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United States v. Lane/Opinion of the Court

APPEAL from the Court of Claims, the object of the suit having been to recover damages against the United States for an alleged breach of contract, made by George Lane with one Risley, who was at the time the treasury agent at Norfolk, Virginia, for the purchase of the products of insurrectionary States.

The case, which depended in part on statutes, regulations of the treasury, and a proclamation of the President, was thus:

ACTS OF 1861 AND 1863.

By act of July 13th, 1861, section 5, 'all commercial intercourse' by and between States declared in insurrection and the citizens thereof, and the citizens of the rest of the United States, was declared unlawful, except such as should be licensed by the President, and conducted under the regulations made by the Treasury Department.

An act of March 12th, 1863, authorized agents of the Treasury Department to collect 'all abandoned and captured property,' &c., and enacted that 'all property coming' into any of the United States not declared in insurrection 'from within any of the United States declared in insurrection, through or by any person other than a treasury agent, or under a lawful clearance by the proper treasury officer, shall be confiscated.'

TREASURY REGULATIONS OF MARCH 31ST, 1863.

The treasury regulations issued March 31st, 1863, by their section 7, ordered thus: 'No permit shall be granted to transport to or from, or to sell or purchase in any place or section whatever, not within the military lines of the United States army.'

Regulation 8, as revised and published September 12th, 1863, declared: 'Commercial intercourse with localities beyond the lines of military occupation by the United States forces is strictly prohibited, and no permit will be granted for the transportation of any property to any place under the control of insurgents against the United States.'

ACT OF 1864.

By the 4th section of an act of July 2d, 1864, the prohibitions of the act of July 13th, 1861, were extended to 'commercial intercourse by and between persons residing or being within the lines of National military occupation, in such districts declared in insurrection, whether with each other or with persons being within such insurrectionary districts, but not within our military lines.'

Section 8 of this act provided that the Secretary of the Treasury might authorize agents 'to purchase for the United States any products of States declared in insurrection at such places therein as shall be designated by him, at such price as shall be agreed on with the seller, not exceeding the market price thereof at the place of delivery, nor exceeding three-fourths of the market value thereof in the city of New York, at the latest quotations known to the agent purchasing.'

Section 9 of this act repealed so much of section 5 of the act of July 13th, 1861, as made it lawful for the President to license or permit such trade by private citizens and traders except to supply necessaries to loyal persons within the Federal lines, and to authorize persons within the Federal lines to bring or send to market in loyal States products of their own labor or of the labor of freedmen or others in their employment.

TREASURY REGULATIONS OF JULY 29TH, 1864.

On the 29th of July, 1864, rules were promulgated by the Secretary of the Treasury, and by one of which 'commercial intercourse with localities beyond the lines of actual military occupation by the United States forces is absolutely prohibited; and no permit will be granted for the transportation of any property to any place under the control of insurgents against the United States.'

TREASURY REGULATIONS OF SEPTEMBER 24TH, 1864.

On the 24th of September, 1864, general regulations for the purchase, on government account, of products of insurrectionary States, were made by the Secretary of the Treasury, approved by the President, by which Norfolk was made a purchasing point, and the special agent was required (by Regulation 7), to the extent of the funds at his command, to purchase all products offered to him (of the character which by his instructions he was authorized to buy); 'but no liability of any character shall be authorized or assumed by any agent, for or on account of the government, previous to the actual delivery of the products, other than a stipulation to purchase products owned or controlled by applicants, at a price to be agreed upon at the place and date of delivery.' The form of this stipulation is given, and consists of a certificate by the treasury agent, that he has agreed to purchase from C. D. property, &c., 'which he stipulates shall be delivered to me, unless prevented from so doing by the authority of the United States,' with a 'request' for 'safe conduct.'

By Rule 8, 'whenever any person shall make application to the purchasing agent in writing, setting forth that he owns or controls products, stating the kind, quantity, and location thereof, or the date at which they will be delivered at some specified location accessible to transportation,' the purchasing agent was directed to give a certificate that such application had been made, and request safe conduct for such party and his necessary transportation to the location specified, and for himself and products from the location specified to the purchasing agent. (The form of this certificate is given.) Rule 9 provided that parties, having sold and delivered products, shall, upon their request, be furnished by the purchasing agent with a certificate stating the character and quantity of articles purchased, the price paid, the aggregate amount of payment, the place whence, and the route by which the property was transported.

PRESIDENT'S PROCLAMATION, SEPTEMBER 24TH, 1864.

On September 24th, 1864, the President issued his proclamation, reciting that Congress had authorized the purchase for the United States of products of States declared in insurrection, and that the Secretary of the Treasury had designated Norfolk and other places named therein as places of purchase, and had made regulations for such purchases, and he therefore proclaimed that all persons, except those in the service of the government, 'having in their possession' such products (and which said agents were authorized to purchase), 'and all persons owning or controlling such products,' are authorized to convey them to either of said places of purchase, and 'such products, so destined, shall not be liable to detention, seizure, or forfeiture, while in transitu or awaiting transportation.' And that 'any person having the certificate of a purchasing agent, as prescribed by Treasury Regulation 8, is authorized to pass with means of transportation to the points named in said certificate, and to return therefrom with the products required for the fulfilment of its stipulations.' And that 'any person having sold, and delivered to a purchasing agent products of an insurrectionary State,' 'and having in his possession a certificate of the fact, stating the character and quantity of products, and the aggregate amount paid therefor, as prescribed by Regulation 9, shall be permitted' 'to purchase from any authorized dealer,' at the place of sale, or any other place in a loyal State, any 'articles not contraband of war, nor prohibited by the War Department,' 'to an amount not exceeding in value one-third of the aggregate value' of products sold by him as certified by the agent; and 'such articles may be transported by the same route and to the same place, from and by which the said products sold and delivered, reached the purchasing agent,' and such goods 'shall have safe conduct, and shall not be subject to detention, seizure, or forfeiture, while being transported to the places and by the route set forth in said certificate.'

Generals and military officers commanding districts, posts, or detachments, and officers commanding fleets, flotillas, and gunboats, 'will give safe conduct to persons and products, merchandise, and other articles duly authorized as aforesaid and not contraband of war, or prohibited by order of the War Department, or the orders of such generals commanding, or other duly authorized military or naval officer made in pursuance thereof.'

THE FACTS OF THE CASE, as found by the Court of Claims, were essentially these:

The claimant, Lane, entered into contracts with the treasury agent at Norfolk, Virginia, for the delivery to the agent of a large quantity of cotton, which was upon the Chowan River, in the State of North Carolina, and within the lines held by the insurrectionary forces. The commander of the military district gave safe conduct to the claimant, his vessel and crew, to bring out the cotton. The claimant also had a license to take out certain articles, a schedule of which was attached to the safe conduct given by the military commander.

The purchasing agent of the Treasury Department of Norfolk appointed a sub-agent to proceed on board of the vessel and to be in charge of the outward cargo contained in the schedule, and not deliver the same to the claimant until he should have delivered to such agent on board the vessel three times its value in cotton. The outward voyage was made without hindrance, and having arrived at Chowan River, the claimant delivered the cotton to the sub-agent on board the vessel.

On her return voyage, the vessel and the cargo were seized by order of a naval commander on duty in the inland waters of North Carolina. After being detained several days, the vessel and cargo were released. She again set off on her course towards Norfolk, and before arriving there was again seized by the order of the admiral commanding the squadron in those waters.

The vessel was afterwards sent to Washington, D. C., where she was libelled, at the instance of the United States, in the Supreme Court of the District of Columbia, sitting in admiralty, where, however, a decree, with costs, passed for the claimant. No record of that suit, however, was produced here.

No proceedings were ever taken against the cotton, and it was ultimately, though after some months' detention, restored to the claimant. It was then taken to New York, but the price of the article had greatly fallen during the detention, and the price received on the sale of it was correspondingly less than if the voyage had not been arrested, and if the cotton had been sold on its prompt completion.

The United States were now called on in the suit to make good the loss caused by the wrongful conduct of its naval officers.

Upon the facts, the Court of Claims ruled, among other things:

That the contracts with the agent of the treasury, for the sale and delivery of the cotton, were valid and lawful contracts.

That the seizure and detention of the claimant's vessels and cargo, by the officers of the navy, were unlawful and unauthorized.

That the judgment of the Court of Admiralty was conclusive; that the voyage was a lawful and proper one, ane conducted according to the prescribed regulations of the trade in which the claimant and his vessel were engaged.

That such acts constituted a breach of the contracts between the claimant and the United States, and entitled him to such damages as he sustained thereby.

