of the decree payment was made to the officers of the court.

In 1868 Brown obtained a pardon from the President, and on his application, previously made, the District Court ordered that all the money that had been collected under the confiscation decree by the officers of the court should be paid to him, after deducting therefrom some unpaid legal costs. And subsequently he caused to be filed in the confiscation proceedings a petition praying for judgment in his favor against those officers for the money. In point of fact, however, Brown received nothing on account of the order.

In this state of things Brown filed a bill in the court below, the Circuit Court for the District of Kansas, against Lawrence Kennedy and wife for the foreclosure of the mortgage. The principal defence was that the mortgage and the debt secured by it had been confiscated under the act of Congress; the defendant asserting also that by coming in to get the money produced by the confiscation, the complainant was estopped from proceeding by way of foreclosure. This defence was the less pressed, as the complainant expressly disclaimed wanting more than one satisfaction. As matter of fact, it was admitted by a statement of facts agreed on, that Brown, the complainant, was, and always had been, a resident of Virginia, and from June, 1860, till September, 1865, had continuously, at his home, in that State, the bond and mortgage, and that neither of the instruments was, during any part of that term, in the District of Kansas.

The court below dismissed the bill; and from its action herein, this appeal came.

Mr. E. S. Brown, for the appellant:

The court held in Pelham v. Rose, and Pelham v. Way, that the note, being capable of manual caption, must be taken into the actual custody of the marshal to constitute a valid seizure, and without this the court cannot adjudicate the condemnation thereof. In the appeal now before the court, it is part of the case as agreed on and admitted, that there was no seizure of the bond and mortgage by the marshal for the District of Kansas; but that at the time of the said pretended confiscation proceedings, the bond and mortgage were without the District of Kansas, and within the exclusive possession and control of Brown, at his home in Virginia, so that the court acquired no jurisdiction thereof.

The whole argument, then, of the other side, must rest on the use of the word credit in the proceedings.

But this word in the marshal's return can mean nothing but the bond and the mortgage. He describes the bond and mortgage, and nothing else; and when he says 'the following described bond, mortgage, and credit,' to wit, he means the bond and mortgage, and nothing else. He uses the word (credit) as a synonym with them. On this return, specially hinges the jurisdiction of the court. No matter what had been done before, if the official act of the marshal did not bring the res within the territorial jurisdiction of the court, no jurisdiction was acquired over the subject.

Further indeed. If the marshal had adopted the language of the information and the warrant, and after the words, 'the bond and mortgage' he had added 'and the estate, property, claim, credits, and rights thereto and therein belonging to the said Edward S. Brown,' that return would have comprehended no other res than Brown's bond and mortgage. To pretend that the owner's right to the res may be seized in one territorial jurisdiction, while the res is in another, is far beyond what was ever maintained in any court. Can it be maintained that the owner's right to his horse may be seized in Kansas, while the horse is in his quiet possession in Virginia? or, that the captain's right to his ship may be seized in Kansas, while the captain is in command, and the ship securely sailing in mid-ocean? The forfeiture of the horse, or ship, or bond and mortgage, is nothing but the forfeiture of the owner's 'estate, property, claim, credits, and rights thereto and therein.'

Miller v. United States does not interfere with the position taken above, nor the views expressed thereon. It is distinguished therefrom in Pelham v. Way.

Messrs. E. Stillings and T. P. Fenlon, contra.

Mr. Justice STRONG delivered the opinion of the court.

title: Brown v. Kennedy


text: Talk:Brown v. Kennedy

title: Talk:Brown v. Kennedy


text:
Brown v. Kennedy/Opinion of the Court

The bill was for the foreclosure of a mortgage, and the principal defence set up is that the mortgage and the debt secured by it had been confiscated under the act of Congress of July 17th, 1862. If it had been, the complainant was not entitled to a decree of foreclosure, and his bill was properly dismissed.

We are unable to perceive why the record of the proceeding in the District Court of the United States for the District of Kansas, on which the defendant chiefly relied, does not show an effective confiscation of the debt, and its forfeiture to the United States, as well as satisfaction thereof by the mortgagors. Doubtless it is true that the court had no authority to decree confiscation of anything which had not by seizure of the marshal been brought within its jurisdiction. Seizure is essential to confer jurisdiction. But the marshal's return that he had attached the bond, mortgage, and credit, conclusively establish that a seizure was made, and that the subjects of the seizure were within the jurisdiction of the court. In this collateral proceeding the complainant is not at liberty to traverse the marshal's return. An attempt was made to traverse it, in part at least, as appears from the agreed statement of facts. It is recited therein that from June, 1860, to September, 1865, continuously, Edward S. Brown had in his possession at his home in the State of Virginia the bond and mortgage, and that during this whole period they were not in the District of Kansas. From this we are expected to infer that the marshal could not have seized them. We can, however, make no such inference against the marshal's return, without disregard of the established rule that such a return is conclusive of the facts stated by it.

