text:
Bors v. Preston

''Geo. H. Forster'', for plaintiff in error.

B. F. Tracy and ''Wm. C. De Witt'', for defendant in error.

This action was brought in the circuit court of the United States for the Southern district of New York. The plaintiff, Preston, is a citizen of that state, while the defendant is the consul, at the port of New York, for the kingdom of Norway and Sweden.

The object of the action is to recover damages for the alleged unlawful conversion by defendant, to his own use, of certain articles of merchandise. The answer denies the material allegations of the complaint, and, in addition, by way of counter-claim, asks judgment against the plaintiff for certain sums. To the counter-claim a replication was filed, and a trial had before a jury, which resulted in a verdict in favor of plaintiff for $7,313.10. For that amount judgment was entered against the defendant.

[Statement of Case from page 253 intentionally omitted]

Mr. George H. Forster for plaintiff in error.

Mr. B. F. Tracy for defendant in error.

[Argument of Counsel on Pages 254-255 intentionally omitted]

HARLAN, J.

The assignments of error question the jurisdiction of the circuit court, under the constitution and the laws of the United States, to hear and determine any suit whatever brought against the consul of a foreign government.

Some reference was made in argument to the fact that the defendant did not in the court below plead exemption, by virtue of his official character, from suit in a circuit court of the United States. To this it is sufficient to reply that this court must, from its own inspection of the record, determine whether a suit against a person holding the position of consul of a foreign government is excluded from the jurisdiction of the circuit courts. In cases of which the circuit courts may take cognizance only by reason of the citizenship of the parties, this court, as its decisions indicate, has, except under special circumstances declined to express any opinion upon the merits on appeal or writ of error where the record does not affirmatively show jurisdiction in the court below; this, because the courts of the Union, being courts of limited jurisdiction, the presumtion, in every stage of the cause, is that it is without their jurisdiction, unless the contrary appears from the record. Grace v. ''American Ins. Co.'' 109 U.S. 283; S.C.. 3 SUP. CT. REP. 207; Robertson v. Cease, 97 U.S. 646.

Much more, therefore, will we refuse to determine on the merits, and will reverse on the point of jurisdiction, cases where the record shows affirmatively that they are of a class which the statute excludes altogether from the cognizance of the circuit courts. If this were not so it would be in the power of the parties, by negligence or design, to invest those courts with a jurisdiction expressly denied to them. To these considerations it may be added that the exemption of the consul of a foreign government from suit in particular courts is the privilege, not of the person who happens to fill that office, but of the state or government he represents. It was so decided in Davis v. Packard, 7 Pet. 284. While practically it may be of no consequence whether original jurisdiction of suits against consuls of foreign governments is conferred upon one court of the United States rather than another, it is sufficient that the legislative branch of the government has invested particular courts with jurisdiction in the premises.

We proceed, then, to inquire whether, under the constitution and laws of the United States, a circuit court may, under any circumstances, hear and determine a suit against the consul of a foreign government. In other words, whether other courts have been invested with exclusive jurisdiction of such suits. The constitution declares that 'the judicial power of the United States shall extend * * * to all cases affecting ambassadors or other public ministers and consuls;' to controversies between citizens of a state and foreign citizens or subjects; that 'in all cases affecting ambassadors, other public ministers and consuls, * * * the supreme court shall have original jurisdiction;' and that in all other cases previously mentioned in the same clause, 'the supreme court shall have appellate jurisdiction, both as to law and fact, with such exceptions and under such regulations as the congress shall make.' The judiciary act of 1789 invested the district courts of the United States with 'jurisdiction, exclusively, of the courts of the several states, of all suits against consuls or vice-consuls,' except for offenses of a certain character; this court with 'original, but not exclusive jurisdiction of all suits * * * in which a consul or vice-consul shall be a party;' and the circuit courts with jurisdiction of civil suits in which an alien is a party. 1 St. 76-80. In this act we have an affirmance by the first congress-many of whose members participated in the convention which adopted the constitution, and were therefore conversant with the purposes of its framers-of the principle that the original jurisdiction of this court of cases in which a consul or vice-consul is a party, is not necessarily exclusive, and that the subordinate courts of the Union may be invested with jurisdiction of cases affecting such representatives of foreign governments. On a question of constitutional construction, this fact is entitled to great weight. Very early after the passage of that act the case of U.S. v. Ravara, 2 Dall. 297, was tried in the circuit court of the United States for the district of Pennsylvania, before Justices WILSON and IREDELL, of this court, and the district judge. It was an indictment against a consul for a misdemeanor of which, it was claimed, the circuit court had jurisdiction under the eleventh section of the judiciary act, giving circuit courts 'exclusive cognizance of all crimes and offenses cognizable under the authority of the United States,' except where that act 'otherwise provides, or the laws of the United States shall otherwise direct, and concurrent jurisdiction with the district courts of the crimes and offenses cognizable therein.' In behalf of the accused it was contended that this court, in virtue of the constitutional grant to it of original jurisdiction in all cases affecting consuls, had exclusive jurisdiction of the prosecution against him. Mr. Justice WILSON and the district judge concurred in overruling this objection. They were of opinion that although the constitution invested this court with original jurisdiction in cases affecting consuls, it was competent for congress to confer concurrent jurisdiction in those cases upon such inferior courts as might by law be established. Mr. Justice IREDELL dissented, upon the ground that the word 'original,' in the clause of the constitution under examination, meant exclusive. The indictment was sustained, and the defendant upon the final trial, at which Chief Justice JAY presided, was found guilty. He was subsequently pardoned on condition that he would surrender his commission and exequatur.

title: Bors v. Preston


text: Talk:Bors v. Preston

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

title: Talk:Bors v. Preston


text:
Bors v. Preston/Opinion of the Court

In U.S. v. Ortega, 11 Wheat. 467,-which was a criminal prosecution, in a circuit court of the United States, for the offense of offering personal violence to a public minister, contrary to the law of nations and the act of congress,-one of the questions certified for decision was whether the jurisdiction conferred by the constitution upon this court, in cases affecting ambassadors or other public ministers, and consuls, was not only original, but exclusive of the circuit courts. But its decision was waived and the case determined upon another ground. Of that case it was remarked by Chief Justice TANEY, in Gittings v. Crawford, Taney, Dec. 5, that an expression of opinion upon that question would not have been waived had the court regarded it as settled by previous decisions.

In Davis v. Packard, ubi supra, upon error to the court for the correction of errors of the state of New York, the precise question presented was whether, under the constitution and laws of the United States, a state court could take jurisdiction of civil suits against foreign consuls. It was determined in the negative upon the ground that, by the ninth section of the act of 1789, jurisdiction was given to the district courts of the United Siates, exclusively of the courts of the several states, of all suits against consuls and vice-consuls, except for certain offenses mentioned in the act. The jurisdiction of the state courts was denied because-and no other reason was assigned jurisdiction had been given to the district courts of the United States exclusively of the former courts,-a reason which, probably, would not have been given had the court, as then organized, supposed that the constitutional grant of original jurisdiction to this court, in all cases affecting consuls, deprived congress of power to confer concurrent original jurisdiction, in such cases, upon the subordinate courts of the Union. It is not to be supposed that the clause of the constitution giving original jurisdiction to this court, in cases affecting consuls, was overlooked, and therefore the decision in that case may be regarded as an affirmance of the constitutionality of the act of 1789, giving original jurisdiction in such cases also to district courts of the United States. And it is a significant fact that in the decision in Davis v. Packard, Chief Justice MARSHALL concurred, although he had delivered the judgments in Marbury v. Madison, 1 Cranch, 137, 1; Cohens v. Virginia, 6 Wheat. 264; and Osborn v. U.S. Bank, 9 Wheat. 738, some of the general expressions in which are not infrequently cited in support of the broad proposition that the jurisdiction of this court is made by the constitution exclusive of every other court, in all cases of which by that instrument it is given original jurisdiction. It may also be observed that of the seven justices who concurred in the judgment in Davis v. Packard, five participated in the decision of Osborn v. U.S. Bank.

