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Mechanics' and Traders' Bank v. Union Bank/Opinion of the Court

ERROR to the Supreme Court of Louisiana; the case being thus:

The State of Louisiana, as is known, during the late rebellion joined the rebel forces. On or about the 29th of April, 1862, however, the government forces under General Butler-then in command of the conquering and occupying army, and commissioned to carry on the war in the Department of the Gulf, a department which included Louisiana-took possession of New Orleans. At the time of his thus occupying the city, the only money then circulating there was notes issued by the rebel confederacy; 'Confederate notes.' In the confusion of things for a few days after the capture, it did not appear plainly to the people generally what would be done about these notes, and there being no other sort of money whatever in general circulation, General Butler, on the 1st of May, 1862, in the necessities of the case, issued a proclamation allowing the circulation of them 'until further orders.'

On the day following, by general order, he established a court. The powers of the court were not defined otherwise than by the order establishing it. The order said:

'Major J. M. Bell, volunteer aid-de-camp, of the division staff, is hereby appointed provost judge of the city of New Orleans, and will be obeyed and respected accordingly.

'Captain J. H. French, aid-de-camp and acting inspector-general, is hereby appointed provost marshal of the city of New Orleans, and Captain Stafford, volunteer aid-de-camp, deputy provost marshal. They will be obeyed and respected accordingly.'

No direct authorization or approval of this court by the President was shown; nor any direct evidence that it was not authorized by him, or that he disapproved it.

At different dates between the 5th and 13th of May, 1862, the Union Bank of New Orleans lent to the Mechanics' and Traders' Bank there $130,000 in Confederate notes, which still had a circulation of a certain kind. Whether any specific agreement was made between the two banks as to the sort of notes in which the money borrowed should be returned, that is to say, whether it was agreed that it should be returned in Confederate notes, or whether there was no understanding or agreement in relation to the payment except that tacitly understood, that it should be returned in notes as current at the time of payment as were the Confederate notes when borrowed this was a matter not clear; the great weight of evidence, however, as the reporter read it, being that there was no understanding in the case other than that last mentioned.

On the 16th of May, 1862, General Butler, by general order, directed that on the 27th following, that is to say, within eleven days, all circulation of or trade in Confederate notes should cease within his department. The depreciation of them, of course, was rapid and great; though the Confederation not yet having fallen to pieces, the notes had some circulation, though a circulation at a great discount compared with good money, in other places in the South.

In this depreciated state of them, the Mechanics' and Traders' Bank, on the 26th of May, that is to say, the day before the notes were to cease circulating in New Orleans, and thereabouts, not then owning any such amount of the notes, tendered to the Union Bank in Confederate notes the $130,000 borrowed, with interest. The Union Bank declined to receive them; and soon after brought suit in the Provost Court to recover in good money the $130,000 lent. That court dismissed the suit, holding that the loan was payable as the borrowing bank had offered to pay it, that is to say, in Confederate money. However, the parties were summoned afterwards before General Butler, who heard an argument from the counsel of the borrowing bank. On a still later day they appeared again before the Provost Court, when the counsel of the borrowing bank being about to make an argument to show the rectitude of the former decision, the provost judge, according to the testimony of the president of that bank, said that he had been ordered to reopen the case and grant a new trial; that counsel 'need read no law to him, for the case would be decided under orders.' The borrowing bank accordingly paid the $130,000 and interest, in lawful money of the United States; paying it, however, under protest.

It may be here stated, as part of the general history of things-though no part of this appeared in the record-that, on the 20th of October, 1862-a little less than six months after General Butler established his court already mentioned-the Federal occupation in Louisiana having now become secure and more extended, President Lincoln himself established at New Orleans, in a formal way, by commission, under the seal of the United States, what was called the 'Provisional Court;' declaring that it should be a court of record for the State of Louisiana, and appointing Mr. Charles A. Peabody judge thereof. This court was in form authorized to hear and determine all causes, civil and criminal.

The lending bank now sued the other bank in one of the inferior courts of Louisiana to recover the money.

Its petition adverted to certain clauses of the Constitution, among them to those clauses which ordain that,

'The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain.'

And also that,

'The President. . . shall nominate, and by and with the advice of the senate. . . shall appoint judges of the Supreme Court, and all other officers of the United States whose appointments are not herein otherwise provided for.'

And, assuming, apparently, that the court established by General Butler-if not meant to be a mere provost's court, that is to say, a court confined to the trial of criminal matters, and, therefore, without jurisdiction in a civil one, such as this suit was, of necessity, meant by the said Butler to be an establishment by him as a commanding officer of the United States in an occupied city, of a court of the United States, with a judge of the same appointed by him, it went on to submit that—

'The ordaining and establishing by General Butler of the said court, the appointment of Major Bell as the judge thereof by the said general, and the action and proceedings of the latter in the premises, were acts in violation of the Constitution, and consequently null and void, conferring no right on the Union Bank to invoke the authority of the said Bell to obtain from him judgment in behalf of the said bank against the defendant, compelling it to pay to the said bank the sum adjudged by Bell to be due to it.'

It submitted further—

'That if the court had been one endowed with perfect jurisdiction, the interference of General Butler in the administration by its judge of its justice, and causing him to make decisions 'under orders,' rendered void all that he did.'

It then alleged that it did not owe to the Union Bank the money which it had been made to pay under an order at once unjust and in violation of the Constitution, and which had been made effective only through military force; and that all this being so it was entitled ex aequo et bono, to have back the money thus taken away.

The petition admitted, as respected the Union Bank, that in all that it had done, it had acted as it thought that it ought to act, and had been seeking to recover what it deemed to be a just debt by a proceeding which it deemed a fair one. Accordingly all claim for damages was waived.

Previously to the case coming on to be heard before the inferior State court of Louisiana, that State adopted a constitution, of which the 149th article was thus:

'All rights, actions, prosecutions, claims, contracts, and all laws in force at the time of the adoption of this constitution, and not inconsistent therewith, shall continue as if it had not been adopted; all judgments and judicial sales, marriages, and executed contracts made in good faith and in accordance with existing laws in this State rendered, made, or entered into, between the 26th day of January, 1861, and the date when this constitution shall be adopted, are hereby declared to be valid,' &c.

Having heard the case, the State court in which the suit was brought said:

'Conceding, for the sake of argument, the incompetence of the Provost Court to render the judgment it did against the borrowing bank, the practical effect of its judgment, viz., the payment of the money, cannot now be inquired into with a view to its restitution, for two reasons:

'1st. There was a valid obligation on the part of the borrowing bank to pay the amount borrowed; and, after the money has been paid, it is immaterial, in a civil point of view, by what means the payment was enforced. Had the officers of the Union Bank forcibly taken the money from the vaults of the other bank, the latter could not recover it if the taker was a legal creditor to the amount taken.

'2dly. Whether the Provost Court was or not a competent court in law, it was a court in fact, and the admission of the plaintiff in his petition of the good faith of the Union Bank brings the case within the terms of article 149 of the constitution of Louisiana, and secures for the judgment obtained under such circumstances the validity which probably it did not previously possess.'

The case being then taken to the Supreme Court of the State on appeal, that court said:

'The important question is, was the judgment which the plaintiff was compelled to pay an absolute nullity, and can he recover from the defendant the amount paid by reason of said judgment?

'This raises the question whether General Butler had the right after the capture of the city, in May, 1862, to appoint a judge to try civil cases. If he had this right the judgment was not an absolute nullity, and the amount paid by the plaintiff cannot be recovered. If the judge had the right to hear and determine the case, the plaintiff cannot recover the money paid in satisfaction thereof, even though it be conceded that there was not sufficient proof to authorize the judgment or that the debt was for Confederate money.

'Under the Constitution the United States has the right to make war, to raise and to support armies and navies, to suppress insurrections, and to repel invasions. The measures to be taken in carrying on war and suppress insurrections are not defined; and the decision of all such questions is in the discretion of the government to whom these powers are confided by the Constitution.

'When the United States captured the city of New Orleans, in 1862, the civil government, existing under the Confederacy, ceased to have authority. As an incident of war powers, the President had the right to establish civil governments, to create courts, to protect the lives and the property of the people.

'The question is, had the general commanding the military forces of the United States which captured the city, the right to establish the provisional court called the Provost Court which rendered the judgment against the plaintiff? We are of the opinion that he had. This was an exercise of the war powers of the United States, presumably with the consent and authorization of the President, the commander in chief.