The next position taken by the appellant is that, at most, only the bond and mortgage were confiscated, leaving the debt, of which the bond and mortgage were mere evidences, still due. In support of this we are referred to Pelham v. Rose, and Pelham v. Way, more recently decided. If this were so, it would not be easy to see how the appellant could make use of the mortgage to collect the debt, when his title to the mortgage no longer exists-when it has been adjudged forfeited to the United States. But Pelham v. Rose, and Pelham v. Way furnish no support to the position that the debt due from the mortgagors was not confiscated as well as the instruments which the parties had adopted as the evidences of the debt. In those cases the information was against a promissory note, and nothing else. So was the warrant or monition. The marshal returned that he had arrested the property mentioned in the warrant, and the court decreed condemnation of 'the note.' The nature of the proceeding is clearly shown in the opinion of Mr. Justice Field in Pelham v. Rose, where he said: 'In the case at bar, a visible thing, capable of physical possession, is the subject of the libel. It is the promissory note of Pelham which constitutes the res against which the proceeding is instituted, and not a credit or debt, which the note is supposed by the defendant's counsel to represent. . . . The object of the present libel is to reach the note itself. This appears at every stage of the proceedings; in the information; in the monition to the marshal; in his return; in the decree of the court, and in the sale made.' It was for this reason it was ruled in Pelham v. Way that the debt was not confiscated.

But the present, case, as is apparent from the record, is very different. Not only were the bond and mortgage given to Brown informed against, ordered to be attached, seized, and condemned, but so, also, was the credit. We have seen that the marshal was commanded to attach the bond and mortgage and the estate, property, claim, credits, and rights thereto and therein belonging to the said Edward S. Brown. What is the credit in a bond and mortgage, if it is not the debt secured or evidenced by them? What are rights in a mortgage, as well as to it, if they are not the rights of the mortgagee to claim and receive the money secured by the mortgage? The ownership of the written instrument is a distinct thing from ownership of the right or credit of which the instrument is the evidence. The word 'credit' does not describe ownership of a mortgage, nor do the words 'rights therein.' The warrant was therefore directed against the debt, as well as against the written evidence of it. The marshal returned that he had attached the bond, mortgage, and credit, and the decree condemned expressly the bond, mortgage, and credit. That the debt was attachable in confiscation proceedings was held by this court in Miller v. The United States, and it was ruled that attachment or seizure could be made without manual caption of the visible evidences of the credit. To the doctrines laid down in that case we adhere; and, as the marshal's return conclusively establishes that the credit was seized, and was therefore within the jurisdiction of the court, we must hold that the decree of condemnation was warranted, and that the debt was effectively confiscated.

It is, perhaps, not necessary to say more. Yet it may be added that the appellant seems to have acquiesced in the decree of condemnation, and in the subsequent payment of the debt by the mortgagors to the officers of the court. The agreed statement of facts exhibits that in 1868, after he had obtained a pardon, on his application the District Court ordered that all the money that had been collected under the confiscation decree by the officers of the court should be paid to him, after deducting therefrom some unpaid legal costs. And subsequently he caused to be filed in the confiscation proceedings a petition praying for judgment in his favor against those officers for the money. Whether, after this, he could assert that the proceedings by which the money was collected were a nullity we will not determine. It is enough that, in our opinion, the debt due originally to him from the mortgagors was confiscated before his bill was filed.

DECREE AFFIRMED.

I concur in the judgment in this case on the ground that Brown waived his rights when he appealed to the confiscation proceedings, and by petition prayed the court to have the money realized from those proceedings paid over to him; which petition was granted by the court.

Mr. Justice FIELD dissented from both the judgment and the opinion.

title: Brown v. Kennedy/Opinion of the Court


text: Talk:Brown v. Kennedy/Opinion of the Court


text:
Holdane v. Sumner

APPEAL from the Circuit Court for the District of Louisiana.

This was a bill in equity filed by Sumner and others, as lessors, against Holdane & Co., one Jeffries, and the Bank of America, to enforce a lien for rent upon certain moneys deposited in the bank, the proceeds of goods which were formerly on the leased premises, and thereby subject to the lessors' privilege. The bank was but a stakeholder. The real defendants were the other parties named, judgment creditors who had garnisheed the moneys for the payment of their judgments. The controversy arose as far back as 1859. The leased premises were known as the Belleville Iron Works, situated near the Mississippi River opposite New Orleans. The tenants were an incorporated company known as the Belleville Iron Works Company. The term of the lease was ten years, commencing the 1st of January, 1856, the rent being a percentage on the amount of work done by the lessees, not to be less than $7500 per annum.

At the close of the year 1858 the company was insolvent, and sought to obtain the benefit of the insolvent laws of Louisiana by making a cessio bonorum. The existing law on this subject, which was passed in 1855, declared that any person may make a cession of his property to his creditors, provided the surrender be made bon a fide, without fraud, and agreeably to the formalities prescribed therefor. It then directed that any debtor wishing to make a surrender of his estate to his creditors must present his petition for that purpose to any judge having jurisdiction. This petition is to contain a statement of the debtor's affairs, with a schedule of his property, debits, and credits, and be sworn to. The sixth section of the action directs as follows:

'That whenever the judge shall be convinced that the debtor who wants to surrender his property has complied with all the formalities prescribed, he shall indorse on the schedule that the cession of all the property of the insolvent is accepted for the benefit of his creditors, and shall order a meeting of the creditors, to be called in the manner and within the time prescribed for respites; he shall also appoint an attorney to represent the creditors absent or residing out of the State, if there be any mentioned in the schedule.'

The seventh section enacts:'That when issuing the order for the meeting of the creditors, the judge shall order that all the proceedings, as well against the person as the property of the debtor, be stayed.'

The act then provides for the appointment of a syndic to take possession of the property, and to administer and sell the same, and contains other provisions regulating the entire proceedings.

