text:
Imhaeuser v. Buerk/Opinion of the Court

Equivalents may be claimed by a patentee of an invention consisting of a combination of old elements or ingredients, as well as of any other valid patented improvement, provided the arrangement of the parts composing the invention is new, and will produce a new and useful result.

Such a patentee may doubtless invoke the doctrine of equivalents as against an infringer of the patent; but the term 'equivalent,' as applied to such an invention, is special in its signification, and somewhat different from what is meant when the term is applied to an nvention consisting of a new device or an entirely new machine.

Pressure in a machine may be produced by a spring or by a weight; and where that is so, the one is a mechanical equivalent of the other. Cases arise also where a rod and an endless chain will produce the same effect in a machine; and where that is so, the constructor in operating under the patent may substitute the one for the other, and still claim the protection which the patent confers. Exactly the same function in certain cases may be accomplished by a lever or by a screw; and where that is so, the substitution of the one for the other cannot be regarded as invention.

Patentees of an invention consisting merely of a combination of old ingredients are entitled to equivalents, by which is meant that the patent in respect to each of the respective ingredients comprising the invention covers every other ingredient which, in the same arrangement of the parts, will perform the same function, if it was well known as a proper substitute for the one described in the specification at the date of the patent. Hence it follows that a party who merely substitutes another old ingredient for one of the ingredients of the patented combination is an infringer if the substitute performs the same function as the ingredient for which it is so substituted, and it appears that it was well known at the date of the patent that it was adaptable to that use. Gill v. Wells, 22 Wall. 1, 28.

Due process was issued against the present respondent and two others, to wit, Theodore Hahn and Charles Keinath, all of whom were duly served, but the respondent last named never filed an answer, and submitted to a decree pro confesso. Both of the other respondents appeared and jointly answered, setting up two principal defences: 1. That the complainant was not the original and first inventor of the improvement. 2. They deny in their answer that they have in any manner infringed the patent of the complainant, or ever invaded any of his rights, as alleged in the bill of complaint.

Proofs were taken, the parties heard, and the Circuit Court having overruled both defences, sent the cause to a master to ascertain what amount the complainant was entitled to recover. Hearing was had before the master, and he made a report, as required by the decretal order. Exceptions were filed by the respondents, who were again heard before the Circuit Court in support of their motion to set aside the master's report. Modifications of an important character were made by the Circuit Court in the report of the master, both in respect to the amount adjudged to the complainant and in respect to the portions to be paid by the respective respondents, the decree being that the complainant do recover of the three respondents the sum of $1,961; and also against the first two in the sum of $3,748.28, with interest and costs, as therein specified.

Seasonable appeal was taken by the first-named respondent, and since the appeal was entered here he has filed the following assignment of errors: 1. That the Circuit Court erred in holding that the patent of the complainant is good and valid. 2. That the Circuit Court erred in holding that the respondents have infringed the claims of the complainant's patent.

Patented time detectors for watchmen were known in the art prior to the date of the patent described in the bill of complaint, and it appears that the complainant, at a certain period anterior to that date, became the owner of such a patent, and that he surrendered the same, and that it was reissued in his name for the then unexpired portion of the term. Certain alterations were made in the specification of the reissue, and, as there described, the invention provided a watch for the watchman, which he carried with him in his rounds, so constructed that, by the insertion of a key kept at each of the stations he was required to visit, he could make a record within the watch indicating the several stations visited, with the precise time of each visit, and the order in which the respective visits were made. Each watch was provided with a lock, so that the watchman had no access to its interior, and as the record of each station could only be made by the peculiar key that belonged to such station, which was there made fast, the watchman could not deceive his employers by making a false record.

All these several functions were effected by using a watch or small portable clock movement enclosed in a strong case, the lid of which could be locked and the key kept by the employer. Like a watch it had an arbor upon which the hour-hand was placed, and a drum was attached so as to revolve as the hour-hand revolved, the purpose of which was to carry the roll of paper to receive the marks indicating the time of each visit. By marks on the paper it was divided into spaces corresponding in their position, relatively as respects the centre of the watch, to the hours and minutes of the watch dial, and by lines drawn lengthwise it was also divided into spaces corresponding in number to the number of markers to be used in effecting the patented result.

Exterior to the watch-movement, but within the case, there were placed small steel bars or springs, terminating each in a point bent at right angles, while the other end was fixed firmly to the circular plate or frame of the watch-movement. These springs were placed and held in a gang, one above another, so that the points were in a row perpendicular to the watch face, at and exterior to the point on the dial of the watch indicating the hour of twelve, and each point was directly opposite one of the longitudinal spaces in the strip of paper around the circumference of the drum.

What the inventor desired to accomplish was to show the exact time of each visit of the watchman, and it is obvious that if the point of one of the springs is pressed inward upon the revolving drum it will perforate the paper within its proper longitudinal division, and that the perforation will show the hour and minute at which it was made; and in order to permit such perforation without injuring the steel point the periphery of the drum was channelled by narrow longitudinal grooves beneath each of the spaces in the paper placed around the drum to receive the marks. Keys were also provided varying from each other in the location and width of the bit and in the number of the bits, so that when one was inserted in the key-hole contiguous to the steel spring, and turned, it would press one of the springs inward upon the paper and make the required perforation, while another would press two springs and make two perforations, another three, and so on, as more fully set forth in the specification. Buerk v. Valentine, 9 Blatchf. 479.

Since the term of that patent expired, the complainant has obtained a patent for the invention in controversy in this case, which, as he admits, is for the same purpose as the other, but which he insists is a valuable improvement in accomplishing the purpose for which both inventions were made. In its main features the new improvement consists in dispensing with the drum entirely and the paper wound around its circumference. Instead of that it attaches a circular disk to the arbor of the hour-hand to revolve therewith, and attaches thereto a circular flat paper dial of larger diameter divided by vertical lines, corresponding with the hours and minutes of a watch dial, and having a portion of its exterior divided into spaces by circular lines drawn at uniform distances, and corresponding to the location of certain steel points as the paper disk is revolved. Beneath the circular plate forming the support or frame of the watch-movement the gang of steel bars or springs is firmly attached to the plate in such position that the points are in a straight line radial to the centre, and over each point is a hole in the plate so that each can be pushed upward, the point thereof passing through the hole sufficiently to perforate the paper dial in the space corresponding to the point of the spring. Over the row of holes is placed a § all strip of metal, called a fixed index, which is fastened to the circular plate or frame of the watch, and extends towards the centre of the disk, and is raised sufficiently above the revolving disk to permit the paper dial to revolve freely under it and over the holes through which the spring-points are to rise, and to prevent injury to these points holes are made in its under surface opposite each point, into which the points as they rise may enter, and then by the power of the spring be withdrawn to their respective positions below the plate. Devices, called keys, of a like character to those used in the prior invention, are provided, to be inserted in a key-hole so located that the bit of the keys when turned will force the springs upwards instead of inwards, as in the other apparatus previously explained. Perforations are made by the combination in the exterior portion of the revolving paper dial, which indicate the precise hour and minute when it was made, and the particular key that was employed, with all the variations accomplished by the devices described in the specification of the prior patent.

Attempt is made in argument to support the first assignment of error chiefly by reference to three exhibits introduced in evidence by the respondents, which were known and used by the public prior to the date of the patent described in the bill of complaint. They are the patent of Schwilgue, the patent of Rowbotham, and the patent of Nolet.

Before entering upon a separate examination of these several patents, it is proper to remark that it is not pretended that any one of them embodies the entire invention secured to the complainant in his letters-patent. Nothing of the kind is pretended, but it is insisted that each contains some feature, device, or partial mode of operation corresponding in that particular to the corresponding feature, device, or partial mode of operation exhibited in the complainant's patent.

Suppose that is so, still it is clear that such a concession cannot benefit the respondent, it being conceded that neither of the exhibits given in evidence embodies the complainant's invention or the substance of the apparatus described and claimed in his specification. Where the thing patented is an entirety, consisting of a single device or combination of old elements incapable of division or separate use, the respondent cannot escape the charge of infringement by alleging or proving that a part of the entire invention is found in one prior patent, printed publication, or machine, and another part in another prior exhibit, and still another part in a third exhibit, and from the three or any greater number of such exhibits draw the conclusion that the patentee is not the original and first inventor of the patented improvement. Bates v. Coe, 98 U.S. 31, 48.

Authority is given to a defendant in an action at law or to a respondent in an equity suit to plead or set up in the answer that the patentee is not the original or first inventor of the improvement; but if the plaintiff or complainant introduces his patent in evidence, the burden is cast upon the defending party to prove his defence, which he may do by showing that the thing patented had been invented or discovered by some other person in this country prior to the alleged invention in the pending suit, or that it had been patented or described in some printed publication in this or any foreign country. Rev. Stat., sect. 4920.

Apply that rule to the facts of the case, and it is clear to a demonstration that neither of the exhibits given in evidence by the respondents constitutes any defence to the charge contained in the bill of complaint. Curtis, Patents (4th ed.), sect. 98.

