text:
Twenty Per Cent Cases (87 U.S. 179)

APPEALS in fourteen cases from the Court of Claims; the case being thus:

On the 28th of February, 1867, Congress passed this joint resolution:

'That there shall be allowed and paid. . . to the following described persons, now employed in the civil service of the United States, at Washington, as follows: To civil officers, temporary and all other clerks, messengers, and watchmen, including enlisted men detailed as such, to be computed upon the gross amount of the compensation received by them; and employees, male and female, in the executive mansion, and in any of the following named departments, or any bureau or division thereof, to wit: state, treasury, war, navy, interior, post-office, attorney-general, agricultural, and including civil officers, and temporary and all other clerks and employees, male and female, in the offices of the coast survey, naval observatory, navy yard, arsenal, paymaster-general, including the division of referred claims, commissary-general of prisoners, bureau of refugees, freedmen, and abandoned lands, quartermater's, capitol and treasury extension, city post-office, and commissioner of public buildings, to the photographer and assistant photographer of the treasury department, to the superintendent of meters, and to lamplighters under the commissioner of public buildings, an additional compensation of twenty per centum on their respective salaries as fixed by law, or where no salary is fixed by law, upon their pay respectively, for one year from and after the 30th day of June, 1866. Provided, That this resolution shall not apply to persons whose salaries, as fixed by law, exceed $3500 per annum.'

On the 12th of July, 1870, Congress passed an act in these words:

'All acts and joint resolutions, or parts thereof, and all resolutions of either house of Congress granting extra compensation or pay, be, and the same are hereby repealed, to take effect on the 1st day of July, 1870.'

Under the said joint resolution of 28th of February, 1866, fourteen different persons filed at different times-some of them after the passage of the repealing act-claims in the court below for the twenty per cent. given by the statute.

The first was employed by the bureau of yards and docks, as a machinist in the navy yard at Washington, upon daily wages at the agreed sum and price of $3.25 per day.

The second and third as coppersmiths on the treasury extension, upon daily wages. Under specific appropriations for the construction of the treasury extension, contracts were entered into for finished work, comprehending both materials and labor materials separately, and labor by the day separately. The services in these two cases were rendered under the latter contracts.

The fourth and fifth as watchmen upon the capitol extension, at daily wages, their compensation changing during the year.

The sixth as a laborer upon monthly wages in the quartermaster's department in the city of Washington.

The seventh was employed in the treasury extension as a laborer upon daily wages; working for part of the time at $1.75 per day, and for another part at $2 per day.

The eighth by the authority of the surgeon-general of the army, as a carpenter at the depot for receiving and distributing medical supplies in Washington.

The ninth was a watchman, laborer, and teamster by the quartermaster's department at Washington.

The tenth was a laborer by the commissary department at Washington.

The eleventh was a laborer, upon daily wages, at the Washington arsenal.

The twelfth was in the secret service division of the Treasury Department, in the capacity of detective, at a monthly salary of $150 per month.

The thirteenth, one Hoffman, was employed by one of the quartermasters on duty in the department at Washington, by the day, as sexton at the Arlington Cemetery, near Washington, but in Virginia, and there rendered his services.

The fourteenth, one Bell, was a plate-printer in the bureau of engraving and printing in the Treasury Department. He was paid the market price for his work, the price being neither a salary nor a per diem compensation, but a fixed rate for the work done; that is to say, per one hundred sheets of face printing and per one hundred sheets of back printing. In the performance of his duties he employed and paid an assistant, but the pay of the assistant was received directly from the disbursing officers of the treasury, and was deducted by them from the amount earned by the claimant. The amount paid him after such deduction was $1184.30, for twenty per cent. of which the court below entered judgment.

Each of the fourteen claimants was paid the highest rate of wages commonly paid for services such as his.

The Court of Claims gave judgment, pro form a, in all the cases, for the claimants, and the government brought the cases here.

The meaning of the joint resolution of February 28th, 1867, it may be well here to state, had been a matter of question in this court on a previous occasion in the cases known as ''The Twenty per Cent. Cases;'' and the court then said that persons are 'properly in the civil service, if they were employed by the head of the department, or of the bureau, or any division of the department charged with that duty, and authorized to make such contracts, and fix the compensation of persons employed, even though the particular employment may not be designated in any appropriation' act. It added, that 'many persons not employed as clerks and messengers of the departments are in the public service by virtue of an employment by the head of the department or by the head of a bureau of the department authorized by law to make such contracts, and such persons are as much in the service, within the meaning of the joint resolution, as the clerks and messengers employed in the rooms of the department building.'

Mr. John Goforth, Assistant Attorney-General, for the United States:

In ''The Twenth per Cent. Cases'', already reported, the salary or pay was fixed directly or limited indirectly by law; and was a fixed and arbitrary rate of compensation; and the person employed had no part in naming the amount to be paid him. In the cases now here, the compensation was not fixed or limited by any law or by the head of any department or division, but was the highest ruling rate in the market for similar labor, and was fixed by the person employed, and changed by him as the market changed. The wages were under the restriction of no statute, and the services were such as might be rendered to any employer.

In the former ''Twenty per Cent. Cases'', this court, in its opinion, said:

'Certain described persons and classes of persons are plainly entitled to the benefit of the provision, whether regarded as officers or as mere employees, and it is no valid argument against that proposition to show that there are or may be other employees or persons in the civil service here who are not within that description, as the terms of the enactment are special and do not extend to every employment in that service, but only to the described persons and classes of persons therein mentioned.'The claimants in the present cases belong to classes different from those in the case cited. Some are connected with the military service, and not with the civil at all.

