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Garratt v. Seibert/Opinion of the Court

This bill is founded upon the act of Congress of July 8, 1870 (16 Stat. 207, c. 230, sect. 58), re-enacted in the Revised Statutes, sect. 4918. That section enacted, 'That whenever there shall be interfering patents, any person interested in any one of such interfering patents, or in the working of the invention claimed under either of such patents, may have relief against the interfering patentee, and all parties interested under him, by suit in equity against the owners of the interfering patent; and the court having cognizance thereof (as in the act provided), on notice to adverse parties, and other due proceedings had according to the course of equity, may adjudge and declare either of the patents void in whole or in part, or inoperative, or invalid in any particular part of the United States, according to the interest of the parties in the patent or the invention patented.' The complainant charges that, on the fourteenth day of February, 1871, he obtained letters-patent No. 111,881, for a new and useful improvement in lubricators, fully described in said letters, for the term of seventeen years from and after the date thereof, and that he is the sole and exclusive owner thereof. He charges further, that letters-patent were issued to William T. Garratt, the defendant, on the nineteenth day of November, 1872, for the period of seventeen years, purporting to secure to him the exclusive right to make, use, and vend a new and useful improvement in lubricators, alleged to have been invented by him. It is further charged that, in March, 1873, the defendant surrendered his said letters, and on the 18th of that month they were reissued (No. 5328), upon an amended specification, for the term of seventeen years, from Nov. 19, 1872. The bill further charges that the alleged invention, patented to the defendant by the said reissued letters, is substantially the same invention made by the complainant in the month of May, 1870, and patented to him on the 14th of February, 1871, as before mentioned, and that the reissued letters granted to the defendant are a direct interference with the prior letters granted, as aforesaid, to the complainant.

The answer of the defendant does not deny the grant of the several letters-patent, as charged in the bill, at the several dates mentioned, nor does it directly deny that his reissued letters are an interference with those granted to the complainant on the 14th of February, 1871. But it avers that in the Patent Office, in the year 1872, an interference was declared between the complainant and the respondent, in order to try the question of priority of invention, that testimony was taken, and that the Commissioner of Patents decided that the defendant was the first and original inventor of the invention described in his letters, and granted him letters therefor, which were afterwards reissued. This averment is unsupported by proof.

In view of such pleadings, it is hardly necessary to inquire whether there is an interference. The answer does not deny it. It rather impliedly admits it. And if it did not, a comparison of the complainant's and the defendant's specifications, including the models and drawings, precludes all doubt that both patents are for the same invention, and that the arrangement of devices in each produces the same result in substantially the same way.

All that remains, therefore, is to determine whether Seibert was the first and original inventor of the invention, or whether the invention was first made by Garratt, the defendant.

Seibert's patent, as we have stated, was granted on the fourteenth day of February, 1871, for a new and useful improvement in lubricators. He had previously (in 1869, Sept. 14) obtained a patent for a lubricator, in which hydrostatic pressure in forcing the lubricant from its cup, or reservoir, was found to act beneficially, though the patent did not claim that specifically, and the inventor seems not to have been aware at that time of its value. The model for this patent Seibert procured to be made by Garratt. Subsequently, having discovered its value in May, 1870, he caused to be made a new arrangement, by which the lubricant reservoir was made to stand vertically, instead of horizontally, as in his first invention, and hydrostatic pressure was applied near its base at the bottom of the lubricant. For this arrangement, he took out his patent of February, 1871. The principle was manifestly the same as that revealed in the earlier patent, though the arrangement for its operation was different. In the one, the lubricant and the condensed water were separated by a piston; in the other, by the difference of their specific gravities. It is not, however, very material to determine that Seibert's invention was made before May, 1870; for we are of opinion that even if it was not made before February, 1871, there is not sufficient evidence in the case to show it was anticipated by Garratt, or by any one. Garratt was a brass founder. In 1869, he had the agency for making the Roscoe oilers, or lubricators, then covered by a patent. It is plain those lubricators were designed for the use of tallow, and tallow alone. They were arranged to admit steam into the reservoir containing the lubricant, whereby it came in contact with the surface of the tallow, melted it, and caused it to mix with the steam, and pass out in a volatile condition into the steam-chest. They did not work well. The steam, acting only on the surface of hard tallow, would not melt and take up enough to lubricate the engine; and Garratt, late in the fall of 1869, after Seibert's first patent was granted, as he and some other witnesses testify, undertook to remedy the defect. He put on a Roscoe lubricator, what he calls a condensing pipe, with a regulating cock. It connected the bottom of the reservoir with the steam-pipe of the engine, at a point above the top of the reservoir. Notwithstanding what he testifies, it is plain that this pipe was intended only to heat and melt the tallow. In view of the difficulty it was designed to remedy, and of the utter uselessness of a condensing pipe applied to the base of hard tallow, this cannot be doubted. The tallow needed heat, not pressure, not a column of water; and the evidence is very satisfactory that the pipe put on was a melting pipe, and used as such alone. It was soon shortened from six feet to two. Why was that done, if it was a condensing pipe? If it was a melting pipe, it is easy to see why its length was reduced; and the proof is, that it never was used for hydrostatic pressure. The cocks were kept wide open in its use, except when the reservoir was to be cleaned out or filled. Such is the testimony of the engineers who had it in charge. We think, also, the weight of the evidence is that the application of the melting pipe was not Garratt's device, even if it involved invention. It seems rather to have been suggested by Watson.

Without going minutely over the evidence, we may notice that after Garratt caused the pipe to be put on the Roscoe lubricator, and after he had made Seibert's first model, he obtained drawings of the Seibert device, and had a model made of it for himself. Not until after this was done did he apply for a patent. It is difficult to believe, in view of this evidence, that he did not obtain the idea of his alleged invention from the prior invention and patent of Seibert. There is nothing, then, to rebut the presumption arising from his patent that Seibert was the first and original inventor. It follows that the decree of the Circuit Court was right.

Decree affirmed.

title: Garratt v. Seibert/Opinion of the Court


text: Talk:Garratt v. Seibert/Opinion of the Court

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


text:
Ivinson v. Hutton (98 U.S. 79)

APPEAL from the Supreme Court of the Territory of Wyoming.

The facts are stated in the opinion of the court.

Mr. Jeremiah M. Wilson for the appellant.

Mr. W. W. Corlett, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Ivinson v. Hutton (98 U.S. 79)


text: Talk:Ivinson v. Hutton (98 U.S. 79)

title: Talk:Ivinson v. Hutton (98 U.S. 79)


text:
Ivinson v. Hutton (98 U.S. 79)/Opinion of the Court

Except in an action of account, which is almost obsolete, it is a general rule that between partners, whether they are so in general or for a particular transaction only, no account can be taken at law. Worrall v. Grayson, 1 Mee. & W. 168; 1 Collyer, Partnership (6th ed.), 339.

Owing to the ability of courts of equity not only to investigate complicated accounts, but also to compel the specific performance of agreements, and to reform or rescind the same, in case of fraud or mistake, and to restrain breaches of duty for the future, it is to them rather than courts of law that partners usually have recourse for the settlement of controversies among themselves. 2 Lindley, Partnership (3d ed.), 933.

Sufficient appears to show that the parties to the present controversy on the 6th of September, 1872, entered into a copartnership for the purpose of raising cattle in the county where they resided; that their business transactions and accounts were large; that the complainant put into the copartnership the sum of $51,075.66, and that he had drawn out from the same the sum of $7,257; that on the 11th of April, 1874, the partnership was dissolved by mutual consent, upon the terms following: 1. That the respondent should pay the complainant $5,000 and all the money the complainant had put into the partnership, less the amount he had drawn out, and that the respondent should pay or secure all debts and liabilities due and owing by the firm. 2. That the complainant should release, assign, and convey to the respondent all the interest of every description which he, the retiring partner, had in the partnership property when the partnership was dissolved.

Neither party knew what amount the complainant had put into the firm nor what amount he had drawn out, but they mutually agreed that their clerk should examine the partnership books, ascertain the amount, and report the same as the basis of their agreed settlement, and that if any error was made, that it should be corrected when discovered.

Pursuant to that arrangement, the clerk examined the books, and reported to the parties that the sum shown to be due from the respondent to the complainant was $47,039.54. By the record it also appears that both parties supposed that the sum reported was correct, and that they made, executed, and delivered each to the other all the papers necessary to perfect and complete the terms and conditions of the dissolution of the copartnership; that in the course of the same day the clerk discovered that he had made an error of $4,036.12 against the complainant in making the computation.

Prompt notice of the error was given to the parties; and the complainant alleged in the original bill of complaint that the respondent then and there promised and agreed to re-examine the accounts, and that he would rectify the error or errors, if any were found to have been made, which he subsequently refused to do. Service was made, and the respondent appeared and demurred to the bill of complaint.

Leave of the court having been first obtained, the complainant amended the bill of complaint by striking out the words containing the promise to rectify the error or errors, and the respondent demurred to the amended bill of complaint. Responsive to the same demurrer, the complainant filed a motion to strike it from the files as irregular; but the court denied the motion, overruled the demurrer, and directed the respondent to file an answer to the amended bill of complaint.