Similarities may doubtless be shown between certain features of the apparatus invented by Schwilgue and the apparatus patented to the complainant, as contended by the respondents; but they utterly fail to point out the differences, except in one or two particulars. They differ not only in construction, but in the mode of op ration, and in almost every particular which gives value to the device as a time detector for watchmen, the foreign patent being much more cumbrous and inconvenient than that of the complainant. Stationary detectors were employed at an early period to secure fidelity in watchmen in making the rounds of their beat in factories or other business establishments. Detectors of the kind were soon followed by portable watch-movements which were carried by the watchman, on which he stamped with ink or other coloring matter the proof of his visit to the several rooms within his beat. Enough appears to show that the patent of Rowbotham was nothing more than an improved apparatus of that class, being evidently so unlike that of the complainant as not to deserve much examination.

Nor is it necessary to enter much into detail in disposing of the other exhibit introduced by the respondents, as it evidently belongs to the same class of detectors as the preceding, and bears little or no relation to the apparatus of the complainant.

Argument to show that the present apparatus of the complainant is substantially different from that described in the expired patent cannot be required, as the comparison already given is amply sufficient to prove that difference to every one not blinded by self-interest or prejudice. Tested by these considerations, it is plain that nothing remains for re-examination but the question of infringement.

Persons seeking redress for the unlawful use of their inventions must allege and prove that they or those under whom they claim are the original and first inventors of the improvement, and that the patent for the same has been infringed by the party against whom the suit is brought. Where the patent in suit is introduced in evidence it affords a prima facie presumption that the invention is new and useful; but the burden to prove infringement never shifts if the charge is denied in the plea or answer. Sufficient proof of infringement may be derived from the comparison of that which is used by the defending party with the description of the invention given in the specification of the patent which constitutes the foundation of the suit, and where the invention is embodied in a machine or apparatus, that mode of conducting the examination is usually the most satisfactory. Sufficient explanations of the complainant's patent have already been given, which need not be repeated.

None, it is presumed, will deny that the time detector sold by the respondents is in appearance and general construction similar to that described in the specification of the complainant. Beyond all doubt, the respondents employ a watch-movement with a series of keys and a single hole, together with a revolving dial fastened to the watch arbor. Like the complainant they dispense with the hour and minute hands of the watch, and attach the false or paper revolving dial to the arbor of the apparatus. Their stationary index is exactly the same as that of the complainant, and they also employ a series of markers arranged radially to the centre of the dial; but the markers are unyielding, while the index is so constructed as to enable the markers to perform the same function as those employed in the complainant's apparatus. They arrange their markers under the false dial, and place the yielding index over the back of the false dial, so that the marks are made from the inside instead of from the outside.

Expert testimony was taken by the complainant, and his witness testified that the apparatus of the respondents is substantially the same in construction and mode of operation as that described in the complainant's specification, and gave his reasons for the conclusion in substance and effect as follows: That the arrangement of the markers is in a line radiating from the centre, the markers being made stationary, so that instead of pressing against the keys while the index supports the paper, the keys, supported by the stationary index, press the paper against the markers; the faces of the marke s, instead of being simple points, form what is called small figures, and the divisions of the paper dial, by concentric circles, is omitted, it appearing that the different figures are made to indicate the different stations, but the arrangement of the gang of markers is preserved. It is denied by the respondents that the index in their apparatus yields; but the witness testifies that, by taking a sight over the edge of the case parallel to the dial when the watch is open, the stationary index is seen to yield, and acts as a spring. Taken as a whole, he regards the marking device as substantially similar to that employed by the complainant.

Unless there is some yielding, either of the markers or the index, it is not easy to see how the key could be turned without tearing the paper or breaking the key, from which it must follow, as contended by the complainant, that the respondents have substituted for his series of yielding spring-points and index a series of permanent or unyielding markers and a yielding index, retaining the other necessary elements of a false dial which shall receive the impressions by the use of the described keys.

Differences between the two arrangements undoubtedly exist, as is usually the case where one is borrowed from the other without consent. Most or all of those differences are well described by the circuit judge in the case to which reference has already been made. Speaking of the infringing apparatus, he says that the gang of steel springs, instead of being placed beneath the circular plate or frame of the watch-movement, is attached to the lid of the case of the instrument, immediately over the lication of the gang of springs in the complainant's detector. When closed, the line or row of points is in the same straight line radially from the centre, and in order to perforate the paper dial they must be pressed downward instead of upward. To that end the key-hole is placed in the side of the lid over the gang of springs instead of being placed in the body of the case below the springs. Instead of the fixed index placed over the holes through which the points rise to perforate the paper, the respondents have in the same location a row of holes in the plate or frame of the movement, into which the points enter, to protect them from injury when making the perforations. During the act of perforation the paper in the complainant's apparatus is sustained by the fixed index, but the necessity for that in the infringing apparatus is obviated by making the motion of the springs downward, whereby the plate of the watch performs the same function during such act.

Other minor differences exist in the manner the paper disk is attached to the revolving disk which is fastened to the arbor of the watch-movement, but they are not deemed to be of the substance of the infringed invention. Examples are also produced as exhibits where are shown watch-dial hands on the detector of the respondents which do not appear on the apparatus of the complainant; but that is a matter not supposed to be included in the infringed patent.

Suffice it to say, without entering further into the comparison of the two specifications, that we are all of the opinion that the charge of infringement is fully sustained, both by the comparison of the specifications, one with the other, and by the proofs exhibited in the transcript.

Exceptions were taken to the master's report; but the rulings of the court in respect to the amount adjudged the complainant for the infringement not having been assigned for error, are not the proper subject of re-examination. Bverk v. Imhaeuser, 14 Blatchf. 19.

Decree affirmed.

title: Imhaeuser v. Buerk/Opinion of the Court


text: Talk:Imhaeuser v. Buerk/Opinion of the Court

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


text:
Scipio v. Wright

This was an action brought by William P. Wright against the town of Scipio, on twenty-five instruments in writing, numbered from 1 to 25, both inclusive, all being alike, except as to their number, and also except that eight of them, being those numbered from 1 to 8, both i clusive, are payable to Slocum Howland or bearer. The others are payable to bearer, no payee being named therein. To all were annexed coupons for the sum of thirty-five dollars each, differing only as to the time when payable, there being one coupon for each instalment of semi-annual interest on each bond, the first being due July 1, 1858, and the last, Jan. 1, 1873. One of which instruments is in the words and figures following, viz.:--

'No. 2.] STATE OF NEW YORK, COUNTY OF CAYUGA. [$1,000.

'Seven per cent loan, not exceeding $25,000.

One thousand dollars

'Be it known that the town of Scipio, in the county of Cayuga and State of New York, in pursuance of an act of the legislature of said State, entitled 'An Act to authorize any town in the county of Cayuga to borrow money for aiding in the construction of a railroad or railroads from Lake Ontario to the New York and Erie or Cayuga and Susquehanna Railroad,' passed April 16, 1852, and for the purpose of aiding the construction of the Lake Ontario, Auburn, and New York Railroad, owes and promises to pay to Slocum Howland or bearer one thousand dollars, with interest at the rate of seven per cent, payable semi-annually on the first days of January and July in each year, on surrender of the coupons hereto attached, at the Bank of the State of New York, in the city of New York, the principal to be reimbursable at the same place at the expiration of twenty years from the first day of January, 1853.

'In testimony whereof, the supervisor and commissioners of the town of Scipio have, pursuant to the provisions of the act aforesaid, and the written assent of two-thirds of the resident tax-payers of said town, obtained and filed in the office of the clerk of the county of Cayuga, hereunto subscribed their names this twentieth day of May, A.D. 1853.

'WILLIAM TABER, 'Supervisor.

'CALVIN TRACY,

'GEORGE SLOCUM, CommissionersOne of the coupons next to said instrument No. 2 is in the words and figures following:--

'$35.]

'The town of Scipio, in the county of Cayuga, hereby acknowledges that there will be due the bearer thirty-five dollars, payable at the Bank of the State of New York, in the city of New York, on the first day of July, 1858, being interest due on that day on bond No. 2.

'WILLIAM TRACY, 'Supervisor.

'CALVIN TRACY,

'GEORGE SLOCUM, 'Commissioners.'

Wright recovered judgment, and the town removed the case here.

The remaining facts and the statutes bearing upon the case are stated in the opinion of the court.

Mr. George F. Comstock and Mr. S. Edwin Day for the plaintiff in error.

Mr. David Wright, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Scipio v. Wright


text: Talk:Scipio v. Wright

title: Talk:Scipio v. Wright


text:
Scipio v. Wright/Opinion of the Court

At the trial of this case in the Circuit Court the extraordinary number of thirty-three exceptions were taken by the plaintiff in error, and signed by the judge. It does not, however, always happen that the merits of a case brought in error are to be measured by the number of exceptions taken in the inferior court, or by the number of errors assigned. In this case, the real questions-the only ones that need particular attention-are few.

