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Crapo v. Kelly/Opinion of the Court

'By issuing a commission against a bankrupt merchant in London, spring a net, which shall cover all the effects of such bankrupt throughout the world, and draw them all to her own forum for distribution,. . . for the fact cannot be disguised that Great Britain having the most extended commerce, and her merchants and manufacturers crediting abroad vastly more than they owe to foreign creditors, has a strong and peculiar interest in contending for a rule which draws to herself the distribution of all the effects which her lucrative commerce has dispersed over the globe.'

Foreign nations are still and to a greatly increased extent our creditors, and especially so with regard to goods at sea, in foreign bottoms. To these the doctrine contended for is quite as applicable as to Massachusetts ships arriving at our port. And this court is now asked to make a decision which, as to the immense interest of our foreign importations daily arriving in the port of New York, will defeat the just claims of domestic creditors in all cases of foreign bankruptcy of the owner and shipper occurring after their shipment and before arrival.

Looking at the question in this light, as one 'of policy and of public utility,' and with a view to what 'the best interests of our own subjects require,' there would seem to be no doubt of the inexpediency of extending the rule of comity farther than it has ever yet been carried, and to cover the goods or ships of foreign bankrupts at sea, and destined for our ports at the time of the bankruptcy.

7. Massachusetts is the last State in the Union to which any enlarged comity should be extended in regard to the recognition of her insolvent laws, and of titles thereby created. In 1854 the Supreme Court of that State decided that an assignment of property in that Commonwealth, made in New York by an insolvent citizen of New York, to a trustee for the benefit of creditors, giving preference to certain creditors, also citizens of New York, is ineffectual as against an attachment made in Massachusetts by a citizen thereof. When a State, which pursues such a policy, sends her assignees in insolvency to New York, to take possession of property, no principle of comity, heretofore announced, can require our courts, for their benefit, to take the property away from New York creditors, who have acquired a prior lien.

Mr. Edwards Pierpont (with whom was Mr. W. Stanley), contra.

Mr. Justice HUNT delivered the opinion of the court.

The claim of Federal jurisdiction over this action is based upon article 4, section 1, of the Constitution of the United States. It is there declared that 'full faith and credit shall be given in each State to the public acts, records, and judicial proceedings of every other State; and the Congress may, by general laws, prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.' In 1790 and in 1804 Congress passed laws prescribing that manner and effect. By the act of May 26th, 1790, after prescribing the forms of authentication, it is enacted: 'And the said records and judicial proceedings authenticated as aforesaid shall have such faith and credit given to them in every court within the United States as they have by law or usage in the courts of the State from whence the said records are or shall be taken.' Under this statute it has been held in this court, from an early day, that the faith and credit spoken of are not limited to the form of the record, and are not satisfied by its admission as a record. It is held that the same effect is to be given to the record in the courts of the State where produced, as in the courts of the State from which it is taken.

The defendant in error insists in reply that the validity of the record of the court of probate and insolvency in the State of Massachusetts is not involved, and the faith and credit due to it is not in ques ion. This is based upon the argument that that record has never adjudicated upon the title or possession of the vessel in question, and that the same was res integra when this action was commenced in New York.

The case of Green v. Van Buskirk, reported in 5th Wallace, p. 310, and also in 7th Id. p. 139, is relied upon as conclusive upon this point. In that case Bates, who lived in New York, executed and delivered to Van Buskirk, who lived in the same State, a chattel mortgage on certain iron safes which were then in the city of Chicago. This was done on the 3d day of November, 1857. Two days after this Green, who was also a citizen of New York, being ignorant of the existence of the mortgage, sued out a writ of attachment in the courts of Illinois, levied on the safes, and sold them in satisfaction of the judgment obtained in the attachment suit. There was no appearance or contest in defence of this attachment suit, and Van Buskirk was not a party to it, although he had power to make himself such party. It was conceded that by the laws of Illinois, mortgages of personal property, until acknowledged and recorded, are void as against third persons. In this state of the affair Van Buskirk sued Green in the New York courts for the value of the safes mortgaged to him by Bates, and of which Green had thus received the proceeds. Green pleaded his attachment suit in bar of the action. The courts of New York gave judgment in favor of Van Buskirk, holding that the law of New York was to govern, and not the law of Illinois, although the property was situated in the latter State, and that the title passed to him by the execution of the mortgage. The case first came before this court on a motion to dismiss for want of jurisdiction. The motion was maintained, on the ground that the record neither showed that the construction of any clause of the Constitution was drawn in question in the State court, nor that any right was claimed under such clause, or that any decision was made against such right. The only issue it was said was as to the right of property and possession at the time of such seizure. In the opinion of the court, delivered by Mr. Justice Miller, after discussing the law applicable to the general questions in the case, the conclusion on the question of jurisdiction is thus stated: 'We do not here decide that the proceedings in the State of Illinois have there the effect which plaintiff claims for them, because that must remain to be decided after argument on the merits of the case. But we hold that the effect which these proceedings have there by the law and usage of that State was a question necessarily decided by the New York courts, and that it was decided against the claim set up by the plaintiff in error, under the constitutional provision and statute referred to, and that the case is, therefore, properly here for review.' Without reference to whether he was right or wrong, the fact that Green claimed under the judicial record of Illinois, and that his claim was overruled, was held to give this court jurisdiction. Without reference to whether Crapo was right or wrong, whether the question was res integra, or res adjudicata, the fact that he claimed title under the Massachusetts record, and that his claim was overruled, gives the court jurisdiction of the present case. The authority of Green v. Van Buskirk, in 5th Wallace, is clear to that point.

The case as reported in 7 Wallace is to the same effect. In restating the argument of jurisdiction Mr. Justice Davis says: 'This court in denial of the motion to dismiss held that the Supreme Court of New York necessarily decided what effect the attachment proceedings in Illinois had by the law and usage in that State, and as it was decided against the effect that Green claimed for them, this court had jurisdiction under that clause of the Constitution' above quoted. Whether the Supreme Court of New York held correctly or otherwise was important when the case came before this court f r a final hearing, but the fact simply that it had decided against Green's claim of the effect of the records gave jurisdiction.

We think the jurisdiction of the court now to hear and decide the case is sufficiently clear.

Omitting all superfluous circumstances, the facts necessary to present the question on the merits are these: On the 23d of February, 1861, the insolvent court of Massachusetts appointed Crapo and others assignees in insolvency of Gibbs & Jenny, and the judge of that court executed and delivered to them an assignment of all the personal property of Gibbs & Jenny. At this date Gibbs & Jenny were the owners of the ship Arctic, an American vessel registered at the port of Fairhaven, in the district of New Bedford, in the State of Massachusetts, which vessel was then on the high seas, to wit, in the Pacific Ocean. On the 30th day of the following April this vessel arrived in the port of New York, and was at once seized as the property of Gibbs & Jenny, by an attachment issued at the suit of one Robinson, a creditor of Gibbs & Jenny, residing in New York. On the next day but one after the arrival of the vessel Crapo came to New York and took possession of her, subject to the possession of Kelly, the sheriff. Crapo represents the title under the Massachusetts assignment, which then, and at all times since, he has sought to enforce. Kelly claims under the New York attachment.

The question is, which proceeding gave the better title.

Certain propositions relating to the question are not disputed.

1. If the assignment under which Crapo claims had been the personal act of Gibbs & Jenny, it would have passed the title to the vessel wherever she might have been at the time of its execution.

2. If the vessel at the time of the execution of the assignment had been within the territorial limits of Massachusetts, the assignment, although not the personal act of Gibbs & Jenny, would have divested their title and that of all persons claiming under them, provided diligence has been used to reduce the vessel to possession.

3. If the vessel had been in the port of New York at the time of the execution of the insolvent assignment (there being no personal assignment), and had subsequently been seized there under attachment proceedings by a New York creditor, such attachment proceeding would have held the vessel as against the prior insolvent assignment.

The first of these propositions results from the fact that personal property, wherever it may be, is under the personal control of its owner, and the title passes by his actual transfer. The second is based upon the idea that the property being actually present and under the control of the law, passes by act of the law. The third proposition assumes that a transfer by legal proceeding possesses less solemnity than one made by the owner himself; that each nation is entitled to protect its own citizens, and that the remedy by law taken by its citizens having the actual possession of the corpus, ought to prevail over a title by law from another State, which is not accompanied by such possession. This principle authorizes the Massachusetts assignee to hold the property when in Massachusetts, and the New York creditor to seize it when it is in New York, under the circumstances stated.

The present case is deficient in each of the elements necessary to bring the vessel within the range of the foregoing principles. She was not transferred by the personal act of the owner. She was not literally within the territory of Massachusetts when the insolvent assignment took effect; and, thirdly, she was not in the port of New York.

The question then arises, while thus upon the high seas was she in law within the territory of Massachusetts. If she was, the insolvent title will prevail.

