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Booth v. Clark/Opinion of the Court

THIS was an appeal from the circuit court of the United States for the District of Columbia, holden in and for the county of Washington.

The dispute was about the same sum of money which was in controversy in the preceding case of Clark v. Hackett.

Booth filed his bill in the circuit court, claiming the money in virtue of his character of receiver, appointed by the chancellor of the first circuit in the State of New York. All the circumstances of the case are recited in the opinion of the court.

On the 29th of March, 1853, the circuit court dismissed the bill, and Booth appealed to this court.

The case was argued by Mr. Bradley, for the appellant, and by Mr. Lawrence and Mr. May, for the appellee.

The counsel for the appellant contended:--

1. That by the proceedings in the court of chancery of New York the property of Clark was vested in the receiver, Booth, before Clark petitioned for the benefit of the bankrupt act, and the right of Booth was not affected by the voluntary bankruptcy and discharge of the defendant. 2 Rev. Stat. 173, §§ 38, 39, in margin; Storm v. Waddell, 2 Sandf. ch. 494, 510, 512, and cases cited.

The order of the court works the transfer of the title. Mann v. Pentz, 2 Sandf. ch. 257, 271, 272.

The subsequent discharge did not devest the title thus created. Marcy v. Jordan, 2 Denio, 570.

It is like an execution in the hands of the sheriff, not levied, which, by the 'settled law of the State,' binds the property. Savage's Assignees v. Best, 3 How 111.

Or the attachment in a New Hampshire suit. Peck et al. v. Jenness et al. 7 How. 612, 619, 622.

It is the settled law of the State of New York, 2 Sandf. ch. 519.

II. The receiver could maintain any action in relation to the property, and rights of property, which the debtor himself could have had. 6 Barb. Sup. Ct. R. 542, 544; 3 Sandf. 311, 316, 317.

III. The matter in controversy was a chose in action at the time of the appointment of the receiver, was personal property, followed the person of the owner, and passed to the receiver.

The term chose in action is broad enough to pass the claim in question, whether the evidence of the debt was in his possession or not, at the time of the appointment of the receiver. Nathan v. Whitelock, 9 Paige, 159; North v. Turner, 9 Ser. and Raw. 244; and the authorities there cited. 19 Wend. 75; Gillett v. Fairchild, 4 Denio, 80, 82, and cases cited.

A claim upon a foreign government would be embraced in such an assignment. 4 Denio, supra, and cases cited. Couch v. Delaplain, 2 Coms. 397, 402, 403; Milner v. Metz, 16 Pet. 321; Comegys v. Vass, 1 Pet. 193, 2 Story's Eq. § 829, 1040.

The fund not being the subject of manual possession, an appropriation of it is all that is required. 5 Binn, 392, 398.

But it was not merely a loose unsettled demand of redress for injuries. The treaties of 1839 and 1843, gave it a fixed character.

Having no locality, the validity of its transfer depends on the law of the place where the transfer was made. 2 Kent's Comm. 570, 7th ed.; Story's Confl. § 362, 383, 399; Van Buskirk v. Hartford Fire Insurance Co. 14 Conn. 583, 586, 587, 588, 590.

'According to the law of the place where made.' Black v. Zacharie, 3 How. 483; Oakey v. Bennett, 11 Ib. 44.

The court of chancery in New York had jurisdiction of the subject-matter, and of the person. It carried with it jurisdiction over his personal effects. Holmes v. Renesen, 4 Johns. ch. 485; S.C.. 20 Ib. 262; Hooper v. Tuckerman, 3 Sandf. Sup. Ct. Rep. 311, 317; Hoyt v. Thompson, 1 Selden, 320; Story's Confl. 420; Life and Letters of Joseph Story, vol. 1, p. 380, Letter to Chancellor Kent.

The defendant resided in the city of New York. He was engaged in business there. His original domicile was in Massachusetts; his next, a domicile for commercial purposes, in Havana; next, from 1841 to 1844, his residence and domicile for business was in New York.

And while so residing and doing business in New York, he appeared in the chancery court, in this cause.

There is no evidence to show any other residence or domicile elsewhere, from 1841 to 1843. In the absence of such proof, prim a facie he was a domiciled citizen of New York, and his rights over his personalty are to be governed by the laws of that State.

We assume, upon these points, that if this cause was in a New York court, the right of receiver would not admit of dispute.

IV. The circuit court of the District of Columbia had jurisdiction of this case; was bound to enforce the rights of the receiver according to the law of the State of New York, and ought to have rendered a decree in favor of the appellant.

1. It had jurisdiction of the cause, if the right of the receiver was complete under the laws of the State of New York. Holmes v. Renwer; Hooper v. Tuckerman; Hoyt v. Thompson; Story's Confl. 419, 420, 421, already cited; Thomas v. Merchant's Bank, 9 Paige, 216; McLaren v. Pennington, 1 Ib. 102; Bank of Augusta v. Earle, 13 Pet. 520, 589, 590, 591; Metz v. Milner, 16 Ib. 321.

2. There were no conflicting claims on the part of any citizen of the District of Columbia, and the court was bound to give effect to the foreign assignment, not only by the comity of nations, but by the peculiar federal relations existing in this country.

3. The policy of the law of this District shows an enlarged comity. Executors and administrators, by statute act, (24th June, 1812, § 11, 2 Stats. at Large, 758,) and assignees of insolvents in the several States, have always been allowed by the courts to sue here. The receiver in this case is not a common law receiver, but a receiver by statute, as in case of insolvency.

4. The court had jurisdiction under the act of 3d March, 1849.

The title of Booth being consummate, and the fund enjoined, and locked up in the treasury, at the instance of the creditors of Clark, it was subject to the claims of other creditors giving notice and filing their bonds.

The design was to keep the money in the treasury, in order that claimants should have a reasonable time to prosecute their rights; the risk ran was that it should be paid over. As regards the claimant, it was merely directory. Time was not of the essence of the law.

'There is a known distinction between circumstances which are of the essence of a thing required to be done by an act of parliament, and clauses merely directory. The precise time, in many cases, is not of the essence.' Rex v. Loxdale, 1 Burr, 447.

The provisions of a law which are merely directory, are not to be construed into conditions precedent. Laws are construed strictly to save a right or avoid a penalty, but liberally to give a remedy, or effect an object declared in the law. Whitney v. Emmett, 1 Bald. C. C. R. 316.

The intention of the legislature should be followed, whenever it can be discovered, although the construction seem contrary to the letter of the statute. Dwarris on Stat. 718; The People v. The Utica Insurance Co. 15 Johns. 380. See also 6 Cranch, 307; 3 How. 565.

By the court: 'Courts are not to construe an act so liberally as to work injustice; but so liberally as to prevent the mischief, and advance the remedy.' Jackson v. West, 10 Johns. 466.

Negative words will make a statute imperative; words in the affirmative are directory only. Rex v. Leicester, 9 Dowl. and Ry. 972; 7 Barn. and Cress. 12.

Where a statute directs a person to do a thing in a given time, without any negative words restraining him from doing it afterwards, the naming of the time will be considered as directory to him, and not as a limitation of his authority. Pond v. Negus, 3 Mass. 230; Smith's Com. § 670, et seq.; Stinson v. Huggins, 16 Barb. 61.

When an act is to be done within a given time, it may be done afterwards, if nothing have occurred to prevent it. Griffith v. Minor, 1 Louis. R. 350; Proseus v. Mason, 12 Ib. 16.

Under a directory statute, a duty not performed at the time specified, may be valid if performed afterwards. Webster v. French, 12 Illinois, 302.

Remedial statutes have been made to extend, by an equitable construction, to other persons, to other things, to other places, and to other times than those expressly mentioned in the statute. Dwarris, 721-726.

Apply these rules to this statute and the facts of this case, and the conclusion is inevitable, that so long as the fund continued in the treasury, the court had jurisdiction to entertain and adjudicate on the complainant's claim to it. It was of no importance that the proceedings should be instituted within any specific time after the award, though it was essential that they should be, while the money was in the treasury. The intent was to prescribe the length of time the money should remain without any claim. It was not a condition precedent, to give the notice within thirty days. There is nothing in the statute to restrain its being done afterwards.

Finally: The circuit court had jurisdiction by reason of the general powers conferred upon it by statute.

It has all the powers given to the circuit courts of the United States by the act of 13th February, 1801. 'Cognizance of all cases in equity between parties, both or either of which shall be resident or be found within said district, (act of 27th February, 1801, § 5; 2 Stats. at Large, 106,) to proceed against non-residents in the same way as they are proceeded against in the general court, or in the supreme court of chancery in the State of Maryland. Act of 3d May, 1802, § 1; 2 Stats. at Large, 193; and see Kendall v. The United States, 12 Pet. 524.

Clark was here litigating the case of B. C. Clark, (now in this court,) and appeared and answered in this case. The fund itself had been enjoined, and was subject to the decree of the court, and was a fund in court. The court had jurisdiction.

The counsel for the defendant in error contended:--

1. That the bill was properly dismissed, because the complainant had not filed his bill of complaint, given notice to the secretary of the treasury, or filed his bond, as required by the 8th section of the act of 3d March, 1849, (9 Stats. at Large, 394.)

No notice was given to the secretary, the bill was not sworn to or filed till the 29th of May, 1851, and the bond on the same day,-being about fifteen days after the expiration of the thirty days limited in said section.

2. The proceedings in the chancery court of New York, being proceedings in rem, could only affect property within the territorial jurisdiction of the State. Story's Confl. Laws, § 543.

