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Reed v. McIntyre

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

William H. Shuey, a merchant at St. Paul, Minn., executed, March 13, 1874, a deed of assignment conveying his entire property, including his stock in trade, to William S.C.ombs in trust, for the equal benefit of all his creditors. Upon the same day, immediately after the acknowledgment of the deed, Combs entered upon the discharge of his duties as assignee, and took possession of Shuey's stock. During the succeeding day, Mrs. Reed obtained a judgment in one of the State courts of Minnesota against Barnard and Shuey, for the sum of $5,120.45. An execution was immediately issued, and the sheriff forthwith levied it upon the same goods of which Combs had taken possession. Upon the occasion of the levy, the officer was notified of the assignment and Combs's possession. On the 31st of March, 1874, Mrs. Sanderson, a creditor of Shuey, by petition filed in the proper court, prayed that he might be declared a bankrupt, upon two grounds: 1st, that being a merchant and trader, he had, Jan. 1, 1874, fraudulently stopped and suspended payment of his commercial paper, to wit, the promissory note held by her, and had not resumed payment thereof; 2d, that, March 13, 1874, being then insolvent, he made the said assignment to Combs with intent to hinder, delay, and defraud his creditors, which she alleged was an act of bankruptcy. Before the return of the rule which issued upon this petition, Shuey, by written stipulation, filed in court, without admitting or denying the alleged grounds of bankruptcy, consented that an adjudication might be entered against him. This was at once done, the order reciting that, in consideration of Shuey's written consent, and of the proofs, in the cause, the facts set forth in the petition were found to be true; and it was therefore adjudged that he was a bankrupt, within the meaning of the act of Congress. McIntyre was duly selected as assignee, and to him the usual conveyance by the register was made. Afterwards, to prevent a sacrifice of the goods at a forced sale, and to save expense, a written agreement was made between Mrs. Reed and McIntyre, whereby the latter took possession of and sold all the property levied upon, but without prejudice to such rights as she had acquired under and by virtue of her execution, or to her right to raise any question in a suit in equity, to be promptly instituted, which she might have raised if that property had remained in the custody of the sheriff.

The present suit was commenced by a bill in equity filed by McIntyre for the purpose of obtaining a judicial determination of Mrs. Reed's rights in the property levid on, or rather in its proceeds. She claimed that to the extent of the judgment against Shuey her rights acquired by the levy are superior to those of the assignee in bankruptcy. That view was controverted by him, and a decree having been rendered in his favor, Mrs. Reed appealed.

Mr. E. C. Palmer for the appellant.

Reed obtained the judgment against Barnard and Shuey in the due course of proceedings at law to recover a bona fide subsisting debt, and the execution thereon was duly issued. The levy on the goods in question by the sheriff having been regular, his possession and right of possession thereunder were prima facie lawful. Wilson v. City Bank, 17 Wall. 473; National Bank v. Warren, 96 U.S. 539.

The adjudication in bankruptcy did not affect the levy or impair the lien acquired thereby. The assignee in bankruptcy took the title to the goods subject to all existing valid liens and incumbrances on them. Kelly v. Scott, 49 N. Y. 595; Cook v. Tullis, 18 Wall. 332; Hayes v. Dickinson, 16 N. Y. Sup. Ct. 277; In re Hambright, 2 Nat. Bank. Reg. 498; McDonald, Assignee, v. Moore, 15 id. 26; Dolson v. Kerr, Sheriff, 16 id. 405; Mitchell v. Winslow, 2 Story, 630; McLean v. Moline, 3 McLean, 201; Donaldson, Assignee, v. Farwell et al., 93 U.S. 631; Jerome v. McCarter, 94 id. 734; Goddard v. Weaver, 1 Wood, 260.

Combs is not a party to this suit, and makes no claim to the goods or to their proceeds. The assignment to him of March 14 was declared void, as having been made with the intent to hinder, delay, and defraud creditors, and as an act of bankruptcy. It presents, therefore, no obstacle to the effectual maintenance of Reed's rights under the levy.

Mr. E. G. Rogers and Mr. George L. Otis, contra, cited Mayer et al. v. Hellman, 91 U.S. 496; Johnson, Assignee, v. Rogers et al., 15 Nat. Bank. Reg. 1; In re Steele et al., 16 id. 105; In re M. J. Nelson, id. 312; In re James Croughwell, 17 id. 338; In re Arthur A. Hull, 18 id. 5; In re John C. Walker, id. 56; Dodge v. Sheldon, 6 Hill (N. Y.), 9; Seaman v. Stoughton, 3 Barb. (N. Y.) Ch. 348; Everett v. Stone, 3 Story, 446; Penniman v. Cole et al., 8 Metc. (Mass.) 496.

MR. JUSTICE HARLAN, after stating the case, delivered the opinion of the court.

title: Reed v. McIntyre


text: Talk:Reed v. McIntyre

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

title: Talk:Reed v. McIntyre


text:
Reed v. McIntyre/Opinion of the Court

It is stated in the printed argument of counsel for the appellee, and the statement is not controverted by opposing counsel, that at the date of the assignment to Combs there was no statute of Minnesota relating to assignments by debtors for the benefit of creditors.

In determining, therefore, the validity and effect of the assignment in question, we must look to the doctrines of the common law and to the provisions of the Bankrupt Act.

The assignment to Combs was, according to the evidence in this cause, made in good faith for the purpose of securing an equitable distribution of the debtor's property for the benefit of all of his creditors, including the appellant, and not with any intent to hinder, delay, or defraud them. The right of a debtor at common law to devote his whole estate to the satisfaction of the claims of creditors results, as Mr. Chief Justice Marshall declares, 'from that absolute ownership which every man claims over that which is his own.' Brashear v. West and Others, 7 Pet. 608; Mayer et al. v. Hellman, 91 U.S. 496. Assignments of property for such purposes, not made with the intent to hinder, delay, or defraud creditors, were upheld at common law, even where certain creditors were preferred in the distribution of the debtor's effects. Nor, according to the doctrines of the common law, could the validity of the assignment to Combs be assailed, simply because its effect was to prevent the appellant from obtaining by judgment and execution a priority and preference over other creditors. An assignment which had the effect to delay a creditor in the enforcement of his demand by the ordinary process of law was not, for that reason alone, fraudulent and void. If not made with the intent to hinder, delay, or defraud creditors, it was sustained at common law. Such an intent was often conclusively presumed, if the assignment contained provisions inconsistent with good faith, or so unreasonable and unusual in their character as to justify the conclusion that it was, in the language of Lord Mansfield in Cadogan v. Kennett (Cowp. 432, 434), a mere 'trick or contrivance to defeat creditors.' But where its provisions were consistent with an honest purpose to deal fairly and justly with them,-the deed reserving for the benefit of the debtor or his family no control over or interest in the property, and imposing no improper restrictions upon its speedy sale and distribution in satisfaction of the debts,-the consequent temporary interference with the prosecution by particular creditors of their claims by the ordinary legal remedies, was regarded at common law as a necessary and unavoidable incident in the discharge by a debtor of his duty to creditors. Mayer et al. v. Hellman, supra. Such interference was not regarded as hindrance and delay, within the meaning of the statutes against fraudulent conveyances. This precise question arose in Pickstock v. Lyster, 3 Mau. & Sel. 371. In that case, a debtor, being sued, made an assignment by deed of all of his effects for the equal benefit of creditors. The jury having been instructed that they must find the deed void if made with the intent to defeat the plaintiff in his execution, returned a verdict in his favor. But the verdict was set aside upon the ground that the jury were misdirected. Lord Ellenborough held that the assignment was 'to be referred to an act of duty rather than of fraud, when no purpose of fraud is proved. The act arises out of a discharge of the moral duties attached to his character of debtor to make the fund available for the whole body of creditors. . . . It is not the debtor who breaks in upon the rights of the parties by this assignment, but the creditor who breaks in upon them by proceedings in his suit. I see no fraud: the deed was for the fair purpose of equal distribution.' In the same case, Bayley, J., said: 'It seems to me that this conveyance, so far from being fraudulent, was the most honest act the party could do. He felt that he had not sufficient to satisfy all of his debts, and he proposed to distribute his property in liquidation of them; this was not acceded to, for the plaintiff endeavored by legal process to obtain his whole debt, the obtaining of which would have swept away the property from the rest of the creditors.' To the like effect are the authorities generally, as will be seen from an examination of the adjudged cases cited in Burrill's Treatise on Voluntary Assignments (3d ed.), sect. 319 et seq., and in 1 American Leading Cases (5th ed.), 71 et seq. Our conclusion, therefore, is that the assignment to Combs could not, upon common-law principles, be impeached simply because it had the effect to prevent the appellant, by means of the execution levy, from securing priority over all other creditors.

