text:
National Bank v. Commonwealth

ERROR to the Court of Appeals of Kentucky; the case being this:The act of Congress establishing the National banks, enacts:

'Section 40. That the president and cashier of every such association shall cause to be kept a correct list of the names and residences of all the shareholders in the association, and the unmber of shares held by each, and such list shall be open to the inspection of the officers authorized to collect taxes under State authority.

'Section 41. Provided, that nothing in this act shall be construed to prevent all the shares in any of the said associations held by any person, from being included in the valuation of the personalty of such person, in the assessment of taxes imposed by or under State authority, at the place where such bank is located, and not elsewhere; but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State. Provided further, that the tax so imposed, under the laws of any State, upon the shares of any of the associations authorized by this act, shall not exceed the rate imposed upon the shares of any of the banks organized under authority of the State where such association is located.'

Under the act of Congress which makes these provisions, the First National Bank of Louisville was established.

A statute of Kentucky, relating to revenue and taxation, lays a tax as follows:

'On bank stock, or stock in any moneyed corporation of loan or discount, fifty cents on each share thereof equal to one hundred dollars, or on each one hundred dollars of stock therein owned by individuals, corporations, or societies.'

And the same statute goes on to enact:

'The cashier of a bank, whose stock is taxed, shall, on the first day in July of each year, pay into the treasury the amount of tax due. If such tax be not paid, the cashier and his sureties shall be liable for the same, and twenty per cent. upon the amount; and the said bank or corporation shall thereby forfeit the privileges of its charter.'

Acting in professed pursuance of the State statute, the Commonwealth of Kentucky demanded payment from the said bank of $4000, with interest, the sum which a tax of fifty cents per share on the shares of the bank gave. Payment being declined the State sued.

The suit was brought in one of the State courts, and according to the practice of the courts of Kentucky by a petition, setting forth the amount of the tax and claiming a judgment for the same. The answer by the same mode of practice, set up four distinct defences to the action. These were:

1. That the bank was not organized under the law of the State, but under the bank act of the United States, and was, therefore, not subject to State taxation.

2. That it had been selected and was acting as a depositary and financial agent of the government of the United States, and, therefore, was not liable to any tax whatever, either on the bank, its capital, or its shares.

3. That its entire capital was invested in securities of the government of the United States, and that its shares of stock represented but an interest in the said securities, and were therefore not subject to State taxation.

4. That the shares of the stock were the property of the individual shareholders, and that the bank could not be made responsible for a tax levied on those shares, and could not be compelled to collect and pay such tax to the State.

The commonwealth demurred; and the case resulting in a judgment in its favor in the Court of Appeals, this writ of error was prosecuted by the bank.

Mr. Wills, with a brief of Messrs. Pirtle and Caruth, for the plaintiff in error:

I. We admit that under recent decisions of this court shares in National banks may be taxed in the hands of the stockholders. But this tax is laid, not on shares in the hands of stockholders, but on the capital of the bank itself.

Under the statute of Kentucky the amount of the tax is calculated by charging fifty cents on each one hundred dollars of stock, exacted in solido from the bank itself, under penalty of twenty per cent. damages in addition against the cashier and forfeiture of the charter. This is not a tax upon the shares but on the bank. The shareholder is neither named nor known in the transaction. It is a matter between the State and the bank. The shares of one hundred dollars are used simply as a means of computing the amount of tax on the capital stock. Without this, or some similar contrivance for estimating, a tax could not be levied on capital stock. There is not a word said about requiring the bank to pay for the shareholder as a convenience, but it directly, in terms, applies to stock of the banks. What stock does the bank own except the capital stock, which is identical with itself? The law requires the cashier of a bank whose stock is taxed, on the first day in July in each year, to pay the amount due. The amount due upon what? Clearly upon the capital stock. The capital of State banks in Kentucky is not always divided into shares of one hundred dollars each; on the contrary, some of the State banks now in operation, as ex. gr., The Merchants' Bank of Kentucky, are divided into shares of only twenty-five dollars each, and one, The Western Financial Corporation, into shares of five hundred dollars each.

Now, these two banks are taxed annually under the statute, because in Kentucky there are no other laws upon the subject. The language is 'fifty cents on each share thereof equal to one hundred dollars of stock.' If that means a tax upon the share, as the Court of Appeals holds, the shares in the said banks being respectively twenty-five and five hundred dollars, and the law providing only for a tax on shares equal to one hundred dollars, nothing can be clearer than that no tax at all is levied on their shares.

II. A tax on the capital stock of the bank cannot be collected.

1. Because of its investment in government bonds.

2. Because of its character as an agency and instrument of the powers of the Federal government. If there be any one principle of constitutional law now universally acquiesced in, it is that the powers, agents, and means employed by Congress to carry into effect the powers vested by the Constitution in the Federal government must be free from State taxation and control. Taxation would impede, burden, and perhaps destroy the constitutional laws of Congress, and hostile legislation revolutionize our National economy. Such protection is necessary to uphold the nation's credit and preserve the nation's life. The tax imposed in this case upon the plaintiff in error is, in substance and in fact, a tax upon the operations of the bank itself.

III. Can the law be enforced as a tax on shares?

The shares in the hands of the shareholders are, under the act of Congress, to be included in the assessment of their personal estate; and, in order that the State officers may have every facility to arrive at the exact number of shares held by each person, the bank is required to keep, at all times, a list of names of stockholders, number of shares held by each, &c. If the means of collecting the tax be nothing, why is Congress careful to insert the foregoing provision? If the States can coerce the bank itself to pay the tax in solido for its stockholders, whence the necessity of the list of stockholders to be open for the inspection of the taxing officers of the State? It was with a view to prevent proceedings such as this one that Congress particularly prescribed the mode of collection as well as the extent of it. It was to prevent these organizations from being made the servants and agents of the States in the collection of taxes; to do which would be to clothe the State with an authority not justified by the constitution, and denied by this court. Without remuneration, and without right, the commonwealth of Kentucky is undertaking to force the plaintiff in error, in its corporate capacity, to collect this tax from its shareholders, and pay the same into the State treasury. Not only so, but penalties of a grave and serious character are imposed upon the bank and its officers in the event of neglect or refusal. Can this burden be imposed? Is it in accordance with the provisions of the act of Congress and the decisions of this court? With great propriety the bank may say to the State: 'You have your assessing officers; send them to the bank; they will there find a list of all stockholders, let them assess for themselves the shares of stock for taxation; but you shall not transform our National agency into a State servant, and compel it to perform a burdensome duty, not enjoined by its charter.'

IV. A concession of the right as claimed carries with it means for its enforcement.

This right, if conceded, may, and actually does, involve the destruction of these National agencies.

'If such tax be not paid,' says the statute, 'the cashier and his securities shall be liable for the same, and twenty per cent. upon the amount; and the said bank or corporation shall thereby forfeit the privileges of its charter.' Such is the law upon which this proceeding is based.

V. The rate of taxation is higher than allowed by Congress.

[The learned counsel then went into an exhibition of facts and figures to show this.]

Mr. Albert Pike, contra.

Mr. Justice MILLER delivered the opinion of the court.

title: National Bank v. Commonwealth


text: Talk:National Bank v. Commonwealth

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

title: Talk:National Bank v. Commonwealth


text:
National Bank v. Commonwealth/Opinion of the Court

In the several recent decisions concerning the taxation of the shares of the National banks, as regulated by sections forty and forty-one of the act of Congress of June 3d, 1864, it has been established as the law governing this court that the property or interest of a stockholder in an incorporated bank, commonly called a share, the shares in their aggregate totality being called sometimes the capital stock of the bank, is a different thing from the moneyed capital of the bank held and owned by the corporation. This capital may consist of cash, or of bills and notes discounted, or of real estate combined with these. The whole of it may be invested in bonds of the government, or in bonds of the States, or in bonds and mortgages. In whatever it may be invested it is owned by the bank as a corporate entity, and not by the stockholders. A tax upon this capital is a tax upon the bank, and we have held that when that capital was invested in the securities of the government it could not be taxed, nor could the corporation be taxed as the owner of such securities.

On the other hand, we have held that the shareholders, or stockholders, by which is meant the same thing, may be taxed by the States on stock or shares so held by them, although all the capital of the bank be invested in Federal securities, provided the taxation does not violate the rule prescribed by the act of 1864.