In St. Luke's Hospital v. Barclay, 3 Blatchf. 259, which was a suit in equity in the circuit court of the United States for the Southern district of New York, the question was distinctly raised whether the consular character of the alien defendant exempted him from the jurisdiction of the circuit courts. The jurisdiction of the circuit court was maintained, the opinion of the court being that the jurisdiction of the district court was made by statute exclusive only of the state courts, and that under the eleventh section of the act of 1789, the defendant being an alien,-no exception being made therein as to those who were consuls,-was amenable to a suit in the circuit court brought by a citizen. Subsequently the question was reargued before Mr. Justice NELSON and the district judge, and the proposition was pressed that the defendants could not be sued except in this court or in some district court. But the former ruling was sustained.

In Graham v. Stucken, 4 Blatchf. 50, the same question was carefully considered by Mr. Justice NELSON, who again held that the constitutional grant of original jurisdiction to this court in cases affecting consuls; the legislative grant in the act of 1789 to this court of original but not exclusive jurisdiction of suits in which a consul or vice-consul is a party; and the legislative grant of jurisdiction to the district courts, exclusive of the state courts, of suits against consuls or vice-consuls,-did not prevent the circuit courts, which had jurisdiction of suits to which an alien was a party, from taking cognizance of a suit brought by a citizen against an alien, albeit the latter was at the time the consul of a foreign government.

In Gittings v. Crawford, Taney, Dec. 1, which was a suit upon a promissory note brought in the district court of the United States for Maryland, by a citizen of that state against a consul of Great Britain, the point was made in the circuit court on writ of error that by the constitution of the United States this court had exclusive jurisdiction of such cases. The former adjudications of this and other courts of the Union were there examined and the conclusion reached-and in that conclusion we concur-that as congress was not expressly prohibited from giving original jurisdiction, in cases affecting consuls, to the inferior judicial tribunals of the United States, neither public policy nor convenience would justify the court in implying such prohibition, and upon such implication pronounce the act of 1789 to be unconstitutional and void. Said Chief Justice TANEY: 'If the arrangement and classification of the subjects of jurisdiction into appellate and original, as respects the supreme court, do not exclude that tribunal from appellate power in the cases where original jurisdiction is granted, can it be right, from the same clause, to imply words of exclusion as respects other courts whose jurisdiction is not there limited or prescribed, but left for the future regulation of congress? The true rule in this case is, I think, the rule which is constantly applied to ordinary acts of legislation, in which the grant of jurisdiction over a certain subject-matter to one court does not, of itself, imply that that jurisdiction is to be exclusive. In the clause in question, there is nothing but mere affirmative words of grant, and none that import a design to exclude the subordinate jurisdiction of other courts of the United States on the same subject-matter.' Taney, Dec. 9. After alluding to the fact that the position of consul of a foreign government is sometimes filled by one of our own citizens, he observes: 'It could hardly have been the intention of the statesmen who framed our constitution to require that one of our citizens who had a petty claim of even less than five dollars against another citizen who had been clothed by some foreign government with the consular office, should be compelled to go into the supreme court to have a jury summoned in order to enable him to recover it; nor could it have been intended that the time of that court, with all its high duties to perform, should be taken up with the trial of every petty offense that might be committed by a consul in any part of the United States; that consul, too, being often one of our own citizens.' Such was the state of the law when the Revised Statutes of the United States went into operation. By section 563 it is provided that 'the district courts shall have jurisdiction * *  * of all suits against consuls or viceconsuls,' except for certain offenses; by section 629, that 'the circuit courts shall have original jurisdiction' of certain classes of cases, among which are civil suits in which an alien is a party; by section 687, that this court shall have 'original but not exclusive jurisdiction of all suits *  *  * in which a consul or vice-consul is a party;' and by section 711, that the jurisdiction vested in the courts of the United States in the cases and proceedings there mentioned-among which (paragraph 8) are 'suits against ambassadors or other public ministers or their domestics, or domestic servants, or against consuls, or vice-consuls'-shall be exclusive of the courts of the several states. But by the act of February 18, 1875, that part of section 711 last quoted was repealed, (Supp. Rev. St. p. 138, par. 18,) so that, by the existing law, there is no statutory provision which, in terms, makes the jurisdiction of the courts of the United States exclusive of the state courts in suits against consuls or vice-consuls. It is thus seen that neither the constitution nor any act of congress defining the powers of the courts of the United States has made the jurisdiction of this court, or of the district courts, exclusive of the circuit courts in suits brought against persons who hold the position of consul, or in suits or proceedings in which a consul is a party. The jurisdiction of the latter courts, conferred without qualification, of a controversy between a citizen and an alien, is not defeated by the fact that the alien happens to be the consul of a foreign government. Consequently the jurisdiction of the court below cannot be questioned upon the ground simply that the defendant is the consul of the kingdom of Norway and Sweden.

But as this court and the district courts are the only courts of the Union which, under the constitution or the existing statutes, are invested with jurisdiction without reference to the citizenship of the parties, of suits against consuls, or in which consuls are parties, and since the circuit court was without jurisdiction, unless the defendant is an alien or a citizen of some state other than New York, it remains to consider whether the record shows him to be either such citizen or an alien. There is neither averment nor evidence as to his citizenship, unless the conceded fact that he is the consul of a foreign government is to be taken as adequate proof that he is a citizen or subject of that government. His counsel insist that the consul of a foreign country, discharging his duties in this country, is, in the absence of any contrary evidence, to be presumed in law to be a citizen or subject of the country he represents. This presumption, it is claimed, arises from the nature of his office and the character of the duties he is called upon to discharge. But, in our opinion, the practice of the different nations does not justify such presumption. 'Though the functions of consul,' says Kent, 'would seem to require that he should not be a subject of the state in which he resides, yet the practice of the maritime powers is quite lax on this point, and it is usual, and thought most convenient, to appoint subjects of the foreign country to be consuls at its ports.' 1 Kent, 44. In Gittings v. Crawford, ubi supra, it was said by Chief Justice TANEY that, 'in this country, as well as others, it often happens that the consular office is conferred by a foreign government on one of our own citizens.' It is because of this practice that the question has frequently arisen as to the extent to which citizens of a country, exercising the functions of foreign consuls, are exempt from the political and municipal duties which are imposed upon their fellow citizens. Halleck, Int. Law, (London Ed.,) vol. 1, c. 11, § 10 et seq. In an elaborate opinion by Attorney General Cushing, addressed to Secretary Marcy, the question was considered whether citizens of the United States, discharging consular functions here by appointment of foreign governments, were subject to service in the militia or as jurors. 8 Op. Atty. Gen. 169. It was, perhaps, because of the difficulties arising in determining questions of this character that many of the treaties between the United States and other countries define with precision the privileges and exemptions given to consuls of the respective nations-exemptions from public service being accorded, as a general rule, only to a consul who is a citizen or subject of the country he represents. Rev. St. D. C. Pub. Treaties, index, tit. 'Consuls.'