In pursuance of this law the Belleville Iron Works Company, on the 29th of December, 1858, presented their petition in due form to the judge of the Fourth District Court of New Orleans (the proper judge for the purpose), who took cognizance of the case, and by an order of the same date accepted the cession for the benefit of the creditors, appointed a time and place for their meeting, and further directed that in the meantime 'all judicial proceedings against the property of said company be stayed.' After this the cause proceeded in the regular course. A syndic was duly appointed and qualified, and took charge of the property of the company; and having obtained an order of sale, the whole property was sold under his direction by the sheriff, and netted over $50,000. Out of this money he paid the rent of the works up to April 1st, 1859, the arrears and interest then amounting to over $14,000. He then made and filed in the court a tableau of distribution, by which he arranged the claims against the estate in the order of priority and privilege, and placed the entire rent to accrue on the lease after the 1st of April, 1859, being for six years and nine months, amongst the privileged claims; which, with a few other privileged claims, largely exceeded the proceeds of the property remaining in his hands. This tableau was filed May 23d, 1859. It met with strenuous opposition from the ordinary creditors, and a long litigation ensued. Suits were commenced by the defendants and others; and Holdane & Co. recovered judgments in the Circuit Court of the United States on May 11th, 1859, amounting in the aggregate to over $4000. The other defendant, Jeffries, sued in the Fourth District Court of New Orleans, and the suit was cumulated with the insolvency proceedings. These proceedings being finally carried by appeal to the Supreme Court of Louisiana, were wholly set aside, on the ground that the insolvency law was intended for natural persons only, and that a corporation, like the Belleville Iron Works Company could not make a cessio bonorum under it. After this decision of the Supreme Court, the cause was remanded to the Fourth District Court of New Orleans, and that court, on the 23d of March, 1860, made the following decree:

'It is ordered, adjudged, and decreed, that the order of the court, entered on the 29th December, 1858, in the case of The Belleville Iron Works Company v. Its Creditors, staying all judicial proceedings against the property of said company, be vacated and annulled; and it is further ordered, that the plaintiff do have and recover of the defendant, The Belleville Iron Works Company, the sum of $3262.86,' &c.

The Supreme Court subsequently held, when the case came up on another appeal, that the effect of this judgment was to annul the order of 29th December, 1858, in all its parts, and to allow the creditors to proceed as if there had been no surrender, and that the money in the hands of the syndic remained the property of the company and could be seized on execution, and did not become the property of its creditors, by virtue of the cessio bonorum.

The defendants having been thus left at liberty to prosecute their judgments to effect, issued executions, and as before said, garnisheed the balance of money in the hands of the syndic, amounting at this time to about $11,000, which he had deposited in bank.

The complainants then, February 23d, 1867, filed this bill to have the said moneys applied to the payment of their rent.

The defendants insisted that the complainants had lost their privilege by not proceeding against the goods themselves, before they were removed from the leased premises, or within fifteen days afterwards; within which time, under the provision of the code, the lessor might seize them if there had been no change of property, and the chattels were still capable of being identified.

The plea of prescription of three years.

The court below, it which the bill was filed, decided that the money belonged to the complainants, lessors of the iron works, and from that decree Holdane & Co., with Jeffries, the opposing creditors, appealed to this court.

Mr. T. J. Durant, for the appellants:

1. The opinions and decrees of the Supreme Court of Louisiana decide that the Belleville Iron Works Company could not make a cessio bonorum, and that all the proceedings in the Fourth District Court of New Orleans were void from beginning to end. With these decisions we have a judgment in our favor on all the points involved in the case, and fatal in all respects to the hopes of the privileged creditors.

There can be no question of landlord's privilege. Farnet et al. v. Their Creditors, and Del Campo, Opponent, shows that if there be no cessio, and the goods are removed, the landlord loses his lien unless he seize them within fifteen days afterwards.

2. The landlord did nothing from 1858 till the filling of this bill, nearly ten years. A prescription runs.

Mr. Conway Robinson, contra:

1. The landlord was prevented from seizing by a judicial order staying proceedings. This saves his rights; such is the established rule in Louisiana, and the rule accords with the principles of equity maintained in this court and elsewhere. The case of Farnet et al. v. Their Creditors, and Del Campo, Opponent, cited on the other side, shows that if there be a cessio the landlord's lien is not lost.

2. The landlord having been guilty of no laches, no prescription runs. The war suspended all statutes of limitation.

Mr. Justice BRADLEY delivered the opinion of the court.

title: Holdane v. Sumner


text: Talk:Holdane v. Sumner

title: Talk:Holdane v. Sumner


text:
Holdane v. Sumner/Opinion of the Court

By the Civil Code of Louisiana, the lessor has for the payment of his rent, and other obligations of the lease, a right of pledge on the movable effects of the lessee which are found on the property leased; and in the exercise of this right, the lessor may seize the objects which are subject to it, before the lessee takes them away, or within fifteen days after they are taken away, if they continue to be the property of the lessee, and can be identified. This seizure is effected by means of a writ of provisional seizure, which is issued to the sheriff upon the lessor filing a petition in the local court showing the amount of rent due, or the amount accruing on the lease, whether due or not, and swearing that he has good reason to believe that the property will be removed.