But it is contended that her right of preference over other creditors in the distribution of the proceeds of the property levied upon can be sustained under the provisions of the bankrupt law, and the adjudication of bankruptcy against Shuey. The argument is, that that adjudication having been made upon the ground, in part, that the assignment to Combs was made with the intent, on the part of Shuey, to hinder, delay, and defraud his creditors, such assignment is to be regarded as fraudulent and void from the moment of its execution, and, therefore, as interposing no obstacle whatever in the way of the levy subsequently made in her behalf. This argument, although plausible and ingenious, is not, in our judgment, sound, or at all consistent with the objects intended to be accomplished by the bankrupt law. If that law had not been in force, the appellant would not have acquired priority over other creditors by the sheriff's levy, for the obvious reason that the right of property, in the goods seized under the execution, had previously passed, by a valid and unimpeachable deed, to Combs, and they were not, thereafter, subject to execution as the property of the debtor. We have often declared that the pro rata distribution of the property of the bankrupt was the main purpose of the bankrupt statute. Buchanan v. Smith, 16 Wall. 277. A serious defect in that statute would be developed if its provisions received such a construction as would enable the appellant to defeat that purpose by obtaining an advantage over other creditors. We are of opinion that no such construction is demanded, either by its letter or its spirit. Since by the sheriff's levy the appellant acquired no priority of right in or lien upon the goods, how could the subsequent proceedings in bankruptcy have the retroactive effect to give her a preference over the other creditors of Shuey? The argument in support of the opposite view ignores the fact that neither Combs nor the creditors who, under the assignment to him, acquired an equitable interest in the property were parties to those proceedings. Their rights, therefore, under his assignment, were not, and necessarily could not be, conclusively determined by those proceedings. Notwithstanding the adjudication, Combs, the assignee of Shuey, was at liberty to contest with the assignee in bankruptcy the question whether the assignment to Combs was a fraud on the Bankrupt Act, or was made with the intent to hinder, delay, or defraud creditors, or to prevent the property from coming to the assignee in bankruptcy, or from being distributed under that act. That no such issue was made between the assignee in bankruptcy and Combs, representing the creditors of Shuey, is due, doubtless, to the fact that the administration of the debtor's effects in the bankruptcy court would accomplish the same end designed by the assignment to Combs; namely, the distribution of the property for the equal benefit of all the creditors. But the absence of such an issue, and the failure of Combs to assert his rights against the appellee, cannot have the effect to increase the appellant's rights to any extent whatever. She cannot complain that the creditors submit without contest to the distribution of the property through the assignee in bankruptcy, rather than through Combs, under the assignment to him. If she did not acquire any right by force of the levy, it is of no consequence to her, under the issues in this suit, that the assignee in bankruptcy rather than Combs has possession of the property in question. She cannot use the adjudication in bankruptcy to give vitality to an execution levy, which, when made, was ineffectual for any purpose of priority, and then employ the levy, thus vitalized, to defeat the primary object of the adjudication, which was to distribute the bankrupt's effects for the equal benefit of all the creditors. Whatever may be the respective claims of the assignee in bankruptcy and Combs, it is sufficient for the disposition of this case to say that the appellant acquired no priority of right by the execution levy. The adjudication in the bankruptcy court was for the purpose of bringing the bankrupt's effects into that court for distribution, and the appellant cannot, by force of that adjudication, secure a priority, which, without such adjudication, she would not have had. To hold otherwise would be to make the bankruptcy proceedings the instrument of defeating the wise and beneficent policy which the Bankrupt Act was intended to subserve. Even if it were conceded that the assignment to Combs was an act of bankruptcy, upon the ground that it was made with the intent to prevent the property from coming to the assignee in bankruptcy, and from being distributed under the Bankrupt Act, it was not invalid, except with reference to proceedings under the bankrupt statute, to be instituted by the bankrupt, or by some creditor, for the purpose of bringing the bankrupt's effects into the bankruptcy court. Everett v. Stone, 3 Story, 446; Dodge v. Sheldon, 6 Hill (N. Y.), 9; Seaman v. Stoughton, 3 Barb. (N. Y.) Ch. 348; 15 Nat. Bank. Reg. 228.

Decree affirmed.

MR. JUSTICE BRADLEY dissented.

title: Reed v. McIntyre/Opinion of the Court


text: Talk:Reed v. McIntyre/Opinion of the Court


text:
Brick v. Brick

APPEAL from the Supreme Court of the District of Columbia.

The facts are stated in the opinion of the court.

Mr. W. B. Webb for the appellant.

Mr. Joseph H. Bradley for the appellee.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Brick v. Brick


text: Talk:Brick v. Brick

title: Talk:Brick v. Brick


text:
Brick v. Brick/Opinion of the Court

In 1864, between the 7th and 27th of September, the appellant, Samuel R. Brick, a resident of Philadelphia, purchased eight hundred and ninety-two shares of stock in the Washington Gas-light Company, a corporation existing in the District of Columbia, charted by Congress, paying for the same $17,277. Of this stock, two hundred and fifty shares were afterwards transferred by his direction on the books of the company to his brother, Joseph K. Brick, a resident of Brooklyn, N. Y., to whom a certificate was issued and from whom a check for $5,250 was received. The question presented is whether this transaction between the brothers was a sale of the stock, or a loan of money on its pledge. Joseph K. Brick is dead, and the evidence as to the character of the transaction is conflicting, as is generally the case when the object of parties in the execution of instruments is not expressed in writing, and is sought years afterwards to be shown by parol. But notwithstanding such conflict, there are certain facts established, indeed not controverted, which must control our judgment.

In the first place, it appears that in September, 1864, the appellant was anxious to purchase stock in the gas company. He had become acquainted with its affairs, and knew that it intended to apply to Congress for power to increase its capital, and was convinced that with such increase the value of the stock would be greatly enhanced. He expressed this conviction in letters to his son, which the complainants produced; and, acting upon it, he purchased to an extent beyond his means of immediate payment, and gave his note for a portion of the purchase-money.

In the second place, the appellant applied to his brother, Joseph, for a loan of money, at the time he was expressing his anxiety to buy the stock of this company, and his brother replied that the money could be raised on call. It was not many days afterwards when a check for the $5,250 was sent.

In the third place, in May and July, 1866, Joseph stated, under oath, that he was not the owner of the stock. In the previous year he had given to the board of assessors of Brooklyn a statement of his personal property, in which he had specified the stock of the gas-light company, valuing it at $5,000, and was accordingly assessed upon it. In May, 1866, he made oath that he had been thus erroneously assessed, and that the error had arisen from his having inserted in the statement the stock held by him for his brother, in which he had no pecuniary interest. The assessment was accordingly corrected. On the same day, he wrote to his brother what he had done, saying that he had told the assessors he held the stock for the latter's benefit, and requesting him to advise the president and secretary of the company that such was the case. And in the statement of his personal property for that year, made in July following, he omitted the stock in question, and verified the statement with his oath that he had no personal property not included in it.

So far from questioning the character of this testimony, the complainants refer to it in their bill, annex copies of the oaths taken, and observe that the stock was purchased to aid Samuel in some matters of business, and was often spoken of as his, though not so in fact, but that being unproductive, the oaths were made by Joseph in order to get rid of the tax assessed against him and make Samuel pay it, as if this circumstance could possibly extenuate what, if not true, was simple perjury.

This bill is signed by the widow of the deceased, and the suit is prosecuted by her and the executors of his will; but we do not think that the evidence in the case justifies the reproach they would cast upon his name and character. There are casual observations made by him, sometimes in loose conversation, mostly in friendly letters, which, unexplained, would indicate that he was owner instead of mortgagee of the stock, expressions not at all unnatural where one holds the absolute title to property; but there is nothing in them which overcomes the weight of his affirmation under oath, supported as that is by all the attendant circumstances.

We are satisfied that the certificate of the two hundred and fifty shares was issued to the deceased as security for a loan, and not upon a purchase. It is competent to show by parol what the transaction was. In the late case of Peugh v. Davis (96 U.S. 336), we stated the doctrine of equity on this subject, where an instrument was in form a conveyance, but was in fact intended as a security; and though the instrument there was a deed of real property, the principle applies when the instrument purports to transfer personal property. A court of equity, we there said, 'looks beyond the terms of the instrument to the real transaction; and when that is shown to be one of security, and not of sale, it will give effect to the actual contract of the parties. As the equity, upon which the court acts in such cases, arises from the real character of the transaction, any evidence, written or oral, tending to show this is admissible. The rule which excludes parol testimony to contradict or vary a written instrument has reference to the language used by the parties. That cannot be qualified or varied from its natural import, but must speak for itself. The rule does not forbid an inquiry into the object of the parties in executing and receiving the instrument. Thus, it may be shown that a deed was made to defraud creditors, or to give a preference, or to secure a loan, or for any other object not apparent on its face. The object of parties in such cases will be considered by a court of equity; it constitutes a ground for the exercise of its jurisdiction, which will always be asserted to prevent fraud or oppression and to promote justice.' Hughes v. Edwards, 9 Wheat. 489; Russell v. Southard, 12 How. 139; Taylor v. Luther, 2 Sumn. 228; Pierce v. Robinson, 13 Cal. 116.

As in our opinion the appellant is the owner of the stock in question, and his brother held it merely as collateral security for the $5,250 loaned, it is unnecessary to consider what, if any, effect is to be given to the decree obtained in the former case of Samuel Brick against the executors of the deceased. Assuming that the District Court never acquired jurisdiction over the executors resident in the State of New York, the situation of the parties remains as previously; and upon payment of the loan with interest, after proper credits for the dividends received, the appellant will be entitled to the possession of the certificate. The present suit proceeds upon the theory that the stock belongs to the estate of the deceased, and is not held as security. It seeks to enforce a claim of ownership to the property, and not the payment of the loan by its sale.