But it seems unnecessary to pursue the subject further. When the jurisdiction of the circuit court depends upon the alienage of one of the parties, the fact of alienage must appear affirmatively either in the pleadings or elsewhere in the record. Brown v. Keene, 8 Pet. 115; Bingham v. Cabot, 3 Dall. 382; Capron v. Van Noorden, 2 Cranch, 126; Robertson v. Cease, supra. It cannot be inferred, argumentatively, from the single circumstance that such person holds and exercises the office of consul of a foreign government. Neither the adjudged cases nor the practice of this government prevent an American citizen-not holding an office of profit or trust under the United States-from exercising in this country the office of consul of a foreign government.

Our conclusion is that, as it does not appear from the record that the defendant is an alien, and since it is consistent with the record that the defendant was and is a citizen of the same state with the plaintiff, the record, as it now is, does not present a case which the circuit court had authority to determine. Without, therefore, considering the merits of this cause, the judgment must be reversed, and the cause remanded for such further proceedings as may be consistent with this opinion. It is so ordered.

GRAY, J.

Mr. Justice MILLER and myself concur in the judgment of reversal, on the ground that the circuit court had no jurisdiction of the case, because the record does not show that the defendant was an alien, or a citizen of a different state from that of which the plaintiff was a citizen. We express no opinion upon the question whether, if the record had shown that state of facts, as well as that the defendant was a consul, the circuit court would have had jurisdiction.

title: Bors v. Preston/Opinion of the Court


text: Talk:Bors v. Preston/Opinion of the Court


text:
Lovell v. St. Louis Mutual Life Insurance Company

M. Blair andA. McClain, for appellants.

''R. McP. Smith'', for appellees.

BRADLEY, J.


text: Talk:Lovell v. St. Louis Mutual Life Insurance Company


text:
Lovell v. St. Louis Mutual Life Insurance Company/Opinion of the Court

This case was commenced by a bill in chancery filed by the appellants, Lovell and wife, citizens of Tennessee, against the St. Louis Mutual Life Insurance Company and the St. Louis Life Insurance Company, for relief in relation to a certain policy of insurance issued by the former company, through an agent at Nashville, Tennessee, to Lovell on his own life, for the sum of $5,000, for the benefit of his wife, and to be paid to her on his death. The policy was dated the twenty-fourth of April, 1868, and stipulated for the payment of an annual premium of $162.14, payable (in the words of the instrument) as follows: 'An annual premium note of $53, and a semi-annual cash premium of $54.57 on the twenty-fourth days of April and October, the first one of said notes, and the first semi-annual cash premium, commencing with the date of this policy.' There was a condition in the policy that if, after the payment of the first three annual premiums, a default should be made in the payment of the annual premiums thereafter to become due, then (in the words of the condition) 'such default shall not work a forfeiture of this policy, but the sum of five thousand dollars, the amount insured, shall be then commuted or reduced to the sum of the annual premiums paid.'

After setting out the policy the bill states the following facts: The premiums called for by the policy were all paid down to and including the twenty-fourth of April, 1873; a new premium note being given at the end of each year, and any dividends due to the insured being credited thereon,-the company being a mutual one. At, or shortly after, the last payment, (which was made to one Foote, agent of the company at Louisville, Kentucky, the agency at Nashville having been discontinued,) Lovell made known to Foote his desire to receive a paid-up policy for what he was entitled to, and a return of his premium note; he and the agent agreeing, as had also been represented by the agent at Nashville, on the issuing of the policy, that all the money he had paid by way of premiums (amounting to $822, less the amount of his outstanding note) would be credited to him, and that he could have a paid-up policy for such amount, as that money, under the regulations of the company, would entitle him to if he had paid it all at once for a paid-up policy. With this view and understanding he surrendered his policy to the agent, to be transmitted to the home office at St. Louis, and exchanged for a paid-up policy in its stead. Lovell being engaged in steam-boating on the Mississippi, gave the matter no further thought, supposing that it would be all right. But, after some time, he was surprised at receiving notice to pay the interest on his note, and on going to his home he found that, instead of a paid-up policy, the original policy had been returned, with an indorsement on the margin in the words and figures following:

'In default of payment of renewal premium due 24th October,     1873, this policy is commuted and reduced to eight hundred      and twenty-two dollars, on condition that the interest on      outstanding premium notes is paid annually in advance.

M. A. CAMPBELL, Assignee.'

The complainant, Lovell, went to the agent at Louisville and protested against the course of the company, and insisted that he was to have received a paid-up policy and a return of his note; but the agent told him that since the agreement made with him for a paid-up policy the St. Louis Mutual Life Insurance Company had sold out to the Mound City Life Insurance Company, (whose name was afterwards changed to the St. Louis Life Insurance Company,) and that such a thing as issuing to him a paid-up policy, or even restoring or reinstating his policy, was wholly outside of the contract with the Mound City company, and that the policy was now forfeited.

The bill charges that after the original policy was surrendered for exchange as aforesaid, without the knowledge or consent of complainant, the St. Louis Mutual Life Insurance Company sold and transferred its entire assets, name, good will, etc., to the Mound City Life Insurance Company, before any interest had accrued on his premium note. The complainant insists that he has been guilty of no default that ought to work a ferfeiture of his policy; and that the money paid by him on his policy should be refunded to him, with interest, and that his outstanding note should be delivered up to be canceled. The bill further states that there is in the hands of William Morrow, treasurer of the state of Tennessee, $20,000 of state bonds, held as the property of the insurance company, under the laws of Tennessee, as indemnity against loss to citizens of Tennessee on life policies such as that of complainant; he therefore prays for an attachment and an injunction to hold said fund subject to the orders of the court, until the claim of the complainant is satisfied. The bill concludes with a prayer for general relief.

An attachment and injunction were issued as prayed, and the defendants appeared and answered the bill. The answer does not question the material averments of the bill, and admits that the affairs of the St. Louis Mutual Life Insurance Company having become greatly embarrassed, on the seventh of October, 1873, the superintendent of the insurance department of the state of Missouri filed in the circuit court of St. Louis county a petition setting forth that the company was insolvent, and praying for an injunction against its carrying on the business further, and that such injunction was issued; and that, in due course, the court pronounced the company insolvent, and restrained it from reinsuring its risks without the order and consent of the court. What further took place in reference to the affairs of the company is shown by the following extracts from the joint answer of the two companies; that is to say:

'In the progress of said matter, said Frank P. Blair, superintendent as aforesaid, on December 13, 1873, filed his motion in said cause, praying said court to order said company to reinsure all the risks held by it in the Mound City Life Insurance Company upon the terms set forth in said motion, and allow him to dismiss his suit as aforesaid. Said terms were that said St. Louis Mutual Life Insurance Company should transfer to said Mound City Life Insurance Company all of its assets, real, personal, or mixed, wheresoever situated, and that in consideration of said transfer said Mound City Life Insurance Company, whose name was afterwards changed to the St. Louis Life Insurance Company, should reinsure all risks of said St. Louis Mutual Life Insurance Company, and assume all its liabilities and should for these purposes increase its capital stock to the sum of $1,000,000, such increase to be secured and paid according to the laws of the state of Missouri, and to the satisfaction of said superintendent. Said motion was duly considered by said court, and was ultimately granted. * *  *

'No policy-holder of said St. Louis Mutual Life Insurance Company and no stockholder therein appeared in opposition thereto, or made any objections, and said arrangement was accordingly fully consummated and carried out according to the terms of said motion.