Mr. Dickey, Assistant Attorney-General (having set forth all the statutes, treasury regulations, &c., bearing on the case, as already given by the reporter, who is indebted for them to Mr. Dickey's brief), for the appellant; Mr. Hoar, Attorney-General, maintaining the same side:

1. The voyage was in violation of law, and the contract alleged and the contracts found by the court to have been made were illegal; the seizure, by the naval officers, was proper, and the claimant has, therefore, no just and legal cause of complaint.

The act of July 13th, 1861, the act of March 12th, 1863, the Treasury Regulations of March 31st, 1863, the Revised Treasury Regulations of September 11th, 1863, the act of July 2d, 1864, the Treasury Regulations of July 29th and 30th, 1864, and those of September 24th, 1864, and the President's proclamation of September 24th, 1864, make it plain, that everywhere commercial intercourse with those parts of the insurrectionary States which were within the control of rebels, was absolutely forbidden, from the beginning of the war, unless, indeed, it may be in the act of July 2d, 1864, and the regulations and President's proclamation made thereunder. But these, in truth, make no change in this regard. If it were intended by that act and the practice under it, to license such trade, it is not so specifically provided, and is manifested only, if at all, by the want of express words of limitation in the act. It authorizes the 'purchase' for the United States of 'any products of States declared in insurrection, at such places therein as shall be designated by' the Secretary of the Treasury. It does not say, expressly, that these provisions relate only to products found within the Federal lines; but is not that the fair construction? Such trade with a public enemy is forbidden without statute, according to the laws of war among all civilized nations; and when that non-intercourse had been so often and so fully proclaimed by all the departments of the government, from the beginning of the war, are we to construe these general words as changing this policy? This construction, limiting the provisions of this act to those parts of the States in insurrection, which were, for the time, within our military lines, is strengthened by the fact that the prohibitions of the act of July 13th, 1861, were extended by the 4th section of this act of July 2d, 1864, even 'to commercial intercourse by and between persons residing or being within the lines of National military occupation, in districts declared in insurrection' 'with each other.' This construction is strengthened, too, by the fact, that section 9 of this act repeals so much of the act of July 1861, as made it lawful for the President to license and permit trade by private citizens in such districts, even within the Federal lines, except to supply necessaries to loyal persons, and to authorize persons within the Federal lines to bring to the loyal States products of their own labor, or of freedmen, &c.

This construction is fortified also by the language of Regulation 3 of the Treasury Regulations of July 30th, 1864.

2. The jurisdiction of the Court of Claims depends, of course, upon the acts of Congress which established it; and these, as all know, give it jurisdiction of 'all claims founded upon any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the government of the United States.' The only ground which can be pretended here is 'contract.' But the United States never contracted with the claimant that its naval officers would not seize and detain his vessel and cotton, and claimant has, therefore, no cause of action which the Court of Claims can, within its jurisdiction, enforce.

The grievance or wrong for which this suit is brought was the capture and detention of his steamer and his cargo of cotton by the naval officers, and afterwards by the officers of the Treasury Department. In fact, this capture and detention, which is a tort, not anything founded on contract, is the gist of claimant's action.

The Court of Claims, however, have no jurisdiction in cases of tort. Claims arising out of damage to, or destruction of, property in the Southern States taken or destroyed by any part of the army or navy, must be referred to Congress.

1. Lane was the undisputed owner of the cotton prior to, and at the making of, the contract. He agreed to sell, and the United States to buy, this cotton. The price to be paid, the place it was to be delivered at, was agreed upon by the contracting parties.

The law authorized it: the agents of the United States were fully empowered to contract. Whatever some other statutes and regulations may have meant, the act of July 2d, 1864, and the regulations and proclamation under it, permitted what was done. To understand the act we must read it by the light of surrounding circumstances, circumstances found in the public history of the day. The United States, it is to be remembered, wanted cotton at this time, grievously. France and England were so greatly suffering from the want of it, as to be tempted to acknowledge the independence of the Confederate States. The people of the North, themselves, greatly wanted it. Public necessity rendered a relaxation of former rules indispensable. The 8th section of the act of July 2d, 1864, which made it lawful for the Secretary of the Treasury, with the approval of the President, to authorize agents to purchase for the Middle States and products of the States declared to be in insurrection, conferred the power to license trading within the military lines of the enemy. The Regulations of September 24th, 1864, which were meant to allow the trading authorized by the act of July 2d, previous, do not adopt the prohibition against non-intercourse contained in the prior regulations of July 2d. They thus show that it was meant to be abandoned.

2. But even if the view we thus take were not correct, the United States are estopped from denying its correctness by the judgment of their own courts. The judgment of the Supreme Court of the District of Columbia, sitting as a court of prize, between the United States and Lane, was on this same subject-matter, to wit, the steamer. The steamer could not be free from liability, and the cotton subject to condemnation. The Supreme Court of the District, by restoring the vessel, established the lawfulness of the whole voyage; for if the voyage was unlawful, the steamer would have been condemned. The judgment is, moreover, conclusive upon all the world, and estops the United States from calling in question the legality and regularity of the voyage. It was a judgment of a court of competent and exclusive jurisdiction, and binds all the world.

It is attempted to conclude the whole question by an estoppel of record. But the record set up as an estoppel is not produced. Never favored, an estoppel which seeks to protect-both in the face of general law and special statutes forbidding it-trading with an enemy who is at once an enemy and a rebel-will not be received.

Mr. Justice DAVIS delivered the opinion of the court.

In the view we take of this case it is unnecessary to discuss the question-conceding the contract to be lawful-whether the action of the naval authorities could be a ground of claim for damages for a breach of this contract against the United States, because, in our opinion, the contract was unauthorized, and had no power to bind the government.

It appears, by the findings of the Court of Claims, that Chowan River, in North Carolina, the place where the cotton was purchased, was within the lines held by the insurrectionary forces, and that the military safe-conduct protected as well the return as the outward voyage, for Lane was permitted to take out an outward cargo, under the supervision of a person, styled in the record a sub-agent of the purchasing agent at Norfolk, whose duty it was to retain possession of the cargo until he should have received from Lane on board the vessel, three times its value in cotton.

At the time this contract purports to have been made, this country, was engaged in war with a formidable enemy, and by a universally recognized principle of public law, commercial intercourse between states at war with each other, is interdicted. It needs no special declaration on the part of the sovereign to accomplish this result, for it follows from the very nature of war that trading between the belligerents should cease. If commercial intercourse were allowable, it would oftentimes be used as a color for intercourse of an entirely different character; and in such a case the mischievous consequences that would ensue can be readily foreseen. But the rigidity of this rule can be relaxed by the sovereign, and the laws of war so far suspended as to permit trade with the enemy. Each state settles for itself its own policy, and determines whether its true interests are better promoted by granting or withholding licenses to trade with the enemy. It being the rule, therefore, that business intercourse with the enemy is unlawful unless directly sanctioned, the inquiry arises, whether there was any law of Congress in force at the time that sanctioned this transaction.

At an early period in the history of the war, Congress legislated on this subject. By an act passed on the 13th of July, 1861, all commercial intercourse between citizens of States in insurrection and citizens of the rest of the United States was declared unlawful; but liberty was given to the President, in his discretion, to license trade with the enemy if he thought it would conduce to the public interests to do so. In so far, however, as it was licensed by him, the manner of conducting it was left to be regulated by the Secretary of the Treasury. In the administration of this law, we do not find any regulation prescribed by the Secretary of the Treasury allowing commercial intercourse within the rebel lines. On the contrary, the trade regulations which were issued by him on the 31st of March, 1863, and the 12th of September of the same year, expressly say that commercial intercourse with those parts of the insurrectionary States within the control of the rebels is absolutely forbidden. Has this policy since then been changed? It certainly has, if this proceeding was authorized; for if Risley in his capacity of treasury agent, could lawfully contract with Lane, a citizen of a State not in rebellion, to purchase from him cotton in the country of the public enemy, which he did not own or control, but must procure after he got there, and had the power to assist him in this enterprise, by allowing him to take out a cargo of goods to facilitate the purchase of the cotton, and to furnish for his protection a sub-agent and a military safe-conduct, then it is clear the door was left open for general trading with the enemy. If one citizen of a State, not in insurrection, could lawfully obtain from a treasury agent the right to transport goods to a place under the control of the insurgents, where he could exchange them for cotton or other products of the country, and could also have safe-conduct to take his property there, and to bring out the property he should buy, with the promise on the part of the agent to protect and purchase it, so could any other citizen-for in this matter equality must be the rule-and in this way it is easy to see a free commercial intercourse with the enemy would be opened, and a radical change effected in the manner of conducting the war. Was this result contemplated by Congress in the act of July 2d, 1864?