The decree must, therefore, be reversed, with directions to the court below to dismiss the bill; and it is

So ordered.

title: Brick v. Brick/Opinion of the Court


text: Talk:Brick v. Brick/Opinion of the Court


text:
De Treville v. Smalls

ERROR to the Circuit Court of the United States for the District of South Carolina.

This is an action of trespass quare clausum fregit, brought by William J. de Treville against Robert Smalls, to try the title to a certain lot of ground in the town of Beaufort, S.C..

The plaintiff having made out a prima facie case, the defendant offered in evidence the following paper:--

'UNITED STATES OF AMERICA. 'Tax-sale Certificate No. 238.

'This is to certify that at a sale of lands for unpaid taxes, under and by virtue of an act entitled 'An Act for the collection of direct taxes in insurrectionary districts within the United States, and for other purposes,' held, pursuant to notice, at Beaufort, in district of Beaufort, in the State of South Carolina, on the thirteenth day of March, A.D. 1863, the tract or parcel of land hereinafter described, situate in the town of Beaufort and State aforesaid, and described as follows, to wit:--

"Lot B, in block 23, according to the commissioners' plat,' was sold and struck off to the United States for the sum of fifteen dollars and _____ cents, being the highest bidder, and that being the highest sum bidden for the same; the receipt of which said sum in full is hereby acknowledged and confessed.

'Given under our hands at Beaufort this second day of April, A.D. 1863.

'WILLIAM E. WORDING,

'WM. HENRY BRISBANE,

'Commissioners.'

To the introduction of which the plaintiff objected, on the ground,--

First, It is not in law a certificate, in this, that it does not, upon its face, show that those proceedings have been taken by the said commissioners prior to the alleged sale, which are essential to the regularity and validity thereof, and of which the act of Congress makes a purchaser's certificate prima facie evidence.

Second, It is not a proper and legal certificate under the act of Congress, because on its face it shows that the commissioners have not sold the plaintiff's lot of land according to the enumeration of said lot required by the act.

Third, Sect. 13 of the act of June 7, 1862, which, in case of the concealment or the loss of the records of assessments and valuation of the respective lots of land to be assessed, authorizes the commissioners to value and assess the same in their own judgment, does not include the right to make a new and different enumeration and description of such lots.

Fourth, Said paper was not issued to any person, at said sale, bidding 'the sum of the taxes, penalty, and costs, and ten per cent per annum interest on said tax,' pursuant to the notice required by the act, nor to any person bidding 'a larger sum,' who, upon paying the purchase-money in gold and silver coin, or in the Treasury notes of the United States, or in certificates of indebtedness against the United States, 'became entitled' under the act 'to receive from the commissioners their certificate of sale,' and said paper on its face purports not to have been issued by the commissioners to any 'purchaser or purchasers,' at a sale made under the seventh section of the act, and is not a purchaser's certificate of sale thereunder, but a mere memorandum that the land was struck off to the United States, and as such memorandum is not made evidence by the act, it is not competent evidence in law of the facts which it recites.

The court overruled the objections and admitted the certificate, to which ruling the plaintiff excepted.

The plaintiff, in reply to the evidence of the defendant, offered evidence to prove that the commissioners did not apportion and charge the said tax upon the said lot of ground as the same was enumerated and valued under the last assessment and valuation thereof made under the authority of the State of South Carolina previous to the first day of January, 1861, but did apportion and charge the said tax upon a lot enumerated and designated as lot B, in block 23. Upon inquiry by the court, the plaintiff said that he did not expect to prove that the records of assessment and valuation of the lot made under the authority of the State actually came within the possession of the board of commissioners previous to the making of their valuation and assessment as aforesaid.

To the introduction of this evidence the defendant objected, his objection was sustained, and the plaintiff excepted.

The plaintiff then offered evidence to prove that in the advertisement and notice of the sale of said lot the same was not described as it was enumerated in the last valuation and assessment thereof made under the authority of the State previous to the first day of January, 1861, and that in said advertisement and notice the said lot was not described as the lot of said owner, nor by its situation and boundaries, nor as enumerated on the old plat of the town of Beaufort, nor by giving the streets and numbers thereon by which said lots were known and recognized, but by the enumeration and designation thereof as lot B, in block 23.

The court, on the objection of the defendant, excluded the evidence, and the plaintiff excepted.

The plaintiff then offered in evidence the following statement of W. E. Wording, one of the commissioners, to wit: 'That the sales under act of Congress, 1862, for non-payment of taxes were advertised by the commissioner to be made at Beaufort. On the Saturday preceding the sale, General Hunter, commanding the military district in which the lands advertised were situated, issued an order forbidding the sale. The commissioners, notwithstanding the order, proceeded to sell, and on the day fixed by the advertisement, and at the hour fixed therein, struck off one lot. They then adjourned the sales from day to day, meanwhile reporting the matter to General Hunter, who finally consented not to interfere with the sale, and to revoke his order, but who did not formally revoke it; and under these circumstances the sales actually took place some time in March following,-about the 13th of March,-and after the first day of sale.' He also offered to prove that during that period Beaufort County was under martial law.

To the introduction of which evidence the defendant objected, and his objection was sustained by the court; and the plaintiff thereupon excepted.

The testimony on both sides having been closed, the plaintiff requested the court to instruct the jury 'that the act of Congress approved 7th June, 1862, under which the defendant claims his title, is in conflict with the fourth clause, ninth section, first article, of the Constitution of the United States, in that the amount of the direct tax theretofore apportioned to the State of South Carolina is increased by the addition thereto of a penalty of fifty per cent, and thus is not in proportion to the census or enumeration directed to be taken in the third section of the same article, whereby all direct taxes are to be apportioned among the several States.' But the court declined so to charge, whereupon the plaintiff excepted.

Judgment was rendered against the plaintiff, who thereupon sued out this writ, and assigns for error the rulings of the court below.

Mr. Theodore G. Barker and Mr. James Lowndes for the plaintiff in error.

The Solicitor-General, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: De Treville v. Smalls


text: Talk:De Treville v. Smalls

title: Talk:De Treville v. Smalls


text:
De Treville v. Smalls/Opinion of the Court

This case presents for our consideration the several acts of Congress of 1861, 1862, and 1863, which provided for the levy and collection of a direct tax, and the contest below was whether, under those acts, the defendant had obtained a valid title to the land in controversy. In support of his possession, he gave in evidence at the trial the tax-sale certificate, to the reception of which exception was taken, for several reasons, most of which are now urged in support of the assignments of error. It is said that the certificate is not evidence of title in the defendant, because it does not on its face show that those proceedings had been taken by the commissioners prior to the alleged sale, which were essential to the regularity and validity of the sale under the acts of June 7, 1862, and Feb. 6, 1863. This objection entirely overlooks the provisions of those acts of Congress. The certificate which by the act of 1863 the board of tax commissioners was required to give to purchasers was simply a certificate of sale. The law did not require it should set forth that a tax had been assessed upon the property; that the tax was unpaid; that the sale had been advertised for a specified time or in a particular manner; nor that it should recite any of the facts which were necessary antecedents to any sale. It made the certificate of sale equipollent with a deed, and cast upon the former owners of the land the burden of showing that the certificate or deed was made without authority. The numerous decisions cited by the plaintiff in error to support his objection are quite inapplicable to the case. No doubt it has been decided that statutes which make a tax-sale deed prima facie evidence of the regularity of the sale, do not relieve a purchaser from the burden of showing that the proceedings anterior and necessary to the power to make the sale actually took place. Such a provision has been held to relate only to the conduct of the sale itself. But the act of 1863 declares that the commissioners' certificate shall be prima facie evidence not merely of the regularity of the sale, but also of its validity and of the title of the purchaser; and it enacts that it shall only be affected as evidence of the regularity and validity of the sale by establishing the fact that the property was not subject to taxes, or that the taxes had been paid previously to the sale, or that the property had been redeemed. How can a deed be prima facie evidence of the validity of a sale, unless it be such evidence of the transmission of the title of the property? Is any sale valid which does not pass title to the subject of the sale? It may be regular in form and in the mode of its conduct, but it cannot be valid, unless authorized by law. Now, the act of Congress makes a certificate of sale by the commissioners evidence that the title acquired by the purchaser under the sale was a valid one, assailable only by proof of one or the other of three things. It is not the certificate of an assessment or of an advertisement of a sale, followed by an actual sale, to which such an effect is given, but a certificate of sale alone. We are not at liberty to interpolate in the statutes requisites for the certificate which the statute does not demand.

