text:
Williams v. Louisiana/Opinion of the Court

A suit was brought by the Attorney-General of Louisiana in the name of the State, in the Superior Court of the District for the Parish of New Orleans against Charles Clinton, State auditor, and Antoine Dubuclet, State treasurer. The petition enumerated a great number of claims against the State which it declared to be illegal and void, and which it was feared the auditor would allow, and the treasurer pay, against which action the petition prayed for an injunction. Among these claims, the only one which demands our attention was one for $2,500,000 of State bonds issued under the act of the legislature ture of April 20, 1871, entitled 'An Act to relieve the State from its obligation to guarantee the second-mortgage bonds of the New Orleans, Mobile, and Chattanooga Railroad Company.' While there were several grounds of objection stated in the petition, the only one which concerns us is the allegation that the issue of these bonds was an an attempt to create a debt of $2,500,000, when the limit to the State debt of $25,000,000, as fixed by the amendment to the State Constitution of 1870, had already been exceeded. In this suit the New Orleans, Mobile, and Texas Railroad Company, successors to the New Orleans, Mobile, and Chattanooga Railroad Company intervened, and the temporaty injunction was dissolved.

On appeal to the Supreme Court the order dissolving the injunction was reversed, and when the case came back to the court of original jurisdiction for further proceedings, Williams and Guion were permitted to intervene for their interest as holders of three of the bonds of $1,000 each, the payment of which was sought to be enjoined in the suit.

The Superior Court decreed the bonds to be void, and perpetually enjoined the treasurer from paying them on their interest coupons, and on appeal to the, Supreme Court that decree was affirmed. It is this final judgment of the Supreme Court of the State that the present writ of error sued out by Williams and Guion seeks to review.

The reason why the State court held these bonds void is that by an amendment of the Constitution of the State, adopted in 1870, no debt should be thereafter created which, added to the debt of the State then existing, would swell the total amount above $25,000,000; and that amount had been reached before the issue of the bonds in question and before the act of the legislature under which they were issued had been passed.

Counsel for defendants in error insist that the writ of error should be dismissed for want of jurisdiction.

They say that the suit is one in the courts of their own State, to which the State itself is a party plaintiff, against its own officers, and the decision rested entirely on the construction of the Constitution and laws of the State, and that no question of Federal law is involved in it. If this be strictly true, their contention should be sustained.

In answer to this, it is said that the bonds held by the intervenors were founded on an obligation which existed prior to the constitutional amendment, and did not, therefore, add to the debt which existed when that amendment was adopted. This is denied by the counsel for the State, and upon the solution of this question the whole case depends, both as to its merits and as to the jurisdiction of this court. For it is insisted by plaintiffs in error that if their contract existed in effect before the amendment, the amendment as construed by the State court impairs the obligation of that contract, and this court can review that question; while if the bonds constitute a new and independent contract, the constitutional provision was properly applied to them and the judgment is right. As this is the question we are to decide, and as it was raised and insisted on by the plaintiffs in error in the court below, we think this court has jurisdiction.

The bonds in question were, as we have already said, issued under an act of the Louisiana legislature, approved April 20, 1871, which was after the constitutional amendment had become come operative. That amendment, which went into effect in December, 1870, declares 'that prior to the first day of January, 1890, the State debt shall not be so increased as to exceed twenty-flve millions of dollars.'

That the State debt already exceeded that sum when the bonds were issued, and, indeed, when the act was passed under which they were so issued, is not denied. But, as already stated, the effect attributed to these facts is denied, on the ground that they were issued in lieu of and in extinguih ment of an obligation of the State existing when the constitutional amendment was adopted.

To determine the soundness of this proposition, it is necessary to examine the statute which authorized their issue, and the nature of the supposed obligation on which the later transaction is said to be founded. The statute reads as follows, and is here given in full:--

'An Act to relieve the State from its obligation to guarantee     the second-mortgage bonds of the New Orleans, Mobile, and      Chattanooga Railroad Company, under an act of the General      Assembly approved February 21, 1870, by subscription on the      part of the State to the capital stock of said corporation,      and to regulate the conditions of such subscription, and to      secure the construction of the road of said corporation from      Vermilionville to Shreveport.

'SECT. 1. (a.) Be it enacted by the Senate and House of     Representatives in General Assembly convened, that the      governor of this State be and is hereby authorized to      subscribe for twenty-five thousand shares of $100 each of the      capital stock of said corporation on behalf of this State,      and to receive the certificates of stock therefor as payment      shall be made for the same, which certificates shall be      deposited by him in the office of the treasurer of this      State, and shall not be assignable of transferable except by      authority of the General Assembly.

'(b.) And be it further enacted, &c., that whereas the     subscription for stock and the issue of bonds therefor herein      provided are intended to extinguish the obligation of the      State to indorse or guarantee the second-mortgage bonds of      said corporation, under the act of the General Assembly      relative to said corporation, approved proved February 21,      1870, and as a discharge of either party from all obligations      for the issue, indorsement, guarantee, and security of said      mortgage bonds, as provided in the fourth section of said      act; the said corporation shall be required, at or before the      complete issue of said bonds, to file with the secretary of state a      full release and acquittance of the obligations of the State      so created to guarantee said mortgage bonds, and for which      the provisions of this act are designed as a substitute and      discharge; and the said corporation shall, by its express      agreement made and entered into by the vote of its board of      directors, and attested by its seal and the signature of its      secretary, obligate itself to commence that part of its      railroad from Vermilionville to Shreveport within six months,      and to complete the same within the time limited therefor in      said act of the General Assembly: Provided, that the said      corporation may purchase from this State the said shares of      stock at their par value, at any time prior to the maturity      of the bonds issued therefor, and may pay for the same in      lawful money or in any of the bonds of this State at their      par value.

'SECT. 2. Be it further enacted, &c., that for the payment of     said subscription bonds of this State shall be issued, signed      by the governor and secretary of state, and sealed with the      seal of the State, payable not less than thirty-five, nor      more than forty years from their date, with interest at the      rate of eight per cent per annum, payable semi-annually in      the city of New York, on the first days of January and July      of each for which interest coupons bearing a fac-simile of      the signature days of January and July of each year, shall be      attached to the bonds, and annually from and after the      issuing of the said bonds or any part thereof, there shall be      imposed for each fiscal year a State tax of one mill on each      dollar of the valuation, for each year, of the real and      personal property in the State, subject to taxation, which      tax shall be assessed, levied, and collected in current      moneys by the annual assessment and collection of taxes for      each year, in the manner prescribed by law for the collection      of other taxes, and the moneys derived therefrom shall      immediately on collection be paid into the treasury of this      State as a distinct fund, and kept as a separate account  and      such moneys and all moneys received from said company for      dividends on said stock shall be applied in each and every      year, first to the payment of the interest as it shall accrue      on the said bonds, and the balance, in each year, shall be      applied to the purchase of said bonds; such tax shall      continue to be so assessed, levied, and collected in each and      every year until all the interest and principal of said      bonds, which shall from time to time remain outstanding,      shall be fully paid; and all bonds and coupons so purchased      and paid, shall be immediately cancelled by the said      treasurer.

'SECT. 3. Be it further enacted, &c., that from and after the     subscription aforesaid and the issue of the certificates of stock, and      during the time the State shall own the same, the State shall      be represented at the corporate meetings of the stockholders;      and in the board of directors to be chosen by the other      stockholders under the charter of their incorporation by the      governor of the State for the time being, or by his proxy or      by another director to be designated by the governor, whose      duty it shall be to attend all the meetings, and perform all      the duties incident to the office of directors, but that the      directors thus appointed shall not vote in the elections of      the board of directors provided for in the act of      incorporation.'

The act of February, 1870, here referred to is an act of many sections and subsections for the benefit of the New Orleans, Mobile, and Chattanooga Railroad Company, giving it increased privileges in the city of New Orleans, authorizing extensions of its projected road, and the unlimited issue of its own bonds.

The fourth section, in addition to this grant of the unlimited right to issue its own bonds authorizes the company to construct and maintain a road from any point on the main line of its road in the parish of St. Martin or Lafayette northwardly to Shreveport via Alexandria; and also from Iberville on the main line to the Mississippi at any point in the parish of West Baton Rouge, and declares that all the powers, privileges, grants, guaranties, and franchises, theretofore granted to said company for the construction, maintenance, and use of its main line of railroad within the State of Louisiana westerly from the city of New Orleans, shall be and are thereby made applicable to the said lines of railroad to Shreveport and to said point in the parish of West Baton Rouge: provided, however, that such provisions of the act, entitled 'An Act to expedite the construction of the railroad of the New Orleans, Mobile, and Chattanooga Railroad Company, in the State of Louisiana,' approved Feb. 17, 1869, as relates to the guaranty of the second-mortgage bonds of said company, shall be applicable only to such parts or portions of the said lines of railroads to Shreveport, and to said point in the parish of West Baton Rouge, as shall be surveyed, located, and constructed within five years from and after the acceptance of this act by said company; and the said provisions of said act shall be applicable to such parts or portions of said last-mentioned lines of railroad as shall be surveyed, located, and constructed within the time last aforesaid.