Indeed, the authorities in New York seem to go to the extent that the decree operates only on property discovered by the proceedings, even within the jurisdiction of the court. Storm v. Waddel, 2 Sandf. 495; 4 Ed. Ch. R. 658; 1 Paige, 637; 2 Ib. 567; 7 Ib. 47, 513; 8 Ib. 569, 475.

It will be seen by the record that the only return made by the receiver of any property of Clark was dated June 30, 1851, which was six years after the sale and eight years after the discharge of Clark in bankruptcy.

In fact, no action was taken in this chancery proceeding, from the year 1842 until 1851.

At the time that this receiver was appointed in New York, the claim now in controversy was a claim against the Republic of Mexico.

Clark's native domicile was Massachusetts. He resided for a while in Havana, and afterwards returned to his native State, and then took up his abode in New Hampshire. See Story's Confl. Laws, §§ 591, 592.

3. The bankrupt court having taken jurisdiction of the claim in controversy, and it having been disposed of under its decree, the property has effectually passed. City Bank of New Orleans v. Houston, 6 How. 486.

4. There was not, by the decisions in New York, any specific lien on the property in question by virtue of the appointment of a receiver; and if there had been, it should have been presented in the district court, and would have been there recognized. Ex parte Christy, 3 How. 316; Savage v. Best, 3 Ib. 119; Norton v. Boyd, 3 Ib. 436; Waller v. Best, 3 Ib. 111; Jenness v. Peck, 7 Ib. 612.

Mr. Justice WAYNE delivered the opinion of the court.

We learn from the record of this case that Juan de la Camara recovered a judgment in the supreme court of New York, against Ferdinand Clark, for $4,688 49/100, with interest at 7 per cent.; that a fieri facias was issued upon the judgment, and that there was a return upon it of 'no goods, chattels, or real estate of the defendant to be levied upon.' Upon this return, Camara filed a creditor's bill, before the chancellor of the first circuit in the State of New York, setting out his judgment and the return upon the fieri facias, in which he seeks, under the laws of that state, to subject the equitable assets and choses in action of Clark to his judgment; and he asks for a discovery of them from Clark, for an injunction, and the appointment of a receiver. Notice of this proceeding, and of the action upon it, were served upon the solicitor of Clark, and the bill of complaint was taken as confessed, upon the defendant's default in not answering. Booth, the present complainant, was appointed receiver on the 3d August, 1842. Clark had been previously enjoined under the proceeding from making any disposition of any part of his estate, legal or equitable. Thus matters stood from the time of the receiver's appointment, in 1842, until June, 1851. Then Booth, as receiver, reports that no effects of Clark had come to his knowledge, except a claim upon Mexico, which had been adjudged to Clark by the United States commissioners, under the treaty with Mexico; and that, as receiver, he was contesting it; and he asks from the court authority to proceed for that purpose, which was granted. Such is an outline of the case in New York, containing every substantial part of it.

We will now state the proceedings of this suit at the instance of the receiver, in the circuit court of the United States for the District of Columbia, from the decision of which, dismissing the receiver's bill, it has been brought to this court for revision.

On the 29th May, 1851, Booth, the receiver, filed his bill in the circuit court for the District of Columbia, reciting so much of the proceedings of the New York courts as was deemed necessary to support his suit. He declares that Clark, when the original suit was instituted against him by Camara, and from that time until after he had been appointed receiver, had resided in New York. That his effects consisted principally, if not wholly, of the claim upon Mexico, and that he claimed that fund as receiver for the purposes of that appointment. Clark answered the bill. He denies that the proceedings against him in the courts of the State of New York created any lien in behalf of Camara, or the receiver, upon the fund in controversy. He admits that no part of his property ever came into receiver's hands, under those proceedings, and that he had the claim upon Mexico whilst the suits were pending against him, and when the receiver was appointed under Camara's creditor's bill; but that all the evidences and papers in support of his Mexican claim were then in the public archives at Washington. He also states, that the board of commissioners under the act of congress of March 3, 1849, entitled 'An act to carry into effect certain stipulations of the treaty between the United States and the Republic of Mexico, of the 2d February, 1848,' had made an award in his favor for the sum of $86, 786 29/100, which sum was then in the hands of the secretary of the treasury of the United States. He then alleges that, being a resident of the State of New Hampshire, he filed in the clerk's office of that district, on the 28th January, 1843, his petition to be declared a bankrupt. That he had been declared a bankrupt on the 22d March following, pursuant to the 'act to establish an uniform system of bankruptcy throughout the United States,' passed August 19, 1841. He then recites that there had been attached to his petition in the bankrupt's court, a schedule of his property, rights, and credits of every kind and description, in which his Mexican claim had been stated; and that it was upon that claim the commissioners had awarded to him the sum before mentioned. He declares that, under the decree of the court in bankruptcy, one John Palmer had been appointed assignee; and that, having given his bond in compliance with the order of the court, he was vested, as assignee, in virtue of the operation of the bankrupt law, of all the defendant's property, for the benefit of his creditors, including the Mexican claim. It is also stated in his answer, that notice of all the proceedings in his matter of bankruptcy had been published in the leading newspapers of New Hampshire, and that the name of Juan de la Camara, and his residence, was placed among the list of his creditors attached to his petition to be declared a bankrupt. And he avers that all of his creditors had had notice of the proceedings in bankruptcy. That neither Camara nor any other creditor had filed or made any objections to those proceedings, or to the action of the assignee, until after the award had been made upon the Mexican claim.

It is not necessary, for the purposes of this opinion, to state the defendant's recital of the sale of his effects by Palmer, the assignee; his purchase of them, including the Mexican claim, or the rights claimed by the defendant under his purchase, all relating to the same having been fully acted upon by this court at this term, in the case of Ferdinand Clark v. Benjamin C. Clark and W. H. Y. Hackett. We state, however, that Palmer, the original assignee in Clark's bankruptcy, having died, he had been succeeded by the appointment of Hackett as assignee. This suit, then, is substantially between Hackett, as the assignee of Clark in bankruptcy, and Booth, the receiver under Camara's creditor's bill; that it may be determined by this court which of them has the official right to the Mexican fund, for the distribution of it between the creditors of Clark, or whether Booth, as receiver, shall have from that fund a sufficient sum to pay Camara's entire debt, leaving the residue of it for distribution between Clark's other creditors.

It appears also from the record that Booth, the receiver, took no steps to execute his official trust, from the time of his appointment in 1842, until 1851, after the award of the Mexican claim had been made in Clark's favor. And, also, that the court of chancery, acting upon the creditor's bill brought by Camara, had not been applied to, either by Camara or by the receiver, for any order upon Clark in personam, to coerce his compliance with its injunction and decree.

Upon this statement of the case we will now consider it. There is no dispute concerning the regularity or binding operation of the judgment obtained by Camara against Clark. None in respect to the proceedings under the creditor's bill. The leading point in the case is the effect of the proceedings under the last, to give a right to the receiver, in virtue of a lien which he claims upon the property of the debtor, to sue for and to recover any part of it, legal or equitable, without the jurisdiction of the State of New York. In other words, as an officer of a court of chancery, for a particular purpose, will he be recognized as such by a foreign judicial tribunal, and be allowed to take from the latter a fund belonging to a debtor, for its application to the payment of a particular creditor within the jurisdiction of the receiver's appointment, there being other creditors in the jurisdiction in which he now sues, contesting his right to do so. Or can he as receiver claim, in virtue of a decree upon a creditor's bill given in one jurisdiction, a right to have the judgment upon which the creditor's bill was brought paid out of a fund of a bankrupt debtor in a foreign jurisdiction; because his appointment preceded the bankrupt's petition.

It is urged that the receiver in this case, by the decree of the court in New York, was entitled officially to the entire property of Clark, real, personal, or equitable, both within and without the State of New York. That he could, as receiver, maintain any action for the property and rights of property of the debtor which the latter could have done. That the fund now in controversy was a chose in action belonging to the debtor when the receiver was appointed, and, though not within the State of New York, that it followed the person of the owner and passed to the receiver, because the owner was domiciled in New York. And it was also said that, having such official rights or liens upon the property of the debtor, the comity of nations would aid him in the assertion of them in a foreign tribunal. The counsel for the receiver cited from the reports of the State of New York several cases in support of the foregoing propositions. We have perused all of them carefully, without having been able to view them altogether as the learned counsel does. Whatever may be the operation of the decree in respect to the receiver's powers over the property of the debtor within the State of New York, and his right to sue for them there, we do not find any thing in the cases in the New York reports showing the receiver's right to represent the creditor or creditors of the debtor in a foreign jurisdiction. It is true that the receiver in this case is appointed under a statute of the State of New York, but that only makes him an officer of the court for that State. He is a representative of the court, and may by its direction take into his possession every kind of property which may be taken in execution, and also that which is equitable, if of a nature to be reduced into possession. But it is not considered in every case that the right to the possession is transferred by his appointment, for where the property is real, and there are tenants, the court is virtually the landlord, though the tenants may be compelled to attorn to the receiver. Jeremy's Equity Jurisprudence, 249. When appointed, very little discretion is allowed to him, for he must apply to the court for liberty to bring or defend actions, to let the estate, and in most cases to lay out money on repairs, and he may without leave distrain only for rent in arrear short of a year. 6 Vesey, 802; 15 Ib. 26; 3 Bro. C. C. 88; 9 Ves. 335; 1 Jac. and W. 178; Morris and Elme, 1 Ves. jun. 139; 1 Ib. 165; Blunt and Clithero, 6 Ves. 799; Hughes and Hughes, 3 Bro. C. C. 87; 5 Madd. 473.