It is contended that the 8th section of this act, which says that it shall be lawful for the Secretary of the Treasury, with the approval of the President, to authorize agents to purchase for the United States any products of States declared in insurrection, conferred the power to license trading within the military lines of the enemy.

If this were so, and it was the intention of Congress to allow this trading, providing it was done on government account, why was it not manifested by a specific provision in the law? Why leave such an important change of policy to be inferred from the general words of the act, and the absence of express words of limitation?

That the Secretary of the Treasury, who, it is natural to suppose, having the administration of the law in his hands was, before it was passed, consulted about it, did not give this interpretation to it, is very clear, for, within a short time after the passage of the act, he adopted, with the approval of the President, a new series of rules regulating commercial intercourse, which were intended to supersede all others, and the third rule absolutely prohibits all intercourse beyond our military lines, and declares further, 'that no permit will be granted for the transportation of any property to any place under the control of the insurgents.' (See Treasury Regulations, and Rules for Commercial Intercourse, of July 29th, 1864.)

It is argued, as the regulations which were issued on the 24th of September following, for the express purpose of enforcing that provision of the act relating to the purchase for the United States of the products of insurrectionary States, do not, in terms, readopt this prohibition against non-intercourse, that therefore it was abandoned. But this does not follow, for there is nothing in these regulations inconsistent with its continuance, and if not expressly revoked, it remained in force. Aside, however, from the construction adopted by the Secretary of the Treasury, we are able to see, by reference to other provisions of the same act, that Congress did not mean to change, by the 8th section, the non-intercourse policy which had prevailed. By the 4th section of this act the prohibitions of the act of July 13th, 1861, were extended even to commercial intercourse by and between persons residing, or being within the lines of National military occupation in districts declared in insurrection, 'with each other;' and the 9th section repeals so much of the act of July, 1861, as made it lawful for the President to license and permit trade by private citizens, in such districts, even within the Federal lines, except to supply the actual wants of the loyal people, and to authorize persons within the Federal lines to bring to the loyal States the products of their own labor, or of freedmen, &c.

The incorporation of these sections in the law is irreconcilable with the idea that Congress intended, notwithstanding these prohibitions, to confer power on the Secretary of the Treasury to allow citizens of loyal States on government account to trade within the actual military lines of the insurgents. If this is not the nature of the power conferred, it is asked what authority did Congress intend to give the secretary, and how was it to be exercised? There is no difficulty in answering these questions and reaching the true meaning of this particular provision, when we consider the entire act, and the treasury regulations adopted to carry into effect the 8th section, in connection with the history of the times. The law was designed to remedy existing evils. The mischiefs attending private trading with the enemy, even in those parts of the insurrectionary districts which were for the time within our military lines, had been seriously felt in the conduct of the war, and the best interests of the country required that it should cease. It was deemed important, however, to still maintain some species of commercial intercourse with the insurgents, for it is well known that the government desired to have, if it did not interfere with military operations, the products of the South, and particularly cotton, brought within our lines. To accomplish this end, and at the same time avoid the complications and embarrassments incidental to private trading, required the inauguration of a new system. This was done by withdrawing from the citizen the privilege of trading with the enemy, and allowing the Secretary of the Treasury, with the approval of the President, to purchase through agents, for the United States, any products of States declared in insurrection. The inquiry is made, how could these agents purchase these products if private citizens were denied the right of trading in the insurrectionary districts, whether they happened to be within the National or Confederate military lines? It would not do to let the army be used for this purpose, and the only other way left open was to hold out inducements for the insurgents themselves to bring their products to us.

If they could be induced to do this, we would obtain their products which we needed, and in the manner of obtaining them, would avoid the evils inseparable from private trading. The inducements for the insurgents to pursue this course were very strong, for besides the liability of having their principal product-cotton-confiscated or destroyed, they were, as is well known, in want of many of the necessaries of life. They were substantially told in the Regulations of the Treasury Department, 'If you will bring your cotton within our lines, we will not only not seize it, but will buy it from you, and you are at liberty to go to the nearest treasury agent in an insurrectionary district to sell it, or if you prefer, you can leave it under the control of some one who can go to the agent and sell it for you.' If this were not enough to accomplish the object, the President of the United States, by way of further inducement, in an executive order of the same date with the Treasury Regulations, said to them: 'You can purchase such articles of merchandise as you need, not contraband of war, to one-third of the aggregate value of the products sold by you, and return with them, and I will guarantee you safe conduct.' Why this limited permission to buy, after the delivery of the products, unless the privilege was for the benefit of the insurgents? If private persons, living in the Loyal States, could engage in a venture like this of the claimant, they would need, as he did, to make the venture remunerative, to take with them a cargo of goods to exchange for Southern products; but there was no authority for this. The permission of the President is limited to the taking of a return cargo, bought with part of the proceeds of Southern products, previously sold and delivered to a purchasing agent of the Treasury Department. Indeed, so particular is the direction on this subject, that the military officer commanding at the place of sale, was not authorized to permit a person who had sold Southern products to buy merchandise, unless he exhibited to him a certificate of the purchasing agent, setting forth the fact of the purchase and sale, the character and quantity of products, and the aggregate amount paid therefor.

Enough has been said, without pursuing this investigation further, to show there is nothing in the act itself, the Regulations of the Treasury Department, or the order of the President, to justify Risley in dealing in the manner he did, with Lane. It follows, therefore, that the voyage itself was illegal, as were the contracts and arrangements by which it was undertaken, and that the vessel and cargo were properly seized for being engaged in illegal trading with the enemy.

Although Risley was not authorized in making any contract with a person occupying the status of Lane, still, if he were, he could only do it in the manner and for the purposes pointed out in the Treasury Regulations.

By these regulations the purchasing agent could not act at all until the person desiring to sell Southern products made application, in writing, that he owned or controlled them, stating their kind, quality, and location, and then the power of the purchasing agent before the delivery of the products was limited to a stipulation (the form is prescribed) to purchase, and to the giving a certificate that such application was made, and requesting safe conduct for the party and his property.

There is nothing in the petition, or the findings of the court below, to show that Lane complied with these provisions. On the contrary, it is clear from his own statement that he neither owned nor controlled the cotton when he contracted to sell it, but that, after the contract was made, he procured it within the rebel lines. Neither the law, nor the regulations through which it was administered, were intended to protect a speculation of this sort. The purchasing agent had no authority to negotiate even with any one in relation to the purchase of Southern products, unless at the time of the negotiation he either owned or controlled them. (See Regulations for the purchase of products of insurrectionary States on government account, of September 24th, 1864, and executive order same date.)

The Court of Claims find that no proceedings were taken against the cotton, and that it was restored to the claimant, but that the vessel was libelled at the instance of the United States, in the Supreme Court of the District of Columbia, where a decree, with costs, passed in favor of the claimant. It is argued, and was so ruled by the court below, that this decree concludes the United States. But the injury arises, how far the United States are concluded by it? The record of the admiralty court is not before us, and we only know from the record in this case, that that court refused to render a decree of forfeiture against the vessel, and awarded costs against the United States.

On what ground the court put its decision-whether for want of proof, insufficient allegations, or on the merits of the case-we have no means of determining.

It may well be that the United States could not re-seize the vessel, or take further proceedings against the cotton, and yet be at perfect liberty to litigate the right of the claimant to damages, in a direct proceeding brought against them to test that question.

There is nothing in this record to show that the Supreme Court of this District, in decreeing to the claimant the restoration of his vessel, adjudicated on the question of his right to damages. As that court had the power to award damages-and the record is silent on the subject-it is clear, either that the court refused damages, or that the claimant did not insist on the court considering the question.

The United States are, therefore, not concluded on this point, and the case is relieved of all difficulty.

The judgment of the Court of Claims is reversed, and this cause is remanded to that court, with directions to enter

AN ORDER DISMISSING THE PETITION.