The plaintiff below brought suit upon twenty-five bonds, or rather notes, each for the sum of $1,000, which, as he alleged, had been issued by the township in pursuance of and under authority of law. Of course, it was incumbent upon him to prove that the town was authorized to create the instruments, and to dispose of them in the manner in which disposition of them was made. The authority relied upon was an act of the legislature passed on the 16th of April, 1852, entitled 'An Act to authorize any town in the county of Cayuga to borrow money for aiding in the construction of a railroad or railroads from Lake Ontario to the New York and Erie, or Susquehanna and Cayuga Railroad.' The first section enacted as follows:--

'It shall be lawful for the supervisor of any town in the county of Cayuga' (the town of Scipio being one), 'and the asses ors of such town, who are appointed by this act as commissioners to act in conjunction with the said supervisor in effecting and executing the purposes of this act, to borrow, on the faith and credit of said town, such a sum of money as they may deem necessary, not to exceed $25,000, for a term of time not to exceed twenty years, with such rate of interest as may be agreed upon, not exceeding seven per cent per annum, and to execute therefor, under their official signatures, a bond or bonds on which the interest shall be made payable annually or semi-annually during the term said money may be borrowed. . . . All moneys borrowed under the authority of this act shall be paid over to the president and directors of such railroad company (now organized, or such company as may be organized, according to the provisions of the general railroad law, passed April 2, 1850), as may be expressed by the written assent of two-thirds of the resident tax-payers of said town, to be expended by such president and directors in grading, constructing, and maintaining a railroad or railroads passing through the city of Auburn, and connecting Lake Ontario with the Susquehanna and Cayuga Railroad, or the New York and Erie Railroad: Provided always, that the said supervisor and commissioners shall have no power to do any of the acts authorized by this act, until a railroad company has been duly organized according to the requirements of the general railroad law for the purpose of constructing the aforesaid described railroad, and the written assent of two-thirds of the resident persons taxed in said town, as appearing on the assessment-roll of such town made next previous to the time such money may be borrowed, shall have been obtained by such supervisor and commissioners, or some one or more of them, and filed in the clerk's office of Cayuga County, together with the affidavit of such supervisor or commissioners, or any two of them, attached to such statement, to the effect that the persons whose written assents are thereto attached and filed as aforesaid comprise two-thirds of all the resident tax-payers of said town on its assessment-roll next previous thereto.'The second section we also quote, as follows, so far as is needful:--

'SECT. 2. It shall be lawful for the supervisor and commissioners of any town in said county, on obtaining and filing such assent, as provided in the first section, to subscribe for and take in the name of and for said town, such a number of shares of the capital stock of such company as shall or may be organized for the purpose of constructing the aforesaid described railroad or railroads, as will be equal to the amount of the bonds executed under the authority of this act.'

The tenth section made it the duty of the electors of the town to elect at the next annual town meeting two commissioners to act in conjunction with the town supervisor in carrying into effect the provisions of the act.

At the time when this act was passed, so far as it appears, there was no organized company in existence with power to build such a railroad as the act described; but on the 23d of August next following, articles of association of such a company, organized under the general railroad laws of the State for the purpose of constructing a railroad from Lake Ontario to the Cayuga and Susquehanna Railroad, passing through Auburn and Scipio, were filed in the office of the Secretary of State. Subsequently to the formation of this company, the supervisors and assessors of the town obtained a written assent of three hundred and one residents and taxables of the town, appearing on the assessment-roll for the year 1852, and on the 8th of December, 1852, two of the assessors made oath that the persons whose written assents were attached thereto comprised two-thirds of all resident tax-payers of the town of Scipio, on the assessment-roll thereof for the year 1852. These assents and the affidavit indorsed thereon were filed in the clerk's office of Cayuga County on Jan. 11, 1853. On the 1st of March, 1853, two r ilroad commissioners were duly elected for the town, and on the 16th of May next following, they, together with the supervisor, in the name and for the town, subscribed upon the books of the said railroad company for five hundred shares of fifty dollars each of its capital stock. On the 20th of the same month they executed by their official signatures the twenty-five notes in suit, payable to bearer. Eight of them were sold by the commissioners to Slocum Howland at par; and the proceeds of the sale were paid to the railroad company on account of the stock subscription, the commissioners taking from the company for the town a certificate for the five hundred shares of stocks, which, so far as it appears, the town now holds. To this extent money was borrowed upon the bonds, and paid over in accordance with the statute. Howland also bought the remaining seventeen bonds from the railroad company, to which they had been delivered by the railroad commissioners under an arrangement we shall notice hereafter, and the company indorsed the certificate of stock as full paid. It is out of these facts that the principal questions involved in the case arise.

It is contended by the plaintiff in error that the bonds were unauthorized; because, as it is alleged, the written assent of the tax-payers did not conform in substance or meaning to the requirement of the statute, in that it did not 'express the railroad corporation to which the moneys to be borrowed by the town should be paid.' We think this position is quite untenable. The identification of the company in the written assent is as perfect as it would have been had it been described by its corporate name. The statute did not require that the taxpayers should 'express' (that is, designate) the company by its name. Any mode of description that designated it was sufficient. The assent authorized the commissioners to pay the money borrowed, for which the bonds were to be given, 'to the president and directors of a railroad company organized according to the requirements of the general railroad laws for the purpose of constructing a railroad connecting Lake Ontario with the Susquehanna and Cayuga Railroad, and passing through the city of Auburn.' This was in strict conformity with the description given in the statute. It fitted exactly the company organized in August, 1852, and there cannot be a doubt that the assent was intended to designate that company. There was no other company in existence to which the description could apply. Unless, therefore, the word 'express,' as used in the statute, was intended to convey some other meaning than described or designated (which can be maintained with no show of reason), the assent in form was all that was required for authority to issue the bonds.

A second position taken by the plaintiff in error is that all the bonds except three are void, because they were issued after the assents of the tax-payers as appearing on the assessment-roll of the town for the year 1852 had spent their force and ceased to be authority. This is founded upon the phraseology of the statute, which requires as a prerequisite to any action by the commissioners that the written assent of two-thirds of the resident persons taxed in said town, as appearing on the assessment-roll made next previous to the time such money may be borrowed, shall be obtained, verified, and filed in the clerk's office. Recalling the facts, heretofore stated, the written assent of the required number of tax-payers on the assessment-roll of 1852 was obtained and verified, and it was filed on the 11th of January, 1853. Then the authority to issue the bonds, borrow the money, subscribe for the stock, and elect railroad commissioners became perfect. The town did elect railroad commissioners on the 1st of March, 1853, the subscription for the stock of the company was made, a debt of $25,000 therefor was incurred, and the bonds or notes for an equal amount were executed, and at least some of them were sold at par and the proceeds of the sale were pa d on account of the subscription, all before any new assessment-roll could be completed and before the law required any to be made. For all this there was complete authority. Every thing had been done which was required to authorize the creation of the indebtedness to the railroad company. Did the legislature intend that after the town had lawfully created a debt and lawfully executed bonds with which to borrow the money necessary to pay it (bonds confessedly authorized at the time when they were made), the bonds should become void if the money could not be borrowed within two months and a half, or between May 20 and Aug. 1, 1853? Did it intend thus to leave the debt in existence, and at the same time to take away the power to provide means for its payment? Such a construction of the act would be most unreasonable. It would be standing upon the letter and ignoring the spirit of the statute. It would be closing our eyes to the only substantial reason for requiring the assent of two-thirds of the resident tax-payers before the commissioners could exert the power given to them by the legislature. That was to ascertain whether the tax-payers would consent to the creation of a town liability, not to ascertain how or when the debt, when incurred, should be evidenced. The substance of the power was the creation of a town debt. All the rest was formal. The legislature, it may be admitted, did not intend that the power conferred upon the railroad commissioners should continue indefinitely. Hence the assent of two-thirds of the taxable residents as appearing on the assessment-roll made next previous to the borrowing of the money was required. But evidently by this was meant that the assent should be given by the tax-payers appearing on the roll made next before any debt of the township should be incurred. It was protection against a town debt that was intended, rather than protection against the form of the debt or the shape it might assume after it had been incurred or when the security for it should be given. Two distinct powers were given by the statute, each dependent for its exercise, though not for its creation, upon the prior consent of the taxables. The one was described by the first section. It was to borrow money and execute bonds therefor, paying over the money borrowed to a railroad company to be expended in grading, constructing, and maintaining its road. This section made no reference to a subscription for the stock or to a debt directly to the railroad company.

But the second section authorized a subscription to the capital stock and the consequent assumption of a legal liability to the company, equal to the amount of the bonds issued, which might be discharged afterwards by levying a tax, or by borrowing money, giving bonds therefor, and paying it over. Nothing in the act postponed a subscription for stock until the money to pay for it could be borrowed. This debt was incurred before the assessment-roll of 1853 had any existence. The right to incur it when it was incurred was, therefore, complete. The exercise of the power was warranted by the written assent filed. For these reasons we think the instruments sued upon are not invalid, because they were not issued until after Aug. 1, 1853, when the assessment-roll for that year was by law required to be completed.

The only other question raised by the assignments of error, and by the numerous exceptions, is, whether the circuit erred in refusing to rule, as requested by the defendant, that the plaintiff could not recover for the last seventeen bonds, because, instead of having been issued for money borrowed, they were issued directly to the railroad company in exchange for its stock.