A receiver is an indifferent person between parties, appointed by the court to receive the rents, issues, or profits of land, or other thing in question in this court, pending the suit, where it does not seem reasonable to the court that either party should do it. Wyatt's Prac. Reg. 355. He is an officer of the court; his appointment is provisional. He is appointed in behalf of all parties, and not of the complainant or of the defendant only. He is appointed for the benefit of all parties who may establish rights in the cause. The money in his hands is in custodia legis for whoever can make out a title to it. Delany v. Mansfield, 1 Hogan, 234. It is the court itself which has the care of the property in dispute. The receiver is but the creature of the court; he has no powers except such as are conferred upon him by the order of his appointment and the course and practice of the court; Verplanck v. Mercantile Insurance Company, 2 Paige, C. R. 452. Unless where he is appointed under the statute of New York directing proceedings against corporations, (2 R. S., 438,) and then he is a standing assignee, vested with nearly all the powers and authority of the assignee of an insolvent debtor. Attorney-General v. Life and Fire Insurance Co. 4 Paige, C. R., 224. In the case just cited, Chancellor Walworth says, that the receiver has 'no powers except such as are conferred upon him by the order of his appointment and the course and practice of the court.' In the statement which has been made of the restraints upon a receiver, we are aware that they have been measurably qualified by rules, and by the practice of the courts in the State of New York, as may be seen in Hoffman's Practice; but none of them alter his official relation to the court, and, so far as we have investigated the subject, we have not found another instance of an order in the courts of the State of New York, or in the courts of any other State, empowering a receiver to sue in his own name officially in another jurisdiction for the property or choses in action of a judgment debtor. Indeed, whatever may be the receiver's rights under a creditor's bill, to the possession of the property of the debtor in the State of New York, or the permissions which may be given to him to sue for such property, we understand the decisions of that State as confining his action to the State of New York.

Such an inference may be made from several decisions. It may be inferred from what was said by Chancellor Walworth, in Mitchell v. Bunch, 2 Paige C. R. 615. Speaking of the property which might be put into the possession of a receiver, and of the power of a court of chancery to reach property out of the State, he declares the manner in which it may be done, thus: 'The original and primary jurisdiction of that court was in personam merely. The writ of assistance to deliver possession, and even the sequestration of property to compel the performance of a decree, are comparatively of recent origin. The jurisdiction of the court was exercised for several centuries by the simple proceeding of attachment against the bodies of the parties to compel obedience to its orders and decrees. Although the property of a defendant is beyond the reach of the court, so that it can neither be sequestered nor taken in execution, the court does not lose its jurisdiction in relation to that property, provided the person of the defendant is within the jurisdiction. By the ordinary course of proceeding, the defendant may be compelled either to bring the property in dispute, or to which the defendant claims an equitable title, within the jurisdiction of the court, or to execute such a conveyance or transfer thereof as will be sufficient to vest the legal title, as well as the possession of the property, according to the lex loci rei sitae.' It is very obvious, from the foregoing extract, that up to the time when Mitchell v. Bunch was decided, in the year 1831, it had not been thought that a court of chancery in the State of New York could act upon the property of a judgment debtor in a creditor's bill which was not within the State of New York, but by the coercion of his person when he was within the jurisdiction of the State; and that it had not been contemplated then to add to the means used by chancery to enforce its sentences, in respect to property out of the State of New York, the power to a receiver to sue in a foreign jurisdiction for the same. It is true that the jurisdiction of a court of chancery in England and the United States, to enforce equitable rights, is not confined to cases where the property is claimed in either country, but the primary movement in the chancery courts of both countries to enforce an injunction is the attachment of the person of the debtor, where he is amenable to the jurisdiction of the court.

We find in the 2d volume of Spence on the jurisdiction of the court of chancery in England, (6, 7,) this language: When, therefore, a case is made out against a person resident within the jurisdiction of the court, in respect to property out of it, but within the empire, or its dependencies, which would call for the interference of the court of chancery if the property were situate in the country, the court, as it had the power, has assumed the jurisdiction, when such an interference is necessary to the ends of justice, of enforcing the equitable rights of the parties to or over property out of its jurisdiction, by the coercion of the person and sequestration of his property here, in the same manner as it would have done had the property been situate in this country. And Sir John Leach said: 'When parties defendants are resident in England, and are brought upon subpoena here, the court has full authority to act upon them personally, with respect to the subject of the suit, as the ends of justice require, and with that view to order them to take or to omit to take any steps or proceedings in any other court of justice, whether in this or in a foreign country. This court does not pretend to any interference with the other courts.' It acts upon the defendant by punishment for his contempt, for his disobedience of the court. The court of chancery has no power directly to affect property out of the bounds of its jurisdiction. Roberdeau v. Rous, 1 Atk. 544; 2 Spence. We believe such to be the proper course, in chancery, in cases of injunction, and that its jurisdiction, by injunction, rests entirely on the coercion of the person. Such, however, was not the course pursued in this case, though the debtor was then a resident of the State of New York, and amenable to the jurisdiction of the court. No motion was made to force Clarke to comply with the injunction which Camara had obtained under the creditor's bill. The matter was allowed to rest for seven years, Camara being aware that Clarke had a pecuniary claim upon the Republic of Mexico, at least as early as in the year 1843. The receiver during all that time took no action. His first movement is an application to be permitted to sue for the fund in the hands of the government, which had been awarded to Clarke by the commissioners under the treaty with Mexico. Permission was given to sue. He has brought his bill accordingly, and it directly raises the question, whether he can, as an officer of the court of chancery in New York, and in his relation of receiver to Camara, be permitted to sue in another political jurisdiction.

We have already cited Chancellor Walworth's opinion as to the course which is to be pursued in New York upon an injunction in a creditor's bill. Mr. Edwards, in his excellent work on receivers in chancery, after citing the language used in Mitchell v. Bunch, says: 'Still, the difficulty remains as to a recognition of the powers or officers of the court, by persons holding a lease upon the property, especially realty, out of the jurisdiction. Then in Malcolm v. Montgomery, 1 Hogan, 93, the master of the rolls observed, that a receiver could not be effectually appointed over estates in Ireland, by the English court of chancery, in any direct proceeding for the purpose; and that attempts had often been made to do so by serving orders made by the English court of chancery, but that they had failed, because the English court of chancery has no direct means of enforcing payment of rent to its receiver, by tenants whoreside in Ireland. The attorney-general and another counsellor also said, that to their knowledge such attempts had been frequently made, but had been uniformly given up as impracticable. A conflict might also arise between the receiver out of the jurisdiction and creditors, and also other persons out of the jurisdiction. The comity of nations and different tribunals would hardly a receiver.'

We also infer, from the case of Storm and Waddell, in 2 Sandford, 494, that the receiver's right to the possession of the property of a debtor in the State of New York, and his right to sue for property there, is limited to that jurisdiction. The chancellor, in the last case mentioned, after having given an epitome of the cause of proceeding in a creditor's bill, and speaking of equitable interests and things in action belonging to the debtor, without regard to the injunction, says: 'The property of the defendant is subjected to the suit, wherever it may be, if the receiver can lay hold of it, or the complainant can reach it by the decree. The injunction, when served, prevents the debtor from putting it away or squandering it.' This language indicates the receiver's locality of action. Taken in connection with that of Chancellor Walworth, in Mitchell v. Bunch, it shows that the receiver's right to the possession of the debtor's property is limited to the jurisdiction of his appointment, and that he has no lien upon the property of the debtor, except for that which he may get the possession of without suit, or for that which, after having been permitted to sue for, he may reduce into possession in that way. Our industry has been tasked unsuccessfully to find a case in which a receiver has been permitted to sue in a foreign jurisdiction for the property of the debtor. So far as we can find, it has not been allowed in an English tribunal; orders have been given in the English chancery for receivers to proceed to execute their functions in another jurisdiction, but we are not aware of its ever having been permitted by the tribunals of the last.

We think that a receiver has never been recognized by a foreign tribunal as an actor in a suit. He is not within that comity which nations have permitted, after the manner of such nations as practise it, in respect to the judgments and decrees of foreign tribunals, for all of them do not permit it in the same manner and to the same extent, to make such comity international or a part of the laws of nations. But it was said that receivers in New York are statutory officers, as assignees in bankruptcy are. That being so, he had, as assignees in bankruptcy have upon the property of the bankrupt, a lien upon the property of a judgment debtor, under an appointment in a creditor's bill. But that cannot be so. An assignee in bankruptcy in England, and in this country when it had a bankrupt law, is an officer made by the statute of bankruptcy, with powers, privileges, and duties prescribed by the statute, for the collection of the bankrupt's estate for an equal distribution of it among all of his creditors.

In England, the property of the bankrupt is vested in the assignees in bankruptcy by legislative enactment. Where commissioners have been appointed, it is imperative upon them to convey to the assignees the property of the bankrupt, wherever it may be or whatever it may be, and it is done by deed of bargain and sale, which is afterwards enrolled. It vests the assignees with the title to the property from the date of the conveyance, it having been previously vested in the commissioners for conveyance by them to the assignees. As to the bankrupt's personal estate, the statute looks beyond the debts and effects of a trader within the kingdom, and vests them in the commissioners in every part of the world. The last is done in England, upon the principle that personal property has no locality, and is subject to the law which governs the person of the owner. As by that law the property of a bankrupt becomes vested in the assignee, for the purposes of the assignment, his title to such property out of England is as good as that which the owner had, except where some positive law of the country, in which the personal property is, forbids it. Cullen, 244.