'And said St. Louis Life Insurance Company in good faith undertook, and is now undertaking, so to carry out said arrangement, and to perform all the terms and conditions, covenants, promises, and agreements thereof. All the stockholders of the said St. Louis Mutual Life Insurance Company have, in good faith, accepted the said transfer and reinsurance under the order of said court, and a very large majority of its policy-holders, to-wit, more than 8,000, have surrendered their policies in it, and accepted policies in lieu from the St. Louis Life Insurance Company, which is, moreover, by the terms of its contract with the St. Louis Mutual Life Insurance Company so approved as aforesaid, directly liable on any and all policies issued by said last-mentioned company to the same extent as itself would have been. * *  *

'Said contract was made, and said transfer and assumption of liabilities executed, and said increase of capital stock made, on or before January 17, 1874.'

Lovell, being sworn as a witness in the cause, fully verified all the allegations of the bill, and there was no conflicting evidence. He showed that when he surrendered his policy, to be exchanged for a paid-up policy, in April, 1873, it was with the distinct understanding, both of himself and the agent of the company, that he was entitled to and would receive a paid-up policy for an amount which the aggregate sum of premiums paid, less the premium note would purchase if paid, as a single premium, and would also receive his premium note; and that the company kept his policy from the time of its surrender in April until after October, and after the company had become insolvent, and had been put under injunction, without giving him any notice that he would not receive what he supposed himself entitled to.

The cause came on to be heard before the circuit judge and district judge, holding the circuit court of the United States for the Middle district of Tennessee, and, the judges differing in opinion upon the questions arising in the case, in accordance with the opinion of the circuit judge, the bill of complaint was dismissed, and the following questions were certified for the opinion of this court, to-wit: '(1) Whether, during the life-time of complainant, James W. Lovell, any suit is maintainable upon the policy of life insurance set forth in the record in this case. (2) Whether the insolvency of the St. Louis Mutual Life Insurance Company and its contract of reinsurance of December, 1873, with the Mound City Life Insurance Company, accompanied by the transfer, of the assets of the former to the latter company, as set forth in the record of this case, operated to confer upon complainants, or either of them, any right of action or suit against the St. Louis Mutual Life Insurance Company, or against the St. Louis Life Insurance Company. (3) Whether, if so, complainants can maintain this suit upon this record apart from the other policy-holders of said St. Louis Mutual Life Insurance Company, whose policies were in force at the time of said reinsurance transaction, and who, equally with complainants, dissented therefrom.'

The first and main question is, whether, under all the circumstances, including the insolvency of the company, and the transfer of its business to another company, the complainants are entitled to any relief. What they ask is a return of the money actually paid on the policy, with interest, and a surrender of the premium note; but, if not entitled to this relief, are they entitled, under the general prayer, to relief in any form? We are satisfied that when Lovell surrendered his policy in April, 1873, for the purpose of having it exchanged for a paid-up policy, he exercised a right which the condition of the policy gave him. It is true, the precise terms of the condition are that the policy shall be commuted in case default is made in the payment of any premium; but as the making of a default is entirely optional with the insured, it follows that the conversion of the policy from an annual-premium policy to a paid-up policy, is at the option of the insured, at any time after the payment of the first three annual premiums. Though in no default, he may elect to pay no more premiums, and may give notice to the company to that effect; for it is the exercise of his option against his own interest; since it would be his interest to hold the policy for its whole amount until the maturity of the next premium, and then to make default. But the greater always includes the less. The right to have the policy commuted and reduced to a paid-up policy, by making a default in the payment of a premium, in legal effect includes the right to have it so commuted and reduced by electing at any time to make such default, and giving due notice to the company of such election. At all events, neither the agent of the company, nor the company itself, made any objection to the surrender of the policy at the time when it was actually surrendered for the purpose of exchange. But it is clear that both Lovell and the agent of the company labored under a mutual mistake as to the amount of the paid-up policy to which Lovell was entitled. They supposed that he was entitled to a paid-up policy for such amount as the sum of the premiums paid (less the premium note) would purchase, if paid as a single premium; whereas the actual stipulation or condition was that the sum insured should be commuted or reduced to the amount of the premiums themselves, not the amount of insurance that they would purchase.

Now, while it is true that the mutual mistake of Lovell and the company's agent could not change the written stipulation, nor bind the company to give Lovell a paid-up policy for a greater amount than the sum of the premiums paid, yet as the mistake was in fact made, and as Lovell surrendered his policy under the influence of that mistake, and, as he testifies, with the distinct understanding that he was to receive a new policy corresponding to such mistaken view, and also to receive his premium note for cancellation, it was the duty of the company, either to have returned him his policy unchanged, or at least to have given him notice of the mistake, so that he might have had an opportunity of determining whether he would still have his policy commuted or not. Good faith required this much from the company. For it must be presumed that their agent, in transmitting the policy to the home office for the purpose of being commuted and exchanged, communicated what had passed between him and Lovell on the subject; and, at all events, the communications made by Lovell to the agent were notice to the company. But nothing of the kind was done. The company neither returned the policy, not gave Lovell any notice that it would not be commuted for the amount which he supposed and expected it would be; and, of course, he was led to suppose that everything was right, and that he would receive his paid-up policy and note in due time. On the contrary, the company kept the original policy for more than six months,-from April until October,-until after they had gone or were forced into a process of liquidation, and then some person, designating himself as assignee, made the indorsement on the policy which has been referred to, declaring that, in default of payment of renewal premium due October 24, 1873, the policy was commuted and reduced to $822, on condition that the interest on outstanding premium notes should be paid annually in advance; and because the interest was not paid on the premium note in April, 1874, the parties having possession of the note, and who had assumed the obligations of the company, declared the policy altogether forfeited, and the complainant entitled to nothing whatever.

It seems to us that the mere statement of the case is enough to show the want of equity in the transaction on the part of the companies, and the right of the complainants to some relief at the hands of the court. The sum of the matter is this: The complainant surrendered his policy, as he had a right to do, for the purpose of having it commuted to a paid-up policy; but he did so with the understanding between him and the agent of the company that the paid-up policy was to be for such amount as the premiums paid would purchase, and that his premium note should be returned to him. So far as the amount of the paid-up policy was concerned, the complainant and the agent acted under a mutual mistake; but the company kept the policy for six months without giving the complainant any notice of the mistake, and then, by indorsement on the policy, attempted to reduce it to a different amount, subject to the payment of interest on the premium note, and kept the note instead of delivering it up for cancellation. In the mean time the company conveyed all its assets to another company, and transferred to such other company all its business, and all interest in its outstanding policies, and completely and utterly put it out of its own power to fulfill any of its obligations, and virtually went out of existence. Under these circumstances, we hold-First, that the complainant, Lovell, was in no default, and that he did not forfeit his rights under his policy; secondly, that he was under no obligation to continue his insurance, either under his original policy or under a paid-up policy, with the new company, to which the St. Louis Mutual Life Insurance Company transferred its business; thirdly, that since the latter company totally abandoned the performance of the contract made with the complainant, and transferred all its assets and business to another company, and since the contract is executory and continuous in its nature, the complainant had a right to consider the contract as at an end, and to demand what was justly due to him by reason of its abandonment by the company.

Our first conclusion, that the complainant was not in default, and therefore that he forfeited no rights under his policy, is based on the fact that when he elected to have his original policy commuted to a paid-up policy, and surrendered it to the company for that purpose, without objection on its part, he had no further duty to perform, and no further premium or interest to pay; and therefore he could not make any default. He became entitled to a paid-up policy of some amount or other. If a difference arose between him and the company as to what the amount was, he would have been entitled to change his mind, and take back his original policy. The company being presumably informed, through its agent, of the amount which the complainant considered himself entitled to, should have given him notice if they did not agree to that amount. They gave him no notice, but assumed to reduce his policy to an amount different from that which he deemed his due, and retained his note, which he expected to be delivered up to be canceled; and no notice of this procedure was communicated to the complainant until after the company had been declared insolvent, and had placed all of its assets and business out of its hands. We think it clear that the complainant was in no default whatever.