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Seymour v. Freer (75 U.S. 202)

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

On the 9th of May, 1835, Henry Seymour, residing at Utica, New York, and Jeremiah Price, residing at Chicago, Illinois, entered in New York, into a contract, thus:

'The said Price agrees that he will forthwith devote his time and attention, and exercise his best judgment, in exploring and purchasing land, to an amount not exceeding $5000, in the States of Illinois, Indiana, and Ohio, and in the Territories of Michigan and Wisconsin, or in such of them as he may find most advantageous to the interest of said Seymour, in whose name the contracts and conveyances shall be made and taken. The purchases shall be made after full and careful searches and explorations, for the most profitable investments, on or near the sites or expectant sites of towns or places of business, and, in general, in tracts of ground of moderate extent; and the said Seymour covenants, on his part, to furnish $5000 for the above contemplated purchases, and that the lands, purchased as aforesaid, shall be sold within five years from the present time and out of the profit which may be made by such purchase and sale (after charging to the investment, the taxes and other charges, if any, together with 7 per cent. interest on the investment and the charges last mentioned), there shall be paid to the said Price, one-half of the same, which one-half of the profit shall be in full of his services and expenses of every kind in making the aforesaid explorations, searches, and in doing all such other things as may be requisite and proper in making the contemplated purchases. It is understood that the purchases shall be made during the present year, and that no payment for services or expenses will be made by said Seymour, except from the profits made as aforesaid.'

Contemporaneously with the making of the contract, Seymour placed into the hands of Price the $5000 mentioned in it. And between June and October, 1835, Price bought about thirty pieces of land in Illinois, thus using all the money.

The lands were unproductive, and consisted, in their sundry parcels, of two thousand four hundred and forty acres, and some village lots, situate in Joliet. It was all conveyed to Seymour.

In August, 1837, Seymour died; he left two sons, viz., Horatio and John F., and four daughters, two of them being, at his death, and at the expiration of the five years mentioned in the contract, infants. By his will, he appointed Horatio, John F., and another, his executors; and his real estate, under the directions of his will, went to his heirs, except the share of one daughter, which was vested in trustees.

No part of the land was sold during the five years specified in the contract. It was admitted of record that, at the expiration of the time for sale, stated in the contract (May, 1840), the lands were unsalable, and that it was entirely uncertain how much they could have been sold for, or whether they would ever have brought enough to repay the original investment and interest.

During the five years, there were no taxes upon, or expenses as to the lands purchased, except taxes upon the lots in Joliet, amounting, in all, to $19.33. These were paid by Price, with money furnished by Seymour. Subsequently to the five years, Price, till his own death, in 1854, paid the taxes on the lands; Seymour's executors furnishing him the money to pay them, as also to pay any small expenses he was put to.

The accounts of Price (independently of the outlay for the purchase, and in which all the taxes and expenses just spoken of were entered), began March 4th, 1837. They were headed:

'Account of payments on account of H. Seymour.'

They began 24th December, 1841, comprised eighty-four items amounting to $2054, and ran to near the date of Price's death in July, 1854, terminating 16th June, 1854. The items were chiefly of taxes on the different pieces of property. But there were several charges for postage on letters, for a small item of travelling expense in paying taxes, for interest on small sums advanced to pay taxes, &c., and one in March, 1845, of $1.53 paid as a charge for advertising a county tax, 'because,' said the account, 'funds not sent.' But there was no charge or claim for services by Price or any other person as agent. In fact, in one or more instances he apparently suffered lands to be sold for taxes. At the date of Price's death all Price's charges for taxes paid and for these small outlays had been settled; Seymour's executors having sent him, from time to time, and apparently as informed of them, checks for the sums due. Between December, 1841, and Price's death in July, 1854, the executors had thus sent him about sixteen different checks.

Price, as already said, died in July, 1854, in Illinois. John High became his administrator. High now looked after the lands; under what exact source of interest was a matter disputed. His accounts of money received and of lands sold were thus headed:

'Account of money received from heirs and devisees of Henry Seymour, deceased (after his decease and after decease of Jeremiah Price), by John High, Jr., as agent for heirs and devisees, to pay taxes and other expenses on lands aforesaid.'

'Account of sales made by John High, Jr., as agent for estate, heirs and devisees of Henry Seymour, deceased, from lands purchased by Jeremiah Price, deceased.'

In 1855 and 1856, High negotiated sales of portions of the land, which were consummated by contracts executed by the heirs and the purchasers. The sales were profitable. Two hundred acres were sold for $69,200; and High now, as administrator of Price, alleging that the original outlays, costs, and interest had been repaid, claimed one-half the surplus; contending that he was entitled to it under the contract of 1835. The representatives of Seymour not being of this opinion, High (who dying in the course of the suit was succeeded by Freer), now, February, 1857, filed a bill in the court below against all the executors of Seymour, his heirs-at-law, and the trustees of the cestui que trust's daughter.

The bill set out the contract, stated that no sales had been made within the five years, and that Price had not insisted on their being so made, because it was thought that the interest of all parties would be promoted by holding on for better times, but that nothing was done to release Seymour or his representatives from their original obligations; that High, after Price's death, had acted at agent of Seymour's representatives, and effected sales; and that the original $5000, interest, &c., being all refunded, and the surplus being clear profits, he, High, as administrator, claimed one-half of it for the estate of Price, and that he had always been and was now ready to agree upon and define the relative rights of the two estates, and divide the profits, but that in consequence of the number of the parties interested, on Mr. Seymour's part, the distance of their residence from the subject-matter, the death of the original party, and the intervention of descents, marriages, &c., and from the refusal of several of the parties so in interest to admit Price's rights, he was afraid that in case the residue of the lands should be sold out, and the whole converted into money and be allowed to go into the hands of Seymour's representatives, he would, owing to their number and to the fact of their residence being without the jurisdiction of the courts of the State where the whole profits had been made, lose Price's share; on which account as he conceived the interposition of a court of equity was necessary. Price's heirs were not made parties to the bill.

The answer, admitting the agreement, purchase, and advance of money, stated that the lands were situated near Price's residence, and being wild required no particular care; that during the five years Price did nothing except what was required of him by his agreement; that at the death of Seymour one of the defendants was a married woman, and two others were infants. It denied that the omission to sell during the five years was for the benefit of the defendants, but averred, on the contrary, that both Seymour, in his lifetime, and the defendants, afterwards, had at all times been anxious to sell if they could do so without loss. It denied that Price did not waive a right to have the property sold within five years, but averred, on the contrary, that he did. It averred, moreover, that Price always treated the defendants as the sole owners, and solely entitled to the proceeds, and never pretended to have any interest; that he refused to pay the taxes or any portion of them; 'but claimed that he ought to be allowed a reasonable compensation for his services as agent, and not under the contract;' that the defendants had always been willing to allow him such compensation. It set up further that by the legal effect of the agreement Price's interest was to be half the profits to be got upon a sale to be made in five years, and averred that no profits on sales could be made or were made within that time; and averred that the defendants had in no way continued or extended the agreement with Price.

As to any claim for a breach of the agreement in not selling in five years, the answer pleaded the statute of limitations.

As to the agency and the expenditures of High, it stated that after the death of Price he, High, was requested by Horatio and John F. Seymour to find purchasers for the land if he could; but that he had no other power respecting the lands; that the contracts for the parcels sold were executed by the defendants and not by High; that the negotiations for such sales were made by the defendants through High, and were subject to the ratification of the defendants, and that High was not employed in consequence of any relationship which he had to Price or to his estate, or on account of the agreement between Henry Seymour and Price.

Finally, it denied that any cause existed for the interposition of a court of equity, submitted that the defendants were improperly joined, for the want of a common interest among them, and asserted that no receiver was wanted, the devisees of Seymour being all well known as citizens of New York, and fully competent to dispose of the lands without the aid of a receiver, and not wanting in ability to refund, &c.

General replications were filed. No proofs were taken, nor did it appear from the evidence, that any letters from either side were called for or produced. Certain facts were admitted.

An interlocutory decree making a reference to a master adjudged that Price, by virtue of the agreement of 1835, was 'entitled, as an equal copartner' in the property to one equal half of the net profits made, or to be made from the sales; that the lands having been purchased by Price as an 'adventure or investment on joint account of himself and said Seymour,' the sales already made and the sales yet to be made were to be deemed and taken as made, and to be made 'on joint account' of the estates of Seymour and Price.

The final decree recited the former decree and a master's report made to enable the court to administer the property on 'just partnership principles,' and, after making a disposition of the proceeds of sales of the lands, it provided that 'the balance which shall remain thereof being clear profits of the partnership land purchase and sale up to the present time, be equally divided between the parties in this suit: one-half to the complainant, and the other half to be held by the heirs and devisees of Henry Seymour, deceased.' And it spoke of 'closing and selling the partnership accounts so far as the sales and collections have progressed.'

The solicitor of the complainants, by consent of parties, was appointed receiver, with an agreement that he might sell at private sale.

The representatives of Seymour brought the case by appeal here.