It is not perceived that this vessel can be said to be u on United States territory, or within United States jurisdiction, or subject to the laws of the United States regulating the transfer of property, if such laws there may be. Except for the purposes and to the extent to which these attributes have been transferred to the United States, the State of Massachusetts possesses all the rights and powers of a sovereign State. By her own consent, as found in article 1 of the Constitution of the United States, she has abandoned her right to wage war, to coin money, to make treaties, and to do certain other acts therein mentioned. None of the subjects there mentioned affect the question before us. The third article of that instrument extends the judicial power of the United States 'to all cases of admiralty and maritime jurisdiction.' This gives the power to the courts of the United States to try those cases in which are involved questions arising out of maritime affairs, and of crimes committed on the high seas. To bring a transaction within that jurisdiction, it must be not simply a transaction which occurred at sea, as the making of a contract, but one in which the question itself is of a maritime nature, or arises out of a maritime affair, or it must be a tort or crime committed on the high seas. Over such cases the United States courts have jurisdiction; that is, they are authorized to hear and determine them. No rule of property is thereby established. This remains as it would have been had no such authority been given to the United States court.

To Congress is also given power 'to define and punish piracies and felonies committed on the high seas, and offences against the law of nations.' It will scarcely be claimed that the title to property could be affected by this provision. Nor does the circumstance that the Arctic sailed under the flag of the United States and was entitled to the protection of that government against insult or injury from the citizens or ships of other nations, touch the present point. None of these instances are like that of the passage of a bankrupt law by the United States, which acts directly upon the property of all the citizens of all the States, wherever it may be. Had the claim of either party to this vessel been based upon a proceeding under that statute, the title would have been complete, if the property had been within the territory or jurisdiction of any of the States of the Union.

It is not perceived, therefore, that the relation of Massachusetts to the Union has any effect upon the title to this vessel. It stands as if that State were an independent sovereign State, unconnected with the other States of the Union. The question is the same as if this assignment had been made in London by a British insolvent court, adjudicating upon the affairs of a British subject.

We are of the opinion, for the purpose we are considering, that the ship Arctic was a portion of the territory of Massachusetts, and the assignment by the insolvent court of that State passed the title to her, in the same manner and with the like effect as if she had been physically within the bounds of that State when the assignment was executed.

The rule is thus laid down by Mr. Wheaton in his treatise on International Law: 'Both the public and private vessels of every nation on the high seas, and out of the territorial limits of any other State, are subject to the jurisdiction of the state to which they belong. Vattel says that the domain of a nation extends to all its just possessions, and by its possessions we are not to understand its territory only, but all the rights it enjoys. And he also considers the vessels of a nation on the high seas as portions of its territory. Grotius holds that sovereignty may be acquired over a portion of the sea.' As an illustration of the proposition that the ship is a portion of the territory of the State, the author proceeds: 'Every state has an incontestable right to the service of all its members in the national defence, but in can give effect to this right only by lawful means. Its right to reclaim the military service of its citizens can be exercised only within its own territory, or in some place not subject to the jurisdiction of any other nation. The ocean is such a place, and any state may unquestionably there exercise, on board its own vessels, its right of compelling the military or naval services of its subjects.'

Chancellor Kent, in his Commentaries, says: 'The high seas are free and open to all the world, and the laws of every state or nation have there a full and perfect operation upon the persons and property of the citizens or subjects of such a state or nation.' 'No nation has any right or jurisdiction at sea, except it be over the persons of its subjects, in its own public and private vessels; and so far territorial jurisdiction may be conceded as preserved, for the vessels of a nation are in many respects considered as portions of its territory, and persons on board are protected and governed by the law of the country to which the vessel belongs.'

Wharton says: 'A ship in the open sea is regarded by the law of nations as a part of the territory whose flag such ship carries.' 'By this (he says) may be explained several cases quoted as establishing the lex domicilii, though they are only sustainable on the ground that the ship at sea is part of the territory whose flag she bears. . . . In respect to principle, ships at sea and the property in them, must be viewed as part of the country to which they belong.' The modern German law is to the same point. Bluntschil, in his Moderne Volkerrect, says: 'Ships are to be regarded as floating sections of the land to which they nationally belong, and whose flag they are entitled to carry.'

Bischof, in his Grundriss des positiven internationalen Seerechts, says: 'Every state is free on the seas, so that its ships are to be regarded as floating sections of its country, territoria clausa; la continuation ou la prorogation du territoire, and those on board such ships in foreign waters are under their laws and protection. This even applies to children born to subjects on such ships.'

Wildman, in his treatise on International Law, says: 'Provinces and colonies, however distant, form a part of the territory of the parent state. So of the ships on the high seas. The rights of sovereignty extend to all persons and things not privileged, that are within the territory.'

The adjudicated cases in this country are to the same effect. In Plestoro v. Abraham, it was held that where a British subject, being indebted, left England, and while on his voyage to this country and before he arrived here, he was, under the laws of Great Britain, declared a bankrupt, and provisional assignees were appointed, it was held that the assignment to such assignees divested the title of the bankrupt to the personal property brought with him to this country. In giving his opinion upon the motion to dissolve the injunction, Chancellor Walworth said: 'In the case of Holmes v. Remsen, Chancellor Kent decided that an assignment by the commissioners of bankruptcy in England, operated as a legal transfer of the personal property and choses in action of the bankrupt in this country. Even as against a subsequent attachment taken out here by an American creditor, under the act against absconding and absent debtors. It is doubtful whether that decision, to its full extent, can be sustained. It was strongly opposed and ably questioned by Platt, in a case between the same parties, which subsequently came before the Supreme Court. It also stands in opposition to the opinions of the State courts in Connecticut, Massachusetts, Pennsylvania, Maryland, and in both of the Carolinas,. . . and to the decision of the Supreme Court of the United States, in Harrison v. Sterry, and in Ogden v. Saunders. But the case before me (he proceeds) steers clear of all these decisions. In the cases cited the contest was between foreign assignees and domestic creditors, claiming under the laws of the country where the property was situated and where the suits were brought. The question in these cases was, whether the personal property was to be considered as having locality of the purpose of giving a remedy to creditors residing in countries where the property was in fact situated at the time of the foreign assignment. In this case the controversy is between the bankrupt and his assignees and creditors, all residing in the country under whose laws the assignment was made. Even the property itself, at the time of the assignment, was constructively within the jurisdiction of that country, being on the high seas in the actual possession of a British subject. Under such circumstances the assignment had the effect to change the property and divest the title as effectually as if the same had been sold in England under an execution against him, or he had voluntarily conveyed the same to the assignee for the benefit of his creditors.'

The case was carried to the Court of Errors of the State of New York, that body being composed of the chancellor, the judges of the Supreme Court, the lieutenant-governor, and the members of the senate. The record did not show distinctly that the vessel which brought the goods was a British ship, and on this point the chancellor's order was reversed. Marcy, justice, and Throop, lieutenant-governor, eminent men and able judges, held that the assignment in Great Britain divested the title of the bankrupt to personal property in this country, and that his property in a vessel on the high seas was likewise transferred. Maynard, Oliver, and Stebbins held that, as to the personal property of the bankrupt in this country, the assignment did not effect a transfer of the same, even as between the assignee and the bankrupt. Maynard and Stebbins held that to produce the transfer, under such circumstances, of the property of a British bankrupt, which was on the high seas at the time of the assignment, it must distinctly appear that the vessel was a British vessel, and thus the property was within British jurisdiction. It is fairly to be inferred that if it had appeared that the vessel was a British vessel the chancellor's order would have been sustained. Thus Mr. Ogden, who argued for the reversal of the order, said: 'Had the goods been on board a British vessel it would have been so averred. In the absence of such averment the fair conclusion is that the vessel in which they were embraked was American; and if so, the goods were as much within our jurisdiction as if landed in a storehouse at New York.' Senator Maynard, in his opinion, repeats this statement. He says: 'The presumption was as fair that it was on board of an American ship as that it was on a British ship; and if so, it was, at the date of the assignment, within the jurisdiction of this country.' Stebbins, senator, says: 'I hold, therefore, that if this property was laden on board an American vessel, and on the high seas at the time of the assignment, it was within the jurisdiction of the United States, and could no more pass by that assignment than if lodged in the custom-house in New York; and if laden on board a British vessel that fact should have been averred by the assignee as essential to his title.' The chancellor's order was reversed, and apparently upon this ground, that it did not actually appear that the ship on which the goods were laden was a British ship. The principle of the decision was in accordance with the principle announced by the chancellor, as already quoted, to wit, that the presence of the goods in a British ship on the high seas, continued them within British jurisdiction. The limited application given to this decision in Johnson v. Hunt, is scarcely sustained by the facts. None of the other cases cited are cases of goods on the ship of the state or nation of the insolvent whose goods are the subject of the assignment. They are cases where the property was confessedly within another jurisdiction and hence the conflict.

Judge Story says, upon this case: 'It is difficult to perceive how the doctrine of the chancellor, as to the operation of the British bankrupt laws upon the British subjects and their property in transitu can be answered. The transfer must be admitted to be operative to divest the bankrupt's title to the extent of an estoppel as to his own personal claim in opposition to it, for the law of America, be it what it may, had not then operated upon it. It was not locally within our jurisdiction. No one could doubt the right of the assignee to personal property locally in England at the time of the assignment. In what respect does such a case differ from a case where it has not passed into another jurisdiction? Is there any substantial difference between its being on board a British vessel and its being on board of an American vessel on the high seas?' No claim can be made that this vessel was within the jurisdiction of New York when the assignment was executed.