The last two claimants are clearly excluded. One, Hoffman, performed his work outside the limits of Washington; and one, Bell, was a contractor for finished work.

The repeal of the joint resolution of February 28th, 1867, prevented the officers of the treasury after its passage from paying the twenty per cent., and left the Court of Claims without jurisdiction of any action for the recovery of anything thereunder. It is true that statutes in general apply only to cases that may hereafter arise. Such an act as this-an act repealing other acts, &c.-cannot in its nature operate on future acts. It applies to existing acts.

Messrs. N. P. Chipman, J. Daniels, and A. P. Culver, contra, relied on ''The Twenty per Cent. Cases'', and the language showing its intended scope, as conclusive.

As for the act of July 12th, 1870, they argued that the real purpose of that act was to cut off a general class of extra compensation which had crept into various statutes; the cutting off of which in future, Congress though advisable; and, for obvious reasons, that it could have no reference to a case where the compensation had been allowed, and where presumably (as in the great majority of cases in fact) it had been received three years before.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Twenty Per Cent Cases (87 U.S. 179)


text: Talk:Twenty Per Cent Cases (87 U.S. 179)

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


text:
Twenty Per Cent Cases (87 U.S. 179)/Opinion of the Court

Additional compensation is claimed by the respective appellees, as employees in the civil service of the United States in this city, by virtue of the joint resolution of the 28th of February, 1867, which provides that twenty per cent. additional compensation shall be allowed and paid to certain classes of such employees in Washington, as therein designated.

Civil officers, whose annual salaries do not exceed $3500, and all clerks, whether temporary or permanent, and messengers and watchmen, are specifically named in the resolution, including enlisted men detailed as such, and the provision is that the additional allowance shal be computed upon the gross amount of the compensation received by such employ e as fixed by law, or where no salary is fixed by law, upon the pay of the employ e for that fiscal year, and that the benefit of the resolution shall extend to employees, male and female, in the executive mansion and in any of the following named departments, or any bureau or division thereof, to wit: state, treasury, war, navy, interior, post-office, attorney-general, and agricultural, and including civil officers and all clerks and employees, male and female, in the offices of the coast survey, naval observatory, navy-yard, arsenal, paymaster-general, bureau of refugees, freedmen, and abandoned lands, quartermasters, capitol and treasury extension, city post-office, and commissioner of public buildings; to the photographer and assistant photographer of the Treasury Department, to the superintendent of meters, and to lamp-lighters under the commissioner of public buildings.

Judgments rendered by the Court of Claims, involving controversies of a like character, were removed into this court by appeal on a former occasion, when it became the duty of this court to examine the joint resolution in question and to determine what, in the judgment of the court, is its actual scope and true intent and meaning, as applied to the several cases then before the court.

Attempt was then made in argument to convince the court that the words of the resolution, 'in the civil service of the United States,' as there employed, should be restricted to persons filling offices or holding appointments established by law, but the court rejected that narrow construction of the phrase and unanimously decided that neither a commission nor a warrant of appointment is necessary to entitle an employ e to the benefits of the joint resolution, provided he was actually and properly employed in the executive mansion, or in any of the departments, or in any bureau or division thereof, or in any of the offices specifically designated in the said joint resolution; that persons so employed here are properly to be regarded as employees in the civil service of the United States within the true intent and meaning of that phrase as there used, if they were employed by the head of the department, or of the bureau or any division of the department, charged with that duty and authorized to make such contracts and fix the compensation of the person or persons employed, even though the particular employment may not be designated in an appropriation act.

Such was the unanimous opinion of the court as to the true construction of the joint resolution under consideration on that occasion, and the court, with equal unanimity, adheres to that conclusion in the cases before the court.

Many persons, not employed as clerks or messengers of a department, are in the public service by virtue of an employment by the head of a department, or by the head of some bureau of a department or division thereof authorized to make such contracts, and such persons are as much in the civil service of the United States, within the meaning of the joint resolution, as the clerks and messengers employed in the rooms of the department building.

Much discussion of that topic, however, is unnecessary, as the question was explicitly determined in our former decision, to which reference is made for a full exposition of the present views of the court upon that subject.

Grant all that, still it is insisted that the joint resolution has been repealed since that decision was made, and that the effect of the repealing act is to bar the right of recovery in all of the cases under consideration; in support of which proposition reference is made to the fourth section of the Appropriation Act of the 12th of July, 1870, which enacts that all acts and joint resolutions or parts thereof, and all resolutions of either house of Congress granting extra compensation or pay, be and the same are hereby repealed, to take effect on the 1st day of July in the same year.

Two propositions are submitted by the United States, based upon that repealing act, to show that the respective appellants in these cases cannot recover: (1.) That the repeal of the joint resolution prevents the officers of the treasury from paying the additional compensation after the date of its passage. (2.) That the repealing act, even if the resolution created an implied contract and gave jurisdiction to the Court of Claims to enforce it, divested the Court of Claims of all jurisdiction in such controversies.

Both of the propositions, as it seems to the court, overlook the material facts of the case, all of which are undisputed. They are as follows: (1.) That the joint resolution ceased to be operative at the end of the fiscal year in which it was enacted. (2.) That such additional compensation is allowed only for that year. (3.) That the claims in these cases are only for such additional compensation during that fiscal year. (4.) That the joint resolution ceased to be operative at the close of that fiscal year. (5.) That the right to such additional compensation became fixed and vested when the year's services were faithfully performed. (6.) That the repealing act, which it is supposed constitutes a bar to the cause of action in these cases, did not become a law until more than three years after the right to the additional compensation had become fixed and vested, and the joint resolution had ceased to be operative in respect to prospective services.

