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Mutual Life Insurance Company v. Young's Administrator/Opinion of the Court

ERROR to the Circuit Court for the District of California, in which court the administrator of McPherson Young, of San Francisco, sued the Mutual Life Insurance Company of New York (a company incorporated by the State of New York but having a general agent, one H. S. Homans, at San Francisco, and an office there for the transaction of life insurance business) to recover $5000, which the administrator alleged had been insured by the said company on the life of his decedent and not paid.

The case was submitted to the court under the act of March 3d, 1865, without the intervention of a jury. This act enacts that parties may submit issues of fact in civil cases in this way; that the finding of the facts by the court may be general or special, 'and shall have the same effect as the verdict of a jury.' And it adds that 'when the finding is special the review may extend to the determination of the sufficiency of the facts to support the judgment.'

On the 5th of June, 1867, the said McPherson Young made application to the said Homans, general agent as aforesaid, for an insurance of $5000 on his life, and thereupon entered into a contract with Homans, as such general agent, in these words:

'THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK.

'Received, San Francisco, June 5th, 1867, from McPherson Young, of San Francisco, California, $99.30, being the first quarter-annual premium on his application for a policy of insurance of the Mutual Life Insurance Company of New York, for the sum of $5000 on the life of said Young, payable at forty-five or death, and premiums paid up in full in ten years; said policy of insurance to take effect and be in force from and after the date hereof, provided that said application shall be accepted by the said company; but should the same be declined or rejected by said company, then the full amount hereby paid will be returned to said applicant upon the production of this receipt.

'For the Mutual Life Insurance Company,

'H. S. HOMANS,

'General Agent for the Pacific Coast.'

'The application of the said Young was transmitted to the said company, and was by them accepted; and a policy was made out, signed, sealed, and transmitted to the general agent, who received the same about the 2d of August, 1867. But the policy did not in terms agree with the memorandum as to date and time of payment.'

The $99.30 mentioned in this receipt were not paid in money; Young simply gave his note for the amount, payable to Homans, personally, at sixty days, which note was never paid.

By the terms of the receipt, as the reader will have noted, the policy contracted for was to take effect and be in force from the date of the receipt, that is to say, from the 5th of June, 1867. The quarterly payments would thus, of course, have been to be made on the 5th of September and the 5th of December, 1867, and on the 5th of March and the 5th of June, 1868, and so on till the ten years had expired or death had supervened. The quarterly payments, too, were to be $99.30.

The policy as issued differed from that contemplated by the receipt, in these particulars:

1st. It bore date the 5th of April, 1867, and instead of being made to take effect from the 5th of June, was made to take effect from the said preceding 5th of April.

2d. The quarterly payments were to be $96.60 instead of $99.30.

3d. The days of payment during the ten years were to be the 6th days of April, July, October, and January, instead of the 5th days of June, September, December, and March.

The policy, in which Young's age was stated to be twenty-six years, witnessed that 'in consideration of the representations made and of the sum of $96.60, to them duly paid by McPherson Young, and of the quarter-annual payment of a like amount on or before the 6th days of April, July, October, and January, in every year during the continuance of the policy, the company agreed to pay the said amount of $5000 to the said McPherson Young or his assigns, on the 6th of April, 1886, when the above-named person, whose life is hereby insured, shall have attained the age of forty-five years; or, should he die previous to attaining that age, in sixty days after the notice and proof of his death, to his executors, administrators, or assigns; the balance of the year's premium, if any, being first deducted therefrom.'

The policy contained a provision, that—

'If the said premiums shall not be paid on or before the days above mentioned for the payment thereof,. . . then in every such case the company shall not be liable for the payment of the sum assured, or any part thereof, and this policy shall cease and determine.'

At the date of these transactions, the time required to go from New York to San Francisco-there being then no overland route was from twenty-three to thirty days.

The policy after being executed was transmitted by the company in New York to Homans at San Francisco, where it arrived on the 2d of August, 1867. With the policy were transmitted and received two receipts for premiums, assumed to be due April 6th, 1867, and July 6th, 1867, signed by one W. Stewart, secretary of the company in New York; one of them, the one for the April premium, will show the form. It was thus:

'THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK.

'BROADWAY AND LIBERTY STREET, NEW YORK,

'April 6th, 1867.

'Received from McPherson Young $96.60 for the quarter-annual premium on policy No. 65,733, due the 6th of April, 1867. For terms of mutual agreement, see application and policy.

'WILLIAM STEWART,

'Secretary.

'Countersigned at _____.

'H. S. HOMANS,

'Agent.'

On this receipt, as on that for the July premium, was affixed, on the 2d of August, 1867, by the agent, Homans, a cancelled revenue stamp, and the receipts were countersigned by Homans, as indicated in the copy of the one above given.

To both the receipts was annexed a document, thus:

'NOTICE TO POLICY-HOLDERS.

'The agreement is mutual (see application and policy), that unless the premium is paid on or before the day it becomes due the policy is forfeited and void. Agents are not authorized to make, alter, or discharge contracts or waive forfeitures. Payments of premiums to agents are not valid unless receipts be given signed by the president, secretary, cashier, or actuary. When receipts are sent to agents for delivery, ''such agents shall countersign the same as evidence of payment to them. All premiums are due and payable at the office in New York''. For the convenience of the assured they may be made to an agent, but only upon the production of the receipt above specified.

'F. S. WINSTON.

'President.'

On the 8th of August, 1867, that is to say, six days after the policy was received by the agent, Homans, he wrote to Young, addressing him at Vallejo, California, as follows:

'SAN FRANCISCO, August 8th, 1867.

'McPHERSON YOUNG, ESQ.,

'Vallejo, California.

'DEAR SIR: Your policy of insurance with the Mutual Life Insurance Company has arrived. Please inform me whether I shall send it to you at Vallejo, or if you will call and get it when you are in the city.

'H. S. HOMANS,

'General Agent.'

'But whether said note was delivered to or received by said Young, or when forwarded, and in what manner, does not appear from the evidence. No notice of the acceptance of said application, or of the issue and arrival of the said policy is shown to have been delivered to or received by said Young, nor was any demand made upon him for further payment, nor any receipt or notice requiring payment presented to him.'

Young was shot at Vallejo on the 21st of August, 1867; and removed on the next day to an hospital in San Francisco, where he died on the 20th of September following; having, from the time that he was shot, been physically and mentally unable to attend to any business. After his death, the agent wrote 'Cancel; dead,' on the policy, and sent it with the two receipts of April 6th and July 6th for premium, attached to the policy and uncancelled, and the note for $99.30, which Young had given to the agent June 5th, 1867, to the office in New York, where the officers, on the 21st of October, cancelled the policy by tearing off the seal and cutting out the name of the president. The note for the $99.30 remained in the company's hands unpaid, but was never surrendered or offered to be surrendered to Young. The word 'cancelled' was written across its face in lead, but by whom did not appear. No subsequent premium was ever demanded by the company or paid.

Administration having been granted on the estate of Young, the administrator sued the company.

The declaration alleged that on the 5th of June, A. D. 1867, the company caused to be made a policy of assurance, purporting that, in the consideration of $99.30, then paid, being the first quarterly annual premium for the sum of $5000 of the life of McPherson Young, payable at forty-five or death, and his promise and undertaking to continue to pay thereafter to the said company, the defendant, like quarterly payments of $99.30 during the term of ten years thereafter, if he should so long live, they did assure, and agree, to and with the said McPherson, that they would pay unto him, upon his attaining the age of forty-five years, or to his executors, administrators, or assigns, in case he should die before attaining that age, the sum of $5000. And that the said McPherson, in all things, performed the agreement, and all the conditions and promises which by the terms of the said policy were by him to be performed.

The defendant pleaded the general issue, and also two special pleas:

1st. That the policy was issued and delivered to the deceased on the 6th of April, 1867; that the premium therein agreed to be paid was not paid, and had never been paid; and that by the rules of the company, of which the decedent had full knowledge, this non-payment operated as a forfeiture.

2d. That another premium, the second, came due July 6th, 1867, that this had not been paid, and that the nonpayment operated as a forfeiture, &c., all as before.

The court below gave judgment against the company, and the company now brought the case here.

Mr. W. D. Davidge, for the company, plaintiff in error:

I. The finding of the court does not sustain the contract set out in the declaration, and upon which issue was joined.

The court found no such remarkable contract as is alleged in the declaration; a contract whereby a party is insured in the sum of $5000, in consideration of $99.30 paid, and his promise to make similar quarterly payments; nor indeed is there any contract of insurance at all found.

The court did find that the application was accepted; and if such acceptance, accompanied, as it was, by the act of transmitting a policy different from that applied for, constituted in law an absolute, instead of a qualified acceptance, then there was found a contract to insure. But a contract to insure is not a contract of insurance. Still less is a contract to insure in consideration of the payment of quarterly premiums of $99.30 for ten years, a contract of insurance, in consideration of the payment of the first quarterly premium of $99.30, and the promise of the assured to make other similar quarterly payments during the ten years.

The question presented is not one of mere variance. It is not that the policy declared on was misdescribed, but that the finding shows there never was any policy at all; and, more than this, the declaration alleges a policy with conditions, and avers that such conditions were performed by the assured. The finding does not show what were the conditions, nor that they were performed; and even if it be assumed that a contract to insure, specially found, would sustain an averment of a policy of insurance, still the allegation that there were conditions, and that they were performed, would have to be found, otherwise the plaintiff would be absolved from performance of the conditions.