It is not intended here to enter again into the argument by which this distinction is maintained, but to give a clear statement of the propositions that we have decided, that we may apply them to the case before us.

If, then, the tax for which the State of Kentucky recovered judgment in this case is a tax upon the shares of the stock of the bank, and is not a tax upon the capital of the bank owned by the corporation, the first, second, and third grounds of defence must fail.

There are, then, but two questions to be considered in the case before us:

1. Does the law of Kentucky, under which this tax is claimed, impose a tax upon the shares of the bank, or upon the capital of the bank, which is all invested in government bonds?

2. If it is found to be a tax on the shares, can the bank be compelled to pay the tax thus levied on the shares by the State?

The revenue law of Kentucky imposes a tax 'on bank stock, or stock in any moneyed corporation of loan and discount, of fifty cents on each share thereof, equal to one hundred dollars of stock therein, owned by individuals, corporations, or societies.'

We entertain no doubt that this provision was intended to tax the shares of the stockholders, and that if no other provision had been made, the amount of the tax would have been primarily collectible of the individual or corporation owning such shares, in the same manner as other taxes are collected from individuals. It is clear that it is the shares owned or held by individuals in the banking corporation which are to be taxed, and the measure of the tax is fifty cents per share of one hundred dollars. These shares may, in the market, be worth a great deal more or a great deal less than their par or nominal value, as its capital may have been increased or diminished by gains or losses, but the tax is the same in each case. This shows that it is the share which is intended to be taxed, and not the cash or other actual capital of the bank.

It is said that there may be, or that there really are, banks in Kentucky whose stock is not divided into shares of one hundred dollars each, but into shares of fifty dollars or other amounts, and that this shows that the legislature did not intend a tax of fifty cents on the share, but a tax on the capital. But the argument is of little weight. What the legislature intended to say was, that we impose a tax on the shares held by individuals or other corporations in banks in this State. The tax shall be at the rate of fifty cents per share of stock equal to one hundred dollars. If the shares are only equal to fifty dollars it will be twenty-five cents on each of such shares. If they are equal to five hundred dollars it will be two dollars and fifty cents per share. The rate is regulated so as to be equal to fifty cents on each share of one hundred dollars.

But it is strongly urged that it is to be deemed a tax on the capital of the bank, because the law requires the officers of the bank to pay this tax on the shares of its stockholders. Whether the State has the right to do this we will presently consider, but the fact that it has attempted to do it does not prove that the tax is anything else than a tax on these shares. It has been the practice of many of the States for a long time to require of its corporations, thus to pay the tax levied on their shareholders. It is the common, if not the only, mode of doing this in all the New England States, and in several of them the portion of this tax which should properly go as the shareholder's contribution to local or municipal taxation is thus collected by the State of the bank and paid over to the local municipal authorities. In the case of shareholders not residing in the State, it is the only mode in which the State can reach their shares for taxation. We are, therefore, of opinion that the law of Kentucky is a tax upon the shares of the stockholder. If the State cannot require of the bank to pay the tax on the shares of its stock it must be because the Constitution of the United States, or some act of Congress, forbids it. There is certainly no express provision of the Constitution on the subject.

But it is argued that the banks, being instrumentalities of the Federal government, by which some of its important operations are conducted, cannot be subjected to such State legislation. It is certainly true that the Bank of the United States and its capital were held to be exempt from State taxation on the ground here stated, and this principle, laid down in the case of McCulloch v. The State of Maryland, has been repeatedly affirmed by the court. But the doctrine has its foundation in the proposition, that the right of taxation may be so used in such cases as to destroy the instrumentalities by which the government proposes to effect its lawful purposes in the States, and it certainly cannot be maintained that banks or other corporations or instrumentalities of the government are to be wholly withdrawn from the operation of State legislation. The most important agents of the Federal government are its officers, but no one will contend that when a man becomes an officer of the government he ceases to be subject to the laws of the State. The principle we are discussing has its limitation, a limitation growing out of the necessity on which the principle itself is founded. That limitation is, that the agencies of the Federal government are only exempted from State legislation, so far as that legislation may interfere with, or impair their efficiency in performing the functions by which they are designed to serve that government. Any other rule would convert a principle founded alone in the necessity of securing to the government of the United States the means of exercising its legitimate powers, into an unauthorized and unjustifiable invasion of the rights of the States. The salary of a Federal officer may not be taxed; he may be exempted from any personal service which interferes with the discharge of his official duties, because those exemptions are essential to enable him to perform those duties. But he is subject to all the laws of the State which affect his family or social relations, or his property, and he is liable to punishment for crime, though that punishment be imprisonment or death. So of the banks. They are subject to the laws of the State, and are governed in their daily course of business far more by the laws of the State than of the nation. All their contracts are governed and construed by State laws. Their acquisition and transfer of property, their right to collect their debts, and their liability to be sued for debts, are all based on State law. It is only when the State law incapacitates the banks from discharging their duties to the government that it becomes unconstitutional. We do not see the remotest probability of this, in their being required to pay the tax which their stockholders owe to the State for the shares of their capital stock, when the law of the Federal government authorizes the tax.

If the State of Kentucky had a claim against a stockholder of the bank who was a non-resident of the State, it could undoubtedly collect the claim by legal proceeding, in which the bank could be attached or garnisheed, and made to pay the debt out of the means of its shareholder under its control. This is, in effect, what the law of Kentucky does in regard to the tax of the State on the bank shares. It is no greater interference with the functions of the bank than any other legal proceeding to which its business operations may subject it, and it in no manner hinders it from performing all the duties of financial agent of the government.

A very nice criticism of the proviso to the 41st section of the National Bank Act, which permits the States to tax the shares of such bank, is made to us to show that the tax must be collected of the shareholder directly, and that the mode we have been considering is by implication forbidden. But we are of opinion that while Congress intended to limit State taxation to the shares of the bank, as distinguished from its capital, and to provide against a discrimination in taxing such bank shares unfavorable to them, as compared with the shares of other corporations, and with other moneyed capital, it did not intend to prescribe to the States the mode in which the tax should be collected. The mode under consideration is the one which Congress itself has adopted in collecting its tax on dividends, and on the income arising from bonds of corporations. It is the only mode which, certainly and without loss, secures the payment of the tax on all the shares, resident or non-resident; and, as we have already stated, it is the mode which experience has justified in the New England States as the most convenient and proper, in regard to the numerous wealthy corporations of those States. It is not to be readily inferred, therefore, that Congress intended to prohibit this mode of collecting a tax which they expressly permitted the States to levy.

It is said here in argument that the tax is void because it is greater than the tax laid by the State of Kentucky on other moneyed capital in that State. This proposition is not raised among the very distinct and separate grounds of defence set up by the bank in the pleading. Nor is there any reason to suppose that it was ever called to the attention of the Court of Appeals, whose judgment we are reviewing. We have so often of late decided, that when a case is brought before us by writ of error to a State court, we can only consider such alleged errors as are involved in the record, and actually received the consideration of the State court, that it is only necessary to state the proposition now. As the question thus sought to be raised here was not raised in the Court of Appeals of Kentucky, we cannot consider it.

JUDGMENT AFFIRMED.


text: Talk:National Bank v. Commonwealth/Opinion of the Court


text:
Jones v. Bolles

APPEAL from the Circuit Court for the District of Wisconsin; the case being thus:

Bolles, a citizen of Massachusetts, on behalf of himself and all other stockholders of the Mineral Point Mining Company, filed his bill of complaint in the court below against one Jones, and the said company, the former a citizen, and the latter a corporation, of Wisconsin, for an injunction to restrain Jones from suing for, claiming or demanding against the said company the purchase-money of a certain tract of mining land in Wisconsin, or any mineral rents for mineral raised on the same. The matter set forth in the bill as a ground for this relief was a charge of misrepresentation and fraud on the part of Jones, perpetrated at Boston in Massachusetts, in November, 1865, whereby he induced him, the complainant, Bolles, who was a broker, to purchase for himself and other persons a large amount of the capital stock of the said mining company. The substance of the specific charges was that Jones and others, agents of the company, represented to him, the complainant, Bolles, that the company was seized in fee of the said tract of land; that it had been conveyed to the company by him, Jones, for the consideration of $30,000, which had been fully paid and satisfied, and that the title of the company was perfect and unincumbered; and, to beget further assurance in him, the complainant, that they exhibited a warranty deed from Jones to the company, and an abstract of title, showing an unincumbered title to the lands; that they further represented that the land was of great value for mining purposes, and that Jones had no interest in the property; that the complainant being entirely ignorant of the facts except as represented to him by Jones, and relying on those representations, purchased on his own account and in trust for others a large amount of the capital stock of the company, and paid upwards of $25,000 for it, and afterwards sold still larger amounts to parties who paid for the same on the faith of the said assurance that the property was unincumbered. The bill then alleged that at the time of the giving of the deed referred to, an agreement was made between Jones and the company (a copy of which was set out), the existence of which was carefully concealed by Jones when he made the representations complained of (but which he now asserted to be valid and subsisting), by which he claimed a large balance to be due to him for mineral rents and purchase-money of the said lands, and threatened to bring an action against the company therefor, which, if successful, would greatly depreciate the stock of the company, and seriously embarrass it.

