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Wisconsin v. Duluth/Opinion of the Court

This is a bill in chancery, filed in this court by the State of Wisconsin, by virtue of the constitutional provision which confers upon the court jurisdiction of suits between the States and between a State and citizens of other States. To the bill as originally brought the city of Duluth, as a corporation of the State of Minnesota, and, therefore, a citizen of that State, and the Northern Pacific Railroad Company, a corporation organized under an act of Congress, were made defendants. Whether the jurisdiction of the court could have been sustained in regard to the latter corporation, it is not necessary to inquire; for the plaintiff, before the final hearing, dismissed the bill as to the railroad company: and we are now, after answer, replication, and a large amount of evidence, to render our decree as between the State of Wisconsin and the city of Duluth.

This city is situated on the northern shore of Lake Superior, near its western extremity; and about seven or eight miles south-east of it, on the Wisconsin shore, is Superior City. A narrow strip of land, varying from three to eight hundred feet in width, projects itself from the shore at Duluth into the waters of the lake about seven miles, terminating just opposite Superior City, and opposite another point coming from the Wisconsin shore. The strip of land first mentioned is a part of the State of Minnesota, and is called Minnesota Point. West of Minnesota Point is a body of water lying parallel to it, and averaging a mile and a half or two miles in width, called Superior Bay, and still west of that a similar body, called St. Louis Bay. Into this latter empties the St. Louis River, draining a large area of country west of the lake, and discharging the water thus collected into the lake.

St. Louis Bay and Superior Bay are spoken of as parts of St. Louis River, as enlargements of that stream; and testimony is taken to show that the water does not flow from the lake east of Minnesota Point into these bays, and other testimony to show that it does. Whether these bays are considered as parts of Lake Superior, or as mere expansions of the river, is in our view immaterial; for it is a fact not denied that there is a current due to the river through both these bays, which, in the natural condition of the points of land we have mentioned, discharged itself into the main body of the lake at the southern end of Minnesota Point; and that this point was the natural entrance and exist of vessels from the lake into the bays, and from the bays into the lake. And previous to the act of the city of Duluth, presently to be mentioned as the foundation of this suit, it was the only passage for vessels into and out of the bay. There was here in this bay a natural harbor where vessels could anchor in safety, and it was the only one on Lake Superior within fifty or sixty miles of its western limit. Here grew up Superior City, at which all vessels landed which came by the great lake system so far west. Outside of the bay and east of Minnesota Point the lake was rough, and there was no protection for vessels from the winds and waves.

The passage or channel at this narrow entrance, which by complainant is called the mouth of the St. Louis River, was never very deep, and the bar, if it may be so called, gave great trouble on this account. For several years prior to 1871, the United States had made appropriations to remedy this difficulty; and a plan had been adopted and money expended in the construction of piers on each side of the channel, which, by confining the flow of the water within narrow limits, would, by the process of scouring, keep the channel from filling up, and it was hoped would also deepen it.

By the spring of 1871, the city of Duluth, stimulated by the construction of the Northern Pacific Railroad westward from that city, which was its terminus on the lake, began to feel the need of a safe harbor of its own. A breakwater or pier built into the lake was started by an appropriation by Congress, but was found to be unsatisfactory. The city of Duluth conceived and executed in a very short time the project of a canal across the narrow neck of Minnesota Point, near its connection with the main shore. By this means, vessels could enter Superior Bay, where it washed the shores of Duluth, as well as by the channel which let them into the same bay at Superior City. The railroad company and the city expended large sums of money to dredge out and make this harbor fit for the purposes of the large commerce which was expected to be brought there by the railroad. The canal across Minnesota Point was made about two hundred and fifty feet wide and from fifteen to eighteen feet deep; while the greatest depth at the mouth of the St. Louis River was ten and twelve feet.

The citizens of Superior City began to resist this action of the people of Duluth and the railroad company as soon as they comprehended the magnitude of the project. The contest has, from that time to the present, been urged before the State legislatures, before Congress, before the War Department (as having charge of appropriations to be spent in the improvement of navigation at these points), and in the courts, where there have been several suits before the one we are now about to decide.

The present suit was brought by State of Wisconsin, on the ground that the channel of the St. Louis River, as it flowed in a state of nature, was the common boundary between that State and the State of Minnesota, and that she has an interest in the continuance of the channel as an important highway for navigation and commerce in its natural and usual course. That the canal cut by Duluth across Minnesota Point, deeper than the natural outlet of the St. Louis River at its mouth, has diverted, and will continue to divert, the current of that river through Superior Bay into the lake by way of that canal. That the result of this is, that while the current cuts that canal deeper and gives an outlet for the water there at a lower level, it at the same time, by diverting this current from the old outlet, causes it to fill up, and thus destroys the usefulness of the river and bay as an aid of commerce, on which the State had a right to rely. The bill, after reciting the facts which we have already detailed, insists that the city of Duluth cannot, by any right of her own nor by any authority conferred on her by the State of Minnesota, thus divert the waters of the stream-the St. Louis River-from their natural course, to the prejudice of the rights of the State of Wisconsin or of her citizens. It declares that this canal at Duluth does this in violation of law; and it prays of this court to enjoin Duluth from protecting or maintaining it, and by way of mandatory injunction to compel that city to fill up the canal and restore things in that regard to the condition of nature in which they were before the canal was made.

The answer, while admitting the construction of the canal, denies almost every other material allegation of the bill. It denies especially that the canal has the effect of changing the course of the current of the river, or does any injury to the southern entrance to Superior Bay or diminishes the flow of water at that point.

A large amount of testimony, professional and non-professional, is presented on that subject. The answer also sets up, as an affirmative defence to the relief sought by the bill, that the United States, by the legislative and executive departments of the government, have approved of the construction of the canal, have taken possession and control of the work, have appropriated and spent money on it, and adopted it as the best mode of making a safe and accessible harbor at the western end of the great system of lake navigation.

Many very interesting questions have been argued, and ably argued, by counsel, which we have not found it necessary to decide. The counsel for defence deny that the State of Wisconsin has any such legal interest in the flow of the waters in their natural course as authorizes her to maintain a suit for their diversion. It is argued that this court can take cognizance of no question which concerns alone the rights of a State in her political or sovereign character. That to sustain the suit she must have some proprietary interest which is affected by the defendant. This question has been raised and discussed in almost every case brought before us by a State, in virtue of the original jurisdiction of the court. We do not find it necessary to make any decision on the point as applicable to the case before us.

Nor shall we address ourselves to the consideration of the mass of conflicting evidence as to the effect of the canal on the flow of the waters of Superior Bay.

We will first consider the affirmative defence already mentioned; for, if that be found to be true in point of act, it will preclude any such action by this court as the plaintiff has prayed for.

It is to be observed, as preliminary to an examination of the acts of the general government in the special matter before us, that the whole system of river and lake and harbor improvements, whether on the sea-coast or on the lakes or the great navigable rivers of the interior, has for years been mainly under the control of that government, and that, whenever it has taken charge of the matter, its right to an exclusive control has not been denied. The operations of the government in this regard have been conducted by the bureau of engineering, as part of the War Department, to which Congress has confided the execution of its wishes in all these matters. That department has mapped out in suitable geographical divisions the work thus imposed upon it, and placed these under the control of officers who are in charge of them. These are again subdivided, so that while the lake system, or, at all events, the western lake system, is in the charge of one general superintendent, the separate works which at different places are conducted under him have each another engineering officer, who has special charge of those works.

For many years past, Congress has been in the habit of passing an annual appropriation bill, called the river and harbor bill, devoted to works of this class exclusively; and in these bills it appropriates specific sums to specific works, either already commenced and unfinished, or for new works thereby authorized, or sums necessary for the safety and protection of works already in existence. The money thus appropriated is expended, as we have said, under the direction of the War Department. It cannot be necessary to say that when a public work of this character has been inaugurated or adopted by Congress, and its management placed under the control of its officers, there exists no right in any other branch of the government to forbid the work, or to prescribe the manner in which it shall be conducted With these observations, we proceed to inquire what the general government has done in the matter before us. As we have already stated, it had for several years been at work under appropriations by Congress, prior to the construction of the canal at Duluth, in the effort to deepen the channel at the mouth of the St. Louis River, but, we may infer, with little success beyond preventing it from filling up. The rapid growth of the city of Duluth, consequent upon its being made the terminus of the railroad, had attracted attention to the necessity of harbor improvements at that point; and Congress had made appropriations for a breakwater, which had been partially constructed outside of Minnesota Point in the main water of the lake. But this had proved a failure; and it was seen that no safe harbor for the vast commerce which was expected to be created at that place by the North Pacific Railroad could be secured in that mode. The city of Duluth and the railroad company, impatient of relief from Congress, inaugurated, therefore, in 1871, the system of improving the inner harbor in the waters of Superior Bay, and effecting an entrance into that harbor by the canal across Minnesota Point. The canal was completed sufficiently for use in that year, and the dredging of the harbor commenced. The matter was in this condition when Congress, by the river and harbor bill approved March 3, 1873, appropriated, 'for the purpose of dredging out the bay of Superior, from the natural entrance to the docks of Superior and Duluth, and preserving both entrances from the lake thereto, $100,000.' The whole sheet of water, as we have said, lying west of Minnesota Point, from one to two miles wide, and extending from Duluth on the north shore to Superior City on the south, was Superior Bay. There was but one entrance into that bay from the lake until the canal was made. There were no docks at Duluth but those made by the railroad company and the city in the inner harbor at the upper end of that bay. We see, then, at once, the Congress, recognizing what had been done by private enterprise at Duluth, determined to place that harbor and that canal under the same protection and to provide for them in the same appropriation which covered the entrance and the harbor at Superior City. Hence, $100,000 was appropriated as one item, for both entrances and for both improvements, to be administered by the same officers as their judgment might dictate. The following extract from the report of the officer in charge of the matter shows what was done under the appropriation:--

1. Completing the pier at the natural entrance to Superior Bay $25,

2. Dredging between the piers at the natural entrance 11,

3. Dredging from natural entrance to docks at Superior City 12,

5. Dredging between piers at Duluth entrance and from the piers to the docks of Duluth 16,

This dredging was in the inner harbor, and the breakwater was thenceforth abandoned as a government work. An estimate made by the engineer department for the next year's appropriations, required for the maintenance of the Superior City entrance, $10,000; for the Duluth entrance, $10,000; and for dredging the bay of Superior, $100,000: and the appropriation bill, among other items, had, for continuing the improvement of the entrance to the main harbor of Duluth, $10,000.