In claiming such a recognition of assignees in bankruptcy from foreign courts, England does no more than is permitted in her courts, for they give effect to foreign assignments made under laws analogous to the English bankrupt laws. Solomons v. Ross, 1 H. B. 131, n.; Jollet v. Deponthieu, Ib. 132, n. But such comity between nations has not become international or universal. It was not admitted in England until the middle of the last century in favor of assignees in bankruptcy. Lord Raymond decreed it in 1811, in the case of a commission of bankruptcy from Holland. Sir Joseph Jekyll, in 1715, said, the law of England takes no notice of a commission in Holland, and therefore a creditor here may attach the effects in the city of London, and proceed to condemnation. 3 Burge, 907. Lord Mansfield, in Warring v. Knight, (sittings in Guildhall, after Hilary term, Geo. III., Cooke's Bank. Laws, 300, 3 Burge, 907,) ruled, that where an English creditor proceeded, subsequent to an act of bankruptcy, by attachment in a foreign country, and obtained judgment there and satisfaction by the sale of the debtor's personal property, the assignees in an action in England could not recover from such creditor the amount of the debt which had been remitted to him. Again, his lordship ruled, that the statutes of bankrupts do not extend to the colonies or any of the king's dominions out of England, but the assignments under such commissions are, in the courts abroad, considered as voluntary, and as such take place between the assignee and the bankrupt, but do not affect the rights of any other creditors.

So the law stood in England until the case of Folliott v. Ogden, 1 H. Bl. 123, when Chancellor Northington stimulated it into a larger comity, by giving effect to a claim to the creditors of a bankrupt in Amsterdam over an attaching creditor in England, who had proceeded after the bankrupt had been declared to be so, by the proper tribunal in Amsterdam. England had just then become the great creditor nation of Europe, and of her provinces in North America. Her interest prompted a change of the rule, and her courts have ever since led the way in extending a comity which had before been denied by them. The judicial history of the change, until the comity in favor of assignees became in England what it now is, is given in 3 Burge, ch. 22; Bankrupt Laws, 886, 906-912, inclusive, and from 912-929. It may now be said to be the rule of comity between the nations of Europe; but it has never been sanctioned in the courts of the United States, nor in the judicial tribunals of the States of our nation, so far as we know, and we know that it has been repeatedly refused in the latter. Our courts, when the States were colonies, had been schooled, before the Revolution, in the earlier doctrines of the English courts upon the subject. The change in England took place but a few years before the separation of the two countries.

That comity has not yet reached our courts. We do not know why it should do so, so long as we have no national bankrupt laws. The rule which prevailed whilst these States were colonies still continues to be the rule in the courts of the United States, and it is not otherwise between the courts of the States. It was the rule in Maryland, before the Revolution. It is the rule still, as may be seen in Birch v. McLean, 1 Harris and McHenry, 286; Wallace v. Patterson, 2 H. and McHenry, 463. An assignment abroad, by act of law, has no legal operation in Pennsylvania. We find from McNeil and Colquhoon, 2 Haywood, 24, that it has been the rule in North Carolina for sixty years. South Carolina has no other. 3 Const. Rep. S.C.. 283; 4 McCord, 519; Taylor v. Geary, Kirby, 313. In Massachusetts, the courts will not permit an assignment in one of the States, whether it be voluntary or under an insolvent law, to control an attachment in that State of the property of an insolvent which was laid after the assignment, and before payment to the assignees. The point occurred recently in the circuit court of the United States for that district, in the case of Betton, assignee, v. Valentine, 1 Curtis, 168; and it was ruled that the assignee of an insolvent debtor, appointed under the law of Massachusetts, does not so far represent creditors in the State of Rhode Island as to be able to avoid a conveyance of personal property in the latter State, good as against the insolvent, but invalid as against creditors, by the law of Rhode Island.

In New York, the 'ubiquity of the operation of the bankrupt law, as respects personal property,' was denied in Abraham v. Plestoro, 3 Wend. 538. Chancellor Kent considers it to be a settled part of the jurisprudence of the United States, that a prior assignment under a foreign law will not be permitted to prevail against a subsequent attachment of the bankrupt's effects found in the United States. The courts of the United States will not subject their citizens to the inconvenience of seeking their dividends abroad, when they have the means to satisfy them under their own control. We think that it would prejudice the rights of the citizens of the States to admit a contrary rule. The rule, as it is with us, affords an admitted exception to the universality of the rule that personal property has no locality, and follows the domicile of the owner. This court, in Ogden v. Saunders, 12 Wheat. 213, disclaimed the English doctrine upon this subject; and in Harrison v. Sterry, 5 Cranch R. 289, 302, this court declared that the bankrupt law of a foreign country is incapable of operating a legal transfer of property in the United States.

Such being the rule in the American courts, in respect to foreign assignments in bankruptcy, and in respect to such assignments as may be made under the insolvent laws of the States of the United States, there can be no good reason for giving to a receiver, appointed in one of the States under a creditor's bill, a larger comity in the courts of the United States, or in those of the States or Territories. On the contrary, strong reasons may be urged against it. A receiver is appointed under a creditor's bill for one or more creditors, as the case may be, for their benefit, to the exclusion of all other creditors of the debtor, if there be any such, as there are in this case. Whether appointed as this receiver was, under the statute of New York, or under the rules and practice of chancery as they may be, his official relations to the court are the same. A statute appointment neither enlarges nor diminishes the limitation upon his action. His responsibilities are unaltered. Under either kind of appointment, he has at most only a passive capacity in the most important part of what it may be necessary for him to do, until it has been called by the direction of the court into ability to act. He has no extra territorial power of official action; none which the court appointing him can confer, with authority to enable him to go into a foreign jurisdiction to take possession of the debtor's property; none which can give him, upon the principle of comity, a privilege to sue in a foreign court or another jurisdiction, as the judgment creditor himself might have done, where his debtor may be amenable to the tribunal which the creditor may seek.

In those countries of Europe in which foreign judgments are regarded as a foundation for an action, whether it be allowed by treaty stipulations or by comity, it has not as yet been extended to a receiver in chancery. In the United States, where the same rule prevails between the States as to judgments and decrees, aided as it is by the first section of the 4th article of the constitution, and by the act of congress of 26th May, 1790, by which full faith and credit are to be given in all of the courts of the United States, to the judicial sentences of the different States, a receiver under a creditor's bill has not as yet been an actor as such in a suit out of the State in which he was appointed. This court considered the effect of that section of the constitution, and of the act just mentioned in McElmoyle and Cohen, 13 Pet. 324-327. But apart from the absence of any such case, we think that a receiver could not be admitted to the comity extended to judgment creditors, without an entire departure from chancery proceedings, as to the manner of his appointment, the securities which are taken from him for the performance of his duties, and the direction which the court has over him in the collection of the estate of the debtor, and the application and distribution of them. If he seeks to be recognized in another jurisdiction, it is to take the fund there out of it, without such court having any control of his subsequent action in respect to it, and without his having even official power to give security to the court, the aid of which he seeks, for his faithful conduct and official accountability. All that could be done upon such an application from a receiver, according to chancery practice, would be to transfer him from the locality of his appointment to that where he asks to be recognized, for the execution of his trust in the last, under the coercive ability of that court; and that it would be difficult to do, where it may be asked to be done, without the court exercising its province to determine whether the suitor, or another person within its jurisdiction, was the proper person to act as receiver.

Besides, there is much less reason for allowing the complainant in this case to be recognized as receiver for the fund out of the State of New York, and in this jurisdiction, even if the practice in chancery in respect to receivers was different from what we have said it was. The remedies which the judgment creditor in New York had under his creditor's bill against his debtor, were not applied as they might have been in that State, according to the practice in chancery in such cases. When Clark had been enjoined under the creditor's bill, and the receiver had been appointed, both judgment creditor and receiver knew at the time,-certainly, as the record shows, in a short time afterwards, that Clark had a pecuniary claim upon the Republic of Mexico. No attempt was made, according to chancery practice, to coerce Clark by the attachment of his person under the injunction, to make an assignment of that claim for the payment of Camara's judgment. It cannot be said that Clark had not property to assign, and that it was therefore unnecessary to attach him. That would make no difference; for whether with or without property, he might have been compelled to make a formal assignment, even though he had sworn that he had none. It was so ruled in Chipman v. Sabbaton, 7 Paige, C. R. 47, and in Fitzburgh v. Everingham, 6 Paige, 29.

There was a want of vigilance in this matter, which does not make any equity which he may have in New York upon Clark's property, superior to that of Clark's creditors, who are pursuing the funds in this district. Nor, according to the rule prescribed in the United States, that personal property has no locality on account of the domicile of the owner, to transfer it under a foreign assignment, can the receiver have in this case any thing in the nature of a lien to bind the property of Clark not within the State of New York. When we take into consideration also the origin of the fund in controversy, the manner of its ultimate recovery from Mexico, the congressional action upon it, in every particular, to secure it, after the awards were made, to those who might be entitled to receive it; the jurisdiction given to the circuit court of this district, with an appeal from its decision to this court, upon the principles which govern courts of equity to adjudge disputes concerning it, and that such cases were to be conducted and governed in all respects as in other cases in equity, we must conclude that the complainant in this case, as receiver, cannot be brought under the rule prescribed for our decision. We concur with the court below in the dismission of the bill.

