text:
Morgan v. Campbell/Opinion of the Court

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

This was a contest between a landlord of demised premises claiming rent, and the assignee in bankruptcy of his tenants, claiming certain personal property on the premises, out of which the landlord by distress expected to get his rent.

The case, which depended more or less upon statute law of Illinois, in force at the time of the landlord's levy, was thus:

A statute of Illinois known as its Landlord and Tenant Act, enacts as follows, in certain sections its enactments bearing on the subject of rent, distress, &c.:

'SECTION 6. In all cases of distress for rent, the person making the same shall immediately file with some justice of the peace, in case the amount claimed does not exceed $100, or with the clerk of the Circuit Court in case it exceeds that sum, a copy of the distress warrant, together with an inventory of the property levied upon; and thereupon the party against whom the distress warrant shall have been issued shall be duly summoned, and the amount due from him assessed and entered upon the records of the court finding the same. The said court shall certify to the person or officer making the same the amount so found due, together with the costs of court, and said officer shall thereupon proceed to sell the property so distrained and make the amount thus certified to him, and return the certificate so issued to him with an indorsement thereon of his proceedings, which return and certificate shall be filed in the proper court.

'SECTION 7. In all cases of distress for rent it shall be lawful for the landlord, by himself, his agent, or attorney, to seize for rent any personal property of his tenant that may be found in the county where such tenant shall reside, and in no case shall the property of any other person, although the same may be found on the premises, be liable to seizure for rent due from such tenant.

'SECTION 8. Every landlord shall have a lien upon the crops, growing or grown upon the demised premises in any year, for rent that shall accrue for such year.

'SECTION 9. In case of the removal or abandonment of the premises by such tenant, all grain or vegetables grown or growing upon any part of the demised premises so abandoned may be seized by the landlord, before the rent is due, and the landlord so distraining shall cause the grain or vegetables so growing to be properly cultivated and perfected, and in all cases husband such grain or vegetables, grown or growing, until the rent agreed upon shall become due, when it shall be lawful for such landlord to sell and dispose of the same as in other cases of seizure, after the rent shall have become due,' &c.

These enactments being in force, one Morgan, on the 18th of June, 1872, leased to Liebenstein & Spiegel certain premises in Chicago, Cook County, Illinois, at a rent of $750 per month, payable September 30th, 1872, and on the last day of every month thereafter. The lease provided that if default should be made in the payment of the rent, when due, Morgan might distrain upon any property belonging to lessees, whether exempt from execution and distress by law or not, and the lessees waived all right to hold or retain any such property under any exemption laws then in force in the State of Illinois, or in any other way; meaning and intending hereby,' said the lease, to give the said party of the first part, his heirs, executors, administrators, or assigns a valid and first lien, upon any and all goods and chattels, and other property belonging to the said party of the second part, as security for the payment of said rent in manner aforesaid, anything hereinbefore contained to the contrary notwithstanding.'

Liebenstein & Spiegel entered into possession of the premises, but paid only one month's rent.

On the 14th of May, 1873, a petition was filed in the District Court for the Northern District of Illinois, by one Harrington, charging Liebenstein & Spiegel with having committed acts of bankruptcy, and praying that they might be declared bankrupts.

Three days afterwards, that is to say on the 17th of May, between seven and eight months' rent ($5250) being now due-Morgan, the landlord, issued his warrant to the sheriff of Cook County for distraining the goods and chattels of his tenants, then on the premises, to pay the rent due; and on the same day the sheriff did levy the warrant upon them, and held them under the warrant, on the premises. On the 16th of June, 1873, he filed in the proper court an inventory of them, and caused a summons in the matter to be issued against the tenants in the way prescribed by the sixth section of the above-quoted Landlord and Tenant Act, and served upon them.

Liebenstein & Spiegel, the tenants, were afterwards declared bankrupts, and one Campbell was appointed their assignee. After his appointment he demanded of Morgan, the landlord, and his bailiff, possession of the chattels taken by them in distress, and held under Morgan's warrant of distress; and against the protest of both Morgan and his bailiff, took the same and was about to sell them.

Thereupon Morgan filed a bill in the court below to enjoin him.

The assignee in bankruptcy demurred to the bill.

The question of course was: Did the law of Illinois, in force on the 14th of May, 1873, when the petition in bankruptcy was filed, confer on a landlord a lien on the personal property of his tenant independently of and prior to the levy of a warrant of distress?

If it did, then, under the settled rule of bankruptcy law, the lien would not be divested; proceedings in bankruptcy never divesting existing liens.

But if it did not so exist, then the assignee in bankruptcy would take the property for distribution among the creditors generally; it being equally settled that no lien can be acquired after the filing of a petition in bankruptcy; this, in virtue of the provision of the fourteenth section of the Bankrupt Act, which enacts that on the appointment of an assignee, and on the assignment to him of the bankrupt's property and estates, the—

'Assignment shall relate back to the commencement of the proceedings in bankruptcy, and thereupon, by operation of law, the title to all such property and estate, both real and personal, shall vest in said assignee, although the same is then attached on mesne process as the property of the debtor.'

The court below sustained the demurrer, thus deciding that prior to and independently of an actual levy of the warrant of distress, a landlord had not in Illinois any lien on his tenant's personal property.

Morgan, the landlord in this case, appealed to this court.

Mr. J. A. Sleeper, for Morgan, the appellant:

1. We submit that by the common law, and the statute of the State of Illinois and the law of the State, as expounded and interpreted by its Supreme Court, the lien of the landlord on the property of the tenant for rent due is paramount and superior to the right of an execution or attaching creditor, a general assignee for the benefit of creditors, or an assignee in bankruptcy.

In Penny v. Little, A. D. 1841, the Supreme Court of Illinois had under consideration the question of the right of the landlord to distrain for rent, and held that the right existed independently of the statute and in virtue of the common law.

The same court had the question of the right of a landlord in, and lien upon, the property of his tenant, under consideration in O'Hara v. Jones, and referring to Penny v. Little, say:

'Under our law the landlord has the lien and the right to distrain in all cases where the rent is certain, whether the right to distrain is reserved in the lease or not. And this statutory lien in favor of the landlord is superior to other junior liens, and may be enforced against all but prior liens and bon a fide purchasers without notice; and if the goods of a tenant are seized under execution or attachment, the landlord's lien for his rent is superior and will hold the property.'

And upon these principles, thus laid down, the court decided that an assignee for the benefit of creditors, takes the property as a mere volunteer, and subject to all liens to which it is then liable; and that if liens exist upon the property when the assignment is made, they must be first discharged, in the order of their priority, and the remainder applied in execution of the trusts.

This decision, we submit, controls the subject.

We do not seek to maintain that, before the rent becomes due, the landlord has either a superior lien over execution or attaching creditors, or the right to distrain the property for the rent; but that he, all along, has an inchoate right, which may not be asserted, and cannot be, until all the conditions upon which his right to distrain are fulfilled; and that when the conditions are fulfilled, by rent becoming due and being unpaid, then eo instanti he may issue his distress warrant and seize the property.

'The landlord's lien is like the lien of an execution on personal property of the tenant. . . . He has the power, when the rent falls due, to issue his execution to his bailiff for collection of his rent by levy and sale of the tenant's property. The landlord's lien is of common-law growth, and does not depend upon statutory enactments for its creation. . . . But the landlord's right to distrain is coeval with the entire history of the common law, and has maintained its energy to the present time.'

If anything previously said in Rogers v. Dickey different from this-which we do not think is the case-it is overruled by the later decision.