This objection has no application to the first eight bonds, numbered from 1 to 8 inclusive. They were sold at par, and the proceeds were paid over to the company. This was, as we have said, a substantial borrowing. The facts respecting the remaining seventeen, as they appear in the record, may be thus summarized:--

On the 7th of January, 1854 the railroad company received from the 'railroad commissioners' of the town the seventeen bonds, nominally at par, and indorsed 'full paid' on the certificate of stock, which the town had previously taken, and upon which $8,000, the proceeds of the first eight bonds, had been paid. This arrangement was accompanied by a written understanding that the company might at any time within eight months from Oct. 11, 1853, redeliver the bonds, or any part of them, to the town, and reduce the amount of credit on the certificate accordingly; and that if the company should sell the bonds for more than par, it should account to the town for the excess, but that the town might at any time within the said eight months, and prior to the sale of the bonds by the company, have the right to demand the redelivery thereof on payment to the company of the par value. The bonds were never redelivered, nor were they demanded. Some time after Jan. 7, 1854 (when does not exactly appear), Slocum Howland bought the seventeen bonds from the railroad company, with notice that money had not been borrowed upon them, but that they had been transferred by the town supervisor and railroad commissioners, or one or more of them, in the first instance to the company in exchange for its stock. What Howland paid for them, whether the company obtained their full par value, is not proved.

Howland held the bonds until 1874, after they became due, when he sold them to the plaintiff, taking his note for the whole price, and that note remains unpaid. Neither Howland, therefore, nor Wright, the purchaser from him, stands in the position of a bona fide purchaser without notice of the exchange of the bonds for stock. Had either of them been such a purchaser, the plaintiff's right to recover could not be gainsaid. But the question now is, whether the fact that the bonds were not issued for borrowed money, but were exchanged for stock of the railroad company, is a defence for the town against a holder who, when he purchased, had notice of the manner of their issue. Were the question an open one, it would seem that it ought not to be a defence. It might be regarded as a fair presumption that the bonds were sold to Howland for not less than their par value, and that the company received their full amount in money; or the transaction might be regarded as practically a borrowing of the money by the town through the agency of the railroad company. So far as discharging the debt of the town for its stock subscription is concerned, and so far as relates to obtaining a full-paid certificate, the transaction is, in legal effect, the same as if the money had been borrowed by the town directly and paid over to the company. And, if it had appeared affirmatively that Howland had paid the full face of the bonds and interest, without any discount, when he bought, every object which the statute could have had in view in enacting that it should be lawful for the town officers to borrow on the credit of the town a limited amount of money and pay it over to the railroad company, executing town bonds therefor, would have been accomplished. In Gould v. The Town of Sterling (23 N. Y. 456), it was said by Selden, J., when speaking of a transaction like that we have now under consideration, where there had been an exchange of town bonds for railroad stock: 'If what was done was the same in effect as if the money had been borrowed and paid over to the railroad company, the difference in form would not be material.' Such a case, however, is not presented by this record.

The statute prescribed the manner in which the power it conferred should be exercised. The town was at liberty to subscribe for stock, but if bonds were used to pay for it the mode of use was directed to be borrowing money with them and paying the money to the railroad company. It is quite conceivable that the purpose of such a direction, instead of allowing an exchange of the bonds for the stock taken, was that the railroad company might obtain an amount of money equal to the am unt of the bonds. This was important to the company, to the town as a stockholder, and to the public as interested in the projected railway. If the bonds might be delivered directly to the company in payment of the stock, it might sell them at a discount. Thus it would fail to obtain the assistance in building its road which the legislature contemplated it should have. Its stock would be practically sold for less than par, and it would not be worth as much to the town as it would be had all the money for which the bonds were given come into the company's treasury. Whether such were the motives that induced the peculiar phraseology of the statute or not, the highest court of New York has repeatedly construed it as prescribing the manner in which the bonds might be used or issued, and as denying the power to exchange them directly with the railroad company for the stock taken by the town. These decisions have been constructions of the identical statute we have now under consideration, and by which the bonds now in suit are alleged to have been issued. The construction given by the State court must, therefore, be our guide. Starin v. The Town of Genoa (23 N. Y. 439) was a suit for interest upon town bonds made under the act. They had been exchanged with a railroad company for capital stock taken for the town, and the exchange was accompanied by the same agreement as that made between the town and company in the present case. The plaintiff was a purchaser from the railroad company, with knowledge that it had received the bonds in payment of stock. In these respects the case was exactly like the present. The Court of Appeals ruled that issuing the bonds by exchanging them for the company's stock was not an execution of the power and authority granted by the statute, but an appropriation of them in a manner not contemplated by the legislature, or by the taxpayers' assent. The court said, 'It was evidently the intention of the act that money should be raised and paid over to aid in the construction of a railroad, and no color is given to the idea or position that the credit merely of any town should be given, through and by which money might be raised.' They, therefore, held that the bonds were issued without authority, and as the railroad company received them on a consideration not authorized, it was chargeable with a knowledge of their invalidity, and it never could have enforced them. It was further ruled that the plaintiff stood in no better position, that having purchased with notice of the manner in which they had been issued, he was not a bona fide holder. Gould v. The Town of Sterling (23 N. Y. 456) is a similar case, and the ruling of the court was the same. In The People v. Mead (24 id. 114) we find a reassertion of the invalidity of bonds first negotiated by exchanging them for stock of the railroad company. The opinion was delivered by Denio, J. It was, however, said that a bona fide holder, who had no knowledge that the railroad company had received the bonds in payment for the stock taken for the town, would not be liable to the defence which existed against the railroad company. Horton v. The Town of Thompson (71 id. 513) is another case in which the Court of Appeals gave the same construction to another similar statute, holding that bonds exchanged for stock were unlawfully issued, and that a purchaser, with knowledge that they had been thus issued, could not enforce them.

It thus appears to be the settled construction given by the courts of New York to the act under which the bonds now in suit were issued, and to other similar acts, that they do not authorize an exchange of bonds for shares of the capital stock of railroad companies, and that a purchaser who had notice at the time of his purchase that such a disposition of the bonds was made by the town officers or railroad commissioners, cannot recover in a suit brought upon them.

We find no decision of the Court of Appeals that is in conflict with what was ruled in the cases we have cited, or which weakens their authority, and as they are constructions of a State statute, we are constrained to follow them. Gould v. The Town of Oneonta (71 N. Y. 298), to which we have been referred, presented an entirely different question. A statute enacted in 1859 had authorized the transfer of the bonds directly to the railroad company in payment of the stock.

Our conclusion, then, is that the Circuit Court erred in declining to instruct the jury, as requested, substantially, that upon the facts proven in the case (and not contradicted), the plaintiff was not entitled to recover upon any of the seventeen bonds, because the supervisor and commissioners did not issue them for borrowed money, but transferred them to the railroad company in payment of the stock subscription.

We find no other error in the record.

The judgment will be reversed and the cause remanded for a new trial; and it is

So ordered.

MR. JUSTICE CLIFFORD and MR. JUSTICE SWAYNE dissented.

title: Scipio v. Wright/Opinion of the Court


text: Talk:Scipio v. Wright/Opinion of the Court


text:
Douglass v. County of Pike

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

This was an action by Joseph M. Douglass on three hundred and twenty-one overdue coupons detached from bonds issued by the county to Pike, Missouri. The bonds are in the following form:--'No. ___.] STATE OF MISSOURI. [$500.00.

PIKE COUNTY BOND.

'Issued in payment of Stock of the Pike County Short Line Railroad Company.

'Know all men by these presents, that the county of Pike, in the State of Missouri, acknowledges itself indebted and firmly bound to the Pike County Short Line Railroad Company in the sum of five hundred dollars, which sum the said county promises to pay to the said Pike County Short Line Railroad Company, or bearer, at the National Bank of the State of Missouri, in St. Louis, Mo., on the first day of January, A.D. 1892, with interest thereon from the first day of January, A.D. 1872, at the rate of ten per cent per annum; which interest shall be payable semi-annually on the presentation and delivery at said National Bank, of the coupons of interest hereto attached; this bond being issued under and pursuant to an order of the county court of Pike County, by authority of an act of the General Assembly of the State of Missouri, approved March 23, 1868, entitled 'An Act to facilitate the construction of railroads in the State of Missouri,' and authorized by vote of the people of Cuivre Township, in said county, taken as required by law, Feb. 7, 1871.

'In testimony whereof, the said county of Pike has executed this bond, by the presiding justice of the county court of said county, under the order thereof, signing his name hereto, and by the clerk of said court, under the order thereof, attesting the same and affixing the seal of said court; this done at Bowling Green, county of Pike aforesaid, this first lay of January, A.D. 1872.

'[SEAL.] A. G. GRIFFITH,

'Presiding Justice of County Court of Pike County, Missouri.

'Attest:

H. C. CAMPBELL,

'Clerk of County Court of Pike County, Missouri.