These preliminary matters being settled, the respondent filed an answer denying the jurisdiction of the court, and setting up several defences. Hearing was had upon the bill of complaint and answer, and the court sent the cause to a special master to take the proofs and report the same to the court. Due report was accordingly made by the master, with his findings of fact, which substantially support all the material allegations of the amended bill of complaint. Exceptions to the report of the master were filed by the respondent, all of which were overruled by the court.

Before making that order, the parties were again heard; and the court confirmed the report of the master, and entered a decree that all the papers, instruments, agreements, notes of hand, and mortgages made and executed by the parties in effecting the dissolution of their copartnership be reformed and corrected in accordance with the findings of the master. From which decree the respondent appealed to the territorial Supreme Court, where the parties having been again heard, the appellate court reversed the decree of the court of original jurisdiction and dismissed the bill of complaint, holding that the complainant had a plain, adequate, and complete remedy at law; and from that decree the complainant appealed to this court.

Since the appeal was entered here, the complainant assigns for error that the court erred in holding that the case was not one of equitable jurisdiction; that the complainant's remedy was at law and not in equity, and in dismissing the bill of complaint on that ground.

Courts of equity have jurisdiction of controversies arising out of transactions evidenced by written instruments which are lost; or if through mistake or accident the instrument has been incorrectly framed, or if the transaction is vitiated by illegality or fraud, or if the instrument was executed in ignorance or mistake of facts material to its operation, the error may be corrected or the erroneous transaction may be rescinded.

Equities of the kind, whether it be for the re-execution, reform, or rescission of the instrument, like the equity for specific performance of a contract, are incapable of enforcement at common law, and therefore necessarily fall within the peculiar province of the courts invested with equitable jurisdiction.

Power to reform written contracts for fraud or mistake is everywhere conceded to courts of equity, and it is equally clear that it is a power which cannot be exercised by common-law courts. Hearne v. Marine Insurance Company, 20 Wall. 490.

Relief in such a case can only be granted in a court of equity; and Judge Story says, if the mistake is made out of proofs entirely satisfactory, equity will reform the contract so as to make it conform to the precise intent of the parties; but if the proofs are doubtful and unsatisfactory, and the mistake is not made entirely plain, equity will withhold relief, upon the ground that the written paper ought to be treated as a full and correct expression of the intent, until the contrary is established beyond reasonable controversy. 1 Story, Eq. Jur. (9th ed.), sect. 152; Gillespie v. Moon, 2 Johns. (N. Y.) Ch. 585; Rhode Island v. Massachusetts, 15 Pet. 271; Daniel v. Mitchell, 1 Story, 172.

Authorities which support that proposition are quite too numerous for citation, and the rule is equally well established that parol proof is admissible to prove the alleged accident or mistake which is set up as the ground of relief. Hunt v. Rousmanier, 8 Wheat. 174; 1 Story, Eq. Jur. (9th ed.), sect. 156; 3 Greenl. Evid. (8th ed.), sect. 360; Adams, Eq. (6th ed.) 171.

Support to the latter proposition is also found in all the standard writers upon the law of evidence. Courts of equity, says Taylor, will also admit parol evidence to contradict or vary a writing where, by some mistake in fact, it speaks a different language from what the parties intended, and where, consequently, it would be unconscionable or unjust to enforce it against either party, according to its terms. 2 Taylor, Evid. (6th ed.) 1041.

Viewed in the light of these suggestions, it is evident that the ruling of the court below, that the complainant had a plain, adequate, and complete remedy at law, was erroneous and utterly subversive of the complainant's rights, as it is clear that the common-law courts could not give him adequate relief. Hipp et al. v. Babin et al., 19 How. 274; Insurance Company v. Bailey, 13 Wall. 621.

Reported cases of the highest authority decide that courts of equity possess the power to correct mistakes in written instruments, even to the extent of changing the most material stipulations they contain and which are the subjects of special agreement; but the settled rule of practice is that the power should always be exercised with great caution, and only in cases where the proof is entirely satisfactory. Finley v. Lynn, 6 Cranch, 249; Oliver v. Insurance Company, 2 Curt. 295.

Where an instrument is drawn and executed which professes or is intended to carry a prior agreement into execution, whether in writing or by parol, which by mistake violates or fails to fulfil the manifest intention of the parties, equity, if the proof is clear, will correct the mistakes, so as to produce a conformity of the written instrument to the antecedent agreement of the parties. Hunt v. Rousmanier, 8 Wheat. 211; S.C.. 1 Pet. 13.

Proof of the most unquestionable character is exhibited in the record that the understanding of the parties was that the respondent was to pay to the complainant the whole amount the latter paid into the firm, less the sums he had drawn out, and that the clerk designated by the parties to examine the books and compute the amount made the mistake alleged in the bill of complaint. Clear proof is also exhibited that corresponding mistakes were made in the writings executed between the parties to effect the agreed dissolution of the copartnership. Under such circumstances, equity, if the proof is clear, will reform the agreements and correct the mistakes, as appears by many standard authorities in addition to those to which reference has already been made. Henkle v. Insurance Company, 1 Ves. 314; Moteux v. Insurance Company, 1 Atk. 545; Collett v. Morrison, 12 Eng. L. & Eq. 171; Andrews v. Essex Co., 3 Mason, 10.

Controversies of the kind often arise in respect to policies of insurance; and the rule is, when once the contract is agreed to, the underwriters are bound to insert it in the policy, and if they omit to do it, the insured have a right to insist upon a perfect conformity to the original agreement. Canedy v. Morey, 13 Gray (Mass.), 377; Wake v. Harrow, 1 Hurlst. & Colt. 202.

Concede that, and still it is suggested by the respondent that errors in matters of practice were committed by the court of original jurisdiction. Suppose that is so, still it cannot afford any justification for the appellate court in dismissing the bill of complaint, as the errors, if any, were amendable, and might have been corrected if the appellate court had reversed the decree of the court of original jurisdiction and remanded the cause for further proceedings. Instead of that, the appellate court dismissed the bill of complaint without qualification, the effect of which, if not corrected, will be that the complainant will be barred of relief.

Irregularity in the proceedings may frequently justify a reversal of the decree and a remanding of the case, but it will seldom or never present just cause for dismissing the bill of complaint. By a reversal in such a case, the right of the complainant is not barred, and when the cause goes down, he may, if he can, correct the errors and preserve his rights. Even if the alleged errors of practice were material, the decree could not be justified, as, if not reversed, it would for ever bar the right of the complainant; but upon a careful examination of the supposed errors, it is clear that they presented no just obstacle to the rightful determination of the controversy. Nor is it correct to suppose that the alleged errors of practice constituted the cause of dismissal in this case. On the contrary, the opinion of the court shows that the bill was dismissed solely upon the ground that the complainant had a plain, adequate, and complete remedy at law, which is a manifest error, as fully shown by the authorities previously cited.

The decree will be reversed, and the cause remanded with directions to enter a decree affirming the decree of the court of original jurisdiction; and it is

So ordered.


text: Talk:Ivinson v. Hutton (98 U.S. 79)/Opinion of the Court


text:
Snell v. Insurance Company

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

This was a suit in equity instituted by Thomas Snell, Samuel L. Keith, and Abner Taylor, partners under the firm name of Snell, Taylor, & Co., to reform a certain policy issued by the Atlantic Fire and Marine Insurance Company of Providence, insuring Samuel L. Keith, from Dec. 6, 1865, at noon, to Jan. 7, 1866, at noon, against loss or damage by fire, on two hundred and twenty bales of cotton, described as 'stored in open shed at West Point, Miss.; loss, if any, payable to Messrs. Keith, Snell, & Taylor.'

The material allegations in the bill are as follows: That said firm, on Dec. 6, 1865, were the owners of two hundred and twenty bales of cotton, worth more than $50,000, stored at West Point, Miss., awaiting transportation to some northern market; that Keith applied in behalf of his firm to Holmes & Bro., general insurance agents at Chicago, representing several companies, including the defendant, to procure insurance upon all the cotton, for the benefit of the firm, in the sum of $49,500, during such time as it remained at West Point, which time was uncertain, in view of the difficulties of transportation; that Holmes & Bro., the duly accredited and authorized agents, among others, of the defendant, did agree with Keith, acting for and in behalf of his firm, to make, grant, and secure insurance in the companies by them represented on this cotton in the sum of $49,500, while it was stored at West Point and until shipped to a northern market, and to receive a premium of one per cent on the total amount insured, to wit, $495, which sum Keith agreed to pay Holmes & Bro., provided the time for the insurance did not exceed one month, but to have a decreased rate if the time exceeded one month, the agreed rate to be paid by Keith when the cotton was removed from West Point, when the extent of the insurance could be definitely fixed; that on Dec. 6, 1865, Holmes & Bro., with intent to carry this agreement into effect, caused to be made several policies in different companies, among them the policy sued on, making an aggregate insurance of $49,500, and after the loss occurred notified Keith to pay, and he did pay, the sum of $495, the premium on the whole amount insured, $80 of which was paid to and received by the defendant for and on account of his firm and in pursuance of the agreement with Holmes & Bro.; that the policy sued on remained in the possession of Holmes & Bro. until some time after the loss; that after the loss, and before any application to adjust the same was made, Holmes & Bro., with the intent to carry out the agreement that the cotton should be insured until its shipment from West Point, filled up the policy so that by the terms thereof the insurance extended from Dec. 6, 1865, until Jan. 7, 1866, at noon; that Keith was assured by Holmes & Bro., when the insurance was taken, that it was not necessary that the policy should state in terms that the insurance was for and on account of Snell, Taylor, & Co., and that the firm would be as fully protected, and the loss would be as promptly paid, as if the policy had expressly stated that the insurance was for and on its account; that relying upon those assurances, and ignorant that, by the terms and legal effect of the terms employed, no other interest in the cotton was insured except his, Keith took the policy into his possession in the full belief that it covered the entire interest of the firm; that soon thereafter, upon being advised to the contrary by his attorney, he demanded of the insurance agents that the policy be corrected so as to conform to the real contract and agreement, but Holmes & Bro. refused to correct or alter the same in any way.