If the title passed to the insolvent assignees, it passed eo instanti the assignment was executed. It took effect then or never. The return of the vessel afterwards to America, her arrival in the port of New York, her seizure and sale there did not operate to divest a title already complete.

Again, the owners of this vessel and the assignees in insolvency were citizens of Massachusetts, and subject to her laws. It is not doubted that a sale of property between them of property on board of this vessel, or of the vessel itself, would be regulated by the laws of Massachusetts. It is not doubted that the vessel was taxable in Massachusetts only, or that if Gibbs or Jenny had been on board of the vessel, and had died before the vessel reached New York, his personal property on or in her would have passed under the laws of Massachusetts.

If this vessel had never returned to the American shores but had gone to the bottom in the Pacific seas, after the assignment was complete, whose vessel would she have been at the time of such loss? There can be but one answer. The Massachusetts statute declares that this assignment vested in Crapo and his associates all the title and interest the insolvent had in this vessel. In other words it vested in them the absolute ownership. There was not then, or for weeks afterwards, any possible question of their title. The insurance-money upon the ship would have been their property, and they would have been bound to collect it and distribute it among the creditors.

Personal property which has an established situs in another State, is no doubt governed by the lex loci sitae rei, so far that it will be governed in its distribution by the laws of the place where found, rather than the law of the domicile. This rule only applies where such property has acquired an established situs. Until that occurs there can be no conflict of jurisdiction.

It is said, however, that the fact that the property on board a vessel at sea and the vessel itself, contracts respecting them and the distribution of the assets of the intestate, are regulated by the laws of Massachusetts, arises solely from the circumstance that the owner is a resident of that State; that jurisdiction of the parties it is, that gives the jurisdiction of these subjects. The authorities from Kent, Story, and Wheaton, and the continental authorities, the civil law before cited, as well as the decisions in Plestoro v. Abrahams, make the ship tself, under such circumstances, a part of the territory of the State to which its owner belongs. If he resides in Boston his property in the remotest county of the State is under the protection of its laws, as being upon and within its territory. So his property on his ship, for the purpose we are considering, is legally and constructively within its territory. In each case it is true that the existence of an owner is necessary to call forth the exercise of the law and the duty and power of the State. In this sense, it is true, that the residence of the owner produces the result. It is produced, however, not only by the existence and residence of the owner, but by an extended State territory upon which his property remains, and where it is subject to State laws and entitled to the protection of the same laws.

Grotius holds that sovereignty may be acquired over a portion of the sea, ratione personarum. Rutherford and others hold this to be an error, and that no nation has jurisdiction over the ocean itself. All agree that jurisdiction over the public and private vessels of a nation at sea, remains to the nation, and it is expressed in the language already quoted.

In the celebrated Trent Case, occurring in 1862, Messrs. Mason and Slidell were removed from a British private vessel by Commodore Wilkes of the San Jacinto, a public vessel of the United States. Great Britain insisted that the rights of a neutral vessel not only had been violated, for which she demanded apology, but she insisted that these persons should be replaced and returned on board a British ship. This was done, and they were actually placed on board a British vessel in or near the harbor of Boston. They were not British subjects, and their return could only have been demanded for the reason that they had been torn from British soil, and the sanctity of British soil as represented by a British ship had been violated. Citizenship or residence had no influence upon the question.

This vessel, the Arctic, was upon the high seas at the time of the assignment. The status at that time decides the question of jurisdiction. The State of New York had no jurisdiction over her until long afterwards. No conflict can, therefore, arise between the laws of New York and of Massachusetts. The United States had no jurisdiction over her for the purpose we are considering. We hold that she was subject to the disposition made by the laws of Massachusetts, and that for the purpose and to the extent that title passed to the assignees, the vessel remained a portion of the territory of that State.

JUDGMENT REVERSED, and the case remanded FOR FURTHER PROCEEDINGS.

Mr. Justice CLIFFORD, concurring in the judgment.

Unable to assent to the opinion of the court just delivered, I will proceed to state the reasons which induce me to concur in a reversal of the judgment brought here for re-examination.

Ships and vessels of the United States, said Mr. Justice Nelson, are creations of the legislation of Congress. None can be denominated such or be entitled to the benefits and privileges thereof except those registered or enrolled by virtue of the act for registering and clearing vessels and regulating the coasting trade, or those which are registered or enrolled in pursuance of the act for the registering and recording ships and vessels, or such as are duly qualified for carrying on the coasting trade and fisheries; and the provision is that they must be wholly owned by a citizen or citizens of the United States, and that they shall not continue to enjoy such benefits and privileges any longer than they shall be so owned, and be commanded by a citizen or citizens of the United States. Nor can any ship or vessel be registered or enrolled unless built and owned, as therein required, and thence continuing to belong to a citizen or citizens of the United States, or ships or vessels captured from the enemy, in war, by a citizen and lawfu ly condemned as prize or adjudged to be forfeited for a breach of the laws of the United States, and being wholly owned by a citizen or citizens thereof. Beyond all doubt these acts of Congress declare the true character of registered and enrolled ships and vessels, and all ships and vessels not brought within these provisions of the acts of Congress, and not entitled to the benefits and privileges thereto belonging, are of no more value as American vessels, said Mr. Justice Nelson, than the wood and iron out of which they are constructed. Their substantial if not their entire value consists in their right to the character of national vessels, and to have the protection of the national flag floating at their masthead.

Governed by these views, this court held, in the case first cited, that Congress having created, as it were, this species of property and conferred upon it its chief value, under the power given in the Constitution to regulate commerce, that no serious doubt could be entertained but that the same power may be extended to the security and protection of the rights and titles of all persons dealing therein. Such ships and vessels are ships and vessels of the United States and not of the several States in any international sense, and there are no authorities, whether judicial or such as treat of the law of nations, which support any different view, as the word state when used in the treatises upon the law of nations means the nation and not any subdivision of it, as is sometimes supposed.

American ships offending against our law may be seized by the executive authority upon the high seas, but a seizure of ships or vessels of one nation cannot be made within the jurisdiction of another for the infringement of its own revenue or navigation laws, as the act of seizure is a violation of the territorial authority of the nation within whose jurisdiction the seizure is made.

By the record it appears that the plaintiff, who is the present defendant, is the sheriff of the county where the suit was instituted, and that the first five defendants are the assignees in bankruptcy, either of William L. Gibbs and William Jenny, or of Edmund Allen, all of Fairhaven, county of Bristol, and State of Massachusetts, having been duly appointed as such by the court of insolvency for that county, and that the other two defendants are their sureties in a bond for the undivided half of the ship Arctic, which they gave to release the ship from an attachment served by the plaintiff in the suit before the court. Gibbs & Jenny owned three-eighths of the ship, and Allen owned one-eighth of the same, and it also appears that the two defendants first named, on the seventh of February, 1861, petitioned the court of insolvency of the county, representing that they owed debts which they were unable to pay in full, and prayed that a warrant might be issued for taking possession of their joint and separate estate, and that such further proceedings might be had as the law in such cases prescribes; and it further appears that such a warrant was issued on the same day, and that on the twentieth of the same month the messenger made return that he had taken possession of all the estate of the insolvent debtors, except such as is exempt by law from attachment, and of all deeds, books of account, and papers which had come to his knowledge, and that he had given the required notice. Three of the defendants were duly appointed assignees of the estate of the insolvent debtors, and on the twelfth of the same month the judge of the court, by an instrument in due form, conveyed and assigned to the said assignees all the individual and partnership estate, real and personal, of the said insolvent debtors, including all the property of which they were possessed, or in which they were interested, except such as was exempted from attachment, and all their deeds, books of account, and papers, which of course included the title-papers to the ship. On the fourteenth of the same month, Allen also presented a petition to the same court, of like import, and which contained a similar prayer, and seven days later the court issued the warrant, and on the twenty-fifth of the same month the messenger made his return to the same effect as that made to the other warrant. All these proceedings appear to be correct, and the judge of the court having appointed as assignees the person first named in the other warrant and the other two persons named as principals in the bond given for value, on the sixth of March in the same year conveyed and assigned to them all the real and personal estate of the insolvent debtor by an instrument in the same form as in the other case, and which contains the same description of the property conveyed and assigned. Throughout these proceedings the ship was in the Pacific Ocean, or on her homeward voyage to the port of New York, where she arrived in safety on the thirtieth of April, laden with a cargo of guano. Debts were owed by the insolvent debtors to parties in New York, and on the twenty-fourth of April, before the vessel arrived at her wharf, Edward M. Robinson commenced a suit against the three insolvent debtors to recover a sum exceeding six thousand dollars, and a judge of the court, upon his application, issued a process of attachment, directed to the sheriff, commanding him to attach all the property of the defendants in that action, or so much thereof as would be sufficient to satisfy the demand in the action; and it appears that on the thirtieth of the same month he did, by virtue of that process, attach one undivided half part of the said ship as the property of the defendants named as such in the process. Seasonable application was accordingly made to the judge by the said five assignees, claiming to be the owners of the said one undivided half of the ship, praying that she might be valued as provided by the law of the State. Hearing was had and the judge granted the application, and the appraisers appointed having valued the said undivided half of the ship, the five assignees with the other two defendants in this action gave the bond which is the foundation of the action in which the judgment before the court was rendered. Reference need only be made to a single allegation in the declaration, which is that the said claimants were not, nor as either of them, at the time the attachment was made, the owners or owner of the said one undivided half of the ship, as that is sufficient to show the nature of the controversy. Service was made, and the defendants appeared and alleged in their answer that the five assignees were the absolute owners of the same at that time, and that they continued to be such until the vessel was released in the manner stated in the declaration. Evidence was introduced by both parties, and the court directed a verdict for the plaintiff, subject to the opinion of the court at general term; and the cause came to hearing at general term, when the plaintiff moved that judgment be entered on the verdict, but the court denied the motion and dismissed the complaint. Pursuant to the regular practice the court, in general term, prepared and entered in the record their conclusions of law, and a statement of the facts on which those conclusions arose. They determined as matter of law that the assignees named as defendants were, at the time the attachment was made, the owners of the property attached, and that they were entitled to claim and take the same from the plaintiff as the attaching officer. Their conclusions, it appears, were based chiefly upon the facts set forth in the agreed statement, which need not be further referred to, as the facts which it contains have already been sufficiently reproduced. They also find to the effect that one of the assignees, in behalf of all, left the place of his residence on the secon of May, and arrived in New York on the following day, for the purpose of taking possession of the ship, but was unable to do so, as he found she was in the possession of the sheriff, it appearing that the plaintiff in the attachment suit, having received early information that the ship was coming to that port, took measures to have the attachment process served even before she came to her wharf. Appeal was taken by the plaintiff in this suit to the Court of Appeals, where the judgment rendered in general term was reversed and judgment rendered for the plaintiff upon the verdict found by the jury in the court of original jurisdiction.