The declaration avers that the county, in behalf of said township, subscribed for and received and retains the stock of said railroad company to an amount equal to the bonds, and paid the coupons falling due up to Jan. 1, 1876; that the road was built through the township; that the subscription was authorized by a vote duly taken, as required by law, on the seventh day of February, 1871; that he is the holder for value of the coupons sued on, and that he duly presented them for payment at said bank as they became due, and that payment was refused.

Judgment was rendered in favor of the defendant on its demurrer to the plaintiff's declaration, the question involved being the constitutionality of the act whereof mention is made in the bonds.

The plaintiff thereupon sued out this writ of error.

Mr. John H. Overall and Mr. Frederic N. Judson for the plaintiff in error.

Mr. George F. Edmunds and Mr. Thomas J. C. Fagg for the defendant in error.

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

title: Douglass v. County of Pike


text: Talk:Douglass v. County of Pike

title: Talk:Douglass v. County of Pike


text:
Douglass v. County of Pike/Opinion of the Court

We are asked to reconsider our decision in County of Cass v. Johnston (95 U.S. 360), because since that case the Supreme Court of Missouri, in ''State, ex rel. Woodson, v. Brassfield (67 Mo. 331), and Webb v. La Fayette County'' (id. 353), has held the Township Aid Act, which we sustained, to be unconstitutional. The question presented, as we view it, is not so much whether these late decisions are right, as whether they should be followed in cases having reference to bonds put out and in the hands of innocent purchasers when they were announced. In the Cass County case we said that the Supreme Court of the State had often been called on to construe and give effect to the act, and had never before that time in a single instance expressed even a doubt as to its validity. We have again examined all the cases, and find that what we then said was true. Judge Dillon, who filled the office of circuit judge in the eighth circuit with such distinguished ability during nearly all the time the act was in operation, from its original passage until after the recent decisions, remarked in Westerman v. Cape Girardeau County, 7 Cent. Law Jour. 354; 'A hundred cases-and I do not think I exaggerate-have been brought on these township bonds in the Federal courts of this State, and prior to the decision in Harshman v. Bates Co. (92 U.S. 569), none of the able lawyers defending these cases ever made a point that the act of March 23, 1868, was unconstitutional.' The reason is obvious. At the very outset it was thought best to take the opinion of the Supreme Court of the State on that subject. The act went into operation in 1868, and in 1869 The State v. Linn County (44 Mo. 504) was decided. There a township had voted to subscribe to the stock of a railroad company, and the county court had made the subscription; but after this was done the court refused 'to deliver the bonds, for the alleged reason, only, that the act under which the subscription was made was unconstitutional and void.' An application was then made for a mandamus to compel the delivery of the bonds; and the only questions presented by the counsel for the respondent in the argument of the case, as shown by the report, were those of constitutionality, and especially was it urged that the act was repugnant to art. 11, sect. 14, which, quoting from the opinion, 'declares the General Assembly shall not authorize any county, city, or town to become a stockholder in, or loan its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent thereto.' All the objections presented were considered by the court, and in conclusion it was said, 'The county court having made the subscription, the company is entitled to the bonds.' It is quite true that the precise objection which has since been raised was not then urged or considered; but the alleged discrepancy between the act and the Constitution was just as apparent then as it is now, and Judge Dillon, in Foote v. Johnson County (6 Cent. Law Jour. 346), says: 'Suits in great numbers on these township bonds have been brought in the Circuit Court of the United States for this district, and they have been defended by the ablest lawyers in the State, upon every ground that they conceived open to them; but this difference between the phraseology of the Constitution and the act, so patent that it could not escape attention, was never presented or urged in any case, so far as either of us recollect, as invalidating the act.' In County of Cass v. Johnston, we attributed this to the fact that in other cases it had been substantially decided that the language of the act and that of the Constitution were in legal effect the same, and we at that time took occasion to look somewhat critically into the rulings on that subject. We have again examined that question, and are satisfied with the correctness of our former conclusion. It is thought, however, that we did not give sufficient effect to State v. Sutterfield, 54 Mo. 391. As to that, we said the question presented related to another clause of the Constitution, and that the decision was placed expressly on the ground of a difference between the two provisions. In this it is urged we were in error. The clause of the Constitution there under consideration was art. 4, sect. 30, which is: 'The General Assembly shall have no power to remove the county seat of any county, unless two-thirds of the qualified voters of the county, at a general election, shall vote in favor of such removal.' Under this provision of the Constitution a statute was passed providing for elections in such cases, to the effect, 'if it shall appear by such election that two-thirds of the legally registered voters of said county are in favor of the removal of the county seat of such county, then,' &c. In the opinion the court say: 'There is no doubt that in general, when an election is held to determine the choice of a candidate, or the determination of some question of public policy, the plurality required by law, whether it be a bare majority, or two-thirds or three-fourths, is determined by the result of the vote cast, without regard to the number declining to vote; and this is upon the ground that a failure to vote is assumed, or may be presumed, to be an acquiescence in whatever result may be produced by the action of those who feel a sufficient interest in the election to go to the polls and vote, and for the further reason that in most cases there is no mode by which the number of absentees can be ascertained. . . . Our Constitution in regard to the proposed removal of county seats, it seems to me, hardly admits of two constructions. It prohibits the legislature from removing them unless two-thirds of the qualified voters shall, at a general election, vote for the removal. The words do not imply an acquiescence or negative sanction, or a negative assent inferred from absence, but a positive vote in the affirmative, and the number of votes required is specifically named, and there is no difficulty in ascertaining what that number is, since the same Constitution provides for a registration, and points out who qualified voters are; and the statute in this case uses the words 'legally registered voters,' and requires two-thirds of them to vote for the change.' The court then refers to Bassett v. The Mayor of St. Joseph (37 Mo. 270), State v. Binder (38 id. 450), and State v. Winkelmeier (35 id. 103), and says: 'In none of these cases, however, was there any examination of, or construction given to, the precise language of the constitutional provision now under consideration. . . . The present case, however, presents very different considerations. The question of removing county seats was regarded by the framers of the Constitution as of sufficient importance to require very stringent provisions in that instrument, and an examination of the laws in force on this subject, at the time of the adoption of the new Constitution, will show the great importance of requiring a strict compliance with its provisions.' We think, then, we were not in error in supposing that the court believed there was an essential difference between the two provisions of the Constitution, and especially so as the judge who delivered the opinion of the court in State v. Sutterfield, by his dissent in the later cases of State v. Brassfield and Webb v. La Fayette County, clearly indicates his disapproval of the effect upon the question now under consideration which was then given that case.

The legislative recognition of the difference between these two clauses of the Constitution is equally apparent. The Constitution went into effect in July, 1865, and it became the duty of the legisla ure, at its next session, which commenced in November, to adapt the old laws to the new order of things. In this connection, it must be borne in mind that the provision for a registration of voters was first introduced into the policy of the State by this new Constitution.

The then existing law regulating the removal of county seats provided that 'whenever three-fifths of the taxable inhabitants of any county, as ascertained by the tax-list made and returned last preceding the application, shall petition the county court praying a removal of the seat of justice thereof to a designated place, the court shall appoint five commissioners,' &c. Rev. Stat. Mo. 1855, p. 514, sect. 1. To meet the requirements of the new Constitution on this subject, an election was provided for, and it was enacted that if it should appear by such election that two-thirds of 'the legally registered voters' were in favor of the removal, commissioners should be appointed to perform the same duties prescribed in the old law. Gen. Stat. Mo. 1865, p. 223, sects. 20-22. Here it is evident the legislature had in mind both the provision for registration of voters and the somewhat unusual requirement that two-thirds of the qualified voters of the county should vote for the measure.

The old law respecting the subscription by the county courts to the capital stock of railroad corporations was as follows: 'It shall not be lawful for the county court of any county to subscribe to the capital stock of any railroad company, unless the same has been voted for by a majority of the resident voters who shall vote at such election under the provisions of this act.' Acts of 1860-61, p. 60, sect. 2. In adapting this to the new constitutional requirements, this is the language used: 'It shall be lawful for the county court of any county, the city council of any city, or the trustees of any incorporated town, to take stock, &c., provided that two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent to such subscription.' Gen. Stat. Mo. 1865, p. 338, sect. 17. This, it will be seen, is the exact language of the Constitution itself, and the intention evidently was to leave its meaning to be ascertained by judicial construction. By another statute passed at the same session of the legislature, the charter of the city of St. Joseph, which had before authorized subscriptions to the capital stock of railroad companies if a majority of the real estate owners in the city sanctioned the same, was amended so as to require that question to be submitted 'to a vote of the qualified voters of said city, and in all such cases it shall require two-thirds of such qualified voters to sanction the same.' Acts of 1865-66, p. 269, sect. 1. At the same session, in amending the charter of the town of Clarksville, evidently to accomplish the same object, this is the language employed: 'After first having obtained the consent of the inhabitants, as required by the Constitution of the State.' Id. p. 254, sect. 1.

