text: Talk:Sage v. Central Railroad Company of Iowa


text:
Sage v. Central Railroad Company of Iowa/Opinion of the Court

The Farmers' Loan and Trust Company, trustee for the bondholders secured by a mortgage of the Central Railroad Company of Iowa, whose claims amounted in the aggregate to $3,700,000, exclusive of interest, commenced a suit in the Circuit Court of the United States for the District of Iowa, Oct. 14, 1874, to foreclose the mortgage for the benefit of all parties interested in the security.

This was done at the request of a large number of the bond-holders, and after much consultation between them in regard to their common interests. After the cause had been pending for nearly a year, and at some time between Oct. 1 and Oct. 22, 1875, Russell Sage, F. Leake, James Buell, and Edwin Parsons, presented a communication to the trustee, a copy of which is as follows:--

'To the Farmers' Loan and Trust Company, Trustee, &c., First Mortgage Bondholders.

'GENTLEMEN,-We are informed by your counsel, Grant and Smith, that they will ask the court, in the foreclosure suit now pending, to enter such decree as the majority of the bondholders desire. Believing that some of the bondholders have other interests to serve than to protect the first mortgage bondholders, and that large numbers of the bondholders, from want of proper information, have been induced to sign various reguests to the court for certain forms of decree injurious to us as bondholders, and being your cestui que trust to the amount set opposite our names of the first mortgage bonds, to secure the payment of which you hold the mortgage as trustee for ourselves and others similarly situated, this is to notify you of such interest on our part, and to request you to instruct your counsel to procure the ordinary decree of foreclosure and sale; and, failing to get this from the court, to take an appeal to the Supreme Court of the United States.

'If, for any reason, you decline to give your counsel such instructions, please inform us, that we may become a party to said proceedings, and take such course as we may be advised in the matter. We understood the trust-deed to require you to procure the ordinary decree of foreclosure and sale. If the bondholders, or a majority of them, request you to purchase the mortgaged premises, and to form a new company, that it is competent for you to do so, upon such terms and conditions as a majority of the bondholders desire; but, until you do so purchase, you are to do all you reasonably can be expected to do to protect the minority as well as the majority of your cestui que trust.

'Respectfully, your obedient servants,

'RUSSELL SAGE, $100,000.

'F. LEAKE, by Russell Sage, $25,000.

'JAMES BUELL, $10,000.

'EDWIN PARSONS, $13,500.

'NEW YORK, Oct. 1, 1875.'

A term of the court commenced Oct. 11, 1875; and on the 22d of that month, the Farmers' Loan and Trust Company, the Central Railroad Company of Iowa, and all the other defendants, together with committees of various bondholders, represented by their respective attorneys, appeared in court and agreed to the form of a decree to be entered in the cause, the same having been the result of consultation and compromise among the parties in interest. At the same time the Farmers' Loan and Trust Company exhibited to the court the communication it had received from Sage and his associates, accompanied by a statement that Buell had deposited with it as trustee $10,000 of bonds secured by the mortgage, Leake, $25,000, and Sage, $100,000, and that it was ready to execute any decree which might be made by the court under the circumstances. The court thereupon, without considering the rights and interests of the various parties, entered, Oct. 22, 1875, the decree agreed upon, and then adjourned until some time in January, 1876.

Down to this time neither Sage nor any of his associates had asked to be made parties to the suit, or to be permitted to intervene in any manner for the protection of their interests, but, Dec. 16, 1875, Sage, Buell, and N. A. Cowdrey presented to the circuit judge, at St. Paul, Minn., the Iowa Circuit Court not being then in session, a petition, as follows:--

'Now comes the Farmers' Loan and Trust Company, as trustee in said cause for Russell Sage, James Buell, and N. A. Cowdrey, and plaintiff in said cause, and prays of the court that an appeal may be allowed to said plaintiff, and tenders to the court an appealbond, with a request that the same may operate as a supersedeas.' Signed, Farmers' Loan and Trust Company, by Grant and Smith, solicitors.

Upon this petition, the circuit judge entered his order, as follows:--

'In this case, an appeal is asked by the complainant so far, and only so far, as it affects the interests of Russell Sage, James Buell, and N. A. Cowdrey.

'I deny the appeal prayed for, because,--

'1. The decree in question was entered by consent of all the parties in interest.

('The term at which this decree was rendered has not yet ended, but stands adjourned until in January next; and the proper course for the parties in whose behalf an appeal is sought is for them to appear, and, if the decree is erroneously entered, or is improper, to apply to be made parties, or to have the decree corrected, or a new decree entered.)

'2. An appeal cannot be taken on behalf of certain bondholders, not parties to the record, leaving the rest of the decree unappealed from. As the trustees (complainants) do not ask for an appeal from the whole decree, I need not consider when they would be justified in a case where there are several millions of dollars of bondholders who acquiesce in the decree, to appeal at the instance of three bondholders who only claim to hold bonds to the extent of $200,000.

'3. If an appeal could be allowed, as asked for, the bond offered is insufficient, as to amount, to secure costs, damages for delay, and costs and interest on the appeal. The clerk will enter the above order of record, denying the appeal prayed for.

'(Signed) JOHN F. DILLON, Circuit Judge.

'AT CHAMBERS, ST. PAUL, Dec. 16, 1875.'

The court met pursuant to adjournment, and Jan. 11, Sage, Buell, and Cowdrey, claiming to be the owners of $200,000 of the bonds secured by the mortgage, filed their petition for leave to intervene in the suit as plaintiffs or defendants, to the end that they might have opportunity to protect the interests they had in common with the other holders of bonds, and with liberty to appeal to this court. Jan. 13, they filed a motion to set aside the decree of Oct. 22.

On the next day, Jan. 14, the cause came on for hearing upon the motion filed Jan. 13, the petition filed Jan. 11, and the petition presented to the circuit judge Dec. 16, with his order thereon. The motion to set aside the decree was denied, and as to the other petition the following order was made: -

'Upon consideration of the premises, it is now by the court ordered, that Sage, Buell, and Cowdrey be, and they are hereby, permitted to become so far parties to the suit as to prosecute, if they so elect, for the protection of their said several interests therein, and in their own names, an appeal to the Supreme Court from the decree entered herein on the twenty-second day of October, 1875; and, if said Sage, Buell, and Cowdrey desire said appeal to operate as a supersedeas, the bond for that purpose is fixed at the sum of $1,000,000, to be given in thirty days from this date; and, if so given, said appeal shall be regarded as taken and perfected on the sixteenth day of December, 1875, the said parties having then applied as aforesaid for said appeal, and having delayed the same until this time by order of the judge at chambers, as above shown; but if said appeal is not to operate as a supersedeas, the bond is fixed at the sum of $2,000.'

No bond was executed under the authority of this order, and, Feb. 16, 1876, a petition for the allowance of an appeal from the orders and decrees of Oct. 22 and Jan. 14, to operate as a supersedeas, was presented to Mr. Justice Miller, the justice of this court assigned to the eighth circuit, in which the district of Iowa is situated; and he allowed the appeal as prayed for, and accepted a supersedeas bond in the sum of $20,000. In due time the transcript of the record was filed in this court, and the appeal docketed.

The Farmers' Loan and Trust Company, represented by a joint committee of the bondholders, now move, 1. To vacate the supersedeas; and, 2. To dismiss the appeal.

1. As to the supersedeas.

In Kitchen v. Randolph, supra, 86, we held that it was not within the power of a justice of this court to grant a supersedeas on a writ of error or upon an appeal, unless the writ of error was sued out and served or the appeal taken within sixty days, Sundays exclusive, after the rendition of the judgment or decree complained of.

The decree in this case was rendered Oct. 22, 1875. At that time, the present appellants were not parties to the suit, and consequently could not appeal. The application of Dec. 16, though made in their interest, was in form by the Farmers' Loan and Trust Company. This application was denied; and properly so, because an appeal was only asked so far as it affected the interests of these appellants. The trustee represents all the bondholders; and as the decree is indivisible, it must appeal for the whole, or none. No application was then made by the appellants for leave to intervene and become parties, and consequently the court could not then have been asked to allow them an appeal as parties. Such an application was, however, made Jan. 11; and Jan. 14 they were admitted as parties for the purpose of appealing. An appeal was then allowed to them; but they did not avail themselves of it, either by giving a supersedeas bond or a bond for costs. And if they had done so, it could not have had the effect of a supersedeas, because it was not allowed until after the expiration of the sixty days. The order of the court, to the effect that if the bond should be given the appeal might be regarded as taken and perfected Dec. 16, was of no effect for the purposes of a supersedeas. While it is true that the court may enter an order in a cause nunc pro tunc, where the action asked for has been delayed by or for the convenience of the court (Perry v. Wilson, 7 Mass. 394), it is never done where the parties themselves have been at fault (Fishmongers' Company v. Robertson, 3 Man., Gr. & S. 974), or where it will work injustice.

A supersedeas is a statutory remedy. It is only obtained by a strict compliance with all the required conditions, none of which can be dispensed with. Hogan v. Ross, 11 How. 297; Railroad Co. v. Harris, 7 Wall. 575. Time is an essential element in the proceeding, and one which neither the court nor the judges can disregard. If a delay beyond the limited time occurs, the right to the remedy is gone, and the successful party holds his judgment or decree freed and discharged from this means of staying proceedings for its collection or enforcement. This is a right which he has acquired, and of which he cannot be deprived without due process of law. The court can no more give effect to a supersedeas by ordering that the appeal shall relate back to a time within the sixty days, than it can to an appeal taken after the expiration of two years, by dating it back to a time within the limitation. To make a nunc pro tunc order effectual for such purposes, it must appear that the delay was the act of the court and not of the parties, and that injustice will not be done.