The prayer of the bill is that the company be decreed and ordered to correct and reform the policy by inserting therein the stipulation that the insurance was made for the benefit or for the account of Snell, Taylor, & Co., and that the firm have a decree for the sum so intended to be insured on the cotton.

The company filed an answer traversing the allegations of the bill, and setting up sundry matters in defence. The court, upon a final hearing on the pleadings and proofs, dismissed the bill, and the complainants appealed to this court.

Mr. Leonard Swett, for the appellants, contended that the error committed by inserting the name of Keith instead of that of the firm as the party assured, when the contract was reduced to writing, would not defeat their rights; but that the policy would be reformed so as to effectuate the intention of the parties, and be enforced by a court of equity. Ellis v. Towsley, 1 Paige (N. Y.), 278, 279; Franklin Fire Insurance Co. v. Hewitt, 3 B. Mon. (Ky.) 231; Harris v. The Columbian Insurance Co., 18 Ohio, 121; New York Ice Co. v. Northwestern Insurance Co., 23 N. Y. 359; Woodbury Savings Bank v. Charter Oak Insurance Co., 31 Conn. 526; The Malleable Iron Works v. Phoenix Insurance Co., 25 id. 465.

No counsel appeared for the appellee.

A., a member of the firm of A., B., & Co., who were the owners of cotton, communicated the facts touching its ownership, situation, value, and risk, so far as he knew them, to C., a duly accredited agent of an insurance company; and thereupon the company, through C., entered into a verbal agreement with A., acting for and on behalf of the firm, to insure for a certain period the cotton for its whole value against loss by fire, at a premium which was subsequently paid to the company. A. assented that the insurance should be made in his name, upon the representation and agreement of C. that the entire interest of the firm in the cotton would be thereby fully protected. The cotton was burnt within the specified period. The policy was then issued and delivered to A., who, being at once advised by his attorneys that it in terms covered his interest, but not that of the firm, forthwith requested the company to correct it, so that it should conform to the agreement. The company having declined to do so, A., B., & Co. filed against it this bill, praying that the policy be reformed, and that the value of the cotton be awarded to them. Held, 1. That the acceptance of the policy was not such as waived any right of A., B., & Co. under the agreement covering their interest in the cotton, which A. in their behalf had made with the company, and that they are entitled to the relief prayed for. 2. That a mere mistake of law does not, in the absence of other circumstances, constitute any ground for the reformation of a written contract.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Snell v. Insurance Company


text: Talk:Snell v. Insurance Company

title: Talk:Snell v. Insurance Company


text:
Snell v. Insurance Company/Opinion of the Court

The elaborate answer of the insurance company comprehends, in the form of express denials and affirmative statements, almost every defence which the ingenuity and skill of able counsel could suggest. But in view of the points to which the evidence seems to have been mainly directed, it is only necessary to consider certain grounds of defence, which will sufficiently appear in this opinion.

We are satisfied that a valid contract of insurance was entered into, on the 6th of December, 1865, between Keith, representing Snell, Taylor, & Co., and Holmes & Bro., representing the defendant and other insurance companies, and we entertain no serious doubt as to its terms or scope. Although there is some conflict in the testimony as to what occurred at the time the contract was concluded, it is shown, to our entire satisfaction, not only that the agreed insurance covered the two hundred and twenty bales of cotton, but that Holmes & Bro., with knowledge or information that the cotton was owned by Snell, Taylor, & Co., and not by Keith individually, intended to insure, and, by direct statements, induced him to believe that they were insuring, in his name, the interest of the firm. He assented to the insurance being taken in his name, because of the distinct representation and agreement that the interest of the firm would be thereby fully protected against loss by fire so long as the cotton remained at West Point. But according to the technical import of the words used in the policy which the company subsequently issued and delivered, only Keith's interest in the cotton is insured. Such is the construction which the company now insists should be put upon the policy, if the court decides that there was a binding contract of insurance. The fundamental inquiry, therefore, is whether Snell, Taylor, & Co. are entitled to have the policy reformed so as to cover their interest.

We have before us a contract from which, by mistake, material stipulations have been omitted, whereby the true intent and meaning of the parties are not fully or accurately expressed. A definite, concluded agreement as to insurance, which, in point of time, preceded the preparation and delivery of the policy, is established by legal and exact evidence, which removes all doubt as to the understanding of the parties. In the attempt to reduce the contract to writing there has been a mutual mistake, caused chiefly by that party who now seeks to limit the insurance to an interest in the property less than that agreed to be insured. The written agreement did not effect that which the parties intended. That a court of equity can afford relief in such a case, is, we think, well settled by the authorities. In Simpson v. Vaughan (2 Atk. 33), Lord Hardwicke said that a mistake was 'a head of equity on which the court always relieves.' In Henkle v. Royal Exchange (1 Ves. Sen. 318), the bill sought to reform a written policy after loss had actually happened, upon the ground that it did not express the intent of the contracting parties. The same eminent judge said: 'No doubt but this court has jurisdiction to relieve in respect of a plain mistake in contracts in writing as well as against frauds in contracts, so that if reduced to writing contrary to the intent of the parties, on proper proof, would be rectified.' In Gillespie v. Moon (2 Johns. (N. Y.) Ch. 585), Chancellor Kent examined the question both upon principle and authority, and said: 'I have looked into most, if not all, of the cases in this branch of equity jurisdiction, and it appears to me established, and on great and essential grounds of justice, that relief can be had against any deed or contract in writing founded in mistake or fraud. The mistake may be shown by parol proof, and the relief granted to the injured party, whether he sets up the mistake, affirmatively by bill, or as a defence.' In the same case he said: 'It appears to be the steady language of the English chancery for the last seventy years, and of all the compilers of the doctrines of that court, that a party may be admitted to show, by parol proof, a mistake, as well as fraud, in the execution of a deed or other writing.' And such is the settled law of this court. Graves v. Boston Marine Insurance Co., 2 Cranch, 419; Insurance Company v. Wilkinson, 13 Wall. 222; Bradford v. Union Bank of Tennessee, 13 How. 57; Hearne v. Marine Insurance Co., 20 Wall. 488; Equitable Insurance Co. v. Hearne, id. 494. It would be a serious defect in the jurisdiction of courts of equity if they were without the power to grant relief against fraud or mutual mistakes in the execution of written instruments. Of course parol proof, in all such cases, is to be received with great caution, and, where the mistake is denied, should never be made the foundation of a decree, variant from the written contract, except it be of the clearest and most satisfactory character. Nor should relief be granted where the party seeking it has unreasonably delayed application for redress, or where the circumstances raise the presumption that he acquiesced in the written agreement after becoming aware of the mistake. Hence, in Graves v. Boston Marine Insurance Co. (supra), this court declined to grant relief against an alleged mistake in the execution of a policy, partly because the complainant's agent had possession of the policy long enough to ascertain its contents, and retained it several months before alleging any mistake in its reduction to writing. But no such state of case exists here. The policy in question was retained for Keith by the insurance agents. It was not surrendered to him, nor did he see it, until after the loss had happened. Immediately upon being advised by his attorney that the policy, in terms, covered only his individual interest, he promptly avowed the mistake, and asked that it be corrected in conformity with the original agreement. There was no such acceptance by him of the written policy as would justify the inference that he had either waived any rights existing under the original agreement, or conceded that the instrument correctly set forth the contract.

It may be said that the mistake made out was a mistake of law, and, therefore, not relievable in equity. It was stated in Hunt v. Rousmaniere's Administrators (1 Pet. 1), as a general rule, that mistake of law is not a ground for reforming a deed, and that the exceptions to the rule were not only few in number, but had something peculiar in their character. The court, however, was careful to say that it was not its intention 'to lay it down, that there may not be cases in which a court of equity will relieve against a plain mistake, arising from ignorance of law.' In the same case (8 Wheat. 174), Mr. Chief Justice Marshall said that he had found no case in the books in which it has been decided that a plain and acknowledged mistake of law was beyond the reach of equity. In 1 Story, Eq., Jr., sect. 138 e and f ( Redf. ed.), the author, after stating certain qualifications be observed in granting relief upon the ground of mistake of law, says that 'the rule that an admitted or clearly established misapprehension of the law does create a basis for the interference of courts of equity, resting on discretion, and to be exercised only in the most unquestionable and flagrant cases, is certainly more in consonance with the best considered and best reasoned cases upon the point, both English and American.' The same author says: 'We trust the principle that cases may and do occur where courts of equity feel compelled to grant relief, upon the mere ground of the misapprehension of a clear rule of law, which has so long maintained its standing among the fundamental rules of equity jurisprudence, is yet destined to afford the basis of many wise and just decrees, without infringing the general rule that mistake of law is presumptively no sufficient ground of equitable interference.

