text:
The Continental

AN act of Congress-that of July 25th, 1866 -prescribes that all coasting steamers and those navigating bays, lakes, or other inland waters, shall carry a green light on the starboard side, a red light on the port side, and in addition thereto a central range of two white lights, the after light being carried at an elevation of at least fifteen feet above the light at the head of the vessel; the head-light to be so constructed as to show a good light through twenty points of the compass, namely, from right ahead to two points abaft the beam on either side of the vessel; and the after light to show all around. It also enacts that ocean-going steamers shall carry 'at the foremast-head a bright white light,' on the starboard side a green light, and on the port side a red light; these two last so fixed as to throw the light from right ahead to two points abaft the beam, and fitted with in-board screens projecting three feet, so as to prevent these lights being seen across the bow.

A previous act, the well-known one of April 29th, 1864, 'for preventing collision on the waters,' thus prescribes: ARTICLE 5. Sailing ships under way. . . shall carry the same lights as steamships under way, with the exception of the white masthead lights, which they shall never carry.

ARTICLE 13. If two ships under steam are meeting end on, so as to involve risk of collision, the helm of both shall be put to port so that each may pass on the port side of each other.

ARTICLE 15. If two ships, one of which is a sailing ship and the other a steamship, are proceeding in such directions as to involve risk of collision, the steamship shall keep out of the way of the sailing ship.

ARTICLE 16. Every steamship, when approaching another ship, so as to involve risk of collision, shall slacken her speed, or, if necessary, stop and reverse.

These two statutes being in force, the steam propeller North Hampton and the side-wheel steamboat Continental, two vessels of rival lines, were in the habit of making regular daily trips between New York and New Haven, on the Long Island Sound; the North Hampton leaving New York about 6 P.M. on one day, and the Continental leaving New Haven about midnight on the same day.

On the night of the 23d of October, 1868, the rival vessels were making their customary trips. That night, though cloudy and with occasional spits of rain, was not very dark nor windy. The sea was open and comparatively smooth. About midnight, the wind being north-northeast, the North Hampton approached New Haven, and by the captain's order steered straight east-northeast for the New Haven light-house; a right course apparently for her to steer when about to enter the harbor. She soon saw the lights of a steamer, which she inferred, and rightly, was the Continental coming down and out of the harbor. After the Continental came down the harbor, she changed her course to go down the Sound towards New York. 'When she first changed her course,' said the captain of the North Hampton, who was examined as a witness, 'she headed directly for the North Hampton, which,' said he, 'I could tell by her range of lights, they being exactly in range after she got her course.' He continued:'After a little her course varied, a little southerly. She was then, when she hauled up, on her course westerly, distant about three miles. I continued going our course east-northeast until I was distant from the Continental, I should judge, about three-quarters of a mile. She was then bearing a very little on our port bow, nearly ahead. I then gave one blast of the whistle and changed my course one point easterly to east by north. I received no response to that whistle for, I should say, nearly or quite a minute. I then heard two blasts of the Continental's whistle, which I immediately answered by one whistle, rung two bells to stop the boat, and in the meantime told the pilot to heave the wheel hard aport.'

Notwithstanding this the two steamers came violently together, the Continental striking the North Hampton on her port side a little abaft midships, nearly square on, and running through her in such a way that she went down in half an hour; her passengers just escaping with their lives.

The defence set up by the Continental for this collision was, the fact that the North Hampton had had no 'central range of two white lights;' for want of which, as the Continental alleged, she took the steamer for a sailing vessel, and starboarded her helm instead of porting it. On the subject of the North Hampton's lights generally, one of the boat's hands of that vessel who had been at the wheel prior to the collision, and left it when he saw the steamer coming down the Sound, testified thus:

'I found the bow light burning brightly. The side lights were also burning brightly. The stern light I found burning dim. There were two lanterns in one box. They showed as one light. I went aft and lowered it down. After I got the box down, I went into the door where the space is, out of the draft, so they would not blow out, and when there picked up the wicks of both lights, one after another. After that was done, I took them to the staff and put them in the box and hoisted them up. I heard the North Hampton blow one whistle. I was aft then, at the time of this first whistle, was just stepping inside the passage-way with the lights, as near as I can recollect. After an interval there was a reply with two whistles from the Continental. I was then coming out of the passage-way, as near as I can remember. The North Hampton blew one whistle again, directly after. I was then in the act of hoisting the lights at that time. After hoisting up the lights I saw the Continental coming for us, and I ran forward on starboard side. I got part of the way forward, when the vessels came together and the concussion knocked me down.'

It appeared from the testimony of those on board the Continental that they had, in point of fact, mistaken the North Hampton for a sailing vessel.

The lookout of the Continental-her forward deck lookout, who had no other duty than that of lookout-'not seeing the vessel itself, but seeing a green and white light'-which he judged to be then a mile or a mile and a half distant-reported, five or six minutes before the collision, 'Sail off starboard bow,' and was answered at the pilot-house, 'Aye, aye!'

The wheelsman, who heard the lookout's report, saw also a green and white light, 'but no red light then four or five minutes before the collision, as he judged, and a mile or a mile and a half off, the North Hampton's lights bearing pretty much the whole time, until it was too late to avoid the collision, about three points on the Continental's bow.' He thereupon starboarded his helm so as to keep her off.

The captain, who had been on the line for thirty years, and who was in the pilot-house with the wheelsman, said:

'I saw the North Hampton's green and white light; she had no stern light; sometimes in a sailing vessel they come forward and stick out a white light when they get frightened; sometimes they have a light forward to overhaul the anchor-chain.'

The captain added:

'A lookout reports a steamer as a steamer, and a vessel as a vessel; all he knows by is the lights; at night, he reports four lights as a steamer, and two lights as a vessel. If the vessel seen has one colored and only one bright light, he reports her as a sail vessel. That's his orders.'

On board the Continental there happened to be, going down the Sound that night, one Horton, for seven years a Hellgate pilot. He had been in the pilot-house, and saw a green and white light-the white light forward, but he saw no aft light. The vessel on which they were seemed to him, he testified, to be a sailing vessel. He said:

'I guessed she was a sailing vessel because she did not have any stern light; I could not see her hull when I first saw her. It is generally the case for a vessel coming into port to take a light forward, to get her chain and anchor ready to drop anchor. I went away from the pilot-house to the lower cabin after I saw the lights. From the time I left the pilot-house till the collision was five or six minutes. After the collision, I saw a stern light halfway up the flag-mast.'

As already mentioned, the Continental was starboarded under the impression that the North Hampton was a sailing vessel, and with a view of keeping out of her way. The North Hampton being in fact a steamer, and knowing that the approaching vessel was one, ported. A collision came of course.

The owners of the North Hampton having libelled the Continental in the District Court of Connecticut, that court dismissed the libel, considering that the North Hampton was in fault; having had no stern-light, and running in direct violation of law, which required her to have a central range of two white lights. The Circuit Court affirmed this decree, and the owners of the North Hampton brought the case here.

Messrs. C. Donohue, C. R. Ingersoll, and J. S. Beach, for the appellants:

Assuming that the steamer could see only the bow and side-lights of the propeller, it was a fault on her part to act as if they were the lights of a sailing-vessel. A white light is prohibited to a sailing vessel under way. She is forbidden to carry any other light than the green light on her starboard side, and the red light on her port side. Sea-going steamers are required to carry the single white light with the side colored lights. Coasting and inland water steamers carry the colored side-lights with the bow and stern white lights. The lights, therefore, which the steamer saw, were lights which a sea-going steamer must carry, but which a sailing-vessel must never carry. And the steamer assumed that the vessel carrying it was not the kind of vessel which the lights declared it to be, but was the kind of vessel which the lights declared it not to be. This was recklessness.