'The plaintiff paid a judgment rendered by a competent court, established by the United States in the exercise of its war powers (the only authority competent to organize a court in this city at the time), and has no cause of action against the Union Bank for the money paid in pursuance of the decree of that court. The United States had authority to establish this court, and the judgment is validated by article 149 of the constitution of Louisiana.'

The judgment in favor of the Union Bank was accordingly affirmed.

From that judgment the case was brought here as within section 709 of the Revised Statutes.

The errors assigned were that the Supreme Court of Louisiana erred:

'1st. In holding that the President had a right to authorize General Butler to establish a court of civil jurisdiction in New Orleans in May, 1862.

'2d. In holding that it was to be presumed that the President did authorize General Butler to establish the court of Judge Bell, with the civil jurisdiction attributed to it by the opinion of the court.

'3d. In holding that the court of Judge Bell had jurisdiction to render its judgment against the Mechanics' and Traders' Bank, and that the said judgment was not a nullity.

'4th. In holding that, supposing the judgment of the Provost Court to have been originally void, it was validated, and so made a bar to the claim of the plaintiff in error, by force of the 149th article of the constitution of Louisiana.'

Messrs. E. and A. C. Janin, for the plaintiff in error:

The order establishing the court in question is for a Provost Court simply. The jurisdiction of such a court is of the criminal sort, and is confined to the minor sort of offences.

Now, conceding that General Butler had power to establish, and that he did establish, and rightly, a Provost Court, yet a case of the kind that this was-a suit by one bank corporation against another bank corporation, for $130,000-was no proper subject for the cognizance of such a tribunal.

Can the jurisdiction be maintained on the ground that the court was a civil tribunal? It cannot be, for two reasons:

1st. Because the character of the court is established as that of a criminal court by the very use of the words 'provost judge.' What a provost judge is, is well known. We have already stated the character of his jurisdiction. He is almost invariably a military officer. Here he was a 'major' in the army, and 'volunteer aid-de-camp of the division staff.' His military character shows that it cannot be meant that his jurisdiction should include civil things.

2d. Because it is indispensable for such a court that it should be established, or at least approved, by the President. There is no record of any civil court during the war being otherwise established. In the case of the 'Provisional Court' established at New Orleans in October, 1862-a civil court-after the occupation of that city, during the war, there was a formal establishment of it by President Lincoln, and by a commission, longer and more full than any ever issued to any judge of this court, sent, under the seal of the United States, to Mr. Peabody, the person appointed by the President to be judge. A court thus formally constituted by the President may be sustained on the authority of certain recent cases here, though perhaps it cannot be sustained without difficulty, in view of the plain language of the Constitution, which makes no provision for the establishment of any sort of civil courts in time of war different from those to be established in times of peace.

The inferior State court of Louisiana, in which the suit for the recovery of the money paid under protest was brought, perceived the pressure of this part of the case and put its decision denying a recovery, on two grounds, which were consistent with want of jurisdiction in the Provost Court. The Supreme Court was less wise. Admitting, in effect, that a mere provost's court could have no jurisdiction of such a case as this was, it assumes that this court was a civil court. But still the difficulty remained that there was nothing to show that the President ever authorized its establishment, and that if he did not, the court had no jurisdiction. The court then 'jumps' this difficulty, and says that General Butler's act 'was an exercise of the war powers, presumably with the consent and authorization of the President;' thus assuming the matter to be proved.

Now, we say, contrariwise, that an act done, in irregular times, and in opposition to what the law requires-an act which on its face is one of usurpation and despotism, as this act was-is not to be presumed to have been rightly done, but until proven to have been so done is to be presumed to have been done wrongly. This is true when there is no evidence in the case and all rests on presumption.

But here we have evidence, and the evidence is that the establishment of this court was General Butler's own act, and was not authorized by the President in advance of it, nor approved by him after it was done.

1. What were General Butler's own ideas of the necessity of an approval by the President? In ex parte Milligan, a brigadier-general had appointed a military court in the State of Indiana (a State at the time, as always before and since, loyal to the Union) to try a man named Milligan for various offences against the laws of war. The civil courts were all in session, and a grand jury was exercising its functions. No hostile army was within the borders of the State, nor expected there. Notwithstanding this, Milligan was convicted and was sentenced to death. A motion was made to this court for a habeas corpus, and the case presented the point whether the man had been sentenced by a competent court. General Butler-the same eminent person who had established the Provost Court now under consideration-having reaped the victories of war, and having by this time returned to the bar to reap those, not less renowned, of peace, appeared before this court as special counsel of the United States, to justify the action of the military commission in Indiana, and to insure, if possible, such action from it as would secure the execution of Milligan. In his argument in the case, as reported, he announces his idea of martial law and of the rights of the officer executing it. He asserts that such officer is 'supreme legislator, supreme judge, and supreme executive.' That, therefore, was his idea of what he himself was when, a conquering hero in New Orleans, he established the Provost Court. A gentleman who was at once a general, a conqueror, and a lawyer, 'supreme legislator, supreme judge, and supreme executive,' had no occasion to communicate about anything with the President of the United States, a person who is never a legislator, never a judge, and though for a short time an executive, is yet never a supreme executive, but an executive limited, coarcted, and restrained by numerous and clear ordinances of a written constitution.

Every presumption, therefore, from what we know of General Butler's views of the action of times of war upon constitutional law, as those views were declared by himself to this court in Ex parte Milligan make it improbable that he consulted anybody before he established his provost's court, or informed anybody, even the President of the United States, afterwards. If his own views of his powers were right, he had perhaps little occasion to do so.

2. The action of that President, as we have it in written records, tends to the same conclusion. On the 20th of October, 1862, the President did establish a civil court in New Orleans, in very great form, as we have already said. Among other formalities, he issued a commission to Mr. Peabody, constituting him judge. This commission recites that the insurrection had temporarily 'swept away the civil institutions of the State, including the judiciary and judicial authorities of the Union,' and that it was 'indispensably necessary that there should be some judicial tribunal existing there capable of administering justice.' The President plainly considered that no such tribunal was there, or since the rebellion had been there. He accordingly established such a one; a Provisional Court; one confessedly not such as the Constitution and laws authorized in time of peace, and established only in an exercise of the rights of war; that is to say, such a one as General Butler pretended to establish. Is it not plain, from the establishment of this court, and especially from the recitals just quoted, that the President never did authorize General Butler's Provost Court at all as a civil court, and that if he ever heard of it acting as such a court, that he disapproved of its doing so? Mr. Lincoln, it is quite plain, felt that to establish a civil court, even in an occupied city, a commission was necessary from him, and when he wished to establish such a court he gave one in form.

In the face of such evidence, both of General Butler's views and of President Lincoln's views, you can presume nothing in this matter.

The authorities in this court show too that the case is not one for favorable presumptions of approval by the President. In the Sea Lion, an act of Congress, after restricting commercial intercourse in the insurrectionary districts, authorized the President to license it in certain cases, with a proviso that the licensed intercourse should be carried on only in pursuance of regulations prescribed by the Treasury Department. The construction was that the President alone had the power to license such intercourse. The court said:

'The license finds no warrant in the statute. The statute prescribed that the PRESIDENT shall license trade.'

It is to be observed too, that in this case General Banks licensed the trade, and that Rear-Admiral Farragut indorsed the license 'Approved.' Yet it was held that 'the President only could license it;' and no presumptions that he had licensed it were indulged in, even though such officers as General Banks and Admiral Farragut with their combined power had sanctioned it.

But the extraordinary part of the case is that Major Bell, the Provost Court, decided the case in favor of the Mechanics' and Traders' Bank; that his judgment was not appealed from to General Butler; but su a sponte-motu mero suo-in exercise of his power as 'supreme legislator, supreme judge, and supreme executive'-the General ordered him to open the case and reverse his decision; and that the provost judge did do this, and, as he says, 'under orders.' Who was the judge? Surely not Major Bell, for his will, his mind, his judgment, were at variance with his decree. General Butler was the judge, and Bell did but record his decree.

1. The case has been argued on the other side as if the jurisdiction of this court under section 709 of the Revised Statutes was clear. But it is not clear; on the contrary, it does not exist.

The grounds on which it is assumed that the jurisdiction exists under the section just referred to, are:

1st. That no court could be established in Louisiana by the government of the United States, nor any judge appointed by it-not even in time of civil war-but in the way provided in certain clauses of the Constitution.

2d. That there was an implied contract by the borrowing bank to restore money received by it from the Union Bank in virtue of a void decree, enforced by military power; and that this implied contract was violated by section 149 of the State constitution.

But no constitutional question is necessarily involved. The judge of the inferior State court seems to have avoided much discussion about any. He found that the debt claimed by the Union Bank was a just debt, and that this being so, and that bank having got, even by a void decree, its money, there was an end to the case.