Two principal questions are presented for decision: (1) Whether the property in the ship, testing the question by the laws of the State where the insolvency proceedings took place, passed to the assignees by virtue of the assignments executed by the court having jurisdiction of the subject-matter; or (2) Whether the attaching creditor is entitled to hold it by virtue of his attachment made long subsequent to the execution and delivery of those instruments.

Property may be attached on mesne process in that State, and if it be true that the property in the ship, testing the question by the laws of that State, did not pass to the assignees of the insolvent debtors by virtue of the instruments of assignment, further examination of the case is unnecessary, as it must plainly follow that there is no error in the record, and that the judgment should be affirmed.

'Full faith and credit,' the Constitution ordains, 'shall be given in each State. . . to the judicial proceedings of every other State; and that Congress may, by general laws, prescribe the manner in which. . . such proceedings shall be proved, and the effect thereof.' Congress accordingly enacted that 'judicial proceedings. . . shall have such faith and credit given to them in every court within the United States as they have, by law or usage, in the courts from whence' they shall be taken.

Discussion of those provisions is unnecessary at this time, as their true intent and meaning have been fully explained by the decisions of this court. Congress, say the court in Mills v. Duryee, have declared the effect by declaring what faith and credit shall be given to the proceeding, so that it only remains, in every case, to inquire what is the effect of a judgment in the State where it is rendered. If a judgment is conclusive in the State where it was pronounced, it is equally conclusive everywhere in the courts of the United States.

Such an assignment, as a general rule, passes the whole of the property of the insolvent debtor, except what is exempted from attachment; or, in other words, the rights of the assignee are as comprehensive as that of an attaching creditor in jurisdictions where the creditor may attach, if need be, the whole property of the debtor, except what is exempted by statute, to respond to the judgment, giving the assignee, like a creditor, the power to reach the property of the debtor, in cases of fraud, even greater than the debtor possessed before the decree of insolvency was passed. Assignees in insolvency under the comprehensive rule by which the assignee is vested with all the rights of property belonging to the bankrupt, acquire the same right as creditors to avoid any transactions of the insolvent debtor which were intended to enable a third party to hold his property in trust for his own benefit. In reference to such a case it has been well said that there is a broad distinction between a bill by a bankrupt, the author of the fraud, and one by the assignee, who seeks to recover the property for the benefit of the very interest sought to be defrauded, as public policy in the first case forbids the court to lend its aid to a plan intended to deprive creditor of their just rights, but to grant relief in the second case, is to act in accordance with the rights of creditors for the purpose of defeating the fraudulent design. In cases unaffected with fraud the assignee stands in the situation of the insolvent debtor, and succeeds to all his property and rights of property, whether legal or equitable, and the rule is supported by the highest authority, that the assignment passes all his property, whether mentioned or not in the schedule to the assignee; and it was held, in Gray v. Bennett, that any one who affirms that a particular thing does not pass by force of the statute must bring himself within its exceptions or show conclusively aliunde that it was the design of the makers of the law that the thing specified should not pass to the assignee.

Where the rule of the State courts is that all the property of the insolvent passes to the assignee, this court has decided, the opinion having been given by the late Chief Justice Taney, that any such imperfection in the schedule cannot have any influence, as this court will adopt the same rule as the State court.

Had the ship been in the home port it is not denied that the insolvents could have conveyed it for a valuable consideration before the decree in insolvency was passed, nor that personal property under those circumstances, if it had been previously conveyed in fraud of the Bankrupt Act, would have passed to the assignees by virtue of the assignment executed to them by the judge of the court of insolvency. Doubt cannot be entertained upon that subject, and it is equally clear by all the authorities that ships at sea and goods to arrive pass to a purchaser for value, if the purchase is made in good faith, just as effectually as if the ship was moored at her wharf and the goods were deposited in a warehouse. Owners of ships, says Mr. Parsons, ought to be able to sell their ships though at sea and employed in making voyages, and the rule which he lays down is in substance and effect that a bon a fide sale, on consideration, with whatever transfer of papers and of registry can be made, is valid if possession be taken by the purchaser as soon as is practicable by reasonable endeavor, however long it may be before such possession is or can be taken; that such a sale does not merely give an inchoate right to be completed by possession, as the whole property in the ship passes to the purchaser, and the sale operates as a complete transfer thereof, vesting the property in the purchaser, liable only to be divested by his laches in taking possession. Such a purchase, he insists, is valid; and he adds, as a second proposition, that the purchaser is not bound to go or send to a distant port to take possession, but may safely wait the arrival of the vessel in her home port. Sales of ships at sea and goods to arrive have been upheld by the courts of that State from the earliest period of her judicial history, as appears by an unbroken series of decisions commencing early in the present century. Delivery in such a case being impossible, it is not required, and it is upon that ground that the title of the purchaser is held to be valid unless he is guilty of laches in taking possession of the ship when she returns. His title is not protected upon the ground that the ship is a ship of the State, but solely upon the ground that a delivery being impossible it is not required. When a ship is abroad, says Abbott, in his valuable work on shipping, a perfect transfer of the ship may, at the common law, be made by assignment of the bill of sale, and delivery of that and the other documents relating to the shi, just as the delivery of the key of a warehouse to the buyer of goods contained therein is held to change the property of the goods, the delivery in such a case being not merely a symbol, but the mode of enabling the buyer to take actual possession as soon as circumstances will permit. Exactly the same rule is adopted by Mr. Chitty in his work on contracts, and he refers to several American decisions for its support. Symbolical delivery, says Chancellor Kent, will in many cases be sufficient and equivalent, in its legal effect, the actual delivery; and he puts the case of the sale of a ship and goods at sea as examples where the delivery must be symbolical by the delivery of the documentary proofs of the title. Superadded to the preceding authorities is another which, it would seem, ought to be regarded as decisive, as it is the unanimous opinion of this court, which was delivered by the late Chief Justice Taney. A ship at sea, said he, may be transferred to a purchaser by the delivery of a bill of sale. So also as to the cargo, by the indorsement and delivery of the bill of lading. It is hardly necessary, said that great magistrate, to refer to adjudged cases to prove a doctrine so familiar in the courts, but he did refer to twelve in number, every one of which supports the proposition. Nor was the question a new one to the court at that time, as the point had been ruled by the unanimous concurrence of the court more than twenty years before that decision, in a case where the opinion was delivered by Mr. Justice Story. He said that cases arise, even of an absolute sale of personal property, where the want of possession is not presumptive of fraud, if possession cannot, from the circumstances of the property, be within the power of the parties; and he puts as a familiar example of the doctrine the sale of a ship or goods at sea, where, as the learned judge said, possession is dispensed with upon the plain ground of its impossibility, and he adds that it is sufficient if the vendee takes possession of the property within a reasonable time after its return home.

Further argument to show that the one undivided half of the ship, which belonged to the insolvents, passed to the assignees by the laws of the State, is certainly unnecessary, as it is believed no different rule prevails anywhere, either in England or in the United States.

By the insolvent law of the State it is provided that the judge shall, by an instrument under his hand, assign and convey to the assignee all the estate, real and personal, of the debtor, except such as is by law exempt from attachment, with all his deeds, books, and papers relating thereto; and it cannot be doubted that the instrument required to be executed by the judge pursuant to that section was intended to have the effect to convey and assign to the assignee all the estate, real and personal, of every name and nature, and that proposition is confirmed by the fact that the seventieth section makes it the duty of the debtor, at the request of the assignee, to do what may be necessary and useful to enable the assignee to demand, recover, and receive all the estate and effects so assigned, especially any part thereof which is without the State.