In O'Hara v. Jones the court supply the reasoning which follows from the facts in Rogers v. Dickey, and hold that inasmuch as the rent was due March 1st, 1867, and the assignment was made March 9th, 1867, the landlord's lien was superior to the claim of the assignee. The court put the decision upon the ground that the rent was due. If the rent had been due in Rogers v. Dickey we have no doubt that the landlord's lien would have preceded the execution lien, whether the distress warrant had been then issued and levied or not, provided the distress had been levied before actual sale, to a bon a fide purchaser without notice, by the sheriff under his execution.

2. No language could be clearer or more comprehensive than the language of the lease under consideration in this case. It is undeniable that, by it, the tenants intended to give the landlord, and that the landlord intended to take and receive a valid and specific first lien on the property of the tenants, as his security for the payment of this rent, in addition to the lien thereon created by the common law and the statute.

It may be argued that the distress warrant is mesne process, or in the nature of an attachment. Judge Drummond so held In re Joslyn. The Supreme Court of Illinois, in O'Hara v. Jones, say it is an execution issued by the land lord. They also have said substantially that it is not the commencement of a suit; that the statute which requires proceedings in court to ascertain the amount of rent due, is only in restraint of the execution of the distress warrant, but that the sale, when made, is made under and by virtue of the landlord's writ of seizure, which the Supreme Court calls his execution.

Mr. Adolphe Moses, contra, for the assignee:

We think it plain that by the Landlord and Tenant Act of Illinois, no lien is created as to the personal property of a tenant; and that the act simply recognizes the commonlaw right of distress, and attempts to regulate it. We concede that as to crops and agricultural products, the statute, acting upon consideration of public policy, grants a lien.

Our case concerns personal property alone.

In Volney Stamps v. Gilman & Co., it is said:

'The distress at common law was a dormant right to take the thing into possession as a pledge. If this right was not made active by actual seizure, it was utterly impotent. The landlord's right (however it may be described) is not a jus in rem; it does not amount to a legal or equitable title.'

This, we submit, is the rule of the common law.

O'Hara v. Jones is much relied on by opposite counsel as changing in Illinois this rule.

The priority of liens under the eighth section of the Landlord and Tenant Law of Illinois had been, previously to that case, passed upon in Miles v. James, as affecting crops. The question as to the lien on personal property came up for the first time before the court in O'Hara v. Jones, and it was evidently misled by the case of Miles v. James, which represents the difference between a statutory lien on crops and the right to distrain on personal property at common law, recognized by the statute. The court inaccurately and loosely speaks of the 'landlord's lien,' 'statutory lien.'

A careful reading of the case of Penny v. Little will show that the court in that opinion carefully treats simply of the right to distrain for rent, and the phrase 'landlord's lien' is not used in the opinion.

In re Joslyn, Drummond, J., then district judge, and since made circuit judge, reviewed this whole subject-matter in 1870, for the guidance of the practice in the Northern District of Illinois. His conclusions, which have always been regarded as satisfactory to the bar, were, on appeal, affirmed in the Circuit Court.

'It is to be remembered that in equity the landlord may have no just preference over the many general creditors of the bankrupt, and, in view of the general scope and spirit of the Bankrupt Law itself, and of the effect which it was to have on the rights of creditors, I have thought that unless the intention of the statute was clear to allow the common law or statutory lien of the landlord to have a priority over the general creditor, it ought not to be so regarded, and, looking at the statutes in our State, bearing upon the right of the landlord to distrain for rent, it seems to me that fairly construing the two laws together, and the effect which one has upon the other it must be said that under the Bankrupt Law, as operating upon the State law, the landlord, except in the particular case referred to, must be treated as being upon the same footing as the general creditors of the bankrupt, and can only have a right to come in like them, and prove his debt in the usual way.'

Equality is the equity of the Bankrupt Law. The decree of the Circuit Court dismissing the bill should, therefore, be affirmed.

Mr. Justice DAVIS delivered the opinion of the court.

The bill in this case cannot be sustained unless the laws of Illinois conferred upon the landlord a statutory lien upon the personal property of the tenant in the county prior to the levy of the warrant. If the lien existed independently of the warrant, and the warrant was used merely as a means of enforcing it, then the theory of the bill is correct. On the contrary, if no lien could be acquired until at least the warrant was actually levied, the court below did not err in dismissing the bill.

The sixth and seventh sections of the Illinois Landlord and Tenant Statute speak of distress for rent. The sixth section prescribes the manner of proceeding, but the seventh recognizes the existence of the right itself, and is in these words: 'In all cases of distress for rent it shall be lawful for the landlord, by himself, his agent, or attorney, to seize for rent any personal property of his tenant that may be found in the county where such tenant shall reside, and in no case shall the property of any other person, although the same may be found on the premises, be liable to seizure for rent due from such tenant.' The eighth section declares that 'every landlord shall have a lien upon the crops growing or grown upon the demised premises in any year for rent that shall accrue for such year.'

These are the only provisions of the statute material to the present inquiry, and they indicate clearly enough the intention of the legislature on the subject. Manifestly it was the purpose to make a distinction in this regard between agricultural products raised on the farm and the general personal property of the tenant in the country. If this were not so, why introduce the eighth section into the law at all, for the right of distress was conferred without it. The distinction was doubtless owing to the fact that agriculture is now, and was at the passage of the law, the chief industry of the State. It could work no serious injury to trade if one kind of property alone were subject to a statutory lien, but to extend this lien to all the personal property owned by a tenant in the county would interfere with it very materially. Be this as it may, the statute does in express terms confer a lien upon the crops growing or grown upon the demised premises in any year for the rent of that year, and recognizes for other personal property in the county the right of distress as it existed at common law. At common law the landlord could distrain any goods found upon the premises at the time of the taking, but he had no lien until he had made his right active by actual seizure. A statutory lien implies security upon the thing before the warrant to seize it is levied. It ties itself to the property from the time it attaches to it, and the levy and sale of the property are only means of enforcing it. In other words, if the lien is given by statute, proceedings are not necessary to fix the status of the property. But in the absence of this statutory lien it is necessary to take proceedings to acquire a lien on the property of the tenant for the benefit of the landlord. This the landlord is enabled to do in a summary way to satisfy the rent which is due him, and in this he has an advantage as creditor over creditors at large of the tenant. It is difficult to see why the tenant, subject to this dormant right of the landlord, is not as much the owner of his effects as any other person would be who owned property and owned debts.

The statute we are considering has been the subject of consideration at the hands of the Supreme Court of Illinois. And it is contended that O'Hara v. Jones is authority for the position assumed by the appellant. The point decided in that case was that the landlord had a right to distrain for rent upon the property of the tenant even after he had made a general assignment for the benefit of creditors of all his property, real and personal, on the ground that the assignee of the tenant could not hold the goods free from the lien of the landlord; that the assignee took the goods of the assignor as a volunteer, and subject to all the liens to which they were then liable.

This decision evidently proceeds on the idea that the statute created a greater and different lien in favor of the landlord than is given by the common-law right of distress. But the court, in the recent case of Hadden v. Knickerbocker, while adhering to the point actually decided in O'Hara v. Jones, repudiate this idea and say that the lien is given the landlord upon growing crops, 'but no specific lien is given upon other property of the tenant.' This case protects bon a fide purchasers who have paid value for the property, with notice that rent was due the lessor and that he was about to distrain, although in O'Hara v. Jones it would seem that purchasers are not to be treated as bon a fide unless they bought without notice.

It is argued that the basis of the decision in O'Hara v. Jones is that the landlord's lien for rent is superior to that of a creditor holding under execution or attachment, and there are expressions in the opinion which tend in that direction, but the court to reach that conclusion would be obliged to overrule Rogers v. Dickey, and this case is not even noticed in the opinion of the court.