If a steamer sees a light which does not clearly indicate the character of the vessel carrying it, she has no right to jump to the conclusion that it is carried by a vessel of any particular class, and especially not of that class which is forbidden to carry such a light. It is her duty to ascertain the truty by all the cautionary means in her power. She must use all necessary vigilance to discover whether the strange light is a fixed light or not-and if fixed, whether it is on a vessel in motion or at anchor-and if on a vessel in motion, what is the course of that vessel as indicating whether she is moved by the wind or by steam. She must look for the strength of the light seen as distinguishing a regulation-light from an ordinary hand-lantern, commonly used about a vessel's deck-and watch for the sails of the vessel-her hull-the noise of her paddles, and the lights of her saloon, if a steamer-and for all the usual indications characterizing the different classes of vessels. And if this inquiry cannot be made without slackening her speed, she must slacken her speed. If not without blowing her whistle, as a signal, she must blow her whistle. She has no right to go on at all if she is in any reasonable doubt on the subject. If, without exercising all reasonable precautions, she insists upon going on, and a collision occurs, she takes the risk, and the fault is justly visited upon her. In the case of The Gray Eagle, that vessel was held to be in fault because she did not, by watching the bearings of the light of another vessel coming towards her-The Perseverance-discover that the light was in motion, and therefore could not be upon a vessel at anchor. And she was condemned as in fault, although the Perseverance was carrying a light she had no right to carry. And such is the law of negligence everywhere. If a man goes upon a railroad track with shut eyes and deaf ears and is run over, it is in vain for him to complain that the whistle was not blown. In the present case no precaution whatever was taken by the steamer to discover the character of the approaching vessel. For it was manifest to the steamer, or should have been, that the vessel was approaching, and was bound into New Haven harbor. The steamer knew that the propeller was due at that place at that time. The two boats were accustomed to meet on every trip of the propeller, and were perfectly well known to each other. It was therefore the steamer's duty to look out for the propeller, just when and where the lights of this approaching vessel appeared. But at least there was reason for a doubt, and, if so, it was clearly her duty to settle that doubt. But those on board did not allow any doubt whatever to enter their mind. They assumed at once that it was a sailing-vessel thus coming toward them, right in the eye of the wind, and they adhered to that assumption stubbornly, until it resulted in disaster.

2. The character of the light was manifested to the steamer, beyond any question, by its bearings.

Those bearings are given to us by the wheelsman of the Continental as three points on the starboard bow when the light was first seen, and they continued the same without alteration until the collision, or until it was too late to avoid the collision. Now these bearings ought to have told those navigating the steamer, that the vessel carrying those lights was directly approaching the steamer. Otherwise they would have changed.

3. And the wind, it is admitted, was north-northeast. The vessel with the lights, therefore, was approaching directly in the eye of the wind. And yet the captain of the Continental swears that he supposed the North Hampton to be a sailing-vessel all the while, and the court below tells us that he was justified in that supposition.

Again: the wind being north-northeast, a sailing-vessel, in order to show her green light to the steamer, must have been on her starboard tack, and could not have lain closer to the wind on that tack than a northwest course. This course would have been nearly at right angles to the steamer's course, and, if the vessel sailing on it was first seen three points on the steamer's starboard bow, every minute would carry her further out of the steamer's way, and would of course change the bearings of her lights, and the relative distance between her lights.

4. The orders which the captain of the steamer testifies he had given to his lookout, and upon which the lookout seems to have acted, on this occasion, shows him to have had a very confused notion of the object of the regulation lights, and indicates a habit of inattention to their particular significance. It is not surprising that a lookout, receiving such orders, should report the propeller as a sail, and is certainly not to be wondered at that the officer who could give them should adopt such a report as infallible, and shut his eyes and ears to any further evidence on the subject.

Messrs. E. H. Owen and T. C. Doolittle, contra:

The North Hampton was running in open violation of statutory requirement and of the well-settled rules of navigation adopted for the purpose of preventing collisions, in that she had no 'after light.'

It is probable that at no time was the after light such as the statute requires, for it is clear that it had been a poor, defective light for some time previous to its being taken down. But however this may have been, it was taken down at the exact moment that it was specially needed to be up, and kept down until the Continental was completely misled by the want of it, and a collision became inevitable.

The statute, by positive requirement, makes a central range of white lights obligatory in inland waters. The requirement applies to all vessels under steam except 'ocean-bound steamers.' And there is the greatest reason for the requirement, for without the central range of white lights the true course and direction of an approaching steamer cannot be had in narrow work. With nothing but the colored lights, steamers may be approaching nearly end on, and so as to involve the risk of collision, when one of them is not visible. The colored lights are to be so constructed as to shine from a point right ahead to two points abaft the beam, so that one steamer approaching another on nearly a parallel course, a very little off either hand, would only see one colored light, and could not thereby determine how near the two were appropaching 'end on.' The bow light alone would not enable the approaching steamer to determine this fact without the aid of the after light, giving thereby a central range of two white lights. If approaching directly end on, the two white lights will be in range, and if not, they will be 'open.'

It is no excuse for the North Hampton that her stern light, having become dim, had been temporarily removed for the purpose of being trimmed.

The absence of the necessary range of lights did in fact deceive, and could not fail to deceive, those in charge of and navigating the Continental. The North Hampton was taken to be a sailing-vessel; she was reported as such, and the movements made on the part of the Continental were based upon that idea.

It is no answer to say that those navigating the Continental, upon reflection, might have known that the North Hampton could not have been a sailing-vessel, because a sailing-vessel does not carry a white light forward, and because, with that wind, a sailing-vessel could not have been heading as she was. Although sailing-vessels are not permitted by law to carry a white light, yet it was proved to be not unusual in the night, when making preparations for landing, to have a light on the forward deck in getting lines and chains ready. As she did not have the lights which steamers are required to carry, the Continental was not bound to presume, from the mere fact that a white light was seen at her bow, that the vessel whose lights were seen was a steamer. There is no evidence that 'ocean-bound steamers,' which carry a white light forward, ever frequent or are ever seen navigating any part of the Sound.

The North Hampton was also in fault in not having a lookout. The fact that she had one is not asserted on the other side. This was gross negligence. She was bound by law to have one. It was necessary for her guidance. The master and pilot had other duties to perform which rendered them incompetent. The fact that the Continental was seen by the master and pilot does not obviate the objection. If she had had a vigilant lookout, the lights of the Continental and her direction would have been more carefully reported, and the collision might have been avoided. A vigilant lookout in the night, in a thoroughfare, is an absolute and inflexible necessity. No one can tell what might have been the effect of having a vigilant lookout forward.

The North Hampton was clearly in fault for sounding one blast of her whistle, and in attempting to cross over and pass the Continental on her left or port side, thus throwing herself right across the bows of the latter vessel.

The Continental was properly navigated and was not in any respect in fault. She was pursuing her lawful and proper course on her voyage. She had all the lights required by law properly set and burning brightly. She had a competent lookout properly stationed and faithfully attending to his duty. She had a competent engineer at his post who answered all the orders from the pilot-house promptly.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: The Continental


text: Talk:The Continental

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

title: Talk:The Continental


text:
The Continental/Opinion of the Court

Ships and vessels are held liable for damage occasioned by collision, either on account of the culpable neglect or complicity, direct or indirect, of their owners, or on account of the negligence, unskilfulness, or carelessness of those employed in their control and navigation. When employed in navigation ships and vessels should be kept seaworthy and be well manned and equipped for the voyage, and in cases where they are not seaworthy or not well manned or equipped, and a collision ensues between such a vessel and one without fault in that respect, the owners of the vessel not seaworthy or not well manned and equipped cannot escape responsibility, if it appears that the unseaworthiness of the vessel or the want of a competent master or of a sufficient crew or of suitable tackle, sails, or other motive power, as the case may be, caused or contributed to the disaster; and as the owners of the vessel appoint the master and employ the crew, they are also held responsible for their conduct in the control and navigation of the vessel.

Controversies growing out of collisions are cognizable in the admiralty, and when prosecuted in that jurisdiction, the rules of decision are different in several respects from those which prevail even in similar controversies when prosecuted in the courts of common law. Where the collision occurs exclusively from natural causes and without any fault on the part of the owners of either vessel or those intrusted with their control and management, the maritime rule, as defined by the Federal courts is, that the loss shall rest where it falls, on the principle that no one is responsible for such a disaster when produced by causes over which human skill and prudence could exercise no control. Admiralty courts everywhere have now adopted that rule, but it cannot be applied where both or either of the vessels are in fault as where the vessel of the respondent is alone in fault the libellant is entitled to a decree for his damages, and the converse of the proposition is equally true, that if the vessel of the libellant is alone in fault, proof of that fact is a sufficient defence to the libel, but if both vessels are in fault, then the damages must be equally apportioned between the offending vessels. Much uncertainty often attends the inquiry by which of those rules a given controversy should be determined, and where the evidence is conflicting the issue presented is frequently one of doubt and difficulty.

Full damages are claimed by the libellants in this case, upon the ground that the steamboat of the respondents was alone in fault, or if that theory cannot be sustained, then they contend that both steamers were in fault and that the damages should be divided. On the other hand, the respondents contend that the vessel of the libellants, the propeller, was wholly in fault, and that the decree of the Circuit Court dismissing the libel should be affirmed.