But when the goods are in custodi a legis, as where they are seized by a sheriff under an execution, or are placed in the hands of a syndic under a cessio bonorum, the lessor cannot exercise this power of seizure, and does not lose his privilege by not exercising it, but said privilege attaches to the proceeds of the property in the officer's hands. This is the immediate result of the laws directing the proceedings in such cases, and has been expressly decided by the Supreme Court of Louisiana. Sheriffs, on execution, are directed to sell subject to the privileges or special mortgages on the property sold. The syndie, under the insolvent law of 1855, is directed to sell the property absolutely, and to distribute it according to the priorities. The curator of a decedent's estate is required to sell the property and distribute it in the same manner. In Robinson v. McCay, Curator, the curator removed the goods from the leased premises, and then, in opposition to the lessor's privilege, set up that he had not asserted his claim by seizure of the goods. The court said: 'The representatives of an estate can do nothing which will destroy or impair a claim existing on the deceased's person or property at the moment of his decease. In this instance the removal by the curator cannot have the effect of destroying the privilege, because the lessor could not exercise his privilege on the thing subject to it. The law makes it the duty of the former to take the property into his possession, sell it, and after the sale to settle the order of privileges contradictorily with the other creditors. The proceeds in the hand of the curator represented the thing. The want of power in the lessor to seize prevented the prescription from running against him.'

It seems that the sheriff may also sell the goods absolutely upon condition of paying the lessor his rent. If the latter apprehends any danger of the goods being sold and removed without his rent being paid, he may get a rule on the sheriff to pay the rent, or get out an injunction. In Robinson v. Staples, the court directed the sheriff not only to pay the lessor the rent that was then due but to reserve sufficient to pay that which was yet to accrue. The exception was taken in that case that the lessor had not exercised his right of provisional seizure. But the court said: 'It is not well argued by the plaintiff's counsel that the lessors cannot have their privilege in this case because they did not make a provisional seizure under the statute. The proceeding was unnecossary, the property being already in custodi a legis under the fieri facias. Another creditor threatened to absorb by his proceedings the lessor's security, and if they were not permitted to protect their privilege prospectively, the security would have been lost.' It appears from this case, as indeed the words of the Code import, that the lessor's privilege extends to his unaccrued rent as well as to that which is due; but the purpose of quoting it here is to show that when goods are in custodi a legis the lessor's privilege attaches to the proceeds without any act of seizure on his part.

But it has been held that if the goods are not in custodi a legis, or in course of legal administration, the lessor will lose his privilege, unless he enforces his remedy. Thus, in Farnet et al. v. Their Creditors, and Del Campo, Opponent, the lessees becoming insolvent, an amicable meeting of their creditors was had, at which liquidators were appointed, who were to take charge of the property and act as trustees of all the creditors until the will of the foreign creditors could be ascertained. The property was thereupon removed from the leased premises and put on storage in another building. About a month afterwards one of the lessees made a regular cessio bonorum, and the lessor insisted on being placed on the tableau as a privileged creditor. The court held that as no formal assignment was made at the first meeting, it was impossible to give to an amicable arrangement of that sort the effect of a cessio bonorum, 'by which,' said the court, 'the rights of creditors are fixed at the date of the surrender. If formal assignment had been made and possession had been given, it might have created an equity in favor of Del Campo [the lessor] against the creditors who took part in the assignment, but certainly against none others;' and the lessor's claim was overruled because he had suffered the fifteen days to go by with out exercising his right of seizure.

Both parties cited this case; the complainants to show that if there be a regular assignment or cessio bonorum in form, the lessor's privilege is preserved without his making a seizure; the defendants, to show that if the assignment is not regularly made, the lessor must avail himself of the remedy which the law gives him. In this case a regular cessio bonorum in form was made; but the Supreme Court set it aside as unauthorized by the law. The question is, whether this unauthorized cessio excused the lessors from following up their remedy, or not. From the authorities which have been cited from the Louisiana reports, it would seem to result that the lessor is only excused from making a seizure in order to preserve his privilege, when he cannot lawfully make it in consequence of the goods being in custodi a legis; in other words, when he is prevented from making it by the act of the law. If, in the present case, the proceedings taken by the Belleville Iron Works Company were absolutely void, the lessors were not precluded from seizing the property; if only voidable, they were precluded. After the decision of the Supreme Court of Louisiana in the case, the cause was remanded to the Fourth District Court of New Orleans, and that court, on the 23d of March, 1860, ordered, adjudged, and decreed, that the order of the court, entered on the 29th December, 1858, staying all judicial proceedings against the property of the company, be 'vacated and annulled;' and that the plaintiff (Jeffrices) recover of the company the sum of $3262, &c. The Supreme Court subsequently held, when the case came up on another appeal, that the effect of this judgment was to annul the order of 29th December, 1858, in all its parts, and to allow the creditors to proceed as if there had been no surrender, and that the money in the hands of the syndic remained the property of the company and could be seized on execution, and did not become the property of its creditors, by virtue of the cessio bonorum.

This vacation of the original order, and setting aside the proceedings had under it, does not, of itself, afford an answer to the question whether the proceedings were absolutely void or only voidable. Proceedings are often set aside for mere irregularities. The judge who accepted the cession had jurisdiction of the subject-matter, and the parties were before him. The order accepting the cession contained an inhibition that all judicial proceedings against the property of the company should be stayed. The defect in the proceedings was, that the corporation was not such a person as was entitled to the benefit of the law. Could such an order be disregarded so long as it was not vacated or reversed? Was it not the duty of the lessors to respect it? How could they safely issue a writ of provisional seizure when there was an express inhibition of all judicial proceedings against the property in a proceeding to which they were parties? The order of the judge accepting the cession, and inhibiting judicial proceedings, was a judicial act. In making it he had to decide on the question of his own jurisdiction over the subject-matter and the parties; and although his decision may have been wrong, acts done in pursuance of it were binding until they were reversed or set aside. All parties acted on this principle. The defendants complied with all orders directed to them in the case. When their actions were cumulated with the insolvent proceedings, they acquiesced in the order of the court, and followed up their rights in regular procedure by contestation and appeal; and only proceeded to enforce their judgments when they had obtained a decision of the Supreme Court in their favor, and a decree of the District Court of New Orleans in pursuance thereof, vacating the original order. Under these circumstances it hardly lies in the months of the defendant to say that the lessors ought to have disobeyed the order of the judge, and disregarded all the subsequent proceedings before they were reversed; and that they should have met the court with the issue of the strong hand.