Tested by these consider tions, it is quite clear that the effect of the assignment, when duly executed by the court of insolvency, as there regarded, was to vest in the assignees the one undivided half of the ship which previously belonged to the insolvent debtors, and the settled law of this court is that in such a case every other court in the United States, whether State or Federal, in which such a proceeding comes under revision, is bound to give it the same effect it would receive in the courts of that State.

Attempt is made to show that the rule laid down in Green v. Van Buskirk, is not applicable to the case before the court, as the ship was upon the high seas, and the suggestion is that the insolvent laws of a State do not have any extraterritorial operation, but the Constitution is operative in the State where the plaintiff resides, as well as in the State which is the domicile of the defendants; and the act of Congress passed in pursuance of the Constitution, provides that such judicial proceedings shall have such faith and credit given to them in every other court within the United States as they have, by law or usage, in the courts of the State from whence they shall be taken.

Evidently the Court of Appeals did not give the proceedings in question the same effect as they have by law and usage in the courts of the State where the statute assignment was executed by the judge of the court of insolvency, and for that reason the judgment should be reversed.

Mr. Justice BRADLEY, with whom concurred Mr. Justice FIELD, dissenting.

title: Crapo v. Kelly/Opinion of the Court


text: Talk:Crapo v. Kelly/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Crapo v. Kelly/Dissent Bradley

Mr. Justice BRADLEY, with whom concurred Mr. Justice FIELD, dissenting.

I dissent from the judgment of the court in this case. According to my view, whilst the disposition of his movable property by the owner is respected by the laws of all States everywhere, the laws of any particular State and transfers by operation of law, have no extra-territorial force which other States will concede, except by comity. This comity is never exercised to the prejudice of the citizens of the State which accords it. In the case now decided the force and effect of the judicial assignment would have been regarded as conclusive in Massachusetts had the ship, the subject of it, returned there and become subjected to its local jurisdiction. But whether conclusive in other countries, to which the ship might have gone, would have depended entirely on the exercise of comity by the governments and courts of those countries; and the reason would be that the property was on the high seas, and not within the jurisdiction of Massachusetts, when the effect of its local laws were called into exercise by the judicial assignment. I do not deny that if the property had been within Massachusetts jurisdiction when the assignment passed, the property would have been ipso facto transferred to the assignee by the laws of Massachusetts proprio vigore, and being actually transferred and vested, would have been respected the world over. But that was not this case.

I think the case comes clearly within the operation of the three fundamental rules or axioms laid down by Huber in his Praelectiones, which constitute the groundwork of Justice Story's Treatise on the Conflict of Laws. 'The first is, that the laws of every empire have force only within the limits of its own government, and bind all who are subjects thereof, but not beyond those limits. The second is, that all persons who are found within the limits of a government, whether their residence is permanent or temporary, are to be deemed subjects thereof. The third is, that the rulers of every empire, from comity, admit that the laws of every people, in force within its own limits, ought to have the same force everywhere, so far as they do not prejudice the powers or rights of other governments or of their citizens.'

And whilst in many particulars the vessels, especially the public vessels, of a country will be regarded as carrying with them the jurisdiction of that country, I cannot concede that this fiction (for it is only a fictio uris) can be extended to such a case as this. When it does apply it applies wherever the ship may be, whether on the high seas or within the limits of a foreign country. It would apply to a ship in New York harbor as well as to a ship on the high seas. But whether that rule can be applied at all, as between the different States of the Union, to vessels belonging to citizens of the United States, which are properly vessels of the United States, and not of particular States, need not be decided in this case.

title: Crapo v. Kelly/Dissent Bradley


text:
Page:Shrinking the Commons.djvu/16

, and are irrevocable provided the stated conditions are met.” This guarantee makes explicit a promise of permanence that has always been implicit in the peer-production model: it “assur[es]. . . developers that their work could never be taken away from them,” but will remain in the commons in perpetuity. It is precisely this assurance that the Copyright Act’s termination provisions may place in doubt.

A GPL variant used for some FOSS works, the GNU Lesser General Public License (“LGPL”), incorporates most of the provisions of the GPL. The key difference is that the LGPL relaxes the GPL’s copyleft condition as applied to application programs dynamically linked to LGPL-licensed library code. This waiver from the GPL’s strict copyleft condition is believed to encourage the commercial use of LGPL-licensed content.

title: Page:Shrinking the Commons.djvu/16


text: Talk:Crapo v. Kelly/Dissent Bradley

title: Talk:Crapo v. Kelly/Dissent Bradley


text: St Joseph Township v. Rogers

title: St Joseph Township v. Rogers


text: Talk:St Joseph Township v. Rogers

title: Talk:St Joseph Township v. Rogers


text:
St Joseph Township v. Rogers/Opinion of the Court

ERROR to the Circuit Court for the Southern District of Illinois.

Rogers brought assumpsit in the court below against St. Joseph Township, Champagne County, Illinois, to recover interest on certain railroad bonds alleged to have been issued by said township. The township set up that the bonds were not properly issued, and void.

On the 28th of February, 1867, the legislature of Illinois passed 'an act to amend the articles of association of the Danville, Urbana, Bloomington, and Pekin Railroad Company, and to extend the powers of and confer a charter upon the same.' In its material parts the act read thus:

'SECTION 12. To further aid in the construction of said road by said company, any incorporated town or townships, along the route of said road, may subscribe to the capital stock of said company in any sum not exceeding $250,000.

'SECTION 13. No such subscription shall be made until the question has been submitted to the legal voters of such incorporation, town or township in which the subscription is proposed to be made. And the clerk of each of said towns or townships is hereby required, upon the presentation of a petition signed by at least ten citizens who are legal voters, to post up notices, &c., notifying the legal voters of such town or township to meet at the usual place of holding elections in such town or township, &c., for the purpose of voting for or against such subscription, Provided, that where elections may have already been held, and a majority of the legal voters of any township or incorporated town were in favor of a subscription to said railroad, then, and in that case, no other election need be had; and the amount so voted for shall be subscribed as in this act provided; and such elections are hereby declared to be legal and valid, as though this act had been in force at the time thereof; and all the provisions hereof had been complied with.

'SECTION 14. If it shall appear that a majority of all the legal voters of such towns or townships, voting at such election, have voted 'For Subscription,' it shall be the duty of the president of the board of trustees, or other chief executive officer, if in incorporated towns, and of the supervisor in townships, to subscribe to the capital stock of said railroad company, in the name of such town or township, the amount so voted to be subscribed, and to receive from said company the proper certificates therefor. He shall also execute to said cempany, in the name of such town or townships, bonds bearing interest at ten per cent. per annum, which bonds shall run for a term of not more than twenty years, and the interest on the same shall be made payable annually; and which bonds shall be signed by such president, executive officer, or supervisor, and be attested by the clerk of the town or township in whose name the bonds are issued, and it shall be his duty to make out a record of the issuing of said bonds. Said bonds shall be delivered to the president or secretary of said company, for the use of said company. And when any city or county shall hereafter vote to make subscription, as aforesaid, the chairman of the board of supervisors of such county and the mayor of such city shall be required to subscribe to the capital stock of said company the amount so voted.

'SECTION 15. It shall be the duty of the clerk of any such town or township in which a vote shall be given in favor of subscription, within ten days thereafter, to transmit to the county clerk of their respective counties a transcript or statement of the vote given, and the amount so voted to be subscribed, and the rate of interest to be paid, Provided that where elections may have been held as aforesaid, it shall be the duty of the town clerks to file with the county clerks of their respective counties, within ten days after the issuing of said bonds, certificates of the votes of their towns, the amount of stock voted to be subscribed, the amount of bonds issued, and the rate of interest payable thereon.'

On the 25th of February, 1869, the same legislature passed an act entitled 'An act to amend articles of association of the Danville, Urbana, Bloomington, and Pekin Railroad Company, and to extend the powers of and confer a charter upon the same.' It was thus:

'WHEREAS, certain township officers along the line and through which the Danville, Urbana, Bloomington, and Pekin Railroad passes, have failed to keep a full and perfect record of elections called and held, and township clerks have failed to file with the county clerk, certificates, as required by section fifteen of the amended articles of association of said railroad, therefore,

'SECTION 1. Be it enacted, where such informalities and neglect may have occurred, and bonds have been issued to aid in the construction of said railroad, that no such neglect or omission on the part of township officers, shall in any way invalidate or impair the collection of said bonds, both principal and interest, as they may respectively fall due,' &c.

So far as to the legislation in the case.

On the trial the plaintiff gave in evidence different bonds, dated October 1st, 1867, issued by the supervisor and clerk of the township, purporting that the township acknowledged itself to owe so much money, which it promised to pay the bearer, with interest, at ten per centum per annum, yearly on the 1st of October.

The bond recited that it was issued by virtue of a law of the State of Illinois, entitled:

"An act to amend the articles of association of the Danville, Urbana, Bloomington, and Pekin Railroad Company, and to extend the powers of and confer a charter upon the same,' approved February 28th, 1867, and in accordance with the vote of the electors of said township at the special election held August fourteenth, 1866, in accordance with said act.'