At the February Term, 1866, of the Supreme Court of the State, that court was called on, in Bassett v. The Mayor of St. Joseph (37 Mo. 270), to give a construction to the act amending the charter of St. Joseph. Under that act an election was held on the 13th of January, 1866, to vote upon the question of an issue of bonds, and four hundred and four votes were polled, of which three hundred and thirty-six were in favor of and fifty-eight against the measure. The mayor refused to sign the bonds after the vote had been taken, and a mandamus was asked to require him to do so. The only reason he gave for declining to sign the bonds was, that 'he was in doubt whether the matter was to be determined by two-thirds of the votes polled at the special election, or by two-thirds of all the voters resident in the city, absolutely, whether voting or not.' In the argument in support of the application for the writ, the attention of the court was called to the fact that here was 'no registry law by which the qualified voters in the city could be ascertained,' and it was further said, 'the votes cast at the last election for city officers and the votes cast at said subsequent election furnish the only correct criterion to ascertain the number of qualified voters in the city at the time said special election was held.' In the opinion, mention is also made of the number of votes polled at the next preceding election; but the court, after stating the exact question put by the mayor as indicating his own doubts, uses this direct and unmistakable language: 'We think it was sufficient that two-thirds of the qualified voters who voted at the special election authorized for the express purpose of determining that question, on public notice duly given, voted in favor of the proposition. This was the mode provided by law for ascertaining the sense of the qualified voters on that question. There would appear to be no other practicable way in which this matter could be determined.' It is true, the bonds voted at this election were not to be used in payment of subscriptions to the stock of railroad companies, but the law construed was the one in which provision was made for such subscriptions. Following this, at the October Term, 1866, of the same court, was the case of State v. Binder (38 Mo. 450), in which similar language in another statute was construed, and Bassett v. The Mayor of St. Joseph cited as establishing the doctrine 'that an election of this kind authorized for the very purpose of determining that question, on public notice duly given, was the mode contemplated by the legislature as well as by the law for ascertaining the sense of the legal voters upon the question submitted, and that there could not well be any other practicable way in which such a matter could be determined. And,' continues the court, 'certainly, in the absence of any evidence to the contrary, it may be presumed that the voters voting at an election so held were all the legal voters of the city; or, that all those who did not see fit to vote (if there were any) acquiesced in the action of those who did vote, and so are to be considered as equally bound and concluded by the result of the election. Rex v. Foxcroft, 2 Burr. 1017; Wilcox on Corp. 546.' Certainly, after these two decisions, made under the circumstances that attended them, and with the mind of the court directed by counsel in their argument to the registration laws, it might fairly be assumed by the legislature to have been judicially determined that the assent of two-thirds of the qualified voters voting at an election duly called and notified, was the legal equivalent of the assent of two-thirds of the qualified voters of an election precinct. Hence it was that at the session of the legislature which began in January, 1868, and as soon, probably, as the effect of these decisions had become generally understood, to avoid all future doubts as to what was meant, the equivalent language, as construed by the courts, was used, instead of that of the Constitution itself. And so we find not only in the Township Aid Act, but in other acts depending for their authority on the same clause of the Constitution, the requisite assent of those voting at an election was deemed by the legislature to be the assent of the qualified voters.

It was under this state of facts and the law that The State v. Linn County (supra) was heard and decided. Other objections to its constitutional validity than those which had formerly been considered were raised, argued, and decided in favor of the law. From that time forward, and until long after the issue of the bonds now in question, the law was treated by the courts and the people as valid and constitutional. No lawyer asked for a professional opinion on that subject could have hesitated to say that it had been settled. It would seem as though every question which could be raised had in some form, directly or indirectly, been presented and decided. While some of the ecisions were rendered before the passage of the township act, it is so clear that the peculiar language of that act was the consequence of those decisions that we do not deem it unreasonable to give them all the effect they would have if made afterwards.

We are, then, to consider whether, under these circumstances, we must follow the later decisions to the extent of destroying rights which have become vested under those given before. As a rule, we treat the construction which the highest court of a State has given a statute of the State as part of the statute, and govern ourselves accordingly; but where different constructions have been given to the same statute at different times, we have never felt ourselves bound to follow the latest decisions, if thereby contract rights which have accrued under earlier rulings will be injuriously affected. The language of Mr. Chief Justice Taney, in Rowan v. Runnels (5 How. 134), expresses the true rule on this subject. He said, p. 139: 'Undoubtedly this court will always feel itself bound to respect the decisions of the State courts, and, from the time they are made, regard them as conclusive in all cases upon the construction of their own laws. But we ought not to give them a retroactive effect, and allow them to render invalid contracts entered into with citizens of other States which, in the judgment of this court, were lawfully made.' Afterwards, in Ohio Life Insurance and Trust Co. v. Debolt (16 How. 416), the same learned Chief Justice, after reiterating what he had before said in Rowan v. Runnels, uses this language: 'It is true the language of the court in that case is confined to contracts with citizens of other States, because it was a case of that description which was then before it. But the principle applies with equal force to all contracts which come within its jurisdiction.' This distinction has many times been recognized and acted upon. Supervisors v. United States, 18 Wall. 71; Fairfield v. County of Gallatin, 100 U.S. 47. Indeed, if a contrary rule was adopted, and the comity due to State decisions pushed to the extent contended for, 'it is evident,' to use again the language of Mr. Chief Justice Taney, in Rowan v. Runnels, 'that the provision of the Constitution of the United States, which secures to the citizens of another State the right to sue in the courts of the United States, might become utterly useless and nugatory.' The true rule is to give a change of judicial construction in respect to a statute the same effect in its operation on contracts and existing contract rights that would be given to a legislative amendment; that is to say, make it prospective, but not retroactive. After a statute has been settled by judicial construction, the construction becomes, so far as contract rights acquired under it are concerned, as much a part of the statute as the text itself, and a change of decision is to all intents and purposes the same in its effect on contracts as an amendment of the law by means of a legislative enactment.

So far as this case is concerned, we have no hesitation in saying that the rights of the parties are to be determined according to the law as it was judicially construed to be when the bonds in question were put on the market as commercial paper. We recognize fully, not only the right of a State court, but its duty to change its decisions whenever, in its judgment, the necessity arises. It may do this for new reasons, or because of a change of opinion in respect to old ones; and ordinarily we will follow them, except so far as they affect rights vested before the change was made. The rules which properly govern courts, in respect to their past adjudications, are well expressed in Boyd v. Alabama (94 U.S. 645), where we spoke through Mr. Justice Field. If the Township Aid Act had not been repealed by the new Constitution of 1875 (art. 9, sect. 6), which took away from all municipalities the power of subscribing to the stock of railroads, the new decisions woul be binding in respect to all issues of bonds after they were made; but we cannot give them a retroactive effect without impairing the obligation of contracts long before entered into. This we feel ourselves prohibited by the Constitution of the United States from doing. We always regret to find ourselves in conflict with the courts of the States in matters affecting local law, but when necessary we cannot refrain from acting on our own judgment without abrogating our constitutional jurisdiction.

For these reasons, the judgment of the Circuit Court will be reversed, and the cause remanded with directions to overrule the demurrer to the petition, and take such further proceedings, not inconsistent with this opinion, as law and justice may require; and it is

So ordered.

NOTE.-In Darlington v. County of Jackson, error to the Circuit Court of the United States for the Western District of Missouri, which was argued by Mr. John B. Henderson for the plaintiff in error, and by Mr. John C. Gage for the defendant in error, and in Foote v. County of Pike, error to the Circuit Court of the United States for the Eastern District of Missouri, which was argued by Mr. John B. Henderson and Mr. Odon Guitar for the plaintiff in error, and by Mr. George F. Edmunds, Mr. Thomas J. C. Fagg, and Mr. Fillmore Beall for the defendant in error, MR. CHIEF JUSTICE WAITE delivered the opinion of the court, reversing the judgments below on the authority of Douglass v. County of Pike, supra, p. 677.


text: Talk:Douglass v. County of Pike/Opinion of the Court


text:
Case v. Beauregard (101 U.S. 688)

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

The facts out of which this case arises are stated in Case v. Beauregard, 99 U.S. 119. The bill in each case is in every essential particular the same, except that here the additional allegation is made that the complainant, as receiver, had brought an action at law and recovered judgment against Beauregard and May, as partners; that Graham, the other partner, was beyond the reach of process; and that an execution upon the judgment was returned nulla bona. The defendants pleaded the decree in the former suit in bar, and the court, finding that the matter set up in the plea was sustained by the evidence, dismissed the bill. Case appealed.

Submitted on printed arguments by Mr. Charles Case for the appellant, and by Mr. Henry C. Miller for the appellee.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Case v. Beauregard (101 U.S. 688)


text: Talk:Case v. Beauregard (101 U.S. 688)

title: Talk:Case v. Beauregard (101 U.S. 688)


text:
Case v. Beauregard (101 U.S. 688)/Opinion of the Court

That the complainant's bill exhibits the same cause of action which was set forth in his former bill against these defendants, and that he now seeks the same relief as that which was sought in his first suit, is quite apparent. The identity of the claims and equities asserted, as well as of the relief asked, is shown by an inspection of the records, and it is hardly denied. The object of both suits was to follow and subject to the payment of a debt due by the partnership of May, Graham, & Beauregard to the First National Bank of New Orleans, certain property alleged to have formerly belonged to the partnership, but which before the first bill was filed had been transferred to the railroad company. The claim made in each of the cases is that the bank has a privilege or lien upon the property for the partnership debt; that the railroad company acquired the property with knowledge of the existence of the lien, and that it is charged with a trust in favor of the bank. The decree dismissing the former bill must, therefore, be a bar to the present suit (it having been pleaded), unless the court which dismissed it was without jurisdiction of the case.