But without relying on this equitable aspect of the case arising from the respect due to the solemn acts of a judicial tribunal, and the conduct of all the parties concerned, there seems to be no sound technical reason for regarding the act of the judge in making the order of December 29th, 1858, as absolutely void. He had jurisdiction, both of the subject-matter and of the parties; but the principal party, the applying debtor, was incapacitated to sue for the relief afforded by the law. Being a corporation, though a 'person' in the legal sense of the term, it was not embraced within the intent and meaning of the insolvent law. Is this anything more than the common case of a party instituting a suit in court who turns out to have no legal standing in the court? And yet no one would assert that this predicament renders the entire proceedings absolutely void, and the court and all its officers trespassers. If a married woman brings an action in her own name, without joining her husband, the proceeding is not void, although the defect may be pleaded in bar, or set up as a defence on the trial.

Without pursuing the subject further, it suffices to say that, in our judgment, the lessors, under the circumstances of this case, were properly excused from making a seizure of the property of the Belleville Iron Works Company as a means of retaining their privilege for the rent accruing on the lease, and that said privilege attached to the proceeds of said property in the hands of the syndie.

The plea of prescription cannot be sustained in this case, inasmuch as the bill was filed in February, 1867; and we have lately held, in the case of Adger v. Alston, that all statutes of prescription and limitation were suspended, at least in the Federal courts, during the period of the late civil war, which was not solemnly determined in Louisiana until the President's proclamation of April 2d, 1866.

DECREE AFFIRMED.

title: Holdane v. Sumner/Opinion of the Court


text: Talk:Holdane v. Sumner/Opinion of the Court


text: Gunn v. Barry

title: Gunn v. Barry


text: Talk:Gunn v. Barry

title: Talk:Gunn v. Barry


text:
Gunn v. Barry/Opinion of the Court

ERROR to the Supreme Court of Georgia; the case being thus:

By a statute of Georgia, passed many years ago, it was enacted that the following property, belonging to a debtor who was the head of a family, should be exempt from levy and sale.

'Fifty acres of land, and five additional ones for each of his children under the age of 16 years, the land to include the dwelling-house, if the same and improvements do not exceed $200.

'One farm horse or mule.

'One cow and calf.

'Ten head of hogs.

'Fifty dollars' worth of provision, and five dollars' worth for each additional child.

'Beds, bedding, and common bedsteads sufficient for the family.

'One loom, one spinning-wheel, two pair of cards, and one bundred pounds of lint cotton.

'Common tools of trade for himself and his wife.

'Equipment and arms of a militia soldier and trooper's horse.

'Ordinary cooking utensils and table crockery.

'Wearing apparel of himself and family.

'Family Bible.

'Religious works and school books.

'Family portraits.

'The library of a professional man not exceeding $300 in value, to be selected by himself.'

In 1861, with this statute in existence, the State of Georgia passed what was called 'an ordinance of secession' from the United States; and joined in the treason and rebellion against the Federal government into which the slaveholding States, for the most part, entered. Her senators and representatives withdrew from Congress; her State government passed into the hands of persons at war with the United States; and she became one of the States styled 'The Confederate States of America;' a confederacy which waged war for several years on the government, and whose insurrection and rebellion the government, on the other hand, sought by force of arms to suppress. The arms of the United States having proved triumphant, the so-called government of the Confederate States fell to pieces, and the State of Georgia was left where she had put herself, that is to say, in the hands of traitors and rebels. No senators or representatives were allowed by the Congress of the United States to come back to its chambers as of old.

In this state of things, in May, 1866, Gunn obtained judgment in one of the courts of the State for $402.30 principal, and $129.60 interest (in all $531.90), against a certain Hart. For what the judgment had been obtained did not appear. Hart had at this time 272 1/2 acres of land, worth $1300, and the judgment bound it as a lien. He had no other land but one piece worth about $100.

On the 2d of March, 1867, the rebellion being suppressed, but the ancient relation of Georgia to the General Government, being still, in point of fact, not restored by representation, the Congress of the United States passed 'an act to provide for the more efficient government of the rebel States;' the act commonly called the Reconstruction Act. This act-reciting that 'no legal State governments or adequate protection for life or property now existed in the rebel States of Virginia, Georgia, North Carolina,' &c., and that it was 'necessary that peace and good order should be enforced in the said State till loyal republican State governments could be legally established,' and putting these said States under military rule-enacted that when the people of any one of the said rebel States should have formed a constitution of government in conformity with the Constitution of the United States in all respects. . . and 'when such constitution shall have been submitted to Congress for examination and approval, and Congress shall have approved the same. . . &c., said State shall be declared entitled to representation in Congress, and senators and representatives shall be admitted therefrom.'

In pursuance of what was contemplated by this act, and of certain amendments to it, the people of Georgia did make a constitution. This constitution by the first section of its seventh article ordained that—

'Each head of a family, or guardian, or trustee of a family, of minor children shall be entitled to a homestead of realty to the value of $2000 in specie, and personal property to the value of $1000 in specie, to be valued at the time they are set apart.'