The act of 1869 authorized the company to issue its bonds payable to the State of Louisiana, at the rate of $12,500 for every mile of railroad actually constructed and accepted by commissioners to be appointed by the governor. The payment of these bonds was to be secured by a mortgage on the road subject to a prior mortgage of the same amount, and the bonds are therefore designated in the statute as second-mortgage bonds. It was declared, also, that the failure to pay the coupons for interest on these bonds, or if any of the sinking refund required by the act should be in arrears for sixty days, the whole of the principal of the bonds should become due and the mortgage should contain a provision for the sale of the road by the trustee in that case.

These conditions being complied with, and the construction of forty miles of the roa being completed to the satisfaction of the governor, he was directed to indorse on the bonds of the company, to the amount of $12,500 per mile for such forty miles, the guaranty of the State of Louisiana of the payment of these bonds, and deliver them to the company. This act also required the company to survey and locate the whole of the main line within eight months after acceptance of the act, a section of forty miles to be completed within twelve months after such survery, and the whole of the line within the State to be completed within three years after such survey and location; and a failure to comply with these requirements as to any part of said road released the State from the obligation to guarantee as to that part of the line. It is argued that the proviso to sect. 4 of the act of 1870, making the provisions of the act of 1869 applicable to the new lines, if constructed within five years instead of three, as in that act, does away with the provisions for requiring specific acts as to location and construction of forty miles, to be performed within shorter periods, and that the obligation of the State to guarantee the bonds continued for five years, though nothing had been done in the mean time.

We do not think this is a sound construction of the proviso, but that the period of five years is there mentioned instead of three in the former act for the final completion of the road, a failure to comply with which released the State from its promise of any further guaranty of the bonds.

This, however, is not very material, as it only adds to the force of the argument, that when the State bought $2,500,000 of the stock of the company, and gave its own bonds for that sum, it was incurring a new debt, and was not discharging an old one of equal amount.

What was the obligation of the State in this matter prior to the act of 1871, and at the time the constitutional limitation of its debt became effectual? and what obligations are assumed by the issue of these bonds?

The State, by the former law, was to become surety for the bonds of the company without any other consideration than a desire for the construction of the road.

By the new amendment she became absolute debtor, and gave her own bonds.

By the former law she had a very stringent provision to secure her from loss for the use of her name as indorser of the bonds of the company.

By the new amendment she agrees unconditionally to pay $2,500,000 of money, with no security for its repayment and no indemnity against loss.

Under the former act she might never have been called on to indorse the bonds, as the conditions might never have been complied with, and if so called on, would perhaps have been held secure against loss by the provision for mortgage and sinking fund on a road to be constructed before the guaranty was indorsed on the bonds. And in fact it now appears very improbable that she would ever have been called on to indorse any bonds not already indorsed when the present bonds were issued.

Instead of a mere promise to indorse them, with a fair security against loss, with a reasonable ground of belief that the right to call for this guaranty would never arise, the State, by the new statute, subscribes for and purchases $2,500,000 of the stock of the company, gives her bonds for it, and becomes the debtor of the company for that amount.

By the new arrangement the State became transformed from a possible creditor of the company, with security for her debt, into a debtor of the company with nothing to show for it but some worthless stock.

It seems impossible to hold that this is in any just sense a redemption of a former obligation. It is equally impossible to hold that the issue of these bonds, if valid, did not for the first time create a debt in regard to this transaction. There was no debt before this. There was no fixed obligation; no certain liability; no strong reason to believe that her promise would ripen into any absolute debt on her part.

The new arrangement was the creation of an unconditin al debt of $2,500,000.

We are unable to discern the force of the reasoning by which validity is supposed to be imparted to these bonds by the act of the legislature.

The constitutional provision against an increase of the State debt was mainly if not solely intended to operate as a limitation on the power of the legislature. We do not know of any increase of the debt which could be lawfully made without its authority, unless it was by the non payment of interest on what already existed. Certainly no new debt beyond the $25,000,000 could be made and be valid without such authority. It is, therefore, vain to say the legislature did it. It is equally vain to say that the legislature professed to be satisfying an old obligation, while on the face of the transaction it is quite apparent that it was a new debt, based on a new consideration, with only an incidental reference to an old contract liability to make it colorable.

We concur, therefore, with the Supreme Court of the State, in holding that these bonds constituted a new debt issued on a new consideration under a new act of the legislature, which was itself void because in conflict with the provision of the Constitution of the State, and the bonds are equally void as being in excess of the amount of debt which the State could constitutionally create.

Judgment affirmed.


text: Talk:Williams v. Louisiana/Opinion of the Court

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


text:
Durkee v. Board of Liquidation

APPEAL from the Circuit Court of the United States for the District of Louisiana.

The facts are stated in the opinion of the court.

Mr. Simon Sterne and Mr. George W. Biddle, with whom were Mr. A. Sydney Biddle and Mr. James Lowndes, for the appellant.

Mr. Gustave A. Breaux and Mr. James Lingan for the appellee.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Durkee v. Board of Liquidation


text: Talk:Durkee v. Board of Liquidation

title: Talk:Durkee v. Board of Liquidation


text:
Durkee v. Board of Liquidation/Opinion of the Court

The bill was filed against the Board of Liquidation of the State of Louisiana by Durkee and others, holders of a large number of the bonds issued to the New Orleans, Mobile, and Texas Railroad Company, which are part of the $2,500,000, mentioned in Williams v. Louisiana, supra, p. 637. Its object, as declared in the prayer for relief, is to have these bonds declared legal and valid obligations, and for such other relief as the case may require and to equity may seem just.

The case was heard in the Circuit Court on the bill, answer, and evidence, and the bill dismissed. The complainants appealed.

In the case of Williams v. Louisiana, to which we have already referred, the Supreme Court of Louisiana held all the issue of bonds of the class on which the bill is founded to be void because they were in excess of the $25,000,000 of indebtedness to which the State was limited by the constitutional amendment of 1870.

That amendment forbids the ereation of any debt beyond that sum until the year 1890. The act under which the bonds now in question were issued was passed in 1871, and the Supreme Court of the State held them to be void because the debt then in existence already exceeded the $25,000,000 limited by the Constitution.

This decision of the State court has just been affirmed by this court, and in doing so we have expressed our concurrence in the grounds on which the State court acted.

Though neither of these decisions is binding on the appellants as an estoppel, because they were not parties to that suit, the principle on which it was decided necessarily governs this. The same objection to the validity of the bonds on which the decision in the former case was supported is taken in the present case by the defendant and set up in the pleading. The cases have been brought to this court and argued together by the same counsel and on the same ground as regards the validity of the bonds. We refer to that case for the reasons which satisfy us that the bonds are void.

There is another reason, however, why the present decree should be affirmed.

The Board of Liquidation is a mere agent of the government to enable it to carry into effect a plan of cono lidating all its outstanding debt and converting it, with the consent of its creditors, into a uniform bond, with the same rate of interest, and providing additional security for its payment. The law under which this liquidating process was to take place and which created this board of liquidation, the present defendant, was passed in 1874, some time after all these bonds were issued. It did not, therefore, enter into the contract on which the bonds were issued. It was an offer on the part of the State to issue new bonds for all her valid bonds outstanding whenever the holders chose to accept the terms on which the exchange was to be made.

In 1976 the legislature of the State passed an act declaring the bonds now in question void, and forbidding the board to receive them as valid in the scheme of liquidation. The legislature undoubtedly had the right to forbid its own agent to receive these bonds. This law may not have affected their validity. It certainly could not make them void if they were valid before. But it could prevent the board from exchanging them for other bonds. There was no contract with the holders of these bonds that this should be done, even if they were valid. To make such a contract there is needed the acceptance of the proposition of the State by the holder, and a good consideration. Neither of these existed in this case, when the legislature simply withdrew its proposition as to these bonds.

Decree affirmed.


text: Talk:Durkee v. Board of Liquidation/Opinion of the Court


text:
Bonham v. Needles

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

The facts are stated in the opinion of the court.

Mr. Thomas J. Henderson for the appellants.

Mr. George A. Sanders for the appellees.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Bonham v. Needles


text: Talk:Bonham v. Needles

title: Talk:Bonham v. Needles


text:
Bonham v. Needles/Opinion of the Court

This was a suit commenced in the Circuit Court for Wayne County, Illinois, by Needles and others. Bonham and the other complainants are taxpayers and real-estate owners suing in behalf of themselves and all other like persons in Big Mound Township of Wayne County. The original defendants were the auditor of state, the treasurer of state, the clerk and the treasurer of the county, the collector of the township, the First National Bank of Springfield, and the unknown holders and owners of certain bonds (with their coupons),-five in number and of $1,000 each,-issued, under date of April 1, 1870, in the name of the township, and payable, twenty years after date, to the Illinois Southeastern Railway Company or bearer, with interest at the rate of ten per cent per annum. The bonds purport to have been issued 'by the township to aid in the construction of the Illinois Southeastern Railway, in pursuance of the authority conferred by an act of the General Assembly of the State of Illinois, entitled 'An Act to incorporate the Illinois Southeastern Railway Company,' approved Feb. 25, 1867, and an act amendatory thereof, approved Feb. 24, 1869, and an election of the legal voters of the aforesaid township, held on the tenth day of November, 1868, under the provisions of said act.' Upon each bond was indorsed, under date of April 21, 1870, a guaranty of payment by the Springfield and Illinois Southeastern Railway Company, and the certificate of the State auditor, under date of July 19, 1870, stating that it was that day registered in his office pursuant to the provisions of 'An Act to fund and provide for paying the railroad debts of counties, townships, cities, and towns, in force April 16, 1869.'