Our second conclusion, that the complainant was under no obligation to continue his insurance in the new company, we think is equally clear. He had nothing to do with that company; it was a stranger to him. It is true that it received all the old company's assets, and assumed all its obligations on policies and otherwise; and the complainant was relegated to the new company for the obtainment of his rights, whatever they were. But that was a transaction between the companies themselves, with which he had nothing to do; and under such a total change of relations and parties, it would be most unreasonable that he should be compelled, against his will, or with the alternative of abandoning all his rights, to continue all his life to fulfill an executory contract by the payment of premiums to a company to which he was a total stranger, and in which, perhaps, he reposed no confidence whatever, or to take a paid-up policy in such company. Still the complainant might be without other remedy than that of accepting insurance in the new company, or of prosecuting the old and virtually defunct company, if it were not for the fund deposited with the treasurer of Tennessee as indemnity to the citizens of that state holding policies in the company. The assignment of all its assets by the old company to the new one, upon the consideration of its obligations being assumed by the new company, is somewhat analogous to an assignment of property by a debtor for the benefit of his creditors, in which only those creditors who are preferred, or those who choose to come in and participate in the fund assigned, receive any benefit, while those who refuse to come in take no benefit, preferring to retain their claim against the debtor. So, here, if the complainant does not choose to continue his insurance with the new company, he would have no remedy except against the old company, (which is totally unable to respond,) were it not for the fund which has been attached in the hands of the state treasurer of Tennessee. To this fund the complainant, being a citizen of Tennessee, had a right to resort. The object of the laws of Tennessee in requiring the fund to be placed on deposit with the treasurer was to protect and indemnify its own citizens in their dealings with the company. The assignment to the new company in Missouri could not deprive them of the right to this indemnity.

Our third conclusion is that, as the old company totally abandoned the performance of its contract with the complainant by transfering all its assets and obligations to the new company, and as the contract is executory in its nature, the complainant had a right to consider it as determined by the act of the company, and to demand what was justly due to him in that exigency. Of this we think there can be no doubt. Where one party to an executory contract prevents the performance of it, or puts it out of his own power to perform it, the other party may regard it as terminated, and demand whatever damage he has sustained thereby. We had occasion to examine this subject in the recent case of U.S. v. Behan, ante, 81, to which we refer. It is unnecessary to discuss it further here.

The question remains as to what is justly due to the complainant in this case by reason of the contract being terminated by the act of the company. He demands a return of all the premiums paid by him, with interest, less the amount of his premium note; and that said note shall be delivered up to be canceled. But we do not think that he is entitled to a return of the full amount of his premiums paid. He had the benefit of insurance upon his life for five years, and the value of that insurance should be deducted from the aggregate amount of his payments. In other words, the amount to which the complainant is entitled is what is called and known in the life insurance business as the value of his policy at the time it was surrendered, with interest, less the amount of his premium note, which should be surrendered and canceled. The balance due him will be small, but it will be something; and, whatever it is, he is entitled to it, as well as to a surrender of his premium note; and his bill ought not to have been dismissed. The amount due the complainant can easily be ascertained by the court by calling in the aid of an expert, without the trouble and expense of a reference to a master. The equitable value of a policy, according to the age of the insured life at the time it was issued, and the number of years it has run, is shown by the ordinary tables used by every life insurance company, and there can be no difficulty in ascertaining the amount in this case. The point of time for calculating the value will be immediately after the payment of the premium due on the twenty-fourth of April, 1873, five years having fully expired, and the first payment being made on the sixth year.

The question has been raised whether the complainant can maintain this suit alone, without bringing in all the other policy-holders. We see no reason why not. It does not appear that there are any other policy-holders who have not accepted the terms of the arrangement between the two companies, and continued their policies in the new company. Nor does it appear but that the fund now in court is abundantly sufficient to meet all demands upon it in favor of those for whose indemnity it was deposited in the treasurer's office, without any abatement, or the necessity of a pro rata distribution. Of course, the St. Louis Life Insurance Company is a proper party to this suit, by reason of its claiming the fund, attached therein, as part of the assets of the St. Louis Mutual Life Insurance Company assigned to it.

In conclusion, our opinion is that the following answers should be returned to the questions certified by the judges of the circuit court; that is to say:

To the first: That during the life-time of the complainant, James W. Lovell, a suit is maintainable upon the policy y of life insurance set forth in the record, under the circumstances and for the cause stated in this opinion.

To the second: That the insolvency of the St. Louis Mutual Life Insurance Company, and its contract of reinsurance with the Mound City Life Insurance Company, accompanied by the transfer of all its assets to the latter company, as set forth in the record, did operate to confer upon the complainants a right of action against the said companies as stated in this opinion.

To the third: That this suit may be maintained upon the record presented therein, apart from the other policy-holders of the St. Louis Mutual Life Insurance Company.

It follows that the decree of the circuit court must be reversed, and the cause remanded for further proceedings in accordance with this opinion; and it is so ordered.


text: Talk:Lovell v. St. Louis Mutual Life Insurance Company/Opinion of the Court


text:
Rector v. Gibbon

''Sol. F. Clark and Sam. W. Williams,'' for appellees.

FIELD, J.

title: Rector v. Gibbon


text: Talk:Rector v. Gibbon

title: Talk:Rector v. Gibbon


text:
Rector v. Gibbon/Opinion of the Court

This is a suit in equity, brought by the plaintiff to charge the heirs at law of David Ballantine, as trustees of certain real property within the Hot Springs reservation, in the state of Arkansas, and compel them to convey it to him. The question for determination is whether, under the act of congress of March 3, 1877, providing for the sale of part of the reservation, they were entitled to purchase the property in preference to him.