The question in Rogers v. Dickey, as stated by the court, was 'whether an execution delivered to the sheriff and in his hands at the time a distress warrant was levied took precedence of the levy by the constable, where there had been no sale of the property levied upon.' The property levied on was on the demised premises, and the court, on full consideration, held that the sheriff, who had in the meantime taken the property from the constable, was justified in the proceeding, and this, too, on the general principles of law, for no point is made of superior right in the levy of the constable by virtue of the Landlord and Tenant Act. This decision could not have been reached if, in the opinion of the court, the landlord had a lien on the property prior to the seizure under the warrant, for the court, in Miles v. James, held that the statutory lien of the eighth section on growing crops was a prior lien to an execution.

But it is unnecessary to consider the cases further, for whatever may be the scope of some of the decisions in the State, the exact point we are considering was decided, as we understand it, in the recent case of Hadden v. Knickerbocker, and, indeed, the question does not seem to have been passed upon in any other case. If, as is said in that case, the statute creates no lien in favor of the landlord on the general property of the tenant in the county, until the levy of the distress warrant, then the question arises, whether the appellant acquired any right to the property in question by reason of his levy as against the assignee of the bankrupts and against the rights of the other creditors. It may become important in other cases to determine whether the lien acquired by the levy, to become operative, must not be perfected in conformity with the provisions of the statute on the subject, but in the view we take of the rights of the parties to this suit, it is not necessary to consider the question. The question might arise where the levy was before the filing of the petition in bankruptcy, and the subsequent proceedings, taken after this was done, were not in conformity with the provisions of the statute. The levy in this case was, however, made after the institution of bankruptcy proceedings, but before the decree in bankruptcy was rendered.

The fourteenth section of the Bankrupt Act declares that the assignment in bankruptcy shall relate back to the commencement of proceedings, and by operation of law vest the title of the estate of the bankrupt in the assignee, notwithstanding the same is then attached on mesne process as the property of the debtor. It is argued that a distress warrant, being the act of the landlord himself, is not an attachment upon mesne process. This is true according to the technical signification of the term, but the meaning of the term in this connection embraces any proceeding by which a lien is first acquired. The object of the law was evidently to prevent any one procuring a lien after the filing of the petition who had not got it before. If the lien existed before the filing of the petition, it could be enforced in the bankrupt court; but if it did not exist the purpose of the law was to prevent its being brought into existence by any proceeding whatever. If this were not so, as soon as it was known that the petition was filed the provisions of the law might be easily evaded. The main purpose which the Bankrupt Act seeks to accomplish is to distribute the property of the bankrupt equally among his creditors, and in order to do this the creditor who has not, when proceedings are begun, such a security as binds the property is prevented from obtaining it, and thus securing a preference over another creditor. There is no good reason why the law should protect a landlord in the issuing of a distress warrant, and repudiate an equally meritorious creditor in the levy of an attachment. If a distress warrant, where no further proceedings are necessary to perfect the lien, is not, strictly speaking, an attachment upon mesne process, yet, under the Illinois statute, as has been remarked by an eminent judge, it is in the nature of mesne process. The statute requires that a copy of the distress warrant be immediately filed in court; the party against whom it issues summoned; the amount due from him ascertained and entered upon the records of the court. It is then made the duty of the court to certify to the officer making the levy, the amount of the debt, and this certificate is his authority to make the sale, which certificate, with the proceedings indorsed upon it, must be returned into court.

It will thus be seen that the landlord, after he levies his warrant, can progress no further until the court has sanctioned the proceeding. The certificate that is issued, if not final process in the ordinary sense of the term, resembles it, and the distress warrant, if not mesne process issuing out of a court, is similar to it. The effect of the distress warrant is to seize the property and hold it for the purpose of enforcing the claim of the landlord upon it, and an ordinary attachment upon mesne process does nothing more for the general creditor. Both have to be returned into court and action taken on them before the property can be sold. Each is process through which a lien is obtained, but by neither can the lien be made available, unless through some final proceeding. There is, therefore, sufficient similarity between these processes for the distress warrant to be treated as a writ in the nature of an attachment upon mesne process.

But we do not want to rest our decision on this point alone, for the fourteenth section of the Bankrupt Law is not levelled at the mode of doing a thing, but at the thing itself. It was the object of this section to prevent the acquisition of any other liens than such as existed when the petition in bankruptcy was filed, and any proceeding by which this is attempted is within the condemnation of the law.

JUDGMENT AFFIRMED.

title: Morgan v. Campbell/Opinion of the Court


text: Talk:Morgan v. Campbell/Opinion of the Court

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


text:
Amsinck v. Bean

APPEAL from the Circuit Court of the United States for the Southern District of New York; the case being thus:

The Bankrupt Act enacts in its thirty-sixth section, that persons trading as partners may be decreed bankrupt, as well as persons trading as individuals; and that when a partnership is decreed bankrupt, all the joint stock and property of the partnership and also all the separate estate of each of the partners shall pass to the assignee, who by the said section is to keep separate accounts of the two estates. Creditors of the firm, and the separate creditors of each partner, may prove their respective debts; and the net proceeds of the joint stock is to be appropriated to pay the former, and the net proceeds of the separate estate to pay the latter. If there be any balance of the separate estate of any partner, after payment of his separate debts, it is to be added to the joint stock to pay the joint creditors; and if there be any balance of the joint stock after payment of the joint debts, it is to be divided and appropriated to and among the separate estates of the several partners, according to their respective right and interest therein, and as it would have been if the partnership had been dissolved without any bankruptcy.

But the act does not contain any provisions by which, when one member alone of a partnership is decreed bankrupt, and there is no decree against the partnership itself, the property of the partnership passes as does the partner's individual property.

In this state of the law, on the 15th of February, 1869, a partnership composed of two persons, named respectively Kintzing and Lindsey, and trading at St. Louis, Missouri, as Kintzing & Co. Kintzing being the senior partner, a contributor of two-thirds of the capital, and a large creditor of the firm for money lent becoming embarrassed in their affairs, and having numerous creditors, including one named Amsinck (a large one, resident in New York) stopped payment.

From the date of this stoppage, Kintzing seemed to have proceeded as if the partnership had been dissolved. The assets of the firm with the tacit assent of Lindsey, the other partner, passed into the exclusive possession of Kintzing. He then submitted a written proposition to the partnership creditors, to pay them in discharge of existing debts, seventy per cent.-in the firm notes, however-at six, twelve, and eighteen months; the arrangement not to bind any creditor until agreed to by all.

Amsinck directed his agent in St. Louis to sign the agreement in behalf of him, Amsinck, on condition, to be privately made with Kintzing & Co., that they should 'discount' the notes thus to be given; paying for them on such so-called operation of discount, one-third cash and the residue in thirty and sixty days; an arrangement which if Kintzing & Co. could not get on ultimately would prove more favorable, of course, to Amsinck than that proposed to the other creditors and accepted by about two-thirds of them. Kintzing & Co. agreed to this, and the fifty per cent. was paid to Amsinck; making a payment in cash of $16,275. The six, twelve, and eighteen months' compromise notes were sent to those creditors who had agreed to accept them, though conditionally; the six months' notes maturing August 18th, 1869.

In the meantime Kintzing went on trying to get the other creditors to accept the terms of compromise proposed; he alone, as it seemed, administering the partnership assets for the benefit of the creditors as contemplated by the agreement of compromise. He took the partnership stock, made new purchases on his own account, transacted the business in his own name, and sold the old and new stock, mingling the funds as if all were his own, except that he kept separate books for each business. The $16,275 (the amount paid to Amsinck) was derived from such mingled funds.

As already observed, about two-thirds of the creditors had signed the compromise agreement when the agent of Amsinck signed it for him. Kintzing continuing to make exertions to get the remaining creditors to sign, transacted business with the old assets and some new ones, in the way mentioned, for a certain time. However, finding that all the creditors would not sign, and so that the plan of compromise would be defeated, he made to the State assignee of Missouri, on the 21st of August, 1869-the six months' notes, which had matured three days before, being still unpaid-a general assignment under the laws of Missouri of his property, for the benefit of his creditors.