Of this appropriation, the engineer in charge says that some repairs to the piers (of the canal) were made, and 45,171 1/2 cubic yards were dredged from the inside harbor.

By the act entitled 'An Act making appropriations for the repair, preservation, and completion of certain public works in rivers and harbors, and for other purposes, approved March 3, 1875, there was 'appropriated, to be expended under the direction of the Secretary of War, for the repair, preservation, and completion of the public works hereinafter named; viz., For dredging the inside harbor of Duluth, $35,000."

In the report of the chief of engineers for the year 1875, it is further stated:--

'The appropriation of $35,000, made in the river and harbor bill, approved March 3, 1875, restricts the application of that sum to dredging the inside harbor, and during the present fiscal year it is proposed to continue the dredging on the anchorage ground.

'The north pier of the canal, which was not built by the United States, is in a very precarious state, owing to its being undermined The estimated cost of the present urgent repairs is $6,300; and as every year some repairs are necessary, an appropriation of $10,000 for this purpose is needed.'

And in the act of Aug. 1, 1876, there is the following paragraph:--

'For the improvement of the harbor at Duluth, Minn., $15,000. Said appropriation is made upon the express condition that it shall be without prejudice to either party in the suit now pending between the State of Wisconsin, plaintiff, and the city of Duluth and the Northern Pacific Railroad, defendants.'

The hostility of Superior City and of the State of Wisconsin could not avail to defeat the appropriation; but as this suit was then pending, the clause that it should be without prejudice to any one in the suit was inserted.

It was not needed. The Congress of the United States had themselves before this, adopted, recognized, and taken charge of this work. It had placed it on precisely the same ground, and provided for it in the same paragraph, and out of the same aggregate sum of money, that it did the work at the original entrance, as it is aptly called, at the mouth of the river. It had abandoned the breakwater as a failure, and as unnecessary, in consequence of this new and more useful improvement. The War Department had accepted the charge of the work, had expended the appropriations made, and had now for several years made the same regular estimates for this work that it did for all others under its control and management. And though the State of Wisconsin had brought her suit in this court to abate the work as a nuisance, and Congress was made aware of the fact, it still, in 1876, made the usual appropriation, and the War Department still had the work in charge; and the Congress cautiously said, this shall prejudice no one in the suit, but we shall go on notwithstanding, and continue this system of improvement.

We do not feel called upon to make an argument to prove that these statutes of the Congress of the United States, and these acts of the Executive Department in carrying those statutes into effect, constitute an adoption of the canal and harbor improvement started by the city of Duluth, and a taking exclusive charge and control of it. That they amount to the declaration of the Federal government, that we here interpose and assert our power. We take upon ourselves the burden of this improvement, which properly belongs to us, and that hereafter this work for the public good is in our hands and subject to our control.

If the merest recital of these acts of Congress, and of the War Department under them, do not establish that proposition, we can have little hope of making it plain by elaborate argument.

Nor can there be any doubt that such action is within the constitutional power of Congress. It is a power which has been exercised ever since the government was organized under the Constitution. The only question ever raised has been how far and under what circumstances the exercise of the power is exclusive of its exercise by the States. And while this court has maintained, in many cases, the right of the States to authorize structures in and over the navigable waters of the States, which may either impede or improve their navigation, in the absence of any action of the general government in the same matter, the doctrine has been laid down with unvarying uniformity, that when Congress has, by any expression of its will, occupied the field, that action was conclusive of any right to the contrary asserted under State authority. The adjudged cases in this court on this point are numerous.

This subject was recently very fully considered in South Carolina v. Georgia et al., 93 U.S. 4, and at this term in Pound v. Turk, 95 id. 459. The doctrine was settled, however, long before this. The following cases are fully in point: Gibbons v. Ogden, 9 Wheat. 1; Wilson et al. v. The Blackbird Creek Marsh Co., 2 Pet. 245; The Wheeling Bridge Case, 18 How. 421; Gilman v. Philadelphia, 3 Wall. 713.

If, then, Congress, in the exercise of a lawful authority, has adopted and is carrying out a system of harbor improvements at Duluth, this court can have no lawful authority to forbid the work. If that body sees fit to provide a way by which the great commerce of the lakes and the countries west of them, even to Asia, shall be securely accommodated at the harbor of Duluth by this short canal of three or four hundred feet, can this court decree that it must for ever pursue the old channel, by the natural outlet, over water too shallow for large vessels, unsafe for small ones, and by a longer and much more tedious route?

When Congress appropriates $10,000 to improve, protect, and secure this canal, this court can have no power to require it to be filled up and obstructed. While the engineering officers of the government are, under the authority of Congress, doing all they can to make this canal useful to commerce, and to keep it in good condition, this court can owe no duty to a State which requires it to order the city of Duluth to destroy it.

These views show conclusively that the State of Wisconsin is not entitled to the relief asked by her bill, and that it must, therefore, be dismissed with costs.

So ordered.


text: Talk:Wisconsin v. Duluth/Opinion of the Court

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Huntington v. Savings Bank

APPEAL from the Supreme Court of the District of Columbia.

This bill, for an account and a distribution of profits, was filed by Fanny A. Huntington, administratrix, and Frank H. Gassaway, administrator, of William S. Huntington, deceased, against the National Savings Bank of the District of Columbia, a corporation chartered by an act of Congress approved May 24, 1870 (16 Stat. 137), the provisions of which are stated in the opinion of the court.

Shortly after the passage of the act, Huntington, and fifteen other persons named therein as corporators, met, organized, and elected the officers provided for. A bond in the penal sum of $200,000, conditioned to pay and to satisfy, to every depositor or person entitled, such sum as the party may be entitled to, within thirty days after such deposit shall be demanded, was filed with the clerk of the Supreme Court of the District of Columbia, and approved by one of the judges thereof. No capital was ever paid into the bank by any of the corporators, nor has it ever issued any stock, or divided shares.

The bill alleges that the bank has done a large business, and sustained no considerable losses, and that, therefore, all its profits, and the present large value of its capital stock and franchises, belong to said sixteen corporators; that neither Huntington in his lifetime, nor the complainants since his death, ever received more than about $3,000 of dividends or profits of said bank; that, while other corporators have received larger dividends, the rights of the complainants have not been recognized, but that, on the contrary, the defendant pretends that upon the death of Huntington all the rights in said business and the franchises survived to the other corporators, and that, as expressive of that view, and to injure the complainants, the defendant has, long since the death of Huntington, adopted a by-law to that effect; that the sureties on the bond are sureties of the corporation and not of each other, and that the liability of each and all of them continues until a new bond is demanded and given, as required by law; and that the right of the surviving members to choose the successor of a deceased member is an assumption wholly unsupported by law. The bill then prays for an account of receipts, expenditures, and profits since the organization of the bank, together with the dividends paid to each corporator; and that the franchises, property, and privileges be valued, and the defendant decreed to pay to the complainants one-sixteenth part thereof.

The answer of the defendant alleges that the profits realized were the property of the individuals who organized under the charter, and that they accrued from the personal credit of the several corporators and their attention to the use of the funds deposited with the bank, and not from the employment of any capital; but denies that said alleged profits, capital stock, and franchises are of great value. It then avers that no division of profits was made among the corporators until after July, 1873, and the death of Huntington; and that the amount so divided was subsequently, in order to meet large losses incurred by reason of the financial panic, refunded by the surviving corporators; but that, in the mean time, the share of the profits due Huntington up to the time of his death, in March, 1872, had been paid to the complainants. It then denies any continuing interest of the complainants in said profits after his death, and alleges that the by-law complained of was not adopted with a view of precluding any rights which had accrued, but for the purpose of defining in the future the relation of the members of the corporation.

The answer further admits that the corporators signing the bond were sureties of the corporation and not of each other; and avers that they did not execute it as corporators, and that it was not capital, nor was its execution by the corporators required by the charter or by-laws, nor was it the consideration of the relations of the parties inter sese; and that, if it were, so far as Huntington's estate is concerned, such consideration would have failed, in consequence of the insolvent condition of his estate and its inability to respond in aid of the other corporators against liabilities and claims.

A general replication was filed, but no proofs were taken. The case was heard on the pleadings, and the bill dismissed. The complainants then appealed to this court.

Mr. Benjamin F. Butler and Mr. Joseph H. Bradley for the appellants.

1. By the provisions of the charter, the company had a capital of $200,000, as security for the repayment of the deposits with interest. Capital is the security for the payment of the debts of a corporation, in whatever form it may be, whether in cash, property, bonds, or notes. It is the fund from which calls upon the stockholders and dividends are to be paid. Nichols v. Tracy, 1 Sandf. (N. Y.) Ch. 278; Durar v. Insurance Company, 4 Zab. (N. J.) 171; Angell & Ames, Corp., sects. 157, 556; The People v. Batchelor, 28 Barb. (N. Y.) 310; Hightower v. Thornton et al., 8 Ga. 486.