A slight examination of the facts in this case will be sufficient to show that the failure to take this appeal in time is attributable entirely to the parties. They knew, more than twenty days previous to the entry of the decree, that there was a conflict of interest between them and a large majority of the bondholders, and that the trustee had been asked to have a decree entered such as those opposed to them desired. Instead of seeking to be made parties to the suit at that time, or during the first eleven days of the term and before the decree was entered, they contended themselves with a notice to the trustee and a demand upon it to procure such a decree as they required, and, if that could not be done, to appeal. This, too, when they knew that they had only $200,000 out of $3,700,000 of the secured bonds. After the decree was entered, they delayed any application to the court for leave to intervene for the protection of their own interest until after an adjournment to a remote day had taken place. Then delaying, until near the expiration of the sixty days, they caused the trustee to apply for leave to appeal, so far as their interests were affected, when it must have been apparent that such an order could not have been made. Even then they filed no application to be made parties so that they might appeal for themselves, but delayed all action in that behalf until long after the time when a supersedeas could be had as a matter of right. All this was the act of the parties, and not of the court.

It is claimed, however, that the motion filed by the appellants Jan. 13, to set aside the decree, operated to suspend the decree, and that under the authority of Brockett v. Brockett, 2 How. 238, they had until sixty days after their motion was denied to perfect an appeal and obtain a supersedeas. But there is an essential difference between that case and this. In that, the motion was made by parties to the suit. The motion was one that could be made without leave, and it was entertained. The cause was referred to a master upon this motion. Under such circumstances, the court held that the decree did not become final until the motion for rehearing was decided. Here, however, the movers were not parties to the suit. They had no right to intervene, except upon leave; and this was refused. Under such circumstances, it is clear that the decree was not suspended in whole or in part by their motion. The appellants were permitted to intervene, but only for the purpose of an appeal. It would have been within the power of the court to set aside the old decree and enter it over again; but this was refused. Leave only was granted to appeal from the decree as originally rendered.

No supersedeas can follow from the appeal allowed by Mr. Justice Miller, because that clearly took effect after the expiration of the sixty days from the date of the decree. Neither can the order of the same justice have the effect of the allowance of a supersedeas on the original appeal, because, as has already been shown, that appeal was not taken in time.

From this it follows that the motion to vacate the supersedeas must be granted.

2. As to the appeal.

The appellants, by the order of Jan. 14, became parties to the suit for the purposes of an appeal. This order, having been made at the same term in which the decree was entered, was within the power of the court; and although it does not appear whether they were admitted as plaintiffs or defendants, it was sufficient to enable them to prosecute an appeal for the protection of their interests. Under this authority their appeal has been allowed and perfected. Whether this brings up the whole of the case, or only a part, it is not necessary now to consider. It is clear that these parties have been allowed their appeal; and that the case is here to the extent that is necessary for the protection of their interests. It is their separate appeal within the rule as to the form in which a severance may be obtained, which is laid down in Masterson v. Herndon, 10 Wall. 416. The motion to dismiss the appeal is, therefore, denied.

Both the appellants and the appellees ask to have the cause advanced for a hearing, but, as only private interests are involved we see no reason why it should have preference over other suits upon the docket. This motion also is denied.

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE FIELD, dissenting.

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text: Talk:Sage v. Central Railroad Company of Iowa/Opinion of the Court


text:
Sage v. Central Railroad Company of Iowa/Dissent Miller

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE FIELD, dissenting.

I dissent from this opinion.

I think the Circuit Court, under the circumstances of the case, had a right to treat the application of appellants for appeal as having been made when they asked liberty to use the name of their trustee for that purpose; and it was rightfully allowed by the Circuit Court as of that date. It this be so, it is not denied that the bond approved by me would operate as a supersedeas.


text: Talk:Sage v. Central Railroad Company of Iowa/Dissent Miller


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Debary v. Arthur

ERROR to the Circuit Court of the United States for the Southern District of New York.

Mr. Stephen G. Clarke for the plaintiff in error.

Mr. Assistant Attorney-General Smith, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Debary v. Arthur


text: Talk:Debary v. Arthur

title: Talk:Debary v. Arthur


text:
Debary v. Arthur/Opinion of the Court

The firm of DeBary & Co. sued the collector of the port of New York to obtain the return of an amount of duties which they alleged had been illegally exacted from them. The Circuit Court, holding that the exaction of the duties complained of was legal, rendered judgment for the defendant. The plaintiffs appeal to this court.

The question arises upon the act of Congress of July 14, 1870 (16 Stat. 262).

By sect. 21 of that statute it is enacted as follows:--

'There shall be levied, collected, and paid, the following duties,' viz.:--

'On all wines imported in casks, containing not more than twenty-two per centum of alcohol, and valued at not exceeding forty cents per gallon, twenty-five cents per gallon; valued at over forty cents and not over one dollar per gallon, sixty cents per gallon; valued at over one dollar per gallon, one dollar per gallon; and, in addition thereto, twenty-five per centum ad valorem.

'On wines of all kinds, imported in bottles, and not otherwise herein provided for, the same rate per gallon as wines imported in casks; but all bottles containing one quart, or less than one quart, and more than one pint, shall be held to contain one quart; and all bottles containing one pint or less shall be held to contain one pint, and shall pay, in addition, three cents for each bottle.

'On champagne, and all other sparkling wines, in bottles, six dollars per dozen bottles, containing each not more than one quart, and more than one pint; and three dollars per dozen bottles, containing not more than one pint each, and more than one-half pint; and one dollar and fifty cents per dozen bottles, containing one-half pint each, or less; and, in bottles containing more than one quart each, shall pay, in addition to six dollars per dozen bottles, at the rate of two dollars per gallon on the quantity in excess of one quart per bottle: Provided, that any liquors containing more than twenty-two per centum of alcohol, which shall be entered under the name of wine, shall be forfeited to the United States. And provided further, that wines, brandy, and other spirituous liquors, imported in bottles, shall be packed in packages containing not less than one dozen bottles in each package; and all such bottles shall pay an additional duty of three cents for each bottle.'

The question presented by the record and arising under this statute is, What rate of duty is imposed upon 'champagne in bottles'? More specifically, Is the duty of six dollars per dozen bottles imposed upon 'champagne in bottles' in this act exhaustive and complete; or did Congress, while enacting a specific rate of duty by the dozen bottles for champagen in bottles, also impose a duty of thirty-six cents for each dozen bottles in addition to the six dollars per dozen specifically named?

The collector of the Port of New York, the defendant in this suit, answered the latter branch of this question in the affirmative. He collected upon the plaintiffs' champagne a duty of six dollars per dozen bottles (quarts), and also collected an additional duty of three cents upon each of the bottles containing the champagne.

In this, we think, he complied with the statute, both in its terms and in its spirit.

1. The language of the statute seems to require this construction. It is proved and conceded that this champagne is wine. The statute imposes duties under three heads: 1. On all wines imported in casks, of the value specified, and containing not more than twenty-two per cent of alchohol. 2. On wines of all kinds imported in bottles, not otherwise herein provided for, the same rate as upon wines imported in casks, and the bottles to pay three cents each in addition. 3. On champagne and other sparkling wines, six dollars per dozen for quart bottles, and other sums specified for smaller bottles.

After making these subjects of taxation, the section puts forth two provisos: 1st, That any liquors entered under the name of wine, containing more than twenty-two per centum of alcohol, shall be forfeited to the United States. This follows immediately after what has been before recited, and applies to all that precedes it. Any liquor entered as wine, which contains more than twenty-two per centum of alcohol, whether it is entered as wine generally, or champagne or sparkling wine, is condemned to the use of the United States. The second proviso is, that packages of wines, brandies, or other spirituous liquors, shall contain not less than one dozen bottles in each package, and all such bottles shall pay an additional duty of three cents for each bottle. Both branches of this proviso include all the liquors that have before been referred to. If still wine, or sparkling wine, brandy, or other spirituous liquors, is imported in bottles, there shall be not less than one dozen bottles in each package. This seems too plain for discussion. The section adds, and in language also embracing every kind of wine, brandy, or other spirituous liquors, that 'all such bottles shall pay an additional duty of three cents for each bottle.'

2. The tax upon the bottles is not only within the language, but it is also within the spirit and meaning, of the statute. A tax of three cents upon the bottle may seem too trifling to have been intended, where a tax of fifty cents upon the contents has already been imposed. That this is not so is apparent from the effort here made to avoid the tax, as well as from the allegation of the complaint that $5,218.68 has been thus paid by this single firm within a period of three months,-from December, 1872, to February, 1873.

Again: the customs acts from the earliest years of the government impose duties on liquors not only, but on the vessels containing them. This is not confined to any particular kind of liquor. The practice has been general and quite uniform. Act of July 4, 1789, 1 Stat. 25; June 29, 1795, 1 Stat. 411; Aug. 30, 1842, 5 Stat. 553; March 2, 1861, 12 Stat. 180; July 14, 1862, 12 Stat. 544; Feb. 8, 1875, 18 Stat. 307.