It is admitted that, upon a contract to insure, the assured has a remedy by action at law, as well as by bill in equity, but it is maintained that, in such action, the plaintiff must show the conditions of the policy contracted for, and that the loss claimed would be recoverable under them. He must give the same evidence of compliance with such conditions as if the action was founded on the policy itself, and is not to be discharged from them, because he is suing upon a contract to issue a policy instead of the policy.

II. The finding does not show any liability on the part of the company.

1. If the acceptance of the application and transmission of the policy be taken together, they show, as was doubtless the case, a qualified acceptance of the proposal to insure. The only overt act found is the transmission of the policy; and the acceptance of a proposal consists in some overt act intended to signify to the other party such acceptance. The overt act may be by words spoken, or mailing a letter, or otherwise, but, whatever the form, until such act there is no aggregatio mentium.

Here the overt act was not, in essential particulars, in accordance with the terms of the offer. The policy differed to the disadvantage of Young from the application in respect of date, from which the policy was to take effect, and the time for making payment of premium. Instead of making the policy begin June 5th, 1867, it made it begin two months earlier, so a second premium came due two months before the time that Young proposed. The loss to the applicant by this change is obvious, and needs no comment. The policy was not then an unqualified assent to the terms of the application. The minds of the parties did not meet, and there was no contract, and indeed none is found by the court below. Certainly Young was not bound to accept the policy. The company could not, after tender of it, have maintained an action to recover the amount of the note, but he had a complete defence in the fact that the policy differed substantially from the application, and the magnitude and effect of that difference were matters for him to decide.

If he was not bound, neither was the company.

2. If the acceptance found be dislocated from the overt act, without which in some shape there can be no assent to a proposal, how then stands the case?

The terms of the application are not found. It is only by inference that the conclusion is reached that they were the terms mentioned in the receipt. But the case is that of a special verdict, and in a special verdict the court can intend nothing. It is the province of the jury, or the court discharging the office of the jury, to draw inferences. Neither the court below as a tribunal of law, nor this court can draw them. But waiving this objection it is apparent that the subject-matter of the application was a policy of insurance, and the law would presume a policy on the usual conditions. But what were these conditions? The finding is silent. That there were conditions is admitted by the declaration. But what were they?

Waiving too this difficulty, let it be inferred that the policy found by the court contained the usual conditions, as doubtless it did. What then? Why then the policy to which the applicant was entitled under the contract assumed to have been made contained the condition that the policy should cease and determine in the event of non-payment of premiums. By the very contract assumed then it was a condition, that the regular quarterly annual premiums should be punctually paid, and those premiums were payable on the 5th days of June, September, December, and March. Were the premiums of the 5th of June and 5th of September paid? Plainly not. For the first, the note was given but never paid. As to the September premium, no further attention was paid to it by the applicant than if the assumed contract had never been made.

If the assumed contract ever existed, it arose when the application was accepted. It matters not whether the applicant knew of the acceptance or not. He knew of his offer, and that such offer would, upon acceptance, ripen into a contract, and that such contract must devolve upon him certain obligations. He is presumed to have known the law and the character of the policy for which he had applied.

The applicant then failed to pay the note given in anticipation of the first premium, and also the second premium. The fact of non-payment of the first note is established by the finding.

Even if there was no default in the payment of the first premium, there certainly was in that due the 5th of September.

The condition as to payment of premium in both the assumed contract and that evidenced by the policy is the same.

This condition is plainly a condition precedent. The payment of the premium is explicitly declared to be indispensable to the continuance of the contract, or, in other words, such payment is a condition precedent.

In Ruse v. Mutual Life Insurance Company, the provision of the policy, as to the payment of premiums during the continuance of the policy, was almost identical with that in the present case. It was held that such a provision created a condition precedent, without performance of which the plaintiff could not recover, and to the same effect is the later case of Howell v. The Knickerbocker Life Insurance Company, where performance was rendered impossible by the act of God; the assured intending to pay the premium but being prevented by an attack of apoplexy two hours before the policy expired. But we need not cite cases to prove settled law.

Messrs. Henry Beard and William Todd Otto, contra:

The questions to be decided arise upon a case found by the court below; a case in the exact nature and with the exact effect of a special verdict: where, as the opposing counsel say, this court cannot draw inferences.

This finding or special verdict-the case-shows:

1. That on the 5th June, 1867, Homans, agent of the New York company, received from Young his note of $99.30, as the first quarterly premium on an application by Young to the company for a policy for $5000 on his own life, payable at forty-five or death, and premiums paid up in full for ten years; and that it was then agreed between Young and the agent of the company that such a policy, from the company, should take effect and be in force from the said 5th of June, provided that the application should be accepted by the company; but that if it should be declined or rejected by the company then that the note should be returned.

The case shows with equal distinctness, and by an express finding,

2. That the application of the said Young was transmitted to the said company and was not declined nor rejected, but that it was by them 'accepted,' and that a policy in response to the application was made out, signed, sealed, and transmitted to the general agent, who received it, and informed Young that it was awaiting him.

The finding that the application was 'accepted' by the company is a finding of a fact. There is nothing to show that an acceptance is found by the court because a policy was transmitted for the applicant. To infer an acceptance from that cause would be to make a conclusion of law, and not to find a fact; which alone, in this part of the case, it was the court's duty to find. There was doubtless evidence, independent of the transmission of the policy, to show an acceptance.

Now, in point of fact, it cannot be doubted that the company meant the policy sent to be, not a rejection of the proposition made, and another proposition; nor, in truth, a qualified acceptance of anything, but to be a substantial compliance with the proposition; a compliance more favorable, if anything, to the applicant than would have been a literal compliance. For though the policy sent did differ in dates and premiums from the offer made, the result of the difference was practically small, and might prove a gain to Young. So far as the amount of premium offered was concerned, Young was plainly a gainer. He offered $99.30. The company took $96.60. The agent had doubtless miscalculated the value of the life. He asked more than the company's rates required. Had Young paid for ten years, which at the age of twenty-six it seemed probable that he would do, the difference would have been $108, pure gain to him. Then, on the other side, the company made the risk begin two months before Young did. The reason is obvious; for the policy shows that Young's birthday was the 5th of April, and the payment became due on his arriving at the age of forty-five; and doubtless in order to facilitate calculation that day was taken. The change caused Young to pay two-thirds of $96.30, that is to say, $64.20 more than he offered. So that as undoubtedly the company hoped that Young would live for the whole ten years during which premium was to be paid, and as of course Young expected to do the same, we have a case where on both sides the policy was meant to be in substance what was asked for. Indeed, in a certain result, that is to say, if Young died on a certain day, the result might be exactly the same as would have been a literal compliance.

The opposing counsel, however, consider that the offer made by Young was in fact and form and substance rejected, as one that the company's interest required it to reject; and that a new proposition, one more favorable to its own interest, was offered; and, so far as the company was concerned, accepted in advance. They treat the differences between the proposition and the policy as wide-substantial-and for the sake of the argument we shall now in what we have to say so regard them.

We set out then on the assumption-one which there is then no evading or avoiding-that the company did, as matter of fact, 'accept,' Young's proposition, as made.

Opposig counsel speak of a 'qualified acceptance' as the acceptance which was made. But this is their language; not the language of the finding. It says that 'the application of the said Young was accepted.' And again it speaks of an acceptance simply, when it says, 'No notice of the acceptance of said application was given.' An 'acceptance' simply, is an acceptance unqualified; and an acceptance unqualified is an acceptance absolute; an acceptance pure and simple. After this finding of an absolute acceptance, and the signing, sealing, and transmission of a policy, the finding continues: 'But the policy did not, in terms, agree with the memorandum as to date and time of payment;' and the differences are stated.

We have then the case of an application to the agent for a policy of a certain date and time of payment, and a contract to furnish such a policy, provided the application is accepted, and an acceptance absolute of the proposition. But instead of the transmission of a policy according to the application which has been accepted-that is to say, one with the proper dates, we have the transmission of one with other dates, dates not according to the proposition which has been accepted, that is to say, one with improper dates.

Now what, in law, is the effect of such a transaction? The same exactly as exists in the case of a statute enacting that such and such things shall be, with a proviso repugnant to the nature of the enactment. Such a proviso is simply insensible and void.

If A. offer to sell to B. a house for $10,000, the offer being perfectly explicit, with leave to B. to accept, or to decline, or reject within ten days, and B. within the ten days says, 'I do not decline your offer, nor reject it; I accept it;' and with this absolute acceptance he send B. $9750, can any man say that the making of this is a 'qualified acceptance,' or a refusal to accept what is offered, and the making of a new proposition to treat on a different basis? Could not B. keep the $9750 and sue for the balance? The case before us is after the finding of an acceptance absolute, in essence, that case. And it is unimportant in what way you vary the figures, so long as you assume that there have been-what is here found as part of the case that the offer made was 'accepted.'This 'pinch,' the opposing counsel perceive and admit when they say:

'The court did find that the application was accepted, and if such acceptance, accompanied as it was by the act of transmitting a policy different from that applied for, constituted in law an absolute instead of a qualified acceptance, then there was found a contract to insure.'

And then they go on a technical ground, shown by themselves, it may be added, not to be true as respects a right to sue, that a contract to insure is not a contract of insurance.

Then, if our position as to the effect of sending an improper policy after the proposition of Young had been 'accepted,' is right, we have the case, confessed by opposing counsel to exist, of a contract to insure according to the application; and an admission also 'that upon a contract to insure, the assured has a remedy by action at law, as well as by bill in equity.'