After the township had for nearly ten years regularly, by an annual levy and collection of a tax for that purpose, paid the interest on the bonds as the same became due,-the order for such being made by the auditor of state,-the present bill was filed. It questioned the validity of the bonds, and asked a decree restraining the officers, who were made defendants, from the assessment or collection of taxes to meet them. Kernochan, one of the appellees, a citizen of Massachusetts, n d the owner, by purchase in good faith, for value, of all the bonds, appeared in the State court, and upon his petition and bond the cause was removed to the Circuit Court of the United States, where upon the pleadings and proofs the bill was dismissed. The complainants appealed.

The controlling questions in the case have already been determined in Harter v. Kernochan, supra, p. 562. It was there ruled that the acts of assembly, recited in the bonds whose validity is here involved, were not repugnant to the Constitution of Illinois, adopted in 1848. We also held that the fifth section of the act of Feb. 24, 1869, conferred upon such townships in Wayne and Clay Counties as had previously voted donations to the Illinois Southeastern Railway Company-the qualified voters of such townships assenting thereto at a regular or special town meeting or election-authority to issue bonds in payment of such donations. The township of Big Mound, on the 10th of November, 1868, voted a donation of $5,000 to the railroad company, one-third to be levied and collected by special tax and paid to the railway company, in each of the years 1869, 1870, and 1871; in lieu of which, however, the company bound itself to take township bonds if requisite authority to issue them could be obtained by further legislation. So far this case in its essential features resembles that. The chief difference between that case and the present one is, that in the former the recorded proceedings of the township distinctly showed that the bonds were voted at a special town meeting, duly called and held to consider the question of their issue; while in this case, the records of the township contain no evidence of a township meeting at which the qualified voters assented to the issue of bonds in payment of the donation voted on the 10th of November, 1868, except a certificate of William Book, claiming to be deputy clerk of Big Mound town. In that certificate he states that 'at an election held at the Yates schoolhouse, on the twenty-eighth day of August that the majority of the voters present voted in favor of giving bonds to the Southeastern Railway Company for the bonus. This August 28th, 1869.' Several witnesses testify that an election was held. But the correctness of the decree and the validity of the bonds in the hands of a bona fide purchaser do not depend upon proof, in this suit, that such an election was, in fact, duly called and held, at which the qualified voters assented to an issue of bonds in payment of the donation previously voted.

The statutes which we have mentioned conferred, as we have shown in Harter v. Kernochan, ample authority upon the township to issue bonds in payment of the donation voted, the qualified electors assenting thereto at a regular or special town meeting. The bonds recite that they were issued in pursuance of the authority conferred by those statutes. Such recitals import a compliance with the statute, and the township, according to the uniform decisions of this court, is estopped to assert, as against a bona fide holder for value, that such recitals are untrue. Buchanan v. Litchfield (102 U.S. 278), and authorities there cited.

There are other questions in the case which counsel have pressed upon our consideration. None of them are, in our judgment, vital to its merits, and we do not stop to comment upon them.

Decree affirmed.

title: Bonham v. Needles/Opinion of the Court


text: Talk:Bonham v. Needles/Opinion of the Court


text:
Wardell v. Railroad Company

APPEAL from the Circuit Court of the United States for the District of Nebraska.

The facts are stated in the opinion of the court

Mr. James O. Broadhead and Mr. James M. Woolworth for the appellant.

Mr. Andrew J. Poppleton for the appellee.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Wardell v. Railroad Company


text: Talk:Wardell v. Railroad Company

title: Talk:Wardell v. Railroad Company


text:
Wardell v. Railroad Company/Opinion of the Court

The road of the Union Pacific Railroad Company passes for its entire length, from Omaha on the Missouri River to Ogden in Utah, a distance of 1,036 miles, through a country almost destitute of timber ft for fuel. During its construction, however, large deposits of coal, of excellent quality and easily worked, were discovered in land along its line, from which abundant supplies for the use of the company could be obtained. The complainant represents that their extent, quality, and value were unknown, and that doubts were generally entertained as to their adequacy to meet the necessities of the company, until he had made explorations in June, 1868, and reported to its managers the information which he had thus acquired; and that upon that information the contract which has given rise to this suit was made, after much negotiation, between the company and himself and Cyrus O. Godfrey, with whom he had become associated in business. But in this respect he is mistaken. Though he may have imparted to the managers the information acquired by his explorations, the knowledge of the existence and general character of the deposits had been communicated to them years before by the engineers appointed to survey the route for the construction of the road. They had reported that coal in inexhaustible quantities, of suitable quality for the purposes of the company, was found so near the line of the road as to render its extraction and delivery easy and convenient. It is of little moment, however, whether the knowledge of the existence, character, extent, and accessibility of the deposits was obtained from the complainant or from others; it is sufficient that the directors of the Union Pacific Railroad Company, having the control and management of its road and business, were informed upon the subject at the time the contract mentioned was made. That contract was as follows:--

'This agreement, made this sixteenth day of July, in the year     of our Lord one thousand eight hundred and sixty-eight,      between the Union Pacific Railroad Company, by its proper      officers, of the first part, and Cyrus O. Godfrey and Thomas      Wardell, of the State of Missouri, or assigns, parties of the      second part:--

'Witnesseth, that the said party of the first part agrees     that the said parties of the second part may prospect at      their own expense for coal on the whole line of the Union      Pacific railway, and its branches and extensions, and open      and operate any mines discovered, at their own expense; that      said railroad company agrees to purchase of said parties of      the second part all clean merchantable coal mined along its      road, needful for engines, depots, shops, and other purposes of the company, and to pay for the same the      first two years at the rate of six dollars per ton; for the      next three years at five dollars per ton; for the four years      thereafter at four dollars per ton; and for the six years      remaining at the rate of three dollars per ton, delivered      upon the cars at the mines of the said party of the second      part, and which shall not be less than ten per cent added to      the cost of the same to the said party of the second part. This contract to be and remain in full force and effect for     the full term of fifteen years from the date hereof.

'The said railroad company agrees to facilitate the     operations of the said parties of the second part, in      prospecting and otherwise, by means of such information as it      may possess, and by furnishing free passes on its road to the      agents of the parties of the second part, not exceeding six      in number. Said railroad company further agrees to put in     switches and the necessary said-tracks, at such points as may      be mutually agreed upon, for the accommodation of the      business of the said parties of the second part; that the      said parties of the second part agree to make all necessary      exertions to increase the demand and consumption of coal by      outside parties along the line of said railroad, and to open      and operate mines at such points where coal may be      discovered, as may be desired by said railroad company; and      to expend within the first five years from the date of this      agreement, in the purchase and development of mines and      mining lands, and improvements for the opening, successful      and economical workin  of the same, not less than the sum of      twenty thousand dollars; also to furnish for the use of the      said railroad company good merchantable coal, and to pay all      expenses for improvements for loading coal into cars. Any     improvement desired by said railroad company in regard to the      coal to be used by it shall be at the cost of said railroad      company.

'In consideration of their exertions to increase the demand     for coal, and the large sum to be expended in improvements,      it is further agreed that the parties of the second part      shall have the right to transport over the said railroad and      its branches for the next fifteen years from the date of this      agreement, coal for general consumption at the same freight      that will be charged to others; but the said parties of the      second part shall be entitled in consideration of services to      be rendered as herein provided, to a drawback of twenty-five      per cent on all sums charged for the transportation of coal.

'The said railroad company agrees to furnish the parties of     the second part such cars as they may require in the      operation of their business, and to transport them as promptly as possible. This     agreement to remain in force for fifteen years.

'The coal lands owned by said party of the first part are     hereby leased for the full term of fifteen years to the said      parties of the second part or their assigns, for the purpose      of working the same as may seem to them profitable; said      parties of the second part to pay for the first nine years a      royalty of twenty-five cents per ton for each ton of coal      taken from their lands, excepting always coal taken from      entries, air-courses, or passage-ways, for which coal no      royalty shall be paid; payments for the same being due and      payable monthly.

'The royalty for the last six years of this lease shall be     free, provided the price of coal to the railway company is      reduced to three dollars per ton. If three dollars ton, then     in that case the royalty ton, them in that case the royalty      shall be as during the first nine years.

'In witness whereof, we have hereunto set our hands seals,     this the day and year first above mentioned.

(Signed) 'OLIVER AMES,

'President of the Union Pacific R. R. Co.