'And no court or ministerial officer in this State shall ever have jurisdiction or authority to enforce any judgment, decree, or execution against said property so set apart, including such improvement as may be made thereon from time to time, except for taxes, money borrowed or expended in the improvement of the homestead, or for the purchase-money of the same, and for labor done thereon, or material furnished therefor, or removal of incumbrances thereon.'

The constitution having been thus adopted in form by the people of Georgia, was sent with this article included to the Congress of the United States, which by an act of June 25th, 1868, 'to admit the States of Georgia, &c., to representation in Congress,' reciting that whereas the people of Georgia, North Carolina, &c., had in pursuance of the already quoted act of March 2d, 1867, 'framed constitutions of State government which are republican, and have adopted said constitutions,' enacted that each of the States of North Carolina, Georgia, &c., shall be entitled and admitted to representation in Congress as a State of the Union when the legislature of such State shall have duly ratified the amendment to the Constitution of the United States. . . known as 'Article Fourteen:' Provided, That the State of Georgia shall only be entitled and admitted to representation upon this further fundamental condition, that the first and third subdivisions of section seventeen of the fifth article of the constitution of said State except, &c., shall be null and void, and that the General Assembly of said State by solemn public act shall declare the assent of the State to the foregoing provision.

The State having afterwards ratified the fourteenth amendment, and complied with other requirements, was by an act of Congress, passed July 15th, 1870, declared entitled to representation in Congress.

The constitution of Georgia being thus approved by Congress, and operative, the legislature of Georgia, on the 3d of October, 1868, passed.

'An act to provide for setting apart a homestead of realty and personalty and for the valuation of said property, and for the full and complete protection and security of the same to the sole use and benefit of families, as required by section first of article seventh of the constitution and for other purposes.'

The language of this act was the same as the provision of the constitution. Under the act all the land of Hart, which altogether, it will have been observed, was worth about $1400, was set apart to him and his family as a homestead.

On a requirement by Gunn, to the sheriff of the county, one Barry, that he should levy on the 277 1/2 acres, Barry refused to do so, upon the ground that they had been set off to Hart and his family under the act of 1868, and on a petition for mandamus against Barry to compel him to make the levy, the courts of Georgia, including the Supreme Court, having decided that the refusal of the sheriff was right, the case was brought here.

The question involved was of course the constitutionality as against Gunn, who had got his judgment before its passage, of the new exemption.

Mr. P. Phillips, for the plaintiff in error:

Hart having had 272 1/2 acres of land, worth $1300, of which land 50 acres, or at very most, say a half, was exempt under the old law, obtained a judgment for $531.90. His debt is thus perfectly secure. He has an interest in the land to the extent of the judgment; an interest which binds it in the hands of the debtor and to whomsoever the debtor may transfer it. Then comes the new constitution and law, which withdraws the whole of the land from the lien, and for all practical purposes dissolves or destroys the lien. The remedy, which was before complete, is now annihilated. And the creditor who, before, would have been paid in full, is deprived of getting anything. If this is not impairing the obligation of a contract-if it is not destroying vested rights what is?

There was, no doubt, great inducement in the Southern States, arising out of the disasters of the war, to legislation in favor of debtors. But while much may be said in extenuation of such legislation, nothing, when it is like that here, can be judicially said in justification of it. In Arkansas an exemption of $7000 has been made. In Mississippi of $4000. In other Southern States exemptions more or less large. With the operation of these exemptions on contracts made subsequently to them, we do not deal. But when applied to contracts made when no such exemptions were allowed or thought of, the illegality is obvious.

Some singular results follow as respects the State of Georgia. The population of the State is estimated at 1,500,000. Under the new exemption every head of a family is entitled to $2000 in land. Assuming that five persons constitute a family, we have 300,000 heads of families; and if each 'head' obtained the $2000 in land, the law appropriates land to the amount of $600,000,000. This is three times more than all the land in the State is estimated at.

No counsel appeared on the other side; but the court was referred to arguments made in Georgia, where the validity of the laws making the new exemption had been sought to be maintained. So far as the reporter understood them, the grounds were somewhat thus:

The old law, so far as it operated on contracts made after its date, was confessedly valid. Practically from the time of its passage no court or ministerial officer of the State had jurisdiction or authority to enforce any judgment, decree, or execution against property set aside under it.

The old law being valid, what made the exemption of 1868 invalid? It was not invalid.

I. In Von Hoffman v. Quincy, this court said:

'It is competent for the States to change the form of the remedy or to modify it otherwise as they may see fit, provided no substantial right secured by the contract is thereby impaired. No attempt has been made to fix definitely the line between alterations of the remedy which are deemed legitimate and those which under the form of modifying the remedy impair substantial rights. Every case must be determined upon its own circumstances.'

So, in that same case, this court referring to an observation made in an earlier case-that 'one of the tests that a contract has been impaired is that its value has by legislation been diminished'-say:

'This has reference to legislation which affects the contract directly, and not incidentally or only by consequence. The right to imprison for debt is not a part of the contract. It is regarded as penal rather than remedial. The States may abolish it whenever they think proper. They may also exempt from sale under execution the necessary implements of agriculture, the tools of a mechanic, and articles of necessity in household furniture. It is said, 'regulations of this description have always been considered in every civilized community as properly belonging to the remedy to be exercised by every sovereignty according to its own views of policy and humanity."