We do not see that the case is altered by the fact proved by an expert, that champagne must necessarily be imported in bottles. It is manufactured in bottles; that is to say, the process of fermentation by which the sparkling quality is communicated to the wine takes place, and must take place, after the wine is put into the bottle, and it cannot be removed from the bottle without practically destroying it. There is no reason to suppose that Congress was influenced in the least by a consideration whether a particular kind of wine could be imported in the cask, or must come in bottles. Champagne is a beverage singularly grateful to the taste, and is indulged in by those who are supposed to be able and willing to pay the tax upon it. It is an article of high luxury, and, upon the soundest principles of economy, should pay a high tax, that articles of necessity may, if possible, go untaxed. It is not strange, therefore, that in an act entitled an act to reduce internal taxation, and when the annual duties were reduced by many millions, the duty on champagne, and the packages in which it is imported, was retained at its height.

Differing from the former acts, this act provides that all wines imported in casks shall pay a prescribed duty upon the quantity, and also an ad valorem duty; while all wines in bottle pay a duty on the quantity and on the bottle.

We cannot recognize the argument that Congress, knowing that champagne, when imported, must come in bottles, considered the bottle a component part of the article, and no more intended its taxation than the cask in which brandy is imported. If Congress had used such language as declared an imposition of six dollars on a dozen bottles of champagne and then stopped, there might have been plausibility in the comparison. But when it imposes a duty 'on brandy and other spirits manufactured from grain, of two dollars per gallon,' and then stops, but taxes champagne in bottles, and declares in words that each bottle shall also be taxed, the argument is at an end. The authorities cited on this branch of the case are all within the principles we have laid down. We find nothing in them in conflict with these positions.

Nor do we attach importance to the manner in which the paragraph of the statute we are considering is divided. Wines, and apparently the entire class of wines, is the subject of this paragraph. Whiskey of domestic manufacture, spirituous liquors of whatever character, imported from other countries, are elsewhere taxed. Here Congress was giving its attention to the subject of wines. It intended to include as subjects of taxation wine of every character, and whether imported in casks or bottles. Duties were imposed upon it in each form as prescribed, unless it contained more than twenty-two per centum of alcohol, in which case it was declared to be forfeited. Whether the provision for taxing the bottle should be found in one place or another, we do not consider very material. Is it there, is the question. We find the duty on the bottle plainly laid in two different parts of the paragraph, and we are all of the opinion that it applies to champagne as well as to other wines.

Judgment affirmed.

title: Debary v. Arthur/Opinion of the Court


text: Talk:Debary v. Arthur/Opinion of the Court


text:
Osterberg v. Union Trust Company

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The Rockford, Rock Island, and St. Louis Railroad Company issued certain bonds secured by its mortgages to the Union Trust Company, the trustee of the bondholders. The trustee filed its bill to foreclose the mortgages, June 11, 1874, in the court below; and on the 29th of the following October a receiver was appointed to take charge of the money, real and personal assets of the company, and all its rights and property, with power to exercise its franchises, and, if need be, to sell, transfer, and convey, under the direction of the court, the whole or any part of the property; and it was further ordered, that the company and Lynde and Cable, or whoever may have possession thereof, do assign and deliver to the receiver the property, and all equitable interests, things in action, and other effects belonging to or held in trust for the company, or in which it had any beneficial interest, right, or title, at the time of filing the bill. The deed executed by the company pursuant to that order transfers to the receiver 'all and every the estate, real and personal, chattels real, moneys, outstanding debts, things in action, equitable interests, property, and effects whatsoever and wheresoever, of or belonging or due to, or held in trust for, the said railroad company, or in which it had any interest, right, or title, at the time of filing the bill of complaint.'

The receiver took possession of the property, and operated the road. On July 11, 1875, a decree was rendered finding the amount due the bondholders, and directing the sale of the road and of certain real estate, specifically described, and of 'all rights, claims, and benefits in and to all leases, contracts, and agreements made with any parties owning any coal lands, or mineral lands, or railroad or railroads, or with any other parties for any other property, together with all and singular the tenements and appurtenances thereto belonging, and the reversions, remainders, tolls, incomes, rents, issues, and profits thereof; and also all the estates, rights, titles, and interests whatsoever, as well at law as in equity, of the said Rockford, Rock Island, and St. Louis Railroad Company, of, in, and to the same;. . . and all other property, real and personal, belonging to said Rockford, Rock Island, and St. Louis Railroad Company, and which is now in possession of said receiver, and hereinafter described or referred to; and all other property, rights, franchises, and things which shall have been acquired by purchase or otherwise, by the said receiver, during the pendency of this suit for use in connection with said railroads, and shall be at the time of the sale hereby decreed in his possession, or to which he may then be entitled.'

The master appointed by the court sold the said road, franchises, &c., Aug. 16, 1875; and, when offering it, publicly declared, 'I am ordered by the court to say, that from the proceeds of the sale will be retained a sum sufficient to provide for the taxes of 1873 and 1874.'

The appellant became the purchaser of the property for the sum of $1,320,000, and paid in cash, conformably to the order directing the sale, $200,000. On the 3d of November, 1875, the court, upon the report of the master, made a further order, directing that the appellant be let into possession on the payment of an additional sum of $350,000, and the delivery of coupons and bonds of a specified amount, he to have the earnings of the road and to pay its expenses after Nov. 1 of that year; but the court decreed, that, on the payment by the appellant of the residue of the purchase-money on or before Dec. 5, 1875, the sale should be confirmed, and that the appellant might apply to the master under the direction of the court for a deed conveying to him the property purchased at the sale. He took possession accordingly on the 9th of that month. On the twenty-eighth day of January, 1876, an order was made extending the time for the payment of the residue of the purchase-money until the 1st of April; and on May 27 of that year an order was made confirming the sale and directing a conveyance, which was carried into effect.

The receiver continued to act until July 26, 1876, when he was discharged from his trust. In his formal report of that date, he states that he had in his hands four bonds of the United States, of $1,000 each, on which he had collected interest amounting to $133.80, and the further sum of $1,395.72, which bonds and money he had received from Henry Curtis, Jr., and the sum of $2,000, which he had received from Cornelius Lynde, and that from the earnings of the road there remained in his hands the sum of $7,417.13. These moneys and the bonds were paid into the hands of the clerk of the court. The taxes on the property for 1875 were not paid by the receiver. The moneys and bonds received from Curtis and Lynde were held by them in trust, and were obtained in the following manner:--

Before the bill to foreclose was filed, several judgments had been recovered against the company, from which it desired to appeal, and Lynde and Curtis, at its instance, became security upon the appeal-bonds. For the purpose of indemnifying them, certain lands, covered by said mortgages, were conveyed to Curtis, and certain moneys, the earnings of the road, were deposited with him and Lynde before the commencement of the suit to foreclose. By the authority of the company, Curtis sold a part of said lands, and converted a part of the moneys into government bonds. Such of the lands as were not sold by him were sold under the decree by a specific description. The lands which had been sold by Curtis were not mentioned or described in the decree, or in the advertisement of sale. The judgments were reversed, or otherwise settled and disposed of; and the property thus held by Curtis and Lynde was released, and they were discharged from their trust about the month of May, 1876, whereupon they delivered to the receiver the bonds and money above mentioned, and Curtis conveyed to him the unsold lands. All the land sold by Curtis was sold before the commencement of the foreclosure suit, and the only money received by him thereafter was for rents and interest. The lands not sold by him were conveyed under the order of the court to the appellant, as the purchaser under the decree.

The appellant, upon these facts, claims that he is justly entitled at law and in equity to the bonds and moneys delivered to the receiver by Curtis and Lynde, and by him paid into court.

By the statutes of the State of Illinois all taxes are made a lien on the first day of May of each year, for that year. Assessments are made between the first day of May and the first day of July in each year. They are reviewed by the town and county boards, and reported to the State auditor for equalization on or before the tenth day of July. The State Board of Equalization meets on the second Tuesday in August, and within the first ten days of December of each year books and warrants for the collection of taxes are delivered to the collectors.

The taxes assessed upon said railroad and franchises, and property for the year 1875, amounted to the sum of $23,000 and upwards; and the appellant claims that the said sum of $7,417.13 is legally and equitably applicable in payment of said taxes.

The court below held that the money and the proceeds of the bonds should, with the other funds in court, be distributed among the creditors, and Osterberg appealed to this court.

Submitted on printed arguments by Mr. J. R. Doolittle for the appellant, and by Mr. C. B. Lawrence for the appellee.

MR. JUSTICE DAVIS delivered the opinion of the court.

title: Osterberg v. Union Trust Company


text: Talk:Osterberg v. Union Trust Company

title: Talk:Osterberg v. Union Trust Company


text:
Osterberg v. Union Trust Company/Opinion of the Court

We are unable to perceive that the appellant is entitled to the relief which he seeks.