Daily trips were run by the propeller between the ports of New Haven and New York, carrying passengers and freight, and she was on her return trip from the latter port and near the entrance to the harbor of her home-port when she was struck by the Continental, the steamboat of the respondents, on her port side, abaft her midships, and damaged to such an extent that she sunk in half an hour. Corresponding trips were run by the steamboat of the respondents between the same ports, the Continental, however, usually leaving the port of New Haven on the same day that the propeller, the North Hampton, left New York on her return trip to the port where both steamers belonged. Accustomed as they were to start on their respective trips at stated hours, each knew pretty nearly when they would meet and where they would pass each other on the route, except when one or the other was detained by stress of weather or other special circumstances, and the proofs exhibited furnish no reason to suppose that either of the steamers met with any detention during this trip. Testimony was taken on both sides and both parties having been heard, the District Court entered a decree for the respondents. Prompt appeal was taken by the libellants to the Circuit Court, but the Circuit Court affirmed the decree of the District Court, and the libellants appealed to this court.

Before the Continental came out of the lower harbor her lights were seen by those on board the propeller when the two steamers were four or five miles apart. Distant from each other as they then were, the better opinion is that they were not at that time on courses which involved any risk of collision, but the Continental, shortly after she came out of the lower harbor, hauled up as usual on her Sound course, heading more directly towards her ultimate destination, and from that moment the course of the two steamers was such that the rules of navigation as well as the dictates of common prudence made it the duty of each to adopt proper precautions to prevent a collision. Beyond doubt they were approaching each other nearly end on, within the maritime meaning of that phrase, and under such circumstances all must admit that the rules of navigation require that 'the helms of both shall be put to port, so that each may pass on the port side of the other.'

Extended argument to establish that theory of fact does not appear to be necessary, as it agrees with the first finding of the District judge and is supported by all the attending circumstances as well as by the weight of the direct testimony. Evidently the two steamers were far enough apart at that time to have adopted whatever precautions were necessary to have prevented a collision, and it is clear that if each had obeyed the rules of navigation, they would have passed each other in safety. Fault is imputed to the steamboat Continental, because she did not port her helm as required by the rules of navigation established by the act of Congress, but the respondents contend that they were deceived and misled as to the character of the approaching vessel and consequent nature of their duty by the failure of those on board of the propeller to display proper lights, as they also were required to do by the same Congressional regulations, as amended by a subsequent act.

Evidence to that effect was given by one of the witnesses called by the libellants. He testified that he was at the wheel prior to the collision; that he saw the Continental coming down the harbor and spoke to another seaman to take his place; that the seaman spoken to did as requested; that he went and called the master and the mates; that he looked at the lights; that the bow light and both the side lights were burning brightly, but that the stern light, which consisted of two lanterns and showed as one light, he found was 'burning dim;' that he went aft and took down both lanterns and went forward in the passage-way on the starboard side and having picked up the wicks carried the lanterns back and put them in the box where they belonged; that he stepped forward into the passage-way to get out of the draft, so that the wind might not blow the lights, out, and he further states that he heard the propeller give one whistle just as he was stepping into the passage-way with the lanterns; that he also heard two whistles from the Continental in reply just as he was returning to replace the lights in the box; that the propeller, just as he was hoisting the lanterns, again blew one whistle; that after he replaced the lights he saw the Continental approaching the propeller, when he ran forward part way and was knocked down by the concussion.

Such a disaster could not have occurred without fault on the part of one or both vessels, as they had an open sea and good weather, and the night, though cloudy, was not very dark, as fully appears from the fact that those on board the propeller saw the lights of the Continental when she was at least four miles distant.

Coasting steamers are required to carry a central range of two white lights as well as the red and green lights prescribed for ocean-going steamers, the after light to be carried at least fifteen feet above the light at the head of the vessel, and the requirement of the act of Congress in respect to it is that it shall 'show all around the horizon.' Signal lights are required by the acts of Congress in order that they may be seen by an approaching vessel in season to enable those in charge of the vessel to adopt the necessary precautions to prevent a collision with the vessel whose lights are so displayed, and when it appears that they were burning so dimly as not to fulfil the purpose and object for which they are required, they cannot be regarded as constituting a compliance with the prescribed requirement. Apply that rule to the present case and it is quite clear that the propeller was in fault, and it appears that the District and Circuit Courts both came to the conclusion that she was solely in fault and denied to the libellants all claim for damages, either as owners of the propeller or as bailees of the cargo. Whether that decision is correct or not must depend upon the evidence, as it is clear that the absence of one or more of the lights required by the act of Congress will not necessarily cast upon the delinquent party the entire consequences of such a disaster. Absence of lights in a case failling within the acts of Congress renders the owners of the vessel liable for the consequences resulting from the omission, but it does not confer any right upon the other vessel to disregard or violate any rule of navigation or to neglect any reasonable or practicable precauton to avoid a collision which the circumstances afford the means and opportunity to adopt.

Steamers displaying proper signal lights are in that respect without fault, but they have other duties to perform to prevent collision besides complying with that requirement, and if they neglect to perform such other duties they will not be held blameless because they displayed proper lights as required by the act of Congress upon that subject.

Some conflict undoubtedly exists in the testimony as to the precise manner in which the two steamers were approaching each other after the Continental came out of the harbor and hauled up upon her Sound course, but the better opinion we all think is that they were approaching each other nearly end on, or substantially in that manner, as found by the District Court. Inquiry as to what their respective courses were before that time would be useless, as the respondents do not claim that either the lookout or master of the steamboat saw the propeller or her lights before the steamboat was put upon her Sound course. Unquestionably the lights of the propeller might have been seen earlier, but it is clear that they were not, if the witnesses are to be believed.

Lookouts are required to be vigilant, and it is not doubted if proper vigilance had been exercised in this case those on board the steamboat might have ascertained the character of the approaching vessel in season to have adopted every necessary precaution to have avoided a collision. They must have expected to meet the propeller about that time, and under the circumstances they had no right to assume without a closer scrutiny that the approaching vessel was a sailvessel because she did not show a stern light. She did show a bow light, which might well have satisfied them that the vessel was not a sail-vessel, as it is more reasonable to suppose that the stern light of a steamer has become dim or extinguished than that a sail vessel will show a light not required nor authorized by the prescribed regulations. Proper scrutiny as to the character of the approaching vessel would or should have induced greater caution on the part of the master of the Continental, and if any doubt remained after such scrutiny was made the steamboat should have slackened her speed or have stopped until every reasonable degree of uncertainty was overcome. Navigators have no right arbitrarily to assume under all circumstances that every vessel approaching which does not show both the signal lights and the central range of two white lights is a sail-vessel which is bound to keep her course, and that if she does not she may be run down and sunk.

Prior to the enactment of the sailing rules neither steamers nor sail vessels, except on the lakes, were required to carry lights of any kind, and yet the rules of navigation were substantially the same as those prescribed in the existing acts of Congress. Lights are now required, but the omission of one vessel to comply with the requirement will not excuse the other from the exercise of all due and reasonable care to prevent a collision.

Viewed in the light of these suggestions, as the case must be, the court is fully satisfied that those in charge of the steamboat did not exercise due care and vigilance to ascertain the character of the approaching vessel, and that if they had done so they would have been enabled to have adopted reasonable precautions to have prevented the collision. Consequently the court is of the opinion that both vessels were in fault, and that the damages should be equally apportioned between the offending vessels.

Where two steamers are approaching each other in an open sea on a night when the lights of a vessel may be seen five miles, the defence that one of the steamers mistook the other for a sail-vessel cannot be admitted as valid, unless it is established by full proof; and where, as in this case, it appears that the approaching steamer showed a bow light in addition to the red and green lights, the court will be still less inclined to give credence to the theory as a valid defence.

DECREE REVERSED, and the cause remanded for further proceedings in conformity to the opinion of this court.

title: The Continental/Opinion of the Court


text: Talk:The Continental/Opinion of the Court


text:
Pugh v. McCormick

ON the 12th of April, 1863, R. C. Martin, at Assumption, Louisiana, drew his promissory note at one year for $7000, in favor of W. W. Pugh, which note after being indorsed there by Pugh came into the hands of James McCormick. The note, as issued, had no stamp upon it.

It was not paid at maturity and no notice of non-payment was given to Pugh, the indorser, who was thus of course discharged. More than eighteen months after the non-payment, however, Pugh wrote upon the note—

'ASSUMPTION, October 16th, 1865.

'Notice of demand, non-payment, and protest waived, and all legal responsibility assumed.

'W. W. PUGH.'

Neither the indorsement nor the waiver of protest, &c., had any stamp.