Jones in his answer to the bill, denied the principal charge in the aggregate as made (a mode of answer which this court observed, in passing, was altogether too narrow a mode of denial), admitted that he, with the president and secretary of the company, were in Boston at the time alleged and attended a meeting at Bolles's house, on the subject, and that he understood that the secretary had made representations to the effect complained of, but that the room was large and pretty well filled, and that he did not hear it. That he afterwards expostulated with the secretary for having made such a statement, and took some pains to inform some persons that it was not true. But he did not allege that he ever so informed the complainant. He denied that he made any such representations himself. He admitted the agreement complained of and insisted upon its validity. He did not deny Bolles's interest as alleged in the stock of the company, though he averred ignorance on the subject of it. Other points were made in the answer, but what has been stated is sufficient to show the principal issue made in the suit.

The Circuit Court, after full proofs, which showed among other things alleged, the purchase of the stock, decreed in favor of the complainant, enjoined the defendant from bringing any action against the company, directed him to execute a release, and declared the agreement entered into between the company and the defendant void. Whereupon Jones, the defendant below, appealed. No question was made on the examination below, as to Bolles still holding his stock.

Mr. M. H. Carpenter, for the appellant:

I. The whole of the complainant's case rests, as regards merits, upon loose verbal alleged admissions, made under circumstances of all others most likely to be misunderstood or misconstrued. They are susceptible of precisely the explanation given by the defendant; his explanation carries upon its face evidence of its truth. The attempt is to hold a party responsible for general conversation held at a kind of social party; that conversation relating to real estate, the title of which might have been fully understood by the examination of an abstract which was publicly exhibited. Can this be done?

II. But there are difficulties as to jurisdiction and pleading.

The basis of the prayer for relief is, that Jones threatens to bring a suit against his co-defendant, the mining company, upon a false and fraudulent claim, and that thereby the complainant is liable to suffer injury and sustain damage, and one of the defendants, the company, is liable to be greatly embarrassed in conducting its affairs. Assume all this to be true. Then,

1st. If Jones made false representations whereby the complainant was induced to purchase stock and was injured, the courts of common law afford an ample remedy. If he made true representations and afterwards attempted to do that which, if consummated, would operate as a fraud upon the complainant, the courts of law still afford a remedy. If his representations operated as an estoppel against his setting up a claim against the company, it would be as operative a defence at law as it would in equity. If the threatened action had been, or were to be brought by Jones, against the company, the answer would be that the claim is false, fraudulent, and brought for the purpose of extortion. This effords a perfect defence in law. If the claim were true and not false, but Jones had estopped himself from enforcing it by making false representations, that is, by representing to the purchasers that he had no claim against the company, and the contrary of those representations if acted upon, would injure and embarrass the company, the defence is still perfect in the action at law. A court of law has thus full and adequate jurisdiction of the subject-matter of the action, whatever may be the alleged particular phase of it.

Yet further. The case stated does not constitute an equitable cause of action. It does not show wherein or how much damage the plaintiff is liable to sustain, and does not pretend that any has been sustained. Courts of equity will indeed protect against great threatened injury where the mischief will be irreparable. But there is no allegation here of irreparable injury; no averment that Jones is irresponsible; no statement of facts from which injury can be inferred. The only allegation upon that subject is that the stock which plaintiff now holds is liable to become greatly depreciated in value.

The bill is not one for discovery. All of the facts are known, and susceptible of proof without any testimony to be furnished by the answer.

2d. But how does a court of equity, on such a case as the one assumed, acquire jurisdiction? The mining company is not charged with fault or collusion. It is not alleged that if sued by Jones, it will not defeat the action; nor that it is incapable of transacting its own business, and protecting its stockholders; nor is it shown how stockholders so large as the complainant and his associates, have not a sufficient control of the affairs of the company; nor that the company could not have brought an action in its own State court to remove a cloud upon its title, if it was likely to be embarrassed by Jones setting up a false and fraudulent claim. If then there is no collusion, or concert of action charged between the defendants, and relief be demanded against both or all in regard to the same thing, and no cause of action be stated against one, there is a misjoinder of parties as to both or all, and, of course, either may demur.

3d. The proof does not show that the complainant, Bolles, is the owner of any stock in the Mineral Point Mining Company. He avoids saying specifically that he owns any stock, or that he owned any at the time of filing the bill. No stockholder has united with him in prosecuting this action. If it be true that he owns one share, worth perhaps $5, he occupies the position of obtaining an injunction to restrain the company from paying an honest debt, of which his distributive share, if it were paid by an assessment, might be less than five cents.

No opposing counsel.

Mr. Justice BRADLEY, having stated the case, delivered the opinion of the court, as follows:

title: Jones v. Bolles


text: Talk:Jones v. Bolles

title: Talk:Jones v. Bolles


text:
Jones v. Bolles/Opinion of the Court

We have examined the proofs in the cause and find them to be very full and convincing against the appellant, and are satisfied with the decree of the Circuit Court, unless the same be invalid for some jurisdictional or technical reason.

It is objected that a court of equity has no jurisdiction of the case because the law affords a complete remedy in damages. This objection is groundless. Equity has always had jurisdiction of fraud, misrepresentation, and concealment; and it does not depend on discovery. But in this case a court of law could not give adequate relief. The agreement complained of is perpetual in its nature, and the only effectual relief against it, where the keeping of it on foot is a fraud against parties, is the annulment of it. This cannot be decreed by a court of law, but can by a court of equity.

It is next objected that there is a misjoinder of defendants by reason of making the mining company a party. But the company is directly interested, and though no relief is prayed against it, but rather in its favor, it is eminently proper that it should be made a party, complainant or defendant. It could not be made complainant against its will, and, besides, its own agents joined in the fraudulent representations that were made. As a separate and independent personality, therefore, distinct from the stockholder interest, there was propriety in making it a party defendant.

It is also objected that the appellee, Bolles, does not distinctly state or prove the amount of his interest in the company. The bill expressly states that the appellee purchased on his own account and in trust for other parties a large number of shares, and paid therefor upwards of $25,000; and then afterwards states that the appellant threatened to bring an action against the company to enforce his pretended claim for rents and purchase-money, whereby the stock of the company, which the appellee alleges he purchased in good faith, and which he still held, was liable to become greatly depreciated in value. This is surely an allegation of a large interest, and the statement is nowhere denied in the answer. The appellant avers only his ignorance on the subject. But the allegation is fully corroborated by the proof, at least so far forth as relates to the purchase of stock by the appellee. No question was made on the examination as to his still holding the stock.

We do not perceive any legal grounds of objection to the decree, and it is therefore.

AFFIRMED.

title: Jones v. Bolles/Opinion of the Court


text: Talk:Jones v. Bolles/Opinion of the Court


text:
Author:Thomas Mozley

Works

 * Reminiscences, Chiefly of Oriel, and the Oxford Movement, 1882.

As contributor:
 * The Times

title: Author:Thomas Mozley


text:
Mephams v. Biessel

THIS was an appeal in admiralty from the decree of the Circuit Court for the District of Missouri, in which one Biessel, on the one side, had filed a libel in personam against M. & W. Mepham, owners of the steamer Iron City, for wages as master and pilot; and in which they, on the other, sought to set off against the claim for services, at whatever sum these might be estimated, a demand that they made against Biessel for injury to certain flour, which on crossing a bar in the river (in order to lighten the vessel, and so get over the bar), it had been necessary to put ashore, and afterwards when the vessel had got over, with the rest of the cargo (that being unloaded and put ashore below the bar), to come back for and reload; and which was ultimately found to be sour; injured, as the Mephams asserted, by Biessel's carelessness in stowing it, when it was taken on board the second time.