Certain of the creditors of the partnership now getting wind of the secret arrangement between Amsinck and Kintzing & Co., and that the $16,275 had been actually received by Amsinck, filed a petition in the District Court at St. Louis, representing that they were creditors of Kintzing, 'a member of the late firm of Kintzing & Co.;' that the said Kintzing had committed various acts of bankruptcy specified (one of the acts specified being the payment to Amsinck), and praying the he, Kintzing (not Kintzing & Co., nor Lindsey, but Kintzing), might be decreed a bankrupt, and he was so decreed accordingly; one Bean being appointed his assignee in bankruptcy.

Thereupon Bean filed a bill in chancery-the bill in this case against Amsinck, in the court below, praying that the payments made to Amsinck might be decreed to have been made in fraud of other creditors and of the Bankrupt Act, and that Amsinck might be decreed to account for and pay them over to him, Bean, the assignee. The answer denied fraud, &c., and set up in addition the point that the bankruptcy proceedings were against Kintzing alone, and not against Lindsey also, and not against the firm; that the complainant, Bean, was the assignee only of Kintzing individually, and not the assignee of the firm; that the copartnership had never been dissolved; that the complainant did not represent the interest of Lindsey in the claim sought to be recovered in the suit; and that Lindsey had an interest in it which did not pass to the complainant.

The court below did not, however, regard the objection as of force. It said:

'It is apparent, from the evidence, that the firm was regarded as dissolved by all parties concerned, by Kintzing, by Lindsey, and by the creditors, including the defendants, and that the assets and effects of the firm were regarded as being put into Kintzing's hands, in trust, to settle up the business as the appointee of the creditors, and pay the compromise notes. Kintzing passed into the hands of the State assignee all that was left of such assets, as being part of the estate of Kintzing. From the State assignee they passed to the plaintiff, as the assignee of Kintzing, as part of the estate of Kintzing.'

It said in addition:

'The composition deed does not appear to have been assented to in any manner by Lindsey. He is not named in it, nor was he, so far as appears, a party to it potentially. . . . There does not seem to have been any authority, so far as Lindsey was concerned, to sign the firm name to the compromise notes, so as to bind him by them. The compromise notes, therefore, signed by Kintzing with the firm name, were the individual notes of Kintzing. Having given them, he was to have the assets to administer with which to pay them.'

This objection arising from the fact of the decree in bankruptcy being against Kintzing alone, being thus disposed of, and the transaction between Amsinck and Kintzing & Co. having been, as the court considered, a clear fraud on the other creditors of that firm, the court decreed a recovery. It said:

'Whether the money could or could not be recovered back by the debtor, the fourteenth section of the Bankruptcy Act especially vests in the assignee all property conveyed by the bankrupt in fraud of his creditors, and authorizes him to sue for and recover the same. This applies to conveyances fraudulent at common law, and to transfers of property such as that in the present case.'

From that decree Amsinck brought the case here, where three assignments of error-two of them not material to be stated-were made; the third one, and the one on which the decision in this court was rested, being this:

'That the decree was erroneous in deciding that the assignee of Kintzing individually could maintain this action; the appellants alleging that if they were liable at all they were liable to Kintzing & Co. or to their assignee.'

Mr. A. F. Smith, for the appellant:

The bankrupt proceedings against Kintzing alone were ineffectual to vest in the assignee title to the partnership property.

It is not pretended by the bill that Kintzing had any right or title to the partnership property to the exclusion of Lindsey. The most that is set up is that he had possession, by the consent of Lindsey, of the assets of the firm for the benefit of the creditors. It is not pretended that Lindsey had been released, or that he had assigned or otherwise parted with his legal interest in the partnership assets. On such a case it is plain that the action must fail.

Nor is the point technical; for if it is well taken, it would be no answer for Amsinck, in the event of his being sued hereafter by the assignee of Kintzing & Co., to plead that they had paid the money to the assignee of an individual member of the firm.

Nor can it be argued that the money paid to the appellants belonged to Kintzing individually. The case shows that it belonged to the partnership.

Messrs. E. T. Allen and E. B. Merrill, contra, for the assignee:

It is not necessary for the dissolution of a partnership as between partners, that a deed of dissolution under the hand and seal of the partners be executed, recorded, and published. A partnership may be dissolved in fact-dissolved by matter in pais as well as by document technically written and executed in form.

Now, the case here shows a dissolution in fact, immediately on the stoppage. Kintzing was the chief capitalist, a creditor, and the person most interested. Lindsey did not, apparently, think his interest worth looking after. He abandoned the wreck; and from that time forth Kintzing took possession of everything; he proposed the compromise; he gave the notes; all, in short, belonged to him; this 'all,' however, being the damnosa hereditas of paying all debts, and the 'forlorn hope' of getting any surplus, necessarily small, if after paying debts anything remained.

In such a case the assignee of Kintzing was assignee of all the assets of the firm, including this claim on Amsinck, to refund what he had got in virtue of a fraud on the other creditors.

Mr. Justice CLIFFORD, having stated the case, delivered the opinion of the court.

title: Amsinck v. Bean


text: Talk:Amsinck v. Bean

title: Talk:Amsinck v. Bean


text:
Amsinck v. Bean/Opinion of the Court

Waiving the first two errors assigned, the single question presented for decision is whether the complainant, as the assignee of the estate of an individual partner of a debtor copartnership, can maintain a suit to recover back money previously paid to a creditor of the copartnership, upon the ground that the money was paid to such creditor in fraud of the other creditors of the firm and in fraud of the provisions of the Bankrupt Act.

Assignees in bankruptcy of the estate of an insolvent copartnership may, perhaps, maintain such a suit for such a claim, even though the money was paid by an individual partner under such an agreement to compromise his separate debts, as the assignees in such a case are required to keep separate accounts of the joint stock or property of the copartnership and of the separate estate of each member of which the copartnership is composed; and the provision is that the net proceeds of the joint stock and property shall be appropriated to pay the creditors of the copartnership, and that the net proceeds of the separate estate of each partner shall be appropriated to pay his separate creditors.

None of the proceeds of the separate estate of the individual partners can be appropriated to pay the partnership debts, unless the proceeds from that source exceed what is necessary to pay the separate debts of the partner, nor can any part of the proceeds of the joint stock or property of the copartnership be appropriated to pay the separate debts of the individual partner, unless there is an excess from that source beyond what is required to pay the partnership debts.

These regulations show that, in cases where they apply, the assignees in bankruptcy of the joint stock and property of a copartnership are required to administer the separate estate of the individual members of the firm or company as well as the described estate of the copartnership, but the Bankrupt Act contains no regulations of a corresponding character applicable in a case where an individual member of a copartnership is adjudged a bankrupt without any such decree against the copartnership or the other partner or partners of which the copartnership is composed.

Instead of that the Bankrupt Act provides that in all other respects the proceedings against partners shall be conducted in the like manner as if they had been commenced and prosecuted against one person alone. Partners are not entitled in any case to come in competition with the joint creditors upon the partnership funds, whatever may be the rights and equities which would otherwise attach between them and the bankrupt partner or partners.

Where all the partners become bankrupt the general rule is that the separate estate of one partner shall not claim against the joint estate of the partnership in competition with the joint creditors, nor shall the joint estate claim against the separate estate in competition with the separate creditors.

Doubt upon that subject cannot be entertained, and it is equally clear that a solvent partner cannot prove his own separate debt against the separate estate of the bankrupt partner, so as to come in competition with the joint creditors of the partnership, for the plain reason that he is himself liable to all the joint creditors, which is sufficient to show that in equity he cannot be permitted to claim any part of the funds of the bankrupt before all the creditors to whom he is liable are fully paid.