Viewed in the light of these suggestions grave doubts arise whether the repealing act in question applies at all to the joint resolution, as it is difficult to believe that Congress would deem it necessary to repeal a provision which had expired by its own limitation more than three years before they acted upon the subject.

Mere supererogation, however, it is said, cannot properly be imputed to the National legislature, and there would be much force in the suggestion if the joint resolution had at that time been in operation and had been the only provision of the kind to which the descriptive words of the repealing act would apply, but the fact is plainly otherwise, as there are several acts of corresponding import which were in full force at that date, and which, it must be admitted, are unquestionably included within those descriptive words.

Enough appears in the repealing act itself to show that Congress did not intend to give it any retroactive effect, except as therein provided, as the act expressly enacts that the provision in question shall take effect on the 1st day of July next before the day it was approved, which affords a demonstration that Congress never intended that it should retroact to any other or greater extent.

Courts of justice agree that no statute, however positive in its terms, is to be construed as designed to interfere with existing contracts, rights of actions, or with vested rights, unless the intention that it shall so operate is expressly declared or is to be necessarily implied, and pursuant to that rule courts will apply new statutes only to future cases, unless there is something in the nature of the case or in the language of the new provision which shows that they were intended to have a retroactive operation. Even though the words of a statute are broad enough in their literal extent to comprehend existing cases, they must yet be construed as applicable only to cases that may hereafter arise, unless the language employed expresses a contrary intention in unequivocal terms.

Such a law, if passed by a State, and construed to have the effect claimed for it in this case by the appellants, would be unconstitutional and void; but it is not necessary to discuss any such proposition in this case, as there is not a word in the repealing act to support the conclusion that Congress intended to rescind any antecedent contract, or to enact any bar to the right of recovery in such cases where the service had been faithfully performed before the repealing act was passed.

Apply those rules to the cases before the court and it is clear the appellees in the first twelve are entitled to recover, as the finding of the court below shows that the claimant in each of those cases is included within the joint resolution as construed and defined by this court.

But the other two claimants, to wit, Hoffman and Bell, are not entitled to recover, the former because he was employed as sexton at the Arlington Cemetery, in the State of Virginia, and not 'in Washington,' and because, consequently, his claim is not within the words of the joint resolution. Nor is the latter, because he was not in the civil service of the United States within the meaning of that provision, as he was a plate-printer, working under a contract as an agreed rate 'per one hundred sheets of face printing and per one hundred sheets of back printing.' He employed an assistant, for whose compensation he was responsible; but the finding of the subordinate court shows that the assistant was paid directly by the disbursing officer, and that the sum thus paid was deducted from the gross earnings of the claimant. Suffice it to say that the claimant was a contractor, and that he employed another to do most or all of the work, and in the judgment of the court such a contractor is not entitled to the additional compensation allowed and directed to be paid by the joint resolution under consideration.

JUDGMENT AFFIRMED IN THE FIRST TWELVE CASES.

JUDGMENT REVERSED IN THE LAST TWO CASES, and the causes remanded, with directions to dismiss the respective petitions.

Mr. Justice SWAYNE, in whose opinion concurred the CHIEF JUSTICE, and Mr. Justice DAVIS, dissenting from the judgment in the first twelve cases:

I dissent from the judgment of the court in these cases in favor of the claimants, and will give my views as briefly as may be. When the resolution giving the twenty per cent. was passed, nearly eight months of the year to which the allowance related had elapsed. The allowance was a mere gratuity. Hence there was no vested right arising from the resolution, and there could be none. But the resolution was operative in each case until the claimant was paid. When repealed, the gratuity which it gave fell with it. The repeal necessarily had that effect. I see no reason for giving the repealing section a more limited construction. It was intended to take away from all those who had not then been paid, the right to be paid thereafter. I think, therefore, that the judgments of the Court of Claims should be reversed.


text: Talk:Twenty Per Cent Cases (87 U.S. 179)/Opinion of the Court


text: Pahlman v. The Collector

title: Pahlman v. The Collector


text: Talk:Pahlman v. The Collector

title: Talk:Pahlman v. The Collector


text:
Pahlman v. The Collector/Opinion of the Court

ERROR to the Circuit Court for the Northern District of Illinois.

Pahlman & Co., distillers in the district of Illinois just named, sued Raster, a collector of internal revenue in the same district, to recover of him certain money which they had paid to him under protest, as tax upon distilling from February to July, inclusive, in 1871, the amount sued for being, as was asserted by them, so much in excess of what was really due.

The only question involved was one of law, and came up on demurrer to special counts in the declaration. That question was whether, under the act of July 20th, 1868, entitled 'An act imposing taxes on distilled spirits, tobacco, and for other purposes,' the assessor and surveyor, in estimating a true producing capacity for a distillery, had power to fix upon a certain period as the true fermenting period, or whether they were bound upon this point by the period of which, in his application, the distiller has stated that he would make use, and of which in point of fact he did make use.

The distiller denied that they had. The collector took the contrary position.

'SECTION 2. The Commissioner of Internal Revenue, for the prevention and detection of frauds by distillers of spirits, is hereby authorized to adopt and prescribe for use such hydrometers, saccharometers, weighing and gauging instruments, meters or other means for ascertaining the quantity, gravity, and producing capacity of any mash, wort, or beer, used in the production of distilled spirits, and the strength and quantity of spirits subject to tax, as he may deem necessary; and he may prescribe rules and regulations to secure a uniform and correct system of inspection, weighing, marking, and gauging of spirits.