The second objection to the reception of the tax certificate is that it was not authorized by the statutes, inasmuch as it certified a sale to the United States. It is insisted that the effect of prima facie evidence is given only to certificates of sale made to the highest bidder, when such bidder was some person other than the United States, and that no authority was given to the board of commissioners to certify a sale when the government was the highest bidder, and when the property was stricken off to it. To this we cannot assent. The plain object of the statutory provision was to give confidence to purchasers, and thereby to enable the government to obtain the taxes due to it. For these purposes it was quite as important that the government should have evidence of its title, if it purchased, as it was that any other purchaser should have such evidence. Taxes, not lands, were what the government required. If the United States became the purchaser at the commissioners' sale, it was only to obtain the taxes by a resale, and such a resale, resting as it must have done upon the original sale made by the commissioners, needed the encouragement and support of a commissioners' certificate equally with a purchase by any bidder. It is not, therefore, to be admitted that the statute intended to put the United States in any worse condition than that occupied by any other successful bidder. The argument that it is only that highest bidder who shall, upon paying the purchase-money (and not the United States, who of course do not pay so much as is claimed for taxes), be entitled to the certificate, is plausible, but we think it unsound. The words, 'who shall, upon paying the purchase-money,' &c., be entitled to this certificate, are not descriptive of the highest bidder entitled, but declaratory of the duty of every purchaser. It is, however, unnecessary to dwell longer on this part of the case. In Cooley v. O'Connor (12 Wall. 391), we held that the act of Congress did contemplate a certificate of sale in cases where the United States becomes the purchaser, as fully as where the purchase is made by another. In that case, the point now made was distinctly presented, and such was our judgment. We adhere to the opinion we then expressed.

The other reasons urged in support of the objection to the admission of the tax certificate of sale may be considered in connection with the first exception to the rejection of evidence. In substance, they are that the certificate was not legal, because on its face it shows the commissioners did not sell the plaintiff's lot according to the enumeration thereof required by the acts of Congress; and to show that such was the fact, the plaintiff offered evidence which was rejected by the court. What was sold was lot B, 'according to the commissioners' plat.' Now, if it be assumed, as it must be, in view of the evidence offered, that the enumeration and valuation of lot B was not in accordance with the last assessment and valuation made under authority of the State previous to Jan. 1, 1862, we do not perceive that it affects the validity of the title acquired by the purchaser at the sale. It was foreseen by Congress that the State records of assessments and valuation of the lots of land in insurrectionary districts might be destroyed, concealed, or lost, so as not to come into the possession of the board of commissioners, whose duty it was to enforce the collection of the tax, and therefore it was enacted by the thirteenth section of the act of 1862 that they should be authorized to value and assess the same upon such evidence as might appear before them, and it was declared that 'no mistake in the valuation of the same, or in the amount of tax thereon, should, in any manner whatever, affect the validity of the sale of the same, or of any of the proceedings preliminary thereto.' The provisions respecting the mode of valuation were only directory. But if they were more, so far as relates to the admissibility of the certificate of sale, the requisition of the first section of the act was quite immaterial. That certificate was made prima facie evidence of the regularity and validity of the sale and of the title of the purchaser irrespective of any recitals it might contain, or of any evidence which might afterwards be adduced to rebut the prima facies. It was presumptive evidence of all antecedent facts essential to its validity, and hence admissible as such. The only question, then, is whether the evidence offered tended to rebut this presumption.

Assuming the evidence would have proved that the commissioners did not apportion the tax upon the lot as the same had been enumerated and valued by the State in the last assessment prior to Jan. 1, 1862, their action was at most a mere irregularity, and the evidence by itself did not prove that. The act authorized the board to assess and value lots of ground according to their own judgment, when the State records of valuation and assessments were destroyed, concealed, or lost, so as not to come into their possession. It is a fair presumption that they discharged their duty according to law. The plaintiff did not offer to show, and disclaimed any intention to show, that the State records of assessment and valuation came into the possession of the commissioners previous to their making the valuation and assessment; and in view of the history of the times, to which we cannot close our eyes, it was a reasonable presumption which the jury ought to have accepted, that the State assessments and valuations were withheld or concealed. They were, of course, in the hands of the insurrectionary State government, and hence inaccessible to the commissioners. The evidence offered had no tendency to show the contrary. As we have seen, the act of Congress declared that no mistake in the valuation or in the amount of the taxes would in any manner affect the validity of the sale, or of any of the proceedings preliminary thereto. Besides, all possible attack upon the prima facies of the certificate was limited by the express provisions of the act, which enacted, as before stated, that it should only be affected as evidence of the regularity and validity of sale, by establishing the fact that the property was not subject to taxes, or that the taxes had been paid previous to sale, or that the property had been redeemed. This left to the owner of lands subject to the tax every substantial right. It was his duty to pay the tax when it was due. His land was charged with it by the act of Congress, not by the commissioners; and the proceeding ending in a sale was simply a mode of compelling the discharge of his duty. All his substantial rights were assured to him by the permission to show that he owed no tax, that his land was not taxable, that he had paid what was due, or that he had redeemed his land after sale. He was thus permitted to assert every thing of substance,-every thing except mere irregularities.

We do not feel at liberty to disregard the plain intention of the acts of Congress. We are not unmindful of the numerous decisions of State courts which have construed away the plain meaning of statutes providing for the collection of taxes, disregarding the spirit and often the letter of the enactments, until of late years the astuteness of judicial refinement had rendered almost inoperative all legislative provisions for the sale of land for taxes. The consequence was that bidders at tax sales, if obtained at all, were mere speculators. The chances were greatly against their obtaining a title. The least error in the conduct of the sale, or in the proceedings preliminary thereto, was held to vitiate it, though the tax was clearly due and unpaid. Mr. Blackwell, in his Treatise on Tax Titles, says (p. 71), 'that out of a thousand cases in court [of tax sales], not twenty have been sustained.' To meet this tendency of judicial refinement very many States have of late adopted very rigid legislation. The acts of Congress we are considering must have had it in view. Hence the stringent provisions they contain. They declare, in effect, that the certificate of the commissioners' sale shall be evidence of compliance with the preliminary requisites of the sale, and that this evidence shall be rebutted only by proof of one or the other of three specified things. There is no possible excuse for not enforcing such statutes according to their letter and spirit. In Gwynne v. Neiswanger (18 Ohio, 400), it appeared that the statute of the State prescribed certain preliminaries to a sale of land for taxes, and directed a deed to be made to the purchaser, which should be received in all courts of the State as good evidence of title, adding, 'nor shall the title conveyed by said deed to the purchaser or purchasers, his heirs, or their heirs, assignee or assignees, be invalidated or affected by any error previously made in listing, taxing, selling, or conveying said land.' The court held that even if there were irregularities in the proceedings, they would not justify declaring invalid a deed which the law under which it was made enacted should not be invalidated for any error in the listing, selling, or conveying.

In Allen v. Armstrong (16 Iowa, 508), we find a construction of another State statute. It enacted that a county treasurer's deed for land sold by him for taxes should be prima facie evidence, 1st, that the property conveyed was subject to taxation; 2d, that the taxes were not paid; 3d, that the property conveyed was not redeemed; and should be conclusive evidence of the following facts: 1st, that the property had been taxed and assessed as required by law; 2d, that the taxes were levied according to law; 3d, that the property was advertised for sale in the manner and for the length of time required by law; 4th, that the property was sold as stated in the deed; 5th, that the grantee was the purchaser; 6th, that the sale was conducted as required by law; and, 7th, that all the prerequisites of the law were complied with by all the officers, from the listing and valuation of the property up to the execution of the deed, and that all things whatsoever required by law to make a good and valid sale, and to vest the title in the purchaser, were done, except in regard to the three points first above named, wherein the deed should be prima facie evidence only. This, it will be noticed, was substantially the same as the United States statute, and the court ruled that irregularities preceding the sale were inoperative to defeat it. The case is in many particulars instructive. See also Tharp v. Hart, 2 Sneed (Tenn.), 569.

In regard to the assignment of the plaintiff, that the court erred in refusing to admit evidence of the order of General Hunter and its revocation, as well as of the fact that Beaufort County was under martial law when the sale was made, it is sufficient to say that we cannot perceive its possible legitimate bearing upon any question really involved in the case, and the assignment has not been seriously pressed.

Nor was there error, of which the plaintiff can take advantage, in refusing evidence to prove that the advertisement and notice of the sale did not describe the property sold as it was enumerated in the last preceding valuation. What we have heretofore said is a sufficient answer to this objection.

One other assignment only remains. It is that the acts of Congress were unconstitutional, because the amount of the direct taxes apportioned to the State of South Carolina was increased by the addition thereto of a penalty of fifty per cent, and therefore was not in proportion to the census or enumeration directed to be taken by the second section of the first article of the Constitution.

The assignment rests upon a mistaken construction of the acts of Congress. It is true that direct taxes must be apportioned among the several States according to the population. The acts of Aug. 5, 1861, June 7, 1862, and Feb. 6, 1863, did so apportion the tax. The fifty per cent penalty was no part of it. The act of Congress of 1861, which levied the tax, provided for no penalty, except for failure to pay it when it was due; and the penalty charged by the acts of 1862 and 1863 was also for default of voluntary payment in due time. A careful reading of the acts makes this very plain. Throughout, a distinction is made between the tax and the added penalty. It is recognized in the first section of the act of 1862, in the second, and in the third, as well as elsewhere. By the third section the owner of the lots or parcels of land was allowed to pay the tax charged thereon (not the tax and penalty), and take a certificate of payment, by virtue whereof the lands would be discharged. It cannot, therefore, be maintained that the tax was in conflict with the Constitution.