Neither can a solvent partner prove against the separate estate of the bankrupt partner in competition with the separate creditors of the bankrupt until all the joint creditors of the partnership are paid or fully indemnified, for if a dividend were reserved to such a party on such proof the joint creditors might be injured by such solvent partner stopping the surplus of the separate estate, which would otherwise be carried over to the joint estate, or the separate creditors might be injured by the funds being stopped and the transmission of the same be delayed.

Two exceptions are admitted to that rule: (1.) Where the property of a partner has been fraudulently applied for the purposes of the partnership. (2.) Where a distinct trade is prosecuted by one or more of the members of the firm.

Subject to the preceding rules, as explained, the solvent partners retain their full right, power, and authority over the partnership property after bankruptcy, in the same manner and to the same extent as if no bankruptcy of a particular partner had occurred. Their lien also remains in full force, not only to have the partnership funds applied to the discharge of the partnership debts and liabilities, but also to the discharge of all the debts due by the partnership to them or any one of them, as well as for their own distributive shares, if any, in the surplus.

Debts due by the bankrupt partner to the partnership are entitled to priority in preference to the debts due by him to his separate creditors, and if the joint funds prove insufficient to discharge his debt to the partnership the solvent partners have a right to prove the deficiency against the separate estate of the bankrupt pari passu with the separate creditors.

Bankruptcy, it is said, when decreed by a competent tribunal, dissolves the copartnership, but the joint property remains in the hands of the solvent partner or partners, clothed with a trust to be applied by him or them to the discharge of the partnership obligations and to account to the bankrupt partner or his assignee for his share of the surplus.

Exceptions undoubtedly exist to that rule where it appears that the partnership or all the partners are insolvent, even though some of them may not be in bankruptcy.

Assets are to be marshalled between the creditors of the copartnership and the separate creditors of the partners only when there are partnership assets and separate assets of individual partners, and proceedings have been instituted against the partnership and the individual members, as provided in the thirty-sixth section of the Bankrupt Act.

Certain exceptions also exist to that rule where both the joint and separate estates are administered by the assignees of the copartnership.

Many decided cases support the proposition that the bankruptcy of one partner operates as a dissolution of the copartnership, but such an adjudication obtained by one partner against another will not be sustained if the real object of the petitioner is to dissolve the firm and the adjudication is not required for any other purpose.

Involuntary proceedings in bankruptcy were instituted in this case against the senior partner of the copartnership, and it is conceded that no such proceedings have ever been commenced against the copartners or the other partner. Proofs were introduced to show that the other partner was largely indebted to the firm, and it may be conceded that the proofs are sufficient to show that the firm is insolvent, but there is nothing in the record to show that the complainant possesses any other authority to maintain the suit than what he derives by virtue of his appointment as assignee of the estate, real and personal, of the bankrupt senior partner of the copartnership.

Repeated decisions have settled the rule that an assignee of the estate of an individual partner has no such title as will enable him to call third parties to an account for partnership property, and it is difficult to see why that rule does not dispose of the case before the court.

All of the debts embraced in the compromise agreement were partnership debts and the payments made to procure the signature of the appellants were made to discharge those debts; nor is the question affected in the least by the fact that some small part of the fund used to make those payments was earned by the senior partner in transacting the business of the copartnership subsequent to the time when the firm suspended payment. Most of the amount, it is conceded, was taken from the partnership assets, and the whole was paid as being the money of the copartnership.

Money paid under such circumstances, if it can be recovered back at all, must be claimed by the partnership in whose behalf it was paid, or by an assignee duly appointed to administer the joint estate, as it is quite clear that neither an individual partner nor his assignee can call the party to whom such a payment has been made to an account for such a payment any more than he could for any other debt due to the copartnership. If liable in fact, a voluntary payment to the appellee would not discharge the obligation, as the liability, if it exists, is to another party; nor would a judgment in this case, even if satisfied, be a bar to a subsequent suit in the name of the partnership or their duly appointed assignees.

Two principal suggestions are made in support of the theory set up by the appellees: (1.) That all the parties concerned in the attempt to effect a compromise between the debtors and their creditors proceeded as if the copartnership had previously been dissolved and as if the assets and effects of the debtor firm had been placed in the hands of the senior partner in trust to settle up the affairs of the debtors with their creditors and to pay the compromise notes. (2.) That the other partner never assented to the compromise agreement nor was he in fact a party to the final arrangement, and that the copartnership name was signed to the compromise agreement and to the notes without his authority.

Issuable matters are certainly involved in those propositions, but suppose they are fully proved, they are not sufficient to show that the other partner ever conveyed his interest in the assets and effects of the copartnership to the bankrupt partner, or that he ceased to be a joint owner of the same when the estate of the bankrupt partner was assigned and conveyed to the complainant below as his assignee.

Nothing is exhibited in the record to warrant the conclusion that the copartnership was ever in fact dissolved before the decree in bankruptcy against the senior partner, and as the compromise notes were given in the name of the copartnership, the other partner remained liable for their payment.

DECREE REVERSED and the cause remanded, with directions to

DISMISS THE BILL OF COMPLAINT.

title: Amsinck v. Bean/Opinion of the Court


text: Talk:Amsinck v. Bean/Opinion of the Court


text:
United States v. Farragut

[Syllabus from pages 406-408 intentionally omitted]

APPEAL from the Supreme Court of the District of Columbia.

On the 22d of January, 1862, the city of New Orleans being then in the possession of the rebel confederacy, and access to it from the ocean by the troops of the United States being cut off by the rebel forces in Forts Jackson and St. Philip, below it; a large armament of mortars was sent to the mouth of the Mississippi, which the Western Gulf Squadron of the United States was blockading; and Flag-officer Farragut, afterwards admiral of that name, ordered to its command. These were his instructions:

'When these formidable mortars arrive, and you are completely ready, you will collect such vessels as can be spared from the blockade and proceed up the Mississippi River and reduce the defences which guard the approaches to New Orleans, when you will appear off that city and take possession of it under the guns of your squadron, and hoist the American flag therein, keeping possession until troops can be sent to you. . . . As you have expressed yourself perfectly satisfied with the force given to you, and as many more powerful vessels will be added before you can commence operations, the department and the country will require of you success.'

On the 3d of February, 1862, Flag-officer Farragut sailed from Hampton Roads to assume his command. By letter of February 10th, 1862, from the Secretary of the Navy, he was instructed that—

'The most important operation of the war is intrusted to yourself and your brave associates. . . . Eighteen thousand men are being sent to the gulf to co-operate in the movements, which will give to the armies of the United States full possession of the ports within the limits of your command. You will, however, carry out your instructions with regard to the Mississippi and Mobile without any delay, beyond that imposed upon you by your own careful preparation. A division from Ship Island will probably be ready to occupy the forts that will fall into your hands.'

A land force of 18,000 men, under Major-General Butler, destined to co-operate with the navy in the attack on New Orleans, was dispatched from Fortress Monroe, and entered the Mississippi about the middle of April, landing on Ship Island there, and putting itself into relations with Admiral Farragut.

General Butler, when leaving Fortress Monroe, received orders by which the army under him was to await the reduction of the enemy's works by the navy, and then, after their capture, in case a reduction and capture was made, the army was to put and leave in them a sufficient garrison to render them secure; but in case the navy failed to reduce the works, then a co-operative movement by the united forces-land and naval-was to commence; the army, covered by the navy, to make its approaches and carry them by assault.

All preparations being made, the fleet commenced the bombardment of Fort Jackson on the 16th of March, which bombardment lasted until April 24th, 1862. At half-past three o'clock on the morning of that day, the fleet, in two divisions, moved up the river, and, aided by the mortar fleet, ran past and between Forts St. Philip and Jackson, placed on the east and west sides of it, under a fire described by Farragut 'such as the world had rarely seen.'