This cause came on to be heard on the transcript of the record from the circuit court of the United States for the District of Columbia, holden in and for the county of Washington, and was argued by counsel. On consideration whereof it is now here ordered, adjudged, and decreed by this court, that the decree of the said circuit court in this cause be and the same is hereby affirmed with costs.

title: Booth v. Clark/Opinion of the Court


text: Talk:Booth v. Clark/Opinion of the Court

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


text:
Boone v. Missouri Iron Company

THIS was an appeal from the circuit court of the United States for the district of Missouri.

The bill was filed by Thomas, in his lifetime, and referred to a complicated history of transactions, running from 1836 to 1848, the date of the bill. A condensed narrative of these transactions is given in the opinion of the court.

The circuit court dismissed the bill, and the complainants appealed to this court.

The case was argued by Mr. Britton A. Hill, for the respondents, no counsel appearing for the appellant.

The argument of Mr. Hill was so intimately connected with the facts in the case, upon which he founded his legal inferences, that the points of law could not be made intelligible without a detailed statement of the particular facts of the case. The argument is, therefore, omitted altogether.

Mr. Justice McLEAN delivered the opinion of the court.

title: Boone v. Missouri Iron Company


text: Talk:Boone v. Missouri Iron Company

title: Talk:Boone v. Missouri Iron Company


text:
Boone v. Missouri Iron Company/Opinion of the Court

This is an appeal from the circuit court of the United States for the district of Missouri.

The bill prays the specific execution of a contract between Thomas and the Missouri Iron Company, dated 15th August, 1839, which requires the defendants to give up and cancel the notes of Thomas to Nancy Bullett, for $10,000, dated 2d November, 1836; to pay a debt due to Martin Thomas; to sell or transfer, on the books of said company, for the use of the complainant, $43,000 worth of stock of said company, or, in the alternative, that the American Iron Company may be decreed to reconvey the one undivided seventh part of the Iron Mountain tract to the complainant.

The complainant died in 1849, and, his death being suggested, an amended bill was filed, praying for an account of rents and profits, for the use of the land and consumption of ores, timber, &c., by the defendants, and for a decree of title, &c.

On the 2d November, 1836, Nancy Bullett, widow, sold to her brother, the complainant, one undivided seventh part of a tract of 20,000 arpens of land, in Washington county, Missouri, known as the Iron Mountain tract; and she executed to him a title-bond of that date, with the condition that she would convey to him the above interest, on the payment of two notes for $5,000 each, one payable at six, the other at twelve months, from the date of the bond. On the 15th of November, 1836, Thomas made a similar title-bond to John L. Van Doren, with the condition to make a deed, upon his paying the two notes of $5,000 each to Mrs. Bullett; and also three notes, of $5,000 each, given by him to Thomas, at eighteen, twenty-four, and thirty months, from the date of the bond.

On the 31st of December, 1836, the Missouri Iron Company was incorporated by the legislature of Missouri, and Van Doren, Pease, and Co. were named in the act as corporators. The company was organized; books were opened to sell the capital stock; Van Doren was appointed to obtain subscribers, but, being unsuccessful, he failed, made an assignment, and became insolvent. Agents were appointed to visit foreign countries; who returned, making a report that a banker in Amsterdam subscribed $600,000 of stock. The stock was raised to $5,000,000, but the company soon became hopelessly embarrassed.

On the 22d of February, 1839, James Bruce, who married Mrs. Bullett, conveyed all their interest in the one seventh of the Iron Mountain tract, to Allen and Sloan, and also assigned the notes of Thomas to them, for the consideration of $4,500. At the same time, Allen and Sloan gave a bond to Bruce and wife, to convey to Thomas all their interest in the one seventh of the tract, on his paying to them $9,000, the amount due on the original purchase.

On the 15th of August, 1839, A. Jones, president of the company, executed the following receipt to Thomas, under which he claims a specific performance against the Missouri Iron Company, and the other defendants, to wit: 'Received of Jesse B. Thomas, of Sangamon county, Illinois, a transfer of $71,400 of the capital stock of the Missouri Iron Company, $43,000 of which is to be transferred to Julius Sichel, of Amsterdam, to consummate a contract entered into with him. The residue of the stock to be appropriated to pay the balance due on the two notes given to Mrs. Bullett,' &c.

On the 2d September, 1841, the board resolved, that the president be authorized to receive back from Thomas the stock issued to him, &c.; and the secretary addressed to him a letter, saying: 'You will perceive that, by the above resolution, the president is authorized to cancel the bond or agreement, in relation to the transfer of your interest in the Iron Mountain tract. As the chance of doing something with the property is better than the stock, I presume you can have no objection to making the transfer; the company is about to be dissolved, and the stock is worth nothing,' &c.

It does not appear that this communication was ever answered by Thomas. He never paid, or offered to pay, the money due to Mrs. Bullett, or to Allen and Sloan, her assignees. He did not transfer to the company the 714 shares of stock, nor demand the cancellation of Mrs. Bullett's title-bond, that he had assigned to the company. Nor does it appear that he did any act to fulfil his contract with Mrs. Bullett.

In January, 1842, it appears the company failed, and all its property was sold on execution. In the amended bill, it is averred that, in 1842, the Missouri Iron Company was dissolved, being insolvent. C. C. Zeigler became the purchaser, at sheriff's sale, of all the Iron Mountain tract, for which he received the sheriff's deed, dated 6th July, 1841; and, on the 6th of January, 1842, the Missouri Iron Company sold the tract to Zeigler, and executed a deed to him.

A decree had been rendered in the circuit court of St. Francois county, at the suit of Allen and Sloan, assignees of Mrs. Bullett, against Thomas and J. L. Van Doren, for the sum of $11,475, which was the consideration for the purchase of the undivided seventh part of the Iron Mountain tract, which was declared to be an equitable lien on the interest purchased; and, under the decree of May 8, 1843, the property was sold to Zeigler, and both Thomas and Van Doren were barred and precluded, by the decree, from enforcing any rights against the same. Pending that suit, Zeigler purchased the interest of Allen and Sloan in the title-bond of Mrs. Bullett to Thomas, and the notes of Thomas, given to Mrs. Bullett, for $6,500.

It appears that, on the 24th of January, 1843, the American Iron Company was incorporated, and that Zeigler sold the Iron Mountain tract to the company.

There is no evidence showing a connection between the Iron Mountain Company first formed, and the present American Iron Company, except that the latter company is in possession of the same property, claiming it by sheriff's sale and deeds of conveyance under a decree, and from parties who were corporators of the first company, and who represented the company.

It would be difficult to find any case where the objections to the specific execution of a contract are more insuperable than in this case. In the first place, the consideration for which the property was purchased has not been paid; and the statute of limitations would have barred a recovery on the notes given, if suit had been brought on them at the time this bill was filed. It is true the purchaser from Thomas, Van Doren, agreed to pay these notes; but, not having done so, the assignment affords no excuse for the negligence of Thomas in his lifetime. And there is no principle in equity better settled, than that he who asks a specific execution of his contract must show a performance on his part, or that he has offered to perform. Neither of these has been done in this case.

In addition to this, it appears that the property claimed by the representatives of Thomas, which he never paid for, was sold in 1841, under a judgment obtained by Martin v. Van Doren, Pease, and Co., the corporators named in the Missouri Iron Company, by the sheriff, and that C. C. Zeigler became the purchaser; and after this, the 6th of January, 1842, the Missouri Iron Company sold the Iron Mountain tract to Zeigler, and executed to him a deed. In the same year the company was dissolved, being insolvent.

It also appears that a decree was rendered for the purchasemoney, in 1843, which the court held was an equitable lien upon the land, and the land was decreed to be sold for the payment of the consideration-money; and one seventh of the whole tract, the amount purchased by Thomas, was, on the 8th of May, 1843, sold. This proceeding was had, on the ground that Thomas had abandoned his claim to the land.

By various efforts and contrivances, the stock of the first company was advanced to $5,000,000, but, as might be expected, after such an inflation, the stock proved to be worth nothing, and the owners became insolvent.

Under the American Iron Company, which succeeded the first company, extensive works have been established, and a prosperous business in mining is carried on.

On a full consideration of this complicated case, there seems to be no ground of equity on which relief can be given to the complainants. On the contrary, their equity appears to have been extinguished by negligence, in not paying the consideration, by the sale of the property by the sheriff, also under a decree of a court having jurisdiction of the case, and also by a conveyance of the Missouri Iron Company. A minute statement of the facts would be tedious, and cannot be necessary, as the case is free from doubts by the outline above given.

The decree of the circuit court, which dismissed the complainant's bill, is affirmed.

This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Missouri, and was argued by counsel. On consideration whereof it is now here ordered, adjudged, and decreed by this court that the decree of the said circuit court in this cause be and the same is hereby affirmed, with costs.


text: Talk:Boone v. Missouri Iron Company/Opinion of the Court


text:
Burchell v. Marsh

THIS was an appeal from the circuit court of the United States for the district of Illinois.

The bill was filed by Marsh, Frear, and Arbuckle, to set aside an award made by arbitrators chosen by them upon the one part, and Burchell upon the other, to hear all matters of claim of either party, upon or against the other, in the law or in equity.