'SECTION 6. Every person intending to be engaged in the business of a distiller or rectifier shall give notice in writing, subscribed by him, to the assessor of the district within which such business is to be carried on, stating. . . the place where said business is to be carried on, and whether of distilling or rectifying. . . . In case of a distiller, the notice shall also state the kind of stills and the cubic contents thereof, the number and kind of boilers, the number of mash-tubs and fermenting-tubs, and the cubic contents of each tub, the number of receiving cisterns and the cubic contents of each cistern, &c. The notice shall also state the number of hours in which the distiller WILL ferment each tub of mash or beer, the estimated quantity of distilled spirits which the apparatus is capable of distilling every twenty-four hours, &c. In case of any change in the location, form, capacity, &c., of such distillery, or in the time of fermenting the mash or beer, notice thereof, in writing, shall be given to the said assessor or to the assistant assessor of the division within twenty-four hours of said change.

'SECTION 9. Every distiller shall cause to be made an accurate plan and description of the distillery and distilling apparatus, distinctly showing the location of every still, boiler, doubler, worm, tub, and receiving cistern, the course and construction of all fixed pipes used or to be used,. . . and of every cock or joint thereof, and of every valve therein. . . . Such plan and description shall also show the number and location, and cubic contents, of every still, mash-tub, and fermenting-tub, together with the cubic contents of every receiving cistern, and the color of each fixed pipe.

'SECTION 10. Every assessor shall proceed,. . . with the aid of some competent and skilful person, to be designated by the Commissioner of Internal Revenue, to make survey of each distillery registered or intended to be registered for the production of spirits in his district, to estimate and determine its true producing capacity, &c., a written report of which shall be made in triplicate, signed by the assessor and the person aiding in the same, one copy of which shall be furnished to the distiller, one retained by the assessor, and the other immediately transmitted to the Commissioner of Internal Revenue. If the Commissioner of Internal Revenue shall at any time be satisfied that such report of the capacity of a distillery is in any respect incorrect or needs revision, he shall direct the assessor to make in like manner another survey, &c.

'SECTION 20. On receipt of the distiller's first return in each month, the assessor shall inquire and determine whether said distiller has accounted in his returns for the preceding month, for all the spirits produced by him; and to determine the quantity of spirits thus to be accounted for, the whole quantity of materials used for the production of spirits shall be ascertained; and forty-five gallons of mash, or beer brewed or fermented from grain, shall represent not less than one bushel of grain, and seven gallons of mash, or beer brewed or fermented from molasses, shall represent not less than one gallon of molasses. In case the return of the distiller shall have been less than the quantity thus ascertained, the distiller or other person liable shall be assessed for such deficiency at the rate of fifty cents for every proof gallon, together with the special tax of $4 for every cask of forty proof gallons, and the collector shall proceed to collect the same as in cases of other assessments for deficiencies; but in no case shall the quantity of spirits returned by the distiller, together with the quantity so assessed, be for a less quantity of spirits than eighty per centum of the producing capacity of the distillery, as estimated under the provisions of this act.

'SECTION 103. The Commissioner of Internal Revenue is authorized to make all such regulations, not otherwise provided for, as may become necessary by reason of any change of law in relation to internal revenue made by this act.'

In accordance with his construction of the powers given him, the commissioner issued, on the 8th of March, 1870, a general circular regulating surveys, containing the following instructions:

'The true producing capacity of a distillery is not limited to what a distiller may produce by following a particular course which he has marked out, but what may be produced under favorable circumstances.

'The true producing capacity of a distillery is not the amount so proposed to be produced, but the amount which can be produced, using all the machinery and apparatus under competent and skilful management, taking as a basis for the calculation such premises as will produce the best practical results.

'The true spirit-producing capacity of a grain distillery is mainly determined by its fermenting capacity; but as this is sometimes affected by the modes of mashing and distilling, these are therefore to be considered.

'Having found the number of bushels which are required to fill the fermenters, the assessor and person designated to aid him will determine what, under all the circumstances, is a reasonable period to be allowed for fermenting, and in so doing they are not bound by the period stated in the distiller's notice, but are to take such period as will, under ordinary circumstances, and with good management, produce the best results. From the best information, it is believed that a fermenting period of sixty hours is as long a period as can be used consistently with good management or a profitable conduct of the business, and where a greater period than this is assumed it must be accompanied with such a statement of the circumstances as will show it to be justified as an exceptional case.

'The surveyor, having ascertained by the measurement the cubic contents of the fermenting-tubs, finds it necessary to determine:

'1st. The number of dry inches to be allowed each tub for fermentation.

'2d. The period necessary to enable the distiller to ferment each tub of mash.

'3d. The number of gallons of spirits that can be produced from a bushel of grain.

'These are questions coming within the discretion and judgment of the assessor and his skilful assistant, with which the office of internal revenue has no disposition to interfere. But it has been thought proper, for the guidance of the surveyor, to prescribe certain rules on these points. Surveyors are, therefore, to be governed by the following rules in fixing the capacity of a distillery, except where they find that they do not correctly determine its capacity:

'Forty-eight hours is prescribed as the maximum period to be allowed for fermentation in sweet-mash distilleries.

'The only exception to this rule that is thought to be justified by sufficient reasons is where the mashing is done by hand, where hot water is the only heating agent, and the distillation is in copper by furnace heat. It is believed that with this imperfect mode of stirring and regulating the temperature, such a perfectly fermented beer cannot be uniformly produced as is necessary for distillation in copper with furnace heat, to prevent occasional burning of the still; in such cases seventy-two hours will be allowed for fermentation.'