On the other hand evidence was given by the township, tending to show that the election held for the purpose of deciding whether the township would subscribe stock, was held on the fourth of August, 1866, and, of course, before the passage of the act of February 28th, 1867, incorporating the company, and that at the time of the election there were three hundred legal voters in St. Joseph Township, of whom only seventy-five persons voted at the election; a majority of the seventy-five only voting in favor of the issuing of the bonds; that no poll-book or record of any kind was made or kept of the election, and that no record or transcript of the proceedings at it was ever transmitted to the county clerk.

The plaintiff in reply relied on the recitals in his bonds, on the fourteenth section of the act, and on the amendatory or curative act.

The question of course was, whether under the two acts above quoted, and the facts of the case, the bonds were valid.

'1st. The election held in August, 1866, as declared in the evidence, was validated by the act of February 28th, 1867, so as to authorize the defendant to subscribe for stock in the Danville, Urbana, Bloomington, and Pekin Railroad, and to issue the bonds in question; and when the stock was subscribed and the bonds issued, the bonds are binding on the defendant in the hands of a bon a fide holder.

'2d. The recitals in the bond estop the defendant from denying the fact of a valid election as against a bon a fide holder of the bonds or coupons attached thereto.'

Verdict and judgment having gone accordingly, the township brought the case here.

Messrs. William Lawrence and C. B. Smith, for the plaintiff in error:

Negotiable bonds issued by a municipal corporation, without any authority of law, are void even in the hands of an innocent purchaser. This all will admit.

2. A statute which authorizes township officers to issue bonds only when an election 'may have already been held, and a majority of the legal voters of the township were in favor' thereof, does not authorize the issue of bonds when less than a 'majority of the legal voters' were in favor thereof, although there were 'a majority of all the legal voters voting at such election.'

If bonds are issued in such case they are issued without authority of law, and are void even in the hands of a bon a fide holder.

The act of February 28th, 1867, confers power on incorporated townships in two classes of cases.

In one, the power is given to be exercised after the question 'has been submitted to the legal voters of the township,' and when 'it shall appear that a majority of all the legal voters of such township, voting at such election,' have voted therefor, &c.

In the other class-the class provided for by the proviso-no future vote is to be had, but townships are authorized to issue bonds only in cases 'where elections may have already been held (without authority of law before the statute was passed), and (only in those cases when) a majority of the legal voters of any township were in favor of a subscription.' This class is sui generis.

The bonds now in controversy recite that they were issued under this statute, 'and in accordance with the vote of the electors of said township, at the special election, held August 14th, 1866, in accordance with said act.' This, of course, was prior to the date of the act, and the bonds now in controversy belong to the second class.

The charge held that a majority of those voting, though those voting were a minority of the legal voters of the township, was sufficient if they voted in favor of bonds to authorize their issue.

This we deny, and insist that a majority of all the legal voters of the township was requisite, because:

1. The language of the proviso to section fourteen, of the act of February 28th, 1867, upon every principle of interpretation clearly so requires. There is no room, therefore, for construction.

2. There is a manifest reason why the legislature would, in this class of cases, require a majority of all the voters, since the vote, when had, was unauthorized, and voters had no motive to attend and indicate their wishes.

3. The language employed as to elections to be held after the statute was passed, when contrasted with that as to past elections, clearly indicates that the legislature intended in one class, as the statute says, to require only 'a majority of all the legal voters voting at such election,' while in the other, as the statute declares, 'a majority of (all) the legal voters of the township' is requisite.

Nor can the opening language of the fourteenth section apply to the case provided for by the proviso to the thirteenth, and cure an omission to comply with its directions in the case for which it provides. It refers, of course, to that part of the section prior to the proviso. Otherwise we have two contradictory enactments for the same case.

4. Where a legislative act confers authority on a municipal corporation to issue negotiable bonds only in cases where a past fact exists, a false recital of the existence of such fact in bonds issued neither estops the corporation from denying it, nor raises a presumption of its existence, even in favor of an innocent holder of such bonds, nor excuses him from the duty of ascertaining if such fact exists.

The false recital of such fact cannot make applicable and operative a legis ative act otherwise inapplicable and inoperative. The charge to the jury as made in the court below goes much further than to assume that if a majority of those voting at an election voted in favor of bonds, then bonds issued would be valid in the hands of an innocent holder. The charge was given on evidence tending to show that no vote was taken on the question of issuing the bonds now in controversy, and certainly none on the 14th of August, 1866, the date recited in the bonds. Yet the charge was that 'The recitals in the bonds estop the defendant from denying the fact of a valid election as against a bon a fide holder of the bonds or coupons attached thereto.' The effect of this is that if a minority vote of all the electors of the township, or if no vote at all was had, bonds issued reciting a vote are valid in the hands of a bon a fide holder. But this, as has been shown, cannot be so, if the want of a vote, or the want of the requisite majority vote, goes to the question of power to issue the bonds, as it does in this case.

There is not much difficulty in distinguishing between negotiable securities executed ultra vires, and those issued within the power of municipal corporations.

The cases on this subject fall within two classes:

One class is where a power is given to a corporation in praesenti, but the power is to be exercised 'on certain conditions,' as it is said in Knox County v. Aspinwall; or as it is elsewhere expressed, where there are 'qualifications coupled with the grant of power.' There is a large class of such cases, but they relate to the question of the regularity of the exercise of power, and of votes taken, &c. Here it has been held by some courts, and denied by others, that when bonds are issued reciting the proper vote, or even without the recital, but when a vote has in fact been had, that bon a fide purchasers of bonds have a right to presume that the corporation has regularly complied with 'the conditions,' because this is a fact within their peculiar knowledge, and on grounds of justice the corporation is estopped from denying it, and upon the principle that they may not take advantage of their own wrong. But in this class 'the conditions' to be performed are all subsequent to the grant of power, mere qualifications coupled with the grant, and none of them hold that where the power is by law made dependent on a vote of electors, and no vote, or only a minority vote, is had, that a recital in the bonds can supply the want of power to issue them.

But there is another class of cases where there is a total absence of any power to issue bonds by a municipal corporation. One of these is where a power is given only when a past fact happens to exist, as the foundation of the power. If there be so foundation on which the power can rest, it cannot exist. Here there are no 'certain conditions' which accompany the power to be performed. Here there are no 'qualifications coupled with the grant of power,' for no power has ever been granted, and none ever existed under 'any circumstances,' because as the power is only to be given in case a certain past fact exist, the non-existence of the fact carries with it the non-existence of the power.

Now, in this class of cases, the fact on which the power depends is not 'peculiarly within the knowledge of the corporation,' and there can be no estoppel, and in such case there is no presumption that officers have regularly performed any duty, because it is not a question of official duty to be performed, but a question of the existence of a past fact, which, in the case now under consideration, was a voluntary, unofficial, unauthorized act. Such facts can be as readily ascertained by bondholders as by corporate authorities. There is no question in such case either as to the directory character of the provisions of the statute, for the essential fact on which the power depends for its existence is past, not in futuro, and is vital to the power itself.

The case now under consideration falls within this class.

In Gould v. Town of Sterling, it was held that where a town had issued negotiable bonds, which could only be issued when the written assent of two-thirds of the resident persons taxed in the town had been obtained and filed in the county clerk's office, the bonds issued without such assent were invalid; and that the purchaser of them could not rely upon the recital in the bonds that such assent had been obtained: and Cooley in his Constitutional Limitations, in commenting on this and other cases, says:

'The doctrine in the case of Gould v. Town of Sterling appears to us to be sound, and that wherever a want of power exists a purchaser of the securities is chargeable with notice of it, if the defect is disclosed by the corporate records, or as in that case by other records where the power is required to be shown.'

5. A statute which attempts to create a municipal debt where none existed before, as by attempting to validate void bonds, is unconstitutional and void.

This principle, and the application of it to this case, are perhaps sufficiently shown in what has already been said.

The curative act of February 25th, 1869, in fact cannot be construed as applicable to the bonds now in controversy. Its preamble relates more especially to the omission to 'keep a full and perfect record of electors,' and 'to file with the county clerk certificates as required by section fifteen of' the act of February 28th, 1867. It enacts that if such informality and neglect may have occurred they shall not invalidate bonds. But if it can apply to the proviso of section fifteen of the act of 1867, and the duty of town clerks to file certificates of votes had prior to the act, so far as it attempts to give validity to what was invalid before, it is an attempt by legislative act to create a debt.

6. Bonds issued by municipal authorities reciting a vote on the 14th of August, cannot be sustained on a vote taken on the 4th of August, when the law under which they are issued requires a vote of electors to authorize their issue.

There is evidence tending to show that a vote was had August 4th, but no evidence tending to show there was any vote August 14th. There was no vote August 14th. Now if the vote taken August 4th authorized any bonds to be issued, it is fair to presume they were issued. On that hypothesis the power existed, and could be used to issue bonds reciting a vote of that date. Nothing in the record shows bonds were not so issued.

7. The fifth section of the ninth article of the constitution of Illinois, of 1848, provides that:'The corporate authorities of counties, townships, school districts, cities, towns, and villages, may be vested with power to assess and collect taxes for corporate purposes; such tax to be uniform in respect to persons and property within the jurisdiction of the body imposing the same.'