It was immaterial what that capital was, so long as the security was satisfactory to and approved by the Supreme Court of the District. The bond given by Huntington and others was to continue until it should be replaced by some other satisfactory to that court, and is consequently binding on his estate.

2. The by-law passed after his death could have no effect on his rights.

3. If the analogy of a partnership is to be followed, the death of Huntington worked no dissolution of his partnership; for it was in an incorporeal body, to the existence of which there was no limit except the will of Congress.

So long, therefore, as his capital is used and employed, the survivors must account with his representatives for all profits. Collyer, Part. (4th Am. ed.), book 2, c. 1, sects. 129-131; Story, Part., sect. 343 and notes; Carey, Part. 290, 291.

Mr. Walter S.C.ox, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Huntington v. Savings Bank


text: Talk:Huntington v. Savings Bank

title: Talk:Huntington v. Savings Bank


text:
Huntington v. Savings Bank/Opinion of the Court

The bill of the complainants assumes that, as personal representatives of William S. Huntington, deceased, they have an equitable ownership of one-sixteenth part of the franchises, property, and privileges of the defendant corporation, and that, as such representatives, they are entitled to call for an account of the profits made, and to demand payment to them of one-sixteenth part of the value of the franchises and property as well as profits. Whether this assumption is well founded or not, whether the estate of their intestate has any pecuniary interest in the corporate franchise and property, can be determined only after a careful examination of the defendant's charter. The corporation was created by an act of Congress, approved May 24, 1870, entitled 'An Act to incorporate the National Union Savings Bank of the District of Columbia.' By that act, George H. Plant, William S. Huntington, and twenty-one other persons named, and their successors, were declared to be a body politic and corporate, under the corporate name mentioned, having succession, capable of suing and being sued, of having a common seal, and generally of doing and performing all things relative to the object of the institution lawful for any individual or body politic or corporate to do.

The object of the institution was declared in the fourth section. By that it was enacted that 'the corporation may receive on deposit, for the use and benefit of the depositors, all sums of money offered for that purpose,' and invest the same in the manner therein described. The section then added: 'The income or interest of all deposits shall be divided among the depositors, or their legal representatives, according to the terms of interest stipulated.'

The eighth section required an annual report to be made to Congress, specifying the number of depositors, total number of deposits, amount invested in bank stock and deposited in bank on interest, amount secured by bank stock, amount invested in public funds, loans on mortgage of real estate, loans on personal securities, amount of cash on hand, total dividends of the year, and annual expenses of the institution; all of which to be certified and sworn to by the treasurer and five managers, or more.

The ninth section required the books of the corporation, at all times during their hours of business, to be kept open for the inspection and examination of the comptroller of the currency or depositors.

The eleventh section enacted that the corporation should file with the clerk of the Supreme Court of the District a bond with security, in the penal sum of $200,000, approved by one of the judges of the court, conditioned to pay to every depositor or person entitled such sum as the party may be entitled to, within thirty days after such deposit shall be demanded; which bond might be sued by any depositor or person entitled, after such demand and refusal to pay.

Other provisions of the act require the officers of the corporation to give security and take an oath for the faithful discharge of their duties; and forbid any officer, director, or committee charged with the duty of investing the deposits to borrow any portion thereof, or use the same, except in paying the expenses of the corporation.

These are all the provisions that have any relation to the question we are considering. It is to be noticed that the charter does not authorize the creation of any corporate stock or capital, nor does it contemplate the existence of any other than the deposits which may be made. The corporators are not required to contribute any thing. There are, of consequence, no shareholders. Not a word is said in the instrument respecting any dividends of capital, or even of profits, to others than the depositors. Certainly, no express authority is given to make dividends to the corporators; and we discover nothing from which such authority can be inferred. The dividends of which a return is required by the eighth section to be made to Congress are evidently those spoken of in the fourth, as made to the depositors. The rules to be applied to the construction of corporate grants are well known. A corporation created by statute can exercise no powers and has no rights except such as are expressly given or necessarily implied. In this case, so far from there being an implication of any pecuniary interest in the corporators, or any duty due to them from the corporation, the contrary is expressly declared. The institution having no capital stock, whatever liability, if any, there may be to the corporators must be satisfied out of the profits made from the deposits. But the charter, when conferring the power to receive money on deposit, limits it to receiving for 'the use and benefit of the depositors,' and directs how it may be invested. It further declares that 'the income or interest of all deposits shall be divided among the depositors or their legal representatives,' not among the depositors and the corporators. It is true, the income or interest is to be divided among the depositors, 'according to the terms of interest stipulated;' implying, perhaps, that the dividend may be less than the interest received by the corporation; but there is nothing in the charter that indicates the excess is for the benefit of the corporators. It is to provide for the necessary expenses of the institution authorized to be paid, and perhaps to raise a contingent fund to meet possible losses.

During the argument, our attention was called to the eleventh section of the charter, which requires the corporation to file a bond with security, in the penal sum of $200,000, conditioned to pay and satisfy depositors; and it is argued that this bond may be considered as capital contributed by the corporators named in the charter: and hence we are asked to infer that they have a pecuniary interest which entitles them to a division of the profits, as also to a share of the capital, and to a beneficial interest in the franchise. If this were so, the complainants' bill does not aver that William S. Huntington was one of the obligors in the bond, or that he was even in that mode one of the contributors to capital stock. But, if it be assumed that he was, it would still be true that the bond was in no sense capital owned by the corporation or by the corporators. It was required by the charter solely for the security of the depositors or creditors of the institution. The corporation was required to give the bond with security, but what the security should be was left to the approval of a judge of the Supreme Court of the District. There was no requirement that the corporators should sign the bond, much less that all of them should. The security might have been given by strangers exclusively, or by one or more of the corporators. If given by the latter, the obligors would have been bound, not as corporators, but as any other persons having no connection with the institution.

We think the complainants have mistaken the nature of the corporation. It is not a commercial partnership, nor is it an artificial being the members of which have property interests in it, nor is it strictly eleemosynary. Its purpose is rather to furnish a safe depositary for the money of those members of the community disposed to intrust their property to its keeping. It is somewhat of the nature of such corporations as church-wardens for the conservation of the goods of a parish, the college of surgeons for the promotion of medical science, or the society of antiquaries for the advancement of the study of antiquities. Its purpose is a public advantage, without any interest in its members. The title of the act incorporating it indicates its purpose; namely, an act to incorporate a national savings bank: and the only powers given to it were those we have mentioned, powers necessary to carry out the only avowed purpose, which was to enable it to receive deposits for the use and benefit of depositors, dividing the income or interest of all deposits among its depositors or their legal representatives. It is, like many other savings institutions incorporated in England and in this country during the last sixty years, intended only for provident investment, in which the management and supervision are entirely out of the hands of the parties whose money is at stake, and which are quasi benevolent and most useful, because they hold out no encouragement to speculative dealing or commercial trading. This was the original idea of savings banks. Scratchley's Treatise on Savings Banks, passim; Grant's Law of Bankers, 571, where, in defining savings banks, it is said the bank derives no benefit whatever from any deposit, or the produce thereof. Such are savings banks in England, under the statutes of 9 Geo. IV., c. 92, sect. 2, and 26 & 27 Vict., c. 87. Very many such exist in this country. Among the earliest are some in Massachusetts, organized under a general law passed in 1834, which contained a provision like the one in the act of Congress, that the income or profit of all deposits shall be divided among the depositors, with just deduction of resonable expenses. They exist also in New York, Pennsylvania, Maine, Connecticut, and other States. Indeed, until recently, the primary idea of a savings bank has been, that it is an institution in the hands of disinterested persons, the profits of which, after deducting the necessary expenses of conducting the business, inure wholly to the benefit of the depositors, in dividends, or in a reserved surplus for their greater security. Such, very plainly, is the defendant corporation in this case. The complainants have, therefore, no pecuniary interest in it, and no right to the relief they ask.

Decree affirmed.


text: Talk:Huntington v. Savings Bank/Opinion of the Court


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Dobbins's Distillery v. United States

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

The facts are stated in the opinion of the court.

Mr. Robert G. Ingersoll and Mr. A. L. Merriman for the plaintiff in error, cited Wharton, Crim. Law, 325.

Mr. Assistant-Attorney-General Smith, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Dobbins's Distillery v. United States


text: Talk:Dobbins's Distillery v. United States


text:
Dobbins's Distillery v. United States/Opinion of the Court

Judicial proceedings in rem, to enforce a forfeiture, cannot in general be properly instituted until the property inculpated is previously seized by the executive authority, as it is the preliminary seizure of the property that brings the same within the reach of such legal process. The Schooner Anne, 9 Cranch, 289.

Due executive seizure was made in this case of the distillery, and of the real and personal property used in connection with the same; and the information in due form was subsequently filed praying for process, and that the property seized should be condemned by the definitive sentence of the court. Pursuant to the prayer of the information, the record shows that process of monition was issued in due form, and that it was duly served by the marshal. Sixteen causes of forfeiture were alleged in the information, all of which, except the first three, were abandoned at the trial.