There thus being ground, not involving a Federal question, upon which the case can be rested, no Federal question should be entertained. The Supreme Court of Louisiana in resting the case on the ground which it did, did not mean to abandon the ground taken by the court below it; ground taken in the pleadings, and of course covered by the final judgment in the Supreme Court as well as in the inferior court.

Whether or not this point not Federal was rightly decided is not a matter open for judgment here. But plainly it was decided rightly. It is impossible to believe that when the Union Bank lent this money-General Butler being then in occupation of the city-and allowing the circulation of Confederate money, only 'till further orders'-it is impossible to believe that the directors or officers of the Union Bank lent Confederate notes to be returned at the borrower's pleasure in kind. The tender made in repayment, on the 26th, was an offer to pay a debt in a thing utterly worthless. In one day afterwards no one would be permitted to circulate or to deal in it. The borrowing bank did not own the notes which it tendered; and the tender was made knowing that it would not be accepted.

2. But assuming that jurisdiction exists in this court, under section 709, or that the decision on the point not Federal was wrong.

The position of the other side is that the court established by General Butler was not established, nor its judge appointed, in accordance with certain articles of the Constitution; the same being the articles which prescribe in what way the courts of the United States shall be established, and judges in them appointed, in cases generally.

That the court was not so established, and that its judge was not so appointed is conceded. But we assert at the same time that the provisions of the Constitution relied on by the other side are not applicable to a state of war.

If they are so applicable then every other provision of the same Constitution, applicable to times and cases generally, may be applied.

For example, 'No one,' says the Constitution, 'shall be deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use without due compensation.'

But in would be bordering on the absurd to say that such provisions were in force while the State was occupied by an invading army to compel its citizens to lay down their arms.

The occupation of New Orleans by the Federal forces did not restore to its citizens the rights which they had renounced under the Constitution of the United States. If the acts of reconstruction are valid, these rights were not restored until Congress provided for their representation in its body. To some extent, indeed, the people of New Orleans ceased to be enemies. For when the city was taken possession of, a proclamation was issued by the commanding general, which, while it declared martial law, promised protection to rights of property. But this was all; all, at least, at the dates which are under our consideration.

Then the question is-admitting that the court established by General Butler was not a court established nor its judge appointed in the way customary in times of peace-was its organization or the appointment of its judge, and its action void, in view of the special circumstances existing when it was established?

The condition of New Orleans when the Federal forces took possession of it has been frequently described by this court. On the 20th October, 1862-months after the establishment of the Provost Court-the President issued his executive order, by which a provisional court was instituted. In this he describes the 'insurrection' as having subverted and swept away the civil institutions of the State, including the judiciary, so that 'it has become necessary to hold the State in military occupation.'

The President accordingly established a provisional court with wide powers and complete ability to enforce them. That in this he acted in accordance with the Constitution has been decided in The Grapeshot, and affirmed in Pennywit v. Eaton and in Handlen v. Wickliffe.

Indeed, it seems to be conceded on the other side that if the Provost Court had been established by the executive under an order issuing directly from him, no question could now exist as to its validity. But surely a general in the command of a department, in the exercise of war powers, must in the absence of evidence to the contrary, be presumed to act in accordance with the views and under the sanction and authority of the commander in chief. When insurrection has swept away the judicial tribunals of a State as well as of the United States, the commanding general in the exercise of the war power had authority to organize a provisional court for the trial of civil as well as of criminal cases. And what if he does call it a Provost Court, provided he show, as he here is alleged by the other side to have done, that the court was meant to be one for the trial of civil causes also? The community must be saved from chaos, and courts are the means by which this end is attained. It is better for the true sovereign that when he is restored to his rights he should find order instead of chaos. On this ground the judgments of the Confederate courts, though presided over by judges in sworn hostility to the United States, have been held valid by this court. The necessity which gave validity to such judgments was certainly no greater than that which called for the organization of courts in New Orleans in May, 1862. It was in this spirit that article 149 of the constitution of the State was passed, affirming all judgments rendered between January, 1861, and its adoption.

That the President was informed of what General Butler had done, and that he approved it so far as even by the views of the other side would be enough to give to it his official sanction, is not to be doubted. His omitting to establish any provisional court in form for nearly six months after the city was occupied proves this. He established this provisional court not by way of showing his ignorance or disapproval of what in the first moment of occupation had been done, but because it was desirable now, though only something like former times prevailed in New Orleans, and till such times prevailed entirely, to have a tribunal established in more form, with better evidences of its powers and jurisdiction, and of the limits upon them which might now safely be made.

But the other side should show affirmatively a disapproval; approval being to be presumed in a case like this.

Besides, the Provisional Court was a court for the State of Louisiana, and not, like the Provost Court, for the city of New Orleans alone.

Yet, further, The Grapeshot did not decide that the President's knowledge or authorization was necessary to make a valid court. In that case, a court established by him during war, and in a place where courts could not be established as in times of peace, was held to have been validly established. But it was not decided that a military commander occupying a place might not have validly established one also. Suppose that after occupying New Orleans General Butler's communications with the President had been cut off, and remained for months cut off entirely, as in fact they were cut off, in every way but by sea, when the Provost Court was established. What then? Could no civil court at all be established? The argument of the other side is reduced to the absurdum.

As to the evidence of General Butler's compelling Major Bell to reverse his decision, the thing rests on the evidence of the officer of the borrowing bank of what the provost judge told him. There is really no legal evidence that General Butler ever did more than hear what the counsel of the borrowing bank had to say. If Major Bell, in such a place and in such a situation as he was in, did no more than consult with General Butler, and after being enlightened by his views reconsider his former decision, what does the 'acting under orders' come to?Reply:

As to the jurisdiction.

1. In suing in the inferior State court to recover the money which the bank borrowing Confederate notes had been obliged by the Provost's Court to pay in good money, that bank set up specially that the establishment of Major Bell's court, his appointment as judge, and his actions and proceedings as such, in the suit before him between the banks, were null and void as being in violation of the Constitution of the United States, which vests the judicial power of the Union in one Supreme Court and such inferior courts as Congress may, from time to time, ordain and establish. And on this ground the plaintiff claimed immunity from any effect resulting from the judgment of Judge Bell's court.

The Supreme Court of Louisiana, however, held that the Provost Court was a lawful one, and the judgment valid and a bar to plaintiff's claim. This presents a Federal question, and assimilates the present case to that of Pennywit v. Eaton.

2. A Federal question is also presented since the Supreme Court of Louisiana held, that supposing the judgment of the Provost Court to have been void, it was made valid by article 149 of the State constitution. For, if that judgment was void when the money was paid under it, to the Union Bank, under protest, an implied contract attached to the Union Bank to refund it, and if article 149 bars or assumes to bar the enforcement of that contract, it impairs the obligation of the contract, and is, consequently, unconstitutional so far as it applies to the present case.

Mr. Justice STRONG delivered the opinion of the court.

The facts of this case, so far as they are necessary to a proper understanding of the question raised, are the following:

In May, 1862, after the capture of New Orleans by the United States army, General Butler, then in command of the army at that place, issued a general order appointing Major J. M. Bell, volunteer aid-de-camp, of the division staff, provost judge of the city, and directed that he should be obeyed and respected accordingly. The same order appointed Captain J. H. French provost marshal of the city, and Captain Stafford deputy provost marshal. A few days after this order the Union Bank lent to the plaintiffs the sum of $130,000, and subsequently, the loan not having been repaid, brought suit before the provost judge to recover the debt. The defence was taken that the judge had no jurisdiction over civil cases, but judgment was given against the borrowers, and they paid the money under protest. To recover it back is the object of the present suit, and the contention of the plaintiffs is that the judgment was illegal and void, because the Provost Court had no jurisdiction of the case. The judgment of the District Court was against the plaintiffs, and this judgment was affirmed by the Supreme Court of the State. To this affirmance error is now assigned.

The argument of the plaintiffs in error is that the establishment of the Provost Court, the appointment of the judge, and his action as such in the case brought by the Union Bank against them were invalid, because in violation of the Constitution of the United States, which vests the judicial power of the General government in one Supreme Court and in such inferior courts as Congress may from time to time ordain and establish, and that under this constitutional provision they were entitled to immunity from any liability imposed by the judgment of the Provost Court. Thus, it is claimed, a Federal question is presented, and the highest court of the State having decided against the immunity claimed, our jurisdiction is invoked.