We have thus considered all the questions presented by the record, and we discover no error.

Judgment affirmed.

MR. JUSTICE FIELD dissented.


text: Talk:De Treville v. Smalls/Opinion of the Court


text:
Hooper v. Robinson

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

The British steamer 'Carolina' came to Baltimore, consigned to James Hooper & Co. They were also her agents while she remained in that port. The plaintiff in error was a member of the firm. Having taken on board her return cargo, the steamer proceeded on her homeward voyage. While in the Chesapeake Bay she was injured by a collision with another vessel, and put back to Baltimore for repairs. She was repaired, and Hooper & Co. paid all the bills and made other disbursements for her. McGarr, the captain, drew on Good Brothers & Co., of Hull, England, for the amount in favor of Hooper & Co., and at the same time directed them to protect the drawees by insurance, which was intended to be done by the policy here in question. The draft bore date Oct. 20, 1872; was for 1,611 18s. 7d.; was payable in London thirty days after sight; and directed that the amount should be charged 'to account for advances for repairs and dispursements of steamship 'Carolina' and her freight, to enable the ship to proceed on her voyage.'

The policy of insurance was dated on the 26th of October, 1872, and was to 'James Hooper & Co., on account of whom it may concern, in case of loss to be paid to their order.' The insurance was 'lost or not lost,'. . . 'on merchandise, to cover such risks as are approved and indorsed on the policy.' The indorsement set forth the date of the insurance, the name of the vessel, the course of the voyage, the rate of the premium, the amount insured ($8,000), and the remark, 'paid advance to cover disbursements and repairs.' The names of the agents of the underwriters were affixed. The instrument was a cargo policy. No inquiry was made of Hooper as to whom he was insuring for, and no representation was made by him except as is disclosed in the memorandum indorsed upon the policy. The draft of McGarr was bought by Brown & Sons, bankers, of Baltimore. They transmitted it to their correspondents in London. On the 11th of November, 1872, it was accepted by Good Brothers & Co., and on the 14th of December following they paid it. On the 14th of November, 1872, the steamer foundered at sea. On the 28th of that month notice of the loss was given to the underwriters. On the 6th of December, in answer to a call for proof of loss and interest, Hooper & Co. furnished the Baltimore agent of the underwriters with the protest and a full account of the items of 'outfit and disbursements of the British steamer 'Carolina." In the statement was the charge, 'to cash paid insurance on advances $117.33.' On the 15th of January, 1873, the agent in Baltimore drew on the defendants in error, his principals in New York, for $8,012, at five days' sight. The draft was paid on the 24th of that month, and on the 31st Hooper & Co. remitted the amount to Good Brothers & Co. in England. When Hooper & Co. received the draft of the 15th of January, they gave a receipt setting forth that when the draft was paid it would be 'in full for claim for total loss of advancements for disbursements and repairs per steamer 'Carolina,". . . 'insured 26th of October, 1872, under policy No. 22,706.' The receipt concluded with a promise, upon the payment of the draft, 'to assign all our right, title, and interest in the above advances for disbursements and repairs to the underwriters.' Hooper said at the time to the agent 'that he had nothing to assign.' On the 10th of February, 1873, Hooper & Co. executed to Robinson & Cox, the attorneys of the underwriters, the promised assignment, which was a printed form filled up by the agent, 'such as is taken in all cases of abandonment for total loss.' Hooper then again told the agent 'that he had no interest in the matter, but as it was customary, he would sign the paper.'

During all these transactions Hooper & Co. were not asked whether they had insured for themselves or for others; whether they had been or expected to be repaid their disbursements; whether any one else was interested in the policy, or for whom they were collecting the insurance. More than a month after the loss had been paid and the money remitted to England, a marine adjuster came from New York to Baltimore 'to ascertain who owed Mr. Hooper for advances.' A full disclosure was thereupon made by Hooper. The adjuster suggested to him 'to write his friends on the other side to return the money.' Hooper asked if the underwriters did not get the premium for insurance, and if the vessel was not lost. Being answered in the affirmative, he said he 'would not have the face to write to the parties to return the money.' No offer has been made to return to Hooper & Co., or to Good Brothers & Co., the premium for insurance. This suit was brought by the underwriters on the 30th of October, 1873, more than nine months after the loss had been paid and the money remitted to Good Brothers & Co., and more than seven months after Hooper's disclosure to the adjuster.

When the testimony was closed on both sides in the court below, the defendant, Hooper, asked the court to charge the jury, in effect, that if they believed the advances and the insurance were made; that the draft on Good Brothers & Co. was drawn, accepted, and paid; that the steamer was lost; proof of loss and payment demanded; that Hooper then furnished the plaintiffs with the account of his disbursements; that the plaintiffs thereupon paid him and took the assignment without having made any inquiry as to whether he was collecting for himself or for others, and that within a few days thereafter he remitted the money to Good Brothers & Co.,-all as stated in the evidence, the plaintiffs were not entitled to recover. This instruction the court refused to give, and instructed, in substance, that if the jury believed that when Hooper made his claim for indemnity under the policy he produced the account and subsequently gave the receipt and executed the assignment, and that when he received payment and delivered the assignment he had received notice of the payment of the draft upon Good Brothers & Co., given to him to recover his advances, which fact he did not communicate to the underwriters, then the plaintiffs were entitled to recover the amount of the insurance money which he had received. Hooper excepted to the refusal to instruct and to the instruction given. The jury found for the plaintiffs, and judgment was entered accordingly. The defendant then brought the case here for review.

Mr. Thomas W. Hall for the plaintiff in error.

That advances to cover disbursements and repairs constitute an insurable interest is settled. Insurance Company v. Barings, 20 Wall. 163, and cases cited.

The present is a stronger one than that case, for neither Hooper, who effected the insurance and to whose order the loss was made payable, nor Good Brothers & Co., for whom it was effected, are suing to recover upon the policy.

If they had an insurable interest in the advances, even 'an inchoate and contingent' one, there can be no doubt that it was covered by the policy 'on account of whom it may concern.'

It is essential to the case of the plaintiffs that they show affirmatively that Good Brothers & Co., to whom Hooper paid over the money as soon as collected, were not entitled to receive it. There is, however, no evidence in the record to support any such view. It is merely an assumption, which the plaintiffs did not attempt to maintain by proof at the trial.

For whom a policy 'on account of whom it may concern' is underwritten, is a question of intention on the part of the person procuring it. It is sufficient that it was intended to indemnify any party having an insurable interest, and it will be applied to that of any person subsequently ascertained to have such an interest who adopts the insurance.

It is immaterial whether the person intended to be protected, therefore, authorizes the insurance beforehand or subsequently adopts it. 1 Phillips, Ins. (5th ed.), sects. 383-385; Buck & Hedrick v. Chesapeake Insurance Co., 1 Pet. 151; Insurance Company v. Chase, 5 Wall. 509; Newsoms' Adm'r v. Douglas, 7 Har. & J. (Md.) 451; Maryland Insurance Co. v. Bathurst, 5 Gill & J. (Md.) 229; Franklin Fire Insurance Co. v. Coates, &c., 14 id. 285; Routh v. Thompson, 13 East, 285; Bridge v. Niagara Insurance Co., 1 Hall (N. Y.), 347; Blanchard v. Waite, 28 Me. 59; 3 Kent, Com. 260. So the interest covered may itself be inchoate and contingent. Lucena v. Craufurd et al., 3 Bos. & Pul. 75; Hancock v. Fishing Insurance Company, 3 Sumn. 132.

That Good Brothers & Co. were the parties whose interest was intended to be insured and protected is clear. They ratified in the fullest manner all that had been done by Hooper and the master of the vessel for their protection. It is a case for the application of the maxim, ''Omnis ratihabitio retrotrahitur et mandato priori aequiparatur. Lucena v. Craufurd et al., supra; Hancock v. Fishing Insurance Company, supra; Lee v. Massachusetts Fire & Marine Insurance Co.'', 6 Mass. 208; 3 Kent, Com. 262.

The court erred in assuming as a conclusion of law that Hooper's omission to communicate to the underwriters, 'when he received payment of said insurance, and made and executed said assignment, that he had already received notice of the payment of the draft' (if the jury should find these facts), entitled the plaintiffs below to recover in this action. He was under no obligation, legal or moral, to disclose the fact that he was insuring for Good Brothers & Co., when he took out the policy, or that he was receiving for them the money, which by the terms of the policy was payable to him.

Silence is not concealment, unless disclosure be a duty. ''Aliud est celare; aliud tacere. Carter v. Boehm'', 3 Burr. 1905; 1 Smith, Lead. Cas. (7th Am. ed.), 834, and notes to leading case; 2 Parsons, Contracts, 363, and cases cited; Russell v. Union Insurance Co., 1 Wash. 409; Finney v. Warren Insurance Co., 1 Metc. (Mass.) 166; Higginson, v. Dall 13 Mass. 96; Wells v. Philadelphia Insurance Co., 9 Serg. & R. (Pa.) 103.