The court below sustained the claim of the libellant, fixing his wages at $900 a month, and refused to allow the set-off raised by the other side.

Mr. Dick, for the appellant; Mr. Leighton, for whom Mr. Drake had leave to file a brief, contra.

Mr. Justice SWAYNE stated the case more particularly, and delivered the opinion of the court.

title: Mephams v. Biessel


text: Talk:Mephams v. Biessel

title: Talk:Mephams v. Biessel


text:
Mephams v. Biessel/Opinion of the Court

The only questions presented for our consideration are, the value of the services of the appellee as master and pilot of the steamer Iron City during the period of his employment upon her in those capacities, and whether he can be held liable upon the principle of recoupment for the damage sustained by a part of the cargo of the vessel upon her first voyage after he took charge of her as captain, which was a voyage from St. Louis Fort Benton, upon the Missouri River. The services commenced on the 16th of March, 1866, and terminated on the 26th of July following-making a period of four months and ten days. Four witnesses were examined. They were Biessel, the appellee; W. G. Mepham, one of the appellants; Bush, the mate, and Stone, the pilot. The leading facts, as developed in the proofs bearing upon the subject of compensation, are as follows:

Biessel had been in the employment of the Mephams as mate upon a steamer at $150 per month. He talked of seeking employment elsewhere, expecting to receive $300 per month. Captain Hunter, also in the employment of the Mephams, to whom he made the communication, requested him to remain until the captain could consult the owners. An interview took place. Biessel told them he had never served as captain, and doubted whether he would suit them in that capacity. They employed him as captain. It was usual to employ two pilots. Biessel found two who asked jointly $1600 per month. Pilots were much in demand at that time. He proposed to the owners to employ Stone as a pilot at $800 a month, and to serve himself as the other pilot, besides performing his duties as master. They assented, and assisted him to procure a pilot's license. The arrangement was carried out. Biessel testifies that the told them it would cost less than to employ two pilots, in addition to the captain. Mepham testifies that he said it should cost them nothing for pilotage but the wages of Stone. Here the parties are at issue, and there is no other testimony upon the subject.

The wages of pilots varied, according to the testimony, from $200 to $1000 per month. Biessel says the usual compensation of captains was $400 per month. Mepham testifies that they paid their three other captains $200 per month. The proof is satisfactory that Biessel performed his duty as captain well and faithfully, and that, in addition, he did full as much service as Stone in discharging the duties of pilot. The boat was impressed into the service of the United States, and was thus employed during a period of twenty-six days. For that time we are satisfied from the evidence that the services of Biessel were charged against the government, and paid for to the appellants, at the rate of a thousand dollars per month. Both parties agree that there was no special contract as to the compensation Biessel should receive. It is to be regretted that the proof is not fuller as to the wages at that time of both captains and pilots. It could have been easily made so, and would have relieved us from some embarrassment which we have felt in coming to a conclusion as to this branch of the case. The entire testimony of Biessel is characterized by a fairness and candor which have impressed us favorably in his behalf. The Circuit Court fixed his compensation as master and pilot at $900 per month.

After a careful examination of all the testimony in the record, we have found no sufficient reason to dissent from this allowance.

The claim for recoupment cannot be sustained. The flour to which it relates was in sacks, which were inclosed in other sacks. According to the shipping phrase it was 'doublesacked.' The shipper directed it to be carried upon deck. A part of it was originally placed in the hold. Upon discovering this, Biessel caused it to be removed to the deck, and directed that no more should be put in the hold. During the voyage, Bush, the mate, says it became necessary for the boat to 'double trip it,' in order to pass a bar. A part of the cargo was landed below the bar and a part above it. This flour was landed above. All the passengers, some fifty in number, assisted in unloading and reloading. Some of them in reloading put a part of the flour in the hold without the knowledge of the captain or mate. The mate subsequently saw it there, but allowed it to remain, and did not advise the captain. The captain knew nothing of it until the vessel reached Fort Benton. That part of the flour was then found to be soured. Mepham says the loss to the appellants was $10 a sack upon a hundred sacks, amounting to $1000. It was the duty of the mate to see to the loading. According to the testimony, the captain was not blamable. There was other flour in the hold during the entire voyage, which arrived at Fort Benton uninjured. There is some reason to believe that the spoiling of the flour in question arose from inherent causes, and not from its being kept under the deck.

There is nothing in the record which would warrant us in holding Biessel responsible.

AFFIRMED.

title: Mephams v. Biessel/Opinion of the Court


text: Talk:Mephams v. Biessel/Opinion of the Court


text:
Bank of Washington v. Nock

ERROR to the Supreme Court of the District of Columbia; where the case was thus:

The trustees of the Bank of Washington filed in May, 1867, a bill against Nock, complaining that in 1840, he having received a patent for a mail lock, made a contract with the Postmaster-General to furnish the government from time to time with the sort of patented lock, at a price stipulated, for the use of the government; that Nock, not having means at his command to manufacture the locks, agreed with the bank, if they would advance money for him, on his drafts on the Postmaster, or otherwise on the proceeds to arise from his said contract, to enable him to fulfil the same, that he would give them a specific lien on, and empower and authorize them to take out of said drafts, when paid, or proceeds, whenever realized, sufficient to repay to them the advances made, or to be made. The bill averred that under this arrangement they did make advances, and that Nock was so enabled to fulfil his contract; but that for some reason but a small amount of the said proceeds were ever realized by Nock until lately; that he still owed the bank $8078.82.

That some time after the principal part of the advances were made, Nock executed an agreement, on the 2d of December, 1852, with the bank, to make to him further advances to prosecute his claim for payment; and that they did make such further advances; Nock agreeing that 'the debt due by him to the bank for former advances, as well as the further advances then and thereafter to be made, for the purpose of prosecuting his said claim, should be first paid out of any receipts relaized by him from the government.'

That Nock, on the 6th of January, 1865, by written obligation, which was in these words, and signed by him: 'I hereby renew and revive my indebtedness and obligations to the Bank of Washington, arising out of certain advances made to me for drafts on the Postmaster-General of the United States in 1840, and all the accruing interest thereupon, as well as for any other advances which have been made to me, or which may be made to me, on any account whatever, by the said Bank of Washington,' did acknowledge all his said debt for the advances, and all the interest accruing thereon, and formally renewed his obligation to pay the same.

That after a long prosecution of his said claim, Nock had recently been awarded by the Court of Claims the sum of $27,000, in satisfaction of the contract to furnish locks, and the same was now about to be paid, but that Nock, refusing to pay the bank its advances, or to recognize the specific lien which it had on the fund, or the validity of his contracts, especially that of the 2d December, 1852, was about to and was seeking to receive the money, and to appropriate it to his own exclusive use, in contravention of equity.

The answer and proofs, which, independently of the answer, were few, showed the patent-right, and the contract with the postmaster, as alleged; that for the purpose of executing the contract Nock had got the advances; that he had drawn several drafts on the Postmaster-General, in reduction of them; that the drafts were all paid, and that the balance asserted remained unpaid. They showed, also, that about four months after the first sum of money advanced by the bank, Nock having now received about $3000 of advances, by an instrument dated June 6th, 1840, reciting the advances to that date, and reciting also his desire to secure, 'by an assignment of the patent, in manner hereinafter expressed,' payment not only of those advances but of all such further sums as might be thereafter advanced, transferred the patent to the bank, upon trust, in case of his failure to pay the bank the money advanced or to be advanced, as it became due, to sell the patent after sixty days' notice by advertisement, and reimburse itself.

The answer, which was not disproved on these points, further set forth that the government having annulled its contract with the respondent, he, for the purpose of procuring the means necessary to sue it in the Court of Claims, entered into the agreement of 1852; but that that prosecution resulted, A.D. 1864, in a judgment adverse to his claim. That desiring to begin a new suit against the government, and to get from the bank money to carry it on, he signed the paper of 1865; but that the bank had never advanced under that agreement but $100 (which the respondent professed himself ready to pay back), declaring that they had no confidence in his claim, and would never advance another cent; that the bank thus refusing to advance money to prosecute the case anew, it then became necessary for the respondent to make other arrangements to get money, and that by aid of these new arrangements with other persons, he procured an act of Congress referring his claim again to the Court of Claims, in which court, without any assistance from the bank, he prosecuted his claim anew, and after having laid out over $11,000 in doing so, got the award of $27,000, upon which the bank sought to fix a lien.