Assuming that the case is thus brought within our right to review it, the controlling question is whether the commanding general of the army which captured New Orleans and held it in May, 1862, had authority after the capture of the city to establish a court and appoint a judge with power to try and adjudicate civil causes. Did the Constitution of the United States prevent the creation of civil courts in captured districts during the war of the rebellion, and their creation by military authority?

This cannot be said to be an open question. The subject came under consideration by this court in The Grapeshot, where it was decided that when, during the late civil war, portions of the insurgent territory were occupied by the National forces, it was within the constitutional authority of the President, as commander in chief, to establish therein provisional courts for the hearing and determination of all causes arising under the laws of the State or of the United States, and it was ruled that a court instituted by President Lincoln for the State of Louisiana, with authority to hear, try, and determine civil causes, was lawfully authorized to exercise such jurisdiction. Its establishment by military authority was held to be no violation of the constitutional provision that 'the judicial power of the United States shall be vested in one Supreme Court and in such inferior courts as the Congress may from time to time ordain and establish.' That clause of the Constitution has no application to the abnormal condition of conquered territory in the occupancy of the conquering army. It refers only to courts of the United States, which military courts are not. As was said in the opinion of the court, delivered by Chief Justice Chase, in The Grapeshot, 'It became the duty of the National government, wherever the insurgent power was overthrown, and the territory which had been dominated by it was occupied by the National forces, to provide, as far as possible, so long as the war continued, for the security of persons and property and for the administration of justice. The duty of the National government in this respect was no other than that which devolves upon a regular belligerent, occupying during war the territory of another belligerent. It was a military duty, to be performed by the President, as commander in chief, and intrusted as such with the direction of the military force by which the occupation was held.' Thus it has been determined that the power to establish by military authority courts for the administration of civil as well as criminal justice in portions of the insurgent States occupied by the National forces, is precisely the same as that which exists when foreign territory has been conquered and is occupied by the conquerors. What that power is has several times been considered. In Leitensdorfer & Houghton v. Webb, may be found a notable illustration. Upon the conquest of New Mexico, in 1846, the commanding officer of the conquering army, in virtue of the power of conquest and occupancy, and with the sanction and authority of the President, ordained a provisional government for the country. The ordinance created courts, with both civil and criminal jurisdiction. It did not undertake to change the municipal laws of the territory, but it established a judicial system with a superior or appellate court, and with circuit courts, the jurisdiction of which was declared to embrace, first, all criminal causes that should not otherwise be provided for by law; and secondly, original and exclusive cognizance of all civil cases not cognizable before the prefects and alcaldes. But though these courts and this judicial system were established by the military authority of the United States, without any legislation of Congress, this court ruled that they were lawfully established. And there was no express order for their establishment emanating from the President or the commander in chief. The ordinance was the act of General Kearney, the commanding officer of the army occupying the conquered territory.

In view of these decisions it is not to be questioned that the constitution did not prohibit the creation by military authority of courts for the trial of civil causes during the civil war in conquered portions of the insurgent States. The establishment of such courts is but the exercise of the ordinary rights of conquest. The plaintiffs in error, therefore, had no constitutional immunity against subjection to the judgments of such courts. They argue, however, that if this be conceded, still General Butler had no authority to establish such a court; that the President alone, as commander in chief, had such authority. We do not concur in this view. General Butler was in command of the conquering and occupying army. He was commissioned to carry on the war in Louisiana. He was, therefore, invested with all the powers of making war, except so far as they were denied to him by the commander in chief, and among these powers, as we have seen, was that of establishing courts in conquered territory. It must be presumed that he acted under the orders of his superior officer, the President, and that his acts, in the prosecution of the war, were the acts of his commander in chief.

Again, it is argued that even if the Provost Court was rightly established, it had no jurisdiction over civil causes. It must be conceded that the order by which the court was created did not define expressly the nature and extent of its jurisdiction. And it is also true that a Provost Court ordinarily has cognizance only of minor criminal offences; but that a larger jurisdiction may be given to it, by the power which brings it into being, is undeniable. Whether a larger jurisdiction was conferred in the case now under consideration we are not called upon to determine. It is not a Federal question. The Supreme Court of Louisiana decided that General Butler had a right, after the capture of New Orleans, in May, 1862, to appoint a judge to try civil cases, notwithstanding the provisions of the Constitution. Having determined that he had such a right, we have disposed of the question which entitles the case to be heard here, and it is not for us to inquire whether the Provost Court acted within its jurisdiction or not. That is a question exclusively for the State tribunals. In determining, as the State Supreme Court did, that the plaintiffs had no such constitutional immunity as they claim, there was no error. If in other respects errors were committed, they are not reviewable by this court, unless they present some other Federal question.

Such a question the plaintiffs allege is presented. Assuming that the judgment given by the Provost Court in favor of the Union Bank was void for want of jurisdiction in the court, they argue that when they paid the sum ad judged against them the law raised an implication of a promise by the Union Bank to refund it, and that the obligation of this contract was impaired by the 149th article of the State constitution of 1868. That article ordained that all judgments and judicial sales, marriages, and executed contracts made in good faith and in accordance with existing laws in the State, rendered, made, or entered into between the 26th day of January, 1861, and the adoption of the constitution, should be valid. But if the court was lawfully established, as the Supreme Court of the State decided, the law raised no such promise as is asserted, and the validating clause of the constitution, therefore, impaired no contract obligation. Besides, we cannot admit that the legislation of a State may not validate the judgments of a court in fact, though in giving the judgments the court may have transcended its jurisdiction.

Nothing more need be added. Sufficient has been said to show that, in our opinion, the plaintiffs have been denied no right or immunity secured to them by the Constitution and laws of the United States. If there is any error in the record, it is one of which this court can take no cognizance.

JUDGMENT AFFIRMED.

Mr. Justice BRADLEY was not present at the argument of this case, and took no part in its decision.


text: Talk:Mechanics' and Traders' Bank v. Union Bank/Opinion of the Court

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


text: Gavinzel v. Crump

title: Gavinzel v. Crump


text: Talk:Gavinzel v. Crump

title: Talk:Gavinzel v. Crump


text:
Gavinzel v. Crump/Opinion of the Court

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

George Gavinzel, M.D., a Swiss, resident in Richmond, Virginia, on the 20th of November, 1863, the rebellion being then flagrant, and 'Confederate notes,' as they were called-that is to say, notes issued by the rebel confederacy-being the only currency common in Richmond, agreed to lend to Robert Crump, a resident, like himself, of Richmond, and whose family physician he was, the sum of $3260 in the said notes; the notes, at the time, having become so far depreciated that the $3260 lent in them were worth in gold but $204. Gavinzel was at this time contemplating leaving the country for Europe, it being, however, a matter of extreme difficulty to pass through the rebel lines.

In adjusting the terms of the loan, the only difference between the two parties was as to the time when the money should be returned. Gavinzel, though he expected that the war would be ended by the spring of 1864, was desirous of postponing the time of payment till the close of the war, whenever that close might take place. Crump wished to have the privilege, in case the war lasted after April, 1864, of making payment at any time after that day and during its continuance. However, after having discussed the matter for a certain time, one Cannon, an attorney, employed by Gavinzel, drew up a bond in these words, the part in brackets at the close of the instrument being the part on which the question in this suit chiefly arose:

'Know all men by these presents, that I, Robert Crump, of the county of Henrico, and State of Virginia, am held and firmly bound unto George Gavinzel, M.D., of the city of Richmond, in the said State, in the sum of $3260, for the payment of which sum, well and truly to be made to the said Gavinzel, his heirs, assigns, and personal representatives, I bind myself, my heirs, executors, and administrators firmly by these presents, as witness my hand and seal, this 20th day of November, 1863.

'The foregoing obligation is made subject to the following terms and conditions, to wit:

'That the said sum of $3260 is to be retained by me, and is not to become due and payable until the close of the present war between the Confederate and the United States of America, during which time the said sum shall not bear any interest whatever, nor shall the same become due and payable after the close of the said war until demand for the same shall be made by the said Gavinzel or his legal representatives upon me or my legal representative; and as soon as the war shall have closed, and said demand shall thereafter have been made, the principal sum of $3260, without interest thereon, shall be paid. But if at that time I shall not be prepared to pay the said sum, I shall have the right to retain the same in my hands for the space of two years from and after the time when such demand is made, I paying legal interest thereon from such time until the said principal sum if paid; and after the expiration of said two years the said principal sum, with such interest as may have accrued thereon after such demand as aforesaid, shall be absolutely due and payable; and the said Gavinzel, his heirs, assigns, and personal representatives, shall have the right to enforce the payment of the same.