Messrs. Kernan and Denio, for the appellants:

This contract, by its terms, plainly excludes implication that the lands are subject to the rules of law applicable to partnership property. The view of the court below is directly in the face of the authorities, including one in this court.

The main question then is the interpretation of the contract and whether, no sales having been practicable within the five years, the old arrangement either remained or was re-established?

The contract is one sui generis. The year in which it was made was an era of great activity in settling lands in the West. 'Sites or expected sites of towns or places of business' were sought for with avidity, and they doubled in value or increased in a yet greater ratio in a few months, in the hands of the possessors. Mr. Seymour was disposed to enter into this field with a considerable sum of money, and Price, who it is to be presumed had local knowledge and an aptitude for selecting lands, was willing to aid Seymour with his local knowledge and active agency for a collateral consideration precisely defined. The question was, how this consideration should be arranged. It was resolved that Seymour should become the purchaser with his own moneys, and Price the purchasing agent, and that the latter should receive (instead of a per diem allowance, or a commission on the amount of the investment, or the interest of a partner in the ultimate profit or loss), one-half of the profits to be got on a sale of the lands within five years, and should have no such interest as would in any event subject him to a loss or compel him to advance money. This, at least, is what is specified in precise language. The enterprise was to be rapidly conducted and speedily wound up. Price was to set about the purchases forthwith. The purchases were all to be made in the then present year, and the lands were all to be sold within five years; and the compensation of Price was expressly made to depend upon, and be measured by the results of a transaction thus to be carried on and consummated. And to preclude any pretence of a claim in any other aspect, it is twice inserted that his compensation is to be limited to a moiety of the profits thus arising, and that he is to have no other compensation.

Such a contract was, in that day, a reasonable one, and there is no ground for believing that the parties meant something beyond what they said.

If this is so, the land having become unsalable in 1840, the representatives of Price had not, at the commencement of this suit, any interest in the proceeds of the land subsequently sold or in the unsold lands remaining.

If, however, the representatives of Price have any interest in the profits, the remedy is by an action of law upon the contract. There is no suggestion that if in such an action the plaintiff establishes his rights to a half of the profits, the defendants are not able and willing to pay him.

The rights of Price and his representatives were barred by the lapse of time.

Any personal action for not selling in five years was long since barred by the statute, as the answer sets up.

The remedy in equity, if there was any, is sought after the lapse of so long a period that upon settled principles of equity the demand will not be enforced. It will be considered a stale demand.

In addition to the defence of a bar by the statute, and to the defect of misjoinder of Seymour's executors in a matter where they had no interest, the bill omits to make Price's heirs a party. If Price's estate has any interest in the matter, they are chiefly interested and should be parties.

Price died in July, 1854, more than fourteen years after the alleged default in selling. He never, during his lifetime, once requested that the lands should be sold, or made any claim to an interest in them. The heading of the accounts negatives all such ideas. The fact that he attended to the payment of taxes with money remitted by Mr. Seymour's representatives, is quite consistent with the character of an agent, and that he let the lands be sold rather than pay taxes himself, is consistent with no other idea. High's accounts show that he was employed by the heirs and devisees of Seymour as their agent. The fact that they both acted distinctly as agents, rather rebuts the idea of any other relation. It is a circumstance of weight that a peremptory sale at any time during these twenty years would have resulted in a loss which Seymour's representatives must have borne alone, as Price and his representatives were in no way bound to contribute; as it also is that during all this time the burden upon the devisees of Seymour was increasing at a rapid rate by the accumulation of interest and taxes and the expenses of agency. Good faith required, on both accounts, that Price should have advised the other party that he claimed a continuing interest, if such was the fact. All idea of a continuance of the contract by mutual consent is thus repelled. But, as the contract looked solely to a sale in five years, and limited the interest of Price to the profits to be made upon such a sale, it required a plain understanding on both sides to continue and extend the arrangement to sales to be made afterwards.

By the decree the heirs of Seymour are deprived of all authority and control over the lands; title is taken from them and vested in a receiver. But there is no allegation that Seymour or his heirs have violated their duty under the contract; nor that they acted improvidently in disposing of the land sold; or that there is any apprehension that they will not dispose of the residue for the best interest of all concerned. They reside where Mr. Seymour did when the contract was made, and are responsible persons. The only ground of complaint is, that the appellants deny that, by the contract, they are bound to pay over to the representatives of Price a share of the proceeds of the land after the same are sold. But this is not an adequate cause for equity to compel a specific performance. Much less does it authorize the court to take the property from the appellants and place it in the hands of a receiver, to be sold by him.

Mr. Mather, contra, argued at length that the case was one of partnership, citing numerous authorities, and that at all events the evidence showed that both Price and High regarded Price as interested, he having no compensation otherwise than in an ultimate share of profits for his many years of service; that selling had gone off without default on either side; the thing being nursed along till a good price could be got; that the case being one of partnership and trust, chancery had special jurisdiction; that the statute did not run against a trust; that there were no laches; and that the relief given was but adequate and proper.

Mr. Justice SWAYNE delivered the opinion of the court.

title: Seymour v. Freer (75 U.S. 202)


text: Talk:Seymour v. Freer (75 U.S. 202)

title: Talk:Seymour v. Freer (75 U.S. 202)


text:
Seymour v. Freer (75 U.S. 202)/Opinion of the Court

The contract which lies at the foundation of this suit, was entered into by Jeremiah Price and Henry Seymour on the 9th of May, 1835. Upon looking into it carefully, we find it contains the following provisions:

Price agreed that he would devote his time and attention and exercise his best judgment, in purchasing lands to an amount not exceeding $5000, in the States of Indiana, Illinois, and Ohio, and in the Territories of Michigan and Wisconsin, or in such of them as he should find most advantageous for the interest of Seymour: the contracts were to be made and the conveyances to be taken in Seymour's name: the purchases were to be made after full and careful search for the most profitable investments 'in or near the sites or expected sites of towns or places of business,' and in general in tracts of land of moderate extent: Seymour agreed to furnish $5000 wherewith to make the purchases contemplated: that the land so purchased should be sold within five years from the date of the contract: that after charging the investment, the taxes, and 7 per cent. interest on the investment, there should be paid to Price one-half of the profits which should be made: it was agreed that this half of the profits should be in full for Price's services and expenses of every kind in making the explorations and searches, and in doing all such other things as should be requisite and proper in making the purchases: the purchases were to be made during the current year: nothing was to be paid by Seymour for Price's services or expenses, except from the profits as aforesaid. The premises in controversy were bought by Price, and the titles vested in Seymour, pursuant to the contract. The property consisted of 2440 22/100 acres of land in the State of Illinois, and several lots in the village of Joliet, in that State.

It was agreed by the parties to this suit, that at the expiration of the five years within which the premises were to be sold, they were unsalable, 'and that it is entirely uncertain how much they could have been sold for, or whether they would even have brought enough to pay the original investment and interest.'

Before the commencement of the suit the property had become very valuable; 200 acres had been sold for $69,200.

Seymour died in 1837, and Price in 1854. The five years within which the property was to be sold, expired in 1840.

The duties and obligations with which the contract clothed Price, were those of an agent. He was to make the requisite searches and explorations in the States and Territories named, and to receive and invest the money of Seymour as he might deem best for Seymour's interest. He was to contribute his time, labor, skill, and judgment, but no money except what might be expended in the service he had undertaken to perform. The titles were all to be taken in the name of the principal, who was to advance the money. These functions were performed by Price. His duties and responsibilities thereupon came to an end, and those of Seymour to him commenced. For his expenditures, whatever they might be, he was to receive no immediate or certain return. The same remark is applicable in respect to his labor and services, and the exercise of his skill and judgment. Everything to be done by the agent he was to do, without any charge to his principal.

Seymour was to receive the titles of the property purchased, as if the purchases had been made by himself at home. All the burdens incident to the acquisition of the property were to be borne by Price, with only the contingency of reimbursement and compensation provided in the contract.

The lands were to be sold within five years. It is not stated by whom, but as the legal title was vested in Seymour, the duty of selling, by the clearest implication, devolved upon him. Price had no power to move in the matter, nor to exert any control, except the right to insist that the property should be sold by Seymour, within the time limited, and that the sales should be fairly conducted. By an implication equally clear, Seymour was to pay all the taxes upon the property which might accrue.

It is proper here to consider the legal and equitable relations of the parties arising out of the contract.