In the case under consideration, the alleged mistake is proven to the entire satisfaction of the court. It is equally clear that the assent of Keith to the insurance being made in his name was superinduced by the representation of the company's agent, that insurance in that form would fully protect the interest of the firm in the cotton. We assume, as we must from the evidence, that this representation was not made with any intention to mislead or entrap the assured. It is, however, evident that Keith relied upon that representation, and, not unreasonably, relied also upon the larger experience and greater knowledge of the insurance agents in all matters concerning the proper mode of consummating, by written agreement, contracts of insurance according to the understanding of the parties. He trusted the insurance agents with the preparation of a written agreement which should correctly express the meaning of the contracting parties. He is not chargeable with negligence, because he rested in the belief that the policy would be prepared in conformity with the contract. As soon as he had a reasonable opportunity to consult counsel, he discovered the mistake, and promptly insisted upon the rights secured by the original agreement. A court of equity could not deny relief under such circumstances, without aiding the insurance company to obtain an unconscionable advantage, through a mistake, for which its agents were chiefly responsible. In all such cases, there being no laches on the part of the party, either in discovering and alleging the mistake, or in demanding relief therefrom, equity will lay hold of any additional circumstances, fully established, which will justify its interposition to prevent marked injustice being done. Wheeler v. Smith, 9 How. 55.

In deciding, therefore, as we do, that the complainants are entitled to have the policy reformed in accordance with the original agreement, it is not perceived that we enlarge or depart, in any just sense, from the general and salutary rule, that a mere mistake of law, stripped of all other circumstances, constitutes no ground for the reformation of written contracts.

We have not overlooked, in this connection, that portion of the evidence which shows that Holmes & Bro., when, by letter, advising the company of the contract, stated, in a postscript, that the insurance would be for a few days only. The officers of the company testify that they would not have permitted the contract to stand, and would have promptly cancelled the policy, had they not supposed the insurance would last but a few days. It was doubtless the belief of Keith, which he expressed to the insurance agents, that the cotton would not remain at West Point beyond a few days. The evidence shows that he had reasonable ground for such belief. But he seems to have guarded against disappointment in that regard, by having it distinctly agreed that the insurance should last until transportation could be obtained, and the cotton shipped from West Point. That Holmes & Bro. so understood the agreement is evident from their letter of Dec. 6, 1865, to the secretary of the company, in which they state that they had taken insurance 'on two hundred and twenty bales of cotton stored in open shed at West Point, Miss., said cotton to remain insured from above date till time of shipment.' It is true that the response of the secretary shows that the company did not approve of such risks. But the contract was not repudiated or cancelled, and they only enjoined upon their agents to 'decline such business in future.' The act of the agents in filling up the blanks in the policy after the loss had occurred was manifestly in consummation of the original contract of insurance.

But independently of the issue in the pleadings as to the mistake in reducing the contract to writing, the company defends the action, and denies its liability upon other grounds, which must now be considered.

The answer alleges that at the time of, and prior to, the alleged verbal contract of insurance the cotton was guarded, night and day, by soldiers of the United States, who occupied the shed in which it was stored, and who were in the habit of sleeping and eating their meals upon it, and smoking and otherwise using fire upon it, or in its immediate vicinity; that those facts were material to the risk, and would or might have influenced Holmes & Bro. and the company in taking and continuing the insurance, or in regard to the rate of premium; and that such facts, although well known to Keith when he applied for insurance, were not communicated by him to Holmes & Bro., or to the company, but were concealed, whereby the contract of insurance, whether reduced to writing correctly or not, became and was void.

The evidence does not authorize a defence upon such grounds. The proof does not show that Keith, when applying for insurance, withheld any fact known to him, and material to the risk. By the terms of the policy, he was under an obligation to make a just, full, and true exposition of all the facts and circumstances in regard to the condition, situation, value, and risk of the property insured, so far as the same were knwon to him, and were material to the risk. The same clause of the policy provides that the risk shall cease, and the policy become null and void, 'if any material fact or circumstance shall not have been fairly represented.' This language must, of course, be construed in connection with the preceding words of the same clause. We find no evidence in the record showing that Keith did not fairly represent every material fact known to him. Rawley, who was within hearing of the conversation between Keith and Edgar Holmes (the active manager of the business of Holmes & Bro.), says, that while he cannot recall the language used, he is 'positive that Keith explained the character of the risk. . . . I know Keith described the character of the risk fully.' When Keith applied to Edgar Holmes for the insurance, the latter asked him how the cotton was stored. He replied, 'In an open shed.' Holmes then said that he did not like the manner in which it was stored; and Keith replied, it 'was guarded day and night.' Thus were Holmes & Bro. notified of its condition and situation. The information that it was guarded day and night indicated that there was something in the attendant circumstances which made a guard necessary for its safety. Indeed, if it was to remain, while under insurance, in an open shed, and at a point remote from the company's place of business, it was clearly in the interest of the insurer to have it guarded day and night. But it is said that the habits of the guard were such, at the time of the insurance, as to endanger its safety. If this were clearly proven, the evidence furnishes no ground for imputing to Keith or Snell or Taylor knowledge of any habitual carelessness or misconduct upon the part of the guard which increased the danger of the cotton being burned.

The answer further alleges that on the 8th of December, 1865, whatever cotton there was in the shed at West Point belonging to the complainants was seized by the United States government, or by its officers, under its orders and direction, excluding complainants thereafter from all possession and control over the cotton, and that such seizure and exclusion from possession and control were maintained until the cotton was burned; that after such seizure the shed passed to the exclusive possession of soldiers of the United States, who were in the habit of using the same for military defence, of sleeping and eating therein, and of smoking and otherwise using fire upon it and in its immediate vicinity; that at the time of the alleged verbal contract of insurance large quantities of loose cotton were lying under the flooring of the shed, which consisted of loose boards, and immediately under the cotton stored in the shed, whereby the risk of fire was greatly increased; that these facts were, each and all of them, material to the risk, and would or might have influenced the judgment of Holmes & Co. and of the company in regard to continuing the insurance, or to the rate of premium therefor; that Taylor, one of the complainants, knew these facts on the 8th of December, 1865, and in ample time before the fire to have communicated them to the company's agents, and sufficiently long before to have enabled the company to cancel the policy and give complainants timely notice thereof; that by reason of his concealing them from the company and its agents, the policy became and was wholly void.

This defence is doubtless based upon that clause in the policy which declares that 'if the situation or circumstances affecting the risk thereupon (the property) shall be so altered or changed, either by change of occupancy in the premises insured, or containing property insured, or from adjacent exposure, whereby the hazard is increased, and the assured fail to notify the company, or if the title to said property shall be in any way changed,. . . in every such case the risk thereupon shall cease and determine, and the policy be null and void.'

It will be observed that an alteration or a change in the occupancy of the premises containing the insured property, unless it increases the hazard, does not avoid the policy, although no notice be given to the insurer. We have already seen that when the contract was made the company's agents were informed that the cotton was guarded by day and by night. There was no change in the character of the guard, except that prior to Dec. 8, 1865, Federal soldiers guarded it as a personal favor to Taylor, while after that date they did so under an order for its seizure. There is some evidence that they were, at times, negligent and careless; but we are not satisfied that their conduct was such as to increase the hazard. In view of the peculiar condition of public sentiment at West Point and in its vicinity against Taylor and others, who had been officially connected with the seizure and collection of cotton, under treasury regulations, the strong presumption is that the presence of Federal soldiers largely decreased, rather than increased, the hazard, and was, therefore, for the benefit of all parties interested in the preservation of the property. We attach no weight to its seizure, under orders of Federal officials, as, in and of itself, affecting the rights of the assured. It had been purchased by Taylor for his firm, and with its money, and it does not appear that any of the cotton claimed by him for the firm did, in fact, belong to the United States, or had become forfeited by reason of his violation of the laws, or of the treasury regulations made in pursuance of them. Nor does it appear that he caused or promoted its seizure. So far as the record shows, it was an unauthorized seizure of the private property of the citizen, caused by the personal hostility towards Taylor of a former treasury agent, who had himself been suspended from his position through the influence or machinations, as he suspected or believed, of Taylor. If, as alleged, the cotton, upon its seizure, passed from the control of the owner to the exclusive temporary possession of Federal officers, such change did not, by the terms of the policy, impose upon the assured the duty of communicating to the company that fact. It was only when the change in the surrounding circumstances increased the hazard that the assured was under an obligation to inform the company thereof. If the seizure had involved a change of title, then the company could have elected to avoid the policy, since it contains express stipulations to that effect. But, as already said, the record furnishes no evidence of any change of title, but only a charge of possession and control, made without the assent of the owner, and which he, perhaps, had no power to prevent; and it does not clearly appear that the hazard was thereby increased.