The answer expressly denied that the drafts which Nock drew were to be 'any lien on the contract,' though it admitted that they were founded on it, and made to enable the bank to receive pay for such locks as should be delivered, and the testimony of the officer of the bank with whom Nock made his original arrangement said: 'We made different advances at different times on drafts. The understanding was, that as soon as the locks were delivered we were to draw the money.' The bank prayed an injunction against Nock's drawing the amount of the judgment from the treasury until it was first paid its advances.

The Supreme Court of the district at special term granted the injunction and directed an account; but at general term dismissed the bill, when the bank brought the case by appeal here.

Messrs. Edward Swan and W. D. Davidge, for the bank:

It is submitted that the lien of the bank upon the fund is too plain for controversy. Without adverting to the effect of the drafts and the assignment of the patent, the lien is expressly declared and established by the agreements of December 2d, 1852, and January 6th, 1865.

The lien being established, the jurisdiction of equity to enforce payment attached.

Mr. Morris, contra:

The only lien really set up in the bill itself, notwithstanding its loose language-'or otherwise on the proceeds to arise from said contract'-is a lien on the drafts or their proceeds. The testimony of the officer of the bank who made the original arrangement, shows that this was the only lien thought of. All the drafts given were paid. The whole case, therefore, falls.

Independently of this, the alleged contract was made in 1840. Within four months of the first sum given, and while but a part of the money way yet advanced, Nock assigned his patent. That the patent had value is proved by the judgment in the Court of Claims for $27,000. It had value when assigned. This bill was filed in 1867. The bank has never offered to reassign. Nock could not, now, compel a reassignment. Had the bank sold, it could have retained the proceeds. This long retention of the patent-a retention for twenty-seven years-amounts to an appropriation of it for the advances. At all events, the bank should show that the security was exhausted. If it has held on to it till it has lost all value, it has no case for equity.

The agreement of 1852 don't keep alive a debt not sued for till 1867. And as an agreement to create one by its own force, the sufficient answer is, that the prosecution which it was meant to assert ended in an adverse judgment.

As to the paper of 1865, the whole consideration for it fails, the bank not having advanced money for the second suit, it being impossible to suppose that $100, which was all that was advanced under it, was what was meant to be advanced to prosecute a claim whose prosecution cost $11,000. Under pretence of an advance, its real purpose was to get an acknowledgment of a debt no longer capable of being enforced. And to use it for any purpose, would be to use it fraudulently. The lien, if the bank ever had any, was lost by the abandonment and refusal on their part to prosecute, or to permit means for the prosecution of the claim. And when thereon, upon his own resources-the bank having declared themselves unwilling to further prosecute, or to provide means for prosecution-Nock was left to proceed in his own way, they virtually accepted the then condition of the case, with an adverse judgment; and when thereafter Nock, with such assistance as was within his power, prosecuted the matter, he prosecuted it for his own benefit, and not for the benefit of the bank.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Bank of Washington v. Nock


text: Talk:Bank of Washington v. Nock

title: Talk:Bank of Washington v. Nock


text:
Bank of Washington v. Nock/Opinion of the Court

Advances were made by the complainants, as they allege, to enable the respondent to fulfil a certain contract which he had previously made with the Postmaster-General to furnish to that department a certain number of mail locks and keys for the postal service of the United States.

Prior to the date of the contract, to wit, on the sixteenth of July, 1839, the respondent had obtained letters patent for the lock to be furnished, as a new and useful improvement, with the exclusive right to make, use, and vend the same, for the term of fourteen years, and on the first day of August following he received orders from the head of that department for two hundred locks and six hundred keys, to be constructed in accordance with his patent.

Before the respondent had filled that order, to wit, on the eighteenth of November of the same year, he received another communication from the Postmaster-General, informing his that he was authorized to make mail locks and keys for the Post-Office Department, of certain specified descriptions, and at certain specified prices, and that orders would be given for the quantities required from time to time, as they were wanted, payment to be made on the delivery of the articles, as ordered for the use of the government.

Wanting more means than he had at command, to enable him to perform his contract, the respondent applied to the bank for a loan, and the complainants allege that he agreed, in consideration that they would advance money for him on his drafts on the Postmaster-General, to give the bank a specific lien on the drafts and their proceeds, whenever the same should be realized, to secure and reimburse the corporation for the full amount of the advances so made or to be made, with interest until the principal should be repaid. Cash advances to the respondent were accordingly made by the bank, under and by virtue of that agreement, and the complainants allege that the advances so made enabled the respondent to fulfil his contract, and to supply the locks and keys for the postal service, as ordered by the department.

Drafts were drawn on the Postmaster-General for the contract price of the locks delivered; but the complainants allege that, for some reason unknown to them, they never received more than two hundred dollars of the proceeds, and that there still remains due and owing to them for the advances made by them, including interest, the sum of eight thousand and seventy-eight dollars and eighty-two cents; that on the second of December, 1852, the respondent entered into a written agreement with the corporation, that if they would make him further advances to enable him to prosecute his claim against the government, the debt dute by him to the bank, for the former advances, as well as the further advances to be made, should be first paid out of any sums he might realize for his claim for the breach of the contract, and that the whole amount of the debt due to the bank should be paid without any discount if the amount he realized of his claim exceeded by thirty-three and one-third per cent. the amount of his debt to the bank.

They also allege that the respondent, on the eighth of January, 1865, by a written instrument of that date, under his hand and seal, acknowledged all the advances so made to him, and renewed and revived his said indebtedness and obligations to the bank for the said advances.

Moneys were subsequently advanced by the bank for the respondent to the amount of one hundred dollars, and they allege that the Court of Claims awarded in his favor the sum of twenty-seven thousand dollars, in full satisfaction for the damages claimed by the respondent for the acts of the department in annulling his contract to furnish such locks and keys for the postal service, and that he neglects and refuses to pay his indebtedness to the bank, or to recognize their specific lien on that fund, but that he is seeking to appropriate the same to his own exclusive use, which, as they allege, is contrary to equity and in fraud of their legal rights. Wherefore they pray that the advances they made to the respondent may be decreed to be a specific lien on the amount recovered in that judgment, and they also pray for an account and for an injunction to restrain the respondent from receiving this amount from the treasury of the United States.

Process having been issued and served, the respondent appeared and admitted that he was the original and first inventor of the lock in question; that he received letters patent for the same as a new and useful improvement, and that the made a contract with the Postmaster-General to furnish the same to that department for the postal service of the United States; that he received an order under that contract for one thousand and forty locks and seven hundred and fifty keys; that he subsequently filled the order, and that the proceeds thereof, except the sum of one hundred and fifty dollars, together with the proceeds of other parcels of the same patented lock and key, to the amount of fifteen hundred and ninety-three dollars and thirty-five cents, were paid to the bank; that all locks and keys manufactured and delivered under the contract were paid for by the department, except twelve hundred, which the Postmaster-General refused to accept, and which the respondent delivered to the bank, in whose possession they have ever since remained, unavailable to the respondent.

Fearful that the proceeds of the drafts would not be sufficient to satisfy the claim for the advances, the officers of the bank demanded further security, and the respondent alleges that thereupon he assigned to the corporation his whole interest in the letters patent for the lock in question, and that the bank continued to hold the same until the letters patent expired. He admits that he executed the drafts and that they were drawn to enable the bank to receive the proceeds of the locks and keys as manufactured and delivered to the department, but he expressly denies that there was any understanding or agreement that the drafts were to be a lien on the contract, as alleged in the argument of the appellants.

Separate defences are also presented to the subsequent agreements set up by the appellants, and in respect to that of the second of December, 1852, he alleges that the advances were made to pay for the services of an agent to procure an extension of the patent and to prosecute his claim against the government for the annulment of his contract; that they were not made a lien on the contract, as supposed by the appellants, and that the application for the extension of the patent was refused, and that the suit in the Court of Claims to recover damages for a breach of the contract resulted in an adverse judgment.

Apart from that defence he also alleges that the bank employed the same agent and agreed to give him one-third of whatever sum they might receive towards their claim, in case the agent was successful in procuring the extension of the patent, or the allowance of the claim.