On the 1st and 14th of July, 1862, the 3d March, 1863, and the 30th of June, 1864, Congress had passed acts requiring all notes, under penalty of their being incapable of being sued on and void, to bear certain stamps; making also some benignant mitigations of the law in cases where, without fraudulent intent, they had not been stamped; neither acts nor modifications being necessary to be here stated.

On the 13th of July, 1866, however, was passed an act necessary to be more fully mentioned. That act-amending the 158th section of the act of June 30th, 1864, and enacting that 'any person who shall make, sign, or issue, or who shall cause to be made, signed, or issued any instrument, document, or paper. . . or shall accept, negotiate, or pay, or cause to be accepted, negotiated, or paid any bill of exchange, draft, or order, or promissory note for the payment of money without the same being duly stamped. . . with intent to evade the provisions of the act, shall for every such offence forfeit the sum of $50;' and, enacting further, that such instrument, document, or paper, bill, draft, order, or note, not being stamped according to law, shall be deemed invalid and of no effect-went on in its 9th section to make certain provisos by which the instrument, though void when made, from not being stamped, might be validated and made operative by being post-stamped. The 2d, 3d, and 4th of the provisos ran thus:

'And provided (2d) further, That hereafter, in all cases where the party has not affixed to any instrument the stamp required by law thereon, at the time of making or issuing the said instrument, and he or they, or any party having an interest therein, shall be subsequently desirous of affixing such stamp to said instrument, he or they shall appear before the collector of the revenue of the proper district, who shall upon the payment of the price of the proper stamp required by law, and of a penalty of fifty dollars. . . affix the proper stamp to such instrument or copy, and note upon the margin thereof the date of his so doing, and the fact that such panalty has been paid, and the same shall thereupon be deemed and held to be as valid, to all intents and purposes, as if stamped when made or issued.

'And provided (3d) further, That where it shall appear to said collector, upon oath or otherwise, to his satisfaction, that any such instrument has not been duly stamped at the time of making or issuing the same, by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the United States of the stamp, or to evade or delay the payment thereof, then, and in such case, if such instrument shall within twelve calendar months after the first day of August, eighteen hundred and sixty-six, or within twelve calendar months after the making or issuing thereof, be brought to the said collector of revenue to be stamped, and the stamp tax chargeable thereon shall be paid, it shall be lawful for the said collector to remit the penalty aforesaid and to cause such instrument to be duly stamped, and the instrument may be used in all courts and places in the same manner and with like effect as if the instrument had been originally stamped.

'And provided (lastly) further, That in all cases where the party has not affixed the stamp required by law upon any instrument made, signed, or issued, at a time when and at a place where no collection district was established, it shall be lawful for him or them, or any party having an interest therein, to affix the proper stamp thereto,. . . and the instrument to which the proper stamp has been thus affixed prior to the first day of January, one thousand eight hundred and sixty-seven, shall be as valid to all intents and purposes as if stamped by the collector in the manner hereinbefore provided.'

In this state of enactment McCormick, the holder of the note, sued on the 25th March, 1868, Pugh, the indorser, in one of the inferior State courts of Louisiana, upon it. The trial coming on January 12th, 1870-and there being no question but that a stamp of $3.50 was the proper stamp as respected amount, for the note (on which $5000 had been paid)-the note was offered in evidence, when it was found to have a $3.50 stamp upon it, but also a certificate thus:

Internal revenue stamps to the amount of $3.50 affixed to this instrument and cancelled, by me, at the request of James McCormick, Esq., this 7th day of October, 1869. Penalty remitted, interest collected.

$3.50 U.S.I.R. stamp cancelled

J. S.C.HAPMAN,

Collector of United States Internal Revenue for the Second District of Louisiana.

COLLECTOR'S OFFICE, BATON ROUGE, LA., October 7th, 1869.

The defendant objected to the introduction in evidence, of—

1st. The note itself, because a note which had been issued unstamped could not after twelve months be post-stamped, unless the penalty was paid; that after twelve months the collector could not stamp and remit the penalty.

2d. To the introduction of the indorsement of the defendant to the instrument, because the said indorsement was not stamped at the time of making it, nor at any time since.

3d. To the writing showing a waiver of demand, protest, and notice of protest, because the said waiver was not, and had never been, stamped.

The court overruled the objections, considering—

1st. That the stamping of the note by Chapman, the collector of internal revenue, was regular enough.

2d. That no stamp was needed for the indorsement.

3d. That none was needed for the waiver.

Judgment accordingly was given, January 12th, 1870, for the plaintiff, and that judgment being taken to the Supreme Court of Louisiana, the judgment was, on the 7th of March, 1870, there affirmed. The case was now here for review.

The reader perceives, of course, that in remitting the penalty the collector of internal revenue had proceeded under the third of the provisos, quoted on page 363, his capacity to do which was given but for twelve months from August 1st, 1866, or twelve months from the issuing of the note, i. e., in this particular case, twelve months from the 12th April, 1863; whereas here the collector's certificate showed that the remission had been on the 12th of October, 1869; plainly too late; though had the penalty been paid, then, under the previous proviso,-where no limit of time was fixed to the collector's power to post-stamp-the post-stamping would have apparently been good.

In this state of things Congress, on the 14th July, 1870, passed yet another act, amending the act of July 30th, 1866, containing the provisos above quoted. It was amended:

'By striking out the words 'fifty dollars,' in the second proviso, and inserting in lieu thereof the following, 'double the amount of tax remaining unpaid, but in no case less than $5;' also by striking out the words 'sixty-six' in the third proviso, and inserting in lieu thereof the words 'seventy-one;' also by striking out the words 'sixty-seven' in the last proviso, and inserting in lieu thereof the words 'seventy-two."

Of course, with the act of 1866, thus amended-assuming that the amendatory act operated retrospectively (that is to say, on notes made previously to July 14th, 1870, the date of its passage), though not unless that assumption was made-if the collector any time after its passage and prior to the 1st of August, 1871, affixed the stamp and remitted the penalty the post-stamping would have been good. Here it had been done on the 12th of October, 1869.

The questions before this court were:

1. Whether this amendatory act of July 14th, 1870, operated retrospectively.

2. Whether, assuming that it did, the court would reverse the judgment below, since though the court below might have wrongly decided at the time that the case came before it (January 12th, 1870), that the collector had power on the 7th October, 1869, to remit the penalty, yet, when by reversal, the case should come again before it the same decision would in virtue of the subsequently passed amendatory act of July 14th, 1870, and its retrospective operation, have to be made, and the same judgment have to be now rightly given which was then given wrongly.

3. Whether the indorsement by Pugh required a stamp.

4. Whether the waiver of demand and notice did.

The case came up to be argued in this court February 7th, 1872.

Mr. Miles Taylor, for the plaintiff in error; Mr. T. J. Durant, contra.

Mr. Justice CLIFFORD, on the 19th of February, 1872, delivered the opinion of the court.

title: Pugh v. McCormick


text: Talk:Pugh v. McCormick

title: Talk:Pugh v. McCormick


text:
Pugh v. McCormick/Opinion of the Court

Reference will be made to the parties as they existed in the State court where the suit was commenced.

Martin, on the twelfth of April, 1863, by his promissory note of that date promised to pay, twelve months after date, to the order of the defendant, at the place mentioned in the note, seven thousand dollars with eight per cent. interest, and the note is indorsed by the defendant without date.

On the seventh of December of that year the defendant paid two thousand dollars, which is indorsed on the note, and on the seventeenth of May following he made another payment of three thousand dollars, for which a receipt was given by the plaintiff. Prior to that, however, to wit, on the sixteenth of October of the preceding year, the following waiver of protest was signed by the defendant, to wit: 'Notice of protest, demand, and protest waived, and all legal responsibilities assumed.'

When the note was executed no internal revenue stamps were affixed to it, and it remained without any such stamps until the seventh of October, 1869, when such stamps, to the amount of three dollars and fifty cents, were, at the request of the plaintiff, affixed to it and cancelled by the collector of internal revenue for the district, the interest being collected and the penalty remitted as more fully appears by the certificate of the collector set forth in the record.

Payment being refused, the plaintiff, as the holder and indorsee of the note in good faith and for value, on the twenty-fifth of March, 1868, instituted the present action of assumpsit to recover the balance due on the note. Service was made and the defendant appeared and pleaded that the plaintiff acquired the note directly from the maker of the same; that no consideration ever passed between the defendant and the plaintiff or between the defendant and the maker of the instrument in regard to the note, and the defendant also denied that he was ever legally bound by the instrument or that he ever at any the rendered himself liable to pay the amount. Neither party demanding a jury the cause was heard and determined by the court, and judgment was rendered for the plaintiff in conformity with the declaration.