We come now to the only remaining question which it seems necessary to consider; viz., the quantity of cotton in the shed belonging to Snell, Taylor, & Co. at the time of the fire.

Upon this point a large amount of testimony was taken which is of a very unsatisfactory nature. Witnesses who passed and repassed the shed from time to time, and who had no special reason for making an estimate of the cotton there stored, were asked to give their best judgment as to the quantity.

If the record contained no other evidence than such opinions of witnesses, the court would have great difficulty in reaching a conclusion as to the quantity of the cotton burned. But there is other and better evidence upon which to rest the determination of this question. The officer commanding the Federal troops stationed at West Point, and who were in possession of the shed from a date prior to Dec. 6, 1865, up to the time of the fire, states that about the time he took possession, under orders from Federal officials, he examined its general condition and counted the bales,-not every bale, but made such a count as satisfied him that there were not less than two hundred and twenty bales, certainly over two hundred bales. He swears that none of the cotton claimed by Taylor was removed after he took possession of the shed, and he was in such possession up to the time of the fire, except for about two weeks in the latter part of December, during which time Captain Pyle guarded it under the same order. But the most important evidence upon this point comes from the witness Freel. Under the authority of the freight conductor of the Memphis and Charleston Railroad Company he contracted with Taylor for the transportation of this cotton to Memphis. He made a contract with Taylor for its shipment as soon as the conductor could get to West Point with the necessary cars. In order to ascertain the number of cars needed for the transportation, he counted the bales in the shed, claimed by Taylor, as well as it was possible for him to do. He found that the front tier contained forty-five bales, and that there were five tiers, and his calculation was that transportation was needed for two hundred and twenty-two bales. At the time of this count, which was in the last of December, he made a memorandum for the benefit of the conductor, in a memorandum-book which he produced when giving his testimony. The memorandum was, '222 bales of Taylor's cotton for you to get cars for.'

The conductor expected to reach West Point with the cars by the first day of January, but he failed to do so. The cars reached West Point on the 7th, the day after the fire, for the purpose of transporting the cotton to Memphis under the contract made by Freel with Taylor. We see no escape, under the evidence, from the conclusion that there were two hundred and twenty-two bales in the shed, belonging to Taylor's firm, at the time of the fire, unless some of it was stolen or fraudulently withheld after Freel's count. Only one witness states any fact from which it may be inferred that any portion of the cotton was stolen prior to the fire, and he only speaks of eight or nine bales being taken off, with the consent of the guard, during a certain night when Taylor was absent from the shed. If that quantity be deducted, as we think it must be, there will be left two hundred and thirteen bales of cotton, averaging, according to the testimony, five hundred pounds per bale, and worth, at the place of its destruction, forty cents per pound.

The decree of the court below will be reversed, with directions to enter a final decree in conformity with this opinion; and it is

So ordered.


text: Talk:Snell v. Insurance Company/Opinion of the Court


text:
Executive Order 520

The following-described tract of public land, lying on the glacial flats of Valdez Glacier and the mountain side to the west, and situated north of the town of Valdez, in the Territory of Alaska, is hereby reserved from sale or other disposition, subject to private rights, if any there be, and set apart for a target range for the use of the troops of Fort Liscum, Alaska, viz:

That tract of land included within metes and bounds as follows:

 * Beginning at Corner No. 1, which is a stone post set in the ground and marked "U. S. M. R. Cor. 1," and situated about 75 feet from the base of the mountain on the west side of the glacier moraine and about 1 mile from the base of said glacier; thence S. 48° 49′ W. a distance of 6,100 feet to Corner No. 2, which is a stone post set in the ground and marked "U. S. M. R. Cor. 2;" thence due west a distance of 5,347 feet to Corner No. 3; said corner being a stone post set in the ground and marked "S. 245 Cor. 3;" said monument being the northwest corner of a tract surveyed by A. Judson Adams, of Valdez, Alaska; this course being the southern boundary of the proposed reservation, and is a prolongation of the northern boundary of claim marked "S. 245;" thence north, following the eastern boundaries of claims marked "S. 457" and "S. 244," also surveyed by said Adams, and the continuation of said boundaries up the side of the mountain to its crest, a distance of approximately 9,280 feet from Corner No. 3, to Corner No. 4; thence following the crest of the mountain in a generally easterly direction to top of the first peak west of Valdez Glacier, from which point Corner No. 1 bears S. 33° 00′ E; thence S. 33° 00′ E. down the side of the mountain to the place of beginning; said tract containing 1,700 acres, more or less. The bearings are true.

., October 26, 1906.

title: Executive Order 520


text:
County of Daviess v. Huidekoper

ERROR to the Circuit Court of the United States for the Western District of Missouri.

The facts are stated in the opinion of the court.

Mr. Willard P. Hall for the plaintiff in error.

Mr. Joseph Shippen, contra.

MR. JUSTICE HUNT delivered the opinion of the court.

title: County of Daviess v. Huidekoper


text: Talk:County of Daviess v. Huidekoper

title: Talk:County of Daviess v. Huidekoper


text: Talk:Executive Order 520

title: Talk:Executive Order 520


text:
County of Daviess v. Huidekoper/Opinion of the Court

The plaintiff below brought this suit to collect from the County of Daviess, Missouri, the amount of forty-four interest-coupons for $35 each, formerly attached to bonds issued by the county to the Chillicothe and Omaha Railroad Company, to aid in the construction of its railroad. A demurrer to the amended petition was overruled, and final judgment for the amount of the coupons was rendered by the court below, which also certified a division of opinion on points presented.

The questions certified are as follows:--

First, Whether the bonds, for the collection of the interest-coupons of which the suit was brought, were issued without due authority of law, and are void in the hands of a bona fide purchaser for value, because the railroad company to which said bonds were issued, in payment of capital stock by it subscribed, was not created according to law until subsequent to the favorable vote of the qualified voters and the order of subscription.

Second, Whether the former judgment recovered by the plaintiffs in a former suit in this court against the defendant, upon interest-coupons from the same bonds again set forth in this suit, estops the defendant from pleading in bar to the merits herein.

The Constitution of Missouri (1 Wagn. Stat. 62), sect. 14 of art. 11, provides as follows, viz.:--

'The General Assembly shall not authorize any county, city, or town to become a stockholder in, or to loan its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent thereto.'

The General Statutes provide (1 Wagn. Stat. 295) how railroad companies may be formed, and further provide (id. 305):--

'SECT. 17. It shall be lawful for the county court of any county, the city council of any city, or the trustees of any incorporated town, to take stock for such county, city, or town in, or loan the credit thereof to, any railroad company duly organized under this or any other law of the State; Provided, that two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent to such subscription.'

Having paid his money in good faith for the bonds issued by this county, and the interest becoming payable, it is not unnatural that the holder and owner should demand payment of such interest. The subscription by the county to the railroad stock, the receipt and holding of the stock by the county, the assent by two-thirds of the qualified voters of the county that such subscription should be made, the actual issuing of the bonds, and the purchase of the same by the plaintiff below, without knowledge of any objection to them, are conceded.

It is said, however, that these things were not done in their proper order; that the vote of the citizens assenting to the subscription was taken before the organization of the railroad company was complete, and that although that act was not under the control or direction of the holder of the bond, but an irregularity of the county, if it is an irregularity, the county is thereby relieved from the payment of its debts, which would otherwise be not only just and honest, but lawful. This is the point that is made in the first of the questions presented by the certificate of the judges. The facts on which this branch of the case rests are these: The articles of incorporation of the road in question, which bear date June 18, 1867, contain the statements required by the statute, giving the length of the road, the amount of the capital stock, and the names of the directors, and were subscribed by the subscribers for the amounts indicated. The amount subscribed was not then as large as that required by the statutes of Missouri, to wit, $1,000 per mile for the length of the road. This sum was, however, obtained as early as the eleventh day of July, 1868, when the articles were filed in the office of the secretary of state, and the incorporation became perfect. On the 1st of July, 1869, the county court made its subscription, issued and sold its bonds, and with the proceeds paid for and received the stock. The road was built through the county; and for several years the county levied and collected taxes to pay the interest of the bonds, and did pay the interest for those years.

The precise question now presented has never been decided in this court, but its determination depends upon principles which are well settled. These bonds are securities which pass from hand to hand with the immunity given by the common law to bills of exchange and promissory notes. The persons who execute and deliver them-the officers of the county court in this instance-are the agents of the municipal body authorizing their issue, and not of the persons who purchase or receive them. If these agents exceed their authority as to form, manner, detail, or circumstance, if they execute it in an irregular manner, it is the misfortune of the town or county, and not of the purchaser; the loss must fall on those whom they represent, and not on those who deal with them. There must, indeed, be power, which, if formally and duly exercised, will bind the county or town. No bona fides can dispense with this, and no recital can excuse it. Thus, if the constitution or the statute should peremptorily prohibit a municipal body from loaning its credit to or subscribing for stock in a railroad corporation, a subscription or a loan made subsequently to the passage of the act would give no right against the county, although the bond should recite that there was such authority, and the purchaser should pay full value in the belief of its truth. There is no difficulty in appreciating the distinction stated; and we are now to ascertain whether the error we are considering, assuming it to be one, arises from an irregularity in the exercise of an existing power, or whether there is total want of authority to act.