'[An upon this further condition, that at any time after the 1st day of April, 1864, and during the continuance of the war, IF the said Gavinzel, or any attorney in fact duly authorized by him to receive payment of said sum, shall be present in person in the city of Richmond, and State of Virginia, I shall have the right (if I elect so to do) to tender said sum, without interest thereon, to said Gavinzel in person, or to his said attorney in fact in person, in said city and State, in current bankable funds; and upon such tender being made the said Gavinzel or his said attorney in fact shall be bound to receive the same in full payment and satisfaction of this obligation; and thereupon the said obligation shall be surrendered and cancelled. But said tender is not to be made except to said Gavinzel or his said attorney in fact in person, in the city and State aforesaid.]

'Witness my hand and seal this November 20th, 1863.'

The instrument having been read over to both parties in the presence of each other, and no objection being made by either party to its terms, nor any alteration being asked for by either, it was executed by Crump on the day on which it was dated.

At the same time with the execution of this obligation, and according to previous agreement, Crump executed a deed of trust to Cannon of valuable real estate near Richmond, to become void provided 'that he, the said Crump, should well and truly pay and satisfy to the said Gavinzel the said sum of $3260, according to the terms and conditions in the said obligation set forth.'Soon after this-that is to say, on December 20th, 1863 Gavinzel got out of Richmond and went to Europe; his escape through the rebel lines having been, according to his own account, almost impossible; attended with greater difficulties than anything which he had ever in his life done.

He left behind him no attorney in fact to collect this debt, but during his absence was wholly unrepresented.

On the 1st of April, 1864, the war then continuing, Crump provided himself with $3260 current funds, bankable at Richmond, to pay the loan; but found neither Gavinzel nor any attorney in fact of his to receive them. He had these funds in his possession from the date mentioned until the close of the war, by which time they had lost all value.

On the 2d of June, 1865, the war being now ended-and not till then-Gavinzel returned from Europe, went to Richmond, and demanded payment in lawful money of the United States of the sum named in his bond, $3260; which payment Crump refused to make.

Gavinzel thereupon filed a bill in the court below, praying a sale of the property conveyed in trust, and a payment to him out of the proceeds of the amount which he claimed.

Crump set up in his answer two defences—

1st. That the said $3260 had no reference to lawful money of the United States; that the loan was made in 'treasury notes of the Confederate States;' that those notes were issued to sustain a rebellion against the United States, and illegal.

2d. That it was part and parcel of the contract between the parties at the time of the loan and the execution of the bond, that the obligor should be at liberty at any time during the continuance of the said war, after the 1st day of April, 1864, to discharge said debt and said bond for $3260, by repayment of that sum, without interest, in current bankable funds to the said Gavinzel, or to his agent; and that without such understanding the obligor would not have received the said $3260, or any part of it in the said Confederate currency, from the said Gavinzel.

The answer further alleged that the respondent had such money on the 1st of April, 1864, and at all times afterwards till the close of the war, ready to pay; but that neither Gavinzel nor any agent of his was at Richmond to receive them.

Both Gavinzel and Crump were examined, but whild both agreed in swearing that at the time when the loan was made, Gavinzel was getting ready to go to Europe if possible, they flatly contradicted each other as to what Gavinzel prior to or at the execution of the bond and deed of trust, said about the fact or the time of his coming back.

Gavinzel was thus examined and thus answered:

'Q. When you left Richmond on the 20th of December, 1863, did you not then expect to return in the spring or summer of 1864?

'A. I did not expect to live that long, much less to return. I had a severe haemorrhage.

'Q. At the time of the loan to Crump what was your estimate of the duration of the war?

'A. I expected that the war would last till the commencement of the next spring, and then be ended.

'Q. Did you intend to be here if the war lasted at that time?

'A. I did not.

'Q. Did you agree to be present in the city of Richmond or to have an agent to act for you in the city of Richmond after the 1st of April, 1864?

'A. I did not.

'Q. Was there at the time of the execution of Crump's bond or since, any different agreement in any respect from that contained in the bond?

'A. Never.'

Crump was thus examined and thus testified:

'Q. At the time of your negotiation with Dr. Gavinzel was anything said by him, and if so what, in regard to his departure from Richmond to Europe?

'A. He said he was getting ready to go. He said that he would certainly be back in April, 1864; and, if not, be would have some one here to act for him.'

The court below decreed that the trust-deed should stand as a security for Crump's paying to Gavinzel $204, lawful money of the United States, with interest, &c. (which said sum of $204 was the value in gold of the $3260 Confederate notes when lent), and that if the said $204 were not paid in two months, with interest, as aforesaid, the property conveyed should be sold. From that decree Gavinzel took this appeal.

The substantial question presented in this cause is, whether the principal sum of $3260, mentioned in the bond and deed of trust, can be discharged by the payment of the sum of $204, the value in gold on the 20th of November, 1863, of $3260 in Confederate notes.

If the large sum may be satisfied by the smaller amount, it is only because by the agreement of the parties the appellee had an absolute right to tender payment to the appellant after the 1st of April, 1864, and during the war, in Confederate money, or in what was equivalent thereto, money then bankable in the city of Richmond, independent of the fact of whether or not Gavinzel was in Richmond, or had an agent there duly authorized to receive payment of the bond.

The bond itself neither shows any such agreement nor gives color to the idea that any such did in fact exist.

And the testimony, taken together, fails to establish any agreement or understanding different from that contained in the bond itself. Even if it were competent to contradict the bond or waive its terms by an antecedent parol agreement or understanding between the parties, this evidence would be ineffectual for that purpose, because—

1st. There is no concord or agreement between the witnesses as to what the conversation in this particular was.

2d. Because the testimony of Crump, taken to be true precisely as he states it, does not amount to either a contract, agreement, or understanding of the parties. It was a statement made at the time of the 'negotiation' for the loan, at a time antecedent to the making of the writing, and it was therefore presumed to be embodied in the writing. It was not an undertaking to be in Richmond nor to have an agent there, but only an expression of an opinion as to what was likely to occur.

The transaction is not void because based on Confederate money. Such transactions have been sustained in this court in more cases than one, their purposes not having in any way been to promote the rebellion.

It is obvious, from the very great difficulty which existed when the bond was given, of a person's getting through the rebel lines, and out of Richmond, that the bond was in fact a wager upon two things:

1st. The issue of the rebellion.

2d. Whether Gavinzel could get out of Richmond and through the rebel lines.

The last matter was one in contemplation of the parties just as much as the first. Gavinzel, plainly, was convinced,--

1st. That the Confederacy would go to pieces, and probably by April, 1864, and that its notes would be, as they soon did prove to be, absolutely worthless.

2d. That he could execute his purpose of getting through the rebel lines, out of Richmond, and of keeping away until the war was ended (if he should so long live); when, of course, a tender in any money but lawful money of the United States would be no tender at all.

Crump, on the other hand, appears to have been uncertain as to the issue of the rebellion, but to have rather thought,

1st. That if the Southern Confederacy did not achieve a triumph by the 1st of April, 1864, its resources would be exhausted, and that it would have to succumb.

2d. That Gavinzel would not be able to get through the rebel lines out of Richmond before that time.

And on the basis of these, their respective beliefs or speculations, they made these contracts. Which belief was right was a matter which nothing but actual result could decide. But if the case, as we above suppose, was the true one, there is no difficulty of seeing how naturally the contract, as expressed in the clause of the bond within brackets, might be made, without any circumvention by Gavinzel of Crump, the obligor.

The only difficulty with the case of Crump is, that like many other people in the Southern Confederacy, he did not judge the signs of the times, and the state of things around him, aright; while his opponent, Gavinzel, a cool, observing, and sagacious Swiss, who saw things as a looker on, and without prepossessions or political aspirations, did.

1. Although there was not in the bond any express undertaking by Gavinzel to be present in Richmond after the 1st of April, 1864, in case the war lasted, or if he should not be personally present then to have an attorney in fact there to receive the money for him, yet such an undertaking is implied by the bond. Unless we so admit, the last clause of the bond would be without any effect whatever on the contract.

It is not to be believed that Gavinzel supposed Crump understood the privilege of the tender as depending upon whether or not Gavinzel chose to be represented in Richmond when the 1st of April arrived; that was to suppose that Crump understood his right of tender as depending on whether Gavinzel should, when the time arrived, be willing to accept it.

It must have been Known to Gavinzel that Crump understood this provision of the bond as securing something more to him than would have been secure to him without it.

Stipulations are not needed and are not inserted in contracts for securing a future privilege to one party, provided the other, when the time comes, shall then be willing to allow it. Such privileges are, of course, secure without any contract.