We think Seymour took the legal title in trust for the purposes specified. A trust is where there are rights, titles, and interests in property distinct from the legal ownership. In such cases, the legal title, in the eye of the law, carries with it, to the holder, absolute dominion; but behind it lie beneficial rights and interests in the same property belonging to another. These rights, to the extent to which they exist, are a charge upon the property, and constitute an equity which a court of equity will protect and enforce whenever its aid for that purpose is properly invoked. Interests in real estate, purely contingent, may be made the subjects of contract and equitable cognizance, as between the proper parties. The object of the trust here was to sell the property within the time limited, and, after deducting from the proceeds the outlay, with interest and taxes, to pay over to Price one-half of the residue. To this extent, Seymour was a trustee, and Price the cestui que trust. They had a joint interest in the property. Seymour held the legal title, but the rights of Price were as valid in equity as those of Seymour were at law.

If Seymour, within the five years, had conveyed the property to one of his children, by way of advancement, or to a stranger, otherwise than upon a bon a fide sale for its fair value, the grantee would have taken the title, subject to the trust upon which Seymour held it, and a court of equity would have followed the property and dealt with it in all respects as if the title had still remained in Seymour. If a valid sale had been made, the trust would have followed and bound the proceeds in like manner as it bound the property.

Upon the death of Seymour, the legal estate passed to his devisees.

The principle of equitable conversion has an important bearing upon the case. Equity considers that as done which is agreed to be done. Money which, according to a will or agreement, is to be invested in land, is regarded, in equity, as real estate; and land which is to be converted into money, is regarded as money, and treated accordingly. In this view of the subject, the personal representative of Price is the proper person to maintain this suit, and it is not necessary that his heirs-at-law should be parties.

There is another view of the subject, which we think may properly be taken. The agreement, that the property should be sold, and half of the profits paid to Price, was a charge upon the property, and gave him a lien to the extent of the amount to which he should be found entitled upon the execution of the agreement, according to its terms. The principle involved in this proposition, is a familiar one in equity, and constantly applied in the administration of its jurisprudence.

It is insisted by the appellees that the contract made the parties copartners in respect to the lands to be bought. We cannot adopt that view of the subject. The adjudications which bear upon it are conflicting and irreconcilable. The case of Berthold et al. v. Goldsmith is conclusive in this forum against the proposition. We deem it sufficient to refer to that authority, without reproducing the considerations which control the judgment of the court.

But the result is the same as if we held that the parties were copartners. In that event, Seymour would still have held the property as trustee for the firm, according to the rights of the respective members.

The appellants contend, that for any violation of the contract to the injury of Price, he had a remedy at law, and that neither he nor his legal representative could have any other.

An action at law, sounding in damages, may, undoubtedly, be maintained in such cases for the breach of an express agreement by the trustee, but this in nowise affects the right to proceed in equity to enforce the trust and lien created by the contract. They are concurrent remedies. Either, which is preferred, may be selected. The remedy in equity is the better one. The right to resort to it, under the circumstances of this case, admits of no doubt, either upon principle or authority. Such, in our judgment, were the effect and consequences of the contract.

At the end of the five years, limited for its complete fulfilment, a new element, not anticipated by the parties, and, hence, not provided for, intervened. The property, if then sold, would have afforded no profit. There would have been nothing to divide. It is uncertain whether it would have yielded enough to reimburse the cost and interest. According to the views we have expressed, there was a trust and lien for the benefit of Price. They could be destroyed only by some thing subsequently to occur. Either Price or Seymour's devisees might have insisted upon the sale of the property according to the contract. This would have extinguished the rights of both parties touching the lands, but it would have benefited neither. There would have been no profit for either party. Price would have lost his expenditures of time, money, and skill. The devisees might have lost the interest upon the investment, and, perhaps, a part of the principal.

The devisees might have held the property, and denied that, under the circumstances, the trust subsisted any longer. If Price acquiesced, his rights would have been at an end.

Price might, also, have expressly or tacitly abandoned his claim. This would have worked the same result. Both parties might have concluded to continue their existing relations, and to wait for a more auspicious period for the disposition of the property. Their interests were the same. What would benefit or injure one could not fail to have the same effect upon the others. If the purchases were judiciously made, the course last suggested was obviously the wisest and best for both parties. Was either of the alternatives adopted? and if so, which one?

This is the turning-point of the case.

The burden of the proof as to the two former rests upon the appellants.

Upon a careful examination of the record we have failed to find the slightest proof of any disclaimer by the devisees, or of any renunciation by Price. If such evidence exist we must suppose it is contained in the correspondence between the parties. They are annexed to the bill accounts, showing the receipts and disbursements of Price down to the time of his death. The receipts, after the death of Seymour, commence on the 24th December, 1841, and terminate on the 16th of June, 1854. All the moneys were received from Messrs. John F. and Horatio Seymour. It appears, by a stipulation in the record, that the sums with which Price debited himself had all been verified by comparing them with the original receipts in the possession of the counsel of the appellants. The Messrs. Seymour lived in the State of New Youk, and Price at Chicago. The moneys were all remitted by checks. It is apparent, from the face of the accounts, that the receipt of the money, in many instances, if not in all, must have been acknowledged by letter. None of these letters have been produced. Why not? The inference is a fair one, to say the least, that they contain nothing unfavorable to the claim of the appellee. This negative feature of the case is not undeserving of consideration. If Price, neither by expression nor acquiescence, did anything to impair his rights, they must still subsist in full force.

We think there is proof in the record, that he and his personal representative considered the time within which the sales were to be made, prolonged until they could be made profitably, and, that in all other respects, the contract remained as if it had originally contained this modification.

We can hardly conceive how the devisees, who advanced the money to pay the taxes, and with whom Price must have corresponded, could have understood his position differently. It is admitted that from the time of the purchases down to the time of his death, Price had the care and charge of the property, and paid the taxes upon it, the devisees furnishing the money. His accounts are long, and the items numerous. There is no proof that he ever made any charge, or claimed anything for his services. His accounts are silent upon the subject. How can this be accounted for, unless he expected to be compensated by his share of the profits of the lands, to be realized when the proper time for selling should arrive?

Upon his death, High, his administrator, succeeded to the agency. He was employed by the devisees, and performed the same duties as his predecessor. He negotiated the sales mentioned in the bill, and at once claimed a share of the profits for Price's estate, according to the contract. The claim was resisted by the devisees, and he thereupon instituted this suit.

The theory insisted upon by the appellees is consistent with all the evidence in the case. It is in conflict with nothing which has been developed. It is alleged, in one of the answers, that Price 'never pretended to the defendants to have any interest,. . . but claimed that he ought to be allowed a reasonable compensation for his services as agent, and not under the contract.' When, where, and how was the claim made? If by letter, why is not the letter produced? The fact is important, but the allegation is wholly unsupported by anything in the record.

The answers set up the bar of the statute of limitations. Where there is no disclaimer the statute has no application to an express trust, such as we have found to exist in this case.

It is said there is a misjoinder of parties in the bill with respect to the executors of Seymour. The doctrine of equitable conversion renders their presence in the case necessary, if not indispensable. If the objection were well taken, the bill as to them would be dismissed. The error would have no other effect.

It is alleged, also, that there is a defect of non-joinder as to the heirs-at-law of Price. The application of the same doctrine is a sufficient answer to this objection.

Conceding that the appellee is entitled to have the contract specifically executed, the appellants insist that the court below erred in decreeing that it should be done by a receiver instead of themselves. There being a trust and a lien a court of equity had unquestionable authority to apply its flexible and comprehensive jurisdiction in such manner as might be necessary to the right administration of justice between the parties. The devisees are numerous. The death of any one of them might seriously retard and embarrass the execution of a decree shaped as the appellants suggest. The appointment of the solicitor of the appellants as receiver, and the stipulation, which appears in the record, that he might sell at private sale, protects in the best manner the interests of all concerned.

The court below held that the contract made the parties to it copartners, and the decree was framed accordingly. But, as the provisions of the decree conform in all respects to our views, this theoretical error constitutes no ground of reversal. A wrong reason was given for what was properly done.

The litigation appears to have been conducted in a spirit of candor and fairness on both sides, which is eminently creditable to the parties.

We find no error in the record, and the decree of the Circuit Court is

AFFIRMED.


text: Talk:Seymour v. Freer (75 U.S. 202)/Opinion of the Court


text: Morey v. Lockwood

title: Morey v. Lockwood


text: Talk:Morey v. Lockwood

title: Talk:Morey v. Lockwood


text:
Morey v. Lockwood/Opinion of the Court

APPEAL from the Circuit Court for the District of Massachusetts.