1. The taxes for 1875 were, at the date of the decree, a subsisting lien upon the mortgaged property, and he had not only constructive but actual notice of its existence. It is true that the title of a purchaser at a judicial sale under a decree of foreclosure takes effect by relation to the date of the mortgage, and defeats any subsequent lien or incumbrance. A lien for taxes does not, however, stand upon the footing of an ordinary incumbrance, and is not displaced by a sale under a pre-existing judgment or decree, unless otherwise directed by statute. It attaches to the res without regard to individual ownership, and when it is enforced by sale pursuant to the statute, prescribing the mode of assessing and collecting them, the purchaser takes a valid and unimpeachable title. But if the doctrine were otherwise, and if the rule of caveat emptor had no application to this case, we are not aware of any principle which would justify withholding from the mortgagee any of the moneys derived from the sale of the mortgaged property, with a view to the application of them to satisfy such a lien. This is not a controversy between incumbrancers. It is, in effect, a proceeding by a purchaser at a judicial sale to apply a portion of his bid to the partial discharge of an incumbrance to which he admits that the property in his hands is subject. Even if the law had not imposed on the purchaser the burden of discharging it, the terms of sale, as announced by the master, clearly did so.

2. He has no rightful claim to any part of the earnings of the road whilst it remained in the possession of the receiver, nor is he in a position to question the orders of the court, as to the application of those earnings. The road would have been surrendered to him at an earlier date had he punctually complied with the terms of the sale; but the court, under the peculiar circumstances of the case, extended to him an indulgence in making the required payments. In the mean time, the road remained in the custody of the receiver, and its earnings were devoted to the payment of current expenses and other meritorious claims.

3. Nor has the appellant a right to the money and government bonds which came to the hands of the receiver from Henry Curtis and Cornelius Lynde. So soon as they were relieved from the trust upon which these persons held them, they belonged in equity to the bondholders. The purchaser could acquire no right to them, as he bought only the property which the decree directed to be sold; and it did not order the sale of this fund, nor did the master attempt to sell it. If the deed of the receiver to Osterberg is broad enough in its language to cover this fund, it is to that extent void, as he was only authorized to convey the property previously described in the decree and sold by the master at the sale.

Decree affirmed.


text: Talk:Osterberg v. Union Trust Company/Opinion of the Court


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Lovejoy v. Spafford

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

The testimony, as exhibited by the bill of exceptions, is set forth in the opinion of the court.

The court below charged the jury as follows:--

'The facts in this case are, in the main, undisputed. The plaintiffs seek to hold the defendant, Lovejoy, for the payment of two acceptances of J. B. Shaw & Co. To establish his liability, the plaintiffs must show that Lovejoy was a member of the firm of J. B. Shaw & Co., and was a joint promisor, or that, having ceased to be a member of the firm, he still remained liable for obligations made in the name of the firm, by reason of failure to give proper notice of the dissolution of the firm to the public. Had he been a member of the firm when the acceptances were given, there would be no doubt of his liability. It is material for you to decide whether credit, on the sale of the lumber at Reed's, was given to J. B. Shaw alone, or to J. B. Shaw & Co. If to Shaw alone, then Lovejoy would not be bound. From 1868 to May 12, 1870, Lovejoy was a member of the firm of J. B. Shaw & Co. This is not disputed. It also appears that, on May 12, 1870, the firm was dissolved. Plaintiff's claim, notwithstanding the dissolution, Lovejoy is liable, because the lumber was sold on the credit of the company, and no notice given them of any dissolution. If you find that the sale at Reed's was, in fact, made to the firm, and that the plaintiffs, in making such sale, gave the credit to the firm of J. B. Shaw & Co., and relied on such credit, then Lovejoy cannot escape liability unless he has given legal notice. Many interesting questions, as to what is proper notice to persons who have not been dealers with the firm which has dissolved, have arisen in this case. It is not necessary for me to go to the extent of those authorities which hold that, in cases of dissolution, in order to avoid liability on the part of retiring partners to strangers, that there must be actual notice, or public notice by advertisement in a newspaper. I do not say that these are the only kinds of proper notice that might be given. In this case, there is no evidence of any public notice; for private communications made to particular persons at the place where the firm did business, or elsewhere, is not sufficient notice to bind other persons.

'There are two questions for you to decide:--

'First, Was there such a firm as J. B. Shaw & Co., and was Lovejoy a member thereof up to May 12, 1870? This is undisputed.

'Second, Did plaintiffs, or their assignees, as in the case of the Mead draft, have reasonable knowledge or information that the firm of J. B. Shaw & Co. still existed at the time the lumber was sold? Knowledge obtained from public notoriety, and from individuals who had knowledge thereof, was sufficient to warrant the plaintiffs in such a belief. If the evidence warrants you in finding that Angell or Mead had reason to believe that the dissolution had taken place at the time of the sale, then the plaintiffs cannot recover. Now, has there been any actual notice or public notice? Without public notice or actual notice, good faith makes Lovejoy responsible, and he cannot escape if the credit was given to the firm. Angell and Mead were in possession of the property. As to the arrangement with other parties, as testified to, it is not material in this case. One partner can bind the firm in a transaction for the benefit of the firm, and the other partners would be responsible for his acts. In this case, J. B. Shaw accepted these drafts in the name of J. B. Shaw & Co.; and if the credit was given to the firm, and Lovejoy had omitted to do any thing to relieve himself from liability, then he is still responsible.'

To the following portions of this charge the defendant duly excepted, and his exception was noted, viz.:--

'If you find that the sale at Reed's was, in fact, made to the firm, and that the plaintiffs, in making such sale, gave credit to the firm of J. B. Shaw & Co., and relied on such credit, then Lovejoy cannot escape liability, unless he has given legal notice of the dissolution of the firm.

'In this case, there is no evidence of any public notice; for private communications made to particular persons at the place where the firm did business, or elsewhere, is not sufficient notice to bind other persons.

'Did the plaintiffs, or their assignees, as in the case of the Mead draft, have reasonable knowledge or information that the firm of J. B. Shaw & Co. still existed at the time the lumber was sold? Knowledge obtained from public notoriety, and from individuals who had knowledge thereof, was sufficient to warrant the plaintiffs in such a belief.'

The defendant requested the court to charge the jury as follows:--

'1. The evidence in this case shows that the firm of J. B. Shaw & Co. was dissolved, and that the defendant had withdrawn therefrom on the twelfth day of May, 1870, more than four months before the lumber was purchased from plaintiffs, or their assignees, and the bills of exchange in suit given and accepted.

'2. That, at the time said bills of exchange were given and accepted, said J. B. Shaw had no authority to accept the same in the name of the previous firm so as to bind the defendant by such acceptance.

'3. The evidence shows that none of the persons selling lumber, for which these acceptances were given, had had any dealing with J. B. Shaw & Co., during its existence, and that they were not, at the time said firm was dissolved, entitled to any notice of the dissolution.

'4. When J. B. Shaw applied to purchase the lumber, and represented that he had authority, as partner, to bind the defendant, those having the lumber to sell were bound to inquire as to the fact, whether he had such authority or not in the absence of previous dealings. And, if the fact of the dissolution of the firm was so publicly and generally known that the jury believe that a reasonable inquiry by the persons selling the lumber would have disclosed the fact of the dissolution, and that they neglected to make any reasonable inquiry, the defendant is not bound.

'5. If the jury find that the fact of the dissolution of the firm of J. B. Shaw & Co. was made known to the business men engaged in the same business as those who sold the lumber to Shaw, in the town where they resided and did business, and was so communicated as to be likely to come to their knowledge, the jury may infer that fact, if they believe it, from the evidence and circumstances.

'6. That, as the persons selling the lumber in this case had not had any dealings with the firm of J. B. Shaw & Co., during its existence, they were not justified in presuming that defendant was a member of that firm, on the statement of any one or two persons who are not shown to have ever had any dealing with that firm during its existence.

'7. That, as to persons who had never dealt with the firm of J. B. Shaw & Co., the defendant, on the dissolution of that firm, was not bound to give notice directly of such dissolution. Neither was it absolutely necessary that notice of the dissolution should have been published in any newspaper, in order to protect Lovejoy against persons who had never dealt with the firm. The jury are at liberty to consider, from the generality and extent to which knowledge of the fact of the dissolution had been spread, especially in the vicinity where the plaintiffs and their assignees lived and did business, and from the lapse of time occurring after the dissolution, whether notice of the dissolution had not reached the plaintiffs, or their assignees, or would not have been ascertained upon such inquiry as they were reasonably bound to make.

'8. If the jury believe that the purchase of lumber, by Shaw, was made for his own benefit alone, and this was known to the sellers, or there were circumstances connected with the sale from which they ought to have known this, the defendant is not bound.

'9. That the fact, that Shaw drew the acceptances in his own name, as drawer, is a circumstance which tended to show that the purchase was for his individual benefit, and that the draft, on the face of it, was for his own funds in the hands of the drawee.'

In reference to such requests of the defendant, the court charged as asked in the first and the second, with the qualification that it was true if he had given legal notice of the dissolution of the firm, and eighth requests; but as to all the other requests and every of them the court said, 'I have already stated to you all the law which I deem applicable to this case, and therefore decline to charge as requested by the defendant,' and declined to give any of said requests except the first and second as above, and eighth; and the defendant duly excepted, and his exception was noted, to the refusal of the court to give each of the requests so refused severally.

The jury retired to consider their verdict, and afterwards came into court for further instructions, in response to which the court said, 'The first proposition which I charged you was, that there is no dispute that the partnership existed in 1868 and 1869, and that it was in fact dissolved May 12, 1870. So far as Lovejoy is concerned, unless he had done something to bring public or actual notice of the dissolution to these plaintiffs or their assignors, or had given public notice of the dissolution, he would continue liable, and cannot escape, if you are satisfied credit was given to the firm.' To all that portion of the charge which follows after the words and figures 'May 12, 1870,' the defendant duly excepted, and his exception was noted.