Exceptions were filed by the defendant, and by the exceptions it appears that the defendant, when the plaintiff offered the note in evidence, objected to its admissibility upon three grounds: (1) Because the face of the instrument was not legally stamped with the internal revenue stamps, as required by law; (2) because the indorsement on the note was not legally stamped; (3) because the certificate waiving demand, notice, and protest was never stamped, and he insisted that the note for the want of such stamps could not be admitted in evidence. All three objections were overruled, and judgment having been rendered for the plaintiff the defendant appealed to the Supreme Court of the State, where the judgment was affirmed. Whereupon the defendant sued out a writ of error to the State court and removed the cause into this court for re-examination.

Two principal questions are presented by the assignment of errors: (1.) Whether the stamps affixed to the note were legally affixed. (2.) Whether the certificate waiving demand, notice, and protest was an instrument which the internal revenue laws required should be stamped. Evidently a satisfactory response to these questions cannot be given without a careful examination of the several provisions in the acts of Congress imposing such revenue duties, and the modifications of the same as enacted by Congress prior to the time when the note and the certificate of waiver were offered and admitted in evidence.

Promissory notes, except bank notes issued for circulation, where the note was given for a sum exceeding twenty dollars and not exceeding one hundred dollars, were by the act of the first of July, 1862, subjected to a stamp duty of five cents. Nine other gradations were prescribed in the same schedule by which the rate per cent. of the duty was somewhat diminished as the amount of the note was increased. Where the note exceeded five thousand dollars the amount of the stamp duty imposed by that schedule was one dollar and fifty cents, and one dollar in addition for every twenty-five hundred dollars or part of twenty-five hundred dollars in excess of five thousand dollars, which shows that the note given in evidence in this case was subject under that act to a stamp duty of three dollars and fifty cents.

Persons who made, signed, or issued, or caused to be made, signed, or issued any instrument, document, or paper of any kind, without the same being duly stamped, were declared by the ninety-fifth section to be subject to a penalty of fifty dollars, and the further provision in the same section was that such instrument, document, or paper should be deemed invalid and of no effect. Section one hundred also provided that if any person made, signed, or issued, or caused to be made, signed, or issued, or accepted or paid or caused to be accepted or paid, with design to evade the payment of any such stamp duty, any bill of exchange, draft, or order, or promissory note for the payment of money and liable to any such duty, he should, for every such bill, draft, order, or note forfeit the sum of two hundred dollars.

Instruments, documents, and papers made, signed, or issued without being duly stamped were, by the ninety-fifth section of that act, declared to be invalid and of no effect, but the twenty-fourth section of the act of the fourteenth of July in the same year provided that no instrument, document, or paper made, signed, or issued prior to the first day of January then next should be deemed invalid or of no effect because it was made, signed, or issued without being duly stamped. Provision, however, was made in the same section that no such instrument, document, or paper should be admitted or used as evidence in any court until it was duly stamped nor until the holder proved to the satisfaction of the court that he had paid five dollars to the collector for the use of the United States.

Exemption from such declared invalidity and nullity was further extended to such instruments, documents, and papers made, signed, or issued prior to the first day of June, 1863, by the sixteenth section of the act of the third of March, passed in the same year, but the same section also provided that no such instrument, document, or paper, or any copy thereof, should be admitted or used as evidence in any court until the required stamps were affixed, together with the initials of the person affixing the stamps and the date when the same were so affixed.

All laws in force in relation to stamp duties when the act of the thirtieth of June, 1864, was passed were by that act continued in force until the first day of August of that year, and the same act adopted a new schedule of stamp duties, which took effect from and after that day. By that schedule persons making, signing, or issuing promissory notes not exceeding one hundred dollars were required to stamp the same with a five-cent stamp, and to add another of the same amount for every additional hundred dollars or fractional part of one hundred dollars.

Neither deeds, instruments, documents, or papers, nor any copy thereof, not stamped, as required by previous laws, could be recorded or admitted or used as evidence under that act until the same was stamped as therein required, but the act provided that no instrument, document, or paper, made, signed, or issued prior to the passage of that act, without being stamped, should be deemed invalid or of no effect for that cause if the stamp or stamps required should be subsequently affixed, and the act gave authority to the person desiring to use or to record any such deed, instrument, document, writing, or paper as evidence to affix the stamp or stamps thereon required in the presence of the court, register, or recorder.

But persons making, signing, or issuing any instrument, document, or paper of any kind, or who caused the same to be made, signed, or issued, or who accepted or paid, or caused to be accepted or paid, any bill of exchange, draft, order, or promissory note without the same being stamped, were by that act subjected to a forfeiture of two hundred dollars, and the further provision was that such instrument, document, or paper, bill, draft, order, or note, should be deemed invalid and of no effect.

Stamps were also required by the act of the thirty-first of March, 1865, where bills of exchange and promissory notes were negotiated as well as where they were accepted and paid, but the forfeiture created by the preceding act for the intentional evasion of the requirements was reduced to fifty dollars instead of two hundred dollars, as provided in the prior law.

Provision was also made that persons desirous of affixing stamps to instruments, not stamped as required by prior laws, might appear before the collector of the proper district and affix the same upon paying the price of the proper stamp and the penalty of fifty dollars, with interest on the stamp duty if it exceeded the amount of the penalty. Such acts being done, that is, the proper stamp being affixed, the penalty paid, and a note of those acts and the date thereof made in the margin of the instrument, the section provides that the instrument 'shall thereupon be deemed and held to be as valid to all intents and purposes as if stamped when made or issued.'

Fifty dollars forfeiture for making, signing, or issuing such an instrument, or for causing the same to be made, signed, or issued, or for accepting, negotiating, or paying, or causing to be accepted, negotiated, or paid, any bill of exchange, draft, or order or promissory note, without the same being duly stamped, was also imposed by the act of the 13th of July, 1866, in cases where the act was done with intent to evade the provisions of that act, but the collector was empowered by that act to remit the penalty and to cause the instrument to be duly stamped in all cases where it appeared to his satisfaction that the omission to affix the stamp happened by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the revenue, or to evade or delay the payment of the duty. Twelve calendar months from the first day of August then next were allowed to the delinquent party by that act to avail himself of that provision, and the section specifically points out the acts to be done by the party and the collector to render the instrument as valid as if it had been stamped at the time it was made, signed, or issued.

Original instruments, or a certified or duly proved copy thereof, duly stamped so as to entitle the same to be recorded, may under that act be presented to the clerk, register, or recorder, or other officer having charge of the original record, and such officer may, upon the payment of the lawful fee, make a new record thereof, and note upon the original record the fact that the error or omission in the stamping of the original instrument has been corrected pursuant to law, and the provision is that the original instrument, or such certified copy thereof, or the record thereof, may in that event be used in all courts and places, in the same manner and with like effect as if the instrument had been originally stamped.

Errors or omissions of the kind which occurred or happened before the first day of August, 1866, might be remedied under that act at any time within twelve calendar months from that date, and subsequent errors and omissions of the kind might also be remedied in the same way at any time within twelve calendar months from the time the instrument, document, or paper was made, signed, or issued without being stamped as required by law, but it is quite clear that the case before the court does not fall within that proviso, as the application to the collector was not made in season to bring the case within either of those regulations.

Had legislation stopped there the ruling admitting the note in evidence would certainly be erroneous, but the act of the fourteenth of July, 1870, amends the preceding act by striking out the words sixty-six, in the third proviso, and inserting in lieu thereof the words seventy-one, whereby the collector of the proper district is still empowered to remit penalties of the kind occurring or happening under the circumstances described in the third proviso of the prior act.

Since the passage of that act it is conceded that the collector may remit the forfeiture therein imposed if it occurred 'by reason of accident, mistake, inadvertence, or urgent necessity, and without any wilful design to defraud the United States of the stamp or to evade or delay the payment thereof,' but it is insisted that the new provision does not operate retrospectively, that it does not empower the collector to remit the penalty for any such omission if it occurred prior to the passage of the act, but the court here is of a different opinion for several reasons.

Special attention is called in the first place to the peculiar phraseology of the new provision, which is that section one hundred and fifty-eight of the act of the thirtieth of June, 1864, as amended by the ninth section of the act of the thirteenth of July, 1866, be and is hereby amended as therein provided. Three amendments are then made in the last-named act, as follows: (1.) By striking out the words fifty dollars in the second proviso and inserting in lieu thereof the following: Double the amount of the tax remaining unpaid, but in no case less than five dollars. (2.) By striking out the words sixty-six in the third proviso and inserting in lieu thereof the words seventy-one. (3.) By striking out the words sixty-seven in the last proviso and inserting in lien thereof the words seventy-two.