The only difficulty set up on the other side is 'that in such action the plaintiff must show the conditions of the policy contracted for, and that the loss claimed would be recoverable under them;' and that here two payments were due, which were conditions precedent to the policy taking effect, and that those two payments or the second one has not been made.

Let us concede this as a general proposition, to be true. But it is equally true that such prepayment may be waived.

And the question now is, has it in the case before us, been waived?

We assert that it has been.

It is elementary law that forfeitures are not favored, and that provisions for forfeiture must be strictly construed. The authorities also hold that these principles are applicable to forfeitures in insurance policies; that the provisions for forfeiture are inserted for the benefit of the companies and may be waived by them; and that courts will find a waiver upon slight evidence.

Now, let us see how the company itself applied these principles to the facts of this case.

The company asserts by its special pleas that the policy was issued and delivered to the defendant April 6th, 1867; that the first premium was not then paid; and that the second premium fell due July 6th, 1867, and was not paid.

The policy bears date April 5th, and the receipts prepared by the company correspond with this date. The company, therefore, regarded the second quarter's premium as due July 6th, and acted upon that idea, although the application was made, and the first memorandum, receipt, and contract given on June 5th. The promissory note given for the first quarter's premium being payable without grace, fell due August 4th. It will be seen that the condition of the policy imposing a forfeiture, required payment to be made 'at the office of the company in the city of New York, or to agents when they produce receipts signed by the president or secretary, unless otherwise expressly agreed in writing.' There is no evidence in this case of its having been otherwise agreed in writing. It does not appear that the policy was received at the San Francisco office before the 2d of August. At or about the 6th of July the policy must have been in the defendant's office in New York, which would give twenty-seven days to August 2d, to make the passage to San Francisco. The defendant knew at the time of dispatching the policy that the second instalment of premium had not been paid at the office in New York. It also knew that it could not be paid to its agents in San Francisco in accordance with the terms of the contract, so as to be obligatory upon defendant, for the reason that the only receipt duly signed as specified in the policy anthorizing the payment to its agents was attached to the policy, and would not reach San Francisco till the month of August, a month after it was due The defendant did not expect payment at its office in New York city, or it would not have sent its receipts to its agent to enable him to receive payment. The defendant, then, by its officers in New York transmitted the policy and receipts with knowledge that payments had not and would not be made at the office in New York, and that it could not be made elsewhere in the mode required by the terms of the contract for a month after due. Yet the policy was sent with an intent that it should be delivered, and payment received by its agent in San Francisco, although it knew that there must necessarily be a forfeiture upon the strict letter of the contract. Also, after the receipt of the policy at San Francisco, on the 2d of August, nearly a month after the second instalment fell due, according to the terms of the policy, the defendant's agent, necessarily knowing that payment had not been made, stamped and countersigned the receipt, ready for delivery upon payment, thereby treating the agreement as still in force. Again, on the 8th of August, four days after the note given for the first quarter's premium fell due, and after default in payment, and, necessarily with knowledge of non-payment of both the note and second instalment, the agent of the defendant addressed to Young the note of the day just named, and set out, supra, p. 90.

This act, after the forfeiture, if any there was, had attached, recognizes the agreement as being still in force. The letter does not even demand payment, or refer to the fact of non-payment, or fix any time when the insured should call for the policy, or make payment. It simply informs him that his policy has arrived, and asks whether it should be sent to him at Vallejo, or whether he would call and get it, when in the city, implying that it would be at his option to have it sent to him at once, or wait his convenience till he should come to the city and be able to call for it. The defendant manifested no haste or anxiety upon the subject, for the policy was on hand from the 2d to the 8th of August at least before the notice of Young was even written, and it does not appear when it was sent. It does not appear that this, or any other notice, reached him. No other act of the company is shown inconsistent with this action, or tending to show an intention to insist upon a forfeiture till after the death of Young, when the policy was cancelled October 31st; payment of the loss having before been refused.

It could hardly have been expected that Young would call to make the second payment until informed whether the risk had been accepted, especially as there was ample time between June 5th, when the application was made, and the 5th of September, the time when the next payment would have fallen due, had the date of the policy agreed with the date of the application, and the preliminary memorandum of agreement given to him by defendant's agent in San Francisco. It was, doubtless, supposed that notice of acceptance or rejection would be given before the note for the first quarter's premium would fall due. But however this may be, the several acts of the defendant, and all its acts, and the acts of its officers in relation to the matter, which were performed subsequent to the accruing of the forfeiture, if any accrued, treat the agreement for insurance as still in force. They, affirmatively, indicate an intention, not to insist upon a forfeiture, and had the accident and death not occurred, there can be no doubt, from the facts found, that even as late as the death of Young, the premium would have been received and the policy delivered. We submit that upon the case as found there was a waiver of any forfeitures which had accrued, and that under the circumstances, after the death of the assured, it was too late, for the first time, to insist upon the forfeiture.

In conclusion, and reverting here to an earlier point of the argument, we may say that the counsel of the other side in arguing that the company in sending the policy which they did, only declined the proposition which Mr. Young made, and simply proposed a new one to him, are forced to assume that the company committed an impropriety towards Mr. Young and a departure from the usual, proper, decorous, and therefore the legal modes of doing business. The company was perfectly free to accept or to decline the proposition made to them. If they meant to decline it and to propose a new proposition, their duty was to do this by a proper and customary sort of communication; and not to make out a new policy such as their interests but not Mr. Young's dictated, and then, however much against his interest, and only because it was in advancement of their own, force it down on him under penalty perhaps of his being harassed soon afterwards by a lawsuit for premiums, as upon an implied acceptance by him, unless he could show that, at his own cost and charges, he at once pitched their unasked for and undesirable policy back into their face. Decency requires that any insurance company which thus seeks to force men into its purposes, against their own, should be held to have said, 'Our policy sent is so favorable to us and so little favorable to you that we are willing to be bound, till we hear affirmatively from you that you do not accept; not expecting to hold you till we hear positively that you do.' In such a case the company takes the risk of death occurring before an affirmative reply is received; and if death does occur, the company is concluded.

We are not here asserting that a 'contract' in the strict legal sense of that word can be made, unless the party assured have heard of what is offered and have assented to it. But whether any 'contract' can or cannot be made without his doing so is not the question. The question is whether an insurance company which in the eager pursuit of its own interests, and in the disregard of other people's, so far departs from the customary, becoming, and proper modes of doing business, as to decline, in the way which it is here asserted that this company did decline, a proposition made to it, and to make, in the way, which it is here asserted that this company did make, a new proposition which it wished to have accepted,-whether a company so acting cannot be estopped from asserting, in its own interests and against the interest of its customers, that it did not make such a contract? And whether when, by the death of the party, that is to say, when by the act of God, it has been caught in its own supersubtle contrivances, and the administrator of the decedent comes into court with the company's own policy in his hand, 'signed, sealed, and transmitted to their general agent,' who had written to the party that it awaited his order-whether in such a case, a court may not hold 'Melior est conditio possidentis,' or, if the judicial dignity could ever properly translate the venerable maxims of the law into phrase not quite perhaps becoming the dignity of the ermine, say: 'You have been rightly served.'

We have, of course, in these remarks been going on the assumption of the other side, that the differences between the policy sent and the proposition made were regarded by the company as important. As we have already said, the policy sent was meant to be a substantial compliance with the proposition made by Young, and in truth was so, and certain to be accepted by him.

1. The finding shows that Young's proposition was 'accepted,' not that it was 'accepted absolutely.' Admitting that by itself a finding that the proposition was 'accepted' might mean that it was accepted absolutely, the finding of the acceptance is here not by itself. The same paragraph which states that the proposition was accepted and that a policy was sent, states also that the policy did not agree with the memorandum as to date and time of payment, and shows wherein the two things differed. This means plainly that the company accepted the life, but not the exact risk offered; in other words, that it accepted the proposition qualifiedly.

2. All the acts relied on as showing a waiver relate-it may be remarked-to the policy which actually issued, and not to the contract alleged to result from the acceptance of the application.

But, passing by this.

To constitute a waiver there must be a valid agreement not to insist on performance of a condition precedent, or such acts as work an estoppel, from having influenced the conduct of the party whose duty it was to perform the condition.

There was here no agreement; and such a thing as a waiver without the party bound to perform being influenced by the acts of waiver relied on, or being even cognizant of them, is without foundation in principle or precedent.

Even if the acts relied on would constitute a waiver it would be merely of the article of time, and not of the payment of the premium during the continuance of the policy.

In no possible view of the case did the company consent to take the premium after the contract had been extinguished by death. Such a thing would simply abrogate any contract of insurance. Here there was no tender during the life of the party assured, nor, indeed, at any time.

4. No waiver is found by the finding, and any waiver is matter of fact.

5. It may be true that the manner in which the company declined the proposition made, and in which it offered a new proposition, was not the most formal that could be conceived. But we are inquiring not into forms, but into substance. The question is, 'was the sending of the policy substantially the qualified acceptance of th proposition offered?' We submit that it was. The qualification proposed may have been the least possible. It was in fact but very slight. Still, Young could say, 'My proposition has not been accepted. I decline the one offered; I care not whether it be better or worse; it is not the same as that made.'

Mr. Justice SWAYNE delivered the opinion of the court.

The question presented for our determination is whether the findings warrant the judgment. The facts found lie within a narrow compass.