From the protracted litigation to which it has given rise, the Hot Springs reservation is famous in the history of land titles of the country. Early in the present century the medicinal qualities of those springs were discovered, and from that fact the adjacent lands had an exceptional value. They were claimed by different individuals,-some portions under a New Madrid certificate, and some portions under pre-emption settlements. The plaintiff entered upon the parcels in controversy as early as 1839, under an attempted location of a New Madrid certificate made in 1820, and he remained in their exclusive possession until April 24, 1876. They were then taken in charge by a receiver appointed by the court of claims under an act passed in 1870, to enable persons claiming title, either legal or equitable, to the whole or to any part of the four sections of land constituting the reservation, to bring suit in that court for the determination of their title as against the United States. Four suits were brought, one of them by the plaintiff, and they resulted in an adjudication that the title was in the United States, and that the several claims were invalid. Hot Springs Cases, 92 U.S. 698. The decision against him was regarded as a special hardship, both from his long possession, and from the fact that his failure to obtain a title was occasioned by the neglect of the public officer, under whose direction the land was surveyed, to return the survoy and a plat of the location to the recorder of land titles for the territory of Missouri. Until such return the location under the New Madrid certificate was incomplete, and the lands were not appropriated so as to exclude the operation of the act of April 20, 1832, by which the four sections were reserved for the future disposal of the United States. This court, in rejecting all the claims, observed that whatever hardship might thereby ensue would, no doubt, be taken into consideration by the legislative department in the future disposition of the lands. Accordingly, and, it is believed, upon this suggestion, congress passed the act of March 3, 1877. It provided for the appointment by the president of 'three discreet, competent, and disinterested persons,' to constitute a board of commissioners, and imposed upon them various duties. Among other things, it required them, under the direction and subject to the approval of the secretary of the interior, to designate a tract sufficiently large to include all the hot or warm springs on the land, embracing what is known as the Hot Springs Mountain, which tract was declared to be reserved from sale; and to lay out the residue of the land into convenient squares, blocks, lots, avenues, streets, and alleys, the lines of which were to correspond with existing lines of occupants of the reservation, as near as might be consistent with the interests of the United States. It also provided that they should, by a map prepared for that purpose, show the metes and bounds of the parcels or tracts claimed by reason of improvements thereon, or occupied on the reservation; should hear proofs offered by claimants and occupants in respect to the lands and improvements, and 'finally determine the right of each claimant or occupant to purchase the same, or any portion thereof, at the appraised value fixed by the commissioners.' It declared that claimants and occupants should file their claims before the commissioners within six months after the first session of the board, or that thei claims should be barred; and that no claim should be considered which had accrued after the twenty-fourth of April, 1876. It also made it the duty of the commissioners to file in the office of the secretary of the interior the map and survey, with the boundary lines of each claim clearly marked thereon, and with each division and subdivision traced and numbered, accompanied by a schedule showing the name of the claimant of each lot or parcel of land, with its appraised value; and also all the evidence taken by them 'respecting the claimant's possessory right of occupation' to any portion of the reservation, and their findings in each case, with their appraisal of the value of each tract and of the improvements thereon; and to issue a certificate to each claimant setting forth the amount of land the holder was entitled to purchase, and its valuation, and also the character and valuation of the improvements. 19 St. 377.

The act made it the duty of the secretary of the interior, within 30 days after the commissioners had filed their report and map, to instruct the land-officers of Little Rock land-district to allow the lands to be entered, and to cause a patent to be issued therefor. Within the required time, the plaintiff filed his claim before the commissioners, and presented proof showing his long-continued occupation of the land in controversy, and the improvements he had made thereon. While it was in his occupation, on the twenty-first of February, 1873, he, through his son, who held the property as trustee to pay certain debts, leased it to the defendants Gibbon and Kirkpatrick for the purpose of a hotel, bath-house, and out-houses, at an annual rent of $500, and $1,500 ADDITIONAL FOR WATER PRIVILEGES, For the term of three years and three months, beginning on that day and ending on the twenty-first of May, 1876. The lease provided that the hotel and other improvements should not cost more than $12,000; that at the end of the term the lessor should have the right to take the improvements by paying two-thirds of their first cost, and should take the furniture in the hotel and bath-house by paying its actual value, so that the same should not exceed $8,000; that if he should not pay these amounts at the end of the term, the lease should be extended on the same conditions until he should make the payments, giving 90 days' notice of his intention to terminate the lease; that upon its termination as specified the lessees should deliver to him, or to his successors in office, or grantees, or 'to whomsoever at that time in law may have the right to control the trust property,' all the lands leased to them, 'promptly, without failure, and free from let or hinderance of any kind whatever, together with all buildings, outhouses, and improvements' that might be erected on the premises. The terms 'to whomsoever at that time in law may have the right to control the trust property,' refer to persons lawfully controlling the property under authority derived from the plaintiff. The lessor then held the property as trustee, and by the covenant, when the trust should be discharged, the right of control would revert to him. They were not intended to authorize a delivery under any circumstances to parties claiming adversely. Soon after the lease was executed the trust was discharged by the payment of the debts, and the property and possession reverted to the plaintiff. Before the lease he had made improvements of the value of at least $1,000 in excavations, grading, and building a wall to protect the land from the action of the water of the Hot Springs creek, and had erected valuable buildings. After the lease a hotel was built on the premises, and before the end of the term the parties agreed that the lease should be continued until some time in the future, when it might be terminated by written notice as provided in the instrument.

In the year 1877 the lessees sold and transferred all their interest in the premises to one David Ballantine, he knowing at the time the terms and conditions of the lease. While the lessees were in possession, and before their transfer, the plaintiff gave them notice of his desire to teminate the lease, and requested them to furnish him with a list of the furniture coming within its provisions, which they promised to do, but never did. He never could get from them the information required for settlement, and therefore none was ever made, though he was ready and willing and frequently offered to pay all the sums that might be due to them under the terms of the lease, which offer they, under various pretenses, always declined. After entering upon the premises under the transfer, Ballantine died, being at the time a resident of Illinois, leaving surviving him certain of the defendants, who are named in the bill of complaint as his heirs at law. By the survey of the commissioners a part of the premises was laid off and designated as lots 5, 6, 7, 8, 9, 10, and 11, in block 89, in the town of Hot Springs, and the residue thereof, on which the hotel and some of the outbuildings were erected, was laid off into a street. They were appraised at the value of $10,000, and condemned, and were then torn down and destroyed. A certificate of their condemnation and value was given to the heirs of Ballantine. As already mentioned, the plaintiff filed his claim to purchase the lots before the commissioners. The heirs of Ballantine also filed a like claim, and to them was awarded the right to purchase, although it was shown that their ancestor had acquired his possession under the lease made to Gibbon and Kirkpatrick. For these reasons-that the heirs never had any other right or title to the lands, or to their possession, except under the lease, containint covenants to restore the property and possession to the lessor, or to his successor in title, on its termination-the plaintiff prays that they be adjudged to hold the lands as trustees for his use and benefit, and be decreed to couvey them to him, on his paying the money advanced in the purchase, and that he be allowed reasonable rent for the occupancy of the lands.

The bill of complaint sets forth the material facts which we have stated, and a demurrer to it was sustained; the court holding that the decision of the commissioners awarding to the heirs of Ballantine the right to purchase was a final adjudication and conclusive upon the parties, and, even if not conclusive, was correct. The ruling in both particulars the plaintiff insists was erroneous.

It is very clear that the heirs of Ballantine are not parties for whose benefit the act of 1877 was passed. He only acquired his claim to the property during that year by transfer from the original lessees of their leasehold interest. He could not assert any independent claim acquired after April 24, 1876. The act in terms declares that no claim to purchase any portion of the reservation accruing after that date shall be considered by the commissioners. As already mentioned, it followed our decision that certain persons, claimants and occupants of portions of the reservation, were not entitled to the land, and was designed to confer upon them and others in like position a title to such portions as they had occupied or improved, after first setting aside and reserving from sale a tract sufficiently large to include the hot springs and land immediately adjacent. Those parties were not trespassers, in the offensive meaning of that term, nor intentional invaders of the rights of the United States. They entered upon the land in the confident belief that they were authorized to do so. The plaintiff relied upon a New Madrid certificate, which was located upon the lands in controversy as far back as 1820, and his failure to secure the title arose, as already stated, from the omission of the public surveyor to return the survey and a plat of them to the recorder of land titles before the act of 1832 took effect and withdrew the lands from appropriation. The government did not treat him and the other claimants as wanton intruders on the public domain, for then it might have ejected them by force. Instead of that, it authorized proceedings for a judicial ascertainment of the merits of their respective claims. The act of 1877 embraces, therefore, under the designation of claimants and occupants, those who had made improvements or claimed possession under an assertion of title or a right of pre-emption by reason of their location or settlement. It was for their benefit that the act was passed, in order that they should not entirely for feit their claims from location or settlement, and their improvements, but should have, except as to the portions reserved, the right of purchase. Parties succeeding, by operation of law or by conveyance, to the possession of such claimants and occupants, would succeed also to their rights. But lessees under a claimant or occupant, holding the property for him, and bound by their stipulation to surrender it on the termination of their lease, stand in no position to claim an adverse and paramount right of purchase. Their possession is in law his possession. The contract of lease implies not only a recognition of his title, but a promise to surrender the possession to him on the termination of the lease. They, therefore, while retaining possession, are estopped to deny his rights. Blight's Lessee v. Rochester, 7 Wheat. 534. This rule extends to every person who enters under lessees with knowledge of the terms of the lease, whether by operation of law or by purchase and assignment. The lessees in this case, and those deriving their interest under them, could, therefore, claim nothing against the plaintiff by virtue either of their possession, for it was in law his possession, or of their improvements, for they were in law his improvements, and entitled him to all the benefits they conferred, whether by pre-emption or otherwise. Whatever the lessees and those under them did by way of improvement on the leased premises, inured to his benefit as absolutely and effectually as though done by himself.