In any aspect of the case the court erred in its instruction in withholding from the jury the question of the materiality of Hooper's alleged omission to inform the defendants in error that the master's draft had been paid. Materiality in such cases is always a question for the jury, even when the fact the improper concealment of which is alleged is one which might and reasonably would have influenced the action of the underwriters in entering into the contract, in accepting or rejecting the risk, or in fixing the amount of the premium. Livingston v. Maryland Insurance Co., 6 Cranch, 274; Maryland Insurance Co. v. Ruden's Adm'r, id 338; McLanahan v. Universal Insurance Co., 1 Pet. 170; Columbian Insurance Co. v. Lawrence, 10 id. 516; New York Firemen's Insurance Co. v. Walden, 12 Johns. (N. Y.) 513; Franklin Insurance Co. v. Coates, 14 Md. 299; Carter v. Boehm, supra; 1 Smith, Lead. Cas. (7th Am. ed.), pp. 848, 850, notes to Carter v. Boehm; 3 Kent, Com. 284, 285.

Viewed, as this action must be, as an ordinary one to recover back money paid under an alleged mistake of facts, the right of the plaintiffs to recover must be determined by the equities of the case and the rules ordinarily applicable to such actions. They will not be permitted to recover if it would be manifestly inequitable to allow them to do so. Moses v. Macfarlane, 2 Burr. 109; Insurance Company v. Chase, 5 Wall. 509; 2 Smith, Lead. Cas. (7th Am. ed.) 402, notes to Marriott v. Hampton.

The plaintiffs are suing to recover back from Hooper money which they paid him without inquiry, and which he, in perfect good faith, paid over to the persons for whom he had collected it, and who, he supposed, were entitled to receive it, long before suit brought, or any notice of any claim or demand on the part of the plaintiffs to have the money refunded.

There is no equity in the claim thus set up. They chose voluntarily, with the fullest opportunity for inquiry, to pay the money without inquiry to a person who received it innocently, and with no fraudulent intention at once paid it over to the parties to whom he believed it to belong. Elliott v. Swartwout, 10 Pet. 137; Buller v. Harrison, 2 Cowp. 565; Carter v. Boehm, 3 Burr. 1905; Milnes v. Duncan, 6 Barn. & C. 671; Cox v. Masterson, 9 id. 902; Townsend v. Crowdy, 8 C. B. N. S. 477; Clarke v. Dickson, El., B. & E. 148.

Mr. Stewart Brown and Mr. Arthur George Brown, contra.

The instruction granted by the court below was correct. Carpenter v. Providence Washington Insurance Co., 16 Pet. 495; Insurance Company v. Barings, 20 Wall. 159; Insurance Company v. Newton, 22 id. 32; Home Insurance Co. v. Baltimore Warehouse Co., 93 U.S. 527; Hidden v. Slater Insurance Co., 2 Cliff. 269; Allegre v. Maryland Insurance Co., 6 Har. & J. (Md.) 408; Angell, Insurance, sect. 59; 2 Parsons, Mar. Ins., p. 474.

The underwriters were entitled to the best evidence that Hooper possessed, 'so that they might be able to form some estimate of their rights and duties before they were obliged to pay.' Columbia Insurance Co. v. Lawrence, 10 Pet. 507; Lawrence v. Ocean Insurance Co., 11 Johns. (N. Y.) 259; 1 Parsons, Mar. Ins. 468, 469; Smith v. Columbia Insurance Co., 17 Pa. St. 253.

Having been, by Hooper's concealment and deceit, induced to pay him $8,000, the underwriters were entitled, after discovery of the real facts, to recover that sum in this action. 2 Parsons, Mar. Ins. 489, 490, and the authorities cited and fully referred to in the notes.

By the abandonment accepted by the underwriters they were put completely in the place of the assured, and were entitled to, and had the right to understand and assume that they thereby acquired and were subrogated to, all the rights which Hooper possessed at the time of the loss, including his right to demand repayment of the 'advances' which had been made by him. Chesapeake Insurance Co. v. Stark, 6 Cranch, 268; Hart v. Western Railroad, 13 Metc. (Mass.) 99; 1 Parsons, Mar. Ins. 229; 2 id. 492, 494; 2 Phillips, Ins., sects. 1511, 2123, 2162; 2 Am. Lead. Cas. 835; Hall & Long v. Railroad Companies, 13 Wall. 367; The Falcon, 19 id. 75; Atlantic Insurance Co. v. Storrow, 5 Paige (N. Y.), Ch. 285, 294; AEtna Insurance Co. v. Tyler, 16 Wend. (N. Y.) 385.

The phrase, 'on account of whom it may concern,' protects only persons who had an insurable interest at the date of the policy, and at the time of loss. 1 Parsons, Mar. Ins. 46, and the authorities cited in note 1, p. 46; 1 Phillips, Ins., sect. 387; Rider v. Ocean Insurance Co., 20 Pick. (Mass.) 259; Garrell v. Hanna, 5 Har. & J. (Md.) 412; 2 Am. Lead. Cas. (5th ed.) 806. Therefore Good Brothers & Co., the drawees of the bill of exchange, had no insurable interest, and no 'concern' with the policy.

When the policy was taken out, there is not the slightest evidence that Good Brothers & Co. had authorized the master to draw on them, or knew that he intended to do so, or were under any obligation to accept or pay the bill; and when the loss occurred, they had not paid the bill of exchange which had been drawn. They had therefore no insurable interest either at the date of the policy or of the loss; and the court properly ignored Hooper's testimony as to the master's orders to protect them, and rejected the defendant's prayer, which chiefly relied upon that testimony.

Defendant's prayer was also fatally defective, by reason of the fact that it assumed that Hooper, by direction of Good Brothers & Co., presented proofs of the loss, because there is no evidence of any such direction.

There is no evidence that either the master of Hooper was agent of Good Brothers & Co., or authorized to insure for them. The former was their friend, who, for some reason best known to himself, drew on them a bill of exchange in Hooper's favor. Seamans v. Loring, 1 Mas. 136. That bill Hooper took, holding on to his lien.

As regards Hooper, however, and his lien and 'advances,' that bill was conditional payment at the moment it was given, and when paid, Dec. 14, 1872, it became absolute payment, and destroyed the lien, and the advances which had been the subject-matter of insurance. The Emily Souder, 17 Wall. 666.

Indeed, his advances were, in fact, repaid to him in cash on the day he sold the bill of exchange to Brown & Sons, and thereafter his only risk was a possible liability as indorser. The indorsement and sale of that bill by Hooper to Brown & Sons was equivalent to an assignment to them of his claim to be repaid his advances, and as such it was a material fact which good faith required him to disclose when he applied to the underwriters to indemnify him for his pretended loss, and offered his proofs, and gave the receipt and assignment. Authorities supra, and 1 Parsons, Mar. Ins. 243 and note 4.

The contract of the underwriters was to pay on proof of interest and of loss. Hooper was therefore bound to show for when and in what right he was collecting the money. This, having exclusive possession of the facts, he undertook and pretended to do, by proving, as if for himself, a loss which he had not suffered, under an interest which had long since ceased to exist.

The underwriters have no concern with the disposition that Hooper chose to make of the money which he induced them to pay under this mistake of fact on their part, which was caused by his own concealments and false representations; and they contend that the instruction of the court below was correct, and should on this ground alone be sustained.

MR. JUSTICE SWAYNE, after stating the facts, delivered the opinion of the court.

title: Hooper v. Robinson


text: Talk:Hooper v. Robinson

title: Talk:Hooper v. Robinson


text:
Hooper v. Robinson/Opinion of the Court

As the facts of which the instruction given was predicated were all indisputable and undisputed, that instruction was equivalent to a direction to find for the plaintiffs. The same remarks apply mutatis mutandis to the instruction asked by the defendant. The case, then, resolves itself into this: Were the plaintiffs entitled to recover upon the case as presented in the record?

A policy like the one here in question, in the name of a specified part, 'on account of whom it may concern,' or with other equivalent terms, will be applied to the interest of the persons for whom it was intended by the person who ordered it, provided the latter had the requisite authority from the former, or they subsequently adopted it. 1 Phillips, Ins., sect. 383.

This is the result, though those so intended are not known to the broker who procures the policy, or to the underwriters who are bound by it. Id., sect. 384.

One may become a party to an insurance effected in terms applicable to his interest, without previous authority from him, by adopting it either before or after the loss has taken place, though the loss may have happened before the insurance was made. Id., sect. 388.

The adoption of the policy need not be in any particular form. Any thing which clearly evinces such purpose is sufficient.

'It is now clearly established that an insurable interest, subsisting during the risk and at the time of loss, is sufficient, and that the assured need not also allege or prove that he was interested at the time of effecting the policy; indeed, it is every day's practice to effect insurance in which the allegation could not be made with any degree of truth; as, for instance, where goods are insured on a return voyage long before they are bought.' 1 Perkin's Arnould, 238.

This is consistent with reason and justice, and is supported by analogies of the law in other cases. We will name a few of them.

A deed voidable under certain circumstances may be made valid for all purposes by a sufficient after-consideration. A devise to a charitable use may be made to a grantee not in esse, and vest and take effect when the grantee shall exist. The doctrine of springing and shifting uses is familiar to every real-property lawyer. They always depend for their efficacy upon events occurring subsequently to the conveyance under which they arise.