Sufficient appears to show that the claimant was the owner of the distillery and all the other property seized, and that he, prior to the alleged causes of seizure and forfeiture, leased the property to the party in possession of the same at the time the alleged acts of forfeiture were perpetrated by the lessee and occupant. Three of the alleged causes of forfeiture only need be noticed, and they are in substance and effect as follows:--

1. That the lessee, occupant, and operator of the distillery neglected and refused to keep the books required by law, and make the required entries in the same; that he made false entries in the books kept in the distillery, and that he omitted to enter in the same the facts required by law, with intent to defraud the revenue, and to conceal from the revenue officers facts and particulars required to be stated and entered in such books, with like intent to defraud the revenue; and that he refused to produce the books kept in the distillery when thereto requested by the revenue officers, contrary to the statute in such case made and provided. 15 Stat. 132.

2. That the distillery, the distilled spirits, and distilling apparatus seized were owned by the lessee, occupant, and operator, and some other person unknown, and were intended to be used by the owners in the business of a distiller, in a manner to defraud the United States, contrary to the act of Congress. Id. 142.

3. That the property seized was used by its owners to defraud the United States of the tax to which the spirits distilled were by law subject, and that the United States had been thereby defrauded of a part of such tax, in violation of law. Id. 59.

Service was made; and the owner and lessor of the distillery and other property seized appeared, and was permitted by leave of court to make defence. His defence consists of an averment that he has no knowledge or information upon the subject of the information, and of a denial of each and every one of the charges made against the property seized. Issue being joined, the parties went to trial, and the verdict and decree of condemnation were in favor of the plaintiffs. Exceptions were duly filed by the claimant; and he sued out a writ of error, and removed the cause into this court.

Matters set forth in the bill of exceptions which are not assigned for error will not be re-examined.

Four errors are assigned, in substance and effect as follows: 1. That the court erred in admitting in evidence the statements of the lessee of the property, as contained in the first paragraph of the bill of exceptions. 2. That the court erred in admitting the evidence set forth in that part of the bill of exceptions denominated paragraphs 2 and 3. 3. That the court erred in charging the jury that it was unnecessary for them to find that the claimant was implicated in the frauds of the lessee and operator of the distillery, or that he had any knowledge of his fraudulent acts or omissions. That if the jury find that the claimant leased the property to the occupant and operator for the purposes of a distillery, and that the lessee committed the alleged frauds, the government is entitled to a verdict, even though the jury should be of opinion that the claimant was ignorant of the lessee's fraudulent acts and omissions. 4. That the court erred in including the real estate in the decree of condemnation or forfeiture.

Instructions not included in the assignment of errors were given by the court to the jury, which deserve to be briefly noticed before proceeding to examine the rulings and instruction of the court, which, it is insisted, present a sufficient cause to reverse the judgment.

Requests for instructions having been presented by the claimant, and the same having been refused, the court, of its own motion, instructed the jury to the effect, that if the evidence satisfied the jury that the lessee and occupant of the distillery made sales of spirits produced by him which he omitted or neglected to enter in his books, with intent to defraud the government, or with intent to conceal from the officers the fact of such sales, then he would be guilty, and it would be their duty to find for the plaintiffs under the first article of the information; that the mere absence of that party from the State or the country was not of itself evidence upon which they could base a verdict, but if they found that he absconded and fled from justice when detected and charged with the frauds alleged against him in the case, that that fact might be considered by the jury, with other evidence, as tending to prove his fraudulent intents and guilt; that the information is a proceeding to condemn and forfeit to the United States certain property, both real and personal, for alleged offences against the revenue law; that the property in question consists of a distillery, with its fixtures and apparatus, and the ground within the enclosure on which the distillery stands, together with the various articles of personal property enumerated in the information, and that the present defendant is the claimant of the property contesting the grounds of forfeiture assigned by the government; that the gist of the proceeding consists in the alleged fraudulent acts and omissions of the lessee and occupant of the distillery, or his agent and employees; and whether the charges against him be positive acts done by him, or omissions to do what the law requires of him, as a distiller, fraud is a necessary element in the case, without which there can be no forfeiture.

Evidence of the statements and declarations of the lessee and occupant of the distillery, voluntarily made while under arrest and afterwards, were offered by the district attorney, as tending to show his fraudulent intent in the doing and omitting to do certain acts assigned in the information as causes of forfeiture; and the ruling of the court in admitting the same, subject to objection by the claimant, constitutes the first assignment of error.

Throughout the trial the claimant appears to have assumed, as the theory of the defence to the information, that he was the accused party, and that he was on trial for a criminal offence created and defined by an act of Congress. Instead of that, the forfeiture claimed in the information is aimed against the distillery, and the real and personal property used in connection with the same, including the real estate used to facilitate the operation of distilling, and which is conductive to that end as the means of ingress or egress, and all personal property of the kind found there, together with the distilled spirits and stills wherever found.

Nor is it necessary that the owner of the property should have knowledge that the lessee and distiller was committing fraud on the public revenue, in order that the information of forfeiture should be maintained. If he knowingly suffers and permits his land to be used as a site for a distillery, the law places him on the same footing as if he were the distiller and the owner of the lot where the distillery is located; and, if fraud is shows in such a case, the land is forfeited, just as if the distiller were the owner. Burroughs, Taxation, 67.

Cases arise, undoubtedly, where the judgment of forfeiture necessarily carries with it, and as part of the sentence, a conviction and judgment against the person for the crime committed; and in that state of the pleadings it is clear that the proceeding is one of a criminal character: but where the information, as in this case, does not involve the personal conviction of the wrong-doer for the offence charged, the remedy of forfeiture claimed is plainly one of a civil nature; as the conviction of the wrong-doer must be obtained, if at all, in another and wholly independent proceeding. 1 Bish. Crim. Law (6th ed.), sect. 835, note 1; United States v. Three Tons of Coal, 6 Biss. 371.

Forfeitures, in many cases of felony, did not attach at common law where the proceeding was in rem until the offender was convicted, as the crown, Judge Story says, had no right to the goods and chattels of the felon, without producing the record of his conviction; but that rule, as the same learned magistrate says, was never applied to seizures and forfeitures created by statute in rem, cognizable on the revenue side of the exchequer court, for the reason that the thing in such a case is primarily considered as the offender, or rather that the offence is attached primarily to the thing, whether the offence be malum prohibitum or malum in se; and he adds, that the same principles apply to proceeding in rem in the admiralty. The Palmyra, 12 Wheat. 1.

Corresponding views were expressed by the same learned judge in a case decided at a much later period, in which he remarked that the act of Congress in question made no exception whatsoever, whether the alleged aggression was with or without the co-operation of the owners. Nor, said the judge in that case, is there any thing new in a provision of that sort. It is not an uncommon course in the admiralty, acting under the law of nations, to treat the vessel in which or by which, or by the master or crew thereof, a wrong or offence has been committed, as the offender, without any regard whatsoever to the personal misconduct or responsibility of the owner thereof, the necessity of the case requiring it as the only adequate means of suppressing the offence or wrong, or of insuring an indemnity to the injured party. United States v. Brig Malek Adhel, 2 How. 210.

Beyond all doubt, the act of Congress in question attaches the offence to the distillery, and the real and personal property connected with the same, the words of the act defining the offence being, that if any such false entry shall be made in said books, or any entry shall be omitted therefrom, with intent to defraud or to conceal from the revenue officers any fact or particular required to be stated and entered in either of said books, or to mislead the revenue officers with reference thereto; or if any distiller shall omit or refuse to produce either of said books, or shall cancel, obliterate, or destroy any part of either of said books, or any entry therein, with intent to defraud, or shall permit the same to be done, or such books or either of them be not produced when required by any revenue officer,-the distillery, distilling apparatus, and the lot or tract of land on which it stands, and all personal property used in the business, shall be forfeited to the United States. 15 Stat. 133.

Nothing can be plainer in legal decision than the proposition that the offence therein defined is attached primarily to the distillery, and the real and personal property used in connection with the same, without any regard whatsoever to the personal misconduct or responsibility of the owner, beyond what necessarily arises from the fact that he leased the property to the distiller, and suffered it to be occupied and used by the lessee as a distillery.

Cases often arise where the property of the owner is forfeited on account of the fraud, neglect, or misconduct of those intrusted with its possession, care, and custody, even when the owner is otherwise without fault; and Judge Story remarked, in the case last cited, that the doctrine is familiarly applied to cases of smuggling and other misconduct under the revenue laws, as well as to other cases arising under the embargo and non-intercourse acts of Congress.

Controversies of the kind have arisen in our judicial history; and it has always been held in such cases that the acts of the master and crew bind the interest of the owner of the ship, whether he be innocent or guilty, and that in sending the ship to sea under their charge he impliedly submits to whatever the law denounces as a forfeiture attached to the ship by means of their unlawful or wanton misconduct.

Analogous views were expressed by Marshall, C. J., at a much earlier period. United States v. The Little Charles, 1 Brock. 347. Objection was there taken to the admissibility of the report and manifest made by the master of the schooner when she arrived at her port of destination, the schooner having been subsequently seized for an alleged violation of the embargo laws. Two grounds were assigned in support of the objection: 1. That the paper offered was not accompanied by the entry. 2. That the declaration of the master, if admitted in evidence, would affect the owner in a criminal case. Both were overruled. Reference will only be made to the reasons given for the second ruling.

Neither confessions nor admissions of the master, it was contended, were admissible to prove the guilt of the owner; and the Chief Justice added, that, if the case was such as was supposed in argument, the objection would be entitled to great weight. But he remarked, that the proceeding was one against the vessel, for an offence committed by the vessel, which is not less an offence, and does not the less subject her to forfeiture because it was committed without the authority and against the will of the owner. It is held, said the Chief Justice, that inanimate matter can commit no offence. But the ship, as a body, is animated and put in action by the crew, who are guided by the master. The vessel acts and speaks by the master; she reports herself by the master. It is, therefore, not unreasonable that the vessel should be affected by this report.