Whenever congress has relieved parties from the consequences of defects in their title, its aim has been to protect those who, in good faith, settled upon public land and made improvements thereon, and not those who, by violence or fraud or breaches of contract, intruded upon the possessions of original settlers and endeavored to appropriate the benefit of their labors. There has been in this respect, in the whole legislation of the country, a consistent observance of the rules of natural right and justice. There was a time, in the early periods of the country, when a party who settled in advance of the public surveys was regarded as a trespasser, to be summarily and roughly ejected. But all this has been changed within the last half century. With the acquisition of new territory, new fields of enterprise have been opened, population has spread over the public lands, villages and towns have sprung up on them, and all the industries and institutions of a civilized and prosperous people have been established, with the church and school-house by their side, before the surveyor with his quadrant and line appeared. With absolute confidence these pioneers have relied upon the justice of their government, and they have never been disappointed. The most striking illustrations of this confidence, and of the just action of the government, are found in the settlement of Oregon and California. Before any laws of the United States had been extended to Oregon, enterprising men crossed the plains and took possession of its fertile fields. They organized a provisional government embracing guaranties of all private rights. They passed laws under which persons and property were protected and justice administered with as much care and wisdom as in old communities. They prescribed regulations for the possession and occupation of land among themselves, and when the laws of the United States were extended over the country those regulations were respected, and the right acquired under them recognized and enforced. On this subject Mr. Justice MILLER, speaking for the court in Lamb v. Davenport, said of the settlement upon the land which now embraces the town of Portland: 'It is sufficient here to say that several years before that [the donation] act was passed, and before any act of congress existed by which title to the land could be acquired, settlement on and cultivation of a large tract of land, which includes the lots in controversy, had been made, and a town laid off into lots, and lots sold, and that these are a part of the present city of Portland. Of course, no legal title vested in any one by these proceedings, for that remained in the United States; all of which was well known and undisputed. But it was equally well known that those possessory rights and improvements placed on the soil were, by the policy of the government, generally protected, so far, at least, as to give priority of the right to purchase whenever the land was offered for sale, and when no special reason existed to the contrary. And though these rights or claims rested on no statute, or any positive promise, the general recognition of them in the end by the government, and its disposition to protect the meritorious actual settlers, who were the pioneers of emigration in the new territories, gave a decided and well-understood value to these claims. They were all subject to bargain and sale, and, as among the parties to such contracts, they were valid. The right of the United States to dispose of her own property is undisputed, and to make rules by which the lands of the government may be sold or given away is acknowledged; but, subject to these well-known principles, parties in possession of the soil might make valid contracts, even concerning the title, predicated upon the hypothesis that they might thereafter lawfully acquire the title, except in cases when congress had imposed restrictions on such contracts.' 18 Wall. 313, 314.

So, in California, the discovery of the precious metals was followed, as is well known, by a large immigration to the state, which increased her population in a few years to several hundred thousand. The majority of the immigrants at first found their way into the mineral regions and became seekers of gold. But still a very large number settled upon the farming lands, erected houses thereon, planted vineyards and orchards, and subjected portions to cultivation. Much of this was in advance of the public surveys, and even before the passage of an act of congress opening the agricultural lands to settlement, and providing for the sale of the mineral lands. Yet the progress of the country was not thereby stayed. The first appropriator of mineral lands within certain limits, or the first settler on agricultural lands to the extent prescribed by the pre-emption laws in force in other states, was recognized everywhere as having a better right than others to the claim appropriated, or to the land settled upon. In all controversies, except as against the government, he was regarded as the original owner from whom title was to be traced. And when the government extended its surveys over the agricultural lands it gave the privilege of purchasing-the pre-emption right-to the first settler, requiring only that his possession should be continued, accompanied with improvement. And when it allowed the mineral lands to be sold, it was to the original appropriator, or to those deriving their claim from him that title was given. In no instance in the legislation of the country have the claims of an intruder upon the prior possession of others, or in disregard of their rights, been sustained. Laborers occupying mining claims or agricultural lands, while working for the first appropriator or settler, acquired no pre-emptive rights over him to such claims or lands; nor did any permissive occupation under him, as tenant or otherwise, impair his rights. To construe the act of 1877 so as to give to lessees a better right than t eir landlord to purchase the land of which he had been in occupation more than a third of a century, would require us to attribute to congress not only the intention to do him flagrant injustice, but to depart from its previous uniform and long-settled policy to protect the pioneer and original settler upon the public domain.

In the dealing of the government with occupants of lots in towns built upon the public lands, we have a further illustration of the good faith which is exacted from parties seeking the title of the United States. The town-site act of congress of May 23, 1844, provides that whenever any portion of the surveyed public lands has been settled upon and occupied as a town-site, it shall be lawful, if the town be incorporated, for the corporate authorities, and, if not incorporated, for the judge of the county court, to enter at the proper land-office, and at the minimum price, such land 'in trust for the several use and benefit of the occupants thereof, according to their respective interests; the execution of which trust as to the disposal of the lots in such town, and the proceeds of the sale thereof, to be conducted under such rules and regulations as may be prescribed by the legislative authority of the state or territory in which the same is situated.' 5 St. 657. The act of congress of March 3, 1853, extended the provisions of this act, and, with certain exceptions, made the whole of the public lands, not being mineral, occupied as towns or villages, subject to like entry, whether settled upon before or after they were surveyed.

In Ricks v. Reed, decided in 1862, the proper construction of the act was a question before the supreme court of California, and the court said: 'It is true, the entry of the town lands by the corporate authorities or county judge is, under the act of congress, 'in trust for the several use and benefit of the occupants thereof, according to their respective interests;' but this provision does not establish that it was the intention of congress to give the benefits of the entry to mere temporary occupants of particular tracts at the date of the entry, without reference to the character of their occupancy, and thereby, in many instances, deprive the original bona fide settlers of the premises and improvements in favor of those who had, by force or otherwise, intruded upon their settlement. Were such the effect of the provision in question, the trespasser of yesterday or the tenant of to-day would often be in a better position than the parties who, by their previous occupation and industry, had built up the town and made the property valuable. We do not think congress could have contemplated that results of this nature should follow from its legislation, but, on the contrary, that it intended that the original and bona fide occupants should be the recipients of the benefits of the entry to the extent, at least, of their interest; that is, of their actual occupancy and improvements.' 19 Cal. 551, 575.