The testimony of Crump is thus supported by circumstances, and so outweights the testimony of Gavinzel, which is unsupported by any.

If, then, the only fact on which depended the right to discharge the bond of the tender, was the duration of the war after April 1st, 1864, that fact having occurred and the defendant having been always ready at the place designated to make the tender, and the actual tender having been prevented by an omission which it was in the power of Gavinzel alone to supply (so known and understood at the making of the contract), to wit, the omission of the plaintiff to appoint an attorney to represent him, the effect of all this was to discharge the bond, as completely as if the tender had been actually made and accepted.

2. This contract was plainly a contract of hazard, and, just as plainly, the only matter of hazard in the contemplation of the parties was, the duration of the war. The parties did not contract with reference to the hazard of Gavinzel's being represented or unrepresented in Richmond by an attorney in fact after the 1st of April, 1864. That was a matter of no hazard; hazard could not be predicated of it, because it was a matter entirely under the control of Gavinzel.

The essence of the agreement was, that Crump might pay back the loan in the currency in which he received it, if the war lasted, and so long as it lasted, after April 1st, 1864. If the war terminated sooner, he was to repay it in the currency which that termination should bring with it. Each party took a risk, and each received a consideration for the risk.

Crump took the risk of being compelled to pay back good money for bad, and the consideration to him was exemption from interest.

Gavinzel took the risk of losing interest, and of being compelled to take worse money for bad, the consideration to him being the chance of converting his Confederate notes into gold; and that he considered this chance valuable may be gathered from the opinion which he entertained, that the war would last till the commencement of the spring of 1864, and then be ended.

Mr. Justice DAVIS delivered the opinion of the court.

The main question in the case arises on the construction of the bond.

The bond is peculiar in its character and unusual in its terms. It is not due until the close of the war of the rebellion, and not even then until specific demand is made for the money. Two things must concur to give the obligee or his representative a right of action: the termination of the war and demand for the money. On demand, if the war has closed, the bond can be discharged by the payment of the principal sum, without interest, but the borrower, if he chooses, can retain the money two years longer by paying legal interest. On the expiration of these two years the principal sum and accruing interest is absolutely due and payable. So far the terms of the bond, it is admitted, are plain enough, but there is still another condition on which the chief controversy in the case depends. It is in the concluding words of the instrument.

It is proved in the case that the money lent was Confederate notes, although the fact is not so stated in the bond, and that after the 1st of April, 1864, the war then continuing, Crump provided himself with the funds for the return of the loan, but found no one in Richmond who was authorized to receive them, and he kept them ready to pay till they lost all value by the termination of the war.

And it is contended by him, as the tender was prevented by the omission of Gavinzel to appoint an attorney in fact to represent him in his absence, the bond is discharged as completely as if the tender had been actually made and accepted.

This would be so if Gavinzel was in default for not appointing an attorney. But the bond does not require him to make the appointment, nor to remain in Richmond. It gives Crump the right to make the tender, if the war continued after the 1st of April, 1864, but the tender could only be made in Richmond, and only to Gavinzel or to an attorney in fact in person who was authorized to receive payment. In other words, the money was payable, if Gavinzel was in Richmond, or had an agent there to receive it, but was not payable if he was not there, or had no agent in the city. Crump may have understood that his right to discharge the bond by the tender was to become absolute if the war lasted (and so long as it lasted) after April 1st, 1864, but the contract does not admit of a construction consistent with that understanding. And the court cannot, without evidence authorizing it to be done, import words into the contract which would make it materially different in a vital particular from what it now is. There is no occasion to introduce parol evidence to explain anything in the contract, because there is no ambiguity about it, and it is not competent by this sort of evidence to alter the terms of a contract, by showing that there was an antecedent parol agreement or understanding between the parties different in a material particular from that which the contract contained. But if it were competent, the evidence fails to establish any such antecedent agreement. Gavinzel and Crump are the only witnesses, and their statements are inconsistent one with the other. In view of this difference in the recollection of the parties-to use no harsher term-how can the court say that Gavinzel agreed either to be in Richmond or to have an agent there to represent him? Both parties were present when the bond prepared by Cannon on the direction of Gavinzel was read to them, and there does not seem to have been any objection to it, or any alteration proposed in the draft of it. Nor is there anything in the record to show that the parties did not, in this transaction, stand on equal ground, with equal intelligence and equal opportunities of judging of the hazard incurred. If so, hard as the bargain is, there is no good reason in the state of the pleadings why it should not be enforced. The answer sets up only two defences, the illegality of a contract based on Confederate notes, and the inability of Crump to discharge the debt, according to the last condition of the bond, by the neglect of Gavinzel on his departure to Europe, to appoint an attorney in fact to receive the money. But the last defence, as we have seen, is not sustained, and in regard to the first, this court has held substantially that contracts, based on Confederate currency, will be enforced when made in the usual course of business between persons resident in the insurgent States, and not made in furtherance of the rebellion.

Whether or not this was a wagering contract, and therefore void, is not a question in the case, as no objection to it on that ground was taken in the answer or on the argument. $The contract was plainly a contract of hazard, mutual hazard. Each party took risks, and each received a consideration for the risk thus taken. Manifestly, the leading object Gavinzel had in the transaction was to lend his money, so that it would not be repaid until the war closed, whether this event occurred before or after the 1st of April, 1864; and this object, on the contingency of his being able to go to Europe, the terms of his contract enabled him to accomplish. If the war ended by April, 1864, as he swears he thought it would, his purpose was attained, whether he went to Europe or not. But if the war continued longer, and he was able to get out of the Confederacy, he was in as good condition as if the war had terminated when he expected it would. There were, however, difficulties to be encountered in getting through the lines, represented by Gavinzel in his testimony 'as the greatest he ever met with in his life.' If unable to overcome these difficulties he would be obliged to stay in Richmond, and Crump would have the opportunity, if he chose to avail himself of it, of paying back the loan in the currency in which he received it.

The inducements to Crump to enter into the contract were the present use of the money and exemption from interest, with favorable terms of repayment. Besides this, there was the chance that he might be able to repay the loan in Confederate money. Both parties not only ran the risk of the war closing before or after the 1st of April, 1864, but also of the value of money whenever the war did close, be that sooner or later, and of the ability of Gavinzel to leave the Confederacy. Certainly the wisdom of Crump in entering into a contract which contemplated such hazards cannot be commended, but if parties make contracts where there is no fraud, upon contingencies uncertain to both, with equal means of information, the courts cannot undertake to set them aside.

Confederate currency was a commodity in trade, and the parties risked their judgment upon the future value of it, as they might have done upon any other commodity for sale in the community. But if it be treated in this case as a loan of money, Crump agreed to repay it by a certain time after the termination of the war, in the currency which that termination should bring with it, and onerous as the condition is, he must abide by it.

The views we have taken of this case are sustained by the decision in Brachan v. Griffin. In that case Griffin agreed, in consideration of 25,000 paper money, to be paid him by Willis in the years 1780 and 1781, to pay the latter  2500 in specie in 1790. Griffin brought his bill in chancery for relief against Brachan, the assignee. Fleming, J., denying the relief, said: 'The contract in this case was founded upon speculation on both sides. Griffin thought the present use of the money would be advantageous to him; and Willis, that it would be more beneficial to him to receive the specie at a distant day. The contract seems to have been fully understood by the parties, and to have been fairly entered into upon both sides.' The language used by this judge is applicable to this contract, which, after all, was a mere speculation upon the paper currency of the Confederacy. Besides this case from Virginia, decided in 1803, there are recent decisions in that State and Maryland which uphold contracts of hazard similar in many respects to the one in this case.

DECREE REVERSED, and the cause REMANDED to that court, with instructions to enter a decree for the complainant,

IN CONFORMITY TO THIS OPINION.

title: Gavinzel v. Crump/Opinion of the Court


text: Talk:Gavinzel v. Crump/Opinion of the Court


text:
Railway Company v. Ramsey

ERROR to the Circuit Court for the Northern District of Illinois; the case being thus:

Several statutes authorize, as is known, the transfer or removal of causes, commenced in the State courts, to those of the United States.

First. Where the amount in dispute, exclusive of costs, exceeds $500, and when the suit is against an alien, or is by a citizen of the State where it is brought, and against a citizen of another State, it may be removed on the petition of the defendant filed in the case, in the State court, at the time of entering his appearance in said court.