Where the insurance is 'lost or not lost,' the thing insured may be irrecoverably lost when the contract is entered into, and yet the contract be valid. It is a stipulation for indemnity against past as well as future losses, and the law upholds it.

Where a vessel insured for a stated time was sold and transferred, and was repurchased and transferred back within that time, it has been held that the insurnace was suspended while the title was out of the assured, 'and was revived again on the reconveyance of the assured during the term specified in the policy.' Worthington v. Bearse and Others, 12 Allen (Mass.), 382.

A right of property in a thing is not always indispensable to an insurable interest. Injury from its loss or benefit from its preservation to accrue to the assured may be sufficient, and a contingent interest thus arising may be made the subject of a policy. Lucena v. Craufurd et al., 3 Bos. & Pul. 75; S.C.. 5 id. 269; Buck & Hedrick v. Chesapeake Insurance Co., 1 Pet. 151; Hancock v. Fishing Insurance Company, 3 Sumn. 132.

In the law of marine insurance, insurable interests are multiform and very numerous.

The agent, factor, bailee, carrier, trustee, consignee, mortgagee, and every other lien-holder, may insure to the extent of his own interest in that to which such interest relates; and by the clause, 'on account of whom it may concern,' for all others to the extent of their respective interests, where there is previous authority or subsequent ratification.

Numerous as are the parties of the classes named, they are but a small portion of those who have the right to insure.

Where money is advanced, as in this case, for repairs and supplies to enable a vessel to proceed on her voyage, the lender has a lien, not on the cargo, but upon the vessel, and the amount of the debt may be protected by insurance upon the latter. Insurance Company v. Barings, 20 Wall. 163, and the authorities there cited. If the owner of a vessel, being also the owner of the cargo, or the owner of the cargo, not being the owner of the vessel, procures a third person to make such advances upon an agreement that he shall be repaid from the cargo, and a bill of lading is furnished to him, he has a lien on the cargo for the amount of his advances, and may insure accordingly. Clark v. Mauran and Others, 3 Paige (N. Y.), 373; Dows v. Greene, 24 N. Y. 638; Holbrook v. Wight, 24 Wend. (N. Y.) 169. The assignment of a bill of lading passes the legal title to the goods. Chandler v. Belden, 18 Johns. (N. Y.) 157. The assignment of a debt, ipso facto, carries with it a lien and all other securities held by the assignor for the discharge of such debt. The Hull of a New Ship, 2 Ware, 203; Pattison v. Hull, 9 Cow. (N. Y.) 747; Langdon v. Buel, 9 Wend. (N. Y.) 80.

Where a lien subsists either on the vessel or cargo, a third party may pay the debt, and, with the consent of the debtor and creditor, be substituted to all the rights of the latter. Dixon on Subrogation, 163; Garrison et al. v. Memphis Insurance Co., 19 How. 312; The Cabot, 1 Abb. (U.S.) 150. Where there is neither an agreement nor an assignment, there can be no subrogation, unless there has been a compulsory payment by the party claiming to be substituted. Sanford v. McLean, 3 Paige (N. Y.), 117.

Recurring to the facts, there are two points upon which we deem it proper particularly to remark:--

First, We find no ground for any imputation of bad faith upon Hooper. We think there was no indirection and no purpose of concealment on his part. Before the insurance was effected, the underwriters had a clear right, if they so desired, to know for whom they were asked to insure. Buck & Hedrick v. Chesapeake Insurance Co., supra. They made no inquiry. This excused Hooper from making any communication upon the subject. When the insurance money was paid, although the face of the policy and other facts, patent and notorious, which must have been known to the underwriters, showed clearly that the advances were made, and that the insurance was effected by Hooper, not for himself, but for others, the underwriters were again silent. The draft on Good Brothers & Co. had then been sold, and Hooper had received the money. Thereafter he had nothing at stake but the solvency of the drawees. When the adjuster, more than a month later, made the inquiry, which should have been made before, Hooper had paid over the money. He then made a frank and full disclosure. We see no reason to doubt that if the inquiry had been made earlier it would have been answered in the same way. In this respect the underwriters have themselves to blame rather than Hooper. The record discloses no ground upon which, ex equo et bono, he can be called upon to pay back the fund in controversy.

Second, It does not appear in the record to whom the vessel and cargo belonged. There is not a ray of light upon the subject. In that respect the case is left wholly in the dark.

The proof as to who were intended to be insured is that they were Good Brothers & Co., and no one else, though, according to the terms of the policy, payment in the event of loss was to be made to Hooper & Co. The former fact is established by the testimony of Hooper, and there is none other upon the subject. He is unimpeached, and his testimony is conclusive. The inquiry then arises, whether Good Brothers & Co. had any insurable interest in the cargo. It does not appear whether they had or had not. We have suggested several ways in which such an interest may have arisen, and have shown that under the policy in question it would have been sufficient if it had subsisted at any time before the loss was known to them. It may possibly have arisen in other modes. This brings us to the question of the burden of proof. Did it rest upon the plaintiffs or upon the defendant? In order to maintain the plaintiffs' case it was necessary to be made to appear that Good Brothers & Co., the assured, had no insurable interest in the cargo, the cargo being the thing insured. Upon both reason and authority, we think the onus probandi was upon the plaintiffs.

It was for them to make out their case. The premium had been paid, the loss had occurred, and the indemnity money had been received by the agents of the assured and paid over to their principals. The plaintiffs claim the right to go behind all this, and to reclaim from Hooper the fund thus received and parted with. It was incumbent upon them to establish every thing necessary to entitle them to recover, and they have no right to throw upon the defendant any part of the burden that belonged to themselves. For authorities upon this subject see 1 Greenl. Evid., sects. 34, 35, 80, 81, and the notes. Such is the legal result, notwithstanding the negative form of the averment, to be established.

But suppose the case were made out as against Good Brothers & Co., and that a recovery could be had if the action were against them, still it by no means follows that the plaintiff in error was liable.

There was laches on the part of the underwriters, or their agents, which is the same thing. Nothing in the record is clearer than that Hooper received the money as the agent of the assured. It was his duty immediately to advise his principals and promptly to pay them. 1 Waite, Actions and Defences, 252, 255. This latter duty it appears he performed. He had then received no notice of the adverse claim subsequently made, and had no reason to expect it. His parting with the money is proof of his sincerity and honesty.

Under all the circumstances, we think he is entitled to the benefit of the principle which in such cases gives immunity to the agent and refers the party complaining for satisfaction to the principals who have received and hold the money.

There was error in the instruction given by the court to the jury.

The counsel on neither side referred to the state of the pleadings. We have, therefore, not adverted to that subject, but have considered the case as it was argued,-entirely upon the merits.

The judgment of the Circuit Court will be reversed, and the cause remanded for further proceedings in conformity to this opinion; and it is

So ordered.

title: Hooper v. Robinson/Opinion of the Court


text: Talk:Hooper v. Robinson/Opinion of the Court


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Railroad Company v. Commissioners (98 U.S. 541)

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

The facts are stated in the opinion of the court.

Mr. A. J. Poppleton for the plaintiff in error.

Mr. J. M. Woolworth and Mr. W. H. Munger, contra.

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


text: Talk:Railroad Company v. Commissioners (98 U.S. 541)


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Railroad Company v. Commissioners (98 U.S. 541)/Opinion of the Court

This was a suit to recover back taxes for the years 1870 and 1871, paid by the Union Pacific Railroad Company upon certain lands in Dodge County, Nebraska. The lands were among those granted by Congress to the company to aid in the construction of its railroad (12 Stat. 489), but the patents were withheld until after the taxes had been paid, by reason of the joint resolution of Congress 'for the protection of the interests of the United States in the Union Pacific Railroad Company, the Central Pacific Railroad Company, and for other purposes,' approved April 10, 1869. 16 Stat. 56.

The lands were returned by the United States land officers to the State auditor and by him to the county clerk for taxation, as required by the General Statutes of Nebraska, and were placed upon the assessment list of the county. The general and the local taxes levied for the respective years were carried out against these lands, with others upon the lists, and the railroad company designated as owner. In due time the tax-lists, with warrants attached for their collection, were delivered to the treasurer of the county. The taxes for the year 1870 became payable May 1, 1871, and those for 1871, May 1, 1872. The warrants authorized the treasurer, if default should be made in the payment of any of the taxes charged upon the lists, to seize and sell the personal property of the persons making the default to enforce the collection.

No demand of taxes was necessary, but it was the duty of every person subject to taxation to attend at the treasurer's office and make payment. During the years 1870, 1871, and 1872, the railroad company was the owner of other lands in the county, and other property, both real and personal, on which taxes were properly levied. On the 11th of August, 1871, the company attended at the treasurer's office, and paid all taxes charged against it for the year 1870, and on the 20th of July, 1872, all that were charged for the year 1871. Before these payments were made there had been no demand for the taxes, and no special effort had been put forth by the treasurer for their collection. The company had personal property in the county which might have been seized; but no attempt had been made to seize it, and no other notice than such as the law implies had been given that payment would be enforced in that way.