After passing the forts the fleet, on the morning of the 25th, proceeded to New Orleans, attacked the forts immediately around the city for its defence, reduced them, and demanded the surrender of the city on that day in the name of the United States.

General Butler in the meantime, in accordance with an agreement which he had previously made with Flag-officer Farragut before the bombardment began, rowing seven miles to get a good footing, landed 3000 men at the quarantine station (Sable Island). He then threw a body of them across the Mississippi and hemmed in the forts. That night the garrison of Fort Jackson mutinied against their officers, and a majority of them surrendered to the government pickets; and on the next day the officers also surrendered, and the government troops were put and left in the forts. He then followed Flag-officer Farragut up the river, and with 2000 men took possession of New Orleans.

Such at least was one part-the historical proscenium as it may be called-of the case; though the evidence adduced in the record of this particular suit, while establishing it, in the main, may or may not have considerably modified it as to the degrees in which the army and the navy shared in the conquest. Whether it did or did not was one of the questions raised and disputed about by counsel, and the reporter states what he has stated chiefly to lead in and make more intelligible what follows.

The result of the reduction of the forts was the capture of a large number of vessels, coal, and other property.

All this property was appraised at the time by a board of officers duly appointed for that purpose. But there being no District Court for the Eastern District of Louisiana open at that time, and much of the property being river steamers unfit to be sent to sea, and much of it necessarily used by the army and navy of the United States in their further operations in the gulf and the river Mississippi, none of it was sent in to be condemed as prize at the time of the capture.

Congress, accordingly, on the 3d of March, 1869, passed an act with the following title and enactment:'An Act relating to captures made by Admiral Farragut's fleet in the Mississippi River in May, 1862.

'Be it enacted, &c., That the vessels attached to or connected with Admiral Farragut's fleet in the river Mississippi, which participated in the opening of that river, and which resulted in the capture of New Orleans in the month of May, 1862, and which by law would have been entitled to prize-money in the captures made by said vessels, shall be now entitled to the benefits of the prize laws in the same manner as they would have been had the District Court for the Eastern District of Louisiana been then open, and the captures made by said vessels had been libelled therein; and any court of the United States having admiralty jurisdiction may take and have cognizance of all cases arising out of said captures, and the same proceedings shall be has therein as in other cases of prize.

'SECTION 2. And be it further enacted, That the shares in such captures awarded to the officers and men entitled to prize shall be paid out of the Treasury of the United States.'

In pursuance of this statute Admiral Farragut, on behalf of himself and the officers and crews of his fleet, filed his libel in the Supreme Court of the District of Columbia, on the 26th April, 1869, against thirty-six sailing vessels of different kinds, or steamers, including the ships Metropolis, Farwell, Milan, the barkantine Ocean Eagle, the bark George Alban, and the steamer Sallie Robinson, of the aggregate value, as alleged, of $116,500.

Five steamers, to wit, the Diana, the Ceres, the Tennessee, the McRae, and the Iberville, valued, as alleged, at $613,520.

[The steamer McRae (of the value as alleged of $96,000), the libel averred had been 'sent up with paroled prisoners to New Orleans, but not being properly cared for by the Confederate officers having her in charge, was sunk.']

Five Confederate vessels, then in process of construction.

The following steamers, St. Charles, Time and Tide, Louisiana Belle, Empire Parish, St. Maurice, and Morning Light, appraised in the aggregate at $64,000, and which steamers, among others, the libel alleged belonged to the Confederate authorities or citizens of the Confederate States, and after being captured were delivered over to the United States, and used by them in transporting their forces, munitions of war, &c.

Sixteen thousand tons of coal worth $20 a ton.

The libel alleged the capture by Farragut's fleet, jure belli, of all these thirty-six vessels, as also of the coal; and setting forth their value, prayed a monition, and that all might be held to be prize of war, and that a decree might be passed directing their value to be distributed among the officers and crews of the Western Gulf Squadron, as to law and justice might appertain.

title: United States v. Farragut


text: Talk:United States v. Farragut

title: Talk:United States v. Farragut


text:
United States v. Farragut/Opinion of the Court

The Treasury Department having informed the District Attorney of the United States at Washington, that it was very questionable whether the captures mentioned in the libel were prize of war, and that it was desired to have this question, besides questions of fact arising in the cases, fully and fairly tried, directed him to take such steps as upon consulation with a gentleman named (Mr. Corwine), who had been retained as special counsel of the government, it might be deemed necessary to take to protect the interests of the government. So far as the reporter could gather things from a confused record, one ground of the question suggested by the Treasury Department, whether the vessels libelled were prize of war, jure belli, was an idea that the captures had been made in a greater or less degree by the aid of the army; it was also of the impression that in asking for so large a sum of prize-money as it did, the libellants were disregarding the statutory rule which gave them so large a sum only when the capturing force was inferior to that opposing it.

However, whatever was the ground of its action, the United States, both by the attorney for the District of Columbia and by special counsel employed in the case, appeared and defended the suit, and such proceedings were had that by a written agreement between the United States on one side, and the libellant on the other, the whole controversy was submitted to three arbitrators, whose award, or that of a major part of them, should by rule of the court be entered as its decree. It was signed by the counsel for Farragut, by the special counsel of the United States, the Attorney-General, the Secretary of the Treasury, and the Secretary of the Navy.

This agreement, after reciting the pendency of the suit which we have just mentioned, and another by the same libellant against the United States, which was not found in the record, but is supposed to have related to the same subject-matter, proceeds as follows:

'Now, for the more speedy and economical adjustment of said controversies, it is agreed between the libellants and the United States that these causes shall be referred to the final determination and award of Henry W. Paine, Esq., of Boston, and Thomas J. Durant, Esq., of Washington, and Gustavus V. Fox, Esq., late Assistant Secretary of the Navy, mutually chosen on the part of the libellants and the United States, the award of whom, or the greater part of whom, shall be final upon all questions of law and fact involved in these causes; said award to be entered as a rule and decree of court in said cases in said Supreme Court, with due right of either party to take evidence, as in other like cases, within thirty days from this date; and with the right also of either party to appeal to the Supreme Court of the United States as from other decrees or judgments in prize cases.'

In due time the arbitrators made their unanimous award, the substance of which is as follows:

1. That the capture was not a conjoint operation of the army and navy of the United States.

2. That forty-two vessels, whose names were given, participated in the capture.

3. That twenty-nine vessels, whose names were also given, and which included the vessels already mentioned by name, were captured, and also five vessels of war in process of construction on the docks in the Mississippi River, and sixteen thousand tons of coal.

4. That the value of each of these vessels separately, and of the coal and unfinished vessels was such and such a sum, which the award specified, the aggregate being $966,120.

5. That all this property was lawful prize of war, and lawfully subject to condemnation as such.

6. That in the engagement which resulted in the capture of those ships, the entire force of the enemy was superior to the force of the United States ships and vessels so engaged.

9. That of the above-mentioned captured vessels, the McRae was wholly lost and destroyed, having been used as a cartel by the United States, and sunk in the river opposite New Orleans, within four days after her capture.

10. That the ships Metropolis, Farwell, and Milan, the barkantine Ocean Eagle, the bark George Alban, and the steamer Sallie Robinson, whose aggregate value was $116,500, were, after capture, given up to the legal owners, from whom they had been taken by the enemy.

The award allowed the captors the value of these vessels, and $46,600 for military salvage due thereon, and closed by giving to the libellants the whole value of all these vessels, $966,120, and the $46,600 salvage just mentioned.