Lockwood, assignee of the inventors, filed a bill in the court just named to restrain Morey and others from infringing letters patent granted to Charles H. and Herman E. Davidson, on the 31st of March, 1857, for a new and useful improved syringe; and which were surrendered and reissued on the 25th day of April, 1865, with an amended specification. The diagram below presents a sectional view of the instrument; now commonly called.

THE DAVIDSON SYRINGE.

Prior to the date, when, by the inventions of Goodyear, India-rubber had become so important an agent in surgical operations, the only syringe in much use was the old metallic syringe, with a plunger, sometimes known as the pump syringe. The objections to the use of it, whether anal or vaginal, were, amongst others, that it required to be worked, if the party was at all feeble, by a second person, that it required the patient to be moved and placed in certain positions before it could be used, thus, sometimes, causing a strain; that where the parts were delicate or diseased, it was liable, even when thus used, by slipping or accidental motion, to injure them; and finally, that unless the instrument was large, when the inconvenience of it was proportionably increased, it required, in many cases, however used, to be removed, refilled, and replaced before a sufficient injection could be obtained. With the discoveries in manufacturing India-rubber, three improved forms of the instrument were made.

1. The globe syringe, composed of a simple globe or bulb of India-rubber with an inflexible pipe inserted in it. By compressing the bulb, the air was expelled and a vacuum caused. The pipe being then placed in any fluid, it flowed by the weight of the external atmosphere into the globe, from which, on the extremity of the pipe being inserted into the part to which it was designed to convey it, the fluid passed on compression of the globe by the hand. One objection, among others, to this instrument was, that it had to be removed, refilled, and replaced, if the injection required was large. The desideratum remained of a syringe which could supply itself, and which, avoiding any strain upon the patient's body, would hold the enema steadily and close to it.

In this condition of the art, so far, apparently, as was known to him, Herman E. Davidson, a physician, resident in Gloucester, Massachusetts, had been attending, prior to August, 1852, a patient, suffering from uterine cancer, and who used a globe syringe, with a rubber bulb and a single inflexible tube. Observing the inconvenience and discomfort to the patient of having to remove this instrument from the body, from time to time, in order to refill the instrument with the enema, Dr. Davidson suggested to a brother of his, Charles H. Davidson, who was a machinist, the making of a syringe which could supply itself with enema without being so removed.

Thereupon, Charles Davidson devised and made a drawing of a syringe, in which the elastic sac had but one opening, the two flexible tubes being coupled to it at that point, the enema entering the sac through one tube and being expelled through the other; a 'single-neck' syringe, and having a 'three-way connection.' The bulb was more round than oval-nearly spherical being the shape of the bulb in the syringe which the patient was then using. Dr. Davidson suggested the use of the oval form of bulb, and also, as a simpler and better mode of combining the parts, to have the two flexible tubes enter the sac at opposite sides.

In the early part of January, 1853, the Davidsons filed a caveat in the patent office, announcing that they had made certain improvements in syringes, and that they were now perfecting them prior to an application for a patent; their petition, together with the accompanying description, being dated on the 8th of January in that year. In that description, the petitioners state that their improvement consisted in using a spheroidal, cylindrical, or globular elastic sac, or bulb, to which were attached, and communicating with it, flexible tubes or pipes; to the ends of which pipes were connected valve-boxes, with suitable valves therein, so that by the alternate action of compression and expansion, the desirable quantity of injection might be administered without removing the instrument to refill it.

When application was made by the attorney of the inventors to the Commissioner of Patents, with a claim for the combination of an elastic sac, with flexible tubes, terminated with suitable valve cases and valves, the whole operating together in the manner and for the purpose set forth, objection was made by the office, on the ground that they were anticipated by Messrs. Pearsall & Gilbert, who, according to an account published in the Franklin Journal, had already improved syringes by making a rubber sac with two tubes coupled to it at one point. The diagram, which the Franklin Journal presented, was thus:

And the commissioner refused to grant the patent, except with a claim, thus-the clause in italics, 'when the sac, tubes, and valve-boxes are in, or nearly in, the axial line,' being particularly insisted on:

'What we claim as new, and desire to secure, &c., is the combination of the prolate spheroidal shaped elastic sac with flexible tubes, terminating in valve-boxes, containing valves, arranged for the purpose of eduction and ejection, when the sac tubes and valve-boxes are in or nearly in the same axial line, the whole operating together substantially in the manner and for the purpose set forth.'

The specification in this form was supposed to have taken the improvement out of the objection of the prior one by Pearsall & Gilbert.

In May, 1856, the Davidsons acquiesced in the rejection, and submitting an amended and restricted claim, the patent was granted.

The original specification described the improvement, in substance,

'To consist of an oval, or spheroidal elastic bulb, with flexible tubes and metallic valve-boxes, containing valves arranged for the purpose of eduction and ejection, when the elastic tubes and metallic valve-boxes were attached to such an elastic bulb in, or nearly in, its greatest axial line. The bulb and flexible tubes are composed of India-rubber, or of any suitable material of sufficient elasticity and flexibility, as is necessary, and required by the patentee in the use or operation of the instrument.'

The specimens exhibited were all made of India-rubber.

The mode of operation of the instrument was described as follows:

'Immerse the end of the eduction pipe in the enema, compress the bulb with the hand, which will expel the air from within, then releasing the grasp, the bulb will recover its form by means of its elasticity, and the partial vacuum will be filled with the enema; then insert the injection pipe, and repeat the operation of compressing the bulb until the required quantity of the enema is administered.'

Having described the invention, what the inventors claimed as new, were the matters already mentioned as the ones thought proper by the commissioner to be so claimed, to wit:

'The combination of the prolate spheroidal-shaped elastic sac, with flexible tubes, terminating in valve-boxes containing valves, arranged for the purpose of eduction and ejection, when the sac, tubes, and valve-boxes are in, or nearly in, the axial line, the whole operating together, substantially in the manner and for the purposes set forth.'

Subsequently to this grant of this patent, it was discovered by the patentees, or their assignee, and also by the commissioner himself, that the invention of Messrs. Pearsall & Gilbert furnished no legal objection to the claim of the Davidsons, as first presented to the office; for, although the prior improvement had a rubber sac, the tubes were metal and inflexible. Accordingly, on a surrender by the assignee he was allowed to amend the claim by restoring it to its original form, and the office granted a reissue with the claim in that form.

The amended specification was substantially the same as the original, leaving out that part which described the bulb, or sac, tubes, and valve-boxes, attached and so arranged as to be 'in, or nearly in, its greatest axial line.' As respected the claim, it was as follows:

'What is claimed as the invention of Charles H. and Herman E. Davidson, is a syringe, having an elastic bulb or chamber, flexible tubes, and a suitable valvular arrangement, when organized, so as to operate substantially as described.'

This claim, it will be observed, is the same with the one in substance made by the Davidsons, and refused by the commissioner when the patent was applied for.

By the 13th section of the Patent Act of 1836 a surrender and an amended specification may be made when the patent issued is inoperative, or invalid, by reason of a defective or insufficient description or specification; or, 'if the error has, or shall have arisen by inadvertence, accident, or mistake, and without any fraudulent or deceptive intention.'

The invention which the bill sought to enjoin was one known as

THE RICHARDSON SYRINGE.

The instrument had the same parts and materials as the one made by the Davidsons; but instead of arranging them in an axial line, the bulb or sac was placed above the point of delivery and discharge of the enema, extending its 'single neck' (which was of course hollow), so that the tubes might connect with each side of it. The difference between it and the instrument of the patentee was, that in the latter, in the axial line, tubes connected with the ends of the bulb; in the former they connected, not with the ends of the bulb but with the sides of its hollow neck. The enema passed from the eduction pipe through the neck or throat into the bulb, and was forced through the discharge pipe by the same means as those used by the patentees.

The chief ground on which the defendants resisted the invention were:

First. That the claim was broader than the invention.

Secondly. No infringement, want of originality, setting up here as the same in principle certain other syringes confessedly of prior date, as:

1. THE MAW SYRINGE.

This it was admitted was a large step from the globe syringe towards that of Davidson. It was composed of an India-rubber chamber, in form cylindrical, with metallic rims or casings at the ends. From these casings there proceeded a metallic tube of about one-third the diameter of the metallic casings, upon which tubes the inner end of flexible pipes, for eduction and injection, were drawn. Appropriate valves were placed within these small metallic tubes. The mode of using was meant to be the same as in the Davidson syringe. But the difficulty was that the metallic heads, which formed a material part of the inclosure, being rigid, counteracted, by their connection with the elastic part of the chamber, the patient's effort to compress it. Accordingly the patient, if a female, or otherwise feeble, could not well compress it, and even when the party using it was not feeble, the strength required to compress the chamber was so considerable that no one cared to use it. Practically it proved of no value. Very few were ever sold. The Davidson syringe on the other hand came into nearly universal use at once.