The case concedes that the question of subscription to the stock of this very company was submitted to the voters of Daviess County, that two-thirds of the qualified voters of that county assented to the making of that subscription, and that the bonds, the coupons from which are here in suit, were issued pursuant to an order of the county court of Daviess County, made under authority of the Constitution and General Statutes of the State of Missouri.

After admitting that it made a contract with this company to take its stock, and not with some other company, and that the contract with this identical company was authorized with the forms and solemnities set forth, and that it received, and, so far as known, has ever since held and enjoyed, and now holds and enjoys, the profits of the stock of this very company issued for such bonds; and also admitting that when the bonds were so issued and delivered by it the incorporation had been completed in form and detail for one year,-can it now be permitted to urge as a defence that such company was not a legally organized corporation when the election was held, and did not become such until after that period?

The Missouri statute already quoted shows that the municipal body, in regard to its privileges, liabilities, and responsibilities as a taker and holder of railroad stock, stands like an individual subscriber. Its eighteenth section is as follows:--

SECT. 18. Upon the making of such subscription by any county court, city, or town, as provided for in the previous section, such county, city, or town shall thereupon become, like other subscribers to such stock, entitled to the privileges granted, and subject to the liabilities imposed, by this chapter or by the charter of the company in which such subscriptions shall be made; and in order to raise funds to pay the instalments which may be called for from time to time by the board of directors of such railroad, it shall be the duty of the county court, or city council, or trustees of such town making such subscription, to issue their bonds or levy a special tax upon all property made taxable by law for county purposes, and upon the actual capital that all merchants and grocers and other business men may have invested in business in the county, city, or town to pay such instalments, to be kept apart from other funds, and appropriated to no other purpose than the payment of such subscription; but the total amount of tax levied for railroad purposes in one year in any county, city, or town shall not exceed thirty per cent of the subscription made by such county, city, or town.'

It shows, also, that it devolved upon the county court, subject to the question of power before stated, to determine whether a subscription had been made, and to raise money for its payment. This included a determination of the questions whether an assent had been given by the voters, and whether a subscription had in fact been made by the county court. It did determine both of these questions in the affirmative, and so certified in the bonds issued by the same authority, and which are now in suit.

Under these circumstances, the authorities in this court and in the State of Missouri hold that the decision of the voters and the action of the county court in issuing the bonds in question, and their subsequent action in receiving and retaining their benefits, gave validity to the bonds, and that they are now to be taken as valid instruments.

Among these authorities are the following: Town of Coloma v. Eaves, 92 U.S. 484, 491; County of Randolph v. Post, 93 id. 502; County of Leavenworth v. Barnes, 94 id. 70; Commissioners of Douglass County v. Bolles, id. 104; Commissioners of Johnson County v. Thayer, id. 631; County of Cass v. Johnson, 95 id. 360; City of St. Louis v. Shields, 62 Mo. 247; Smith v. Clark County, 54 id. 58, 81.

These authorities show that if the county had made a contract with the railroad company in April, 1868, it would not have been permitted, under the circumstances stated, to deny it. But here was no contract. It was a simple indication of the pleasure or wish of the voters of the county that aid should be furnished to this railroad. The statute was intended as a guard against hasty action in this respect, and makes no requisition that the corporation shall be so perfected that a quo warranto could not reach it. If assent is given to a specified aid to a railroad named, we are of the opinion that a perfection of the corporation before the subscription is made and the bonds issued is a compliance with the statute.

Ruby v. Shain (54 Mo. 207) is cited to the contrary. There are several reasons why that case does not control the one we are considering.

1. The question of the legality of the subscription was never properly reached. Whether the tax which was levied to pay the county subscription for stock was legal or illegal, it was certain that the collector, who had a warrant for its collection valid on its face, and who was the defendant in that suit, was not liable for enforcing it. That an officer in such case is protected by his writ, and that to protect himself he need not even produce the evidence of a judgment, was held as long ago as in Holmes v. Newcaster (12 Johns. (N. Y) 395), and has been so held from that time to the present. Such, too, is the express holding of the court in Ruby v. Shain, and an examination of the merits of the case was unnecessary.

2. It differed from the present case in the fact that not only the township vote of assent, but the subscription to the stock and the issuing of the bonds, all occurred before the organization of the company. The vote was taken in June, 1869, the subscription ordered and the bonds issued on the 9th of November, 1869, while the articles of association were executed on the 10th, and filed with the secretary of state on the 12th of the same month and year. In the present case, the election was held April 7, 1868, the articles were filed July 14, 1868, the subscription made and the bonds dated July 1, 1869. The organization was complete for a year before the subscription was made.

3. In that case, the subscription was needed to complete the organization. In this case it was not. The court, in Ruby v. Shain, say, 'that it is not intended that counties, cities, or towns shall, by their subscription, form the basis on which a future corporation is to be erected, a nucleus around which aid is to be gathered from other quarters, to construct roads, but that they may, by their subscriptions or loans, aid corporations already in existence.' There is a broad difference between the cases where the subscription is actually made and the bonds are issued in fact after the corporation is complete, and where these things are done while the corporation remains incomplete.

Upon the whole matter, we are of the opinion that the case was well decided. The first question certified is answered in the affirmative, and as that disposes of the entire controversy, no attention need be given to the second question.

Judgment affirmed.


text: Talk:County of Daviess v. Huidekoper/Opinion of the Court


text:
Bardley v. United States

APPEAL from the Court of Claims.

This was an action by Andrew C. Bradley for the use of George Taylor, Samuel Cross, and Peter F. Bacon, trustees, to recover the sum of $4,200 rent claimed to be due from the United States for the premises No. 915 E Street, in the city of Washington, for the fiscal year ending June 30, 1876.

The court below found the following facts:--

1. On the 6th of June, 1873, the Postmaster-General and the claimant, Bradley, made and executed an indenture, of which the following is a copy:--

'This indenture, made this sixth day of June, in the year one thousand eight hundred and seventy-three, by and between Andrew C. Bradley, of Washington, D. C., of the first part, and John A. J. Creswell, Postmaster-General, for and in behalf of the United States of America, of the second part, witnesseth: That the said party of the first part, for and in consideration of the rents, covenants, and agreements to be paid, kept, and performed by the party of the second part, doth hereby demise and lease unto the said party of the second part, those certain premises, with the four-story brick house and brick stable thereon, situated on the north side of E Street, between 9th and 10th Streets, in the city of Washington, in the District of Columbia, and known as house numbered 915 on said E Street northwest, to have and to hold to the party of the second part, for the term of three years from and after the fifth day of June, Anno Domini one thousand eight hundred and seventy-three, with the privilege to the said party of the second part of a renewal of the said term for the further period of two years.

'The said party of the second part yielding and paying therefor the annual rent, during the said term and a subsequent renewal thereof, as aforesaid, of four thousand two hundred dollars ($4,200), payable quarterly, on the thirtieth day of September, the thirty-first day of December, the thirty-first day of March, and the thirtieth day of June.

'And it is hereby mutually understood and agreed, by and between the parties hereto, that this lease is made subject to an appropriation by Congress for the payment of the rental herein stipulated for, and that no payment shall be made to said party of the first part on account of such rental until such appropriation shall be available, and that as soon as practicable after such appropriation shall become available the arrears of the rent then due shall be paid in full, and thereafter payment shall be made at the times and in the manner hereinbefore stipulated.

'And it is hereby agreed by said party of the first part that he will, at his own expense, remove such partitions and construct such partitions, with necessary doorways and doors, in said building, and construct such water-closets, with the necessary water connections, as may be required by the supervising architect of the Treasury Department, and that he will leave in good order all gas-fixtures now in said building for the use of the said party of the second part; and the party of the second part will keep the said premises in good repair during the continuance of this lease and any renewed term thereof, and the expenses of any alterations of or additions to the interior, not herein otherwise provided for, so as to adapt it to the use of the United States, and not calculated to damage the premises, are to be borne by the party of the second part, and all taxes and assessments legally levied or charged upon the property are to be paid by the party of the first part.

'And it is hereby further provided that in case the premises, or any part thereof, during said term, or the renewal thereof, be destroyed or injured by fire or other unavoidable casualty, so that the same shall be thereby rendered unfit for use, then the rent hereinbefore reserved, or a just and proportionable part thereof, according to the extent and nature of the injury sustained, shall be suspended or abated until the said premises shall have been put in proper condition for use by and at the expense of the said party of the first part; and the said party of the second part covenants to deliver up the said premises to the party of the first part at the determination of this lease, or at the end of any renewal of the term thereof, in good order and condition, reasonable wear and use thereof and injury by unavoidable fire or other casualty excepted.

'And it is further stipulated that the party of the second part may, at or before the delivery of the premises aforesaid, remove such additions to or improvements of the same, placed on the premises by the said party of the second part, the removal of which, as aforesaid, will not injure the premises, as he, the said party of the second part, may elect so to do.