'C. O. GODFREY.

'THOMAS WARDELL.'

This contract on the part of the railroad company was made by direction of the executive committee of the board of directors, of whom the president was one, and not by the board itself. It was never reported to the board for its consideration or action. But notwithstanding this defect, in August following the contractors, Wardell and Godfrey, entered upon its execution, and began work on several mines along the line of the road. Soon afterwards Godfrey transferred his interest to Wardell, perceiving, as the bill alleges, that sums beyond those stipulated would be required, and being alarmed at the risks which he believed he had assumed.

In January following (1869) a corporation under the laws of Nebraska, called the Wyoming Coal and Mining Company, was formed to develop and work the mines, having a capital stock of $500,000, divided into shares of $100 each, a majority of which was taken by six of the directors of the railroad company, one of whom was its president; and to it Wardell assigned his contract without any consideration.

The corporation continued the execution of the contract, Wardell, acting as its superintendent, secretary, and general manager, and delivered coal as needed by the railroad company up to the 13th of March, 1874, when the officers and agents of that company, by order of its directors, took forcible possession of the mines and of the books, papers, tools, and other personal property of the coal company, which they have held and used ever since. Hence the present suit, which Wardell brings in his own name, alleging as a reason that a majority, if not all, of the directors and stockholders of the coal company, except himself, are also directors and stockholders of the railroad company, and that, therefore, he can obtain no relief by a suit in the name of the coal o mpany. He prays that an account may be taken of the amount due for the coal delivered to the railroad company; for drawback on freight from the date of the contract to the forcible seizure alleged; for coal extracted from the mines since their seizure; for the property of the coal company taken, and for the damages arising from the seizure and the attempted abrogation of the contract; and that the rights and interests of the several parties may be ascertained and declared; and for general relief.

To this bill the railroad company filed an answer, setting up is substance three defences:--

1st, That the contract of July 16, 1868, was a fraud upon the company; that it was made on its part by the executive committee of its board of directors, a majority of whom were, by previous agreement, to be equally interested with the contractors in it, and for that reason its terms were made so favorable to the contractors and unfavorable to the company as to enable the former to make large gains at the expense of the latter, and that the organization of the Wyoming Coal and Mining Company was a mere device to enable those directors to participate in the profits; and that, therefore, the contract was of no validity and binding obilgation upon the company;

2d, That at the time of the seizure of the property the railroad company was the owner of nine-tenths of the stock of the coal company, and had become apprehensive that Wardell, its superintendent and manager, would not furnish the coal needed to run the trains; and, 3d, That since then the coal company and the railroad company, through their boards of directors, have had a settlement of their transactions, by which the contract of July 16, 1868, has been rescinded and the sum of $1,000,000 allowed to the coal company, and that the railroad company has set apart and tendered to the complainant $100,000 for his share in the coal company in that settlement.

The court below held that the contract of July 16, 1868, was a fraud upon the company, but that the complainant was, apart from it, entitled to some compensation for his time, skill, and services while engaged in taking out the coal, with the return of the money actually invested and compensation for its use, the amount to be credited with what he had actually received out of the business; and that at his election he could have an accounting upon that basis or take the $100,000 tendered by the company. Of the alternatives thus offered the complainant elected to take the $100,000 instead of having the accounting mentioned, but appealed to this court from the decree, contending that the contract itself was valid and that he is entitled to an accounting upon that hypothesis.

The evidence in the case justifies the conclusion of the court below as to the nature of the contract of July 16, 1868. It was evidently drawn more for the benefit of the contractors than for the interest of the company. The extent, value, and accessibility of the coal deposits along the line of the road of the company were, as stated above, well known at the time to its directors, having the immediate control and management of its business. Wardell, the principal contractor, informed those with whom be chiefly dealt in negotiating the contract that coal could be delivered to the company as a cost of two dollars per ton, yet the contract, which was to remain in force fifteen years, stipulated that the company should pay treble this amount per ton for the coal the first two years, two and a half times the amount for the next three years, twice the amount for the following four years, and one-half more for the balance of the time. And lest these rates might prove too little, the contract further provided that the sum paid should not be less than ten per cent added to the cost of the coal to the contractors. These terms and the leasing of all the coal lands of the company for fifteen years to those parties upon a royalty of twenty-five cents a ton for the first nine years, and without any royalty afterwards if the price of the coal shoud be reduced to three dollars, with the stipulation to provide side-tracks to the mines, and also the furnish cars for transportation of coal for general consumption, and after charging them only what was charged to others, to allow them a drawback of twenty-five per cent on the sums paid, gave to them a contract of the value of millions of dollars. These provisions would of themselves justly excite a suspicion that the directors of the railroad company, who authorized the contract on its behalf, had been greatly deceived and imposed upon, or that they were ignorant of the cost at which the coal could be taken from the mines and delivered to the company. But the evidence shows that those directors were neither deceived nor imposed upon, nor were they without information as to the probable cost of taking out and delivering the coal. And what is of more importance, it shows, as alleged, their previous agreement with the contractors for a joint interest in the contract, and, in order that they might not appear as co-contractors, that a corporation should be formed in which they should become stockholders, and to which the contract should be assigned; and that this agreement was carried out by the subsequent formation of the Wyoming Mining and Coal Company and their taking stock in it. This matter was so well understood that when the contractors commenced their work in developing the mines and taking out the coal, they kept their accounts in the name of the proposed company, though no such company was organized until months afterwards.

It hardly requires argument to show that the scheme thus designed to enable the directors, who authorized the contract, to divide with the contractors large sums which should have been saved to the company, was utterly indefensible and illegal. Those directors, constituting the executive committee of the board, were clothed with power to manage the affairs of the company for the benefit of its stockholders and creditors. Their character as agents forbade the exercise of their powers for their own personal ends against the interest of the company. They were thereby precluded from deriving and advantage from contracts, made by their authority as directors, except through the company for which they acted. Their position was one of great trust, and to engage in any matter for their personal advantage inconsistent with it was to violate their duty and to commit a fraud upon the company.

It is among the rudiments of the law that the same person cannot act for himself and at the same time, with respect to the same matter, as the agent of another whose interests are conflicting. Thus a person cannot be a purchaser of property and at the same time the agent of the vendor. The two positions impose different obligations, and their union would at once raise a conflict between interest and duty; and, 'constituted as humanity is, in the majority of cases duty would be overborne in the struggle.' Marsh v. Whitmore, 21 Wall. 178, 183. The law, therefore, will always condemn the transactions of a party on his own behalf when, in respect to the matter concerned, he is the agent of others, and will relieve against them whenever their enforcement is seasonably resisted. Directors of corporations, and all persons who stand in a fiduciary relation to other parties, and are clothed with power to act for them, are subject to this rule; they are not permitted to occupy a position which will conflict with the interest of parties they represent and are bound to protect. They cannot, as agents or trustees, enter into or anthorize contracts on behalf of those for whom they are appointed to act, and then personally participate in the benefits. Hence all arrangements by directors of a railroad company, to secure an undue advantage to themselves at its expense, by the formation of a new company as an auxiliary to the original one, with an understanding that they, or some of them, shall take stock in it, and then that valuable contracts shall be given to it, in the profits of which they, as stockhl ders in the new company, are to share, are so many unlawful devices to enrich themselves to the detriment of the stockholders and creditors of the original company, and will be condemned whenever properly brought before the courts for consideration. Great Luxembourg Railway Co. v. Magnay, 25 Beav. 586; Benson v. Heathorn, 1 Y. & Col. C. C. 326; Flint & Pere Marquette Railway Co. v. Dewey, 14 Mich. 477; European & North American Railway Co. v. Poor, 59 Me. 277; Drury v. Cross, 7 Wall. 299.

The scheme disclosed here has no feature which relieves it of its fraudulent character, and the contract of July 16, 1868, which was an essential part of it, must go down with it. It was a fraudulent proceeding on the part of the directors and contractors who devised and carried it into execution, not only against the company, but also against the government, which had largely contributed to its aid by the loan of bonds and by the grant of lands. By the very terms of the charter of the company five per cent of its net earnings were to be paid to the government. Those earnings were necessarily reduced by every transaction which took from the company its legitimate profits. It is true that some of the directors, who approved of or did not dissent from the contract, early stated that they held their stock in the coal company for the benefit of the railroad company and transferred it, or were ready to transfer it, to the latter; but the majority expressed such a purpose only when the character and terms of the contract became known and then were desirous to screen themselves from censure for their conduct.

The complainant, therefore, can derive no benefit from the contract thus tainted, or sustain any claim against the railroad company for its repudiation. The coal company may, perhaps, be entitled to reasonable compensation for the labor actually expended in the development of the mines and delivery of coal to the railroad company, considered entirely apart from the contract; and also for its property forcibly taken possession of by the officers of the railroad company. But an accounting for compensation thus limited is not desired by him, and as the two companies have since settled the matter in dispute between them by the payment of $1,000,000 to the coal company, of which $100,000 has been set apart for complainant, and he has elected to take that sum if an accounting cannot be had upon the assumed validity of the contract, the decree of the court below is

Affirmed.


text: Talk:Wardell v. Railroad Company/Opinion of the Court


text:
Peck v. Collins

ERROR to the Court of Appeals of the State of New York.