In the former bill it was not averred that judgment at law had ever been recovered against the partnership for the debt, and that an execution had been issued thereon and returned fruitless. The present bill contains such an averment. It is alleged that judgments at law were obtained against two of the members of the partnership on or about the twenty-sixth day of February, 1873, which was after the decree dismissing the former bill, and that executions issued upon those judgments had been returned that no property could be found. The complainant insists that this averment not having been made in the former bill, the decree of dismissal, though unqualified, cannot be regarded as a final adjudication of the equities between the parties, and that it is, therefore, no bar to the present suit.

It is no doubt generally true that a creditor's bill to subject his debtor's interests in property to the payment of the debt must show that all remedy at law had been exhausted. And generally, it must be averred that judgment has been recovered for the debt; that execution has been issued, and that it has been returned nulla bona. The reason is that until such a showing is made, it does not appear, in most cases, that resort to a court of equity is necessary, or in other words, that the creditor is remediless at law. In some cases, also, such an averment is necessary to show that the creditor has a lien upon the property he seeks to subject to the payment of his demand. The rule is a familiar one, that a court of equity will not entertain a case for relief where the complainant has an adequate legal remedy. The complaining party must, therefore, show that he had done all that he could do at law to obtain his rights.

But, after all, the judgment and fruitless execution are only evidence that his legal remedies have been exhausted, or that he is without remedy at law. They are not the only possible means of proof. The necessity of resort to a court of equity may be made otherwise to appear. Accordingly the rule, though general, is not without many exceptions. Neither law nor equity requires a meaningless form, 'Bona, sed impossibilia non cogit lex.' It has been decided that where it appears by the bill that the debtor is insolvent and that the issuing of an execution would be of no practical utility, the issue of an execution is not a necessary prerequisite to equitable interference. Turner v. Adams, 46 Mo. 95; Postlewait & Creagan and Keeler v. Howes, 3 Iowa, 365; Ticonie Bank v. Harvey, 16 id. 141; Botsford v. Beers, 11 Conn. 369; Payne v. Sheldon, 63 Barb (N. Y.) 169. This is certainly true where the creditor has a lien or a trust in his favor.

So it has been held that a creditor, without having first obtained a judgment at law, may come into a court of equity to set aside fraudulent conveyances of his debtor, made for the purpose of hindering and delaying creditors, and to subject the property to the payment of the debt due him. Thurmond and Others v. Reese, 3 Ga. 449; Cornell v. Radway, 22 Wis. 260; Sanderson v. Stockdale, 11 Md. 563.

In Brisay v. Hogan (53 Me. 554), it was ruled that when a creditor seeks by his bill to obtain payment of his debt from land paid for by the debtor, but conveyed to his wife, a levy of an execution is unnecessary, if the debtor never had legal title to the land. See also Day et al. v. Washburne, 24 How. 352.

The foundation upon which these and many other similar cases rest is that judgments and fruitless executions are not necessary to show that the creditor has no adequate legal remedy. When the debtor's estate is a mere equitable one, which cannot be reached by any proceeding at law, there is no reason for requiring attempts to reach it by legal processes.

But, without pursuing this subject further, it may be said that whenever a creditor has a trust in his favor, or a lien upon property for the debt due him, he may go into equity without exhausting legal processes or remedies. Tappan v. Evans, 11 N. H. 311; Holt v. Bancroft, 30 Ala. 193. Indeed, in those cases in which it has been held that obtaining a judgment, and issuing an execution, is necessary before a court of equity can be asked to set aside fraudulent dispo itions of a debtor's property, the reason given is that a general creditor has no lien. And when such bills have been sustained without a judgment at law, it has been to enable the creditor to obtain a lien, either by judgment or execution. But when the bill asserts a lien, or a trust, and shows that it can be made available only by the aid of a chancellor, it obviously makes a case for his interference.

Now, if we are correct in these views of equity jurisdiction, it is a plain inference that the decree pleaded in bar of the present suit was a final adjudication of the equities asserted by the complainant therein.

The bill in that case asserted in the most ample terms the remedilessness of the complainant at law. It averred that at and before the transfer and conveyances of the partnership property, sought to be charged, to the railroad company, each of the members of the partnership was largely indebted, without means and in a state of insolvency, and that they had since been and still were insolvent; so that a suit at law and the recovery of a judgment against them, or either of them, would not afford the complainant any relief, because neither of the partners have or had, since the dates of the pretended transfers of said partnership property, any property whatever upon which the complainant could levy an execution at law, or seize for the satisfaction of the debt due to the bank. What more could have been necessary to show that the complainant had no remedy at law, that his remedy, if he had any, was in equity?

But this was not all. The bill charged that the conveyances of the partnership property, and the transfers by which it had been vested in the railroad company, were illegal and fraudulent, that the bank had a privilege or lien upon the property, and it prayed that the various acts of sale, transfer, and conveyance by which the property that had belonged to the partnership had been conveyed to the railroad company, should be declared null and void, and that the property should be decreed to be liable to the payment of the amount due to the bank.

Thus it appears the bill exhibited all that was necessary to give to the court, sitting as a court of equity, complete jurisdiction over the subject of the controversy between the parties, and over all the equities now asserted by the complainant in his present suit. It must, therefore, be held that the decree dismissing that bill determined the equities of the case. And this must be so, whether the reasons for the dismissal were sound or not. That decree was affirmed in this court, and affirmed on the merits. We regarded the case and treated it as requiring an adjudication upon the complainant's equity to be paid out of the property in the hands of the railroad company. Nothing that can now be done in another suit can take away the legal effect of the decree. Even were we of opinion that the case was erroneously decided, it would still be res judicata, a bar to the complainant, a protection to the defendants. It would be idle, therefore, to reconsider the question whether the bank has a lien upon the property he seeks to charge, or whether there had been a trust in the bank's favor.

Decree affirmed.


text: Talk:Case v. Beauregard (101 U.S. 688)/Opinion of the Court


text:
Anthony v. County of Jasper

ERROR to the Circuit Court of the United States for the Western District of Missouri.

The facts are stated in the opinion of the court.

The case was argued by Mr. John B. Henderson and Mr. Joseph Shippen for the plaintiff in error, and by Mr. Alexander Graves, contra.

Mr. E. J. Montague and Mr. Fillmore Beall filed printed arguments for the defendant in error.

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

title: Anthony v. County of Jasper


text: Talk:Anthony v. County of Jasper

title: Talk:Anthony v. County of Jasper


text:
Anthony v. County of Jasper/Opinion of the Court

This is a suit upon interest coupons originally attached to bonds issued under the Township Aid Act of Missouri, and presents the following facts:--

On the 10th of February, 1872, the township of Marion, in Jasper County, upon a cal duly made under the law, voted to subscribe $75,000 to the stock of the Memphis, Carthage, and Northwestern Railroad Company upon certain conditions, and on the 28th of March following the county court made the subscription on the terms and subject to the conditions specified.

On the 30th of March in that year an act was passed by the General Assembly of Missouri, entitled 'An Act to provide for the registration of bonds issued by counties, cities, and incorporated towns, and to limit the issue thereof.' Sect. 4 of that act is as follows:--

'Before any bond hereafter issued by any county, city, or incorporated town, for any purpose whatever, shall obtain validity, or be negotiated, such bond shall first be presented to the State auditor, who shall register the same in a book or books provided for that purpose in the same manner as the State bonds are now registered, and who shall certify by indorsement on such bond that all the conditions of the laws have been complied with in its issue, if that be the case, and also that the conditions of the contract under which they were ordered to be issued have also been complied with, and the evidence of that fact shall be filed and preserved by the auditor. But such certificate shall be prima facie evidence only of the facts therein stated, and shall not preclude or prohibit any person from showing or proving the contrary in any suit or proceedings to test or determine the validity of such bonds or the power of any county court, city, or town council, or board of trustees, or other authority to issue such bonds, and the remedy by injunction shall also lie at the instance of any tax-payer of the respective county, city, or incorporated town to prevent the registration of any bonds alleged to be illegally issued or founded under any provision of this act.'

On the 4th of June, 1872, the county court ordered that $50,000 of the bonds which had been voted should be issued, that the clerk have them registered according to law, and, when registered, that they be deposited in escrow with some responsible banker in St. Louis.