In his answer the respondent also admits the execution of the agreement of the sixth of January, 1865, but he alleges that he never received under it more than one hundred dollars, and that when he needed funds to enable him to prosecute his claim to a successful result, the appellants refused to make him any advances, and informed him that they had no confidence in his claim, and that they would not advance him a dollar for that purpose.

By the order of the court the cause was referred to an auditor, and he reported that the several advances made to the respondent amounted to eight thousand seven hundred dollars and thirty-three cents, and the court, at a special term, on the fifth of August, 1867, entered a decree in favor of the complainants for that amount. But the respondent appealed to the full court in general term, where the decree was reversed and a decree entered dismissing the bill of complaint. Whereupon the complainants appealed to this court, and still insist that their claim is a lien upon the judgment recovered by the respondent against the United States in the Court of Claims.

Liens existed at common law, and they usually arise by statute or by contract, or by the usages of trade or commerce. Such a contract, if alleged, must be proved, and when proved the rights of the parties depend upon the terms of the contract.

The complainants contend that their claim is a lien upon the judgment recovered by the respondent, but he denies that proposition and insists that he never entered into any such contract. Before examining that question, however, in its general aspect, it becomes necessary to inquire and determine whether by the terms of the original arrangement it was agreed and understood between the parties that the advances made by the bank to the respondent were to be a lien upon the contract made by the respondent to manufacture the locks and keys and deliver the same to the Postmaster-General, or whether those advances were only to be a lien on the drafts to be drawn by the respondent for the proceeds of the locks and keys so manufactured and delivered, after the proceeds became due and payable.

Evidently the views of the complainants cannot be sustained by virtue of the original arrangement, unless they had a lien upon the contract between the government and the respondent, as the drafts drawn for the proceeds have all been paid and adjusted to the satisfaction of all concerned. Suffice it to say on this point that the complainants do not allege in the bill of complaint that they had any lien upon the contract; and if they had done so the allegation would not be of any avail, as the answer expressly denies the existence of any such lien, and there is nothing in the proofs to sustain any such theory.

What they do allege is, that they had a specific lien upon the drafts drawn for the proceeds of the locks and keys manufactured and delivered, but it is not alleged that there were any such drafts outstanding and unpaid by the government, which were included in the judgment recovered by the respondent. On the contrary, it is alleged in the answer, and not denied by the complainants, that all the drafts drawn for locks and keys manufactured and delivered to the department were paid in full by the government.

Twelve hundred locks were manufactured, which were refused by the Postmaster-General, but the averment of the answer is, that they were delivered to the bank, and it does not appear that any draft or drafts for the contract price of those articles were ever drawn, presented, or refused. Such advances were made by the bank at different times, and one of the appellants testifies that the understanding was that they were to draw the money as soon as the locks were delivered, and that the orders were given to enable them to draw the money due for locks and keys furnished to the department; and the respondent testifies that the whole amount due for the locks furnished was paid by the government either to him or to the bank.

Much of the respondent's indebtedness to the bank was contracted prior to the sixth of June, 1840, and on that day he assigned his whole interest in the letters patent to the bank, or to one of the appellants for the benefit of the bank, as security for such advances, with authority, in case he should fail to pay the same when the advances became due, to sell and dispose of the patent at public or private sale, first giving sixty days' public notice of such sale, as provided in the instrument of assignment.

Dissatisfied with the arrangement the department refused to give further orders for the locks and keys, and on the sixth of December, 1841, the department annulled the contract, and entered into a new contract with another party to supply the locks and keys for the postal service of the United States.

All the drafts drawn by the respondent for the proceeds of locks and keys furnished to the department had been paid, and he had no claim upon the United States except for the breach of the contract.

Suppose all these suggestions are correct, still the complainants refer to the agreement of the second of December, 1852, and insist that they are entitled to a decree by virtue of that instrument. Undoubtedly the effect of that instrument was to renew and revive the original promise of the respondent to pay to the bank any balance which he owed the corporation for those prior advances, but it did not have the effect to renew or revive any prior lien on the contract between the respondent and the government, because no such prior lien ever had any existence. It removed the bar of the statute of limitations, but its effect in all other respects was only prospective.

Briefly stated, the terms of the instrument are, that the bank shall advance such sums of money as they may think proper for the necessary costs and expenses in prosecuting the claim of the respondent against the government, and that he, the respondent, agrees, in consideration thereof, that their debt against him, together with the sums so advanced, shall first be paid out of any receipts realized from the government. Certain advances were accordingly made for that purpose, an agent was employed, a suit was instituted in the Court of Claims but nothing was recovered, and the result was an adverse judgment against the claimant. Both the bank and the claimant abandoned the prosecution of the claim, and nothing further was done in that behalf for the period of twelve years. Nothing in fact was ever done by the bank or the respondent under that agreement after the suit was determined in favor of the United States.

Conditioned, as the instrument was, that the debts of the bank were to be paid out of the receipts which they might collect from the government, our conclusion is, that the supposed lien never attached to the claim of the respondent, as nothing was ever collected. Beyond doubt he owes the debt, as he received the advances, but the question is whether the bank acquired any lien by virtue of that instrument, and our conclusion is that no lien was created by it, because nothing was collected from the government.

Years elapsed before the respondent made any further attempt to obtain damages for the refusal of the Postmaster-General to fulfil the contract. Some new powers had been conferred upon the Court of Claims, and the respondent employed a new agent, who succeeded in procuring the passage of a resolution by Congress, referring the matter again to the Court of Claims for their adjudication. Encouraged by this resolution he instituted a new suit in the Court of Claims, and on the sixth of January, 1865, he gave the bank another written agreement renewing and reviving his indebtedness and obligations arising out of certain advances made to him for drafts on the Postmaster-General, and for all accruing interest, as well as for any other advances which have been or may be made by the said bank.

Reference is made by the plaintiffs to this instrument as showing a lien on the judgment in question in behalf of the complainants, but it is quite clear that the language of the instrument will not admit of any such construction. Unquestionably it is a new promise, but it contains no language whatever to support the theory that the parties intended that it should have the effect to create a lien in favor of the bank upon the claim of the respondent against the United States.

Special reference is made in the instrument to the advances made for the drafts drawn on the Postmaster-General, not as creating or recognizing any lien on the original contract, but as descriptive of the indebtedness and obligations which it was the purpose of the respondent to renew and revive.

Two indorsements were made on the instrument, to wit, one for sixty dollars and the other for forty dollars, and it is true that those indorsements contain the recital that those sums were advanced in aid of the claim of the respondent, and that the appellants, as trustees of the bank, have an interest in the claim, but it is not there stated, even if the indorsements are competent evidence, what their interest is, nor that they have any other or greater interest than other creditors. They do not pretend that they advanced more than those two sums under the last agreement, and they admit that the respondent several times applied to them for money, and that they refused to supply his wants, which fully supports the allegations of the answer.

His theory is that they agreed to advance what was necessary to pay the expenses in the new prosecution of the claim, but the complainants deny that proposition, and insist that they let him have all they agreed to furnish, and if that allegation is true it affords strong ground to conclude that the instrument under consideration never was intended to create any such obligations as is supposed by the appellants. But if it will admit of such a construction then it is clear that the complainants cannot recover, as they never fulfilled the contract. They never advanced but one hundred dollars, and it is part belief that either party ever supposed that the expenses of prosecuting the claim to a successful result would not exceed that sum.

DECREE AFFIRMED.


text: Talk:Bank of Washington v. Nock/Opinion of the Court


text:
Bushnell v. Kennedy

ERROR to the Circuit Court for the District of Louisiana; the case being thus:

The 11th section of the Judiciary Act, a section which defines the original jurisdiction of the Circuit Courts, enacts:

'That the Circuit Courts shall have original cognizance, concurrent with the courts of the several States, of all suits of a civil nature at common law or in equity, when the matter in dispute exceeds, exclusive of costs, the sum or value of $500, and the United States are plaintiffs or petitioners,. . . or the suit is between a citizen of the State where the suit is brought and a citizen of another State.'