Apply that rule to the case before the court, and it follows that the distillery, and the real and personal property used in connection with the same, must be considered as affected by the unlawful doings and omissions of the lessee and occupant of the property as a distillery, subject to the rules and regulations prescribed by Congress. United States v. Distillery, 2 Abb. (U.S.) 192.

Suppose that is so, still it is insisted by the claimant that the declaration of the lessee and occupant of the distillery made subsequent to his arrest were not competent evidence in the case; but the court is entirely of a different opinion, as the arrest of the lessee did not to any extent affect or change his relations to the property or to his lessor. If his lease was a subsisting one at the time of his arrest, his relations to the property and the owner of the same continued unaffected by that occurrence, nor is there any thing in the authority cited by the claimant which, when properly understood, asserts any different doctrine.

Statements made by the master of a ship as to what occurred during the voyage, tending to inculpate the owner in the guilty enterprise of the ship, are not admissible in evidence against the owner, where he is charged with a crime, if the statements were made subsequent to the time when he ceased to be master and the common enterprise had come to an end; but the rule has no application here, as the arrest of the lessee did not abrogate the lease, and, if the prosecution had failed, he might have continued to operate the distillery in spite of the accusation contained in the information.

2. Certain private books, letters, and memoranda, found in an open box in a room occupied by the lessee and operator of the distillery as a private office, were also offered in evidence, to the admissibility of which the claimant objected; but, inasmuch as it appears that they were the books, letters, and papers of the person in whose office they were found, and that they related in part to the business of the distillery, it requires no argument to show that the objection of the claimant was without merit.

Other letters and bills of lading, found by the marshal in an open box in the room occupied by the same party as a private office, were also introduced in evidence, subject to the claimant's objection, which, it appears, were addressed to the operator of the distillery, and that they tended to prove the shipment by the distiller to the firm from which they came of large quantities of high-wines, and that the firm rendered accounts to the shipper of the sales as commission merchants.

Found as the papers were in the office of the distiller, it is too clear for argument that they were properly admitted, unless it be assumed that it was the claimant, and not the distillery and the property connected with the same, who was on trial.

3. Much discussion of the remaining error assigned will not be required, as it presents the same question in principle as that involved in the first assignment of error, which has already been sufficiently considered.

None of the material facts are in dispute, nor were they to any considerable extent at the trial. Beyond controversy, the title of the premises and property was in the claimant; and it is equally certain that he leased the same to the lessee for the purposes of a distillery, and with the knowledge that the lessee intended to use the premises to carry on that business, and that he did use the same for that purpose.

Fraud is not imputed to the owner of the premises; but the evidence and the verdict of the jury warrant the conclusion that the frauds charged in the information were satisfactorily proved, from which it follows that the decree of condemnation is correct, if it be true, as heretofore explained, that it was the property and not the claimant that was put to trial under the pleadings; and we are also of the opinion that the theory adopted by the court below, that, if the lessee of the premises and the operator of the distillery committed the alleged frauds, the government was entitled to a verdict, even though the jury were of the opinion that the claimant was ignorant of the fraudulent acts or omissions of the distiller.

Viewed in that light, the legal conclusion must be that the unlawful acts of the distiller bind the owner of the property, in respect to the management of the same, as much as if they were committed by the owner himself. Power to that effect the law vests in him by virtue of his lease; and, if he abuses his trust, it is a matter to be settled between him and his lessor; but the acts of violation as to the penal consequences to the property are to be considered just the same as if they were the acts of the owner. The Vrouw Judith, 1 C. Rob. 150; United States v. The Distillery at Spring Valley, 11 Blatchf. 255; Same v. The Reindeer, 2 Cliff. 57; Same v. Nineteen Hundred and Sixty Bags of Coffee, 8 Cranch, 398; Mitchell v. Torup, Parker, 227.

Examined in the light of these suggestions, as the case should be, it is clear that there is no error in the record.

Judgment affirmed.


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McPherson v. Cox

APPEAL from the Supreme Court of the District of Columbia.

On the twenty-sixth day of November, 1870, Mrs. Mary A. Cox, the appellee, who was a widow, sold and conveyed to Charles H. Holden, Charles W. King, and Samuel Ford, square No. 312 of the city of Washington, for the sum of $38,000. No part of this was paid at the time, but a bond was given for it, due ten years after date, with interest payable annually; and, to secure the payment of this sum and of the interest as it fell due, the purchasers made a deed of trust, with the usual conditions, to John D. McPherson and Jesse B. Wilson. At the time of the transaction, the bond was placed in the possession of McPherson, the appellant, where it remains to the present time.

In June, 1873, Mrs. Cox filed her bill in chancery, in the Supreme Court of the District of Columbia, praying that McPherson be discharged and removed from his trust under the deed, and be compelled to deliver to her the bond of Holden, King, and Ford.

The court decreed that, on account of the ill-feeling and unfriendly relations shown to exist between the parties, by reason of a controversy between them in regard to a claim of McPherson for $5,000 for legal services, against Mrs. Cox, and of a lien for that amount on the bond mentioned, it was fit and proper that he should cease to be such trustee. It accordingly declared him removed as trustee, and all his rights and powers vested in the other trustee, Wilson; and ordered him to deliver up the bond to Wilson, who was to hold it subject to the further order of the court. But Wilson was to receive and pay over to Mrs. Cox all that might be paid on it, except $10,000 of the latest payments, which was to be retained subject to the further order of the court.

From this decree McPherson appeals to this court.

The remaining facts in the case are set forth in the opinion of the court.

Mr. Philip Phillips and Mr. George F. Appleby for the appellant.

Ill-feelings and unfriendly relations of a cestui que trust towards his trustee constitute no ground for removing the latter from his trust. Forster v. Davies, 4 De G., F. & J. 133; Gibbes v. Smith, 2 Rich. (S.C..) Eq. 131; Berry v. Williamson, 11 B. Mon. (Ky.) 245; Hill, Trustees, 191.

The appellant was in no fault in any of the transactions complained of by the appellee; and the court below, in paying no regard to the testimony, and decreeing his removal, acted arbitrarily, and without a full consideration of the whole case. Eyre v. Potter, 15 How. 42; Bouldin v. Alexander, 15 Wall. 132; Peter v. Beverly, 10 Pet. 564; Sergeant v. Howe et al., 21 Ill. 148; Berry v. Skinner, 30 Md. 572; Gibbes v. Smith, supra; Berry v. Williamson, supra; Tiffany & Bullard, Law Trusts and Trustees, 387.

The court erred in decreeing that the appellant should part with the possession of the bond on which he claimed a lien for his professional services as an attorney-at-law. Platt v. Haler, 23 Wend. (N. Y.) 456; Warren v. Griswold, 8 id. 666; Worrall v. Johnson, 2 Jac. & W. 218; Russell's ase, 1 Keny. 129; In re Murray, 1 Russ. 519; In re Paschal, 10 Wall. 483; Maughan, Solicitors and Attorneys, 107, 137; Prevost v. Gratz et al., 6 Wheat. 481; Zeigler v. Hughes, 55 Ill. 288; Clark v. Pendleton, 20 Conn. 495; Chitty, Contr. 75, and cases cited.

The bill should have been dismissed for want of proper parties, and for multifariousness, and because it was prematurely filed. Wilbur v. Almy, 12 How. 191; 2 Story, Eq. Jur., sect. 1280; Drane v. Gunter, 19 Ala. 731; Cruger v. Halliday, 11 Paige (N. Y.), 319; Sergeant v. Howe et al., 21 Ill. 148, Breedlove v. Stump, 3 Yerg. (Tenn.) 257; Story, Eq. Pl., sect. 271.

Mr. Albert Pike, contra.

Whatever the contract was as to the amount of the contingent fee, there was no note or memorandum of it in writing, and it was not contemplated by either party that it was to be, or could be, performed on either side within a year. Therefore, by the Statute of Frauds in force in the District of Columbia, it was of no effect.

The contract was clearly champertous. Thurston v. Percival, 1 Pick. (Mass.) 415; Kenney v. Browne, 3 Ridgway, Cas. Parl. 462; Strange v. Brennan, 10 London Jurist, 649; Stevens v. Bagwell, 15 Ves. 139; Wood v. Downes, 18 id. 120; Strachan v. Brandon, Eden, 303; Stanley v. Jones, 7 Bing. 369; Lathrop v. Amherst Bank, 9 Metc. (Mass.) 489; In re Masters, 4 Dowl. P. C. 18; Williams v. Protheroe, 5 Bing. 313; In the Matter of Bleakley, 5 Paige (N. Y.), 311; Merritt v. Lambert, 10 id. 352; Rust v. Larue, 4 Litt. (Ky.) 411; Arden v. Patterson, 5 Johns. (N. Y.) Ch. 44; Satterlee v. Frazer, 2 Sandf. (N. Y.) 14]

To call the fee contingent is an abuse of language.

If the contract was not champertous, it is because success was to be certain, and then the fee was enormously exorbitant and extortionate. Such contracts, made when the client is, by fear, doubt, and apprehension, under the lawyer's influence, cannot be sanctioned. Walmesley v. Booth, Barn. 478; Drapers' Company v. Davis, 2 Atk. 295; Saunderson v. Glass, id. 298; Sayer, Law of Costs, 321; Hobert, 117.