The facts are stated in the opinion of the court.

Mr. Alexander D. Wales for the plaintiff in error.

Mr. M. M. Waters, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Peck v. Collins


text: Talk:Peck v. Collins

title: Talk:Peck v. Collins


text:
Peck v. Collins/Opinion of the Court

This writ of error is brought to review a judgment of the Court of Appeals of the State of New York involving the construction and effect of certain proceedings under the laws of the United States relating to letters-patent for inventions. On the 25th of October, 1865, one Byron Mudge obtained letters-patent for an improved mode of sinking wells. In January, 1866, he assigned to Preston R. Peck and George W. Peck each an undivided quarter of the patent. On the 5th of March, 1866, Mudge surrendered his patent, and applied for a reissue, and at the same time asked that an interference should be declared between him and one James Suggett, who had obtained two patents relating to the same matter, one in March, 1864, and the other in February, 1866. An interference was accordingly declared, and the application for reissue was, of course, suspended. The interference also embraced the application of one Nelson W. Green for a patent, then pending. This interference case was pending before the Patent Office and the Supreme Court of the District of Columbia, to which it was finally appealed, until January, 1868, when a decision was reached adverse to Mudge's application for ar eissue, sustaining Suggett's patent, and granting a patent to Green. The effect of these proceedings and of this decision upon Mudge's patent was the matter passed upon by the Court of Appeals. That court held that the patent had thereby become valueless and void for any purpose, except perhaps as it might be ancillary to a bill in equity under sect. 4915 of the Revised Statutes of the United States.

The materiality of this decision to that of the case arose from the following facts: On the 24th of April, 1866, after Mudge had surrendered his patent for a reissue and had obtained a declaration of interference, as before stated, he and the two Pecks entered into an agreement with Collins, the defendant in error, to sell to him, for the price of $4,000, one-fourth of the patent, and to give him a deed therefor whenever he should call for it. Collins paid the Pecks their portion of the purchase-money in advance by delivering to them two 7-30 United States bonds for $1,000 each. On the 28th of April, 1866, George W. Peck entered into a further agreement with Collins to convey to him, for the price of $1,500, three thirty-seconds more of the patent, and to give a deed therefor when called upon for that purpose. Collins gave his note for the last-named sum.

As these contracts were made in ignorance of the effect of a surrender of the patent for a reissue, they were afterwards conditionally revoked by returning the consideration money and note to Collins, upon the following stipulations respectively. On the 11th of June, 1866, Collins and George W. Peck executed an agreement of which the following is a copy, namely:

'Articles of agreement made this 11th day of June, 1866,     between Truman D. Collins, of Cortland, N. Y., of the first      part, and George W. Peck, of Cortland, N. Y., of the second      part, are as follows:--

'Whereas the said Peck did, by a contract bearing date April     28th, 1866, bind himself, in consideration of the sum of      fifteen hundred dollars, which sum was then paid to said      Peck, to deed to said Collins an undivided three      thirty-second part of a patent-right entitled a new mode of      sinking wells; and whereas said contract was given after the      letters-patent had been surrendered up for a reissue, and in      ignorance of the fact that under certain circumstances the      letters would not be returned to the owners of said patent;      and whereas the said Peck desires a release from his      obligations under the said contract in case he shall not be      enabled to fulfil such obligations: 'Now this agreement witnesseth, that the said Collins, in      consideration of the restoration of the said fifteen hundred      dollars, agrees to release the said Peck from all obligations      he has incurred under said contract, provided said Peck shall      not be enabled at any time to fulfil the terms and conditions      of said contract. And the said Collins further agrees to pay     all that portion of the expenses of the application for a      reissue which have been incurred, or which may be hereafter      incurred, which it shall be incumbent on said Peck to pay as      an owner of said patent, as stated in said patent, viz. a     three thirty-second part. The said Collins further agrees to     pay to the said Peck the sum of fifteen hundred dollars when      the said Peck shall notify him of his readiness to fulfil the      said contract by deeding to said Collins his interest in said      patent or any reissue which may be granted under said      application.

'T. D. COLLINS.

'G. W. PECK.'

On the 6th of July, 1866, Collins, on receiving from the two Pecks the two 7-30 bonds which he had delivered to them, gave them the following receipt and agreement, namely:--

'Received July 6th, 1866, of Preston R. Peck and G. W. Peck,     two thousand (2,000) dollars in 7-30 bonds, said bonds to be      returned to Preston R. Peck and G. W. Peck as soon as Byron      Mudge succeeds in getting a reissue of a patent for putting      down wells, now in the Patent Office, or providing the old      patent is returned; but if said patent is not reissued or      returned, then T. D. Collins in to keep the bonds and      surrende  his article he has for the purchase of an interest      in said patent.

'T. D. COLLINS.'

Preston R. Peck assigned all his interest in this agreement to George W. Peck.

After the application of Mudge for the reissue of the patent had been refused, and a final adjudication had been made against his claim and in favor of Suggett and Green, the attorney of G. W. Peck, in some way which does not appear, got possession of the original patent, and Peck tendered himself ready to perform the conditions of the last two agreements, and demanded payment or return of the sums mentioned therein, to wit, the $2,000 and the $1,500. This being refused by Collins, the present suit was brought to recover the money. The judge who tried the cause nonsuited the plaintiff upon the following view of the case, as stated in the bill of exceptions, namely: 'I am inclined to think that I ought to nonsuit the plaintiff for the reason that the surrender of this patent by the patentee operated as an extinguishment of that patent. That certainly is within the reasoning of Judge Nelson in the case in Black's Reports,-although that case is not precisely in point and in accordance with the apparent and real intent of the parties when a surrender is made, and if such surrender does not absolutely and unqualifiedly extinguish the patent,-and it seems to me that there should be some act of the department indicating an intention to send that patent back into the world as a valid patent. There should be a definite act of the department indicating an intention that it should remain in force, still having life and vitality.'

The plaintiff excepted, and the cause was taken by appeal to the Supreme Court of New York in General Term, and thence to the Court of Appeals, by both of which courts the judgment was affirmed. The Court of Appeals construed the two contracts to mean by a return of the old patent, a return of said patent clothed with the same force and validity which it had before it was surrendered for a reissue; and held that the effect and operation of the refusal of a reissue, and the decision against Mudge on the interference, was to destroy such force and validity. The first question for us to decide is, whether this decision as to the effect of the surrender, and the refusal to reissue the patent, was or was not erroneous. If it was not, we are relieved from an examination of any other question in the case. And on this point we have very little embarrassment. We think that the Court of Appeals was right in deciding that by the surrender of Mudge's patent for a reissue, the interference declared, thereon, the decision against Mudge, and the subsequent refusal of a reissue of his patent, said patent became destitute of validity and absolutely void.

It was decided by this court in the case of Moffitt v. Garr (1 Black, 273), that the surrender of a patent under the act extinguishes it. That was an action to recover damages for an infringement. Whilst the action was pending the patent was surrendered, and this fact was pleaded as a bar to the further prosecution of the suit. The averment of the plea was 'that since the commencement, &c., the said Moffitt surrendered to the United States the patent before that time issued to him, and for the alleged infringement of which this suit is brought.' This plea was sustained on demurrer, and judgment given for the defendant. The judgment was affirmed by this court after argument by able counsel. Mr. Justice Nelson, in delivering the opinion of the court, said: 'The point in the case is, whether or not the patentee may maintain a suit on the surrendered patent instituted before the surrender, if he has not availed himself of the whole of the provision, and taken out a reissue of his patent with an amended specification. The construction given to this section, so far as we know, and the practice under it, in case of a surrender and reissue, are, that the pending suits fall with the surrender. A surrender of the patent to the commissioner, within the sense of the provision means an act which, in judgment of law, extinguishes the patent. It is a legal cancellation of it, and hence [it] can no more be the foundation for the assertion of a right after the surrender, than could an act of Congress which has been repealed.'

Since the decision of this case it has been uniformly held that if a reissue is granted, the patentee has no rights except such as grow out of the reissued patent. He has none under the original. That is extinguished. And, although for the purpose of fixing a date to the title in a question of priority, and of limiting the period for which the patent is to run, the date of the original patent is important; no damages can be recovered for any acts of infringement committed prior to the reissue.

It seems to us equally clear, that as the law stood when that decision was made, and as it continued to stand in 1866, when the surrender of Mudge's patent took place, a patent surrendered for reissue was cancelled in law as well when the application was rejected as when it was granted. The patentee was in the same situation as he would have been if his original application for a patent had been rejected. The law declares in terms, that 'the specifications and claim in every such case shall be subject to revision and restriction in the same manner as original applications are.' Act of March 3, 1837, c. 45, sect. 8, 5 Stat. 193; July 8, 1870, c. 230, sect. 53, 16 Stat. 205; Rev. Stat., sect. 4916. The question of his right to any patent at all was opened anew, the same as upon an original application for a patent. Surrender of the patent was an abandonment of it, and the applicant for reissue took upon himself the risk of getting a reissue or of losing all. A failure upon the merits, in a contest with other claimants, only gave additional force to the legal effect of the surrender.