Second. When the suit is against an alien, and a citizen of the State wherein it is brought, or is by a citizen of such State against a citizen of the same, and a citizen of another State, upon petition of the defendant, filed at any time before trial or final hearing, if (so far as relates to him) it is brought for the purpose of restraining or enjoining him, or is a suit in which there can be a final termination of the controversy, so far as concerns him, without the presence of the other defendants, as parties in said cause.

Third. When a suit is between a citizen of the State in which it is brought and a citizen of another State, it may be so removed on the petition of the latter, whether he be plaintiff or defendant, filed at any time before the trial or final hearing of the suit, if before or at the time of filing said petition he makes and files in said State court an affidavit, stating that he has reason to and does believe that, from prejudice or local influence, he will not be able to obtain justice in such State court.

To effect a removal in any of the cases the petitioner must, at the time of filing his petition in the State court, offer to the State court 'good and sufficient security for his entering in said Circuit Court on the first day of its session copies of said process against him, and of all pleadings, depositions, and testimony, and other proceedings in the case, or in said cases, where a citizen of the State where the suit is brought is a defendant, copies of all process, pleadings, depositions, testimony, and other proceedings in the cause concerning or affecting the petitioner,' &c.

These different statutes being in force, and the only ones on the subject, the record in the present case came here.

It showed that Ramsey originally commenced an action against the Pittsburg, Cincinnati, and St. Louis Railway Company in the Superior Court of the City of Chicago; that the suit was afterwards transferred, according to the statutes in such case provided, to the Circuit Court of the United States for the Northern District of Illinois; that while it was pending in that court undetermined the files and pleadings were all destroyed by fire; that after the fire the plaintiff asked leave to file a declaration as a substitute for the one destroyed; that the defendant assented to this request, and on the same day the court made an order, as follows:

'By agreement of the parties, by their attorneys, as per stipulation filed, leave is given them to file a copy of the declaration and plea heretofore filed herein and destroyed by fire on the 9th of October last, and it is ordered that they be substituted for and stand in the place of the original declaration and plea so destroyed.'

That thereupon copies of such pleadings were filed, but that there was nothing in the declaration or plea to show the jurisdiction of the Circuit Court; that on the 11th June, 1872, the parties went to trial upon the issues joined, and that a verdict was rendered for the plaintiff on the 14th of the same month; that on the same day the defendant filed a motion for a new trial, and on the 29th a further motion in arrest of judgment, for the reason that there was nothing upon the record to show that the court had jurisdiction, and that on the 29th of December following the court overruled both motions and gave judgment upon the verdict.

It nowhere appeared that either of the parties attempted to supply any of the lost files except the pleadings, or that any objection was made to the jurisdiction until after the trial was had and a verdict rendered.

The action of the court in overruling the motion in arrest of judgment was the only matter now assigned for error.

Messrs. E. Walker and R. B. Roberts, for the plaintiff in error:

There nowhere appears on this record any averment of the citizenship of the plaintiff, nor is any allusion made even to his residence.

As early as Bingham v. Cabot, and the short cases of Abercrombie v. Dupuis, and Wood v. Wagnon, the necessity of averment of citizenship, as an indispensable prerequisite to the maintenance of jurisdiction, was announced, and Marshall, C. J., in Brown v. Keene, said:

title: Railway Company v. Ramsey


text: Talk:Railway Company v. Ramsey

title: Talk:Railway Company v. Ramsey


text:
Railway Company v. Ramsey/Opinion of the Court

'The decisions of this court require that the averment of jurisdiction shall be positive; that the declaration shall state expressly the fact on which jurisdiction depends. It is not sufficient that the jurisdiction may be inferred argumentatively from the averments.'

In Jackson v. Ashton, and in Piquignot v. The Pennsylvania Railroad Company, the court declined to examine any questions till the jurisdiction was shown in the pleadings.

In the later case of The Lucy, the court uses this language:

'No consent of counsel can give jurisdiction. Appellate jurisdiction depends on the Constitution and the acts of Congress. When these do not confer it courts of the United States cannot exercise it.'

In the case now before the court, the consent to file a declaration could not, under the authorities which we have cited, either confer citizenship on the plaintiff or jurisdiction on the court.

Messrs. Ross and Phillips (a brief of Mr. John Van Arman being filed) contra:

No doubt when a suit is brought originally in the Circuit Court, the declaration should state, and state positively, just as Marshall, C.J., in the case cited, says, the fact of different citizenships between the parties, upon which difference of citizenship the jurisdiction of the Circuit Court, as all know, depends. But the same thing is not true in a case removed from a State court. The declaration there never, or at least very rarely, states the citizenship of either party. Any statement of it would, in most cases, be surplusage, and irrelative to both the jurisdiction and the controversy. Citizenship, therefore, in a case originally brought in a State court can be shown, on a removal, by affidavit. Indeed if it could not be thus shown, the statutes, so far as they authorize removal on the application of a defendant would be a dead letter. He has nothing to do with the declaration in the case, and can put no averments of any sort into it.

The only question, therefore, now before the court is whether, when the case shows that the statutes authorizing removal require a difference of citizenship, and when it further shows that the case was removed according to the statutes in cases of removal provided, and when it further appears that all the original papers in the case have been burned,-the question, we say, is whether the court will, in such a case, presume that there was proper evidence before the court to justify a removal. That it will we can hardly doubt.

The CHIEF JUSTICE delivered the opinion of the court.

In cases where the jurisdiction of the courts of the United States depends upon the character of the parties, as it no doubt does in this, the facts upon which it rests must, of course, somewhere appear in the record. They need not necessarily, however, be averred in the pleadings. It is sufficient if they are in some form affirmatively shown by the record.

Here the parties have, by stipulation and agreement placed on file and made part of the record, admitted that the cause was brought to the Circuit Court by transfer from a State court in accordance with the statutes in such case provided. By the same stipulation it is made to appear that all the original files in the cause had been destroyed by fire. True the stipulation refers specially to pleadings alone, but in this court, after what has occurred below, it may with great propriety be assumed that it was intended to include all papers and entries in the cause.

The parties, after this destruction, asked to supply the pleadings. Neither party seems to have considered that anything else was necessary. Each, apparently admitting jurisdiction, seemed anxious to get ready for trial. They were permitted to file copies of the lost declaration and plea and thus make up their issues. The record now before us contains none of the lost files, but is made up of the stipulation above stated, the substituted pleadings, and the proceedings thereafter.

We have then a case before us upon error in which the record presented shows upon its face that part of the files in the cause were destroyed before the record was made, and that neither one of the parties has considered it necessary to have them supplied. The question arises, therefore, whether under such circumstances we are confined to what is in terms expressed upon the record sent to us, or whether we may resort to presumptions to give effect to what is expressed.

We are reviewing the action of another court and are to determine whether or not there is error in what it has done. The restoration of the lost files was not absolutely necessary to support the jurisdiction of that court. Having been once there the court is presumed to know their contents and is permitted to act upon that knowledge. Parol proof, too, is admissible to aid the memory of the court.

Consent of parties cannot give the courts of the United States jurisdiction, but the parties may admit the existence of facts which show jurisdiction, and the courts may act judicially upon such an admission.

Here the parties have put into the record their joint admission that the cause was transferred to the Circuit Court from a State court, and that the evidence of the transfer which was once among the files has been destroyed. They have asked the court to act upon this admission and proceed with the cause. The court did proceed. The fair presumption from all this is that it was then within the knowledge of the parties and the court that there had been on the files in the cause everything which the statute required to be there to complete the transfer, and that the appearance and admission of the parties was expected and intended to have all the force and effect which a restoration of the papers could have. If, therefore, with these papers in the record the jurisdiction would appear, the judgment ought not to have been arrested, and there is, consequently, no error.

We are then permitted to inquire what the lost papers would have shown if they had been incorporated into the record, and for that purpose may presume they contained all that the law required they should.

To obtain the transfer of a suit, the party desiring it must file in the State court a petition therefor and tender the required security. Such a petition must state facts sufficient to entitle him to have the transfer made. This cannot be done without showing that the Circuit Court would have jurisdiction of the suit when transferred. The one necessarily includes the other. If upon the hearing of the petition it is sustained by the proof the State court can proceed no further. It has no discretion and is compelled to permit the transfer to be made. The petitioning party is then required to file in the Circuit Court copies of the process, and of all pleadings, depositions, testimony, and other proceedings in the State court. This includes the proceedings by which the transfer was effected, and these, as has been seen, must show the facts necessary to give the Circuit Court jurisdiction.