Several objections, some of them technical, have been taken by the counsel for the plaintiff in error to the judgment rendered. We shall confine our remarks to one of them. It is fundamental, and goes to the right, justice, and law of the case. The receipt of the 5th of June was the initial step of the parties. It reserved the absolute right to the company to accept or reject the proposition which it contained. There was a necessary implication, that if it were accepted the response and acceptance were to be by a policy, in conformity with the terms specified in the receipt as far as they extended, and beyond that, in the usual form of such instruments as issued by the company. But it was clearly within the power of the company, under the condition expressed, wholly to reject the application, without giving any reason; or to accept the proposition with such modifications of the terms specified, and of the usual conditions of such policies, as it might see fit to prescribe. The entire subject was both affirmatively and negatively within its choice and discretion. The acceptance was a qualified one, and there was none other.

It was by a policy departing from the terms specified in the receipt in the particulars before mentioned but containing as to the conditions imposed otherwise, nothing beyond what was usual in such cases. At this stage of the business, the company was not bound according to the receipt, because it had not agreed to a part of the terms specified, and those terms were material and of the essence of the proposition. Clearly the company never did agree to those terms. What it would have done if the applicant had refused, as he might have done, to take the policy it is not material to consider. It is enough that the company did not so agree.

This court has no power to make such an agreement for it. The indispensable element of the consent of one of the parties is shown not to have existed. The contrary appears by the policy transmitted to the agent. The consent of the applicant appears, but that alone is unavailing. That fact, in any sound legal view of the case, is as if it were not. In the analysis of the case the receipt, for the reasons stated, must be laid out of view.

This brings us to the examination of the controversy as respects the policy of insurance. Here the position of the parties is reversed. The applicant assented to the proposition contained in the receipt, but the company did not. The company assented to the policy, but the applicant never did. The mutual assent, the meeting of the minds of both parties, is wanting. Such assent is vital to the existence of a contract. Without it there is none, and there can be none. In this case it is not established by any direct proof, and there is none from which it can be inferred. This is not controverted. If it be alleged there was fault on the part of the agent, for which the company is responsible, in not communicating promptly and fully with the applicant upon the arrival of the policy, there are several answers to the imputation. Such fault, viewed in any light, cannot be taken as the legal equivalent of the assent of the applicant to the terms of the policy. But no such fault is shown. The applicant knew that the company was not bound, and would not be bound until it chose to become so, and that it had the right to do what it did. It was his duty to keep up the necessary communication with the agent by calling upon him when the answer from the office in New York might have been expected to arrive, and if he intended to be absent, by giving the agent his address during his absence, and taking from him a promise to communicate the result as soon as the reply was received.

It does not appear that he took any step whatever in this way. Neither he nor his personal representative, therefore, had any reason to complain. If he had received notice of the proposition made through the policy it would have been at his option to give or refuse his assent. He was certainly in nowise bound until such assent was given. Until then, there could be no contract on his part, and if there was none on his part, there could be none on the part of the company. The obligation in such cases is correlative. If there is none on one side there is none on the other. The requisite assent must be the work of the parties themselves. The law cannot supply it for them. That is a function wholly beyond the sphere of judicial authority. As the applicant was never bound, the company was never bound. The policy was, therefore, no more a contract than the receipt. Both had the same fatal defect, the want of the assent of one of the parties.

Even where the parties supposed they had agreed and it turned out there was a misunderstanding as to a material point, the requisite mutual assent as to that point being wanting, it was held that neither was bound.

The deceased paid nothing. The contest is an effort on that side to gather where he had not sown. The law involved is expressed by the phrase 'it takes two to make a bargain.'

In this view of the case, irrespective of the other considerations which have been urged upon our attention, we hold that the facts found do not warrant the conclusion reached.

JUDGMENT REVERSED, and the case REMANDED, with directions to enter a judgment

IN FAVOR OF THE PLAINTIFF IN ERROR.


text: Talk:Mutual Life Insurance Company v. Young's Administrator/Opinion of the Court

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


text: Secombe v. Milwaukee and St. Paul Railroad Company


text: Talk:Secombe v. Milwaukee and St. Paul Railroad Company


text:
Secombe v. Milwaukee and St. Paul Railroad Company/Opinion of the Court

ERROR to the Circuit Court for the District of Minnesota; in which court Secombe brought ejectment against the Milwaukee and St. Paul Railway Company, to recover a lot in Minneapolis used by the company for a station.

The cause was heard by the court without the intervention of a jury.

It was admitted that Hiram Osborne and Ovid Pinney, under whom Secombe, by deeds of quitclaim made in 1870, claimed, had once been owners of the lot. But the railway company was now in possession of it, claiming under an act of condemnation made in 1867-three years before the deeds of quitclaim-in favor of the Minnesota Central Railway Company, in the alleged exercise of the right of eminent domain. The company defendant had succeeded to that company's rights.

Against the right of the Minnesota Central Railway Company, in whose favor the judgment of condemnation was entered, Secombe alleged:

1st. That under the constitution and laws of Minnesota the company was not a corporation, and, therefore, under the said laws not authorized to procure a condemnation in any form.

2d. That whether it was a corporation or not, all of the proceedings taken to obtain title to the lot were, under the said constitution and laws, void.

In 1856, the territorial legislature of Minnesota incorporated a certain railroad company under a name then given to it.

In 1858, the Territory became a State and made a constitution.

This constitution prohibited the formation of corporations by special act.

It ordained also that 'no person should be deprived of property without due process of law,' and that private property should not be taken for public use without just compensation therefor 'first paid or secured.'

About the same time, by a constitutional amendment, the State authorized the company above mentioned as incorporated by the Territorial legislature in 1856, and to which it had since made a loan of its credit by the issue of State bonds, for the payment of whose interest the company was to provide, to mortgage its roads, franchises, &c., to the State as security for payment of the principal and interest of the bonds. The railroad company made the mortgage, but paid neither principal nor interest on the State bonds; and in 1860, the legislature of the State, by an act declaring that a default had occurred on the part of the company, in paying the interest on the bonds, directed the governor to foreclose the mortgage, and to bid in and purchase the roads and franchises in the name of the State. This the governor did.

In the following year, 1861, the legislature by another act-a special act-which recited the act authorizing the foreclosure of the mortgage, and the purchase and acquisition of the road, its franchises, &c., by the State under the foreclosure-granted the road, its franchises, &c., to certain persons who had organized themselves into another company; the grant being subject to certain conditions, for the non-performance of which the grant was to be forfeited.

In 1862, the conditions having been broken, and a forfeiture having occurred, the road was regranted to a yet third set of persons organized into a new company, and called the Minnesota Central Railway Company.

It was this company which had caused the lot in question to be condemned for the purposes of its road; and the company derived its corporate existence under legislation of the same character as did the St. Paul and Pacific Railroad Company, which in the case of the St. Paul and Pacific Railroad Company v. Parcher, the Supreme Court of Minnesota held good and constitutional. That court considered that although corporations could not be formed by special act, yet that the State could buy the property including the franchise-or right to be a corporation of a corporation already created-and could hold without a merger, if it was for its interest and it desired to do so, the franchise which it had thus bought. It considered further that it was for the interest of the State to do so, because this would better enable it to secure the successful prosecution of important enterprises which it could not well carry on itself; while, that it was the intention of the State to keep alive the purchased franchise and hold it without merger, sufficiently appeared, the court thought, from legislation subsequent to the foreclosure. The court, in conclusion, said:

'There was no attempt here to create new corporate franchises, and thus to form and to bring into existence for the first time that which is the very essence of a corporation, and without which a corporation is nothing. But corporate franchises already in existence and held by the State as property, without merger in its general sovereignty and without extinguishment, were transferred to the persons enumerated in the act. This, we think, was a legitimate and constitutional transaction.'

The part of the case relating to the proceeding of condemnation was thus:

'SECTION 10. The said company shall have the right of way upon any lands, to survey and lay down said road, not exceeding two hundred feet in width, and whenever it is necessary to have such lands, they shall have the right to enter upon, take and hold such lands, and occupy the same. When the same shall not be granted to said company, the compensation to be paid therefor shall be thus ascertained. The said company shall apply to the Judge of the District Court of the Territory of Minnesota, for the appointment of three commissioners, whose duty it shall be, to proceed to assess the damages which may be sustained by the several owners of the lands through which the road of said company is located. It shall be the duty of said company to give thirty days' notice of their application for the appointment of said commissioners, in one or more newspapers published in each of the counties through which said road is laid out; and it shall be the duty of such commissioners to cause ten days' notice of their meeting to appraise the damages of any land through which said road may run, to be given to the owner or claimant thereof. Either party feeling aggrieved by the decision of such commissioners, may appeal to the District Court of the county in which such land may be situated; and said appeal shall be tried in the same manner as if commenced therein. The notice to be given by the commissioners to the owners of lands required by the railroad, shall be in writing, and delivered to said owner or owners, or left at their usual place of residence; or if non-residents, then said notice shall be published in the nearest newspaper to where said land is situated, at least four weeks before making such appraisement.'

The court below found as facts the following matters; this finding under the statute authorizing such finding of fact by the court, being in the nature of a special verdict:

1st. That, on the 26th of September, 1863, the company petitioned the District Court of the Fourth Judicial District of Minnesota, for the appointment of three commissioners to assess the damages which might be sustained by the owners of the land in question, by reason of the appropriation of it for railroad purposes.