Section one hundred and fifty-eight of the act first named provided that the forfeiture, where the omission to affix the stamp was with the intent to evade the duty, should be two hundred dollars, but the succeeding act passed the next year reduced the forfeiture to fifty dollars.

Such an omission subjected the party to a penalty of fifty dollars also under the act of the thirteenth of July, 1866, but the penalty under the present act cannot exceed a sum which is double the amount of the tax unless that sum is less than five dollars.

Legislation in respect to the amount of the forfeiture in the earlier acts of Congress upon the subject would have been unnecessary if it had not been intended to extend the jurisdiction of the collector or some other officer to delinquencies of the kind which arose under the acts of Congress therein mentioned. All agree that the collector might, within the period of time designated in those acts, remit such forfeitures or penalties for past delinquencies if the application, as before explained, was seasonably made, and the court is unanimously of the opinion that the better construction of the act under consideration is that Congress intended to give such delinquent party a further opportunity to remedy such errors and omissions on the terms and conditions prescribed in the new provision.

Extended argument in support of the conclusion does not seem to be necessary, as the reasons to support it are apparent from its statement. Grant all that and still it may be suggested that the ruling in this case was made before the present act was passed, and it must be admitted that the suggestion is correct, but the new act shows to a demonstration that the ruling in question has become immaterial, having ceased to be prejudicial to the defendant, as the collector now possesses the power to do what he then did, that is, to affix the stamps to the note, remit the penalty, and make the proper memorandum of his doings; and it is so clear that the plaintiff would have a right to require those acts to be done if a new trial were ordered that the court is unhesitatingly of the opinion that the judgment ought not to be reversed for that cause, as the proper stamps were affixed to the instrument and the amount of the required duty was deposited in the treasury before the note was used as evidence.

Where the case is brought here by a writ of error to a State court for re-examination the court is not inclined to reverse the judgment unless there is some substantial error to the prejudice of the complaining party, and especially not where it appears that the error has become immaterial and that the same party will be entitled to judgment if a new trial is granted. Payment of the stamp duty was made to the collector at the time he affixed the stamps to the note, and inasmuch as the government makes no complaint, and the whole transaction is characterized by good faith, the court is of the opinion that the judgment of the State court may be sustained.

II. Objection is also made that the note was not admissible as evidence because the indorsement was not stamped, but the court is of the opinion that the objection is without merit, as a stamp is not required to such a writing.

III. Whenever a party in a suit upon a bill of exchange or promissory note is required to prove demand and notice or protest, he may comply with those conditions by proving that the opposite party waived the requirement.

Proof to that effect was offered in this case, which consisted of the usual memorandum signed by the party and written on the back of the note, and the statement in the bill of exceptions is that the defendant, when the note was offered, objected to the admissibility of that writing, but the court admitted it and the defendant excepted.

Satisfactory proof of waiver in such a case is in all respects equivalent in law to a compliance with the requirement.

Such a waiver need not be in writing, as an oral declaration to that effect would be equally effectual, and it does not appear that any one of the internal revenue acts contains any requirement if it is in writing that it should be stamped, nor is any authority referred to as a support to the objection taken to the ruling of the court. On the contrary, the Supreme Court of California has decided the other way and this court is of the same opinion.

JUDGMENT AFFIRMED.

title: Pugh v. McCormick/Opinion of the Court


text: Talk:Pugh v. McCormick/Opinion of the Court


text:
Insurance Companies v. Weides

ERROR to the Circuit Court for the District of Minnesota; the case being this:

C. & J. R. Weide insured in four different companies a stock of goods which they had; all the policies being alike, and each containing clauses thus:

'In case of loss the assured shall forthwith give notice of said loss to the companies, and as soon after as possible render a particular account of such loss, signed and sworn to by them, stating whether any and what other insurance has been made on the same property, giving the actual cash value of the property, their interest therein, for what purpose and by whom the building insured, or containing the property insured, and the several parts thereof, were used; when and how the fire originated; and shall also produce a certificate, under the hand and seal of a magistrate,. . . nearest to the place of the fire, stating that he has examined the circumstances attending the loss, knows the character and circumstances of the assured, and verily believes that the assured has, without fraud, sustained loss on the property insured, to the amount which such magistrate shall certify; and the assured shall, if required, submit to an examination under oath, by any person appointed by the companies, and subscribe to such examination when reduced to writing; and shall also produce their books of account and other vouchers of all property hereby insured, whether damaged or not damaged; and shall also produce certified copies of all bills and invoices, the originals of which have been lost, and exhibit the same for examination by any one named by the company. . . . All fraud, or attempt at fraud, or false swearing on the part of the assured, shall cause a forfeiture of all claim under this policy.'

A fire having occured and the goods insured having been burnt, the Weides sued the companies on the policies. On the trial it became material to prove what was the quantity and value of the goods which the plaintiffs had when the fire occurred. As bearing upon this, evidence was introduced, without objection, tending to show that the plaintiffs took a correct inventory of their stock on the 28th of February, 1866, which was correctly reduced to writing by one of them in an inventory book; that the prices or values were correctly footed up therein; that at the same time the footings were correctly entered by one of the plaintiffs upon the fly-leaf of an exhausted ledger, and afterwards transferred also by one of the plaintiffs to the fly-leaf of a new ledger; that neither of the plaintiffs could remember the amount of such inventory or footings, and that both the inventory book and the exhausted ledger had been destroyed. The plaintiffs then offered the entry of the footings upon the fly-leaf of the new ledger, which the court, in the face of objection by the other side, received.

The reception of this evidence made the first exception.

The plaintiffs then offered in evidence 'the said first item on the debit side in their present ledger of said merchandise account therein,' which the court received under objection; and afterwards 'the said merchandise account in said ledger contained.' received in like manner. The reception of these two items of evidence made the second and third exceptions.

There being evidence tending to show that the real loss of the plaintiffs was far less than the total amount of insurance made by the companies sued, and that certain other insurance companies had made insurance on the plaintiffs' stock of merchandise; and also that the plaintiffs had made certain settlements at the rate of 54 cents on a dollar with certain of the said other insurance companies; and that on an examination of the plaintiffs before this action was commenced under oath, required by the defendant of the plaintiffs, under the already quoted conditions of the policies, the plaintiffs disclosed the fact that they had made such settlements, but on such examination refused to answer questions put to them by the defendant as to the amounts for which they made such settlements; the companies' defendant requested the court to instruct the jury thus:

'If the jury shall believe that the plaintiffs, or either of them, in the course of an examination on oath, under the policy, refused to answer any questions by which defendant could fairly estimate or reasonably infer the plaintiffs' real loss in the insured property, and have not before the commencement of this action answered the said questions under oath, then the jury must find for the defendant.'

Which instruction the court refused to give; this refusal being the subject of a fourth exception.

There being also evidence tending to show that the plaintiffs were requested to produce duplicate bills of purchases, the defendant moved the court to instruct the jury as follows:

'If the jury believe from the evidence, that the plaintiffs were requested by the defendants to produce duplicates of invoices of goods purchased by them, the originals of which were alleged by them to be destroyed, and neglected to do so before the commencement of this action, their right of action never accrued, and the jury must find for the defendant.'

Which instruction the court refused to give; this refusal being the matter of the fifth exception.

So to the testimony of the plaintiffs tending to show material discrepancy from material statements made by them in their proofs of loss and their examination on oath under the policy, the defendant moved the court, as his fourth prayer, to instruct the jury as follows:

'If the jury shall believe that the plaintiffs testifying on this trial have made statements materially differing from statements knowingly made under oath in their proofs of loss, whether in their particular account made to the defendant, or any examination on oath submitted to by them, under the terms of the policy, this is false swearing, and the jury must find for the defendant.'

Which instruction the court refused to give.

In the examination on oath made by the plaintiffs under the policy, the plaintiffs having stated their outstanding debts to be between $18,000 and $20,000, and having stated in evidence before the jury that their indebtedness did not exceed $8000 at the time of the fire, and there being evidence tending to show that plaintiffs knowingly made the statement in their examination on oath, and subscribed and made oath to the same, the defendant moved the court, as a fifth prayer, to instruct the jury as follows:

'In their examinations under the policy, plaintiffs seem to have sworn that the outstanding debts of their firm amounted to between $18,000 and $20,000 at the time of the fire. In their testimony here they state positively that their indebtedness did not exceed $8000 at that time. If the jury shall believe that they knowingly made the statement set forth in their examination on oath and subscribed and made oath to the same, the jury must find for the defendants.'

Which motion or request the court refused to give; their refusal of these fourth and fifth prayers making a sixth and seventh exception.