This court, then, here admitted that though a contract was in existence the legislature might legislate upon it so as to diminish its value provided the legislation were indirect. And the very sort of legislation which was in question in this case is given as an illustration of the means through which a diminution, lawful in character, may be made. The reason of the lawfulness, though the legislation be retroactive, was also plainly adumbrated. It was that the principles of humanity having in all civilized countries, time out of mind, induced legislatures to intervene between the creditor and his debtor to prevent the former from stripping the latter and his family of those articles which are necessary to their existence, and this sort of legislation being exercised by every sovereign 'according to his own views of policy and humanity,' every person entering into a contract enters into it with a full recognition of the right of the legislature to act on the subject according to such, its own views-views which, of course, must vary according to times and exigencies.

Hence, if the right of the legislature was legitimately exercised; if, in other words, the particular law did not transcend the limits of fair legislation, the 'obligation of contracts' was not impaired even though the legislation were retroactive, and though by a change in the character of the articles exempted the remedy might, in particular cases, be less visibly efficacious, as in others it might be more so.

Now, was the argument this, to wit, that the act of 1868 is unlawful because abstractly and in itself considered it made an exemption too great in amount? That fact was denied. An exemption of a house and lot worth $2000, and of personalty worth $1000, was not so plainly an excessive exemption as to be certainly void; void whether considered prospectively or retrospectively. Such a thing cannot be affirmed; the legislature of Georgia having had a right within fair limits to act according to 'its own views of policy and humanity.'

Then, was it void because by it a greater amount was exempted than by the former act? If the fact were so, still, if the increase were made by the legislature of the State in a fair exercise of the legislature's 'views of humanity and policy,' it would be hard to say, under the language of this court above quoted from Von Hoffman v. City of Quincy, that from this cause merely-the increase not being really great-it was void in toto. But the increase in the magnitude of the exemption was denied by the argument in Georgia. On the contrary, looking at the number of items exempted under the old law, and their character, it was asserted that in some cases of land in some families the exemption would be much less. A homestead of at least 50 acres, worth any sum, and if a man had ten children, of 100 acres, was exempted. Then the 'bedsteads,' 'tools,' and 'cooking utensils' exempted must all be 'common' or 'ordinary.' But nothing else was so required to be. All wearing apparel of the debtor and of all his family-however numerous the family or valuable the apparel-was exempted; so would a theological library be, however extensive and valuable, and family portraits which, if by certain artists, would have great value. In a case where the 50 acres were near a city, or where the family was of any quality and with members at all numerous, the articles exempted by the old law could hardly fail far to exceed $3000 in value. The new provision was but an equalization to all the people of the State of what was meant to be given by the old law, but was not really given.

II. Then was the case affected by the fact that the constitution and statute changing the character of the exemption declare that no court or ministerial officer in the State shall ever have authority to enforce any judgment, decree, or execution against said property so set apart? &c. How did that affect the matter? Under the old exemption no court or ministerial officer of the State could ever have had jurisdiction or authority to enforce any judgment, decree, or execution against the property set apart. Assuming that the exemption itself was valid, any prohibition by words was useless, and any words of prohibition were but surplusage. The prohibition followed from the validity of the exemption, and followed as much without words of prohibition as with them.

The case, then, was this. The legislature acting on 'its own views of policy and humanity' has so far modified an old exemption that, instead of some real estate, the value of which varied and might be worth much more than $2000, and a great number of articles of personalty nominatim, whose value also varied and which, of themselves, might be worth much more than $1000, and might be found in some families and not at all in others; now exempts realty worth $2000 and personalty worth $1000; so as to make the law operate for all as equally and equitably as possible. Is the legislative power constitutionally incapable of making such a change?

Then it could not be contended that by the mere contract, whatever it was, on which this judgment had been obtained, any lien was acquired. The new constitution withdrew nothing from the operation of the contract. And though a lien was acquired by the judgment, yet, if the new exemption did withdraw the land from the operation of it, the obligation of no contract was impaired.

But the strongest view, it was said, remained. In 1865 a revolution had swept over the land. The old State government had gone to wreck. The people had no civil government, and were in anarchy. The Congress of the United States invited them to make a government, and undertook to guarantee to the State one of a republican form. The constitution of 1868 was the result. It was made through the power and agency of Congress, under its law and under its eye. It was more the work of Congress than of the State. Congress insisted that a portion of the proposed constitution, which it disliked, should be fundamentally rejected; and that place should be given to new propositions which it thought good. The people of the State wanted neither change. But all that Congress prescribed to be done was done. Congress then assented that the instrument should go into effect, and it is in virtue of that assent that it did go into effect. The constitution of Georgia is, therefore, an act of Congress, and it has, accordingly, all the validity of such an act. Now there is no doubt that Congress may if it please pass a law impairing the obligation of contracts, though the States may not.

Mr. Justice SWAYNE delivered the opinion of the court.