But the section gives this original cognizance subject to two limitations, of which one runs thus:

'Nor shall any District or Circuit Court have cognizance of any suit to recover the contents of any promissory note or other chose in action in favor of an assignee, unless a suit might have been prosecuted in such court to recover the said contents if no assignment had been made, except in cases of foreign bills of exchange.'Having thus conferred and limited the original jurisdiction, the act in the 12th section provides:

'That if a suit be commenced in any State court against an alien, or by a citizen of the State in which the suit is brought against a citizen of another State,. . . and the defendant shall, at the time of entering his appearance in such State court, file a petition for the removal of the cause for trial into the next Circuit Court,. . . it shall then be the duty of the State court to accept the surety, and proceed no further in the cause,. . . and the cause shall then proceed in the same manner as if it had been brought by original process.'

With these enactments in force, Kennedy & Co., merchants of New Orleans, brought suit against Bushnell, to recover from him the balance of ten thousand dollars, which had been intrusted or lent by them to Mills & Frisby, doing business at Baton Rouge, for the purchase of cotton, to be shipped to the firm in New Orleans. Bushnell borrowed the whole sum of Mills & Frisby under a promise to return it within six days; repaid, in fact, twenty-five hundred dollars, but failed to refund the balance. Thereupon, Mills & Frisby assigned all their claim to the debt of Bushnell to Kennedy & Co., who filed their petition against him in the Third District Court of New Orleans, and prayed a writ of attachment, which was issued accordingly.

Certain parties, resident in New Orleans, were made garnishees, and required to answer interrogatories touching the moneys, credits, or property of Bushnell in their hands, or under their control. These interrogatories were answered by the peremptory denial of the garnishees that they had in their hands, or under their control, anything belonging to Bushnell. Afterwards, a citation was issued against Bushnell, and served personally upon him, requiring an answer to the petition. Thereupon he appeared and filed a petition, averring that all the members of the firm of Kennedy & Co. were citizens of Louisiana, and that he was a citizen of Connecticut, and prayed that the suit against be removed into the Circuit Court of the United States for the District of Louisiana. This petition was allowed, and the cause removed according to its prayer. But, by an order of the Circuit Court, the suit was remanded to the State District Court, and it was this order which was brought here for revision by the writ of error.

That Kennedy & Co., as assignees of Mills & Frisby, were entitled, under the laws of Louisiana, to sue in the State court upon the debt assigned to them, in their own names, was apparently conceded upon the argument at the bar. But it seemed to have been the opinion of the Circuit Court that they could not maintain a suit in that character in a court of the United States without averring in their petition that their assignors, Mills & Frisby, were citizens of another State than the defendant, entitled, if no assignment had been made, to maintain suit upon the debt against the defendant; the ground of this opinion, doubtless, having been the disability to sue in the National courts, imposed by the already quoted 11th section of the Judiciary Act upon the assignees of a chose in action, in cases of which those courts would not have jurisdiction if the suit were brought by the assignors.

Mr. Durant, in support of the order below:

A suit brought by original process in a Circuit Court of the United States, on a chose in action assigned to the plaintiff, must show on the face of the record that the action could be maintained under the jurisdiction of the court if no assignment had been made, but the petition originally filed in the State court, and transferred to the United States Circuit Court, does not show on its face that the parties, Mills & Frisby, who assigned the claim sued on to Kennedy & Co., could have brought suit against Bushnell by original process in the Circuit Court. The Circuit Court was, therefore, on the face of the record, without jurisdiction.

The theory of the 11th section of the Judiciary Act of 1789 is, that the civic title or quality of citizenship pertaining to him who assigns a chose in action is transferred by the assignment to the assignee, and will disqualify the latter, however qualified otherwise he may be, from suing in the Circuit Court, if the former were himself disqualified; and if his quality be not affirmatively set forth, it is as if he were presumed to be disqualified, and the suit cannot be maintained; or, as an equivalent expression, the citizenship of the assignor of the chose in action must be alleged in the petition. This necessity goes into the 12th section, which expressly enacts that the cause, when transferred, shall 'proceed in the same manner as if it had been brought by original process.' Had this cause been brought by original process, confessedly it would have been dismissed.

Mr. Ashton, contra.

The CHIEF JUSTICE delivered the opinion of the court.

title: Bushnell v. Kennedy


text: Talk:Bushnell v. Kennedy

title: Talk:Bushnell v. Kennedy


text:
Bushnell v. Kennedy/Opinion of the Court

That the indebtedness of Bushnell to Mills & Frisby was a chose in action cannot be doubted; for under that comprehensive description are included all debts and all claims for damages for breach of contract, or for torts connected with contract. Nor can it be denied that every suitor who brings an action in a court of the United States must aver in his pleadings a state of facts which, under the National Constitution and laws, gives to the court jurisdiction of his suit.

In the case before us the suit was brought in the State court, where no question of jurisdiction, founded upon citizenship, could arise. In that court, therefore, there was no necessity for any averment in respect to citizenship. But under the 12th section of the Judiciary Act, any defendant, being a citizen of another State than the plaintiff or petitioner, is entitled, upon application at the proper time, to have his cause removed to a Circuit Court of the United States; and in the case under consideration, the defendant filed his petition, averring the requisite facts as to his own citizenship and the citizenship of the petitioners, and, thereupon, obtained an order for removal.

The order was, doubtless, rightly made. The jurisdiction of the cause was regularly transferred to the Circuit Court, and the cause stood in that court as if brought there by original process. The jurisdiction thus acquired by the Circuit Court was in no sense appellate. Removal, under our peculiar system of State and National jurisdictions, is simply a mode in which the right to resort under certain circumstances to the latter rather than the former is secured to defendants as well as plaintiffs.

(1st.) Whether the 11th section of the Judiciary Act applies to a suit instituted by the assignees of such a chose in action as is shown in the pleadings? and—

(2d.) Whether valid objection can be taken to jurisdiction of such a suit when removed to the Circuit Court by the defendant under the 12th section.

Upon the first question, it may be observed that the denial of jurisdiction of suits by assignees has never been taken in an absolutely literal sense. It has been held that suits upon notes payable to a particular individual or to bearer may be maintained by the holder, without any allegation of citizenship of the original payee; though it is not to be doubted that the holder's title to the note could only be derived through transfer or assignment. So, too, it has been decided, where the assignment was by will, that the restriction is not applicable to the representative of the decedent. And it has also been determined that the assignee of a chose in action may maintain a suit in the Circuit Court to recover possession of the specific thing, or damages for its wrongful caption or detention, though the court would have no jurisdiction of the suit if brought by the assignors. And it has recently been very strongly argued that the restriction applies only to contracts 'which may be properly said to have contents;' 'not mere naked rights of action founded on some wrongful act, some neglect of duty to which the law attaches damages, but rights of action founded on contracts which contain within themselves some promise or duty to be performed.'

And this view of the restriction seems to be warranted by the consideration of the mischief which it was intended to prevent. Not a little apprehension was excited at the time of the adoption of the Constitution in respect to the extent of the jurisdiction vested in the National courts; and that apprehension was respected in the Judiciary Act, which soon afterwards received the sanction of Congress. It was obvious that numerous suits, by assignees, under assignments made for the express purpose of giving jurisdiction, would be brought in those courts if the right of assignees to sue was left unrestricted. It was to prevent that evil and to keep the jurisdiction of the National courts within just limits that the restriction was put into the act.

This view has the sanction of Chief Justice Marshall, who, in the case of the Bank of the United States v. The Planters' Bank of Georgia, used this language: 'It was apprehended that bonds and notes given in the usual course of business, by citizens of the same State to each other, might be assigned to the citizens of another State, and thus render the maker liable to a suit in a Federal court.'

And when it is remembered what class of actions it is, which, upon the principles of the common law, can be maintained by an assignee in his own name, it may well be admitted that it would not have been an unreasonable construction of the restriction if it had been applied only to notes, bonds, and other written contracts, containing promises to pay money, upon which an assignee could sue without using the name of the assignor. Of such contracts, certainly, it may with more propriety be said that they have 'contents,' than of claims for damages arising either from torts or from breaches of contracts.

It is true that at an earlier day a different construction was given to it. In Sere v. Pitot, it was held that an assignee, by act of the law, as the general assignee of the effects of an insolvent, could not sue in the Circuit Court unless the insolvent himself might sue. It is not easy to reconcile this opinion with the later jndgments; but it is not necessary now to determine definitely the true construction of the restriction, as we think that the jurisdiction of the Circuit Court over the cause before us can be well supported on the 12th section. That section, as we have already stated, provides for the removal of suits by defendants. The restriction in the 11th section is not found in the 12th. Nor does the reason for the restriction exist. In the 11th section its office was to prevent frauds upon the jurisdiction, and vexation of defendants, by assignments made for the purpose of having suits brought in the name of assignees, but in reality for the benefit of assignors. In the 12th it would have no office, for the removal of suits could not operate as a fraud on jurisdiction, and was a privilege of defendants, not a hardship upon them.