'In witness whereof, the parties hereto have hereunto set their hands and seals the day and year first above written.

'A. C. BRADLEY. [SEAL.]

'JNO. A. J. CRESWELL, [SEAL.]

'Postmaster-General.

'Signed, sealed, and delivered in presence of

T. A. SPENCE.

A. G. MILLS.'

2. The premises described in said indenture were sold and conveyed, and the lease was assigned, by said Bradley to Alexander R. Shepherd, and by him conveyed and assigned to George Taylor, Samuel Cross, and Peter F. Bacon, as alleged in the petition and in the amendment thereof.

3. Said premises were used and occupied for the uses and purposes of the Post-Office Department, and for the benefit of the United States, under the direction of the Postmaster-General, from the time of executing said indenture until and including June 30, 1876, as well as subsequently thereto.

4. The claimants have been paid the rent of said premises, through special appropriations of Congress, up to and including June 30, 1875, but have been paid nothing for the year ending June 30, 1876.

5. It does not appear that demand has ever been made upon the Postmaster-General on the part of the claimants for delivery up of the possession of the premises.

On the foregoing facts, and the statutes in relation thereto, the court concluded as matter of law that the claimants were entitled to recover the sum of $1,800. Judgment having been rendered for that amount, the claimants appealed to this court.

When the indenture was executed, two statutes were in force.

'No contract or purchase shall hereafter be made, unless the same be authorized by law, or be under an appropriation adequate to its fulfilment, except in the War and Navy Departments, for clothing, subsistence, forage, fuel, quarters, or transportation, which, however, shall not exceed the necessities of the current year.' Act of March 2, 1861, sect. 10, 12 Stat. 220; Rev. Stat., sect. 3732.

'It shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriations.' Act of July 12, 1870, sect. 7, 16 Stat. 251; Rev. Stat., sect. 3679.

The deficiency bill for the fiscal years ending June 30, 1873 and 1874, contained the following provision:--

'For rent of house numbered nine hundred and fifteen E Street northwest, for further accommodation of the clerical force of the department, from June sixth, eighteen hundred and seventy-three, to June thirtieth, eighteen hundred and seventy-four, four thousand four hundred and eighty-eight dollars and eighty-six cents, and hereafter no contract shall be made for the rent of any building, or part of any building in Washington, not now in use by the government, to be used for the purposes of the government, until an appropriation therefor shall have been made in terms by Congress.' 18 Stat. 144.

The act making appropriations for the legislative, executive, and judicial expenses of the government for the year ending June 30, 1875, appropriated $4,200 'for rent of house numbered nine hundred and fifteen E Street northwest.' Id. 107.

The act of March 3, 1875 (id. 367), making appropriations for the fiscal year ending June 30, 1876, contains the following:--

'For rent of house numbered nine hundred and fifteen E Street northwest, eighteen hundred dollars: Provided, that the above sum shall not be deemed to be paid on account of any lease for years of said building: Provided, however, that at the end of the present fiscal year the Postmaster-General be directed, upon the demand of the lessor, to deliver up the possession of said premises.'

Mr. J. Hubley Ashton and Mr. Nathaniel Wilson for the appellants.

The construction given by the Court of Claims to that clause of the lease which provides for the payment of the rent violates the settled rules of interpretation applicable to contracts and to the relations of landlord and tenant, and is wholly inconsistent with the intention of the parties as expressed in the other provisions of the indenture. It attributes to the lessor the manifestly irrational purpose and intent of giving the possession of his property for five years, while he in the mean time was to keep it in good repair and make extensive improvements, and was to accept whatever rent the tenant might think proper to pay.

It is equally incredible that the parties should have intended to agree, and to put in writing an agreement, to submit to Congress 'the right to make or refuse appropriations.'

Such a construction destroys the lease, with all its covenants, save those which are for the advantage of the lessee, and is inconsistent not only with its general conditions, but with the obvious meaning of other provisions in the same clause which is relied upon to exempt the tenant from liability. The provision for regular quarterly payments after 'an appropriation' is wholly irreconcilable with the theory that the lessor intended to leave the time as well as the amount of payment to the arbitrary determination of the tenant.

The clause under consideration was inserted for the purpose of designating the method and source of payment, and not of making the legal rights and relations of the parties dependent upon any future contingent event.

If, however, this court shall be of opinion that the agreement contemplated that such rights and relations, as well as the mode of payment, were to be determined by Congress, then the recognition of the binding obligation of the contract was to be manifested by an appropriation, which, when once made, was an acceptance of the lease, thereby validating it for the entire term, and entitling the lessor to the stipulated rent.

Apart from and independently of the expressed intention of the parties, it is apparent that Congress considered that the lease was presented as a conditional contract for a term of years, to be approved or disapproved. That body obviously intended that its action should be construed to be, and it by implication was, an acceptance and ratification of the lease for the whole term. If Congress had not so intended, it would not have provided in such specific terms for the payment of rent, nor declared that thereafter, except as to buildings then in use in Washington, no contract should be entered into until an appropriation had been made; but, as a subsequent Congress did, would have appropriated the requisite money without reference to the term, with a proviso that the same should not be deemed to be paid on account of any lease for years.

While it may be admitted that, where the United States is a principal, acts and omissions which would create a presumption of ratification in the case of an individual will create no presumption against it, the action of Congress, when fully cognizant of all the facts, in accepting the benefits of a contract, has the same legal significance and consequences as the similar action of an individual. Fremont v. United States, 2 Nott & H. 461; Story, Agency (8th ed.), sect. 239; McCauley v. Brooks, 16 Cal. 1; Roberts et al. v. United States, 92 U.S. 41.

A ratification once deliberately made, upon a full knowledge of all the material circumstances, becomes eo instanti obligatory, and cannot afterwards be revoked or recalled. Wharton, Commentaries on Agency, sects. 72, 73.

If it should be held that the action of Congress did not ratify the contract and validate the lease for the entire term, it must be admitted that it did validate it for the first and second years; and as the government entered the premises and maintained possession under the lease, it is liable for the stipulated rent for the third year.

A tenant holding over after the expiration of his lease, with the consent of the landlord, becomes a tenant from year to year, subject to the terms and conditions of the original lease. Taylor, Landlord and Tenant, sect. 22; Kingler v. United States, 4 Nott & H. 407; Baker v. Root, 4 McLean, 572.

A lease for years, though void as to the term, is good for one year if the lessee enters, and the tenancy thereafter becomes a tenancy from year to year.

A lease void under the Statute of Frauds, for want of authority of the agent who executed it, will regulate the rights of the parties during the actual existence of the tenancy. Taylor, Landlord and Tenant, sect. 26; Porter v. Bleiler, 17 Barb. (N. Y.) 140.

The rights and liabilities of the parties are to be measured and determined by the lease under which possession was obtained, and neither party can change the terms of the tenancy without the assent of the other.

Furthermore, if the lease was void, and not subsequently validated, the government, having entered upon and occupied the premises, is to be deemed as having entered under an implied lease, and is bound to make a fair and reasonable compensation for the rent or the use and occupation of the premises.

It has been held by this court that, in the absence of an express contract, or when the express contract is void, the government is liable for the value of the property which it has received and used. Salomon v. United States, 19 Wall. 17; United States v. Gill, 20 id. 517.

The Solicitor-General, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Bardley v. United States


text: Talk:Bardley v. United States

title: Talk:Bardley v. United States


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

Leases, like deeds or other written instruments, must receive a reasonable construction, as derived from the language employed, without the aid of extrinsic evidence beyond what may be necessary to identify the premises and to disclose the circumstances surrounding the transaction when the instrument was executed. Quackenboss v. Lansing, 6 Johns. (N. Y.) 49; Taylor, Landlord and Tenant, sect. 160, note.

Sufficient appears from the findings of the court below to show that, on the 6th of June, 1873, an indenture of lease was executed by the appellant to the United States, whereby the former, in consideration of the rents, covenants, and agreements in the instrument specified, demised and leased to the United States the premises described in the petition for the term of three years from and after June 5, 1873, with the privileges to the lessees of a renewal of the term for the further period of two years, at and for the annual rent, during the said term and subsequent renewal thereof, of $4,200, payable quarterly on the days specified in the indenture of lease exhibited in the record.

Both sides concede what the lease and record show, that the premises were leased by the United States for the convenience of the Post-Office Department, and that the Postmaster-General took immediate possession of the same, and that the premises have ever since been used for the purposes of his department.

Four other findings of the court below should be noticed in this connection: 1. That the lessor sold and conveyed the premises to Alexander R. Shepherd and assigned the lease to him, and that he, the assignee, conveyed and assigned the same to the other persons named in the petition. 2. That the premises were used by the United States for the purposes mentioned for the whole period alleged. 3. That the holders of the lease have been paid the whole rent, except for the last year, for which they have been paid nothing. 4. Adequate appropriations were made by Congress authorizing the payments which have been made, but Congress refused to appropriate more than $1,800 for the last year.

Pursuant to those findings, the court below held that the plaintiffs could only recover the sum appropriated, and rendered judgment in their favor for that amount, from which judgment the plaintiffs appealed to this court. Since the appeal was entered here, the appellants assign for error that the court below erred in the construction given to the indenture of lease, and to the two acts of Congress referred to in the findings of fact.