In Howard v. St. Clair and M. L. and D. Company, it was held that this section

'Was to be construed as a limitation upon the power of the legislature to delegate the right of corporate or local taxation to any other than the corporate or local authorities, and that by the phrase 'corporate authorities' must be understood those municipal officers who are either directly elected by the people to be taxed, or appointed in some mode to which they have given their assent.'

By the township organization law, in force in St. Joseph Township, the 'corporate authorities,' or municipal officers 'elected by the people,' were, when the vote w s had and bonds issued in this case, 'one supervisor, one town clerk, one assessor, one collector,' &c.

The township cannot be made liable on bonds issued only by the supervisor and clerk, in favor of a railroad company in payment of a subscription by such officers, made in the name of the township, to the capital stock of such company, without the consent of a majority of the qualified voters of such township, given in favor of such subscription and issue of bonds, after the enactment of a law authorizing them.

8. It is error for the judge in charging a jury in the trial of an issue of fact, to assume the existence of a disputed material fact in issue.

The record shows that one of the disputed questions of fact on the trial in the Circuit Court was whether an election was held in August, 1866, yet the judge charged the jury that 'the election held in August, 1866, as detailed in the evidence, was validated by the act of February 28th, 1867,' &c. This charge assumes a controverted fact, and instructs the jury accordingly. The objection now taken, though technical, is good, and one on which courts have reversed judgments.

The point mainly relied on by the counsel of the plaintiff in error is, that the majority of all the legal voters of the township did not vote in favor of the election. But independently of the impossibility of the supervisors knowing otherwise than by the election who all the legal voters were, it is to be observed,

I. That the counsel, in point of fact, would completely change the order of the provision as found in the act. They transfer the proviso of the thirteenth section from that section where it occurs, and apply it to the fourteenth section following, as though it read,

'The supervisor shall subscribe if it shall appear that a majority of the legal voters voting at such election have voted for subscription, provided that where elections may have already been held and a majority of the legal voters of any township were in favor of a subscription to said railroad, then and in that case no other election need be had.'

By what authority do counsel thus treat an act of the legislature?

II. That the phrase 'a majority of the legal voters of any township,' as used in the thirteenth section, is no broader than the phrase 'a majority of all the legal voters of such townships voting at such election,' used in section fourteen, but the latter expression only states more fully what the former implies. This appears in various ways.

1st. It is apparent from the provisions of section fifteen of the act which required the town clerks to file with the county clerks 'certificates of the votes of their towns.' If a majority of all the voters residing in the townships were necessary, whether voting or not, the certificate of votes cast at the election would be valueless without some provision for ascertaining the number of actual legal voters in the township.

2d. Phraseology, almost identical with that of this statute, occurs in section five, article seven, of the constitution of the State of Illinois, which forbids the removal of a county seat 'until the point to which it is proposed to be removed shall be fixed by law, and a majority of the voters of the county shall have voted in favor of its removal to such point;' yet the Supreme Court of Illinois, in construing this section and the phrase 'voters of the county,' held

'That the voters of the county referred to were the voters who should vote at the election authorized by it. We hold, therefore, that a majority of the legal votes cast at this election is sufficient to determine the question of a relocation of the county seat.'

Similar language is used in section six of the same article of the onstitution of the State of Illinois, which, in People v. Garner, received a similar construction from the Supreme Court of the State. The same construction has been given by the Supreme Court of Tennessee.

'A majority of the voters of the county,' says the court in Louisville and Nashville Railroad v. County Court of Davidson County, 'means a majority of those who actually vote.'

It equally prevails in Missouri. In State v. Mayor of St. Joseph, an act of the legislature required a proposition to create a city debt to be submitted 'to a vote of the qualified voters of said city,' and two-thirds of such qualified voters to sanction the same, and an election had been held at which three hundred and thirty-six votes were for and fifty-eight against the proposition; but the mayor declined to sign the bond, because he was in doubt whether the matter was to be determined by two-thirds of all the votes polled at the special election called to vote on the question, or by two-thirds of all the voters resident in the city absolutely, whether voting or not. The court ordered a peremptory mandamus, and in the opinion said:

'We think it was sufficient that two-thirds of all the qualified voters who voted at the special election authorized for the express purpose of determining that question on public notice duly given, voted in favor of the proposition. This was the mode provided by law for ascertaining the sense of the qualified voters of the city upon that question. There would appear to be no other practicable way in which the matter could be determined.'

These decisions, and none contrary can be found, over throw the main defence interposed to the collection of the bonds.

III. The fact as to whether an election had been held, and a majority of the voters were in favor of subscription, was by the fourteenth section to be passed upon and decided by the supervisor.

'If it shall appear,' says that section. Appear to whom? Evidently to the officer or officers upon whom the statute imposed the duty of subscribing for the stock and executing the bonds. If it appeared to the supervisor of the township that an election had been held, and a majority of the legal voters were in favor of subscription to the railroad, then he had to act on behalf of the town. Some one had to decide when it had become his duty, and no one else-no other officer-was authorized to determine this for him. The supervisor not being authorized or required to execute the bonds until it should 'appear' that a majority had voted for subscription, it was proper that he should find and recite in the bond the fact that must appear to him before he could legally act. Such finding and recital on the bond of his conclusion would conclude the township for which he was authorized to act, as well as himself, as to whether the required majority had voted.

'A statute, in providing that county bonds should not be delivered by the commissioners until a sufficient sum had been provided by stock subscriptions, or otherwise, to complete a specified railroad, and imposing upon them the duty of delivering the bonds, when said provision has been made, without indicating any person or tribunal to determine that fact, necessarily delegates that power to the commissioners, and, if delivered improvidently, the bonds will not be invalidated.'

IV. The act of February 28th, 1867, validated the election and cured any irregularities in holding it.

V. The issue of township bonds could be authorized by the legislature without the vote of the electors of the township.

[This point was largely examined on the constitution and laws of Illinois.]

VI. The plaintiff in error is estopped from attempting to impeach the validity of the bonds, not only by the circumstances under which they were issued, and the act on of the officers and citizens of the township, but by the recitals in the bonds.

The second instruction does not assert that the plaintiff in error is estopped from showing that no election was held, but from denying the fact of a valid election. In the cases where bonds have been held by this or other courts void, an election being required by the statute authorizing their issue, no election was held, or the election was as to issuing bonds to a different corporation from the one to which they were issued, as in Marsh v. Fulton County, which was no election, or where the power to issue the bonds was denied or prohibited, and, therefore, any election illegal. The instruction presents the proposition that the recitals in the bond protect the bon a fide holder for value, against irregularities or erroneous conclusions of the officers in regard to the election held, which might impeach the bonds in the hands of parties, with notice. Whether the word 'valid' intends this qualification or not, the authorities fully sustain the instruction.

VII. The objection that the election was held on the 4th, instead of the 14th, as recited in the bond, seems sufficiently answered by referring to the law. It was immaterial on what day the election was held, and it was not necessary to state it in the bond. It is one of the facts which the recital should make conclusive.

Mr. Justice CLIFFORD delivered the opinion of the court.

Bonds, payable to bearer, issued by a municipal corporation to aid in the construction of a railroad, if issued in pursuance of a power conferred by the legislature, are valid commercial instruments; but if issued by such a corporation which possessed no power from the legislature to grant such aid, they are invalid, even in the hands of innocent holders.

Such a power is frequently conferred to be exercised in a special manner, or subject to certain regulations, conditions, or qualifications, but if it appears that the bonds issued show by their recitals that the power was exercised in the manner required by the legislature, and that the bonds were issued in conformity with those regulations and pursuant to those conditions and qualifications, proof that any, or all, of those recitals are incorrect will not constitute a defence to the corporation in a suit on the bonds or coupons, if it appears that it was the sole province of the municipal officers who executed the bonds to decide whether or not there had been an antecedent compliance with the regulation, condition, or qualification which it is alleged was not fulfilled.

On the 28th of February, 1867, the legislature amended the articles of association of the Danville, Urbana, Bloomington and Pekin Railroad Company, and enacted that any incorporated town or township, in counties acting under the township organization law, along the route of said railroad, may subscribe to the capital stock of said company in any sum not exceeding $250,000. No such subscription, however, it was enacted shall be made until the question has been submitted to the legal voters of such town or township in which the subscription is proposed to be made. Regulations are also enacted for taking the sense of the legal voters upon such a proposition, which provide that the clerk of the town or township, upon the presentation to him of a petition stating the amount proposed to be subscribed, signed by at least ten citizens who are legal voters and taxpayers therein, shall post up notices in at least three public places in the municipality, not less than thirty days before the day of holding such election, notifying the legal voters thereof to meet at the usual place of h lding elections, or some other convenient place named in the notice, for the purpose of voting for or against such subscription. Prior to the passage of that act, however, an election was held in that township to determine whether the municipality would subscribe $25,000 to the capital stock of that railroad company, and the proofs show that a majority of all the legal voters of the township voting at the election voted for the subscription sixty-two votes being cast in favor of the subscription and seventeen against the proposition. Pursuant to the vote at that election the supervisor of the township subscribed, in the name of the municipality, $25,000 to the capital stock of that railroad company, and executed, in the name of the township, the bonds held by the plaintiff, bearing interest at ten per cent. per annum, payable in ten years from date, which bonds were signed by the party issuing the same as such supervisor, and were attested by the clerk of the township

Objection is made to the preliminary proceedings because the election approving the subscription was held before the act was passed giving such authority to such municipalities, but two answers are made to that objection, either of which is decisive:

1. By the act conferring that authority it is provided that where elections may have already been held, and a majority of the legal voters of the township were in favor of a subscription to said railroad, then and in that case no other election need be had, and the amount so voted for shall be subscribed as in the act is provided; and the provision is that such elections are legal and valid as if the act had been in force at the time thereof, and that all the provisions had been fulfilled.