The award, it will be noted, said nothing about any other vessels than those mentioned in the tenth paragraph having been given up to the owners of them, though there was some evidence in the record which tended to prove the bare fact that the steamers St. Charles, Time and Tide, Louisiana Belle, Empire Parish, St. Maurice, and Morning Light had been given up to their owners; but who the owners were, where they resided, or anything else about them did not appear in the said evidence.

This award having come into the court below, it was excepted to by the United States, and a motion soon made to set it aside; the following being the grounds of the exception and motion:

'1st. That the finding that the capture was not a conjoint operation of the army and navy of the United States, is not warranted by the law and the facts, but is expressly contrary to the law and the facts.

'2d. That the finding of the value of the vessels alleged to have been captured, is without warrant of law, and wholly unsupported by evidence.

'3d. That the finding that the property alleged to have been captured was 'lawful prize of war, and lawful subject of condemnation as such,' is erroneous and wholly unsupported by the law and facts.

'4th. That the finding that the force of the enemy was superior to the forces of the United States ships and vessels engaged in the alleged capture, is erroneous and wholly at variance with and unsupported by the law and the facts.

'5th. That the finding that the steamer McRae was lost after that she was alleged to have been captured, and while she was being used as cartel by the United States, is erroneous and not supported by the law and the facts. The evidence shows that the McRae belonged to the United States prior to her use and when she was used by the rebels, and that she was recaptured from them by the naval forces of the United States on the occasion referred to in the award, and that she was not prize of war. At most it was but a recapture.

'6th. That it is erroneous, and not warranted by law, to allow military salvage, as against the United States, for the alleged recapture of the vessels set out in paragraph ten of the award. Such property was not recaptured by the libellant and those he represents.'

The court refused to set the award aside, and on the contrary made it the decree of the court. From that decree the United States took this appeal.

After the case came into this court the Attorney-General dismissed the appeal as to the sixteen thousand tons of coal, the five vessels of war in process of construction, and five other vessels, namely, the Diana, the Ceres, the Tennessee, the McRae, and the Iberville, covering $613,520 of the decree, and this sum has been distributed among the captors.

The record, as it came to this court, was a very confused one. It was composed, a considerable part of it, of evidence in the cause; some of it received by stipulation, some of it documentary, and more-the most of it, indeed-by depositions. Whether any part of this was before the arbitrators, or what part of it, or what other testimony, if any, was before them, the confused state of the document rendered it impossible for any one to know.

Mr. G. H. Williams, Attorney-General, and Mr. R. M. Corwine, special counsel, for the United States.

The first question is, What is brought up by the appeal?

The 'appeal,' reserved by the agreement to refer, is from the judgment or decree of the Supreme Court of the District of Columbia.

The award was of no avail until it was entered as a rule or decree of that court, and from that rule (i. e., judgment) or decree the appeal might be taken.

Such appeal is to be as from other decrees or judgments in prize cases.

Now, in decrees in prize cases all pleadings, together with the report of the arbitrators, go up with the appeal, and the proceedings in all respects are governed by the Rules of Practice in Admiralty.

By Rule 44, in admiralty, power is given the court to refer any matter in dispute to one or more commissioners; and such commissioners shall have and possess all the powers of masters in chancery. So that, if the parties had not agreed, the court might have referred the cause to arbitrators. But here the parties did agree, and the court adopted the selection of arbitrators, and their form of submission, and referred the cause.

The 44th Rule, as we have said, confers upon commissioners the powers of masters in chancery, and the rule, as laid down in 2d Daniell's Chancery Practice, is that the master must report all the evidence for the inspection of the court. Evidence improperly rejected by the master may be examined in court.

Such an appeal as was here made from the decree below, brings then the case here to be tried de novo, without reference to the proceedings of the arbitrators, and, in fact, as if no reference had been made. The decree was vacated by the appeal.

[The learned counsel then, on an assumption that all questions of fact were open to examination at this bar, went into an examination of the evidence; inferring, on such examination, that in several particulars of fact-including the degree in which the army shared in the conquest-the conclusions of the arbitrators were not well made, and that really, on a perfectly true view of the case, nothing was due to the libellants at all.]

Reverting, however, in a larger degree to matters of law, and admitting, for argument's sake, that the evidence cannot be gone into:

The decree of the court below finds that the ships Metrop olis, Milan, Farwell, the barkantine Ocean Eagle, the bark George Alban, and the steamer Sallie Robinson, were, after capture, 'given up to the loyal owners from whom they had been taken by the enemy.'

Upon these facts, the existence of the rights of postliminy in the said owners at the time of the recapture of their property by our forces may fairly be assumed.

That right entitled the owners to a restoration of their property by the captors; while, on the other hand, the captors became entitled to military salvage, for which they had a lien upon the property, but that was the only interest they had in it.

The claim of the captors for military salvage might have been enforced by proceedings in personam as well as in rem; and this shows that the liability therefor, so far as it constituted a personal charge, rested upon the owners. The captors could certainly have no ground for asserting a claim against the government on account of salvage, unless, perhaps, the property or its proceeds had been appropriated by the government after the capture, which was not the case. And the proceeding in the court below being virtually but the prosecution of a claim against the government, the allowance of military salvage to the promoters of that proceeding, in respect of the property referred to, was improper.

It appears also, from the record, that the steamers St Charles, Time and Tide, Louisiana Belle, Empire Parish, St. Maurice, and Morning Light, were restored to their owners. The presumption is, though there may be no specific evidence to that effect, that the restoration of this property was due to the fact that the owners thereof were loyal to and under the protection of the government. If so, then the right of postliminy existed in their favor, and the only interest the captors really had in the property was a salvage right, which, for reasons already stated, cannot be made the subject of claim against the government in this proceeding. The allowance made by the court below, in respect of this property, should therefore be wholly excluded.

It is accordingly submitted that at the very least the decree of the court below ought to be modified in the following particulars:

1. The amount allowed by the court as the value of the ships Metropolis, Farwell, Milan, the barkantine Ocean Eagle, the bark George Alban, and the steamer Sallie Robinson, should be stricken out, $116,

2. The amount allowed by the court as military salvage on the same vessels should also be stricken out, 46,

3. The amount allowed by the court as the value of the steamers St. Charles, Time and Tide, Louisiana Belle, Empire Parish, St. Maurice, and Morning Light, should also be stricken out, 64,

Mr. B. F. Butler, for Admiral Farragut and his officers and men; Mr. Hubley Ashton, for Admiral Porter; Mr. Nathaniel Wilson, for Rear-Admiral Bailey, contended that under the terms of the submission which made the award of the arbitrators final, not only on questions of fact but on 'questions of law' also, it was doubtful if anything at all could be considered in this court; that certainly the ordinary rule which made such an award conclusive as to matter of fact, prevented a consideration of the case de novo as on appeals in admiralty.

The learned counsel, however, examined the evidence fully, seeking to show that on it, as in matter of law, the award was perfectly just.

Mr. Justice MILLER delivered the opinion of the court.

The first and most important question arising in the argument of the case before us, respects the validity of the award and its effect in limiting the field of investigation of this court on appeal.

On the one hand it is maintained that the provision which gives to either party the right to appeal to this court, as from other decrees or judgments in prize causes, in effect nullifies the award here and opens the entire case upon all the pleadings and evidence in the record as though no award had been made. On the other, it is argued that the clause which declares the award final upon all questions of law and fact involved in the cause, forbids any inquiry here into any question of law or fact passed on by the arbitrators.

As regards the first proposition, it is unreasonable to suppose that parties to a suit in court, referring the whole subject to arbitrators with an agreement that the award shall be final and become the decree of the court, intended to leave the whole case open after the award as though none had been made.

The provision for an appeal to this court was undoubtedly to negative the possible inference that such appeal was forbidden by the clause making the award final in all questions of law and of fact arising in this case.