The reception of the evidence of the footings on the fly-leaf of the new ledger and the refusals to charge as requested were the matters assigned for error.

There were two other errors assigned arising from a refusal by the court to lay down as rules of law a certain rule for the jury to pursue, in computing the amount of stock from certain data. But the counsel of the companies in this court, while asserting that the rule was undoubtedly correct arithmetically, candidly admitted that it could not be stated as a rule of law to be laid down by the court. The requests, therefore, need not be stated.

Messrs. J. M. Carlisle and J. D. McPherson, for the plaintiffs in error; Messrs. W. H. Peckham and Lorenzo Allis, contra.

Mr. Justice STRONG delivered the opinion of the court.

title: Insurance Companies v. Weides


text: Talk:Insurance Companies v. Weides

title: Talk:Insurance Companies v. Weides


text:
Insurance Companies v. Weides/Opinion of the Court

It is contended in the first place, that there was error in the court's receiving the entry of the footings upon the fly-leaf of the new ledger. It will be observed that the footings upon the fly-leaf of the ledger were not offered or received as independent evidence. They were accompanied by proof that they were correct statements of the values of the merchandise, and that they were correctly transcribed either from the inventory book or from the fly-leaf of the exhausted ledger, both of which appear to have been originals. How far papers, not evidence per se, but proved to have been true statements of fact, at the time they were made, are admissible in connection with the testimony of a witness who made them, has been a frequent subject of inquiry, and it has many times been decided that they are to be received. And why should they not be? Quantities and values are retained in the memory with great difficulty. If at the time when an entry of aggregate quantities or values was made, the witness knew it was correct, it is hard to see why it is not at least as reliable as is the memory of the witness. It is true a copy of a copy is not generally receivable, for the reason that it is not the best evidence. A copy of the original is less likely to contain mistakes, for there is more or less danger of variance with every new transcription. For that reason even a sworn copy of a copy is not admissible when the original can be produced. But in this case the inventory book and the fly-leaf of the exhausted ledger had both been burned. There was no better evidence in existence than the footings in the new ledger. And we do not understand the bill of exceptions as showing those footings to have been copied from a copy. It does not appear whether they were taken from the inventory book or from the fly-leaf of the old ledger. And it is of little importance, for as those entries were made at the same time, neither ought to be regarded as a copy of the other, but rather both should be considered originals. We do not, however, propose to discuss this exception at length, for we regard it as settled by the decision in Insurance Company v. Weide, that the evidence under the circumstances was properly received.

The second and third exceptions are disposed of by what we have already said, and they are unsustained.

There is nothing also in the fourth exception. By the policies the assured after furnishing proofs of loss were bound, if required, to submit to an examination under oath, and it was stipulated that until such examination should be permitted the loss should not be payable. Of course it is to be understood that the examination contemplated relates to matters pertinent to the loss. In these cases the plaintiffs did submit to an examination, but declined to answer questions respecting the amounts for which they had made settlements with other insuring companies. We are unable to perceive that the questions proposed had any legitimate bearing upon the inquiry, what was the actual loss sustained in consequence of the fire. If the plaintiffs had claims upon other insurers, and compromised with some of them for less than the sums insured, it is not a just inference that their claim against these insurers was exaggerated. A compromise proposed or accepted is not evidence of an admission of the amount of the debt. There was then no sufficient foundation laid for the instruction requested by the defendants, that if the jury should believe that the plaintiffs, or either of them, in the course of an examination on oath, under the policies, refused to answer any questions by which the defendants could fairly estimate, or reasonably infer plaintiffs' real loss in the insured property, and had not before the commencement of the actions answered the questions under oath, the verdict must be for the defendants. There was no evidence of refusal to answer such questions.

The fifth exception is to the refusal of the court to instruct the jury that if they believed from the evidence the plaintiffs were requested by the defendants to produce duplicates of invoices of goods purchased by them, the originals of which were alleged by them to be destroyed, and neglected to do so before the commencement of the actions, their right of action never accrued, and that the verdicts must be for the defendants. The prayer for this instruction was founded on the clause in the policy that the assured should produce certified copies of all bills and invoices, the originals of which had been lost, and exhibit the same for examination to any person named by the company, and that until the proofs, declarations, and certificates (stipulated for in case of loss) were produced and examinations and appraisals permitted, the loss should not be payable. The bills of exception state that there was evidence tending to show that the plaintiffs were requested to produce duplicate bills of purchases, but there does not appear to have been any evidence when the request was made, whether before the commencement of the actions or afterwards, or whether there was neglect or refusal of the plaintiffs to comply. Moreover, the request was for duplicates, and not for certified copies. We cannot, therefore, say there was error in refusing the instruction asked for.

Nor was there error in denying the defendants' third and fourth prayers. It is true the policies stipulated that fraud or false swearing on the part of the assured should work a forfeiture of all claim under them. The false swearing referred to is such as may be in the submission of preliminary proofs of loss, or in the examination to which the assured agreed to submit. But it does not inevitably follow from the fact that there was a material discrepancy between the statements made by the plaintiffs under oath in their proofs of loss, and their statements when testifying at the trial that the former were false, so as to justify the court in assuming it, and directing verdicts for the defendants. It may have been the testimony last given that was not true, or the statements made in the proofs of loss may have been honestly made, though subsequently discovered to be mistaken. It is only fraudulent false swearing in furnishing the preliminary proofs, or in the examinations which the insurers have a right to require, that avoids the policies, and it was for the jury to determine whether that swearing was false and fraudulent.

The remaining two assignments of error are not pressed, and it is properly conceded that the court could not lay down as a rule of law the mode of computation designated it the prayers for instruction.

JUDGMENT AFFIRMED.


text: Talk:Insurance Companies v. Weides/Opinion of the Court


text:
Bank of Bethel v. Pahquioque Bank

IN error to the Supreme Court of Connecticut; the case being thus:

On the 3d of June, 1864, Congress passed its well-known 'act to provide a National currency, secured by a pledge of United States bonds;' under which act numerous new banks were organized, and numerous State ones, availing themselves of power given by the act, were converted into National ones, and like those first created by the act placed under the control of the laws and officers of the United States, including specially a Comptroller of the Currency, under whose directions a limited amount of notes were to be given to the banks; these notes being the only ones that the banks could issue.

The act, after providing for the mode in which the new banks were to be organized under articles of association, enacts:

SECTION 8. That every association formed pursuant to its provisions shall 'be a body corporate,' and 'have succession by the name designated in its organization certificate for a period of twenty years from its organization, unless sooner dissolved.

(1st.) According to the provisions of its articles of association, OR,

2d.) By the act of its shareholders, owning two-thirds of its stock, OR,

(3d.) Unless the franchise shall be forfeited by a violation of this act.'

'By such name,' continues the section, 'it may sue and be sued, complain and defend as fully as natural persons.'

The 32d section, after enacting that all the banks in certain cities of the United States shall redeem their circulating notes at par in New York, provides:

'That nothing in this section shall relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful money on demand.'

The 46th section enacts:

'That if any such association shall, at any time, fail to redeem in the lawful money of the United States any of its circulating notes when payment thereof shall be lawfully demanded. . . the holder may cause the same to be protested, in one package, by a notary public,. . . and such notary public on making such protest or upon receiving such admission shall forthwith forward such admission, or notice of protest, to the Comptroller of the Currency. . . . And after such default,. . . It shall not be lawful for the association suffering the same to pay out any of its notes, discount any of its notes, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to deliver special deposits.'

The 50th section enacts:

'That on becoming satisfied, as specified in this act, that any association has refused to pay its circulating notes as therein mentioned and is in default, the Comptroller of the Currency may forth with appoint a receiver. . . who. . . shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to such association, and upon the order of a court of competent jurisdiction may sell or compound all bad or doubtful debts, and on a like order sell all the real and personal property of such association, on such terms as the court shall direct. . . . And such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the comptroller. . . . And from time to time the comptroller, after full provision shall have been first made for refunding, &c.,. . . shall make a ratable dividend of the money so paid over to him on all such claims as may have been proved to his satisfaction, or adjudicated in a court of competent jurisdiction.'

A proviso to this section says, however,

'That if such association against which proceedings have been so instituted on account of any alleged refusal to redeem its circulating notes as aforesaid, shall deny having failed to do so, such association may. . . apply to the nearest circuit or district or territorial court of the United States to enjoin further proceedings in the premises, and such court. . . after the decision of the court or the finding of a jury that such association has not refused to redeem its circulating notes. . . shall make an order enjoining the comptroller or any receiver from all further proceedings on account of such alleged refusal.'