2. Because the legislature passed a subsequent act declaring such subscriptions legal and obligatory. Some of the township officers, it seems, failed to keep a full and perfect record of elections called and held to authorize such subscriptions, and that the clerks of the townships failed in some instances to file the necessary certificate with the county clerk, as required by the fifteenth section of the prior act. Omissions and defects of the kind becoming known, the legislature, on the 25th of February, 1869, enacted that where such informalities and neglect may have occurred and bonds have been issued, or may hereafter be issued, to aid in the construction of said railroad, that no such neglect or omission shall in any way invalidate or impair the collection of said bonds, principal or interest, as they may respectively fall due, and that all assessments that are now made for the payment of the principal or interest are hereby legalized, and the township collectors and county treasurers are hereby authorized and empowered to enforce the collection and payment of said tax as is now provided by law for the collection of all other taxes.

Bonds to the amount of the subscription were accordingly issued, bearing date October 1st, 1867, signed by the supervisor and countersigned by the clerk, and each bond contains the recital that it is issued under and by virtue of the aforesaid law of the State, entitled an act to amend the articles of association of the said railroad company, and to extend the powers of and confer a charter upon the same, and in accordance with the vote of the electors of said township at the special election held August 14th, 1866, pursuant to said act, and pledges the faith of the township for the payment of the said principal sum and interest as stipulated in the instrument.

Evidence was introduced by the defendants showing that there is no record of the supposed election, when it is alleged that the question of the proposed subscription was submitted to the legal voters of the township, and that no such certificate as that required by the act conferring the authority to subscribe for the stock of the said company is on file in the office of the county clerk, but the plaintiff pr ved that the alleged meeting was notified, called, and held, and that sixty-two votes were given in favor of the subscription and seventeen against it, as announced at the election.

Two instructions were given by the court to the jury, to which the defendants excepted: (1.) That the election held as described in the evidence was validated by the act of the 28th of February, 1867, so as to authorize the defendants to subscribe for the stock of the railroad company and to issue the bonds in question, and that the bonds having been issued for the stock subscribed, are binding on the defendants in the hands of a bon a fide holder. (2.) That the recitals in the bonds estop the defendants from denying the fact of a valid election as against a bon a fide holder of the bonds or coupons thereto annexed.

Under the instructions of the court the jury returned a verdict for the plaintiff, and the court rendered judgment on the verdict.

Repeated decisions of the State courts have established the rule that the legislature has the constitutional right to authorize municipal corporations to subscribe for the stock of a railroad company, and to issue their bonds to aid in the construction of such an intended improvement; that the supervisors of the municipality have the power, in case such a subscription is authorized, to subscribe for the stock of the railroad company, and to call an election to ascertain the will of the legal voters in that behalf. Such corporations are created by the legislature and they derive all their powers from the source of their creation, and those powers are at all times subject to the control of the legislature. Every where the construction and repair of highways within their limits are regarded as among the usual purposes of their creation, and the expenses of accomplishing those objects are among their usual and ordinary burdens. Railways also, as matter of usage founded on experience, are so far considered by the courts as in the nature of improved highways and as indispensable to the public interest and the successful pursuit, even of local business, that the legislature may authorize the towns and counties of a State through which the railway passes, to borrow money, issue their bonds, subscribe for the stock of the company, or purchase the same to aid the railway company in constructing or completing such a public improvement. Legislation of the kind may be prohibited by a State constitution, but it is settled everywhere that such an act is not in contravention of any implied limitation of the power of a State to pass laws to promote the usual purposes of municipal corporations.

Argument to show that defective subscriptions of the kind may in all cases be ratified where the legislature could have originally conferred the power is certainly unnecessary, as the question is authoritatively settled by the decisions of the Supreme Court of the State, and of this court, in repeated instances.

Suppose that is so, still it is insisted by the defendants that the election held to ascertain whether the legal voters of the township would authorize the subscription, was irregular and a nullity: (1.) Because a majority of the legal voters of the township did not vote at the meeting notified and held for that purpose. (2.) Because the meeting was notified and held before the act was passed providing for such an election.

Responsive to th first objection, it is insisted by the plaintiff that the legislature in adopting the phrase 'a majority of the legal voters of the township,' intended to require only a majority of the legal voters of the township voting at the election notified and held to ascertain whether the proposition to subscribe for the stock of the company should be adopted or rejected, and the court is of the opinion that such is the true meaning of the enactment, as the question would necessarily be determined by a count of ballots.

Tested by these considerations, it is clear that an election was held within the meaning of the act of the legislature, and that a majority of the legal voters of the township did vote in favor of the subscription, as the proofs show that a meeting was called and held, and that the majority of the legal voters voting at the meeting, voted in favor of the proposition.

Sufficient has already been remarked to show that the second objection cannot avail the defendants, as the same act provided to the effect that if the election had already been held and a majority of the legal voters had voted in favor of the subscription, no other election need be held, and that the amount so voted shall be subscribed, as provided in the same act. Mistakes and irregularities are of frequent occurrence in municipal elections, and the State legislatures have often had occasion to pass laws to obviate such difficulties. Such laws, when they do not impair any contract or injuriously affect the rights of third persons, are never regarded as objectionable, and certainly are within the competency of the legislative authority.

Even if the legislature may be a subsequent act validate and confirm previous acts of a municipal corporation otherwise invalid, still the defendants insist that a prior legislative act will not have any such effect, which cannot be admitted, as it would be competent for the legislature to authorize a municipal corporation to make such a subscription without requiring any such preliminary election.

Concede, however, that a prior act is insufficient to dispense with the preliminary election, still the concession cannot benefit the defendants, as it is clear that the subsequent act entirely obviates all the mistakes and irregularities in the prior proceedings, as it provides that where such informalities and neglect may have occurred, and bonds have been issued, or may hereafter be issued, to aid in the construction of said railroad, no such neglect or omission on the part of township officers shall in any way invalidate or impair the collection of said bonds, principal or interest, as they may respectively fall due. Authorities to support that proposition are hardly necessary, but another answer may be given to the objection quite as satisfactory as either of the others, which is that the fourteenth section of the act makes it the duty of the supervisor who executed the bonds to determine the question whether an election was held, and whether a majority of the votes cast were in favor of the subscription, and inasmuch as he passed upon that question and subscribed for the stock and subsequently executed and delivered the bonds, it is clearly too late to question their validity where it appears, as in this case, that they are in the hands of an innocent holder.

Knox County v. Aspinwall. Non-compliance with one of the conditions was clearly shown in that case, as the notices of the election as required by law had not been given in any form, but the decision was that the question as to the sufficiency of the notice and the ascertainment of the fact whether the majority of the votes had been cast in favor of the subscription was necessarily left to the inquiry and judgment of the county board, as no other tribunal was provided for the purpose, and the court held that after the authority had been executed, the bonds issued, and they had passed into the hands of innocent holders, it was too late, even in a direct proceeding, to call the power in question, and that it was beyond all doubt too late to call the power in question to the prejudice of a bon a fide holder of the bonds in a collateral way, which is attempted to be done in the case before the court.

Exactly the same principles were applied in the case of Royal British Bank v. Turquand, in which the opinion was given by the chief justice. He said the bond sued upon in the case is allowed to be under the seal of the company and to be their deed, consequently a prima facie case is made for the plaintiff, as the defendants having executed the bond have no defence under the plea of non est factum, and consequently the onus is cast upon them of showing that the bond is unlawful and void. No illegality appears on the face of the bond or condition, which shows that the plea, in order that it may be supported, must allege facts to establish illegality, but the plea makes no charge of fraud against the plaintiff and states no facts from which fraud may be inferred. Want of authority to execute the bond, it was conceded, would be an answer to the action, but it was denied that a mere excess of authority by the directors would have that effect, unless it appeared that the plaintiff had knowledge of that fact, as the presumption would be, from what appeared on the face of the bond, that it was issued by lawful authority, and the court held that the plaintiff was entitled to recover, as he had advanced his money in good faith for the use of the company, giving credit to the representations of the directors that they had authority to execute the instrument. Dissatisfied with the judgment the defendant brought a writ of error in the Exchequer Chamber, where the case was reargued, but the court of Errors unanimously affirmed the judgment.

Viewed in any reasonable light the court is of the opinion that the plaintiff is an innocent holder for value, and that the loss, even if the supervisor failed in his duty to his constituents, cannot be cast upon the bon a fide creditors of the township.

JUDGMENT AFFIRMED.

Mr. Justice MILLER and Mr. Justice FIELD did not sit in this case.


text: Talk:St Joseph Township v. Rogers/Opinion of the Court