Anciently, a counsellor-at-law could bring no action in any English court, for his fee was not a debt. This was law in the time of Coke, and in that of Lord Hardwicke. The fees of counsel were honoraria, not merces. 1 Coke, Inst. 295 a; Moor v. Row, 1 Rep. Ch. 21; Thornhill v. Evans, 2 Atk. 331; Chesley v. Beliot, 4 T. R. 317; Newman v. Payne, 4 Bro. C. C. 352; Aubrey v. Popkin, 1 Dick. 403; Saunderson v. Glass, 2 Atk. 295; Crossley v. Park, 1 Jac. & W. 460. See also Dupin, ain e, Profession d'Avocat i., 105-110, 147, 597, 599, 690, 698, 699, 715; Camus, Lettre de la Profession d'Avocat, id. 267, 273.

There are no transactions which courts of equity will scrutinize with more jealousy than those between attorneys and their clients, especially when the latter are of inferior capacity and inexperienced. Mills v. Mills, 26 Conn. 217; Ex parte Plitt, 2 Wall. C. C. 453; Haight v. Moore, 37 N. Y. Sup. Ct. 161; McMahon v. Smith, 6 Heisk. (Tenn.) 167.

The court, if its action is needed, will disregard a contract for contingent fees, and allow counsel what, under the circumstances, it deems fair. The contract must have been made in abundant good faith, without suppression or reserve of facts, or exaggeration of apprehended difficulties, or undue influence of any sort or degree; and the compensation bargained for must be reasonable, and the transaction characterized throughout by all good fidelity to the client, or the court will not hold such compensation to be valid. Ex parte Plitt, 2 Wall. Jr. 473.

It is for the attorney to show that the dealings between him and his client, by which the attorney is benefited, are just and fair, and purely voluntary. Mason v. Ring, 2 Abb. (N. Y.) Pr. N. S. 322; Brock v. Barnes, 40 Barb. (N. Y.) 521.

The oral contract relied on is on its face void under the Statute of Frauds. It was not for any service presently to be rendered, nor were the counsel to engage in any litigation where the result would be doubtful. They were not to attempt, and they did not attempt, to 'break the lease' for the forfeiture of the contract to build. They were to wait until, some time during the seven years unexpired, the lessee might possibly, by a breach of another covenant, clearly and indisputably forfeit all right; and then they were to sue.

The appellant cannot retain the bond. He has no lien thereon, and no right thereto,--

First, Because there is no valid contract, and no indebtedness as claimed.

Second, Because the bond was received by him not in his character of attorney or solicitor, nor in the course of his professional employment for Mrs. Cox, nor in the ordinary course of his business, but in his character of trustee alone. Stevenson v. Blakelock, 1 M. & S. 538, per Gifford, arg., and Littledale, J., and Lord Ellenborough; Ex parte Nesbitt, 2 Sch. & Lef. 279; Champernown v. Scott, 6 Madd. 93.

title: McPherson v. Cox


text: Talk:McPherson v. Cox

title: Talk:McPherson v. Cox


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McPherson v. Cox/Opinion of the Court

Third, Because the terms of the alleged contract are wholly inconsistent with the existence of a lien, it being for payment of the fee, at an uncertain future time, out of the proceeds of the sale of the land, when she should sell the same. Hilton v. Bragg, 7 Taunt. 21, per Lens, Sergeant, arg.; The Case of an Hostler, Yelv. 67, note; Cowell v. Simpson, 16 Ves. 275.

The counsel for the appellant said, below, that he did not ask a decree establishing the lien,-which, of course, he could not have upon the pleadings,-but only a decree affirming his client's right to retain the bond. That would be a decree establishing his lien. For the lien of a solicitor on the deeds and papers in his hands is merely a right to withhold them from his client, and not a right to enforce any claim against him; and, as long as the client allows them to remain in the solicitor's hands, the lien is unavailing. Blunden v. Desart, 2 Con. & L. 119; Bozon v. Bolland, 4 Myl. & Cr. 358.

Such a lien depends not on contract, but on the law. Blunden v. Desart, supra.

It is not fit that the appellant should continue to be trustee, holding the fee, and claiming a lien on it in his own favor. He only wears the mask of a trust, in order to have thereby an undue advantage of the beneficiary. If he has a lien, he could sell under it, and buy in the property. There is a conflict of interests, which incapacitates him and unfits him to be trustee. Green v. Winter, 1 Johns. (N. Y.) Ch. 41; Davoue v. Fanning, 2 id. 270; Howell v. Baker, 4 id. 120; Van Horne v. Fonda, 5 id. 509; Willard, Trustees, 187, 188, 194, 472; Willis, Trustees, 121, 126, 162; Hill, Trustees, 535; Henley v. Phillips, 2 Atk. 48.

The removal of a trustee, at the request of the cestui que trust, and the appointment of another person to sell the lands conveyed by the deed, is matter of discretion for the court, and will be ordered when good cause is shown. Ward v. Dortch, 69 N. C. 279.

MR. JUSTICE MILLER delivered the opinion of the court.

The question for our consideration is the soundness of the decree of the court below.

The pleadings show the original bill, an amended bill, and three supplemental bills, and answers, and replications to the answers.

The charges on which complainant asked the removal of McPherson may be classified into those which affirm a neglect of his duty as such trustee, and into those which show acts and intentions hostile to her interests.

Of the first class are charges,--

1. That arrears of interest on the bond have been permitted to accumulate, and that he failed to collect such interest or to sell the property, as the deed of trust authorized.

2. That he neglected to attend to having the property insured or the taxes paid, as was his duty; and in this connection she charges that she had paid him $150 for that purpose.

Of the acts which show hostile or fraudulent intentions she charges,--

3. That, on a sale made by the obligors in the bond of part of the property, he induced her to release the lots so sold and accept thirteen notes of $1,000 each, secured by a mortgage on them, which notes she supposed was the first lien on those lots; whereas, it turned out that three other notes of like amount, of the same series, secured by the same mortgage, had been issued and sold to bona fide holders, and that these notes were a prior lien, and endangered her security. She alleges that this was well known to McPherson, who was acting as her agent and trustee, and was fraudulently concealed from her.

4. That he had notified Ford, one of the obligors in the bond, to pay her no more money, and had thus prevented him from paying to her the interest after it was due.

5. And, mainly, that he sets up a false and exorbitant claim of $5,000 for legal services, and claims a lien on the bond in his possession, and a right to appropriate the first money paid on said bond to the satisfaction of said claim.

The answer denies that the deed of trust imposed on him any obligation to collect the interest, or see to the insurance of the houses or to the payment of the taxes. Denies that he ever received any money from her to pay for insurance, or any notice to sell for non-payment of interest or taxes. Denies any hostile purpose towards complainant, and any act or intent inconsistent with his duty as trustee. He admits that he does assert a claim for $5,000 due to the partnership firm of Carlisle & McPherson, for services as attorneys and counsellors, in regard to this same property, and for which he claimed, and now asserts in this answer, a lien on the bond, and a right to hold it until that sum is paid. And he denies that in the transaction by which she released certain lots covered by the deed of trust, and received the notes and deed of trust securing them that any thing was concealed from her. And in regard to this he says that she was present when the matter was transacted, and received in person the thirteen notes and the money for which the other three notes were sold, and knew well what she was doing.

Testimony was taken on all these issues, the most important of which is that of the complainant and defendant and of Carlisle.

As preliminary to any further investigation of these issues, it is necessary to determine the defendant's duties, and his rights under the deed of trust.

After the usual clause of conveyance, it proceeds thus:--

'In and upon the trusts hereinafter mentioned and declared, and for no other purpose whatsoever, that is to say:

'In trust: First, To permit the said Charles H. Holden, Charles W. King, and Samuel Ford, their heirs or assigns, to use and occupy the said-decribed premises, and the rents, issues, and profits thereof to take, have, and apply to and for their sole use and benefit until default be made in the payment of the principal sum of the debt hereinbefore mentioned, or of some instalment of the annual interest.

'Second, Upon payment of any instalment of the principal of the said debt, to release to the said parties of the first part of said square, which they shall designate in the proportion of two square feet of ground for every three dollars so paid.

'Third, And upon full payment of the said debt of thirty-eight thousand dollars ($38,000), and of the interest thereon, and all other proper costs, charges, commissions, and expenses incurred in pursuance of this trust, to release the said square numbered three hundred and twelve (312), or so much thereof as has not been released, unto the said parties of the first part, their heirs and assigns, at their proper cost.

'Fourth, And upon this further trust upon default being made in the payment of the said principal sum, or of any interest due on the same, to sell at public auction, on such terms and after such notice as the said trustees or trustee shall deem proper, so much of the said property as they or he shall deem necessary to pay the sum due, and out of the proceeds in the order following, to pay, 1st, the costs and expenses of said sale, including the usual trustee's commission; 2d, to pay the amount due the said Mary A. Cox, whether of interest or principal; 3d, to pay the said Mary A. Cox the residue of said proceeds to an amount not exceeding the principal sum, or the part thereof unpaid to be received by her in advance, in whole or part satisfaction, as the case may be, of the said principal sum; 4th, to pay over the residue, if any, to the said parties of the first part, their executors, administrators, or assigns.'

There is here no duty or obligation or right to do more than two things; namely, to make the releases of parts or of the whole of the ground, as the payments entitled the obligors in the bond to have them made, and to sell the land or parts of it, as their failure to pay might justify, and in making such sale to receive and distribute the money as required. But it is very clear that the trustees assumed no obligation to look after the taxes or the insurance. The deed of trust does not mention either taxes or insurance. Nor were they bound, or did they undertake by any thing found in this instrument, to look after the payment of the annual interest. The bond was made payable to complainant, and she alone was authorized to receive the interest, and to give a valid receipt for it. Payment to either of the trustees would have been no defence to a suit by her.

It is very clear, therefore, that as there was no duty imposed upon the defendant as trustee to look after the taxes or insurance, or the collection of the interest, he was guilty of no neglect in regard to them.