Since the surrender of the patent in this case the patent laws have undergone a general revision by the act of July 8, 1870, c. 230. In the fifty-third section of that act (being the section relating to the surrender and reissue of patents), a new clause was introduced, declaring that the surrender 'shall take effect upon the issue of the amended patent;' and this clause is retained in sect. 4916 of the Revised Statutes. What may be the effect of this provision in cases where a reissue is refused, it is not necessary now to decide. Possibly it may be to enable the applicant to have a return of his original patent if a reissue is refused on some formal or other ground which does not affect his original claim. But if his title to the invention is disputed and adjudged against him, it would still seem that the effect of such a decision should be as fatal to his original patent as to his right to a reissue.

We find no error in the record.

Judgment affirmed.

title: Peck v. Collins/Opinion of the Court


text: Talk:Peck v. Collins/Opinion of the Court


text:
Smelting Company v. Kemp

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

Motion to set aside submission.

Mr. Robert H. Bradford and Mr. Willis Drummond in support of the motion.

Mr. Alexander T. Britton and Mr. Walter H. Smith, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Smelting Company v. Kemp


text: Talk:Smelting Company v. Kemp

title: Talk:Smelting Company v. Kemp


text:
Smelting Company v. Kemp/Opinion of the Court

The showing made on this motion satisfies us that this case, and the one which follows it on the docket, were brought here for a determination of the questions on which depends the title of the St. Louis Smelting and Refining Company to its addition to Leadville; that the decision of these suits will dispose of a large number of others now pending in the court below; that when the suits were begun below all the defendants united in the employment of counsel to present their defence, and contributed to a common fund for the payment of the expenses of the litigation; that since these cases have been docketed here the parties to this have come to an amicable understanding in respect to the subject-matter of their particular litigation, under which this submission has been made, through new counsel ep loyed in behalf of the defendants in error and without the concurrence of those interested in the other case and the suits still pending below. The questions involved are important. Under these circumstances we think we ought not to accept the submission of the cause against the wishes of those collaterally interested in the decision that may be made.

The submission will, therefore, be set aside, and the cause restored to its place on the docket; and it is

So ordered.


text: Talk:Smelting Company v. Kemp/Opinion of the Court


text:
Schaumburg v. United States

ERROR to the Circuit Court of the United States for the Eastern District of Pennsylvania.

Mr. George W. Biddle and Mr. Charles Henry Jones for the plaintiff in error.

The Solicitor-General, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Schaumburg v. United States


text: Talk:Schaumburg v. United States

title: Talk:Schaumburg v. United States


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

The judgment in this case is affirmed on the authority of United States v. Eckford, 6 Wall. 484. Claims for credit can be used in suits against persons indebted to the United States to reduce or extinguish the debt, but not as the foundation of a judgment against the government. In the present case the court instructed the jury as matter of law that the plaintiff in error, from July 1, 1836, until March 24, 1845, was in the military service of the United States as a first lieutenant of dragoons or cavalry; and that he was entitled as such to credit for the pay and emoluments that accrued during that period, and this was admitted to exceed the debt sued on by the United States. The jury thereupon brought in a verdict for the defendant. Had the jury gone further and struck the balance that would be due from the United States, no judgment could have been rendered for it. Any verdict, therefore, beyond the one actually given would have been fruitless. The court itself decided that the plaintiff in error was entitled to his pay and emoluments from July 1, 1836, to March 24, 1845. While sometimes the jury have been permitted to certify to a balance they find to be due from the government in cases of this kind, and under some circumstances it may be proper they should do so, a refusal of the court to direct that it be done cannot be reviewed here.

Judgment affirmed.


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


text:
National Bank v. City Bank

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

The facts are stated in the opinion of the court.

Mr. H. M. Finch for the plaintiff in error.

Mr. Albertus Perry, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: National Bank v. City Bank


text: Talk:National Bank v. City Bank

title: Talk:National Bank v. City Bank


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

A. F. Smith & Co. were the owners of the Corn Exchange Elevator of Oswego, N. Y., in which they were engaged in the general business of elevating and storing grain for the public. They were also large dealers in grain on their own account. In September, 1869, Mower, Church, & Bell, commission merchants in Milwaukee, received orders from Smith & Co. to purchase for them two cargoes of wheat, and to draw on them for the purchase-money against each cargo. The cargoes were bought, and sight-drafts for part of the purchase-money and time-drafts for the balance were, in each instance, drawn on A. F. Smith & Co.

The Milwaukee National Bank purchased these drafts, and received also the bills of lading for the wheat. They describe Mower, Church, & Bell as the shippers, and, by their terms, the cargo, in each case, is to be delivered at Oswego to the account or order of T. L. Baker, cashier of the Milwaukee Bank, care of the City Bank of Oswego.

The Milwaukee Bank enclosed the drafts and the accompanying bills of lading to the City Bank of Oswego, with instructions about insurance, and added, 'On payment of the drafts you will deliver the cargo to the order of Messrs. Smith & Co. If not paid, please hold and advise by telegraph. Messrs. Smith & Co. will pay all expenses.'

The letter and enclosures were duly received and acknowledged by the City Bank, and on presentation to A. F. Smith & Co they paid the sight-drafts and accepted the time-drafts.

When the vessels arrived at Oswego the masters promptly reported to Mannering, the cashier of the City Bank, who made the following indorsement on each bill of lading held by the masters:

'Deliver to the Corn Exchange Elevator, for account of T. L.     Baker, cashier, Milwaukee, subject to order of the City Bank,      Oswego.

'Oct. 9, 1869.

D. MANNERING, Cashier.'

A. F. Smith & Co. sold and shipped the wheat after it had been put in their elevator, and shortly thereafter they failed. When the time-drafts fell due, they were duly protested for non-payment, and have never been paid.

The Milwaukee Bank sued the City Bank to recover the loss on the drafts, on the ground that the City Bank had delivered the wheat to Smith & Co. before the drafts were paid, contrary to the instructions which accompanied the drafts and bills of lading. All the evidence is embodied in the bill of exceptions, and on the case, as there made, the court instructed the jury to find a verdict for the defendant, which was done. It is this instruction which is assigned for error by the plaintiff.

The City Bank, in receiving the drafts and bills of lading with instructions to deliver the wheat to A. F. Smith & Co., on payment of the drafts, and acknowledging the receipt of these drafts, became the agent of the Milwaukee Bank in the business which it had undertaken. Whatever obligation might, under other circumstances, be imposed on the bank by its consent to receive the drafts and bills of lading, it, in the present case, received them with instructions which the bills of lading empowered it to execute; namely, to control the possession of the wheat until the drafts on Smith & Co. were paid. In acknowledging the receipt of these papers the cashier says: 'We prefer, after this, not to receive B. L. (meaning bill of lading) when we have to look after the property.' This is an implied admission that they were to look after the property, and would do so in the case to which the letters related. The bank also undertook to discharge this duty when the masters of the vessels, presenting themselves and cargo to the cashier of that bank for delivery, were directed by him in writing to deliver to the Corn Exchange Elevator. It, therefore, undertook to discharge a duty as agent of the Milwaukee Bank in regard to the custody of the wheat, under instructions that it should deliver it to Smith & Co. on payment of the drafts. There is evidence tending to show that the City Bank, in its account with the Milwaukee Bank, made an additional charge or percentage for their trouble beyond the customary charge for collecting and remitting proceeds of the drafts. So that it undertook a duty for which it received and intended to exact compensation.

What, then, is the measure of its obligation as such agent to the plaintiff?

We suppose that there can be no question that it should use due care and diligence in performing the task which it had undertaken.

One of the clear duties of an agent, under such circumstances, is to obey instructions, if by a reasonable exercise of diligence and care they can be obeyed.

We think the instructions in this case very clearly implied that the bank, which by the bill of lading was invested with the full right to the possession of the wheat, should not deliver it to A. F. Smith & Co., except upon payment of the drafts,-that that is, of all the drafts drawn against each cargo of wheat. The reasons for this are very plain. The wheat had been bought by Mower, Church, & Bell in Milwaukee for A. F. Smith & Co., but they had to raise the money to pay for it by drafts on the latter. These drafts could only be negotiated by placing the control of the wheat in the hands of the purchasers of the drafts as security for their payment. The sight-drafts were paid by Smith & Co. when the wheat arrived in Oswego. They had thus paid that much money on the purchase. They were to pay all expenses. There remained unpaid, however, the time-drafts; and the instructin of the Milwaukee Bank to its agent, the City Bank, was not to part with the possession and control of this wheat to Smith & Co. until those drafts were paid. It was the only security which the bank had for their payment, and it was ample.