At the time the several payments were made the company filed with the treasurer a notice in writing that it protested against the taxes paid, for the reason that they were illegally and wrongfully assessed and levied, and were wholly unauthorized by law, and that suit would be instituted to recover back the money paid.

This suit was begun Aug. 20, 1875, and on the trial the judges of the Circuit Court were divided in opinion as to the question, among others, 'whether the payment of the said taxes under the written protests above appearing, without any demand therefor or effort to collect the same, made the payment a compulsory one in such sense as to give the plaintiff (the railroad company) the right to recover back the amount thereof as at common law, there being no statute giving or regulating the right of recovery in such cases.' The presiding judge being of the opinion that the payment was voluntary and not compulsory, judgment was entered against the railroad company, and the case has been brought to this court upon a writ of error for a determination of the question upon which the judges were divided, and which has been duly certified upon the record.

We have no difficulty in answering the question in the negative. We had occasion to consider the same general subject at the last term in Lamborn v. County Commissioners (97 U.S. 181), which came up on a certificate of division from the Circuit Court for the District of Kansas. As that was a case from Kansas, we followed the rule adopted by the courts of that State, which is thus stated in Wabaunsee County v. Walker (8 Kan. 431): 'Where a party pays an illegal demand with a full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity therefor, or unless to release his person or property from detention, or to prevent an immediate seizure of his person or property, such payment must be deemed voluntary and cannot be recovered back. And the fact that the party at the time of making the payment files a written protest does not make the payment involuntary.'

This, as we understand it, is a correct statement of the rule of the common law. There are, no doubt, cases to be found in which the language of the court, if separated from the facts of the particular case under consideration, would seem to imply that a protest alone was sufficient to show that the payment was not voluntary; but on examination it will be found that the protest was used to give effect to the other attending circumstances. Thus, in Elliott v. Swartwout (10 Pet. 137) and Bond v. Hoyt (13 id. 266), which were customs cases, the payments were made to release goods held for duties on imports; and the protest became necessary, in order to show that the legality of the demand was not admitted when the payment was made. The recovery rested upon the fact that the payment was made to release property from detention, and the protest saved the rights which grew out of that fact. In Philadelphia v. Collector (5 Wall. 730) and Collector v. Hubbard (12 id. 13), which were internal-revenue tax cases, the actions were sustained 'upon the ground that the several provisions in the internal-revenue acts referred to warranted the conclusion as a necessary implication that Congress intended to give the tax-payer such remedy.' It is so expressly stated in the last case. p. 14. As the case of Erskine v. Van Arsdale (15 id. 75) followed these, and was of the same general character, it is to be presumed that it was put upon the same ground. In such cases the protest plays the same part it does in customs cases, and gives notice that the payment is not to be considered as admitting the right to make the demand.

The real question in this case is whether there was such an immediate and urgent necessity for the payment of the taxes in controversy as to imply that it was made upon compulsion. The treasurer had a warrant in his hands which would have authorized him to seize the goods of the company to enforce the collection. This warrant was in the nature of an execution running against the property of the parties charged with taxes upon the lists it accompanied, and no opportunity had been afforded the parties of obtaining a judicial decision of the question of their liability. As to this class of case Chief Justice Shaw states the rule in Preston v. Boston (12 Pick. (Mass.) 14), as follows: 'When, therefore, a party not liable to taxation is called upon peremptorily to pay upon such a warrant, and he can save himself and his property in no other way than by paying the illegal demand, he may give notice that he so pays it by duress and not voluntarily, and by showing that he is not liable, recover it back as money had and received.' This, we think, is the true rule, but it falls far short of what is required in this case. No attempt had been made by the treasurer to serve his warrant. He had not even personally demanded the taxes from the company, and certainly nothing had been done from which his intent could be inferred to use the legal process he held to enforce the collection, if the alleged illegality of the claim was made known to him. All that appears is, that the company was charged upon the tax-lists with taxes upon its real and personal property in the county. After all the taxes had become delinquent under the law, but before any active steps whatever had been taken to enforce their collection, the company presented itself at the treasurer's office, and in the usual course of business paid in full every thing that was charged against it, accompanying the payment, however, with a general protest against the legality of the charges and a notice that suit would be commenced to recover back the full amount that was paid. No specification of alleged illegality was made, and no particular property designated as wrongfully included in the assessment of the taxes. The protest was in the most general terms, and evidently intended to cover every defect that might thereafter be discovered either in the power to tax or the manner of executing the power. Three years afterwards, and after the decision in Railway Company v. McShane (22 Wall. 444), which was supposed to hold that the particular lands now in question were not subject to taxation, this suit was brought. Under such circumstances, we cannot hold that the payment was compulsory in such a sense as to give a right to the present action. As the answer to this question disposes of the case, it is unnecessary to consider the other questions certified.

Judgment affirmed.


text: Talk:Railroad Company v. Commissioners (98 U.S. 541)/Opinion of the Court


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Hendrie v. Sayles

APPEAL from the Circuit Court of the United States for the Eastern District of Michigan.

Lafayette F. Thompson and Asahel G. Bachelder, claiming to be inventors of a railroad brake, executed, before letters-patent were issued to them therefore, the following assignment, which was duly recorded in the Patent Office:--

'Whereas we, Lafayette F. Thompson, of Charlestown, and Asahel G. Bachelder, now or late of Lowell, in the State of Massachusetts, have invented an improved mode of operating the brakes of railway cars, and have applied, or intend to apply, for letters-patent of the United States of America therefor.

'Now, therefore, this indenture witnesseth, that for and in consideration of $100, in hand paid, the receipt whereof is hereby acknowledged, I have assigned and set over, and do hereby assign, sell, and set over, to Henry Tanner, of Buffalo, in the State of New York, all the right, title, and interest whatever which we now have, or by letters-patent would be entitled to have and possess, in the aforesaid invention, the said invention being described in the specification as prepared and executed by us, or to be prepared and executed by us, for the obtaining of said letters-patent; the whole to be enjoyed and held by the said Henry Tanner and his legal representatives, to the full extent and manner in which the same whould have been or could be held and enjoyed by us had this assignment never been made.

'And we do, by these presents, authorize the Commissioner of Patents to issue the said letters-patent to the said Henry Tanner and his legal representatives, as the assignee of our whole right and title to the same and to the new invention aforesaid.

'In witness whereof, we have hereto set our signatures and seals, this first day of April, A.D. 1852.

'LAFAYETTE F. THOMPSON. [SEAL.]

'ASAHEL G. BACHELDER. [SEAL.]

'Witness, R. H. EDDY.'

Letters-patent were issued on the sixth day of the following July to Tanner, who, July 13, 1854, assigned to Thomas Sayles all his remaining right and title in them for the unexpired term thereof, and 'any extension thereof that may hereafter be granted,' excepting, however, certain reserved territory and specified railroad corporations. Said letters were renewed and extended for seven years from July 6, 1866.

After that date, and until some time in 1873, Hendrie infringed the patents within the territory not so reserved, and Sayles filed his bill for an account, &c., to which Hendrie demurred, upon the ground that Sayles had no legal title to the extended term. The demurrer was overruled, and a decree for want of an answer passed for the complainant. Hendrie thereupon appealed here.

Mr. D. Bethune Duffield for the appellant.

Unless the complainant has the sole legal title to the extended term, he cannot maintain this suit. 1 Barb. Ch. Pr. 39; 1 Dan. Ch. Pr. 241. The whole case depends upon the assignment of April 1, 1852, to Tanner. If it gave him such an interest in that term that the legal title thereto would vest in him the moment the extension should be granted, the demurrer is bad.

The assignment is to be construed like any other contract to carry out the intention of the parties, and to further that intention their situation and the surrounding circumstances may be considered. 2 Pars. Contr. 499; Shore v. Wilson, 9 Cl. & Fin. 555-569; Mumford v. Getling, 7 C. B. N. S. 309; Carr v. Montefiore, 5 B. & S. 427. It was made before the issue of the patent. The inventors then had an inchoate right to the exclusive use of their invention, it being complete; and they could assign it, so that the legal right which would result from the issue of the patent would vest in Tanner. Gayler v. Wilder, 10 How. 477. And they perhaps had an inchoate right to an extension, assignable with the same effect as their right to a patent. Railroad Company v. Trimble, 10 Wall. 367.

The granting clause of the instrument, when taken as a whole, plainly indicates the invention and the letters-patent intended to be conveyed, as described in and to be obtained by the specification, and the latter was not prepared to obtain the extension.

And again, the inventors authorize the issue of 'said letters-patent' to Tanner, as the assignee of their 'whole right and title to the same,' not to any letters-patent, but to 'said letters-patent.' There is no grant of, and no reference to, an extension. This clearly shows that the original term was alone intended to be conveyed.

This court has never passed directly upon the question whether an assignment of the 'invention' necessarily includes both terms of a patent, or clearly shows an intention so to do. The authorities on the circuit rule otherwise. Clum v. Brewer, 2 Curt. C. C. 520; Waterman v. Wallace, 13 Blatch. 132.

Mr. Albert H. Walker, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Hendrie v. Sayles


text: Talk:Hendrie v. Sayles

title: Talk:Hendrie v. Sayles