The provisions of statutes already given being in force, and the Commissioner of Internal Revenue having issued the regulations just quoted, the plaintiffs, on the 1st of August, 1870, intending to engage in the business of distilling alcohol from grain, gave notice to the assessor, as required in the sixth section of the act of July 20th, 1868, above quoted, that they would ferment each tub of mash, or beer, used by them in the manufacture of alcohol, for the period of seventy-two hours. When, however, afterwards the assessor and his skilled assistant estimated and determined the producing capacity of the distillery, pursuant to the directions of the tenth section of the act, the capacity was determined by assuming the period of fermentation to be forty-eight hours; this assumption being made, of course, in accordance with the above-quoted regulations prescribed by the Commissioner of Internal Revenue. The tax was assessed and collected according to the survey thus made.

The court below gave judgment for the collector, and the plaintiff brought the case here.

Mr. W. B. Scales, for the plaintiff in error:

The commissioner, by his regulations, not only treats the sixth section of the act of 1868, and the notice which it requires to be given, as a nullity, but claims the right to fix upon any fermenting period which he thinks proper.

The object of the legislature in taxing distilled liquors was to raise revenue on them, not to cripple or destroy distillers; neither was it to compel them to carry on their business in a manner to produce the largest amount of taxable products without regard to facts or to the reasonable interests of the distillers.

That the notice in section six was intended to give the distiller the right to contract and fix his own period of fermentation is shown, not only by the language of the act, but by the debates upon it while under consideration in the committee of the whole.

The Congressional Globe of the time shows that when the act was before Congress, Mr. Beck, a member, moved to strike out the word will,' in section six, and insert in lieu the words, usually takes to,' so that the passage would read—

'The number of hours in which the distiller usually takes to ferment each tub of mash or beer.'

'It is impossible to tell how long it will take to ferment. I know it varies in my district, from three days and a half to five days; depending upon the weather and other causes. You should not punish a man who cannot help himself. He should not be held responsible for the failure to ferment within the time when the weather or a thousand other circumstances may prevent the fermentation.

'MR. SCHENCK. When I first read the form of expression contained in other legislation it struck me somewhat in the same way. We called a council of distillers on the subject and found that this was just the language they used. They have twenty-four hour, forty-eight hour, and seventy-two hour beer. Although there may be a little difference occasioned by the temperature, they classify their beer in that way, and every distiller will tell, in regard to a particular kind of beer, what time he wants for his mode of distillation, so that the bill is, in fact, drawn in conformity with the notions of the distillers themselves. The amendment would make it very vague even as to the rules of the distillers themselves.

'MR. BECK. They should not be punished for failing to do what is inevitable. The time varies in extreme cold or in extreme warm weather. A thunderstorm will so affect it that it will not ferment in a very long time. If the committee, however, think that the word will leaves margin enough I will not press the amendment.

'MR. ALLISON. I think it does.

'MR. SCHENCK. Permit me to say that our object is to charge upon the capacity, among other things and if we leave an uncertainty about this we run the risk of not getting the capacity taxed. The distillers themselves have their rule on the subject, and whatever time it takes to ferment they designate their beer accordingly, as twenty-four, forty-eight, or seventy-two hour beer.

'MR. BECK. I withdraw the amendment. I only desired to call attention to the subject.'

It is thus seen that the wording of section six, in inserting the word 'will,' and retaining it on debate, was intended by the chairman of the committee which ordered it, and that, too, after conference with distillers, to give distillers the right to fix and control the period of fermentation, each for himself, and that, too, with reference to the per diem tax. And upon debate the word was retained, because it expressed and would secure that right to distillers.

Mr. G. H. Williams, Attorney-General, and Mr. S. F. Phillips, Solicitor-General, contra:

No canon for the interpretation of statutes justifies a reference to what was said by particular members of the legislature on the discussion of a bill which subsequently became a law.

The provision in section two, authorizing the commissioner to adopt and prescribe means for ascertaining the producing capacity of such beer, necessarily intrusts to him, in connection with the skilful surveyor, his agent, the power of selecting the point of time for applying such means; that is, the point at which such beer becomes most productive, or is ripe.

A true producing capacity implies a true fermenting period, and nature is as uniform in 'her fermenting periods,' for considerable quantities of beer and lengths of time, as in any other of those operations which render her uniformity proverbial. It seems, upon consideration, to be entirely reasonable to allow the Commissioner of Internal Revenue to determine, as matter of science combined with extensive observation, what within the United States, with rare exceptions, must be the maximum fermenting period, and equally so for a skilled surveyor to determine what is the true fermenting period of a certain distillery whose location and methods of operation he has examined.

In general, however, it seems enough to say that the statute is as careful in requiring from the distiller minute data for ascertaining actual results, contemplated or accomplished, as it is in leaving the surveyors to use their skill untrammelled, under the general superintendence of the commissioner, in determining what ought to be the result, at least with a margin of twenty per cent.; and that it will be injurious to confound matters intended to be kept apart, if this skill is to be embarrassed by the rules of practice of persons not required to be skilful; persons of whom all that the law knows is, that they intend to become distillers.

Mr. Justice STRONG delivered the opinion of the court.

The question is whether, by the act of Congress under consideration, the assessor and his assistant, in estimating the true producing capacity of a distillery, are empowered to fix, as the true fermenting period, any other than that which the distiller in his notice to the assessor, required by the sixth section, has declared he would use for fermentation, and which he actually did use.