It is true, indeed, as was said in argument, that the section provides that after removal 'the cause shall then proceed in the same manner as if it had been brought by original process;' but we cannot recognize the validity of the inference that the defendant, before pleading in the Circuit Court, may move to dismiss the suit for want of jurisdiction. This construction would enable the non-resident defendant in a State court to remove the suit against him into a Circuit Court, and then, by a simple motion to dismiss, defeat the jurisdiction of both courts. Such a construction, unless imperatively required by the plain language of the act, is wholly inadmissible. And it is clear that the language of the act does not require it. Its plain meaning is that the suit shall proceed, not that it shall proceed unless the defendant moves to dismiss. The defendant is not in court against his consent, but by his own act, and the suit is to proceed as if brought by original process, and the defendant had waived all exception to jurisdiction, and pleaded to the merits. Under the 11th section the exception to jurisdiction is the privilege of the defendant, and may be waived; for the suit is still between citizens of different States, and the jurisdiction still appears in the record. The first act of the defendant, indeed, under the 12th section, is something more than consent, something more than a waiver of objection to jurisdiction, it is a prayer for the privilege of resorting to Federal jurisdiction, and he cannot be permitted afterwards to question it.

We cannot doubt, therefore, that the Circuit Court had jurisdiction of the case under consideration. We are all of opinion that the court erred in remanding the cause to the jurisdiction of the State court, and the order to that effect must be

REVERSED.


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


text:
Noonan v. Bradley

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

In October, 1855, Noonan, the defendant in the court below, purchased of one Lee, and received from him a warranty deed of certain real property situated in the State of Wisconsin, and for the purchase-money gave his bond in the penal sum of eight thousand dollars, conditioned to pay four thousand dollars in four equal annual instalments, with interest, secured by a mortgage on the property. At that time the premises were in the possession of one Orton, holding them adversely to Lee, and in consequence of this fact Noonan required from Lee, as a condition to the delivery of the bond, an agreement against its enforcement in case his title to the land should fail (except as against the United States for the portion of the river (Milwaukee) beyond a certain designated line), and to deduct from the sum stipulated the amount of any incumbrances which might be found on the property. Such an agreement was accordingly given, and was indorsed on the bond. It was as follows:

I agree, if my title fails to the property for the consideration of which this bond is given, except as against the United States, for the portion of the river beyond the meandered line, that I will not enforce this bond; and if any incumbrances shall be found, that the amount of the same shall be deducted from the moneys to fall due on this bond.

J. B. LEE.

A clause in the mortgage provided, that upon default of Noonan to pay any of the instalments of the principal, or the interest, or the taxes on the property, as they became due, the entire principal of the bond with interest should, at the option of Lee, be immediately payable.

In March, 1859, default having been made in the payment of the several instalments, Lee elected to claim the entire amount as due, and brought suit against Noonan and others in the District Court of the United States for the District of Wisconsin, then exercising Circuit Court powers, to foreclose the mortgage, praying in his bill for a sale of the mortgaged premises, the payment of the debt secured, and for general relief. Noonan answered the bill, setting up that Lee's title had failed before the commencement of the suit; but the court, by its decree, made in January, 1860, found that there was due on the bond a sum exceeding five thousand dollars, and directed a sale of the mortgaged premises, and the application of the proceeds to the payment of the amount found due, and that if the proceeds were insufficient the marshal should report the deficiency, and Noonan should pay it with interest, and in default of such payment the complainant should have execution therefor.

From this decree Noonan appealed to this court, and, pending the appeal, for the purpose of trying his title to the land purchased, brought ejectment in one of the Circuit Courts of the State of Wisconsin against Orton, the party in possession. He then gave notice to Lee of the action, and required him to undertake its management. Lee at once retained counsel, who, for him, assumed the conduct of the action.

Pending the appeal in this court, and the action of ejectment in the State court, Lee died domiciled in New York, and Bradley, the plaintiff in this case, was duly appointed by the proper tribunal in that State administrator of his estate. On his application, Bradley was then substituted as representative of his intestate on the record in the case on appeal in this court.

At the December Term, 1862, this court gave its decision in the case, adjudging that the District Court erred in ordering the defendant Noonan to pay and deficiency which might remain of the principal and interest of the mortgage debt after applying the proceeds of the sale, and that complainant have execution therefor. To this extent the decree was reversed; in other particulars it was affirmed.

In the opinion delivered on rendering the decision the court observed, that upon the facts disclosed by the record it found no defect in the title of Lee, and that Noonan's title had not failed. In this language reference was of course had to the title as it appeared upon the evidence presented at the hearing in the District Court in January, 1860.

Afterwards, in January, 1863, final judgment was rendered in the action of ejectment in the State court in favor of Ortion, the party in possession, and against Noonan, upon the ground that the latter was not seized in fee of the premises, and acquired no title by his purchase from Lee, and that Orton was thus seized.

When Lee died there were effects of value belonging to him in Wisconsin, and in February, 1865, one T. L. Ogden was duly appointed administrator of those effects by a tribunal having jurisdiction of the matter in that State; and he qualified and entered upon the discharge of his duties as administrator, and when this action was commenced had in his possession the bond given by Noonan to Lee on the purchase of the premises.

In September, 1866, Bradley, as administrator of the estate of Lee, under the appointment in the State of New York, brought the present action upon this bond of Noonan. The declaration set forth his title as administrator under this appointment, and contained four counts.

1 The first count was on the penalty of the bond simply.

2 The second was on the bond, setting out the condition written in the bond, and averring breach of the condition.

3. The third was on the bond, setting out the condition, averring a breach of the condition; and that Lee commenced suit to foreclose the mortgage given to secure the bond; the decree of the District Court, the appeal by Noonan; and that the Supreme Court, pending the appeal, substituted Bradley as administrator, affirmed a part of the decree; that Bradley filed the mandate in the court below; that a sale was had and confirmed, and $53.56 was applied 'to the sums so due, by the terms of the said condition of said bond, and by the terms of said decree as aforesaid.' 'Yet the said defendant hath not paid said several sums mentioned in said bond,' &c.

4. The fourth count was on the bond, giving a copy of the whole bond, and the indorsement upon it, and setting out the proceedings in the foreclosure suit more fully, and concluding: 'Yet the said defendant hath not paid said several sums mentioned in said bond, and the condition thereof, nor either of them, nor any part thereof,' &c.

Every count of the declaration was upon the bond itself, not upon the decree in the foreclosure suit, and the breach alleged as furnishing the cause of action was the non-payment of the money called for by the bond.

To the declaration the defendant interposed three pleas:

1st. That as to the supposed causes of action mentioned therein, the plaintiff was not and never had been administrator of the effects of the deceased.

2d. That there were effects of value of the decedent at the time of his death in the State of Wisconsin, among which was the bond in suit; that T. L. Ogden was duly appointed by a tribunal in that State administrator of those effects, and had qualified and entered upon, and was engaged in the discharge of his duties as such officer at the time the action was commenced; and that by reason of this appointment and qualification, the effects of the decedent, in Wisconsin, were, under the laws of that State, vested in him, with all rights of action in relation thereto, and that as a consequence the letters issued to the plaintiff in the State of New York, with reference to the causes of action stated in the declaration, were void and of no effect.

3d. That the title of Lee to the premises sold had failed, the plea setting up the agreement indorsed on the bond, and the proceedings and judgment in the ejectment suit, to bring the case within the agreement.

To the pleas the plaintiff demurred; the Circuit Court sustained the demurrer, and entered final judgment thereon in favor of the plaintiff for the penalty of the bond; and the defendant brought the case to this court on writ of error.

Messrs. M. H. Carpenter and I. P. Walker, for the plaintiffs in error; Mr. J. S. Brown, contra.

Mr. Justice FIELD, after stating the case, delivered the opinion of the court, as follows:

title: Noonan v. Bradley


text: Talk:Noonan v. Bradley

title: Talk:Noonan v. Bradley