The jury returned a verdict in favor of the plaintiffs; judgment was rendered thereon. The defendant then sued out this writ of error.

Argued by Mr. William Lockren for the plaintiff in error. Submitted on printed arguments by Mr. W. O. Bartlett for the defendants in error.

MR. JUSTICE HUNT delivered the opinion of the court.

title: Lovejoy v. Spafford


text: Talk:Lovejoy v. Spafford

title: Talk:Lovejoy v. Spafford


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Lovejoy v. Spafford/Opinion of the Court

The action was by the holder of two drafts dated Sept. 27, 1870, drawn by J. B. Shaw upon J. B. Shaw & Co., and accepted in the name of J. B. Shaw & Co. The object of the action was to charge Lovejoy as a partner. The firm of J. B. Shaw & Co. was formed on the fifteenth day of April, 1868; transacted a lumber business at Davenport, Iowa; and continued until the twelfth day of May, 1870, when it was dissolved by an instrument in writing. In fact, Lovejoy was not a member of the firm of J. B. Shaw & Co., nor was there in existence such a firm when the drafts were accepted in its name. The acceptance in the firm name was a fraud on the part of Shaw.

The questions arising upon the bill of exceptions grow out of the sufficiency of the notice of the dissolution of the firm given by the retiring member.

Formal notice was given to all those who had previously dealt with the firm. It does not appear whether there had been any change of signs, nor whether the firm had any external sign.

No evidence was given that notice of the dissolution was published in any newspaper; and it was proved that two daily papers were published in Davenport at the time of the dissolution. After that time the business was carried on in the name of J. B. Shaw alone.

Prior to the present transaction, the plaintiffs, in discounting its paper, had heard of the firm, and who were its members. They testified that they had no information of the dissolution till some time after its occurrence.

The drafts in suit were given for lumber sold by the plaintiffs and by one Mead, were drawn by Shaw, and accepted by him in the name of the firm at Read's Landing, where the lumber was sold.

There was no evidence that the firm had ever had any other transaction at Eau Claire or Read's Landing.

No evidence was given of the relative position of the places in question; but from the maps and gazetteers we learn that Eau Claire is in the interior of the State of Wisconsin, and distant several hundred miles from Davenport, in the State of Iowa. Read's Landing is not far from Eau Claire.

The case was tried by the Circuit Court, upon the theory, that to discharge a member of a firm from the claim of one who had had no dealing with it prior to its dissolution, but who knew of its existence and who were its members, it was necessary that the latter should have received actual notice of the dissolution, or that notice should have been published in a newspaper at the place of business. This doctrine was not announced in terms, but such was the result of the trial. Either of these notices was held to be sufficient; but it was held that, without one of them, the retiring member could not protect himself. In terms, the holding of the judge was, that there must be either actual notice or public notice; and it will be seen from the offers and exclusions presently to be stated, that this public notice could mean only a newspaper publication.

Thus the witness Barnard, after testifying that he had been in business at Davenport prior to May 12, 1870, until the time of the trial; that he had business relations with all the lumber dealers at that place, and knew them all; and that he knew of the dissolution when it occurred,-was then asked whether or not it was generally known at Davenport at the time the firm was dissolved that such dissolution had taken place.

To which the plaintiffs objected, on the ground that the same was incompetent and immaterial; which objection was sustained, and the defendant Lovejoy excepted, and his exception was noted.

Defendants' counsel then asked the witness: 'State whether or not it was generally known at this time along the river that this dissolution had taken place.'

To which plaintiffs made the same objections as before; and the objection was sustained, and an exception taken by defendant Lovejoy, and noted.

Defendants' counsel then asked the witness: 'Did you at or near the time of the dissolution communicate the fact that it had occurred to any persons other than the plaintiffs; and, if so, to whom, and in what manner?'

To which the plaintiffs made the same objection as before; which objection was sustained, and an exception was taken and noted for the defendant Lovejoy.

Counsel for defendant Lovejoy stated, in connection with the questions to the witness Barnard, that he did not expect to prove actual notice of the dissolution to the plaintiffs, or to the persons who sold the lumber.

John C. Spetzler was sworn as a witness in behalf of the defendant, and testified that in May, 1870, he was in the employment of J. B. Shaw & Co., in their yard at Davenport, as salesman; that the business was conducted after the dissolution by Shaw, in the name of J. B. Shaw.

The defendant proposed to prove by the witness that the dissolution, immediately upon its occurrence, was a matter of general repute and knowledge in the city of Davenport, where the firm did business, and that all lumber dealers in Davenport were informed of it.

To which plaintiff objected, on the grounds that the same was incompetent and immaterial; which objection was sustained. To which the defendant Lovejoy excepted, and his exception was noted.

Sumner W. Farnham, not a partner, was sworn on behalf of the defendant, and testified, that, in September, 1870, and before the transaction in question, he visited Eau Claire in company with J. B. Shaw; was there two or three days, and called on the lumber dealers of that place. The witness was then asked whether on that occasion he or Shaw gave any notice to the lumber dealers at Eau Claire of the dissolution of the firm of J. B. Shaw & Co. If so, to whom, and in what manner?

To which the plaintiffs objected, on the grounds that the same was incompetent and immaterial, unless the defendant proposed to prove actual notice to plaintiffs, or to those who sold the lumber, or notice by publication in a newspaper. The objection was sustained by the court; and the defendant Lovejoy excepted, and his exception was noted.

The defendant then offered to prove by this witness, that, while he and Shaw were at Eau Claire on this occasion, and before the sale of the rafts in question, the said Shaw, in the presence of the witness, notified all, or nearly all, of the lumber dealers in Eau Claire, where plaintiffs then lived and did business, and in the vicinity, that the firm of J. B. Shaw & Co. had dissolved, and that Farnham & Co. had sold out to Shaw.

To which the plaintiffs objected, on the grounds that the same was immaterial and incompetent, unless the defendant proposes to show actual notice to the plaintiffs, or to those who sold the lumber; which objection was sustained, and the defendant Lovejoy excepted, and his exception was noted.

In Pratt v. Page, 32 Vt. 11, cited as an important case, it was held, that, to entitle a plaintiff to recover in a case like the present, these facts must appear: 1. The claimant must have known at the time of making his contract that there had been a partnership. 2. That he did not then know of its dissolution. 3. That he supposed he was entering into a contract with the company when he made it. In the court below the plaintiff recovered, on the ground of want of sufficient notice of dissolution; but in the appellate court that question was not reached.

In City Bank of Brooklyn v. McChesney, 20 N. Y. 240, the bank having had previous knowledge of the existence of the firm of Dearborn & Co., of which the defendant, McChesney, was a member, discounted a note made in the firm name, but after the partnership was in fact dissolved, without knowledge or information on the part of the bank; it was held, there being no publication of dissolution, that the retiring partner was liable. The court makes no examination of the law, but adopts as the basis of its judgment the opinion of Senator Verplanck in Vernon v. Manhattan Company, 22 Wend. 183.

In that case, Senator Verplanck made use of this language: 'Now, following out this principle, how is a person, once known as a partner, to prevent that inducement to false credit to his former associates which may arise after the withdrawal of his funds, from the continued use of the credit which he assisted to obtain? How shall he entitle himself to be exempted from future liability on their account? The natural reply is, He must take all the means in his power to prevent such false credit being given. It is impossible for him to give direct notice of his withdrawal to every man who may have seen the name of his former firm, or have accidentally received its check or note. No man is held to impossibilities. But he does all he can do in such a case by withdrawing all the exterior indications of partnership, and giving public notice of dissolution in the manner usual in the community where he resides. He may have obtained credit for his copartnership by making his own interest in it known, through the course of trade. So far as those are concerned who have had no direct intercourse with the firm, he does all that is in his power to prevent the continuance and abuse of such credit, if he uses the same sort of means to put an end to that credit which may have caused it. But there are persons with whom he or his partners may have transacted business in the copartnership name and received credit from. To such persons he has given more than a general notice of the partnership; for he has directly or indirectly ratified the acts of the house, and confirmed the credit that may have been given, either wholly or in part, upon his own account. He knows, or has it in his power to know, who are the persons with whom such dealings have been had. Public policy, then, and natural justice, alike demand that he should give personal and special notice of the withdrawal of his responsibility to every one who had before received personal and special notice, either by words or acts, of his actual responsibility and interest in the copartnership. Justice requires that the severance of the united credit should be made as notorious as was the union itself. This is accomplished by the rule that persons having had particular dealings with the firm should have particular notice of the dissolution or alteration, but that a general notice, by advertisement or otherwise, should be sufficient for those who know the firm only by general reputation.' Both the Senator and the Chancellor, and the court in McChesney's case, agree in the opinion that persons who merely take or receive for discount the paper of a firm are not to be deemed dealers with the firm, so as to be entitled to actual notice.

In Bristol v. Sprague, 8 Wend. 423, which was an action against a retired partner upon a note made after the dissolution, Nelson, J., says, 'It is well settled that one partner may bind another after dissolution of the firm, if the payee or holder of the note is not chargeable with notice, express or constructive, of the dissolution of the partnership (6 Johns. 144; 6 Cowen, 701); and that such notice must be specially communicated to those who had been customers of the firm, and as to all others by publication in some newspaper in the county, or in some other public and notorious manner.'