If, as complainant alleges, her interest was not paid, she had a right to have the two trustees advertise and sell the property, or so much of it as would be necessary to pay what was due. But they were not bound to do this, nor had they any right to do it, until she made request; and there is no pretence that she ever made such request or desired such action.

It is proper to say in this connection that the testimony wholly fails to show the payment of $150, or any other sum, to defendant, to be used in paying for insurance. We may also add, that there is not the slightest evidence that defendant concealed from the complainant, or in any manner misled her in the transaction, by which she released the lots mentioned, and received other security for such release. But it appears very clearly that she was present when the whole thing was done, and received the money for which the notes first due were sold; and, if she did not know they were a first lien, it is not the fault of McPherson.

There remains to be considered the charge that he forbade Ford to pay money to complainant, and that he sets up a false claim for $5,000, and the right to a lien on the bond for that sum.

These may be considered together, as they involve the main subject of controversy below, and lie at the foundation of the suit.

McPherson occupied in these transactions, and is charged in the bill and supplemental bills of complainant with misconduct in two distinct characters or relations to her; namely, as trustee in the deed we have mentioned, and as her counsel and attorney in the management of her lawsuits, and legal adviser in regard to her property. It is important to keep this distinction in mind; for it runs through the whole case, and is recognized in the decree, which not only removes him as trustee under the deed, but requires him to deliver up the bond, although it seems to recognize a right of his in that bond to be established by future litigation.

Now, as we have already said, this bond was payable directly to complainant. She was entitled to its possession, and to receive all the money paid on it, so far as any thing in the trustdeed, or any right conferred on McPherson by that trust, is concerned. Its possession, as connected with the trust, belonged neither to him nor to his co-trustee, Wilson. If, therefore, he had any right to that possession, it must be found in the other relation we have mentioned, and we will proceed to consider that.

We have the deposition of three witnesses, and three only, who knew and could tell the facts on which the lien of McPherson must rest, if it exist at all. These are the complainant, the defendant, and Carlisle, the law-partner of defendant, and interested with him in the lien asserted.

In regard to the facts which are relied on to create the lien there does not seem to be much, if any, difference in the statements of the parties. It is only when they come to the amount that these difference are irreconcilable.

Without entering minutely into the examination here of what each witness says, we will first state what we consider established beyond question.

It appears that complainant had made to Angus and Lewis a long lease of square 312, with a right in them to purchase at a fixed price; namely, $15,000. That, while they held the property under this contract, it had risen very much in value, and Mrs. Cox became desirous to get released from it. For this purpose she employed McPherson and Carlisle as her lawyers; and they succeeded in recovering possession of the property, avoiding the contract, and recovering rents and profits amounting to $2,700. In doing this, they successfully prosecuted an action of ejectment, a separate action for mesne profits, and defended a suit in equity brought by Angus and Lewis to enforce the original contract. That, in employing the law-firm of Carlisle & McPherson to attend to this business, she agreed to pay them a fixed sum for their services, which, in a letter written to them after a controversy had arisen as to the amount so fixed, she says, 'was to be paid out of the proceeds of sales of the property, as such proceeds shall be realized.' After the embarrassment of Angus and Lewis's claim had been removed, the whole square was sold, as we have already shown, to Holden, King, and Ford, and the deed of trust and bond made by them, and the bond left with the defendant. This bond was the first proceeds of the sale of the square.

Some time after this, and after Holden, King, and Ford had built houses on some of the lots of the square, they sold them to James Pike for $16,000, and obtained the release of them by Mrs. Cox, from the lien of the deed of trust, by giving her $13,000 in those notes as payment on the bond, and paying her in cash $4,000, the proceeds of the other notes given in the same transaction. In the deeds of trust given by Pike on those lots to secure said notes McPherson and Wilson were made trustees, and they had been in the deed from which they were released; but, though the original bond remained through all these transactions with McPherson, the money and the notes arising from this last sale were handed over to complainant. Although several years had elapsed, and Carlise & McPherson had no written agreement with complainant about their fee, they permitted the entire proceeds of this last sale, and of the recovery for rents and profits, and the interest which Holden & Co. had paid on their bond, to go into complainant's hands without objection, and had during that time frequently loaned her money, had acted as her counsel and attorneys in both the sales, and drawn all the papers necessary to secure her interests. Thus far the facts seem undisputed.

But not long after this last transaction McPherson addressed a note to Mrs. Cox, suggesting that the matter of the fee for the services of his firm, resting only in parol, was not on that account in a satisfactory position, and enclosing her a writing, which he requested her to sign, acknowledging an indebtedness of $5,000 for their services, and a lien on the securities for the land sold. To this she replied next day, refusing to do as requested, because she said the fee was to be $2,500, and not $5,000.

An animated correspondence now ensued between Mrs. Cox and McPherson, into which Carlisle was also drawn by letters addressed to him personally to Mrs. Cox.

Thereupon McPherson, either with a view to bring her to terms, or more probably as a protection to his right of lien, gave notice to Ford, who had bought out his other partners, not to pay any thing more to Mrs. Cox on the bond; but learning a few days afterward that Ford construed this notice, or used it as a pretext for delaying the payment of the interest due, he told him he could pay the interest to Mrs. Cox. Not long after this the present bill was filed.

It will thus be seen from this condensed statement of facts undisputed that complainant acknowledged that she had agreed to pay to Carlisle & McPherson, out of the proceeds of the sale of the property, if she was successful in getting rid of the contract with Angus and Lewis, $2,500, as their compensation, of which she las thus far never paid or tendered a dollar; and that they had successfully performed their part of the agreement. As regards the difference between the parties as to the amount to be paid by complainant, the clear and circumstantial statements of Carlisle and McPherson, under oath, are not overcome by any thing produced by complainant, and we are satisfied she agreed to pay $5,000.

This contract is now assailed as illegal, on three grounds, which we shall consider in their order:--

1. The first is, that the amount is so large in proportion to the services rendered, and the promisor being a woman without other advice when she entered into the contract, that a court of equity should hold it void, as an unjust extortion from an unprotected female.

Our answer to that is, that we believe the services rendered were worth the money, especially as they were to get nothing unless they were successful.

2. It is said the contract is obnoxious to the doctrine of champerty.

The answer is, that the attorneys did not agree to pay any of the costs, they did not agree to take any part of the land, which was the subject of the suit, for their compensation, nor did they agree to take any thing but money. The single fact that they agreed to wait for their money until complainant could sell the land, and to receive a fixed sum out of the purchase-money, does not, under any definition of champerty, bring it within that principle.

3. It is said to be within the Statute of Frauds, because not in writing, and not to be performed within a year.

But the Statute of Frauds applies only to contracts which, by their terms, are not to be performed within a year, and do not apply because they may not be performed within that time. In other words, to make a parol contract void it must be apparent that it was the understanding of the parties that it was not to be performed within a year from the time it was made. Peter v. Compton, Skin. 353, decided in King's Bench by Lord Holt, and the cases collected under that one in 1 Sm. L. C. 432.

There is nothing in the present contract to show that it was not to be performed inside of a year, nor any thing to show that it could not have been fully performed within that time. The action of ejectment which settled the forfetire of the lease might hvave been brought and tried within that time, and the readiness with which the property sold for $38,000 shows that the amount of the fee might have been realized and paid before the year was out. At all events, it cannot be said that the contract was not to be performed within that time.

We are also of opinion that this obligation on the part of complainant to pay $5,000 to Carlisle and McPherson was, and is now, a lien on the bond in McPherson's possession. It is so by the express contract of the parties, as admitted by Mrs. Cox. It was to be paid out of the proceeds of the sale of the land recovered by the suit in equity in which they were employed. The first sale of the land was in a lump, and this bond for $38,000 represents the proceeds of that sale. It is the only proceeds of the sale. It is also a very fair inference, from the fact that the bond was left in McPherson's possession, that it was done as a recognition of the lien. There is no other reason why it should have been left with him. It was no part of his right or his duty as trustee to hold it. Its possession was in no way essential to any of the very few acts which, as trustee, McPherson could be called on to do under the deed of trust. It is, therefore, manifest that it was left with him as her attorney, or as a security for his debt. It is none the less clear to us, that, apart from the express agreement for a lien, the same result follows from his relation to her as attorney, and the possession of this bond as a paper coming to him in the course of his employment in that character. We have decided in the case of Paschal (10 Wall. 483), that an attorney has a lien by law, under circumstances similar to these, for all that is due him as attorney or counsellor, on the papers of his client in his hands.

McPherson has done nothing to waive or defeat this lien. He might very well have insisted, when the square was sold to Holden & Co., that the fee should then have been paid or secured to him out of the purchase-money. But he accepted possession of the bond as a concession to his client. He continured her counsellor all through the transaction. He advised with her about the sale. He drew up all the writings necessary to the sale and to the security of the purchase-money. His consent to act as trustee in a matter where his duties were merely formal, and in which another trustee was joined with him, are in no sense inconsistent with his position as her attorney, and his rights growing out of that relation. Until she changed them their interests were the same; namely, the faithful and prompt payment of the money due on the bond. The money was hers, but out of its she was to pay the $5,000.