2. THE THIERS SYRINGE.

This was an instrument of French manufacture. It had two flexible tubes, with suitable valves, but it did not have an elastic bulb or chamber, in form at least, like that shown in the patent. A diagram of it is below.

1. It was not made of elastic material, but of a metal base plate and a rubber hood set upon it; the rubber hood forming one substantial part of the chamber to be collapsed, and the metal base plate forming the other substantial part thereof.

2. The chamber was not expanded by the elasticity of the material, but by means, wholly or partly, of a metal spring placed within the chamber.

3. The necessary prolongation of the flow of the pressure after the collapsing of the chamber had ceased was accomplished, not by the reaction of the chamber alone, as in the Davidson instrument, but by that and an air-chamber acting in connection with it.

These Thiers syringes were imported to and sold in this country in small numbers until about the time of the introduction of the Davidson syringes, and soon after that disappeared from the market.

In addition to these were numerous syringes, known as the Galante, the Phelps, the Johnson, the Hernstein, the Leroy, the Feuchtwanger, and others, some of which had had a certain sale and others none; all were displaced by Davidson's. Much evidence was taken on the one part to show their priority to that of Davidson, and on the other to disprove it; but no priority was sufficiently shown.

The court below decreed an injunction, and from the decree this appeal came.

Messrs. H. F. French and G. S. Boutwell, for the appellants:

The original patent was neither 'inoperative nor invalid,' nor was the specification 'defective or insufficient.' The case, therefore, does not fall within the 13th section of the act of 1836, and the reissue was, therefore, without authority of law.

The claim in the reissued patent is broader than the invention, and, consequently, is void. If the fair construction of the reissue claim includes any syringe of which the Davidsons were not the original and first inventors, then the claim is broader than the invention, and so is void. Now, a fair construction includes both the Maw and the Thiers syringe; both of them old, known, and used. Can any other construction be supported? By striking out the words 'or chamber,' and giving a very literal meaning to the word 'bulb,' we may, indeed, make a distinction. We may say the Maw syringe has everything else, but it has not a bulb. Even this, however, cannot fairly be said of the Thiers syringe, for it has an elastic bulb. But those words cannot be stricken out. The surrender for reissue was for the very purpose of inserting them. The original claim describes a bulb in the words 'prolate spheroidal-shaped elastic sac.' The word chamber was not there. It was not in the caveat, and it was used in the reissued claim with a purpose.

It is, in no sense, a synonyme with bulb. Every bulb is a chamber, but a chamber is not necessarily a bulb. Chamber is the larger phrase, and may include bulb, but it certainly includes cylinder as well. Any inclosed space is a chamber. In the Davidson caveat, they describe their sac as spheroidal, cylindrical, or globular. The Maw syringe has everything in the Davidson syringe but the bulb. The Davidson syringe, as described in the reissue, includes every element of the Maw, including the chamber, which the Davidsons do not now pretend to have invented.

The syringe made by the appellants is a combination of old parts, substantially different from the Davidson syringe in structure and effect.

1. Our bulb is not their bulb, but different in this, that ours has but one aperture, while theirs has two apertures.

2. The arrangement, or organization, differs in this, that in ours, the fluid in the bulb is above the point of delivery, and we have gravity to aid in expelling it, while in theirs, one-half the fluid is below the centre of the bulb.

3. Ours has a three-way piece, not found in theirs, and which cannot be used with theirs.

4. Ours is so constructed as to receive other pipes for various purposes.

These differences constitute ours a different instrument, different in its combination of parts, and different in its mode of operation; more different from it than theirs was from the Maw. #fn-s-s

The patent is wholly void, as well for the invention claimed in the original patent, as for the broader claim found in the reissued patent, because syringes containing all that is claimed as the invention of the Davidsons, were long before their alleged invention, known and used in this country.

Messrs. B. R. Curtis and Causten Browne, contra.

1. The limitation of the claim, as found in the patent, in the form in which it is issued, was caused from actual inadvertence and mistake of the Commissioner of Patents. The Davidsons acquiesced from necessity in the commissioner's decision; but the Patent Office had a right to admit and correct its own blunder, and to grant a reissue with the claim as originally made.

2. The terms bulb, or chamber, are used as synonymous terms. Besides, the argument of the other side assumes that the invention patented, embraces any and all elastic chambers, by the intermittent compression and relaxation of which the instrument is made to operate as an injection syringe; whereas, it covers only instruments having substantially such an elastic chamber as is described.

3. The Richardson syringe is our syringe, under a less useful form. It is, in fact, the form in which Dr. Davidson first invented it, 'three-way piece and all,' a form abandoned as less simple than the one where the pipes were in an axial line. The gravity of an ounce or two of water is small; of other things sometimes injected less. But, in our form, the benefit of gravity can be obtained by turning the sac up perpendicularly.

4. The Maw syringe had two flexible tubes with suitable valves, and it had an elastic chamber, but it did not have an elastic bulb, or chamber, substantially like that shown in the patent. We need not examine particularly the construction of the elastic chamber. Whether the difference was theoretically great or small, practically, it was a very important one.

The same thing is true of the Thiers syringe, which has marked differences in the construction of the elastic chamber, particularly the metal spring to expand it, and which proved of little practical use.

Mr. Justice NELSON delivered the opinion of the court:

Several objections are taken to this reissued patent; among others, and which is the most material, that the claim is broader than the invention.

The 13th section of the act of 1836 authorizes a surrender, and an amended specification, when the patent issued is inoperative, or invalid, by reason of a defective or insufficient description or specification; or, 'if the error has, or shall have arisen by inadvertence, accident, or mistake, and without any fraudulent or deceptive intention.' We do not doubt that the commissioner had full authority to grant the amendment; and, under the special circumstances of the case, it would seem to have been a duty, as the inventors were led into the error by himself, as may be seen from his letter when the patent was originally granted.

The amendment was very material, as the language of the original claim tied the patentees down to a syringe, consisting of the parts mentioned, to an instrument in which they were arranged in an axial, or straight line; tying them down to the mere form of the construction, regardless of the substance and legal import of the invention. While the original specification and claim remained, it was competent for any one to evade the patent, and enjoy the substance of the improvement by a change in the mere form of the construction; that is, by an arrangement of the several parts in any form, if not in an axial or straight line. And this is what the defendants are endeavoring to accomplish, and would have accomplished, if the amendment of the claim had not been allowed.

They have constructed a syringe with the same parts and materials as used by the patentees; but, instead of arranging them in an axial line, the bulb or sac is placed above the point of delivery and discharge of the enema, extending its hollow neck so that the tubes may connect with each side of it. The only difference even in form between this and the patentees' is, that the latter, in the axial line, tubes connect with the ends of the bulb; in the former they connect, not with the ends of the bulb but with the sides of its hollow neck. The enema passes from the eduction pipe through the neck or throat into the bulb, and is forced through the discharge pipe by the same means as used by the patentees. The mode of operation is precisely the same in both instruments. The change is one of form and not of substance, and upon well-established principles of patent law, constitutes no defence to a bill for an infringement. #fn-s-s-s

As bearing upon this point it may be stated that the patentees themselves first constructed and used this form of syringe; but, becoming satisfied that the other form was the best, recommended it in their specification accordingly. They are protected, however, against the use of any form, as will be seen by the authorities referred to, that embodies substantially their ideas and mode of operation.

On the question of novelty there are two specimens of syringe produced by the defendants that are chiefly relied on as disproving it: one called the Maw syringe, and the other the Thiers. The first differs from the patentees' in this, that the cylindrical bulb, or chamber, is made so rigid both in the material and from its metallic ends, or heads, that it is not sufficiently elastic to be adapted to practical use; and for this reason it failed and went out of the market.

The Thiers syringe differed from the patentees' in this, that part of the bulb or chamber is metal, and part rubber; and the elastic portion is aided by a spring inside of the chamber. There is, also, an air-chamber attached to the delivery pipe. The whole construction and arrangement is different from the patentees', as they have dispensed with the metal portion of the bulb, the spring, and the air-chamber, and substituted a simple India-rubber bulb.

The rest of the proof on this point is conflicting, and we agree with the court below, that the weight of it is decidedly with the complainant.

DECREE AFFIRMED.

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text: Talk:Drakely v. Gregg

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