In Ketcham v. Clark, 7 Johns. 147, Van Ness, J. said, 'In England, it seems to be necessary that notice should be given in a particular newspaper, the 'London Gazette;' but we have no such usage or rule here. I think, however, we ought at least to go so far as to say that public notice must be given in a newspaper of the city or county where the partnership business was carried on, or in some other way public notice of the dissolution must be given. The reasonableness of it may, perhaps, become a question of fact in the particular case.'

Mr. Parsons, in his Treatise on Partnership, pp. 412, 413, gives this rule: 'In respect to persons who have had dealings with the firm, it will be necessary to show either notice to them of a dissolution or actual knowledge on their part, or at least adequate means of knowledge of the fact. As to those who have not been dealers, a retiring partner can exonerate himself from liability by publishing notice of the dissolution, or by showing knowledge of the fact.' He adds: 'A considerable lapse of time between the retirement and the contracting the new debt, would, of course, go far to show that it was not, or should not have been, contracted on the credit of the retiring partners.'

Mr. Justice Story, in his work on Partnership, says, the retiring partner 'will not be liable to mere strangers who have no knowledge of the persons who compose the firm, for the future debts and liabilities of the firm, notwithstanding his omission to give public notice of his retirement; for it cannot be truly said, in such cases, that any credit is given to the retiring partner by such strangers.' Sect. 160. In a note he discusses the doctrine as laid down by Bell and Gow, and adheres to the rule as above announced.

Mr. Watson says, that to dealers actual notice must be given; as to strangers, he says, 'An advertisement in the 'London Gazette' is the most usual and advisable method of giving notice of a dissolution to the public at large.' Watson on Part. 385.

In his Commentaries on the Law of Scotland, Professor Bell, in speaking of a notice to dealers, says, 'An obvious change of firm is notice; for it puts the creditor on his guard to inquire, as at first. So the alteration of checks or notes, or of invoices, is good notice to creditors using those checks and invoices.' As to notices to strangers, he says, 'As it is impossible to give actual notice to all the world, the law seems to be satisfied with the 'Gazette's advertisement, accompanied by a notice in the newspaper of the place of the company's trade, or such other fair means taken as may publish as widely as possible the fact of dissolution.' The 'Gazette' notice he holds to be one circumstance to be left to the jury. 2 Bell's Com. 640, 641.

In Wardwell v. Haight, 2 Barb. S.C.. 549, 552, Edmonds, J., says, 'The notice must be a reasonable one. It need not be in a newspaper. It may be in some other public and notorious manner. But whether in a newspaper or otherwise, it must, so far as strangers and persons not dealers with the firm are concerned, be public and notorious, so as to put the public on its guard.'

In view of these authorities, we are of the opinion that the rule adopted by the judge on the trial of this cause was too rigid. We think it is not an absolute, inflexible rule, that there must be a publication in a newspaper to protect a retiring partner. That is one of the circumstances contributing to or forming the general notice required. It is an important one; but it is not the only or an indispensable one. Any means that, in the language of Mr. Bell, are fair means to publish as widely as possible the fact of dissolution; or which, in the words of Judge Edmonds, are public and notorious to put the public on its guard; or, in the words of Judge Nelson, notice in any other public or notorious manner; or, in the language of Mr. Verplanck, notice by advertisement or otherwise, or by withdrawing the exterior indications of partnership and giving public notice in the manner usual in the community where he resides,-are means and circumstances proper to be considered on the question of notice.

When, therefore, the defendant proved that actual notice had been given to all those who had dealt with the firm; that all subsequent business was carried on in the name of the remaining partner only, thus making a marked change in the presentation of the firm; when the claimants received and obtained the draft at a distance of several hundred miles from the place where the firm did business, and there was no evidence that the firm had ever before transacted any business in that place,-we think the evidence offered should not have been excluded. When the defendant offered to prove that it was generally known along the Mississippi River that the dissolution had taken place, and offered evidence showing to whom, to what extent, and in what manner, notice had been given; that all the lumber dealers in Davenport were notified and knew of the dissolution; that at Eau Claire, on the occasion of the transaction in question, and before the drafts were made, notice was there given to all, or nearly all, of the lumber dealers in that place that the firm had been dissolved,-we think the evidence was competent to go before the jury.

The question is not exclusively whether the holders of the paper did in fact receive information of the dissolution. If they did, they certainly cannot recover against a retired partner. But if they had no actual notice, the question is still one of duty and diligence on the part of the withdrawing partner. If he did all that the law requires, he is exempt, although the notice did not reach the holders. The judge held peremptorily that there must be either actual notice or public notice,-in effect, that it must be through a newspaper,-and excluded other evidence tending to show a public and notorious disavowal. In this we think he erred.

He refused to admit evidence which would have sustained the fifth request to charge, that, if the notice was so generally communicated to the business men of Eau Claire as to be likely to come to the claimants' knowledge, the jury are at liberty to find such knowledge. In this we think he erred.

Without prescribing the precise rule which should have been laid down, we are of the opinion that the errors in the rulings were of so grave a character that a new trial must be ordered.

New trial ordered.


text: Talk:Lovejoy v. Spafford/Opinion of the Court


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Lake Superior and Mississippi Railroad Company v. United States

APPEALS from the Court of Claims.

The first case was argued by Mr. Walter H. Smith for the appellant, and by Mr. Solicitor-General Phillips for the appellee. The second case was argued by Mr. Thomas H. Talbot and Mr. E. R. Hoar for the appellant, and by Mr. Solicitor-General Phillips for the appellee.

MR. JUSTICE BRADLEY delivered the opinion of the court.


text: Talk:Lake Superior and Mississippi Railroad Company v. United States


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Lake Superior and Mississippi Railroad Company v. United States/Opinion of the Court

Congress, in most of the legislative acts by which it has made donations of the public lands to the States in which they lie for the purpose of aiding in the construction of railroads, has stipulated that the railroads so aided shall be public highways for the use of the government, free from all tolls or other charge for transportation of its property or troops. The question has arisen between the railroad companies owning these roads and the officers of the government, whether this reservation includes the free use of the roads alone, or transportation also. The companies claim, that, if they give to the government the free use of their roads, it is all that is required of them. The government claims that it is entitled to have free transportation on the roads, and that it is the duty of the companies to perform it; and Congress has refused compensation for such transportation, giving the companies, however, the right to appeal to the Court of Claims. That court having been applied to, and having decided adversely to the companies, they have appealed to this court, and the cases are now before us for consideration.

The manner in which the question arises is stated with sufficient accuracy by the counsel of one of the appellant companies, as follows:--

'Was the plaintiff, by reason of being a land-grant railroad, bound to transport the troops and property of the United States, free of charge, or had she a right to a reasonable compensation for such services. . ..

'The act of May 5, 1864 (13 Stat. 64), made a grant of land, in the usual form, to the State of Minnesota, to aid in the construction of plaintiff's road. That act contained the following provisions: 'And the said railroad shall be, and remain, a public highway for the use of the government of the United States, free from all toll or other charge for [upon] the transportation of any property or troops of the United States.' Sect. 5, p. 65. The seventh section provides,--

"That the United States mail shall be transported over said road, under the direction of the Post-Office Department, at such price as Congress may, by law, direct: Provided, that, until such price is fixed by law, the Postmaster-General shall have the power to determine the same."By the act of Congress of June 16, 1874 (18 Stat. 74), making appropriations for the army for the fiscal year ending June 30, 1875, it was provided, 'That no part of the money appropriated by this act shall be paid to any railroad company for the transportation of any property or troops of the United States over any railroad which, in whole or in part, was constructed by the aid of a grant of public land, on the condition that such railroad should be a public highway for the use of the government of the United States, free from toll or other charge, or upon any other conditions for the use of such road for such transportation; nor shall any allowance be made out of any money appropriated by this act for the transportation of officers of the army over any such road when on duty, and under orders, as a military officer of the United States. But nothing herein contained shall be construed as preventing any such railroad from bringing a suit in the Court of Claims for the charges for such transportation, and recovering the same, if found entitled thereto by virtue of the laws in force prior to the passage of this act.'. ..

'The case turns upon the construction that should be given to the clause in the act of 1864, which declares that 'the said railroad shall be, and remain, a public highway for the use of the government of the United States, free from all toll or other charge for [upon] the transportation of any property or troops of the United States."

And the counsel for the appellants analyzes this provision as follows:--

'This is a legislative declaration of three things: 1. That the railroad shall be a public highway. 2. That the United States shall have the right to use the same for the transportation of its troops and property. 3. That the United States, in the transportation of its troops and property over such railroad as a public highway, shall not be required to pay toll or other charge.'

It is somewhat singular that a provision apparently so simple in its terms should give rise to such a wide difference of opinion as to its true construction. The difficulty arises from the peculiar character of a railway as a means of public travel and transportation. The case of a turnpike or a canal would have furnished no difficulty whatever. Those thoroughfares are usually constructed and owned by companies who have nothing to do with transportation thereon. They merely furnish the thoroughfare. Had the provision in question related to public works of this kind, it would have been clear that the right reserved to the government would have been merely the right to use the works themselves (the turnpike or the canal) free from toll. The words 'free from all toll or other charge for the transportation of property or troops' would have referred, by necessary implication, to transportation performed by the government itself, either in its own carriages or vessels, or in carriages or vessels procured and employed at its expense. No one would imagine for a moment that the turnpike or canal company would be bound to furnish the means of transportation, much less the propelling power and labor for performing it.