That the producing capacity of a distillery is conclusively determined by the survey and estimate made under the tenth section of the act (that survey, however, being subject to revision by the Commissioner of Internal Revenue), was ruled in Collector v. Beggs. In that case we said 'the survey and estimate of producing capacity made under the tenth section were conclusive while they remained, though subject to revision under the direction of the Commissioner of Internal Revenue. And the extent of liability to taxation was, by the act of Congress, directed to be measured, not by the actual product of spirits, but by what should have been the product of the materials used according to the estimate made under the tenth section.' And this is very plainly the intention of the law, for by that section, the only one which expressly provides for the ascertainment of the producing capacity, it was made the duty of the assessor, with the aid of some competent and skilful person to be designated by the Commissioner of Internal Revenue, to make survey of each distillery registered, or intended to be registered, for the production of spirits in his district, not only to estimate, but to determine its producing capacity. Of this estimate and determination the assessor and his assistant are required to make a written report in triplicate, signed by them, one original of which is to be furnished to the distiller, one retained by the assessor, and the third is to be transmitted to the Commissioner of Internal Revenue. It is also provided that if the commissioner shall at any time be satisfied that such report of the capacity of a distillery is in any respect incorrect, or needs revision, he may direct the assessor to make another survey. Thus a measure of taxation is fixed, and the distiller is notified of it before he commences distilling. All this leaves no doubt that the reported survey was intended by Congress to be conclusive until corrected by direction of the commissioner.

But while this is not denied by the plaintiffs in error as a general proposition, it is insisted that in estimating and determining the producing capacity of the distillery, the assessor must be controlled by the notice which the distiller is required to give him by the sixth section of the act, and must base his calculations upon the period of fermentation fixed in that notice. It is said he has no power to adopt any other period of fermentation, even though ordered to do so by the commissioner, and, if he does, that his estimate and determination are not conclusive. In this objection we cannot concur. It is founded, we think, upon a misapprehension of the statute. The sixth section requires every person engaged in, or intending to be engaged in, the business of a distiller, or rectifier, to give notice in writing to the assessor of the district within which he proposes to carry on the business, stating therein his name, his associates, if any, and his proposed place of business. If he be a distiller, he is required to state in his notice the kind of stills and the cubic contents thereof, the number and kind of boilers, the number of mash-tubs and fermenting-tubs, and the cubic contents of each tub, the number of receiving cisterns and the cubic contents of each cistern, together with a particular description of the lot or tract of land on which the distillery is situated, with the size and description of the buildings thereon, and of what material constructed. The distiller is also required to state in his notice the number of hours in which he will ferment each tub of mash or beer, and the estimated quantity of distilled spirits which the apparatus is capable of distilling every twenty-four hours.

The object of these requirements is too plain to be misunderstood. Clearly it is not to enable the distiller to determine for himself the producing capacity of his distillery, and thereby partially fix the extent of his liability to taxation. It is to furnish protection against frauds, and possibly to assist in the ascertainment of the quantity of spirits actually distilled. If intended at all to bear upon the estimate of the producing capacity of the distillery, it can only be regarded as suggestive, not as controlling. It is after this notice has been given that the assessor and his skilled assistant are required, as by the tenth section of the act, to make an estimate and determination of the producing capacity. They are no more required to take the fermenting period designated in the notice as the true fermenting period than they are controlled by the distiller's statement of the number and cubical contents of the stills, mash-tubs, and cisterns he intends to use, or by his estimate of the capability of his apparatus. They are required to calculate and report what the distillery can produce, not what the distiller proposes to produce, or what the apparatus would produce, if employed in a particular manner. To enable them to discharge this duty the provisions of the ninth section were enacted. That section requires the distiller to furnish to the assessor an accurate plan of the distillery and distilling apparatus, showing the location and mode of construction of the apparatus and the cubical contents of each vessel. Undoubtedly the main elements necessary for a determination of the producing capacity are the size of the stills, mash-tubs, and cisterns, and the duration of the fermenting period. There is unquestionably, in the nature of things, a true fermenting period, dependent on the operation of natural processes, a period which may be variant from that selected by a distiller. This period may vary somewhat in different latitudes, but it is everywhere ascertainable, and the commissioner, we think, is authorized by the second section of the act to prescribe regulations for ascertaining it. By that section he is authorized to adopt and prescribe for use such hydrometers, saccharometers, weighing and gauging instruments, meters, or other means for ascertaining the quantity, gravity, and productive capacity of any mash, wort, or beer used or to be used in the production of distilled spirits, as he may deem necessary. This is inconsistent with the idea that the notice of the distiller is to determine the producing capacity. And though in his notice he is required to state the time in which he will ferment his mash, and also an estimate of the quantity of distilled spirits which the apparatus is capable of distilling every twenty-four hours, that is his estimate. Nowhere in the act is any provision made that his statement and estimate shall be obligatory upon the assessor and his skilled assistant. Nor is there to be found in the act any rule by which the producing capacity of a distillery is to be determined, except that the commissioner of internal revenue is, by the second and one hundred and third sections, empowered to make necessary regulations. The declaration shows that such regulations were made, and they were followed by the assessor. The survey was made accordingly. If instead of following the instructions given by the commissioner, the assessor must adopt a period for fermentation given to him by the distiller-a period which may, or may not, be a true one; that is, the period within which complete fermentation takes place-it is obvious there can be no certainty in the ascertainment and determination of the actual producing capacity of the distillery, and the object which the law has in view will be defeated. At most, all the assessor and his assistant can do will be to ascertain the actual product. The possible product cannot be ascertained; yet, as we have had occasion to say heretofore, when giving a construction to this act of Corgress, both the producing capacity and the quantity of spirits actually produced are made by the law measures of taxation, and provision is made for the determination of each.

But without pursuing the subject farther, we have said sufficient to show that in our opinion the notice given by the distiller of the time he will ferment each tub of mash or beer does not control the survey. The assessor must determine and report the true actual capacity, and not what the distillery will produce in the distiller's proposed mode of running it. There is, therefore, no well-founded objection to the conclusiveness of the survey in this case, and as the tax assessed and collected was in accordance with the survey, the plaintiffs have no right of action to recover it back.