Due appropriation of the sum of $1,800 was made by Congress to pay the rental for the last year; and the court below rendered judgment in favor of the appellants for that sum, which exhausts the appropriation made by Congress for that purpose, the only question for decision being whether the appellants can recover in this case the balance of their claim which has never been appropriated by Congress.

Moneys not appropriated cannot be drawn from the treasury; and it is equally clear that the parties, by the terms of the lease, understood and agreed with each other that the lease was made subject to an appropriation by Congress for the payment of the stipulated rental, and 'that no payment shall be made' to the lessor 'on account of such rental until such an appropriation shall become available;' that as soon as practicable after such an appropriation shall become available, the arrears of rent then due shall be paid in full, and that payment thereafter shall be made at the times and in the manner stipulated in the indenture of lease.

Prior to that time, Congress had enacted that it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of the appropriation made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriation; and both parties concur in the proposition that that provision was in full force and operation at the time the indenture of lease under consideration was executed. 16 Stat. 231; Rev. Stat., sect. 3679.

Such contracts or purchases for the future were forbidden by the act of the 2d of March, 1861, unless the same were authorized by law or were made under an appropriation adequate to their fulfilment, except for clothing, subsistence, forage, fuel, quarters, or transportation, in the War or Navy Department; nor could those departments make any such contracts, even for those purposes, beyond the necessities of the current year. 12 Stat. 220; Rev. Stat., sect. 3732.

Forty years earlier, Congress enacted that neither the Secretary of State, or of the Treasury, or of War or Navy Department, should thereafter make any contract other than such as were necessary for the subsistence and clothing of the army and navy, and contracts for the quartermaster's department, except under a law authorizing the same, or under an appropriation adequate to its fulfilment. 3 Stat. 768.

Congress passed an act directing the Secretary of the Navy to cause floating dry-docks to be constructed at three of the national navy-yards, and specified appropriations were made towards constructing the several docks. Proper measures were adopted by the Secretary to ascertain what each structure would cost, from which it appeared that the appropriation for each was greatly insufficient. In view of these facts, the Secretary doubted whether he could lawfully contract to have the work done, and submitted the question to the Attorney-General, who decided that the facts as stated brought the

Mr. John D. S. Dryden, contra. of the act last named, and that the contracts could not lawfully be made. 4 Op. Att'y-Gen. 600.

Cases arise, as there stated, where the authority to contract for the work is expressly given in the appropriation act, and in such cases it is clear, as there admitted, that the power to contract exists even though the price to be paid exceeds the amount appropriated. Examples of the kind are given in that opinion, to which many more might be added; but when no such authority is given, and nothing is contained in the act appropriating the money from which such an authority may be implied, it is clear that the head of the department cannot involve the government in an obligation to pay any thing in excess of the appropriation.

Argument to show that money cannot be drawn from the treasury before it is appropriated is unnecessary, as the Constitution provides that 'no money shall be drawn from the treasury but in consequence of an appropriation made by law;' nor is it necessary to enter into much discussion to show that the act of Congress making it unlawful for the head of a department to involve the government in any contract for the future payment of money in excess of an appropriation is a valid act, and of binding obligation, as such regulations and prohibitions in one form or another have been in operation without question throughout nearly the whole period since the adoption of the Constitution.

Acts of Congress of the kind, it must be admitted, are both valid and salutary in their operation; and it is equally clear that the party who drafted the indenture of lease intended to incorporate into the instrument the substance of the provision which prohibits the head of a department from involving the government in any contract for the future payment of money in excess of the appropriation made for its fulfilment. Well-founded doubt upon that subject cannot be entertained, and the court is of the opinion that the words of the indenture are amply sufficient to effect the object which the person who drafted the instrument intended to accomplish.

Both parties agreed that the indenture was subject to an appropriation to be made by Congress for the payment of the rental, and that no payment should be made to the lessor on account of such rental until such an appropriation should become available. Concede that these stipulations are valid, of which there can be no doubt, and it is clear to a demonstration that the claim of the appellants in excess of the amount allowed by the court below is utterly groundless.

Even suppose that is so, still it is insisted by the appellants that Congress, by subsequent legislation, has committed the United States to the annual payment of the stipulated rental for the whole term of three years specified in the indenture of lease, and that they are entitled to judgment for the entire rental of the third year which remained unpaid when the suit was commenced, irrespective of the fact that the judgment rendered in their favor by the court below exhausts the whole amount of the money appropriated by Congress for that purpose.

Two annual appropriations were made by Congress, which in the aggregate were sufficient to pay the stipulated rental of the premises for the first two years; and the findings of the court below show that the payments for those two years were duly made, and that nothing more is claimed by the appellants in that regard. Of these, the first was simply an appropriation of the amount required to pay the stipulated annual rental, without any explanation whatever beyond what was necessary to describe the premises leased, from which it is plain that nothing can be inferred from that act to support the theory of the appellants. 18 Stat. 107.

Annexed to the second appropriation, which is for the sum of $4,488.86, is the following proviso, to wit: that hereafter no contract shall be made for the rent of any building, or part of any building in Washington, not now in use by the government, to be used for the purposes of the government, until an appropriation therefor shall have been made in terms by Congress. Id. 144.

Specific appropriations by these two acts were made available to pay the rental of the premises leased for the first two years; but it is clear as any thing in legal decision can be, that they furnish no ground whatever to support the theory that Congress entered into any legal obligation to make such an appropriation for the third year. Instead of that, the inference, if any, to be drawn from the last act tends to negative the appellants' theory, and to show that Congress intended to adhere to the stipulations of the lease,-that it was made subject to an appropriation by Congress for the payment of the rental stipulated, and that no payment should be made to the lessor on account of such rental until such an appropriation should become available.

Unsupported as that theory is by those two appropriation acts, or by any thing else exhibited in the record, it may well be dismissed as destitute of merit, without further consideration.

If the indenture of lease had been for three years without any covenant that it was made subject to an appropriation by Congress, and that no payment on account of rental should be made until such an appropriation became available, it may be that the theory of the appellants, that the contract was for three years as an entire term, might be maintained; or if not, that it might perhaps be held that Congress had ratified the instrument by appropriating money to pay the rental for the first two years. Be that as it may, it is still true that no ratification of the present indenture by any such act would benefit the appellants in that regard, so long as it contains the covenant that no payment of the rental shall be made until an appropriation for the purpose becomes available.

Viewed in that light, as the case should be, a few observations will be sufficient to show that nothing is found in the remaining appropriation act to warrant a judgment in favor of the appellants for any sum beyond what was allowed by the court below.

Eighteen hundred dollars were appropriated by Congress for the third year, several months before the second year expired. Appended to that appropriation is the proviso that the above sum shall not be deemed to be paid on account of any lease for years of said building, which shows conclusively that Congress intended to negative the theory of the appellants that the indenture gave them the right to recover any thing of the United States beyond the sum appropriated by Congress.

Confirmation of that proposition is also derived from a second proviso annexed to the same appropriation, by which it is enacted that at the end of the present fiscal year the Postmaster-General be directed, upon demand of the lessor, to deliver up the possession of the said premises. Id. 367.

Construed as those provisions should be, in view of the subject-matter and the surrounding circumstances, it is clear that Congress intended to give seasonable notice to the lessor of the premises that no more than the sum appropriated would be paid as rental of the same for the third year, and that he might take possession of the same if he did not see fit to accept the sum appropriated for their use and occupation.

Corresponding views were expressed by the court below, and they held, and well held, that inasmuch as the appellants never demanded the redelivery of the premises, it must be determined that they acquiesced in and assented to the terms of rent offered by Congress for the third year.

Public officers, in such a case, having no funds in the treasury and being without authority to bind the United States, can only agree to pay the stipulated rental, provided the money is appropriated by Congress, and if the lessor, voluntarily and without any misrepresentation or deception, enters into a lease on those terms, he must rely upon the justice of Congress; nor do the circumstances in this case disclose any hardship, as the appellants were seasonably notified that they would not be paid for the third year any greater rent than the sum appropriated for the purpose. Churchward v. The Queen, Law Rep. 1 Q. B. 199.

For these reasons the court is of the opinion that there is no error in the record.

Judgment affirmed.

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE FIELD, MR. JUSTICE STRONG, and MR. JUSTICE HARLAN, dissenting.


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


text:
Bardley v. United States/Dissent Miller

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE FIELD, MR. JUSTICE STRONG, and MR. JUSTICE HARLAN, dissenting.

I am of opinion that the two annual appropriations expressly for the sum due for each year's rent, according to the terms of the lease, were recognitions of the validity of that contract which bind the United States, and that the claimant was entitled to recover the same amount for the third year.

title: Bardley v. United States/Dissent Miller


text: Talk:Bardley v. United States/Dissent Miller


text:
Wirth v. Branson

ERROR to the Circuit Court of the United States for the Southern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Horatio C. Burchard for the plaintiff in error.

Mr. S.C.orning Judd, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Wirth v. Branson


text: Talk:Wirth v. Branson

title: Talk:Wirth v. Branson