The facts in the case were these:--

There were two commercial firms in New York, carrying on business under the names of Marsh and Frear, and Alexander Frear and Co. The first was composed of Stewart C. Marsh and Alexander Frear; and the second, of Alexander Frear and William M. Arbuckle. Burchell was a retail country merchant, having a store at St. Charles, in Kane county, Illinois, and another store at Cherry Valley, in Winnebago county, Illinois. Burchell had been in the habit, for several years, of purchasing goods from the firms in New York, and of making payments on account.

In March, 1852, the two firms brought suits in the circuit court of the United States for Illinois, against Burchell, by summons. At April term, 1852, at Chicago, Burchell filed an affidavit for a continuance, stating that he could prove by absent witnesses that the debt was not due when the suit was brought in March, nor until the April following. Whereupon the plaintiffs submitted to a nonsuit.

In May, 1852, the two firms renewed their suits, but filed the affidavits required by law, and commenced the suits by writs of capias ad respondendum, under which Burchell was arrested and held to bail. The amount claimed by Marsh and Freer was $12,000, and by Freer and Arbuckle, $2,014. These suits were brought by R. V. M. Cross, as agent and attorney for the plaintiffs.

In July, 1852, the court being held at Springfield, the causes were continued upon affidavit of the defendant.

In October, 1852, there was an agreement for a reference to arbitrators, which, however, was afterwards revoked by Freer.

In December, 1852, the parties agreed upon another award. The agreement recited the claims of the firms upon Burchell, and the suits, 'by which the said Burchell claims to have sustained damages by reason of having been sued by said firms as aforesaid, and by reason of the doings of the said firms towards him.' The agreement then proceeded thus:--

Now, therefore, in consideration of the premises, and to put an end to all further controversies, and for a full and final adjustment of all differences between them, this article of submission, made and entered into this 15th day of December, A. D. 1852, between Alexander Freer, william M. Arbuckle, and Stewart C. Marsh, of the one part, and Peter J. Burchell, of the other part, witnesseth, that the said parties have agreed to and do hereby submit all demands, suits, claims, causes of action, controversies, and disputes between them, to the arbitrament, determination, and award of F. B. Mosley, Oliver M. Butler, and such other person as the said Mosley and Butler may select, who are within sixty days from the day of the date hereof, and on such day as they or a majority of them shall select, meet at St. Charles, Kane county, (of the time of which meeting notice shall be given to the said parties or their attorneys,) and the said arbitrators shall hear all matters of claim of either party upon or against the other, founded in law or equity. And the said award shall direct and determine what, if any thing, is due or owing from said Burchell to said firms, or what, if any thing, shall be due from either or both of said firms to the said Burchell, &c., &c.

Evidence was given before the arbitrators, of the accounts, of the credits, the institution of the suits, of the time when the goods were to be paid for, of Burchell's pecuniary condition, of the arrest under the capias, and bail, of the violent declarations of Cross, the agent of the plaintiffs, the opinions of witnesses, how much injury Burchell's credit had sustained by reason of the suits, &c., &c.

In February, 1853, the arbitrators awarded as follows, namely:

'First, that all claims, demands, controversies, and disputes, between the respective parties, or between the said Burchell and the firm of Marsh and Freer, and also between the firm of Alexander Freer and Co. and the said Burchell, should cease and be determined by the said award. Second, that as between Stewart C. Marsh and Alexander Freer (the firm of Marsh and Freer) and the said Burchell, that there was due from said firm of Marsh and Freer to the said Peter J. Burchell, the sum of one hundred dollars, which said sum they did direct that the said Marsh and Freer should pay in money to the said Peter J. Burchell, in one month from the date of said award. Third, as between Alexander Freer and William M. Arbuckle, (the firm of Alexander Freer and Co.,) that there was due from said firm of Alexander Freer and Co. to said Burchell, the sum of twenty-five dollars, which said sum they did direct that your orators, Alexander Freer and William M. Arbuckle, should pay in money to said Burchell, in one month from the date of the said award. Fourth, that the costs of said arbitration should be paid as follows: That the firms should pay all the costs which they had made or occasioned, and should also pay the said Burchell his costs expended in and about said arbitration.

In February, 1853, the firms filed a bill, on the equity side of the court, to set aside this award. The bill was answered, and the cause came up, upon bill and answer, in May, 1853, when the court decreed that the award should in all things be vacated, annulled, and set aside; and that Burchell should absolutely refrain and desist from counting upon, or in any manner pleading said award, in any suit or proceeding, in law or equity.

Burchell appealed to this court.

It was argued by Mr. Gillet, for the appellant, and by Mr. Carlisle and Mr. Washburne, for the appellees.

Mr. Gillet made the following points:--

1. The arbitrators had full power to act upon all 'demands, suits, claims, causes of action, controversies, and disputes between the parties.'

2. Under this submission, the arbitrators were constituted by the parties sole judges of the facts and the law, and equity arising from them.

3. That an award is made in ignorance of the rights of the parties, and of the duties and powers of the arbitrators, is no ground for setting it aside.

4. A court of equity will only interfere to set aside an award on a voluntary submission, for corruption or improper conduct of the arbitrators; and on a hearing, upon bill and answer, when these are charged and denied, the award cannot be set aside.

5. Every thing is to be presumed and every legal intendment made in favor of an award.

6. Where the submission is general, the power to award costs is a necessary incident to the power of the arbitrators.

7. Where an award covers matters not submitted, but is good in other respects, such matters will be rejected as surplusage, and the residue of the award will be good.

8. Where the whole or a part of an award is not within the terms of the submission, the party can obtain redress at law, and a court of equity has no jurisdiction.

The counsel for the appellees stated the case as follows:--

The answer admits Burchell's indebtedness to the firm of Marsh and Freer, to the amount of $3,822, and interest, and to the firm of Freer and Co., $1,014.80, being less than the amounts claimed by them respectively in the bill; but no proof appears in the record to countervail the answer in this respect.

There is no pretence in the record of any debt (technically) by the appellees, or either of them, to Burchell; nor of any demand (in the largest sense) against them, or either of them, except such as may have accrued by reason of an alleged anticipation of the maturity of his debts to them respectively, and the alleged premature institution of suits against him thereon.

The award (as alleged and admitted ubi supra) was as follows: -

First. That all claims, demands, controversies, and disputes, between the respective parties, or between the said Burchell and the firm of Marsh and Freer, and also between the firm of Alexander Freer and Co. and the said Burchell, should cease, and be determined by the said award.

Second. That as between Marsh and Freer, and said Burchell, there was due from said firm to said Burchell the sum of $100; which sum should be paid, &c.

Third. That as between A. Freer and Co. and said Burchell, there was due from said firm to said Burchell, $25, to be paid, &c.

Fourth. That the appellees should pay the costs.

The case was heard on bill, answer, exhibits, and replication.

It is only necessary to read the bill and answers, to be persuaded of the gross injustice which has been done to the appellees.

title: Burchell v. Marsh


text: Talk:Burchell v. Marsh

title: Talk:Burchell v. Marsh


text:
Burchell v. Marsh/Opinion of the Court

But it is not contended that the court could exercise any power in the nature of appellate jurisdiction merely, to correct this injustice. It is admitted that the award must stand, unless it can be impeached upon some distinct and recognized ground of relief in equity.

For the appellees it is submitted:--

First. That their relief, if any, must be in equity; because, as will presently be shown, it is principally claimed upon matters dehors the award, and which, therefore, could not be taken advantage of at law. 2 Story's Eq. Jur. § 1452, and cases there cited; 2 Wils. 148; 2 Johns. Ch. R. 367; 8 East, 344; McCormick v. Gray, 13 How. 27.

2. The record shows a case of gross partiality and misconduct on the part of the arbitrators, and this is ground of relief in equity.

I. As to the law. 2 Story's Eq.Ju. § 1452; Herrick v. Blair, 1 Johns. C. R. 101; Walker v. Frobisher, 6 Ves. 70; Van Cortlandt v. Underhill, 17 Johns. R. 411, per Spencer, Ch. J.

II. As to the facts.

These appear upon the allegations of the bill, and the admissions of the answer in part; and in other part by the insufficient and evasive denials of the answer.

From all which it clearly appears, that no evidence whatever was offered to the arbitrators of the damages sustained by Burchell, 'by reason of having been sued by said firms as aforesaid, or by reason of the doings of the said firms towards him.' Evidence was received and heard, under objection by the appellees, of certain offensive language and harsh proceedings, by one Cross, an attorney employed by the appellees for the collection of their debts against the appellant, and witnesses, who appear to have been certain bystanders for that purpose, were sworn that they 'should think, judging from the evidence they had heard given before said arbitrators, that said Burchell had sustained damages by reason of being sued as aforesaid, and by the statements of said Cross, in injury to his business and credit, to the amount of $10,000.'

Mr. Justice GRIER delivered the opinion of the court.

This case was submitted on bill and answer. The appellees, who were complainants below, pray the court to set aside an award made between the parties, as 'fraudulent and void.' The bill charges that 'the award was made either from improper and corrupt motives, with the design of favoring said Burchell, or in ignorance of the rights of the parties to said submission, and of the duties and powers of the arbitrators who signed the said award.'

The answer denies 'that the arbitrators acted unjustly, or with partiality or ignorance, in making their award; but avers that they acted justly, fairly, and with a due consideration of the rights of the parties.' This allegation of the answer must be taken to be true, unless it appears, from other facts admitted by it, that this conclusion or averment founded on them is incorrect.