Indeed, Congress has, in several instances, commencing as far back as 1824, made donations of right of way, or grants of land, for canals and turnpikes, and has made almost the exact reservation contained in the railroad grants. The first was that made May 26, 1824, authorizing the State of Indiana to connect the Wabash River with the Miami of Lake Erie; and the reservation was in these words: 'And provided further, that the said canal when completed shall be and for ever remain a public highway for the use of the government of the United States, free from any toll or charge whatever, for any property of the United States, or persons in their service in public business, passing through the same.' 4 Stat. 47.

On the 2d of March; 1827, an act, with precisely the same reservation, was passed, making a grant of land to the State of Illinois, to aid in opening a canal to unite the waters of the Illinois River with those of Lake Michigan. 4 Stat. 234. On the 2d of March, 1833, an amendment to this act was passed, which declared 'that the lands granted to the State of Illinois, by the act to which this is an amendment, may be used and disposed of by said State for the purpose of making a railroad, instead of a canal, as in said act contemplated;. . . Provided, that if a railroad is made in place of a canal, the State of Illinois shall be subject to the same duties and obligations, and the government of the United States shall be entitled to and have the same privileges on said railroad, which they would have had through the canal if it had been opened.' Evidently the only thing reserved in this case was the use of the road.

It will be observed that the last-cited act was passed in 1833, when railroads were about being introduced as means of public communication in this country. It is undoubtedly familiar to most of those whose recollection goes back to that period, that railroads were generally expected to be public highways, on which every man who could procure the proper carriages and apparatus would have the right to travel. This was the understanding in England, where they originated. The Railway Clauses Consolidation Act, passed in 1842, provided in detail for the use of railways by all persons who might choose to put carriages thereon, upon payment of the tolls demandable, subject to the provisions of the statute and the regulations of the company. Acts of 5 & 6 Vict. c. 55. And suits were sustained to compel railway companies to keep up their roads for the use of the public. King v. Severn R. Co., 2 B. & A. 646; Queen v. Grand Junction, 4 Q. B. 18; 2 Redf. sect. 249; Pierce's American Railway Law, 519. Most of the early railroad charters granted in this country were framed upon the same idea Thus the charter of the Mohawk and Hudson Railroad Company, granted by the legislature of New York in 1826 (which was one of the earliest), after giving the company power to construct the road, provided as follows:--

'And shall have power to regulate the time and manner in which goods and passengers shall be transported, taken, and carried on the same, as well as the manner in which they shall collect tolls and dues on account of transportation and carriage, and shall have power to erect and maintain toll-houses and other buildings for the accommodation of their concerns.' Laws of 1826, p. 289.

In subsequent charters, granted in 1828 and succeeding years, the intent is still more plainly expressed. Thus, in the charter of the Ithaca and Owego Railroad Company, it is provided:--

'Sect. 9. The said corporation shall have power to determine the width and dimensions of the said railroad; to regulate the time and manner in which goods and passengers shall be transported thereon; and the manner of collecting tolls for such transportation; and to erect and maintain toll-houses, &c. Sect. 11. The said corporation may demand and receive from all persons using or travelling upon said rail the following tolls; to wit, for every ton weight of goods, &c., three cents per mile for every mile the same shall pass upon the said road, and a ratable proportion for any greater or less quantity; for every pleasure-carriage, or carriage used for the conveyance of passengers, three cents per mile, in addition to the toll by weight upon the loading. Sect. 12. All persons paying the toll aforesaid may, with suitable and proper carriages, use and travel upon the said railroad, subject to such rules and regulations as the said corporation are authorized to make by the ninth section of this act.' Laws of 1828, p. 17.

Substantially the same provisions were contained in other charters granted in 1828 and 1829. Laws of 1828, pp. 197, 228, 296, 307, 403, 474; Laws of 1829, p. 252. In 1830 and subsequent years, an abbreviated formula was employed, but still apparently recognizing the possible use of the roads by the public; giving, amongst other things, express power to regulate the time and manner in which goods and passengers should be transported thereon, and power to erect toll-houses, &c. So in the early charters granted by the legislature of Massachusetts, it was usual, after granting a toll upon all passengers and property conveyed or transported upon the road, to provide that the transportation of persons and property, the construction of wheels, the form of cars and carriages, the weight of loads, &c., should be in conformity to such rules, regulations, and provisions as the directors should prescribe, and that the road might be used by any persons who should comply with such rules and regulations. This formula was continued down to 1835. See 2 Railroad Laws and Charters, pp. 41, 60, 67, 77, 95, 103, 117, 124, 132, 141, 166, 195, 215. Like provisions were inserted in various charters granted by the legislature of Maine, some as late as the year 1837; and in 1842 a general law was passed, requiring every railroad company whose road should be connected with that of another company to draw over their road the cars of such other company; and, on refusal so to do, the latter company was authorized to run its cars, with its own locomotives over such road, being subject to the general regulations thereof. See 1 id. 8, 22, 60, 63, 77, 310. Similar provisions as to the use of railroads by the public are contained in several early charters granted by the legislature of New Hampshire, coming down to a period as late as 1844. Id. 325, 335, 343, 364, 378, 411. In that year a statute was passed, entitled 'An Act to render railroad corporations public in certain cases,' &c., by one section of which it was provided, that said corporations, whenever thereto required by the legislature, should permit all persons to run locomotives and cars on their road. Id. p. 648.

In New Jersey, not only did the railroad charters contain provisions similar to those above quoted with regard to the authority of the directors to regulate the construction of carriages to be used on their roads, the weight of loads to be carried, the times of starting and the rate of speed, but expressly declared that such roads should be public highways. See Charter of Camden and Amboy Railroad Company, Feb. 4, 1830. The charter of the New Jersey Railroad, passed in 1832, distinguished between tolls for transportation in the cars of the company and those of other persons; and provided that no farmer should be required to pay any toll for the transportation of the produce of his farm to market in his own carriage, weighing not more than one ton, when the load did not exceed one thousand pounds.

The charter of the Philadelphia and Trenton Railroad Company, granted by the legislature of Pennsylvania in 1832, expressly made the road a public highway, and contained various provisions adapted to a road of that character; and no doubt similar provisions were contained in other charters granted in that State.

In the case of Boyle v. Philadelphia and Reading Railroad Company, 54 Penn. 310, decided in 1867, the Supreme Court of Pennsylvania held that the charter of the latter company made the road a public highway, on which all persons might place vehicles of transportation on conforming to the regulations of the company; and that in limiting the amount of 'tolls' demandable for transportation on the road, the legislature had reference to 'tolls' charged to other parties using the road, and not to the freights or charges for transportation which the company itself was authorized to demand when performing transportation.

In Missouri, as late as the year 1847, the legislature, when incorporating the Hannibal and St. Joseph Railroad Company, subjected it to the same restrictions and gave to it the same privileges before imposed and conferred on the Louisiana and Columbia Railroad Company, created in 1837; amongst which was the following: namely, 'that the company should have power to prescribe the kind of carriage to be used on its road, by whom, whether to be propelled by steam or other power, all cars being subject to the discretion of the company, and no person to put any carriage on the road without its permission; and the company was authorized to charge tolls and freight for the transportation of persons, commodities, or carriages on the road; and it was declared that the State and the United States should have the right, in time of war, to use said road in transportation of troops or munitions of war in preference to all other persons.' Missouri Railroad Laws, pp. 8-13. In reference to this railroad (among others), Congress, in 1852, made a grant of land to the State of Missouri, with the same reservation now under consideration, 'that the said railroads shall be and remain public highways for the use of the government of the United States,' &c. 10 Stat. 9. Read in connection with the charter of the railroad, which the rule relating to laws in pari materia requires, it is certain that, in this case at least, the reservation has relation to the use of the railroad alone, and not to the transportation service of the company.

On the other hand, in Maryland, from the first railroad charter granted in 1826,-namely, that of the Baltimore and Ohio Railroad Company,-the legislature has prohibited the use of railroads by any other company or person than the companies owning the same, except with their consent. But even this legislation is a recognition of the distinction between the railroad considered as a structure adapted to general use, and its actual use by placing vehicles and conducting transportation thereon. See Laws of Md. 1826, c. 123, sect. 18, and charters in subsequent years in the Session Laws.

It is undoubtedly true, that, in practice, railroads, as a general thing, are only operated by the companies that own them, or by those with whom they have permanent arrangements for the purpose. These companies have a practical, if not a legal, monopoly of thier use. The great expense of constructing and managing cars and motive power fit to be used on railroads as they have actually developed, the difficulty of strict compliance with the regulations adopted, and the diversified ways in which the companies could make the transportation business uncomfortable to those who might attempt to carry it on, are a most effectual security against any interference with their business as carried on by themselves. And in some of the States where railroads were originally declared public highways, the right of the public to use them has been expressly abrogated,-as in Massachusetts, for example, by the act of 1845. See Railroad Laws and Ch. 648.