As we have already said, A. F. Smith & Co. were the owners and managers of the Corn Exchange Elevator. It is proved that the officers of the bank knew this. The cashier of the City Bank, therefore, knew that when he made the order on the bills of lading for the delivery of the wheat to the Corn Exchange Elevator, he was ordering its delivery to A. F. Smith & Co. It was by reason of this delivery and the failure of Smith & Co. that the amount of the drafts was lost to plaintiff.

Did the defendant, therefore, under the circumstances of the case, exercise due care and diligence in storing this wheat in the Corn Exchange Elevator?

The judge took this question from the jury and decided it in favor of the defendant. We are of opinion that in this the court erred. We do not decide here that the defendant was negligent. We think there was evidence on which that question should have been left to the jury. We think it should still be left to a jury.

It was said in answer to this view of the subject that the bank had no warehouse or other place of its own in which to store the wheat, and that this was known to the Milwaukee Bank, which must, therefore, have known that the City Bank would be compelled to store it with some one until the drafts, which had some time to run, should be paid. That Smith & Co. were supposed to be safe and solvent men engaged in that business, of good reputation, and that all wheat received under such circumstances in Oswego was deposited in elevators. These are circumstances for the jury to consider. On the other hand, it is to be said that there were other elevators in Oswego, not owned by Smith & Co., ready to receive the wheat. To some of these it could have been delivered without danger of complicating the possession as bailee, with possession under claim of ownership. And this is important, for there are laws making the embezzlement of property, when held as bailee by warehousemen and elevators, a criminal offence. It would be more difficult to convict Smith & Co. of embezzlement for selling this wheat when it had been bought for them, part of the money paid for it by them, and when they had accepted negotiable drafts for the remainder of the purchase-money, and when in fact it was their property, subject only to the payment of their outstanding drafts.

Was it acting with ordinary prudence to hazard the security which possession of the wheat gave, by delivering it to the very party to whom his principal had directed him not to deliver it? It further appears that the defendant bank took no receipt from Smith & Co., showing that they held it as bailees, but left that to stand on the indorsement they made on the bills of lading in the hands of the masters of the vessels, and a simple acknowledgment of the receipt of the wheat by A. F. Smith & Co. on the same bills of lading. One of the firm of Smith & Co. swears that no warehouse receipt was given.

There was a plain course to be pursued, which involved no difficulty or trouble, namely, storing the wheat in some other elevator or warehouse until A. F. Smith & Co., on payment of the acceptances, should call for it. This course would not have involved a departure from their instruction not to deliver to Smith & Co. until the drafts were paid, and would have saved all parties from loss.

Some question is made in the argument as to the effect of proceedings taken by plaintiff to recover the wheat or its value of parties who bought or received it from A. F. Smith & Co. It is only necessary to say, if the jury shall be of opinion that defendant was negligent in delivering the wheat to A. F. Smith & Co., it is responsible to plaintiff for the amount of the unpaid drafts, less any sum not actually recovered from others.

Without further comment, we are of opinion that there was v idence of negligence or want of due care on the part of defendant, which, taken in connection with the positive instruction of the plaintiff, should have been submitted to the jury. The judgment of the Circuit Court will, therefore, be reversed, with instructions to grant a new trial.

So ordered.


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


text:
McCarthy v. Provost

APPEAL from the Circuit Court of the United States for the District of Louisiana.

Mr. Thomas J. Semmes for the appellant.

Mr. Henry B. Kelly for the appellee.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: McCarthy v. Provost


text: Talk:McCarthy v. Provost

title: Talk:McCarthy v. Provost


text:
McCarthy v. Provost/Opinion of the Court

We have no jurisdiction in this case. The suit was brought to recover one two hundred and fortieth part of certain lands, and for a partition so as to set off to the appellant in severalty that interest. It is averred in the bill that 'the value of the property sought to be partitioned amounts to more than $5,000,' but the matter in dispute on this appeal is only one two hundred and fortieth part of the whole property, as that is all the appellant claims. Our jurisdiction, therefore, depends on the value of that part, which certainly is not shown to be more than $5,000.

Appeal dismissed.


text: Talk:McCarthy v. Provost/Opinion of the Court


text:
Yates v. National Home

ERROR to the Circuit Court of the United States for the Eastern District of Wisconsin.

The facts are stated in the opinion of the court.

Mr. Luther S. Dixon for the plaintiff in error.

No counsel appeared for the defendant in error.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Yates v. National Home


text: Talk:Yates v. National Home

title: Talk:Yates v. National Home


text:
Yates v. National Home/Opinion of the Court

By the act of Congress of March 21, 1866, c. 21, the President of the United States, the Secretary of War, the Chief Justice of the United States, and such other persons as might thereafter be associated with them, according to the provisions of that act, were constituted a board of managers of an establishment for the care and relief of the disabled volunteers of the United States army, by the name of 'The National Asylum for Disabled Volunteer Soldiers;' with power to take, hold, and convey real and personal property, and to make by-laws, rules, and regulations, not inconsistent with the laws of the United States, for carrying on the business and government of the asylum.

Authority was given to the board of managers, consisting of twelve persons, to procure suitable sites and to erect for military asylums the necessary buildings for all persons serving in the army of the United States at any time in the war of the Rebellion, who were not provided for by existing laws, and who had, or might thereafter, become disqualified from procuring their own maintenance and support by reason of wounds received or sickness contracted while in the line of their duty during the rebellion. The act further provides that the officers of the asylum shall consist of governor, deputy-governor, secretary, treasurer, and such other officers as the board of managers MAY DEEM NECESsary, to be appointed from disabled officers serving as before mentioned, and removable by the board from time to time as the interests of the institution may require.

At a meeting of the board of managers held on the 12th of April, 1867, E. B. Wolcott and John S.C.avender, two of their number, were appointed a committee to select a plan for asylum buildings at Milwaukee, to make and accept proposals for the same, to superintend the construction, and to put the building then owned by the asylum in condition for immediate use. At the January meeting the president of the board was added to the committee. Shortly thereafter several building contracts were entered into, and the work of construction was commenced.

On the 28th of December, 1868, Yates, a disabled officer who had served in the Union army, and who was deputy-governor of the branch asylum at Milwaukee, addressed a communication to Cavender and Wolcott, from which it appears that he had theretofore purchased the materials, employed the labor, and directed the work for the new building, not included in the special contracts with mason, tin, and iron workers. Up to that date his services in that connection had been given gratuitously, but in consequence of the action of the board, whereby his duties and responsibilities were increased and his pay as deputy-governor reduced, he gave notice, in the same communication, that he would not assume or take any further responsibility for anything pertaining to the construction of the new building, unless the asylum, in consideration of his perfecting the plans, directing the work, employing the labor, purchasing materials, and putting the institution in proper working order, would pay him five per cent on all purchases and disbursements that had been or until the completion of the building might be made by him or under his direction, outside of contracts for masons, roofers, and steam-heater's works. Upon that communication, containing these propositions, Cavender and Wolcott, as 'Building Com. Nat. Asylum,' in good faith, we doubt not, but without any action upon the part of the board of managers, made and signed this indorsement: 'Col. Theo. Yates will complete the work as proposed, and will be paid in the manner and to the amount herein named.' Yates claims in this action the sum of $8,414.96 for services performed by him under that agreement.

The court below gave a peremptory instruction to the jury to find for the defendant, which was done. Judgment was entered thereon. Yates sued out this writ.

We have not been favored with a brief on behalf of the defendant, but are informed by counsel for the plaintiff that the court below was of opinion that Yates was prohibited by the by-laws of the institution, of which he was an officer, from contracting for or receiving compensation for the services by him rendered. In that view we concur. One of the by-laws in force when the agreement was made provides that 'the board shall fix such stated and sufficient salaries to any officer or agent of the establishment, payable in money, as they shall deem proper, which shall be in full for the services of the officer or agent, and not to be diminished during his term of office. No perquisites, fees, allowances, or advantages, other than his salary or stated pay, shall be permitted to any officer, agent, or employ e of the establishment, under any pretence whatsoever.' Another by-law declared that 'the president of the board shall. . . approve all contracts, make and sign all requisitions,' & c. If the appointment of Wolcott and Cavender as a committee with power to make and accept proposals for the new building, and to superintend its construction, authorized them, without consulting the board, or without the concurrence of its president, to make all contracts pertaining to the erection of that building, it by no means follows that they could make a binding contract with an officer of the institution, in conflict with its by-laws and whereby he could receive, in addition to his salary or stated pay, 'perquisites, fees, allowances, or advantages.' The manifest object of the by-law in question was to remove from the officers of the asylum, charged with the immediate conduct of its affairs, all possible temptation to so manage the institution as to derive pecuniary advantage therefrom beyond their respective salaries or stated pay.

It is contended that the plaintiff was not bound, in his capacity as deputy-governor, to perform any services whatever in connecton with the construction of the new building. Were this conceded,-as, perhaps, it must be,-he is confronted not only with the fact that he was an officer of the asylum, with a stated salary, but with an express prohibition, in the by-laws of the institution, against his receiving under any pretence whatsoever, perquisites, fees, allowances, or advantages other than his salary or stated pay. The evidence furnishes no reason to suppose that the board of managers were aware of, or ever recognized or approved the agreement of the building committee to compensate him for special services. The sole question, therefore, is whether the building committee had authority to contract with an officer of the institution that he should receive compensation or pecuniary advantages, beyond his salary, for the services in question. They clearly had not, and, without considering other questions argued by counsel, we approve, for the reasons given, the instruction to find for the defendant.