On the 12th of May, 1866, the plaintiff in error recovered in the Superior Court of Randolph County a judgment against W. R. Hart of the sum sum of $402.30 principal, and $129.60 interest up to the date of the judgment, and costs. An execution was issued upon the judgment, and placed in the hands of the defendant in error as sheriff of that county. He was thereby commanded to make the sums above mentioned and further interest upon the principal from the 12th of May, 1866, and the costs. The plaintiff in error requested him to levy upon a tract of land of 272 1/2 acres, belonging to Hart, the defendant in the judgment. Barry refused. He assigned as the only reason for his refusal that the premises had been set off to Hart under the provisions of the act passed by the General Assembly of the State, and approved October 3d, 1869, entitled 'An act to provide for setting apart a homestead of realty and personalty, and for the valuation of said property, and for the full and complete protection and security of the same to the sole use and benefit of families, as required by section first of article seventh of the constitution, and for other purposes.' Gunn thereupon petitioned the Superior Court of the county, for a writ of mandamus to compel the sheriff to make the levy. The petition set forth that the land in question was the only property known to him subject to the lien of his judgment, except a tract of 28 acres of the value of $100, situated in the county of Stuart, which was also included in the homestead so set apart; that the premises in question were worth the sum of $1300, and that they embraced a much larger number of acres than the real estate exempt from levy and sale by the laws in force when the judgment was recovered and when the debt on which it was founded was contracted. It does not appear that these allegations were denied, and we do not understand that there is any controversy upon the subject. After a full hearing the court affirmed the validity of the act in its retrospective aspect, and gave judgment against the petitioner. The Supreme Court of the State affirmed this judgment.

The first section of the seventh article of the constitution of Georgia of 1868 provides that 'each head of a family, or guardian or trustee of a family of minor children, shall be entitled to a homestead of realty to the value of $2000 in specie, and personal property to the value of $1000 in specie, to be valued at the time they are set apart, and no court or ministerial officer in this State shall ever have jurisdiction or authority to enforce any judgment, decree, or execution against said property so set apart, including such improvement as may be made thereon from time to time, except for taxes, money borrowed or expended in the improvement of the homestead, or for the purchase-money of the same, and for labor done thereon, or material furnished therefor, or removal of incumbrances thereon.'

The first section of the act of the 3d October, 1868, is in the same terms.

It may well be doubted whether both these provisions were not intended to be wholly prospective in their effect. But as we understand the Supreme Court of the State has come to a different conclusion, we shall not consider the question.

The statute in force when the judgment was rendered declared that the following property belonging to a debtor who was the head of a family should be exempt from levy and sale (to wit): 'Fifty acres of land and five additional ones for each of his children under the age of sixteen years, the land to include the dwelling-house, if the same and improvements do not exceed two hundred dollars; one farm horse or mule, one cow and calf, ten head of hogs, and fifty dollars' worth of provisions, and five dollars' worth additional for each child; beds, bedding, and common bedsteads sufficient for the family; one loom, one supinning-wheel, and two pairs of cards, and one hundred pounds of lint cotton; common tools of trade for himself and his wife; equipments and arms of a militia soldier and trooper's horse; ordinary cooking utensils and table crockery; wearing apparel of himself and family; family Bible, religious works and school books; family portraits; the library of a professional man in actual practice or business, not exceeding three hundred dollars in value, to be selected by himself.'

No one can cash his eyes over the former and later exemptions, without being struck by the greatly increased magnitude of the latter.

Section 10 of Article 1 of the Constitution of the United States declares that 'no State shall pass any law impairing the obligation of contracts.'

If the remedy is a part of the obligation of the contract, a clearer case of impairment can hardly occur than is presented in the record before us. The effect of the act in question, under the circumstances of this judgment, does not indeed merely impair, it annihilates the remedy. There is none left.

But the act reaches still further. It withdraws the land from the lien of the judgment, and thus destroys a vested right of property which the creditor had acquired in the pursuit of the remedy to which he was entitled by the law as it stood when the judgment was recovered. It is in effect taking one person's property and giving it to another without compensation. This is contrary to reason and justice, and to the fundamental principles of the social compact. But we must confine ourselves to the constitutional aspect of the case. A few further remarks will be sufficient to dispose of it. It involves no question which has not been more than once fully considered by this court.

Georgia, since she came into the Union as one of the original thirteen States, has never been a State out of the Union. Her constitutional rights were, for a time, necessarily put in abeyance, but her constitutional disabilities and obligations were in nowise affected by her rebellion. The same view is to be taken of the provision in her organic law and of the statute in question, as if she had been in full communion with her sister States when she gave them being. Though her constitution was sanctioned by Congress, this provision can in no sense be considered an act of that body. The sanction was only permissive as a part of the process of her rehabilitation, and involved nothing affirmative or negative beyond that event. If it were express and unequivocal, the result would be the same. Congress cannot, by authorization or ratification, give the slightest effect to a State law or constitution in conflict with the Constitution of the United States. That instrument is above and beyond the power of Congress and the States, and is alike obligatory upon both. A State can no more impair an existing contract by a constitutional provision, than by a legislative act; both are within the prohibition of the National Constitution.

The legal remedies for the enforcement of a contract, which belong to it at the time and place where it is made, are a part of its obligation. A State may change them, provided the change involve no impairment of a substantial right. If the provision of the constitution, or the legislative act of a State, fall within the category last mentioned, they are to that extent utterly void. They are, for all the purposes of the contract which they impair, as if they had never existed. The constitutional provision and statute here in question, are clearly within that category, and are, therefore, void. The jurisdictional prohibition which they contain with respect to the courts of the State, can, therefore, form no impediment to the plaintiff in error in the enforcement of his rights touching this judgment, as those rights are recognized by this court.

THE JUDGMENT IS REVERSED, and the cause will be remanded to the Supreme Court of Georgia with directions to enter a judgment of reversal, to reverse the judgment of the Superior Court of Randolph County, and thereafter to proceed

IN CONFORMITY TO THIS OPINION.

title: Gunn v. Barry/Opinion of the Court


text: Talk:Gunn v. Barry/Opinion of the Court

title: Talk:Gunn v. Barry/Opinion of the Court