2d. That the company had, previously to the said time, given thirty days' notice of their intended application, directed, among other persons, to Hiram Osborne and Ovid Pinney (the then owners), in the State Atlas, a newspaper published in the county.

3d. That the court appointed certain persons (named) as commissioners for the said purpose.

4th. That the commissioners, at least four weeks before the 2d day of December, 1863, published in the said State Atlas notice of their meeting to appraise the damages of the said premises on the said 2d day of December, 1863, which notice was directed to Osborne and others, naming them. That Osborne could not be found in Minneapolis, and that his place of residence was unknown to the commissioners.

5th. That, on the 8th of April, 1864, the commissioners reported that they had awarded damages for the land entered upon and taken possession of by the company in the sum of $40; which report was, on the 16th day of April, 1864, filed with the clerk of the court.

6th. That, at a general term of the court, on the 20th of July, 1867, the court made an order that the award be confirmed, and judgment be entered thereon in conformity with the award, and that the $40 be paid into court by the company on the judgment to be entered, by leaving the same with the clerk thereof.

7th. That on the 22d of December, 1868, on motion of the company, a judgment was entered by the clerk in favor of the said Minnesota Central Railway Company, confirming the award, and directing that the said sum of $40 be paid into court by leaving the same with the clerk; and that the company at the time of the entry of judgment, paid into court the sum of $40.

8th. That the said judgment was thereupon docketed and satisfaction thereof entered by the clerk as against said company; and that a copy of the judgment, certified by the clerk, with his certificate that the same had been satisfied as against the said company by the payment of the said sum of money into court, was thereafter recorded in the office of the register of deeds of the said county.

No fact material to the issues appeared upon the trial other than the foregoing.

It was not shown upon the trial in any way or manner that Osborne or Pinney ever appeared in any of the said proceedings, or that any personal notice was ever given to or had by the said Osborne, of any of the said proceedings, or that any notice other than as aforementioned was given to or had by either of the said persons; or that the said State Atlas was the nearest newspaper to where the premises described in the complaint were situated.

The court below gave judgment for the defendant, and from that judgment the case now came here.

Mr. Secombe, propri a person a, plaintiff in error:

1. The Minnesota Railway Company, in whose favor the condemnation is alleged to have been made, had no corporate existence.

The constitution of Minnesota ordains, in express terms, that railroad corporations shall not be formed by special law. How this provision of fundamental law has been violated, if not in letter, certainly in spirit. No railroad corporation was, indeed, created in the exactly ordinary way, but there being a railroad corporation already in existence, with roads, franchises, and all other requisites of a railroad, under mortgage to the State, the mortgage is foreclosed, and the mortgaged property, including franchises and all other requisites, is bought by the State itself, and then, by a special act, it all is granted out to certain individuals, and in St. Paul and Pacific Railroad v. Parcher, this is held not to violate the provision of the constitution against the creation, by special law, of railroad corporations; but to be, all, 'a legitimate and constitutional transaction!'

It would seem that the problem proposed to the Supreme Court of Minnesota for solution should be thus stated: 'Given an express constitutional prohibition against the formation of a corporation by special act, in what way may that constitutional provision be defeated?'

The solution given by the court is ingenious, but seems to us to be in violation of the purpose of the constitutional provision thus avoided. It is a manner of dealing with a constitutional provision which should not, we think, commend itself to this court.

2. The alleged manner of the attempted exercise of the right of eminent domain, and consequently the alleged divestiture of the plaintiff's right of possession was unconstitutional.

There was not provided for by law a judicial trial, in determining the just compensation which should be paid for the taking of the private property in controversy in this case.

The constitution of Minnesota provides that no person shall be deprived of life, liberty, or property without due process of law; and this means a judicial trial. It is not necessary to assert in this case that a trial by jury is an essential part of that judicial trial. But it is absolutely necessary that there should be a proceeding in a court of competent jurisdiction, and that the party to be affected by the proceeding should be summoned into that court and have notice of the object of the proceeding.

The tenth section of the act of March 1st, 1856, which contains all that there is on the subject, provided that the judge of the District Court may be applied to, to appoint commissioners to assess the damages, and that a notice of this application shall be published in a newspaper. This act of the judge is purely ministerial, and his functions end with the appointment. This notice, which is only constructive in its nature, has expended its entire force when the appointment has been made. The commissioners thus appointed are required to give notice of their meeting to assess damages. The effect of this notice ends with the meeting which is the sole subject of the notice. An interested party may have happened to see the published notice of the application to the judge, and may have been present when the judge made the appointment. He may have had actual notice of the meeting of the commissioners, and have been present and seen them looking at the premises. But at this point the effect of the notice ends.

There is, it is true, an abortive attempt in the statute to give a judicial trial upon appeal to the District Court from the award of the commissioners, but there is an entire absence of any provision for notice to the landowner, which would require or enable him to take advantage of that opportunity. The commissioners are not required or authorized to make their award to the court, or to file it in the court or with the judge or clerk; nor are they required to notify in any way to the landowner the award or the making thereof. So that while there is here provided a proceeding in court, there is no provision made for any notice by which the court could acquire jurisdiction of the person of the landowner in that proceeding.

3. The laws under which the attempted exercise of the right of eminent domain was made are further void, because they authorize the taking of the property before making payment therefor.

The constitution of Minnesota provides that private property shall not be taken for public use, without just compensation therefor, first paid or secured.

The act of March 1st, 1856, provides that the lands may be entered upon, taken, held and occupied, before any steps are taken for paying or securing the just compensation.

This is in direct violation of the constitution of Minnesota.

4. In summary proceedings, under which the rights of parties are affected and divested, without their consent, a strict compliance with all the requirements of the statute must be shown by the party claiming title thereunder.

The only provisions of law by which the rights of Secombe's grantors could be affected are those contained in the act of March 1st, 1856.

Now, there was a non-compliance with the foregoing provisions of law:

1st. In that the said commissioners did not, at the time of their meeting, or within a reasonable time thereafter, assess the damages to the said land. The meeting of the commissioners was on the 2d day of December, 1863; they did not make their award until more than four months thereafter.

2d. In that the commissioners awarded damages for the land which had been theretofore entered upon and taken possession of by the company, at the time when the same was so entered upon and taken possession of as aforesaid.

3d. In that the company did not, within a reasonable time thereafter, pay or tender to the landowner the damages so awarded. In order to acquire the right which the company was seeking under this law, it was the duty of the company at once to tender the landowner the amount of the award, to the end that if the landowner was satisfied with the award he might have his money, and if he was not satisfied he might have his appeal from the award. Yet no payment was ever made or tendered to the landowner, nor was any notice ever given to or had by him, that any award had been made.

Mr. F. R. E. Cornell, contra.

Mr. Justice DAVIS delivered the opinion of the court.

The case was tried by the court without the intervention of a jury, and the only material point for inquiry is, whether on the whole case the decision of the court below, which was adverse to the plaintiff, was correct.

Whether the Minnesota Central Railroad Company, under whom the defendant claims-and which occupied for railroad purposes the land in question long before the deeds of quitclaim under which the plaintiff sets up title were made-whether this company had the right to condemn the land and took the proper steps to condemn it, depends of necessity on the laws of the State; and if these laws have been construed by the highest court of the State in a case similar in character to the one before us, the Federal courts are relieved of all difficulty.

We do not feel called upon to enter into an examination of the several acts on this subject, both public and private, which are quite numerous, in order to show that the Minnesota Central Company had a corporate existence, and was therefore capable of performing an act of condemnation. It is enough to say that the point is settled in favor of the company by the decision and reasoning of the Supreme Court of Minnesota in St. Paul and Pacific Railroad Company v. Parcher.

The Minnesota Central Company was authorized by law to procure the condemnation of land for the use of its road, and from the findings of fact by the Circuit Court it sufficiently appears that the statutory provisions on the subject were observed.

It is no longer an open question in this country that the mode of exercising the right of eminent domain, in the absence of any provision in the organic law prescribing a contrary course, is within the discretion of the legislature. There is no limitation upon the power of the legislature in this respect, if the purpose be a public one, and just compensation be paid or tendered to the owner for the property taken. This general rule has received the sanction of the Supreme Court of Minnesota in analogous cases to the one at bar.

It hardly need be said that the taking of private property in order that a railroad may be constructed, is a public necessity. It is urged that the property in controversy was occupied before the proceedings in condemnation were begun, but there is nothing in the findings of fact to show that this was so. Even if the plaintiff were in a situation to make the objection it would not avail him, for prior occupation without authority of law would not preclude the company from taking subsequent measures authorized by law to condemn the land for their use. If the company occupied the land before condemnation without the consent of the owners, and without any law authorizing it, they are liable in trespass to the persons who owned the land at the time, but not to the present plaintiff.

It is urged, also, against the validity of the award of the commissioners that it was not made in reasonable time, or the amount of it ever paid or tendered to the parties in interest. Whether this be so or not does not concern the plaintiff. It is enough for him to know that a judgment was entered confirming the award, and the money paid into the court for the use of Pinney and Osborne, and is there now unless they have seen fit to withdraw it. It is a fair presumption, as both these persons had notice, actual or constructive, of the proceedings in condemnation, and took no steps to review them, that they were either satisfied with the award or concluded they could not make successful opposition to it.