Judgment affirmed.


text: Werner Erhard vs. Columbia Broadcasting System


text: The New International Encyclopædia/Guthe, Hermann


text: Talk:Yates v. National Home/Opinion of the Court


text:
Arthur v. Jacoby

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

The facts are stated in the opinion of the court.

Mr. Assistant Attorney-General Smith for the plaintiff in error.

Mr. Lewis Sanders and Mr. George N. Sanders, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Arthur v. Jacoby


text: Talk:Arthur v. Jacoby

title: Talk:Arthur v. Jacoby


text:
Arthur v. Jacoby/Opinion of the Court

This was a suit to recover back duties paid under protest. The bill of exceptions stated it was proven at the trial that all the goods charged with the duties were 'pictures painted by hand, and their value depended on the skill of the particular artist who painted them, and the porcelain ground on which they were painted was only used to obtain a good surface on which to paint, and was entirely obscured from view when framed or set in any manner, and formed no material part of the value of said painting on porcelain, and did not in itself constitute an article of chinaware, being manufactured simply as a ground for the painting, and not for any use independent of the paintings.' The collector exacted a duty of fifty per cent ad valorem under the clause in schedule B, sect. 2504, Revised Statutes, relating to 'china, porcelain, and parian ware, gilded, ornamented, or decorated in any manner,' while the importer claims they were dutiable at ten per cent ad valorem only, under the clause in schedule M, which embraces 'paintings and statuary not otherwise provided for.' In other words, the collector claimed they were decorated china or porcelain ware, and the importer that they were paintings on china or porcelain. The evidence seems to have left no doubt on this subject, for it is expressly stated in the bill of exceptions to have been proved that the porcelain ground on which the painting was done 'did not in itself constitute an article of chinaware.' Such being the case, the painting which was done on it did not make it decorated chinaware. Confessedly the goods were paintings done by hand, and as it is not claimed they were 'otherwise provided for' than as chinaware decorated, it follows the court was right in directing a verdict in favor of the importer for the difference between ten and fifty per cent. It is a matter of no importance in this case that the colors used were metallic, and that the pictures were baked to make the colors more firm. If the jury had found a verdict in favor of the defendant, the court should have set it aside as against what is admitted to have been proved. Under such circumstances a judgment will not be reversed on account of a positive instruction to find for the plaintiff. Pleasants v. Fant, 22 Wall. 116.

As the bill of exceptions states that the facts on which the case depends were proved, we cannot say that the admission in evidence of samples of 'similar' importations on which duties had been paid at ten per cent could have prejudiced the collector's case. The question which the court decided was, that the goods were not chinaware, but paintings.

Judgment affirmed.

title: Arthur v. Jacoby/Opinion of the Court


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


text:
Thacher's Distilled Spirits

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

The facts are stated in the opinion of the court.

Mr. Thomas Harland for the claimant.

Mr. Assistant Attorney-General Smith, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Thacher's Distilled Spirits


text:
Page:The Monist Volume 2.djvu/7

A

VOL. II

CHICAGO: THE OPEN COURT PUBLISHING CO 1891–1892

title: Page:The Monist Volume 2.djvu/7


text: Talk:Thacher's Distilled Spirits

title: Talk:Thacher's Distilled Spirits


text:
Thacher's Distilled Spirits/Opinion of the Court

The case before us originated in an information filed in the District Court for the Southern District of New York against certain package of distilled spirits by the district attorney, as forfeited by reason of a violation of the regulations of the Commissioner of Internal Revenue concerning the tax on distilled spirits.

Sect. 3249 of the Revised Statutes authorizes that officer 'to prescribe rules and regulations to secure a uniform and correct inspection, weighing, marking, and gauging of spirits.' One of the regulations established under this authority says that 'whenever any rectifier proposes to empty any spirits for the purpose of rectifying, purifying, refining, redistilling, or compounding the same, he will file with the collector a notice or statement giving the number of casks or packages, the serial number of each, the number of wine and proof gallons in each, the kind of stamps and serial numbers of each, the particular name of such spirits as known to the trade, the proof, by whom produced, the district where produced, by whom inspected, and the date of inspection.'

It is made the duty of the gaugers to inspect, brand, and stamp all spirits required by law to be inspected, of which returns are to be made daily in duplicate to the assessor and collector, containing a true account in detail on Form No. 59.

The information, after reciting the seizure of the spirits and alleging that they had formerly been owned by one Bensberg, alleges 'that said Bensberg, while his ownership of said spirits continued, and with the purpose and intention of obtaining the issue to him of stamps for rectified spirits, to be placed upon certain other spirits upon which the tax had not been paid, and for the purpose of evading said tax, and enabling him to dispose of the latter mentioned spirits without compliance with any requirement of law respecting them, falsely made returns to the collector of the collection district aforesaid upon Form 122 aforesaid; that the spirits first above mentioned were emptied for rectification upon his premises aforesaid, and the stamps, marks, and brands thereupon effaced and obliterated, and that said Bensberg, then and there, by means of a bribe of money for that purpose, paid by said Bensberg to a certain United States gauger, who was then and there charged with the duty of inspecting the emptying of packages of spirits for rectification upon the premises aforesaid, and of making his certificate relating thereto as set forth in Form 122 aforesaid, and of making a report relating thereto to said collector upon a form duly, by the commissioner aforesaid according to law, for that purpose prescribed, and known as Form 59, whereof a copy is hereto annexed and marked B, induced said gauger to make his certificate upon Form 122 as aforesaid, and the return upon Form 59 aforesaid, that the packages of spirits first above mentioned were emptied upon said premises, and the stamps, marks, and brands upon them effaced and obliterated, while in truth and in fact such returns, Forms 122 and 59, and said certificate, were wholly false, and said packages were not emptied, or said stamps, marks, or brands effaced or obliterated, but on the contrary thereof said packages were subsequently shipped and delivered to the claimant in this action, and said Bensberg then and there conveyed to said claimant all the right, title, and interest therein which he could convey in view of the facts hereinbefore alleged, against the form of the statutes of the United States in such case provided.'

On demurrer to this information judgment was rendered for the United States in the District Court, which was affirmed on a writ of error by the Circuit Court.

The Revised Statutes, sect. 3451 is as follows:--

'Every person who simulates or falsely or fraudulently     executes or signs any bond, permit, entry, or document      required by the provisions of the internal revenue laws, or      by any regulations made in pursuance thereof, or who procures      the same to be falsely or fraudulently executed, or who      advises, aids in, or connives at such execution thereof,      shall be imprisoned for a term not less than one year nor      more than five years, ad  the property to which such false      and fraudulent instrument relates shall be forfeited.'

It is objected by counsel for the claimant of the whiskey, that the regulation in question is unauthorized by the statute. But we see no just ground for such a proposition.

The internal revenue law is very specific in the details of that which is necessary to prevent fraud, especially in regard to the tax on whiskey and tobacco, and it was still found necessary to authorize the bureau which had charge of the collection of that tax to prescribe regulations for conducting the business of making and selling whiskey, and to adopt forms of reports in the information which it must receive from the officers engaged in collecting the tax, and the parties who should pay the tax.

The rule in question seems to be a reasonable one and within the purview of the power conferred.

After all, the essence of the charge against Bensberg is that he defrauded the government out of the tax justly due, and that he did it by the fraudulent use of these forms and in violation of the regulations.

It is also urged that the offence which he committed had relation to the other whiskey on which he placed the stamps fraudulently obtained. The answer to this is, that while both packages were properly stamped, the fraud was committed in obtaining stamps on a false certificate of emptying the casks now seized, and a false certificate of the gauger to that effect in violation of the regulation on that subject. We are of opinion that it was in regard to the whiskey now seized that the false entry was made, and the forfeiture attached to it.

Though claimant's counsel sets up the innocence of the present claimant in regard to the fraud or any knowledge of it, it can hardly be necessary at this day to reconsider the doctrine that when the act has been done which the law declares to work a forfeiture of the property, the right of the government to seize the property, and assert the forfeiture, attaches at once and may be pursued by the government whenever and in whose hands soever that property may be found. See Henderson's Distilled Spirits, 14 Wall. 44.

Judgment affirmed.


text: Talk:Thacher's Distilled Spirits/Opinion of the Court


text: Page:The Monist Volume 2.djvu/8

title: Page:The Monist Volume 2.djvu/8


text:
Walnut v. Wade

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

The facts are stated in the opinion of the court.

Mr. William C. Goudy and Mr. Allan C. Story for plaintiff in error.

Mr. Thomas S. McClelland and Mr. George A. Sanders for the defendant in error.

MR. JUSTICE WOODS delivered the opinion of the court.

title: Walnut v. Wade


text: Talk:Walnut v. Wade

title: Talk:Walnut v. Wade