In the consideration of this case, it will not be necessary to incumber it with a history of the facts charged and admitted or denied by the pleadings, except as they shall be incidentally noticed. The general principles, upon which courts of equity interfere to set aside awards, are too well settled by numerous decisions to admit of doubt. There are, it is true, some anomalous cases, which, depending on their peculiar circumstances, cannot be exactly reconciled with any general rule; but such cases can seldom be used as precedents.

Arbitrators are judges chosen by the parties to decide the matters submitted to them, finally and without appeal. As a mode of settling disputes, it should receive every encouragement from courts of equity. If the award is within the submission, and contains the honest decision of the arbitrators, after a full and fair hearing of the parties, a court of equity will not set it aside for error, either in law or fact. A contrary course would be a substitution of the judgment of the chancellor in place of the judges chosen by the parties, and would make an award the commencement, not the end, of litigation. In order, says Lord Thurlow, (Knox v. Symmonds, 1 Ves. Jr. 369,) 'to induce the court to interfere, there must be something more than an error of judgment, such as corruption in the arbitrator, or gross mistake, either apparent on the face of the award, or to be made out by evidence; but in case of mistake, it must be made out to the satisfaction of the arbitrator, and that if it had not happened, he should have made a different award.'

Courts should be careful to avoid a wrong use of the word 'mistake,' and, by making it synonymous with mere error of judgment, assume to themselves an arbitrary power over awards. The same result would follow if the court should treat the arbitrators as guilty of corrupt partiality, merely because their award is not such an one as the chancellor would have given. We are all too prone, perhaps, to impute either weakness of intellect or corrupt motives to those who differ with us in opinion.

1. The first objection to the award in this case is, that it is not within the submission. But we are of opinion this objection is without foundation.

The submission recites that controversies and disputes had arisen between the firm of March and Freer, and of Freer and Arbuckle, with Burchell. It states the controversies to have arisen from suits brought by said firms against Burchell, to recover certain debts claimed to be due by him to the firms, respectively, 'and the said Burchell claims to have sustained damages by reason of having been sued by said firms and by reason of the doings of the said firms towards him.' The parties, therefore, agreed to submit 'all demands, suits, claims, causes of action, controversies, and disputes between them, to the arbitration and award of F. B. Mosley,' &c., 'who are to hear all matters of claim of either party, upon or against the other, in law or equity.'

On the hearing, the arbitrators received evidence of the debts alleged to be due from Burchell to the two firms, and of the alleged oppressive and ruinous suits brought against him by one Cross, who acted as agent of the firms. The witnesses, in proving these transactions, were permitted to state certain slanderous language used by Cross in speaking to and of Burchell, charging him with dishonesty and perjury. When this testimony was offered, the complainants' counsel agreed that it might be received, subject to exceptions.

It has been argued, that because the arbitrators received evidence of the slanderous language used by Cross, that, therefore, they included in their award damages for his slanders, for which his principals would not be liable; and that, therefore, they had taken into consideration matters not contained in the submission. But the answer to this allegation is, that the record shows no admission or proof that the arbitrators allowed any damages for the slanders of Cross. Whether the complainants were liable, and how far they were justly answerable for the conduct of their agent, were questions of law and fact submitted to the arbitrators. All these questions were fully argued before them by counsel. Whether their decision on them was erroneous, does not appear. The transactions which were testified to, with regard to the suits brought against Burchell, and whether they were oppressive, wrongful, and ruinous to him, was one of the very matters submitted to the arbitrators. The words as well as the acts of Cross made part of the res gestae, and could not well be severed in giving a history of them. Every presumption is in favor of the validity of the award. If it had stated an account, by which it appeared that the arbitrators had made a specific allowance of damages for the slanders of Cross, it would have been annulled, to that extent at least, as beyond the submission. But it cannot be inferred that the arbitrators went beyond the submission, merely because they may have admitted illegal evidence about the subject-matter of it.

We are of opinion, therefore, that there is nothing on the record to show that the arbitrators, in making this award, exceeded their authority, or went beyond the limits of the submission.

2. The charges of fraud, corruption, or improper conduct in the arbitrators, as we have seen, are wholly denied by the answer, which must be assumed to be true, unless facts are admitted from which they are a necessary or legal inference. We can see nothing in the admitted facts of the case from which any such inference can be justly made. The damages allowed for the alleged oppression of Burchell, and the ruin of his business as a merchant, may seem large to some, while others may think the sum of four, or even five thousand dollars as no extravagant compensation for such injuries. It may be admitted, that, on the facts appearing on the face of the record, this court would not have assessed damages to so large an amount, nor have divided them so arbitrarily between the parties; but we cannot say that the estimate of the arbitrators is so outrageous as of itself to constitute conclusive evidence of fraud or corruption. Damages for injuries of this sort cannot be measured by any rules, nor can the court properly impute corruption to others, because they differ with them in their estimation of a matter which depends on discretion rather than calculation. It is enough that the parties have agreed to trust the discretion and judgment of neighbors acquainted with them, and their relative standing and credit. The admission of witnesses to prove their estimate of the damages (even if it had been in the face of the objection of counsel, and not by consent) may have been an error in judgment, but it is no cause for setting aside the award; nor can the admission of illegal evidence, or taking the opinion of third persons, be alleged as a misbehavior in the arbitrators which will affect their award. If they have given their honest, incorrupt judgment on the subject-matters submitted to them, after a full and fair hearing of the parties, they are bound by it; and a court of chancery have no right to annul their award because it thinks it could have made a better.

In fine, we are of opinion that this record furnishes no evidence of corruption or misbehavior in the arbitrators, nor of 'ignorance,' (as charged in the bill,) or of any such mistake as would justify a court of chancery in annulling it.

The decree of the court below is therefore reversed, and the record remitted with directions to dismiss the bill of complaint, with costs, but without prejudice to any legal defence.

Mr. Justice McLEAN and Mr. Justice NELSON dissented.

Mr. Justice NELSON.

I do not agree to the judgment of the court in this case. I think the damages allowed against the complainants, by the arbitrators, are so extravagant, disproportioned, and gross, as to afford evidence of passion and prejudice, and justified the judgment of the court below, in setting aside the award. It is difficult, if not impossible, to see, upon any other ground, how between four and five thousand dollars should have been allowed against one of the firms in the submission, and but some one thousand dollars against the other, under the circumstances of the case.

This cause came on to be heard on the transcript of the record from the circuit court of the United States for the district of Illinois, and was argued by counsel. On consideration whereof it is now here ordered, adjudged, and decreed by this court that the decree of the said circuit court in this cause be and the same is hereby reversed, with costs, and that this cause be and the same is hereby remanded to the circuit court, with directions to dismiss the bill of complaint, with costs, but without prejudice to any legal defence which the parties may have.

title: Burchell v. Marsh/Opinion of the Court


text: Talk:Burchell v. Marsh/Opinion of the Court


text:
Hinkle v. Wanzer

THIS was an appeal from the circuit court of the United States for the southern district of Alabama.

The case is fully stated in the opinion of the court.

It was argued by Mr. Phillips, for the appellant, and by Mr. Reverdy Johnson and Mr. Reverdy Johnson, Junior, for the appellees. There was also a brief filed by Mr. Hopkins for the appellant, and Mr. Chandler, for Hunter.

The points which were made by the respective counsel can better be understood by giving them in connection with their own statements of the facts; and as these were short, they are inserted.

Mr. Phillips, for the appellant, stated the case thus:--

The complainant seeks to enjoin the defendant Hunter from issuing and levying an execution on a certain judgment recovered in the said circuit court, on the 10th April, 1839, by Moses Wanzer, founded upon a note signed by Thomas Long, George D. Fisher, and the complainant, Hinkle, who was a surety thereon.

The note, being the property of one John Fisher, was transferred by him, with very many others, to Gordon, Campbell, and Chandler, on the 13th May, 1837, for purposes thus stated in the receipt: 'The proceeds of all notes, as they may be collected, are to be appropriated by us in the payment of any demands which we may hold against said Fisher and Johnson, upon their own debts, and not upon indorsements or liabilities for others.'Mozes Wanzer, the defendant to this bill, being one of the creditors thus provided for, the attorneys aforesaid transferred to him the note above described, upon which the judgment was recovered.

It is admitted by the record, that after the recovery of the judgment, Wanzer was fully satisfied of his debt out of other assets, and that he no longer claims to have any interest in or control over said judgment; and that said Hunter, without any assignment or other transfer from said Wanzer, has issued an execution thereon, and threatens to levy the same on the property of the complainant, by the authority alone of the said attorneys.

These proceedings are justified by the defendant, Hunter, on the ground that they were had under the instructions of Fisher. 'At this time, says defendant, Fisher gave verbal as well as written instructions to the said firm, to protect this defendant from the payment of the debts aforesaid, from the papers mentioned in that receipt.' And again: 'The particular claim of this defendant on this note was derived from a letter written by Fisher, in Mobile, to the firm, at the instance of this defendant, to hold the balances in their hands after the payment of the debts particularly provided for, for the indemnity of this defendant.' Upon the same head, the deposition of the attorney states: 'Fisher gave verbal and written directions to deponent to protect Mr. Hunter any remainder there might be after the payment of the claims in the hands of deponent's law firm.'

There is no evidence to sustain the averment that the instructions given by Fisher to the attorneys, were at the instance of the defendant, Hunter, or by virtue of any agreement with him, or that the attorneys ever notified said Hunter of the instructions during the life of said Fisher, or that the said Hunter had become the creditor of said Fisher during his lifetime. Fisher died on the 9th February, 1838, and the complainant, Hinkle, was appointed administrator de bonis non of his estate, on 3d December, 1849.