Nor have we been able to discover in the conduct of McPherson any hostility to complainant or to her interests, or any thing in what he has said or done which is inconsistent with the faithful performance of his duty to her under the deed of trust. The only act looking in the slightest in that direction is his warning to Ford to pay Mrs. Cox no more money on the bond. Finding her angry with him, and denying his right to hold the bond as security for his fee, it was necessary to the protection of the security to give some warning to the obligor of his right to be paid before the money all passed into her hands. It may be well doubted if he was not entitled, now after all that had passed, to be paid out of the first money yet to be paid on the bond, even if it were the interest. But, on reflection, he waived that, and told Ford he could pay her the interest. But there was in all this, and in all the quarrel, mainly carried on by complainant, nothing which could in the least interfere with, or would be likely to color his action jointly with, Wilson in executing releases when the property was sold or money paid, or in advertising and making sale when required by complainant in default of payment. If, in doing this, he wished to retain his fee, or any part of it, we have already shown it was his right to do so; and that right cannot be inconsistent with any right of hers, since she was the person who was to pay, and whose debt would be paid, by such a course.

We are, therefore, of opinion that McPherson has a right to the possession of the bond until the fee of $5,000 is paid, and that he has done nothing inconsistent with his duty as trustee under the deed of trust, nor displayed any hostile feeling to the real legal rights or interest of complainant, nor failed or neglected to perform any duty devolving on him as such trustee.

What, then, should be the decree of the court?

1. As to the removal of McPherson from the trusteeship we think there is no ground for such action.

Where a trustee is charged with an active trust, which gives him some discretionary power over the rights of the cestui que trust, and which brings him into constant personal intercourse with the latter, it may be conceded that the mere existence of strong mutual ill-felling between the parties will, under some circumstances, justify a change by the court. But there is here no such case. McPherson will have and can have, nothing to do as trustee which requires any personal intercourse with Mrs. Cox. Unless Ford wishes to pay part of the money and ask a release of part of the property, he has literally nothing to do as trustee until the bond is due. And in all that he may have to do as trustee, his duty is so merely ministerial and so clearly defined, that he can do her no harm whatever. When, in addition to this, it is considered that there is another trustee with equal power, and without whom McPherson can do nothing, we see no danger to her interests or any reason for his removal.

The following authorities support this view of the matter: Forster v. Davies, 4 De G., F. & J. 133; Gibbes v. Smith, 2 Rich. (S.C..) Eq. 131; Berry v. Williamson, 11 B. Mon. (Ky.) 245; Perry, Trusts, sect. 277.

Since, as we have shown, the appellee has a right to the possession of the bond, and there exists no reason for his removal, it is suggested that there should simply be a dismissal of complainant's bill. In support of this view, it is strenuously maintained, by what we think is a misconception of the case as made by the pleadings and the evidence, that the amount of the fee claimed by McPherson and Carlisle, and the existence of the lien, are not issues in this suit of which the court can take notice, or on which it can found any action. It must be confessed that the case is so far embarrassed by the unaccountable failure of the appellee to file a cross-bill asking for relief by a decree establishing his debt and his lien, that no affirmative relief of that character can be given. But it is not true that the existence and the amount of that lien are not legitimate subjects of inquiry in this case, and necessary to a proper decree.

Leaving out the matter of the trust, of which we have already disposed, complainant asks as relief in regard to this bond, that it be delivered up to her. As a legitimate defence to this demand, McPherson answers that he has a right to the possession of the bond as security for $5,000 due him by complainant. She, by supplemental bills and replications, says you have no such lien, or, if you have a lien, it is only for $2,500. It is beyond dispute, therefore, that the pleadings put in issue the existence of the lien and the amount of that lien for which McPherson can hold the bond. The testimony taken is also mainly devoted to those points. The issue is fairly made. What could be more pertinent to the relief sought, and to the defence against it, than both these issue? It is clear that the bond belongs rightfully to Mrs. Cox. If there is no such lien, she is entitled absolutely to the relief she asked; namely, to have its possession restored to her. If there is a lien on it, she is entitled to have that possession on payment of the lien; and whether she is bound to pay $2,500, or $5,000, or nothing, is to us very clearly a ligitimate issue to be tried in the suit. So far, then, as ascertaining her right to the possession of the bond, and the terms or conditions on which that right could be enforced by the court, it seems to us that the issue of the existence of this lien and its amount were not only fairly in the case, but necessary to be determined to enable the court to render such a decree as the pleading, the evidence, and the relief sought required.

That decree is this:--

''That the decree of the Supreme Court of the District be wholly reversed. That a new decree be rendered there, denying so much of the relief sought by complainant as prays for the removal of the defendant from his trusteeship. That it be declared that complainant is entitled to the possession of the bond of Holden, King, and Ford, on payment to McPherson of the sum of $5,000, for which he rightfully holds said bond as security for his services to complainant as her attorney and counsel. And that McPherson have liberty, if he be so advised, to file a cross-bill for the establishment of his debt and his lien, and for such remedy for its enforcement as equity can give in the case''.

MR. JUSTICE STRONG.

I concur in the reversal of the decree of the court below, but I dissent from so much of the opinion as determines the amount due Messrs. Carlisle and McPherson as compensation for their professional services, for which the lien on the bond to Mrs. Cox is asserted. I think that the amount, as well as the existence of the debt, should be established in an issue sent to a court of law, especially as no cross-bill was filed.

MR. CHIEF JUSTICE WAITE.

I dissent from the judgment in this case, and am entirely satisfied with the decree below.

MR. JUSTICE HUNT and MR. JUSTICE HARLAN also dissented.

title: McPherson v. Cox/Opinion of the Court


text: Talk:McPherson v. Cox/Opinion of the Court


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United States v. Driscoll

APPEAL from the Court of Claims.

The facts are stated in the opinion of the court.

The court below rendered judgment pro forma for the claimant.

The Solicitor-General for the United States.

Mr. Joseph Casey and Mr. Thomas J. Durant, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.

title: United States v. Driscoll


text: Talk:United States v. Driscoll

title: Talk:United States v. Driscoll


text:
United States v. Driscoll/Opinion of the Court

This is an appeal from the Court of Claims. The petition of the appellee alleges that he worked the number of days specified, for the United States, ten hours a day, when he was required by law to work only eight hours a day; that he was paid at the rate of ten hours a day; and he claims further compensation for such number of days as the additional two hours aggregated will make, computing a day's work at eight hours instead of ten hours.

This is the basis and extent of the claim. The United States, among other defences, allege that the appellee was never employed by them, nor on their behalf.

The case is fully set forth in the findings of the Court of Claims. A brief statement of the facts will be sufficient for the purposes of this opinion.

The United States contracted with Ralph Ordway to furnish, from certain quarries near Richmond, Va., granite, to be delivered in Washington City. He was to be paid at specified prices.

They contracted with him, further, 'to furnish all the labor, tools, and matierals necessary to cut, dress, and box, at the quarry or quarries, all the granite, in such manner' as should be directed. The United States were to pay him 'the full cost of said labor, tools, and materials, and also the insurance on the granite, increased by fifteen per cent on such cost.'

The contract contained this further clause:--

'And the party of the second part (Ordway) further agrees to furnish such number of men as may be deemed necessary for the proper prosecution of the work by the party of the first part (the United States); and the party of the second part further agrees to cut as well as furnished and deliver all the granite herein contracted for, at such times as may be required by the party of the first part, and in default thereof to forfeit and pay to the United States the sum of one hundred (100) dollars per diem for each and every day thereafter, until the final delivery of the same, which sum shall be deducted from any moneys which may be due him; and if that amount be not due him, then his bondsmen are to be held liable for any deficiency, to be recovered of them by suit in the name of the United States.' The larger the amount of the cost, the larger would be the amount to be paid Ordway. His interests and those of the United States were, in this particular, therefore, in direct antagonism. Hence the United States employed and paid a superintendent and clerk, who were to be present all the time. The former was to see that every thing was done according to the contract, and that no frauds were committed on the government. It was also his duty, at the end of every month, to certify Ordway's accounts for his expenditures during that time. The clerk was his assistant, and subject to his directions. The employes were engaged and paid as follows: When a man was set to work, Ordway's foreman gave his name to the clerk of the superintendent, who put it on the time-book. The foreman put the price opposite the name. The clerk kept a ledger account, made out a pay-roll at the end of each month, and had the men sign it. It was approved by the superintendent, and delivered to Ordway, and he received the amount from the United States, with the fifteen per cent added, according to the contract. He then paid the men, according to the pay-roll and their receipts thereon. The appellee was employed and paid in this way.

It is clear that there was no privity between the appellee and the United States. Ordway employed him and was to pay him, and did pay him. The United States had no interest in the rate or amount paid, save that the sum so paid, with fifteen per cent in addition, was the measure of the amount to be paid to Ordway. The fact that Ordway procured the appellee's receipts, presented his own vouchers to the government, and received his pay before paying his hands, is immaterial as regards the rights of the parties. It was a convenience to the contractor, and safe for government. The hands trusted the former; and, if he had failed to pay them, the loss would have been theirs. The government having the contractor's receipts, it could not have fallen upon the United States. The acknowledgment of payment by the employes, before getting their money, was wholly their own concern. Ordway was bound by his contract to have the work done as specified; and upon every default he was liable for a penalty of $100 a day until he should fulfil his undertaking. This stipulation is incongruous with the idea of his being an agent and not a contractor. The latter was his relation to the government. Between himself and the appellee it was simply that of employer and employ e.

The mode, manner, and rate of Ordway's compensation was a matter between him and the United States, and was one with which the appellee had nothing to do. Hence, in this case, it can in nowise affect the rights of the parties. The appellee stands upon exactly the same ground as the employees of any other contractor with the government. It follows that he can have no rightful claim against the appellant. This is conclusive against him. It is, therefore, unnecessary to consider the other points of defence insisted upon by the United States.

Judgment reversed, and the case remanded with directions to dismiss the petition.


text: Talk:United States v. Driscoll/Opinion of the Court