But the ascertained impracticability of the general and indiscriminate public use of these great thoroughfares does not preclude their use by transportation companies having no interest in the roads themselves. Such companies, in fact, are actually engaged in conducting a vast carrying business on the principal lines of railroad throughout the country. Nor does it preclude the idea, that it may be of great importance to the government, in conducting its various operations in peace and in war, to have the free use of railroads as thoroughfares whenever it chooses to assume the conduct and management of its own transportation thereon.

Be this, however, as it may, the general course of legislation referred to sufficiently demonstrates the fact, that in the early history of railroads it was quite generally supposed that they could be public highways in fact as well as in name. This view pervaded the language of most charters granted at that period, many of which still remain in force; and the railroads constructed under them are, theoretically at least, public highways to this day. This fact affords the only explanation of much of the language used, not only in those early charters, but in many of those which have been granted since, the latter adopting, as was natural, the forms of phraseology found prepared to hand. The language referred to is only consistent with the idea that railroads were to be regarded and used as public highways. The forms of legislative expression thus adopted, and coming down from a period when they had greater practical significance than they now have, bring with them an established sense, which renders them free from all uncertainty and doubt. We know, as well as we know the sense of any phrase in the English language which has a historical meaning and application, what is meant when a railroad is spoken of in a law as a 'public highway.' We know that it refers to the immovable structure stretching across the country, graded and railed for the use of the locomotive and its train of cars.

But it is not alone in charters which contemplate the creation of railroads as public highways that we find evidence of the understood distinction between railroads as mere thoroughfares, and the operations to be carried on upon them by means of locomotives and cars. This is manifest from the fact, amongst other things, that express power is invariably given (if intended to be conferred) to the railroad company to equip its road, and to transport goods and passengers thereon and charge compensation therefor. This practice evidently springs from the conviction that a railroad company is not necessarily a transportation company, and that, to make it such, express authority must be given for that purpose, in compliance with the rule that no power is conferred upon a corporation which is not given expressly or by clear implication.

In view of the legislative history and practice referred to, it seems impossible to resist the conclusion, when we meet with a legislative declaration to the effect that a particular railroad shall be a public highway, that the meaning is, that it shall be open to the use of the public with their own vehicles; and that when Congress, in granting lands in aid of such a road, declared that the same shall be and remain a public highway for the use of the government of the United States, it only means that the government shall have the right to use the road, but not that it shall have the right to require its transportation to be performed by the railroad company. And when this right of the use of the road is granted 'free from all toll or other charge for transportation of any property or troops of the United States,' it only means, that the government shall not be subject to any toll for such use of the road. This, we think, is the natural and most obvious meaning of the language used, when viewed in the light afforded by the history of railroad legislation in this country.

This was also the interpretation put by the Executive Department of the government upon the reservation in question prior to the passage of the acts of 1864. At the breaking out of the late civil war, it became a matter of great practical importance to the railroad companies which had received grants of land subject to this restriction, whether they were or were not to receive any compensation for transporting government property and troops in their cars. It was held that they were, and that a reasonable abatement should be made for the free use of the road, to which the government was entitled. The views of the War Department were set forth in a communication from Mr. Cameron, Secretary of War, to the president of the Illinois Central Railroad Company, dated Aug. 15, 1861, in which he says, 'It has been decided by this department that the clause in your charter (9 Stat. 467, sect. 4) gives a clear right to the government of the United States to the use of your roadway, without compensation, for the transportation of its troops and its property. As a proper compensation for motive power, cars, and all other facilities incident to transportation, two cents per mile will be allowed for passenger travel, subject to a discount of thirty-three and a third per cent as due to government for charter privileges. Payment for transportation of freights, stores, munitions of war, and other public property, will be made at such reasonable rates as may be allowed railroad companies, subject, however, to the abatement of thirty-three and a third per cent, as before specified.' A movement to compel the same company to transport property for the government free of charge was made in 1865; but was reported against adversely by learned committees, after receiving from the War Department a full explanation of the reasons upon which its action had been based. See letter of Q. M. Gen. Meigs to Senator Sherman, dated Feb. 14, 1865, and the action of the Senate and House of Representatives, 2d Sess. 38th Congress, Cong. Globe, vol. lxviii. pp. 890-902, 1045, 1387-1389. The same views were fully expressed by the Attorney-General, when applied to for his opinion, in 1872. 14 Opinions, 591. In accordance with these views, settlements were made with the different companies concerned down to the passage of the act of 1874, suspending payment, as before stated.

It is not without significance, in this connection, that in other grants, when Congress intended to provide for transportation being performed by the railroad company, explicit and proper language is used for that purpose. As in the case of the Union Pacific Railroad Company, chartered by Congress July 1, 1862, where it is enacted that the company shall transmit despatches over its telegraph lines, transport mails, troops, and munitions of war, supplies, and public stores, upon its railroad, for the government, whenever required to do so by any department thereof, and that the government shall at all times have the preference in the use of the same for all the purposes aforesaid, at fair and reasonable rates of compensation, not to exceed the amount paid by private parties for the same kind of service. 12 Stat. 493. In this case compensation was provided for. In other cases the transportation was to be furnished without charge. After the discussion in 1865, before referred to, Congress made several grants of land, with the express reservation that the government property should be transported over the roads concerned at the cost, charge, and expense of the company owning and operating the same, when required by the United States so to do, using language entirely different from that under consideration in the cases now before the court. See acts of 1866 (14 Stat. 95, 237, 241, 290, 338, 549).

But suppose, in the cases under consideration, the States of Kansas and Minnesota, to which the land-grants were directly made, had themselves severally chosen to construct the railroads in question, to be operated and used by any individuals or transportation corporations who might see fit to place rolling-stock thereon upon payment of the proper tolls, would the government have had any further right than that of using the road with its own carriages free of toll? It certainly could not have the right to use the carriages of third persons placed on the road; nor, from any thing contained in the act of Congress, could it require that the State should procure and place rolling-stock on the road. All that the act reserves is the free use of the railroad. Of course this implies, also, the free use of all fixtures and appurtenances forming part of the road, and which are essential to its practical use, such as turntables, switches, d ep ots, and other necessary appendages. Lord Chancellor Cottenham, in the case of Cother v. The Midland Railway Company, 2 Phill. 473, said, 'The term 'railway,' by itself, includes all works authorized to be constructed; and, for the purpose of constructing the railway, the company are authorized to construct such stations and other works as they may think proper.' 1 Redf. on Railw., sect. 105. The 'works' referred to by the Lord Chancellor were those permanent and immovable appendages which constitute parts of the completed structure.

We are of opinion that the reservation in question secures to the government only a free use of the railroads concerned, and that it does not entitle the government to have troops or property transported by the companies over their respective roads free of charge for transporting the same.

In coming to this conclusion, we do not place any great stress upon the use of the work 'toll,' as being a word peculiarly applicable to charges for the use of a highway, as contradistinguished from the charge for transportation, which is more properly denominated 'freight;' for whilst this is undoubtedly true, it must be conceded, that, in the actual language of railroad legislation, the word 'toll' is very often used to express the charge for transportation also. Our opinion is based rather upon that marked distinction which the mind naturally makes, and which is so generally made in railroad legislation between the road as a thoroughfare and the transaction of the carrier business thereon, whether by the railroad company itself or by other persons, and the manifest intent of Congress, in the legislation under review, to reserve only the free use of the road, and not the active service of the company in transportation.

The objection that it would be inconvenient for government to provide locomotives and cars for the performance of its transportation cannot be properly urged. The government can do what it always has done, without experiencing any difficulty, employ the services of the railroad and transportation companies which have provided these accommodations. It might be very convenient for the government to have more rights than it has stipulated for; but we are on a question of construction, and on this question the usus loquendi is a far more valuable aid than the inquiry what might be desirable.

Equally untenable is the idea, that, because railways are not ordinarily used as public highways, therefore the appellation of 'public highways,' when given to them, must mean something different from what it has ever meant before, and must embrace the rolling-stock with which they are operated and used. Such a method of interpretation would set us all at sea, and would invest the courts with the power of making contracts, instead of the parties to them. It is contended by the government, that though it be not entitled to the active services of the company, but only to the use of the 'railroad,' that, at least, this term (railroad) must be regarded as including the equipment of the road as a part thereof, and that the government should be adjudged to have the free use of the locomotives and cars of the company, as well as the track. But, as suggested, we cannot see any good reason for this position. No doubt the word, as used in certain connections and in particular charters and instruments, may properly have a wider latitude of signification, so as to include the equipment and rolling-stock as accessory to the track, constituting together one incorporated mass or corpus of property as the subject-matter of the particular enactment or disposition. It is not our purpose to question the propriety of this view in the cases and for the purposes to which it may be applicable. But where, as in the laws under review, the railroad is referred to throughout in its character as a road, as a permanent structure, and designated and required to be a 'public highway,' it cannot, without doing violence to language, and disregarding the long-established usage of legislative expression, as shown in the previous part of this opinion, be extended to embrace the rolling-stock or other personal property of the railroad company.

The decrees of the Court of Claims in the several cases must be reversed, and a new decree made in favor of the respective petitioners, in conformity with the principles of this opinion; that is to say, awarding to each of them compensation for all transportation performed by them respectively of troops and property of the government (excepting the mails), subject to a fair deduction for the use of their respective railroads.

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE CLIFFORD, MR. JUSTICE SWAYNE, and MR. JUSTICE DAVIS, dissenting.


text: Talk:Lake Superior and Mississippi Railroad Company v. United States/Opinion of the Court