Upon this statement the appellant will contend, that there was no assignment or appropriation of the note in question by Fisher to Hunter, nor any intention to make one. But on the contrary, the attorneys were at all times bound to hold the surplus funds that might accumulate in their hands at the free disposal of said Fisher, as well after the said 'verbal or written instructions' as before. Tiernan v. Jackson, 5 Pet. 595; Rogers v. Lindsey, 13 How. 441; Williams v. Everett, 14 East, 582; Grant v. Austin, 3 Price, 58; Hoyt v. Story, 3 Barb. S.C.. 265; Cowperthwaite v. Sheffield, 3 Comstock, 243; Rogers v. Hosack's Exrs. 18 Wend. 319; Watson v. Duke of Wellington, 4 Cond. Eng. Chan. 573; 72 Law Library, 231; Scott v. Porcher, 3 Men. 662; Walwyn v. Coutts, Ib.

These instructions conferred a power upon the attorneys of a revocable character; but even if the power were irrevocable during life, it became extinct by the death of Fisher.

In those cases where the power is coupled with an interest, the rule is otherwise; but there it must be an interest in the thing itself. Hunt v. Rousmanier, 8 Wheat. 204; Houghtaling v. Marvin, 7 Barb. S.C.. 412; ''Eastm. v. Morton,'' Ohio, June term, 1854, Amer. Law Reg., August, 1854.

The case, however, as the appellant contends, does not involve these considerations, because it appears that Long, one of the makers of the note, has paid the same to said Hunter.

The bill, which is sworn to, avers that the complainant, who was well acquainted with Hunter's handwriting, had seen the receipt or statement which Hunter had given to Long, in satisfaction of said judgment, and in 13th interrogatory, Hunter is specially required to answer whether he did not 'give or sign any receipt or statement showing the payment,' &c.

Hunter omits to give a separate answer to this interrogatory, but in answer to the 8th, 9th, 10th, 11th, and 12th interrogatories he says: 'This defendant has not released Long, nor received any settlement, payment, or satisfaction from him.'

This answer, as the appellant contends, is not of that character which requires two witnesses, or one witness and corroborative facts, to disprove it. It does not contain a 'clear and positive denial' of the charge in the bill. An answer deserves more or less credit, as it fairly meets all the inquiries contained in the bill. A general denial is not sufficient, but there must be an answer to sifting inquiries upon the general question. Welford, 366, 367, 369; Freeman v. Fairlie, 3 Mer. 41; Welford, 309, 310; 2 Eq. Ca. Abr. 67; Paxton's case, Sel. Ca. in ch. 53; 6 Vesey, 792; 1 Sims and Stu. 235; Hepburn v. Durand, 1 Br. Chan. ch. 436; Prout v. Underwood, 2 Cox Chan. 135; Daniel v. Mitchell, 1 Story, 188; Bk. Georgtown v. Geary, 5 Pet. 110; 9 Cranch, 160; 2 Daniel's Chan. 984; Hughes v. Garner, 2 Young and Call, 333; Parkman v. Welsh, 19 Pick. 234; Greeley Eq. 4.

The record, therefore, contains upon the subject of payment the precise statement of the bill sworn to; and the positive evidence of Mrs. Long, (p. 41,) opposed by the loose, indefinite, and evasive response of the answer. The oath of the complainant is a full offset to that of defendant. Garron v. Carpenter, 1 Port. 374; Searcy v. Pannell, 1 Cook's Rep. 110; 1 McLeod; Lendell and Gamon, 10 Humph. 164; Union Bank of Georgtown v. Geary, 5 Pet. 99.

The counsel for the appellees presented the following statement.

The bill in this case seeks to restrain the collection of an execution in favor of Wanzer, (but controlled by and belonging to Hunter,) against Long and the complainant, Hinkle. The judgment upon which its execution issued was upon a note for $1,520, held by the firm of Fisher and Johnson, made by Thomas Long, George D. Fisher, and Hinkle, the complainant, and on 17th April, 1837, placed by Fisher and Johnson, together with other notes, in the hands of attorneys for collection and to cover certain liabilities of Fisher and Johnson, as appears by the receipt of the attorneys. The proceedings in which the judgment was rendered were in the circuit court of the United States for the ninth circuit. The bill alleges, in the first place, that the judgment does not belong to Hunter, and he has no right to control it; in the second place, that Fisher, who owned the note on which the judgment was obtained, abundantly indemnified Hunter, his security; and that Hunter, out of the property transferred to him by Fisher, has been fully satisfied, and consequently, has no right to enforce this judgment; in the third place, if the judgment belongs to Hunter and he has not been fully indemnified out of Fisher's assets, yet he has collected this judgment out of Long, and has no right to enforce the execution against Hinkle, the complainant. It prays that the judgment be declared satisfied, or that complaint, as administrator of Fisher, be declared entitled to the judgment, and that Wanzer and Hunter be enjoined proceeding upon it, &c.

The answer of Hunter admits that Wanzer has now no interest in the judgment, and explains why suit was brought in his name. Fisher was indebted to Wanzer and others; Wanzer placed his claim in the hands of Gordon, Campbell, and Chandler, attorneys, for collection; Fisher's other creditors also placed notes in their hands. To settle these suits, Fisher placed with the attorneys a number of notes for collection, and among them was the note of Long, indorsed by Hinkle, the complainant. This note was sued in the name of Wanzer, with the intention to secure his claim. Wanzer's debt was paid out of other notes of Fisher.

The answer then states, that Hunter was the indorser of Fisher for a large amount, and he became so to enable Fisher to settle the debts for which he was sued by Gordon, Campbell, and Chandler. The arrangement made by Fisher with these attorneys is set out in the answer. The substance of it is, that Fisher was to give his notes, indorsed by Hunter, in payment of the notes of Fisher, who had been sued by Gordon and Co. These notes, indorsed by Hunter, were given, to the amount of nearly $18,000. Fisher gave instructions to the attorneys to save Hunter from the payment of these debts, by the paper mentioned in the receipt. In addition to these liabilities, Hunter states that he indorsed a note of Fisher, for $10,000, dated March 1, 1837, at sixty days, which was protested and paid by Hunter, party out of Fisher's property, and partly out of his own; and refers to a deed from Fisher to him, securing him against liability on this note. He further states, that he paid Nelson, Carleton, and Co. $3,472, on a bill of exchange drawn by Fisher, 8th March, 1837. Thus, upwards of $30,000 were paid by Hunter, on account of Fisher; and the extent of credits which the answer gives to Fisher's estate is but $16,558.28.

Hunter denies that the judgment in question was ever settled by Long, or that he ever released him.

The evidence of Campbell explains the whole transaction by which Hunter became security for Fisher.

Barney proves that Hunter, by 23d April, 1843, had paid on the four notes given under the agreement, which came into the hands of the United States Bank, $11,627.65, which included interest. On these notes, $4,336 had been paid in 1838, which about corresponds with the sums the answer states to have been collected from Fisher's estate, and paid on account of these four notes.

Campbell, also, proves that $4,818.27 were paid on account of a judgment by the Bank of Columbus against Hunter, on the note for $10,000, referred to in the answer and the deed. This amount corresponds with the first item in the credits given Fisher's estate; and for the balance of the note Hunter was liable, and (he says) paid.

Sayre proves that Hunter paid him on notes given under the agreement, and on a draft of Fisher, indorsed by Hunter, $3,271.52.

Gilchrist proves that Hunter paid $3,442 on the bill in favor of Nelson, Carleton, and Co.

Making an aggregate paid out by Hunter, on account of the several responsibilities, of $32,677.17.

And the complainant's effort is to overcome the statement of credits contained in the answer, by showing that Hunter received from Fisher's estate full indemnity for all liabilities. In this he fails; for his whole evidence does not make even as much of Fisher's property come into Hunter's possession as the answer gives credit for. The depositions of Cook, Gilchrist, Bolling, Sadler, and Fisher, do not prove that Hunter ever collected, out of the property or assets of Fisher, $10,000.

The complainant relies on the deposition of Mrs. Long, and what he deems the corroborating evidence of Bolling, to show that the judgment has been satisfied by Long.

The bill was dismissed in the circuit court.

The appellees will contend:--

1. That, if the state of accounts between Hunter and Fisher's estate be as shown in the answer, Hunter is, under the circumstances, entitled to the proceeds of the judgment. 2 Story's Eq. §§ 1044-1047; 5 Wheat. 277; 5 Pet. 600; 1 Ves. Jr. 281; 5 Paige, 632; 1 Johns. C. 205; 4 Cond. Eng. Ch. R. 690; 4 Myl. and Cra. 702; 1 Story's Com. Eq. § 499.

2. That the account stated in the answer is as correct as it purports to be, and is unaffected by any evidence in the cause.

3. That the answer being responsive and sworn to, as to facts in the personal knowledge of the defendant, and denying Long's satisfaction of the judgment, it can only be overcome by two credible witnesses, or one and strong corroborating circumstances, neither of which requisites exists in the present case; and the whole equity of the bill being sworn away, it was properly dismissed. 6 Wheat. 453; 5 Pet. 99; 9 Cranch, 153; 6 Ib. 51.

Mr. Justice DANIEL delivered the opinion of the court.

title: Hinkle v. Wanzer


text: Talk:Hinkle v. Wanzer

title: Talk:Hinkle v. Wanzer