The provision of the act that the commissioners 'shall finally determine the right of each claimant or occupant' to purchase the land, or a portion of it, does not necessarily withdraw that determination from the consideration of the court. It is final so far as the land department is concerned. By the general law all proceedings for the alienation of the public lands, from the incipient steps to a patent, are placed under the supervision of that department. The provision in question takes the action of the board, in the particulars mentioned, from that supervision. In effect it substitutes the board in the place of the ordinary land officers, with only a modification of duties and powers adapted to the peculiar circumstances of the case. It does not withdraw its decisions from the correcting power of the court when the board has misconstrued the statute, and thus defeated its manifest purpose, and made its benefits inure to those who were never in the contemplation of congress, and theref re were not intended to be the recipients of its bounty.

The powers of the commissioners, under the act of 1877, are not essentially different from those of the receiver and register of the land-office in cases of conflicting claims to pre-emption. The latter officers must hear the evidence of parties, and decide as to which has the better right to the patent certificate. The judicial character of their investigation and determination is as great and important as that of the commissioners under the act of 1877. The acts done in both cases relate merely to the sale of public lands; and it is difficult to perceive any reason why, when private to 'finally determine the right closed against relief in the courts of the country in the one case more than in the other.

The statute, in requiring the commissioners 'finally determine the right of each claimant or occupant to purchase' parts of the reservation, recognizes the existence of rights as between different claimants, though equally without title so far as the government is concerned. But in their decision they have ignored the universally acknowledged right as between landlord and tenants, giving to the latter what could by no possibility belong to them in the relation which they occupied. Had congress intended to invest the commissioners with absolute discretion in awarding the privilege of pre-emption of the several parcels of land, its language would have been different; it would not have required an examination of witnesses, a regard for existing boundaries, and a determination of rights. Everything in the statute, from the beginning to the end, indicates an intent that, in awarding the right of pre-emption, the commissioners should be governed, not by an arbitrary discretion, but by the existence of claims by possession, and a consideration of the mutual rights of parties as between one another. They had no right to disregard the very principle on which their appointment was based.

On matters depending upon conflicting evidence as to the extent of occupation and the value of improvements, and many other matters, the action of the commissioners is undoubtedly final; but, upon the construction of the law, and particularly as to the parties for whose benefit it is designed, it is subject equally with all local boards of limited jurisdiction to have its conclusions, if erroneous, reviewed and corrected by the judicial tribunals; at least, the equities of third parties arising from contracts or fiduciary relations between them and the person to whom the commissioners may adjudge the right to purchase, are not concluded by their action. This question was very fully and thoughtfully considered in Johnson v. Towsley, 13 Wall. 72. In that case the direct question was as to the effect to be given to the tenth section of the act of June 12, 1858, which declared that appeals in cases of contest between different settlers for the right of pre-emption should thereafter be decided by the commissioner of the general land-office, 'whose decision shall be final unless appeal therefrom be taken to the secretary of the interior.' It was held that the finality there declared had reference only to the supervisory action of the land department; that after the title had passed from the government, and the question had become one of private right, the jurisdiction of courts of equity might be invoked to ascertain if the patentees did not hold in trust for other parties; and if it appeared that the party claiming the equity had established his right to the land upon a true construction of the acts of congress, and by an erroneous construction the patent had been issued to another, the court would correct the mistake. In the opinion, Mr. Justice MILLER, speaking for the court, referred to the general doctrine that when a special tribunal has authority to hear and determine certain matters arising in the course of its duties, its decision within the scope of its authority is conclusive upon all others, and said: 'That the action of he land-office in issuing a patent for any of the public lands, subject to sale by pre-emption or otherwise, is conclusive of the legal title, must be admitted under the principle above stated; and in all courts, and in all forms of judicial proceedings where this title must control, either by reason of the limited powers of the court, or the essential character of the proceedings, no inquiry can be permitted into the circumstances under which it was obtained. On the other hand, there has always existed in the courts of equity the power in certain classes of cases to inquire into and correct mistakes, injustice, and wrong, in both judicial and executive action, however solemn the form which the result of that action may assume when it invades private rights; and by virtue of this power the final judgments of courts of law have been annulled or modified, and patents and other important instruments issuing from the crown, or other executive branch of the government, have been corrected or declared void, or other relief granted. No reason is perceived why the action of the land-office should constitute an exception to this principle. In dealing with the public domain under the system of laws enacted by congress for their management and sale, that tribunal decides upon private rights of great value, and very often, from the nature of its functions, this is by a proceeding essentially ex parte, and peculiarly liable to the influence of frauds, false swearing, and mistakes. These are among the most ancient and well-established grounds of special jurisdiction of courts of equity just referred to, and the necessity and value of that jurisdiction are nowhere better exemplified than in its application to cases arising in the land-office.' This case is a leading one in this branch of the law, and has been uniformly followed. The decision aptly expresses the settled doctrine of this court with reference to the action of officers of the land department, that when the legal title has passed from the United States to one party, when in equity and in good conscience, and by the laws of congress, it ought to go to another, a court of equity will convert the holder into a trustee of the true owner and compel him to convey the legal title. This doctrine extends to the action of all officers having charge of proceedings for the alienation of any portion of the public domain. The parties actually entitled under the law cannot, because of its misconstruction by those officers, be deprived of their rights. Townsend v. Greeley, 5 Wall. 326, 335; Carpentier v. Montgomery, 13 Wall. 480, 496; Shepley v. Cowan, 91 U.S. 330; Moore v. Robbins, 96 U.S. 530; Quinby v. Conlan, 104 U.S. 420; Smelting Co. v. Kemp, Id. 636.

The bill is open to the objection that it does not allege that the heirs of Ballantine have acted upon the award and purchased the lands in controversy; but their counsel makes no point upon this omission, and admits that they have in fact purchased.

It follows from the views expressed that the decree of the court below must be reversed and the cause remanded, with instructions to overrule the demurrer, and to take further proceedings in accordance with this opinion; the plaintiff to have leave to amend his bill and the defendants to answer.

WAITE, C. J., dissenting.

I am unable to agree to this judgment. In my opinion the act of March 3, 1877, granted a new right to the occupants of the Hot Springs reservation, and provided a special tribunal for the settlement of all controversies between conflicting claimants. The right and the remedy were created by the same statute, and, consequently, the remedy thus specially provided was exclusive of all others. No provision was made for a review of the decisions of the tribunal. Its determination, therefore, of all questions arising under the jurisdiction must necessarily be conclusive, and not open to attack collaterally. It seems to me there is a very broad distinction between this case and that of Johnson v. Towsley, 13 Wall. 72, and others of that class. Here a special tribunal has been created for a special purpose. It has been clothed with power to compel the attendance of witnesses, 'and to finally determine the right of each claimant or occupant to purchase' from the United States, under the provisions of the act of congress, the ground he occupies or claims. The duties of the tribunal are judicial in their character, and their decisions evidently intended to be binding on the parties. The question now is, not whether, if Rector had kept away from the tribunal and Gibbon had got a title under his occupancy, he could be charged as trustee for Rector on account of his tenancy, but whether, having appeared before the tribunal and been beaten in a contest with Gibbon, on that identical question Rector can in this suit correct the errors of the tribunal in its decision. I think he cannot. If he can, it is difficult to see why all the decisions of the tribunal are not open to revision by the courts.

I am authorized to say that Justices HARLAN, WOODS, and BLATCHFORD concur with me in this opinion.

title: Rector v. Gibbon/Opinion of the Court


text: Talk:Rector v. Gibbon/Opinion of the Court


text:
Cochrane v. Badische Anilin Soda Fabrik

E. N. Dickerson, for appellants.

B. F. Thurston, for appellee.

BLATCHFORD, J.

title: Cochrane v. Badische Anilin Soda Fabrik


text: Talk:Cochrane v. Badische Anilin Soda Fabrik