This suit is an effort to question the propriety of the condemnation and sale of the property in a collateral proceeding, not by the party even whose land was appropriated, but by a stranger to the original proceeding, who, whatever his motive in buying, got no other estate than the original owners could convey a fee subject to the easement of the railroad company. The judgment of condemnation in this case was rendered by a competent court, charged with a special statutory jurisdiction, and all the facts necessary to the exercise of this jurisdiction are shown to exist. A judgment thus obtained is no more subject to impeachment in a collateral proceeding than the judgment of any other court of exclusive jurisdiction.

If it were so, railroad companies would have no assurance that the steps taken by them to procure the right of way would conclude any one, and they would be constantly subject to vexatious litigation.

JUDGMENT AFFIRMED.


text: Talk:Secombe v. Milwaukee and St. Paul Railroad Company/Opinion of the Court


text:
Lewis v. Hawkins

APPEAL from the Circuit Court for the Western District of Arkansas.

The case was thus:

A statute of limitation in Arkansas, passed January 4th, 1851, enacts that no suit at law or in equity for the recovery of real estate shall be brought after the lapse of seven years from the time when the cause of action accrued.

This statute being in force, Lewis, in November, 1853, agreed to sell to Hawkins certain real estate; Hawkins, for the consideration-money giving to Lewis his two promissory notes, each for the sum of $500, payable, one on the 1st of February, 1855, and the other on the 1st of February, 1856, and Lewis at the same time giving to Hawkins his bond in the penal sum of $2000, binding him, Lewis, upon the payment of the two notes to Hawkins, to convey in fee simple the premises so sold.

It did not appear that this bond authorized Hawkins to take possession of the property sold, or that he did so.

In October, 1855, Hawkins sold and conveyed the land to one Hamiter; Hamiter, as a part of the consideration, assuming the payment of the notes which Hawkins had given to Lewis. Hamiter went into possession of the premises, and occupied them, with his family, until May, 1866, when he died, leaving a widow and nine children his heirs-at-law, and whom, with the widow, he made his devisees; the widow being made his executrix. The widow and her family had occupied the premises ever since Hamiter's, the husband's, death.

Nothing having been paid by any one upon the two notes, Lewis sued Hawkins, and on the 11th of August, 1860, recovered a judgment against him for $1201. The judgment remaining also wholly unpaid, Lewis filed, in August, 1871, a bill against Hawkins and the widow and executrix of Hamiter (his children and heirs-at-law not, however, being made parties), to enforce the payment of the notes and interest against the land.

The bill alleged that the complainant had always been and still was willing to perform the agreement on his part, and offered to execute and bring into court, to be delivered to the defendants, or either of them lawfully entitled thereto, a deed conveying the land in fee simple in accordance with the condition of the title-bond, on being paid the purchase-money due, with the interest. And alleged further that the complainant, since the second note fell due, had duly tendered to Hawkins a deed of conveyance, and demanded the payment of the amount due for the purchase-money thereof; but that Hawkins refused to accept the deed and to pay the purchase-money.

The prayer of the bill was that the equity of redemption of the defendants, and of all persons claiming through them or either of them, might be barred and foreclosed, and that the defendants be compelled to pay to the complainant the amount due to him for the land with interest; the complainant being ready and willing to execute and deliver to the defendant Hawkins, or his assigns, a deed for the land in fee simple with warranty of title; and that in case the said defendants would not pay the said purchase-money by a short day to be named, the premises might be sold and the proceeds applied to the payment of the decree to be rendered for the purchase-money.

Both defendants answered.

The answer of Hawkins denied that nay tender of a deed as alleged in the bill had been made to him, and he set up as a defence his discharge in bankruptcy.

Mrs. Hamiter, the widow, relied upon the already-mentioned statute of limitations of Arkansas, which bars suits at law and in equity for real estate after the lapse of seven years from the time the cause of action accrued.

The depositions of both Lewis and Hawkins were taken. The former stated that the tender alleged in the bill had been made; the latter that no such tender had ever been made.

The court below dismissed the bill for want of equity, and from that, its decree, Lewis, the complainant, brought the case here.

Mr. A. H. Garland, for the appellant:

There is nothing in the record showing upon what grounds the bill was dismissed.

If the court based its decision upon the question of tender of a deed, it was error.

If upon the statute of limitations, it was error equally.

There are no other points upon which it is possible to have founded the decree.

By the terms of the contract, as evidenced by the title-bond, the purchase-money was to have been paid before a deed was made. The notes were due and payable at a specified time, and if not paid then there was a default, and Lewis had his right of action at once. Besides the tenor of the notes, the title-bond made payment a condition precedent, and no tender of a deed was necessary at all.

If, however, it were necessary to tender a deed, a failure to do so would be no cause of dismissal, but only a reason for taxing Lewis for costs of suit, as he might possibly have avoided a suit by tendering the deed. But to avoid all this, we have the fact that Lewis could not know who claimed the land after Hawkins, nor to whom to make the deed. He avers, however, his readiness to make the deed to the person entitled to it under the order and decree of the court, and this was all he could do. There can be nothing, then, in the question of tender.

When Hawkins purchased the land and took a title-bond from Lewis, the parties stood towards each other just as if Lewis had made a deed to Hawkins, and Hawkins had mortgaged back the land to secure the payment of the purchase-money. And this proceeding is simply an attempt to foreclose a mortgage. It is a proceeding in rem to subject the land to the payment of money, of the non-payment of which Hawkins's vendee had due notice. This being true, the plea of the statute of limitations is of no effect. This defence is set up by analogy to the statute bar to the remedy at law; but it is well settled that the statute of limitations which would bar a debt secured by mortgage will not bar the remedy upon the mortgage, because the mortgage has a legal import more extensive than the mere evidence of the debt.

Even if the judgment on these notes had been barred, yet Lewis could recur to his mortgage and ask for its enforcement.

Indeed, it is not seen how Hawkins and his vendee, holding by consent of Lewis, and necessarily with full knowledge of the non-payment of the purchase-money, could plead limitations at all, whether in an action to recover the land or to make it pay the debt.

Messrs. Pike and Johnson, contra, for the widow:

1st. The bond for title did not convey to Hawkins any legal interest in the land, but at most an equity, with right of possession.

2d. On failure to Hawkins to pay the notes the bond was forfeited, and Lewis had a right to retake the possession.

3d. The estate in fee being in Lewis, how can he have a lien? The man cannot have a lien on that which is his own?

4th. The first note fell due on the 1st of February, 1855. Upon that default Lewis was entitled to retake possession. This suit was instituted by him on the 31st of August, 1871, eleven years after he obtained judgment. The statute of limitations then barred any action by him, in law or equity, for possession. Having lost the right to regain possession, he cannot avoid the statute bar by setting up a lien for the purchase-money, and asking to have a decree for money already in judgment, and a sale of his own land to satisfy such decree.

5th. Suppose such sale were decreed. How would the purchaser have legal title, when neither Hawkins nor Hamiter ever had any?

6th. Assume that Lewis had once, on the 1st of February, 1855, a right to sue on the notes, to bring ejectment or to foreclose, or to do all at once, yet the limitation prescribed by the act of January 4th, 1851, applied to the case and barred an ejectment or suit to foreclose at the end of seven years thereafter. Under the statute the right to foreclose was barred long before this suit was brought.

7th. It so appears on the face of the bill, and there is no averment of any fact to prevent the bar applying. The defendants could have availed themselves of the statutory bar by demurrer.

8th. The bill, therefore, did not make a case in which the plaintiff was entitled to relief or discovery, and therefore it was properly dismissed for want of equity, i. e., for want of right to equitable relief.

Mr. Justice SWAYNE delivered the opinion of the court.

title: Lewis v. Hawkins


text: Talk:Lewis v. Hawkins

title: Talk:Lewis v. Hawkins


text:
Lewis v. Hawkins/Opinion of the Court

Upon the execution of the notes and the title-bond between Lewis and Hawkins, Lewis held the legal title as trustee for Hawkins; and Hawkins was a trustee for Lewis as to the purchase-money. Hawkins was cestui que trust as to the former and Lewis as to the latter. The seller under such circumstances has a vendor's lien, which is certainly not impaired by withholding the conveyance. The equitable estate of the vendee is alienable, descendible, and devisable in like manner as real estate held by a legal title. The securities for the purchase-money are personalty, and in the event of the death of the vendor, go to his personal representative. It does not appear that the title-bond authorized Hawkins to take possession, or that he did so. If there were no such authority, and he entered into possession, he held as a licensee or tenant at will. The vendee cannot in such cases dispute the title of his vendor any more than the lessee can dispute that of his lessor. Any other person coming into possession under the vendee, either with his consent or as an intruder, is bound by a like estoppel. Hamiter, having bought and assumed the payment of the purchase-money stipulated to be paid by Hawkins, took the property subject to the same liabilities, legal and equitable, to which it was subject in the hands of Hawkins.

The discharge in bankruptcy released Hawkins from personal liability for his debt, but the statute of limitations cannot avail to protect the land from the vendor's lien upon it, for the purchase-money which Hawkins agreed to pay, and which Hamiter, when he bought the land, assumed and agreed to pay for him.

We have already shown that as between Lewis and Hawkins there was a trust which embraced the purchase-money and fastened itself upon the land. The debt did not affect his assignee personally, but as we have shown also it continued to bind the land in all respects as if the transfer had not been made. The trust was an express one. Its terms and purposes were evinced by the title-bond, and the promissory notes to which that instrument referred. 'As between trustee and cestui que trust, in the case of an express trust, the statute of limitation has no application, and no length of time is a bar. Accounts have been decreed against trustees extending over periods of thirty, forty, and even fifty years. The relations and privity between trustee and cestui que trust are such that the possession of one is the possession of the other, and there can be no adverse possession during the continuance of the relation. . . . A cestui que trust cannot set up the statute against his co-cestui que trust, nor against his trustee. These rules apply in all cases of express trusts.'