Nor is there any such hardship as is suggested. We have seen that a report of the surveyor's determination of producing capacity is by the law required to be placed in the hands of the distiller before he commences business. If dissatisfied with it, he may apply to the commissioner for another survey. He is thus informed of the extent of his liability to taxation. He has, therefore, little reason to complain, when he commences distilling, and does not produce at least eighty per cent. of what his distillery can produce, as determined by the survey, if he is taxed according to a standard which is not false, and of which he had thus early notice.

JUDGMENT AFFIRMED.


text: Talk:Pahlman v. The Collector/Opinion of the Court


text: The Lottawanna

title: The Lottawanna


text: Talk:The Lottawanna

title: Talk:The Lottawanna


text:
The Lottawanna/Opinion of the Court

APPEAL from the Circuit Court for the District of Louisiana; the case-divested of irrelative incidents, with a great number of which, as seen in the record, it had come here confused and perplexed-was thus:In the year 1819 this court, in The General Smith, decided, as the profession has generally understood, that in respect to repairs or necessaries furnished to a ship in the port or State to which she belongs, no lien is implied unless it is recognized by the municipal law of the State; declaring the rule herein different from that where the repairs or necessaries are furnished to a foreign ship; in which case the general maritime law gives the party a lien on the ship itself for his security.

In view of this decision most or all of the States enacted laws giving a lien for the protection of material-men in such cases.

In the year 1833, in the case of The Planter (Peyroux v. Howard), the converse of the rule in The General Smith was laid down, and process against a vessel in her home port was used and supported, the State law giving a lien in the case.

In 1844, this court, acting in pursuance of acts of Congress which authorized it to adopt rules of practice in the courts of the United States in causes of admiralty and maritime jurisdiction (and adhering to the practice declared as proper in the cases mentioned), adopted the following Rule of Practice:

'RULE XII.

'In all suits by material-men for supplies, repairs, or other necessaries for a foreign ship, or for a ship in a foreign port, the libellant may proceed against the ship and freight in rem, or against the master and owner alone in personam; and the like proceeding in rem shall apply to cases of domestic ships, where by the local law a lien is given to material-men for supplies, repairs, and other necessaries.'

On the 1st of May, 1859, a new twelfth rule was adopted as a substitute for the one above given. It was thus:

'In all suits by material-men, for supplies or repairs, or other necessaries for a foreign ship, or for a ship in a foreign port, the libellant may proceed against the ship or freight in rem, or against the master or owner alone in personam. And the like proceedings in personam, but not in rem, shall apply in cases of domestic ships for supplies, repairs, or other necessaries.'

The reasons for the substitution of this latter rule for the former one are stated by Taney, C. J., in the case of The Steamer St. Lawrence, to have been that in some cases the State laws giving liens, and the constructions put on them by State courts, were found not to harmonize with the principles and rules of the maritime code, and embarrassed the Federal courts in applying them.

With the case of The General Smith, and others following it, unreversed, and with the substituted twelfth rule in force, two sailors, on the 30th December, 1870, filed libels in the District Court, at New Orleans, against the steamer Lottawanna, claiming wages. The libel alleged that the vessel when they shipped was in the port of New Orleans and was making voyages between that port and various ports and places on the Red River and its tributaries, and it was thus, and inferentially, to be gathered that New Orleans was the home port of the vessel.

By consent of the owners the vessel was subsequently sold under an order of court, and the proceeds, $10,500, were brought into the registry.

In the meantime about forty different persons intervened, claiming in the aggregate $35,000. Some were sailors, claiming wages. That their claims were a lien on the fund was conceded. But the majority of the claims (in amount $32,804) were for stores, materials for repairs, or for labor and supplies of different sorts furnished to the vessel in the port of New Orleans; the port which, as above said, was apparently her home port, though the fact that it was so was nowhere distinctly asserted, nowhere in any way denied, and nowhere in any way proved.

Among the interveners claiming a share of the fund for supplies furnished to the vessel, in the port of New Orleans, were two firms, Wilson & Co. and Chaffee & Brother; the former claiming $3091 and the latter $10,896.

None of the interveners alleged in direct terms that they had any maritime lien on the vessel, or its proceeds, or prayed for process to enforce such a lien; though the libels of some of them contained a prayer that the court would decree the payment of the intervener's claim with privilege on the vessel or its proceeds.

There was also a firm, Bell & Kennett, who claimed the whole fund in the registry. This firm had had something to do with the vessel, and had sued its owners and got judgment against them in one of the State courts of Louisiana; the Sixth District Court for the Parish of Orleans. On this judgment they issued execution and attached the funds in the registry of the District Court. They also had decrees in personam against the owners in the admiralty.

A report of a commissioner appointed by the District Court to report distribution showed, that after deducting costs of the marshal, registrar, &c.,

The net proceeds of sale in the registry were $9,

That the sailors' wages (the only admitted admiralty liens) amounted to 2,

The question was, to whom was this balance to be paid? Bell & Kennett claimed the whole of it, under their attachment in execution.

Wilson & Co., Chaffee & Brother, and the other interveners at New Orleans, for supplies furnished in that port, opposed this claim, and-asserting that on an account justly taken between the said Bell & Kennett and the owners of the vessel, it would appear that the former were indebted to the owners, and not the owners to them-were not willing even that Bell & Kennett should come pari passu on the fund; much less that they should sweep it all away.