Such are the papers which we are to presume were filed in this cause, and from what has occurred the conclusion is irresistible that they must have contained all that was necessary to justify the court in accepting the transfer. This it need not have done unless the jurisdiction was apparent. Either party upon the filing of the papers could have moved to remand, or the court itself, without a motion, could have sent the case back if the jurisdiction did not appear. As both the court and the parties accepted the transfer, it cannot for a moment be doubted that the files did then contain conclusive evidence of the existence of the jurisdictional facts.

This ends the case. With the lost files in the record, we should see that the court had the right to permit the parties to litigate before it as they did.

There is here no question of a restoration of lost records. This record has never been lost. It was not made until after the fire. The litigation was pending when that calamity occurred. What has been lost is part of the files which, when the time arrived to make up a record, would have been incorporated into it. What we have to consider is whether in the record as made their loss has been supplied. We think it has by the recorded acts of the parties and their stipulation.

JUDGMENT AFFIRMED.


text: Talk:Railway Company v. Ramsey/Opinion of the Court


text:
Stephen v. Beall

APPEAL from the Supreme Court of the District of Columbia; the case being thus:

In the year 1849, by deed of bargain and sale, all in technical form, one Colburn conveyed to Mrs. Mary Bell and to her three children, John, Sarah, and Maria, by name, a piece of ground described, in the District of Columbia, with the appurtenances; the grant being 'unto the said Mary, John, Sarah, and Maria, their heirs and assigns forever; to have and to hold the said described land and premises with the appurtenances unto them the said Mary (the mother), John, Sarah, and Maria, their heirs and assigns forever, to them and their sole use, benefit and behoof forever.'

The mother subsequently married a man named Beall, and so became Mrs. Mary Beall.

In this state of things, the estate of one Magruder, in Maryland, being about to be sold by a certain Stephen, as trustee, under a decree of court there, Beall bought it, for $10,100, and in pursuance of the terms of sale as prescribed by the decree, paid to Stephen, the trustee, $1000 in cash, and gave to him his three notes, each for $3033.33 1/3, secured by a deed executed by himself and wife, all with recitals of its history and purpose and with everything in or about it, in form, purporting to convey the whole of the tract of land which Colburn in 1849 had conveyed to her the said Mrs. Beall (while bearing the name of Bell), and to her three children. The children were not parties to the deed of trust.

The order of court for the sale of Magruder's property directed that a deed should be given by Stephen, the trustee, only on the payment by the purchaser of all the purchase money.

Beall, the husband, did not pay his three notes, and a resale by Stephen of the original property was directed by the court having jurisdiction of the matter. The proceeds were directed to be applied to discharge the three notes, and any surplus was to be paid to Beall. A resale by public auction was accordingly made on the 5th of May, 1859; the purchaser being one Crowley. The price, however, thus obtained was but $6478, thus leaving a debt due by Beall of $2622, exclusive of interest. The resale was reported to the court and was confirmed by it, after an opposition to it by Beall. To get satisfaction for the deficit of $2622 and interest Stephen, the trustee, now, June, 1871, filed a bill in the court below against Mr. and Mrs. Beall, praying an account of what was due to him on the notes and a sale of the property which had been conveyed to him by Mr. and Mrs. Beall in the deed of trust, or of so much of it as would satisfy what should be found due.

Mr. and Mrs. Beall answered. They set up that at the time of the execution of the deed of trust, the title to the lot was in Mrs. Beall (then Mrs. Bell), 'jointly with her children,' naming them; and 'submitted that the lot could not now be sold without affecting their rights.'

They submitted further, that Mrs. Beall could neither at law nor in equity pledge her separate estate for the payment of her husband's debt.

On a cross-bill filed by them, they averred that when the sale was made by Stephen as trustee, to Beall, Stephen misrepresented the value of the property, much exaggerating it, and promised to execute a valid deed to Beall for it, on receiving the $1000 and the notes.

They averred further, that Stephen was now in possession of the land of Magruder said to have been resold to Crowley; that the said resale was really made for Stephen, the trustee; and fraudulent, as being a purchase made by a trustee at his own sale. They did not in this cross-bill state when Stephen came into possession of the property once held by him in trust, nor state any other thing to show how long after the 'resale' it was. The cross-bill itself was sworn to February 28th, 1872.

Stephen, in answer to this cross-bill, denying his promise to execute any deed before the full purchase-money was actually paid, admitted that he was in possession of the land resold, but averred that the resale to Crowley was a bon a fide sale; and that he Stephen was in possession by a bon a fide purchase from Crowley, and for full consideration which had been paid by him. He denied all fraud in the said purchase by Crowley on the resale, and in his own purchase, and averred that his own purchase from Crowley was not thought of by either himself or Crowley, until after Crowley's purchase had been made; and, of course, that it was made without any fraudulent combination with Crowley. But he did not state the date when he came into possession of the property on his alleged purchase from Crowley.

No proofs being made, the case was heard on the pleadings.

The court below dismissed the bill, and Stephen appealed.

Mr. R. T. Merrick, for Mr. and Mrs. Beall, and in support of the decree below:

The bill was rightly dismissed, and this for several reasons:

1. It wanted necessary parties. The lot conveyed by Mr. and Mrs. Beall, had been conveyed to the latter (before her marriage with Beall) and to her children. The law of the District of Columbia, as it stood prior to 1857, was the old law of Maryland, which after the creation of the District still remained. By that law a joint tenancy was created. Every party was seized per my and per tout, as the old terms are; that is to say of the whole and of part. A conveyance by the mother though it may not have made a good title for the whole, did affect the whole. A sale under the deed of trust would have cast a cloud on the title of the children, and they should have been brought in, and if any decree of sale was made it should have been with reference to their rights.

If the interest of the defendant requires the presence of new parties, he takes the objection of non-joinder, and the complainant is forced to amend, or his bill will be dismissed.

2. The debt sought to be secured was the individual debt of the husband, Beall, and it was not competent for the wife, under the policy of the law made for her protection and under the provisions of the deed or deeds by which she held the property in connection with her children, to incumber that property for the security of her husband's debts. Steffey v. Steffey, in the Court of Appeals of Maryland, and Central Bank of Frederick v. Copeland, in the same court seem to show this.

3. That the price which Beall agreed to pay for the property was wholly excessive, is proved by what it brought on the resale; and that Stephen did promise to make a conveyance in fee simple to Beall, as soon as he got the money and secured notes, can hardly be doubted in view of the payment which the latter made of $1000 in money, and of the deed of trust given on his wife's estate. Why take cash and a security on a new estate, while the complete title in the old one is retained? If a deed in fee simple was not promised and intended, then this taking of cumulated securities shows that Stephen knew that the property had been sold to Beall at a grossly exaggerated value, and renders the allegation of fraud in this particular, as alleged in the cross-bill, the more probable.

But the great objection to the complainant's case, the vulnus immedicabile, remains. No doctrine is better settled in equity none more wisely settled, or upon foundation more deeply laid in morality and in the admitted frailty of human nature-than that a trustee shall not purchase at his own sale. No contrivances, no indirections, will save him when he has done so. The intervention of third parties so far from assisting him does but make his case worse, since the intervention of others shows his consciousness of guilt.

It is here admitted that the trustee is in possession of the property which he professed to sell, or rather to resell. At what date he sold it we know. At what date he came into possession of it is a matter not at all disclosed. He may have come into possession at once. In such a case undoubtedly his possession would be convincing proof of a bad purpose when he made the sale. And his omission to state, in any way, in his answer to the cross-bill, when he did come into possession, so that a chancellor may see how soon, or how long after the sale, it was, infers as a necessity the conclusion that his possession followed hard upon his sale.

The court should perhaps put what Chancellor Kent calls the 'sting of disability' into any such doings by a trustee, as ever getting into possession of property once sold by him in a fiduciary character. Such a rule is a safe rule, and the only safe rule.

But if a long lapse of time will repel all presumption of fraud, then certainly it lies upon a trustee to state clearly and to show that a long lapse of time has intervened. In this case the admitted possession by Stephen, as an individual, of the property sold by him as a trustee, puts upon him the burden of proof, even if the proof be nothing but his own answer. That proof he can surely give. The time when he came into possession is matter peculiarly within his own knowledge; and when, on that subject, he keeps silence, he is entitled to no favorable presumption. Those calling him to an account are entitled to every such; for it may well be that they don't know when he made his purchase.

It is not enough that he state that there was no fraud. Whether there was fraud or not may be a question of law. He swears therefore to matter of law. Let him state and swear to dates, and the court will decide whether there was or was not fraud.

Mr. T. T. Crittenden, contra, for Stephen, the appellant.

Mr. Justice HUNT delivered the opinion of the court.

title: Stephen v. Beall


text: Talk:Stephen v. Beall

title: Talk:Stephen v. Beall