The 45th section enacts:

'That all associations under this act when designated for that purpose by the Secretary of the Treasury, shall be depositories of the public money (except receipts from customs), under such regulations as may be prescribed by the secretary; and they may also be employed as financial agents of the government; and they shall perform all such reasonable duties as depositories of the public moneys and financial agents of the government as shall be required of them.'

The 52d section enacts:

'That all transfer of the notes, bonds, bills of exchange, and other evidences of debt owing to any association, or of any deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money for either, made after the commission of an act of insolvency, or in contemplation thereof, with a view to prevent the application of its assets in the manner prescribed by this act, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void.'

The 53d section enacts:

'That if the directors of any association shall knowingly violate or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this act, all the rights, privileges, and franchises of the association derived from this act shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that purpose by the Comptroller of the Currency, in his own name, before the association shall be dissolved.'

The 57th section ( and this is an important one to be noted in the case) enacts:

'That suits, actions, and proceedings against any association, under this act, may be had in any circuit, district, or territorial court of the United States, held within the district in which such association may be established; or in any state, county, or municipal court in the county or city in which said association is located; having jurisdiction in similar cases. Provided, however, that all proceedings to enjoin the comptroller under this act shall be had in a circuit, district, or territorial court of the United States, held in the district in which the association is located.'

In this state of statutory law about National banks, the First National Bank of Bethel, in Connecticut, on the 21st of February, 1868, failed to redeem some of its circulating notes. They were protested, and on the 26th of February a receiver was appointed under the above-quoted 50th section of the Currency Act, who immediately entered on the duties of his office.

The National Pahquioque Bank of Danbury, Fairfield County, in the same State, asserted that it was a creditor of the Bethel Bank, and presented its claim to the receiver. The receiver, however, disallowed it.

The Pahquioque Bank thereupon, on the 30th of May, 1868, brought assumpsit in the Superior Court of Fairfield County, a court of Connecticut having jurisdiction in similar cases, against the Bethel Bank. The Bank of Bethel defended itself against the claim on these, in substance, among other grounds:

1. That the courts of the United States alone had jurisdiction after the appointment and acceptance of the receiver.

2. That prior to the suit brought the Bank of Bethel had forfeited its charter by a violation of the Currency Act, in not paying its notes, and could not be sued anywhere.

3. That it could not be sued because it was, at the time, under the control and in possession of a duly appointed receiver, 'incapable of self-defence, and entitled to the legal protection and guardianship thrown about it by the law.'

4. That the decision of the receiver on the presentation of the claim was conclusive on the parties to the suit as an adjudication, unless set aside by the Comptroller of the Currency, or by some court of the United States having jurisdiction.

But the court give judgment for the Pahquioque Bank for the full amount of its claim. The Bethel Bank then took the case on error before the Supreme Court of the State, where the judgment of the Superior Court of Fairfield County was affirmed. To review this final judgment of the Supreme Court this writ of error was brought.

Messrs. C. B. Goodrich, Roger Averill, and L. D. Brewster, for the Bank of Bethel, plaintiff in error:

1. The National banks, under the act of 3d June, 1864, have been established as instruments by which the government may perform some of its trusts. They are controlled by the Treasury department. They are allowed to receive from the Comptroller of the Currency notes which they may circulate as money. They cannot issue any instrument for circulation or use as money, or as a substitute for money, except the notes intrusted to them by the comptroller. Their existence, as bodies corporate, can be sustained under the Constitution, only, because they may be employed by the government in the execution of its functions. The act imposes upon the Comptroller of the Currency certain duties of a public character, to perform which he is clothed with certain powers. The legality and propriety of the supervision and control which is exercised by the Comptroller of the Corrency of the United States over National banking associations, and the effect of his acts in relation thereto, are to be determined, exclusively, by the laws of the United States; the construction of which is ultimately to be given by the courts of the United States. The suit brought in the Superior Court of Fairfield County, a State court of Connecticut, was thus brought in a court without jurisdiction.

2. An association under the act is to have succession (that is to say, corporate existence) for the period of twenty years from its organization, unless the franchise (which consists in a right of banking) shall be forfeited by a violation of the act. Now the Bank of Bethel committed a violation of the act, a 'default,' as the act itself calls it, on the 21st of February, 1868, at which time in failed to redeem some of its circulating notes; which failure was duly ascertained by the Comptroller of the Currency, who, on the 26th of February, acted thereupon, by the appointment of a receiver. This action of the comptroller was not enjoined by any District, Circuit, or Territorial Court of the United States; the only courts competent to enjoin or act in the matter. The result is that the power of succession (corporate capacity) ceased to exist prior to the 30th May, 1868, on which day the Pahquioque Bank instituted their suit. The association was dissolved; the receiver was clothed with power to reduce the assets to money, by suit in his own name; was directed to pay the money to the Treasurer of the United States, subject to the order of the Comptroller of the Currency, for the use of those entitled as creditors, giving priority of payment to the United States; the remainder or surplus of the proceeds, after the payment of debts, to be paid by the comptroller to the shareholders of the association or their legal representatives, in proportion to the stock by them respectively held, and not to the association in its corporate capacity.

3. On the 30th May, 1868, on which day the Pahquioque Bank commenced its suit, the Bank of Bethel had no authority to pay, was prohibited from paying, any creditor; it had no means within its control with which to pay. If the bank had authority, after notice by the comptroller, to pay a creditor, it might by such payment defeat the provision of the act which gives to the United States, from the assets of the association, priority of payment for any deficiency in the redemption of its circulating notes after applying the bonds deposited for their redemption. It results, from the want of authority to pay a creditor, at the time the suit by the Pahquioque Bank was instituted, that no suit at law, in any court, State or National, could be instituted against the Bank of Bethel. If one creditor, after the appointment of a receiver, may institute a suit in a court of law, every creditor can, and by such course of proceeding disregard the winding up under the direction of the comptroller.

4. After an association has been placed in the hands of a receiver, the statute prescribes the mode of winding up, which includes an ascertainment of the creditors, and the amount severally due to them. This mode of proof excludes all others. This cannot be doubted, except by holding that the act conferring authority upon the Comptroller of the Currency to appoint a receiver, to receive proof of claims, to wind up the affairs of the corporation, is unconstitutional.

Messrs. W. F. Taylor and O. S. Seymour, contra:

1. The whole argument against the jurisdiction of State courts is answered by the 57th section of the act which in cases like that where the Pahquioque Bank sued, gives the jurisdiction in express words to 'any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.'

2. The association does not become extinct, ipso facto, by the appointment of a receiver. The 50th section speaks of it as existing. The powers of the receiver may be superseded, if the bank shows that it did not fail to redeem its notes. Default in paying notes only curtails its privileges. But even if it were a cause for forfeiture, still by the undoubted rules of the common law and by the express provisions of the 59th section of the act, a judgment of forfeiture by a judicial tribunal is necessary, and the corporate existence continues till such judgment is had. Questions of forfeiture cannot be tried in a collateral way. The only evidence which the law admits is the copy of the judgment of forfeiture, by a competent tribunal, in a proceeding instituted directly for the purpose of an adjudication of forfeiture.

3. A judgment by a State or other court, for a sum of money (such a judgment was given in the courts below), does not take things out of the receiver's hands. It does not interfere with any duties which the Currency Act imposes on him. It merely ascertains the justice of a claim and fixes its amount. Payment of the claim can be made only in subordination to the Currency Act. No number of judgments would prevent 'the winding up under the direction of the comptroller.' The only result is that the claim being 'adjudicated by a court of competent jurisdiction' the creditor under it comes in for a dividend.

Then is the disallowance by the receiver of the claim presented to him before the judicial adjudication, a decisive adjudication of that claim? Certainly not. The comptroller and receiver are not judges of the United States. They cannot hold a court, summon a jury, compel the appearance of witnesses, or swear witnesses if they should appear. Every citizen of the republic may of common right appeal to a judicial tribunal for the adjudication of his rights. The right of trial by jury is secured by the Constitution to controversies of the character of that between these two banks, and the right of trial by jury implies that the controversy may be brought before a court that has power to summon a jury. There is in the act no provision for the establishment of a special tribunal to adjudicate claims against the insolvent bank. The failure to make any, leaves their adjudication to the courts in the ordinary course and manner of settling disputed claims. This would be the necessary inference from mere silence, and is confirmed and established by the provision in the 50th section, that the comptroller is to make a ratable dividend 'on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction.'

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Bank of Bethel v. Pahquioque Bank


text: Talk:Bank of Bethel v. Pahquioque Bank

title: Talk:Bank of Bethel v. Pahquioque Bank