John Purcell was the presiding justice of the court in March. He continued in office until September, 1872, when he resigned, and R. S. Merwin was appointed in his place Oct. 21, 1872. The bonds now in question were sealed with the seal of the court, affixed by the clerk, and signed by Merwin, as presiding justice, and by the clerk in October, 1872, but antedated as of March 28. Merwin delivered them during the same month, with the first two coupons cut off, to the Union Savings Bank of St. Louis, for the use of Edward Burgess, a contractor for building the road. In November, Burgess sold them to one Wilson at fifty-five cents on the dollar, and the bank gave them up to the purchaser on his order. Neither the other justice of the county court, nor the court as a court, consented to what was done by Merwin, and the railroad company has never fully complied with the conditions of the vote authorizing the issue of the bonds. No registry of the bonds was ever made, as required by the act of March 30, 1872, and they did not have upon them the certificate of registration. Anthony, the plaintiff below, was a purchaser for value of the bonds from which the coupons sued on were cut, and without any notice that they had been antedated, or were in any respect irregular or invalid.

The Circuit Court, on this state of facts, gave judgment against Anthony, and he brought this writ of error.

All the questions presented in the argument of this case were disposed of in Douglass v. County of Pike (supra, p. 677), except such as arise under the act of March 30, 1872. That act, it is claimed, renders the bonds invalid, because they were not registered and had no certificate of registry on them. Against this it is urged:--

1. That the act does not apply to bonds issued under the township aid law; and,

2. That if it does, the county is estopped from denying that these bonds were actually issued on the day they bear date.

The first o jection is, as we think, untenable. It does not appear to have been taken or considered below. While the bonds are township bonds, in the sense that they are payable out of taxes levied on the property in the township which voted them, they were issued by the county. The county court, which represented the county in its corporate capacity, made the subscription voted by the township, and issued the bonds in the name of the county. Under the same authority the necessary taxes are to be levied on the property in the township, and from moneys obtained in this way the county treasurer is to pay the bonds and coupons as they mature. The bonds on their face acknowledge an indebtedness of the county 'for and on account of' the township. Since townships have no corporate organization of their own they act through the county, which, for this purpose, represents them as, under other circumstances, it does the people of the whole county.

The act in question is not confined to the bonds of counties, but embraces all issued by counties. As there can be no township bonds except they are issued by counties, it seems to us that they come within the descriptive words used in the fourth section, and we have been unable to find any thing in the other parts of the act manifesting an intention to give these words any other than thier usual and ordinary signification. The object of the new legislation undoubtedly was to guard against unauthorized issues of this class of public securities. For this purpose a new policy was adopted by the State. The evil which the General Assembly had in view affected township bonds, as well as those of counties, cities, or towns. In fact, as ordinarily the same officers put out the township bonds that did those of the county, it is impossible to discover any good reason for guarding one against frauds and mistakes rather than the other. The records of the county court should contain an account of all that has been done in this way by that body for the townships, and the chief financial officer of the county can as easily furnish the State auditor with a statement of these obligations as he can of those of the county at large. When the State auditor certifies to the county court the amount required during the next year to meet maturing coupons and costs and expenses, the special tax can be levied by the county court, under the township aid law, as amended in 1871 (Wagner's Stat. 331, sect. 52), on the real estate and personal property in the township for whose account the bonds were issued. No embarrassment can possibly arise in this particular, for there is no such conflict between the two statutes as to produce a repeal by implication. The registration statute is supplementary only to that under which the bonds were originally issued.

This brings us to consider the question of estoppel. There can be no doubt that it is within the power of a State to prescribe the form in which municipal bonds shall be executed in order to bind the public for their payment. If not so executed they create no legal liability. Other circumstances may exist which will give the holder of them an equitable right to recover from the municipality the money which they represent, but he cannot enforce the payment, or put them on the market as commercial paper. The act now in question is, we think, of this character. It in effect provides that no bond issued by counties, cities, or incorporated towns shall be valid, that is to say, completely executed, until it has been countersigned or certified in a particular way by the State auditor. For this purpose, after being executed by the corporate authorities, it must be presented to that officer, and he must inquire and determine whether all the requirements of the law authorizing its issue have been observed, and whether all the conditions of the contract in consideration of which it was to be put out have been complied with. To enable him to do this, evidence must be submitted which he is required to file and preserve. If he is satisfied, the registry is made, and the requisite certificate indorsed on the bonds. This being done the execution of the bond is complete, and, under the law, it may then be negotiated, that is to say, put on the market as valid commercial paper. When the certificate is found on the bond the purchaser need not inquire whether what has been certified to is true. As against a bona fide holder the public is bound by what its authorized agents have done and stated in the prescribed form.

Dealers in municipal bonds are charged with notice of the laws of the State granting power to make the bonds they find on the market. This we have always held. If the power exists in the municipality, the bona fide holder is protected against mere irregularities in the manner of its execution, but if there is a want of power, no legal liability can be created. When the bonds now in question were put out, the law required that to be valid they must be certified to by the auditor of state. In other words, that officer was to certify them before their execution was complete, so as to bind the public for their payment. We had occasion to consider in McGarrahan v. Mining Company (96 U.S. 316) the effect of statutory requirements as to the form of the execution of patents to pass the title of lands out of the United States, and there say: 'Each and every one of the integral parts of the execution is essential to the validity of a patent. They are of equal importance under the law, and one cannot be dispensed with more than another. Neither is directory, but all are mandatory. The question is not what, in the absence of statutory regulations, would constitute a valid grant, but what the statute requires.' The same rule applies here. The object to be accomplished is the complete execution of a valid instrument, such as the law authorizes public officers to put out and bind for the payment of money the public organization they represent. For this purpose the law has provided that the instrument must not only be signed and sealed on behalf of the county court of the county, but it must be certified to or countersigned by the auditor of state. Of this law all who deal in the bonds are bound to take notice.

In order to recover in this case it became necessary for the plaintiff to prove that the bonds from which the coupons sued on were cut had been executed according to law. He did prove that they were signed by the presiding justice and clerk of the court, and were sealed with the seal of the court. This, before the act of March 30, 1872, would have been enough, but after that more was necessary. The public can act only through its authorized agents, and it is not bound until all who are to participate in what is to be done have performed their respective duties. The authority of a public agent depends on the law as it is when he acts. He has only such powers as are specifically granted; and he cannot bind his principal under powers that have been taken away, by simply antedating his contracts. Under such circumstances, a false date is equivalent to a false signature; and the public, in the absence of any ratification of its own, is no more estopped by the one than it would be by the other. After the power of an agent of a private person has been revoked, he cannot bind his principal by simply dating back what he does. A retiring partner, after due notice of dissolution, cannot charge his firm for the payment of a negotiable promissory note, even in the hands of an innocent holder, by giving it a date within the period of the existence of the partnership. Antedating under such circumstances partakes of the character of a forgery, and is always open to inquiry, no matter who relies on it. The question is one of the authority of him who attempts to bind another. Every person who deals with or through an agent assumes all ths risks of a lack of authority in the agent to do what he does. Negotiable paper is no more protected against this inquiry than any other. In Bayley v. Taber (5 Mass. 285), it was hel that when a statute provided that promissory notes of a certain kind, made or issued after a certain day, should be utterly void, evidence was admissible on behalf of the makers to prove that the notes were issued after that day, although they bore a previous date.

It matters not that when the bonds were voted the registration law was not in force. Before they were issued it had gone into effect. It did not change in any way the contract with the railroad company. The company was just as much entitled to its bonds when it complied with the conditions under which they were voted after the law as it could have been before. All the legislature attempted to do was to provide what should be a good bond when issued. There was nothing changed but the form of the execution.

Purchasers of municipal securities must always take the risk of the genuineness of the official signatures of those who execute the paper they buy. This includes not only the genuineness of the signature itself, but the official character of him who makes it. This plaintiff is charged with notice of the fact that Merwin was not the presiding justice of the county court until October, 1872, and that he could not have signed the bonds in his official capacity until that time. Had he signed them in March, he could not have bound the township for their payment. This is equivalent to notice that they were not in fact issued before March 30, and that consequently they were not valid because not certified by the auditor of state.

This case is entirely different from Town of Weyauwega v. Ayling (99 U.S. 112), where we held the town was estopped from proving that the bonds were actually signed by a former clerk after he went out of office; because the clerk in office adopted that signature as his own when he united with the chairman in delivering the bonds to the railroad company, pursuant to the vote of the town. There the bonds were not only complete in form at the time they bore date, but when they were actually issued as genuine by the proper agents, one of whom was the clerk who should have signed them. Here they were not actually complete in form when they were issued, and it was only by a false date inserted by one of the two agents required by law to unite in their execution, and without the knowledge or consent of the other, who never acted at all, that they were apparently so. They were never in a condition to be issued, and were never in fact issued by the proper authorities. They were in legal effect forged.

It follows that the judgment of the Circuit Court was right, and it is consequently

Affirmed.

MR. JUSTICE CLIFFORD, MR. JUSTICE SWAYNE, and MR. JUSTICE STRONG dissented.


text: Talk:Anthony v. County of Jasper/Opinion of the Court


text:
Dauterive v. United States

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

The facts are stated in the opinion of the court.

Mr. Edward Janin for the appellants.

The Solicitor-General, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Dauterive v. United States


text: Talk:Dauterive v. United States

title: Talk:Dauterive v. United States