'As between trustees and cestui que trust, an express trust, constituted by the act of the parties themselves, will not be barred by any length of time, for in such cases there is no adverse possession, the possession of the trustee being the possession of the cestui que trust.'

The same principle applies where the cestui que trust is in possession. He is regarded as a tenant at will to the trustee. 'Therefore, until this tenancy is determined there can be no adverse possession between the parties.' The relation once established is presumed to continue, unless a distinct denial, or acts, or a possession inconsistent with it are clearly shown.

In many of the cases it is held that the lien of the vendor under the circumstances of this case is substantially a mortgage. It is well settled that the possession of the mortgagor is not adverse to that of the mortgagee. In the case last cited it is said that to apply the statute of limitations 'would be like making the lapse of time the origin of title in the tenant against his landlord.' That the remedy upon the bond, note, or simple contract for the purchase-money is barred in cases like this, in no wise affects the right to proceed in equity against the land. As in respect to mortgages, the lien will be presumed to have been satisfied after the lapse of twenty years from the maturity of the debt, but in both cases laches may be explained and the presumption repelled. The principles upon which this opinion proceeds are distinctly recognized in Harris v. King. That case alone would be decisive of the case before us. The considerations which apply where the vendor in such cases resorts to an action of ejectment were examined by this court in Burnett v. Caldwell.

The bill avers the tender of a deed by the complainant to Hawkins before the bill was filed. The answer of Hawkins denies the allegation. The testimony of Lewis sustains the bill; that of Hawkins the answer. The averment is not established. Except as to the costs the point is of no significance. If the tender of a deed had been properly made, and there had been no unjustifiable resistance to the taking of the decree by the complainant, to which he is entitled, he would have been required to pay all the costs. There being a contest, and it appearing that a tender would have been without effect, the costs must abide the result of the litigation.

There is manifest error in the decree, but the bill is defective in not making the heirs-at-law of Hamiter parties, unless there is some statutory provision of the State of Arkansas which obviates this objection.

If necessary the bill can be amended in the court below.

DECREE REVERSED, and the cause REMANDED with directions to proceed

IN CONFORMITY WITH THIS OPINION.

title: Lewis v. Hawkins/Opinion of the Court


text: Talk:Lewis v. Hawkins/Opinion of the Court


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Ray v. Norseworthy

ERROR to the Supreme Court of Louisiana.

The case was thus:

The first section of the Bankrupt Act enacts:

'That the several District Courts be and hereby are constituted courts of bankruptcy. . . . And the jurisdiction hereby conferred shall extend to all cases and controversies arising between the bankrupt and any creditor or creditors who shall claim any debt or demand under the bankruptcy; to the collection of all the assets of the bankrupt; to the ascertainment and liquidation of the liens and other specific claims thereon; to the adjustment of the various priorities and conflicting interests of all parties, and to the marshalling and disposition of the different funds and assets, so as to secure the rights of all parties, and due distribution of the assets among all the creditors.'

The twentieth section enacts:

'When a creditor has a mortgage or pledge of real or personal property, or a lien thereon for securing the payment of a debt owing to him from the bankrupt, he shall be admitted as a creditor only for the balance of a debt after deducting the value of such property, to be ascertained by agreement between him and the assignee, or by a sale thereof, to be made in such manner as the court shall direct.'

With these provisions of the Bankrupt Act in force, W. A. Parks owning a plantation in Louisiana, sold the same to one Brigham, who, in consideration of the sale, gave his note for $11,666.66 to Parks, and to secure the note gave also what is called, in Louisiana, 'a special mortgage with vendor's privilege;' a sort of security apparently like a common-law mortgage for purchase-money.

Parks sold for value this mortgage with its privileges to one Norseworthy (the transfer being duly recorded), and soon afterwards died. Brigham, the purchaser of the land, was declared bankrupt, and his assignee, one Norton, filed a petition in the District Court of the United States at New Orleans, setting forth certain facts, though exactly what facts-as the petition itself was not produced-did not appear. So far as might be inferred from a recital and order hereinafter quoted, made upon the petition, it rather seemed that the petition represented that Parks had owned the land and sold it Brigham, taking the mortgage, &c.; that Brigham was now bankrupt, and that he, Norton, was his assignee; that it was necessary to sell the land to pay the debts of the bankrupt; and praying an order of sale and power to apply the proceeds to paying, in discharge of special mortgages, to one J. D. Denegre, $7091; to Parks, $11,666.66; and to one R. Nugent, $2044. Parks had, at this time, been dead for more than a year, and his estate had been sold. Denegre too was dead. Norseworthy lived in Texas, several hundred miles from New Orleans. Whether the fact of his interest in the mortgage originally owned by Parks was in any way stated, or indeed whether his name was mentioned in the petition in any way did not appear. But it appeared that a notice of the sale, intended to be a notice to him, had been sent through the mail by the assignee in bankruptcy, to a person supposed by the said assignee to be Norseworthy's attorney, and to represent him, but who, in fact, did not represent him at all in any way. Neither did it appear what rule was made or what return had been made by the marshal.

Although, as above said, the petition itself was not produced, nor the rule, nor the marshal's return, the following proceedings upon the petition in the court of bankruptcy were produced:

'The petition and rule filed by the assignee, came up, Mr. H. D. Stone, for the assignee; and it appearing to the satisfaction of the court that the service required by law has been duly made, and that the facts set forth in the petition are true; it is ordered that the prayer of the petition be granted and the rule be made absolute; that he assignee be authorized to sell the bankrupt's property following, to wit:'

[Here followed a description of the property mortgaged.]

'It is further ordered that said assignee be also authorized to cancel and mortgages, liens, judgments, and incumbrances resting on said property, and particularly those in favor of the estate of J. D. Denegre for $7091, being a special mortgage; the special mortgage and vendor's privilege in favor of W. A. Parks, for $11,666.66, and the special one in favor of R. Nugent for $2044, reserving to said parties and to all other persons in interest all the rights in law to the proceeds according to their rank and priority.'

The assignee, in pursuance of the already-quoted order, sold the land at public sale, and it came finally in the hands of one Ray.

Norseworthy now sought, in one of the State courts of Louisiana and by some of the proceedings usual in the civil-law practice, or in the code of the State just named, to subject the land to the payment of his mortgage for $11,666.66.

To establish his case, he produced his mortgage and transfer.

The other side, to show a discharge of the mortgage, put in evidence the recital and order of the District Court, quoted just above, but did not produce or put in evidence the petition on which the order and proceedings were had, nor the rule, nor the marshal's return.

One of the issues in the court in which Norseworthy made his proceeding was, whether Norseworthy received a proper notice or was legally made a party to the proceeding under which the assignee attempted to sell the property free of his mortgage.

The court held that he had not received a proper notice, and that his rights were thus unaffected by the sale. The Supreme Court of the State was of the same opinion, and from its judgment made on that view the case was now here.

It was admitted in this court, on both sides, to be plain, alike under the first and the twentieth sections above quoted of the Bankrupt Act, that under proper proceedings-which, of course, included a notice properly given to parties in interest-the District Court had authority to order the sale of the property free of liens. So that the only questions in the case were: 1st. Whether Norseworthy was to be taken as having received proper notice, and if not, 2d. Whether the want of it was fatal to the discharge of his lien.

Messrs. Durant and Horner, for the plaintiff in error:

The Supreme Court of Louisiana seeks to withdraw this case from the operation of the admitted rule that the District Court sitting in bankruptcy has authority to order the sale of the property in question free of prior incumbrances, on the ground that the mortgage-creditor, Norseworthy, did not receive proper notice, and was not legally made a party to the proceedings resulting in the order to sell the property in question free from his prior mortgage.

The answers to this are manifold:

1st. The fact that Norseworthy was not a party to the rule is not sufficiently proved, and on him was the burden to adduce sufficient proof. The recital in the order of sale is, 'that it appears to the satisfaction of the court that the service required by law has been duly made.' If by law Norseworthy was required to be served, it is here recited that he was served, and duly served.

2d. Assuming, however, that Norseworthy was a stranger to the proceedings in bankruptcy, he could not annul them collaterally. The proceedings are in rem and all the world are parties.

The only question before the State court, which could legally be agitated, was the competency of the District Court of the United States for the Eastern District of Louisiana. This competency cannot be denied. The decision of a court of a peculiar and exclusive jurisdiction must be completely binding upon the judgment of every other court in which the same subject-matter comes incidentally in controversy.

Norseworthy's relief, therefore, was to be found in the national court. A rule for a new trial, an appeal, an action of nullity, &c., &c., even an application to the extended supervisory jurisdiction of the Circuit Court of the United States, under the national Bankrupt law, were all open to him there, and not elsewhere. In a more important case than this it was decided that the State of Texas was bound to appeal from an order of court directing a receiver to sue, and could not contest his right to do so collaterally.

3d. The discharge in bankruptcy freed Brigham from all liability for the debt due Norseworthy. The debt was extinguished, and under Louisiana law all the concomitants of it perished. There could be no hypothecary right remaining in Norseworthy after the sale of the property by the bankrupt court and the final discharge of the bankrupt.