It is to be observed that the appeal is not and could not be from the award, but from the decree of the court below. That court would deal with the award in the same manner that awards in other courts could be dealt with.

There is nothing in the nature of the admiralty jurisdiction, or of an appeal in admiralty, as counsel seem to suppose, which would prevent parties in that court, whether sitting in prize or as an instance court, from submitting their case by rule of the court to arbitration, or which varies the effect to be given to such award from that to be given to it in any other court, either in the court below or on appeal. This award is to be construed here and its effect determined by the same general principles which would govern it in a court of common law or of equity.

Nor do we conceive, notwithstanding the expression in the agreement of submission, that all questions of law in the case are concluded by the award. In this respect it is no more than a submission of all matters involved in the suit.

Where the award finds facts it is conclusive, where it finds or announces concrete propositions of law, unmixed with facts, its mistake, if one is made, could have been corrected in the court below, and can be corrected here. Where a proposition is one of mixed law and fact, in which the error of law, if there be one, cannot be distinctly shown, the parties must abide by the award.

The award was also liable, like any other award, to be set aside in the court below, for such reasons as are sufficient in other courts. For exceeding the power conferred by the submission, for manifest mistake of law, for fraud, and for all the reasons on which awards are set aside in courts of law or chancery. A motion was made in that court to set aside the award on the following grounds:

1st. The finding that the capture was not a conjoint operation of the army and navy of the United States is not warranted by the law and the facts, but is expressly contrary to the law and the facts.

2d. The finding of the value of the vessels alleged to have been captured is without warrant of law and wholly unsupported by evidence.

3d. The finding that the property alleged to have been captured was 'lawful prize of war, and lawful subject of condemnation as such,' is errorneous and wholly unsupported by the law and facts.

4th. The finding that the force of the enemy was superior to the forces of the United States ships and vessels engaged in the alleged capture, is erroneous and wholly at variance with and unsupported by the law and the facts.

5th. The finding that the steamer McRea was lost after that she was alleged to have been captured, and while she was being used as cartel by the United States, is erroneous and not supported by the law and the facts. The evidence shows that the McRea belonged to the United States prior to her use and when she was used by the rebels, and that she was recaptured from them by the naval forces of the United States on the occasion referred to in the award, and that she was not prize of war. At most it was but a recapture.

6th. It is erroneous, and not warranted by law, to allow military salvage, as against the United States, for the alleged recapture of the vessels set out in paragraph No. 10 of the award. Such property was not recaptured by the libellant and those he represents.

A glance at these grounds will show that all of them, except the last, is an attempt to reopen the questions submitted to the arbitrators, because they had decided erroneously questions of pure fact, or of law and fact, in which the former was so mingled with the latter as to be inseparable.

Applying these principles to the case before us, we think we are bound by the first statement of the award, that the capture was not a conjoint operation of the army and navy. There is no evidence here of any misapprehension of the law governing that question, and it must obviously have been one mainly of fact, and the award, is therefore, conclusive.

So also the names of the vessels participating in the capture, of the vessels and other property captured, and the value of that property, are all questions exclusively of fact which the arbitrators had a right to find, were bound to find, and the finding is a finality. The finding that all this property was lawful prize of war and subject to condemnation as such, was the very thing submitted to them for their decision, and unless it can be shown that in making this award they have acted upon a manifest mistake of law, the award must be upheld. Does this appear? Having found the capture, the property captured, the names and character of the vessels engaged in it, and the nature of the capture, the only other question open was the character of the captured property.

Was it liable to capture as prize for any of the reasons which make property liable to the law of prize? Was it contraband of war? Had it been engaged in violating or attempting to violate a blockade? Was it enemy property? If it was captured with any or all of these characteristics it was lawful prize, and subject to condemnation, and whether it was or not was clearly matter to be decided by the arbitrators, and unless they violated some principle of law in deciding it, which this court can see, the award must be confirmed.

The Attorney-General insists that it sufficiently appears from the record that the ships Metropolis, Farwell, Milan, the barkantine Ocean Eagle, the bark George Alban, and the steamer Sallie Robinson, of the value of $116,500; and the steamers St. Charles, Time and Tide, Louisiana Belle, Empire Parish, St. Maurice, and Morning Light, of the value of $64,000, were not lawful prize or subjects of condemnation. The foundation of the argument is that these vessels were owned by loyal citizens, and were on that account delivered up to their owners by the military authorities after their capture. As regards the six vessels last named, the award is totally silent as to their being delivered to the owners, or as to the loyalty of those owners.

There is some evidence in the record, if we could go behind the award, to show that they were delivered to their owners, but none whatever as to the character of these owners for loyalty. We cannot, in the face of the award that they were lawful prize and subject to condemnation, infer that their owners were loyal men, if we could look to the evidence to find that the vessels were delivered by them.

It is, therefore, clear that there is no sufficient evidence to show that the award as to these vessels was based on any mistake of law.

The six vessels first named stand on a different ground. As to them, the tenth finding of the award is, that they 'were after capture given up to their lawful loyal owners, from whom they had been taken by the enemy.'

On this point we understand the award as stating that these vessels had been the property of loyal citizens of the United States, had been seized by the enemy for their own use, and when captured from the enemy by the libellants had been restored by the military power on New Orleans to their original owners, and that on this state of facts the arbitrators hold that when captured they were lawful prize and liable to condemnation as such in a prize court. Unless the fact that the original owners were loyal to the government of the United States is of itself sufficient to exempt these vessels from the law of prize, the award of the court must be sustained. If the owners resided on that side of the line of bayonets spoken of in the Prize Cases which adhered to the Union, then they were not liable to condemnation as prize, for their owners could have interposed a claim in the prize court, and on payment of salvage their property would have been restored to them. But if their owners resided on the other side of that line, were themselves citizens of and domiciled in States declared by the President's proclamation to be in insurrection, then their property captured in naval warfare was lawful prize, and subject to condemnation. The loyalty of the owners made no difference in this regard. This whole subject was exhaustively examined in the Prize Cases, and the second proposition established by the opinion, commencing at page 671, 2 Black, is that property of persons domiciled or residing within the enemy's lines was enemy property, and liable to capture as prize of war, without regard to their sentiments of loyalty or disloyalty to the United States government. This was sustained on the ground that all such property, being capable of use in aid of the enemy, was liable to capture for the purpose of crippling his resources. And one vessel and some personal property was condemned as prize in that case, because owned by citizens of Richmond, though no disloyal acts were charged or proved against them.

This rule was acted on by this court in all cases which came within it (and there were several) growing out of the same civil war. The rule is vindicated by the fact that these very vessels were seized and were in use by the public forces of the enemy at the time they were captured, and their capture was a deadly blow at their power to carry on the war.

There is nothing in the finding of the court, nor in the record, nor is it suggested by counsel in argument, to show that these owners were not domiciled in the rebel States. It would be reasonably supposed from all that is known, that such was the case; and in favor of the award and decree below it will be presumed that the arbitrators had evidence of that fact.

It does not appear, therefore, that in holding these vessels liable to capture and condemnation, and lawful prize of war, the arbitrators violated any principle of law.

But it is quite clear that in awarding the value of these vessels to the captors as prize, and in addition forty per cent. of that value for salvage, they did violate law and justice.

This is too apparent to need argument, and is seen on the face of the award; and the decree of the Supreme Court of the District as to the $46,600 awarded as salvage is REVERSED, and in all other particulars it is affirmed, and the case is REMANDED to the Supreme Court of the District of Columbia, with directions to reform its decree in this particular, and for such further proceeding as may be necessary, in conformity with this opinion.

REVERSED AND REMANDED ACCORDINGLY.


text: Talk:United States v. Farragut/Opinion of the Court


text: Fox v. Seal

title: Fox v. Seal


text: Talk:Fox v. Seal

title: Talk:Fox v. Seal