Messrs. E. T. Merrick and G. W. Race, contra:

1. An issue was formed on the question of fact whether Norseworthy was rightly served, and was decided against the plaintiff in error by both the inferior State court and by the Supreme Court of Louisiana.

And it is this question of fact which is brought here by the writ of error, and this court is requested to re-examine the proofs and testimony and find the facts differently from the courts having jurisdiction of them. This it will not do.

2. If the petition had been put in evidence by the assignee in bankruptcy, and it had appeared that Norseworthy was a party named in it, there might be some value in the recital subsequently made, that it appeared to the satisfaction of the court that service had been made. But he puts in evidence the recital and the order made on the petition, but withholds the petition itself, the rule, and the marshal's return. The inference is irresistible that Norseworthy's title nowhere appears in it. Of what worth then is the recital? What is put in evidence, if it shows notice at all and to anybody, fails to show to whom the notice was. It may be to any one man as well as to any other.

Parks was dead, and his property sold in 1868. It cannot, therefore, be pretended that Norseworthy could be bound by any imaginary notice to Parks, who had by public act sold the mortgage in his lifetime.

The proofs adduced on the trial in the lower court by the plaintiff and passed upon by the District and Supreme Courts show that instead of serving a summons, citation, or notice on Norseworthy (the holder of the mortgage), the notice was sent to a person who was not his attorney, nor authorized to accept service for him.

This is not due process of law. A party who never appeared in the bankrupt court, whose rights were of record in the public archives of the recorder's office, was not to be divested of real rights by chance notices served on third parties not representing him, through the mail.

The bankrupt court being one of special and limited jurisdiction, it was incumbent that those who pretend to have divested the legal rights of third parties, should clearly show by the record such formal proceedings as the law requires, and such service of process as was needed for the exercise of such jurisdiction.

The discharge of the original mortgagor from all his debts would not affect a lien on his estate, and especially when the estate on which the lien was had passed to another owner.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Ray v. Norseworthy


text: Talk:Ray v. Norseworthy

title: Talk:Ray v. Norseworthy


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Ray v. Norseworthy/Opinion of the Court

The theory of the plaintiff in error is that the title of the petitioners under the first mortgage and privilege was extinguished by the decree of the bankrupt court, and that the plaintiff acquired an absolute title to the land from the assignee in bankruptcy, discharged of all prior incumbrances and privileges.

1. Jurisdiction of the bankrupt courts extends to all cases and controversies arising between the bankrupt and any creditors who shall claim any debt or demand under the bankruptcy, to the collection of all the assets of the bankrupt, to the ascertainment and liquidation of the liens and other specific claims thereon, to the adjustment of the various priorities and conflicting interests of all parties, and to the marshalling and disposition of the different funds and assets, so as to secure the rights of all parties and the due administration of the assets among all the creditors.

Powers of like kind were conferred upon the bankrupt courts by the former Bankrupt Act, and the provision in that regard is expressed in substantially the same terms.

Cases involving the construction of that provision were several times removed into this court for re-examination, in all of which it was held that the power conferred extended to all cases where the rights, claims, and property of the bankrupt, or those of his assignee, are concerned, because they were matters arising under the act and were necessarily involved in the due administration and settlement of the bankrupt's estate.

So where the bankrupt court ordered the mortgaged premises to be sold, and directed that the mortgages should be cancelled and that the property should be sold free from incumbrances, rendering to the parties interested their respective priorities in the proceeds, this court decided that the bankrupt court did not exceed their jurisdiction, and affirmed their action.

Corresponding decisions were made by the State court in construing the former Bankrupt Act, which are equally applicable to cases like the one before the court.

Even if, by the true construction of the first section of the act, any doubt, could arise as to the power of the bankrupt court to authorize such a sale, it has been well held that it may be derived from the twentieth section of the same act. By that section it is provided that a creditor having a mortgage or pledge of real or personal property, or a lien thereon, for the security of a debt, shall be admitted as a creditor only for the balance of the debt, deducting the value of such property to be ascertained by agreement between him and the assignee, or by sale thereof, to be made in such manner as the court may direct.

Beyond all doubt the property of a bankrupt may, in a proper case, be sold by order of the bankrupt court free of incumbrance, but it is equally clear that in order that such a proceeding may be regular and valid the assignee must apply to the bankrupt court for an order to that effect, and must set forth the facts and circumstances which it is supposed justify the application, that the judge may decide whether or not the application shall be granted. Secured creditors in such a proceeding must have due opportunity to defend their interests and consequently must be properly notified and summoned to appear for that purpose.

None of these conditions were fulfilled in this case. Instead of that the State court finds that the petitioner was never properly notified and that he was not made a party to the proceeding resulting in the order to sell the property in question free of his prior mortgage, and it was upon that ground that the State court decided that his rights were unaffected by the proceedings.

Concede to the fullest extent the powers of the bankrupt court to do everything specified in the Bankrupt Act, still it is clear that the mortgage and privilege of the petitioner could not be cancelled and displaced without notice nor without an opportunity to be heard, nor could the proceeds of the sale be adjudged to a junior mortgagee with or without notice, unless for some cause other than what is disclosed in the record. Notice in some form must be given in all cases, else the judgment, order, or decree will not conclude the party whose rights of property would otherwise be divested by the proceeding.

No man is to be condemned without the opportunity of making a defence, or to have his property taken from him by a judicial sentence without the privilege of showing, if he can, that the pretext for doing it is unfounded. Every person, as this court said in the case of The Mary, may make himself a party to an admiralty proceeding and appeal from the sentence, but notice of the controversy is necessary in order to enable him to become a party.

Authorities to the same effect are very numerous, nor is there any well considered case which gives any support to the proposition that the judgment, order, sentence, or decree of a court disposing of property subject to conflicting claims will affect the rights of any one not a party to the proceeding and who was never in any way notified of the pendency of the proceeding.

Such a sale made in such manner without notice may, under some circumstances, be set aside as violating the rights of the prior mortgagee, but the mortgagee may, if he sees fit, affirm the sale and proceed to enforce his priority against the proceeds of the sale, which is the real nature of the proceedings in this case.

Authority is doubtless posessed by the assignee to sell the property of the bankrupt, whether the same is or is not incumbered, but when he sells incumbered property without any special order from the court he sells the same subject to any and all lawful incumbrances, and can convey no better or higher interest than the bankrupt could have done. In such a case it will be taken for granted that the assignee sold only such right or title to the property as was vested in him as the representative of the bankrupt, and therefore that he sold it subject to the incumbrances.

Such sales may be made without notice to the secured creditor, but if the assignee desires to sell the property free of incumbrances he must obtain authority from the bankrupt court, and must see to it that all the creditors having liens on the property as duly notified, and that they have opportunity to adopt proper measures to protect their interests.

DECREE AFFIRMED.

Mr. Justice BRADLEY did not sit in this case.

title: Ray v. Norseworthy/Opinion of the Court


text: Talk:Ray v. Norseworthy/Opinion of the Court


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Randall v. Kreiger

APPEAL from the Circuit Court for the District of Minnesota.

Mrs. Sarah Randall, whose husband, John Randall, had been seized in fee during their marriage of a piece of land in Minnesota, brought suit, her husband being now dead, to have dower in the land.

The case was thus:

In May, 1849, the said John Randall, being seized as above-said in fee of the land, he and his wife, then, as always before and afterwards, resident in the State of New York, executed in the form proper to pass a feme covert's interest in lands in that State, a power of attorney to a person in Minnesota, by which the latter was authorized to sell and convey the land in question, as also other tracts. The power was duly recorded in Minnesota. At the time when this power was given it seemed that there was no mode prescribed by statute in Minnesota by which a non-resident feme covert could execute a power under seal to pass her interest in real estate.

In January, 1855, there being still apparently no statute in Minnesota of the sort just mentioned, the attorney, professing to act in behalf of Randall and his wife, sold and conveyed with general warranty the land, in consideration of $3000, to one Kreiger. The deed to Kreiger was in conformity to the local law of Minnesota, and the sum for which he purchased the land-one apparently fair-was paid to Randall, the husband.

On the 24th of February, 1857, the legislature of Minnesota, then still a Territory of the United States, passed an act in these words:

'A husband and wife may convey by their lawful agent or attorney any estate or interest in any lands, situate in this Territory; and all deeds of conveyance of any such lands, whether heretofore or hereafter made, under a joint power of attorney from the husband and wife, shall be as binding and have the same effect as if made and executed by the original parties.'

In May, 1859, Randall and his wife by an instrument duly executed revoked the power of attorney made in 1849. Randall himself soon afterwards died, leaving to his wife his entire estate; the same consisting wholly of personalty, and being estimated as worth between $100,000 and $200,000. She had already received of it more than $50,000.

The value of the property now was $7000, independently of improvements put upon it after the conveyance.

The claim of the widow was resisted on several grounds; among them that any defect in her acknowledgment had been remedied by the curative act of 1857; that the purchase-money having been paid to her husband, and having passed to and been accepted by her, she was estopped while still holding it to claim dower in addition; that she had elected to take the provision made by her husband's will, and which was inconsistent with the claim to dower now set up, &c., &c.

But the only question considered by the court, was the one whether the case fell within the curative part of the above-quoted act of 1857; the concluding portion which enacts that all deeds of conveyance in the Territory made prior to the passage of the act under a joint power of attorney, from the husband and wife, shall be as binding and have the same effect as if made by the original party.

The court below (Dillon, J.), said:

title: Randall v. Kreiger


text: Talk:Randall v. Kreiger

title: Talk:Randall v. Kreiger