The commissioner divided the sum ratably between all the interveners, including with them Bell & Kennett. The owners opposing this, he made a second report, remarking that the only admiralty liens in the case were the claims for sailors' wages (which had now been paid), and that the claims of Wilson & Co., Chaffee & Brother, and the other interveners were not such liens; that though where the owners did not oppose such distribution, a fund in the registry might properly be distributed to material-men, &c., claimants on it for supplies furnished to the ship, who yet had no admiralty lien in rem, yet that it could not be so distributed if the owners did oppose the distribution, this principle being settled by the cases of The Maitland, and The Neptune, and not departed from except in the case of remnants unclaimed by the owner. The commissioner concluded, therefore, that nothing could be done but pay the fund either to the owners, or to the sheriff of the parish of Orleans to answer his execution and attaching process; and this last he recommended as the more just disposition of the money.

Upon the case coming before the District Court on exceptions to this report, that court, December, 1871, decreed that the interveners mentioned by the commissioner should be dismissed, and that the fund should be paid, as the commissioner had suggested, to the sheriff, to answer the process issued in the suit of Bell & Kennett against the owners.

From this decree of the District Court the interveners took the case to the Circuit Court, and moved in the District Court that the money in the registry there should be transferred to the registry of the Circuit Court. This motion the District Court denied, and the moneys were paid over to Bell & Kennett. In the Circuit Court objection was made, as also it had been made before, to the regularity of the appeal, on account of some matters of form. The Circuit Court affirmed the judgment of the District Court, but at the same time dismissed the appeal.

From this decree Wilson & Co. and Chaffee & Brother brought the case here by appeal; Bell & Kennett being the appellees.

Reference has been made in the opening part of this statement of the case, to the decision in the case of The General Smith, decided A.D. 1819, and other cases; and to the two different twelfth rules in admiralty.

In different cases coming here about eight years ago, especially in The Moses Taylor and in The Hine v. Trevor,-this court decided that the grant of admiralty jurisdiction given by the Judiciary Act to Federal courts is exclusive, that State statutes which attempt to confer on State courts a remedy for marine contracts or torts by proceedings strictly in rem, are void. And on the 6th of May, 1872, after the present suit was brought, the twelfth rule of 1859, itself an amendment of the rule of 1844, was thus amended anew:

'In all suits by material-men for supplies or repairs or other necessaries, the libellant may proceed against the ship and freight in rem, or against the master or owner alone in personam.'

The twenty-sixth rule in admiralty (having no connection, however, with any of the preceding matters, but yet adverted to in the argument), says:

'In suits in rem, the party claiming the property shall verify his claim on oath or solemn affirmation, stating that the claimant by whom or on whose behalf the claim is made is the true and bon a fide owner, and that no other person is the owner thereof.'

Messrs. J. A. Grow and L. M. Day, for the appellants:

1. The claims of all the interveners were for materials, supplies, repairs, and other necessaries furnished to the boat, undoubted admiralty contracts.

Though under the twelfth rule in admiralty adopted by this court in 1859 they could not have proceeded in rem against this boat, if New Orleans was her home port, yet it is very questionable whether New Orleans was so. No person filed any claim for the vessel, or her proceeds, according to the twenty-sixth admiralty rule. Consequently there was no one entitled to be heard as owner, nor is there any evidence in the record to show where the owners reside. But the twelfth rule, as made in 1859, was altered in May, 1872, by this court, and the persons who intervened could now undoubtedly proceed in rem, no matter where the owners reside. The history of the decisions and reles applicable to the matter shows that the court has always meant to protect by a lien, enforceable somewhere, persons furnishing supplies in the home port as much as those furnishing them in a foreign port. The General Smith, and Peyroux v. Howard (The Planter), enabled such persons to enforce in the admiralty liens when given by the State law, and as liens were given by the law of all the States the protection was complete. But this administration of State lien laws through admiralty courts was found to cause trouble, as explained by Taney, C. J., in The Steamer St. Lawrence, and in 1859 the new twelfth rule of practice relegated in effect the furnishers in home ports to their home courts, where they were still abundantly protected. But The Moses Taylor, and The Hine v. Trevor, in December Term, 1866, decided that this was unlawful. Furnishers in home ports were thus left quite unprotected so far as a capacity to enforce a lien was concerned. They could not under the twelfth rule of 1859 sue in the admiralty; nor under the two cases just mentioned enforce admiralty liens in State courts. What in these circumstances did this court do? Availing itself of the power given to it by Congress it enacted the twelfth rule of May, 1872. It plainly meant by this rule to give a remedy in rem to furnishers in home ports, and to annul The General Smith, and Peyroux v. Howard. The law and rules of this court, as they now exist, must govern, and not those that existed when the suit was brought.

But this court had jurisdiction to distribute these proceeds among the interveners, even if the vessel was in her home port, and the parties not entitled to proceed in rem. So well settled is this principle that text-books declare it as elementary. Parsons says:

'Where a vessel, or other property against which a suit is brought, is sold, and brought into the registry, the power of the court to distribute these proceeds is unquestioned.'

'When a lien is waived by intendment of law, or lost by neglect to enforce it within a proper time, it has been held that the claim may be enforced against the proceeds.'

But the interveners have admiralty liens; they are material-men, and though not entitled to process in rem in consequence of the twelfth rule in admiralty, as it existed when this suit was brought, they still all intervened for claims founded upon admiralty contracts, which would create an implied maritime hypothecation and lien.

In The Steamer St. Lawrence, this court allowed a materialman a lien for supplies furnished in the home port of the vessel after the repeal of the original or first twelfth rule in admiralty; not on the ground that a State statute gave it, as the State could not confer jurisdiction on the Federal courts, but on the ground that the party had an admiralty contract, and that his proceedings were begun before the repeal of the first twelfth rule.

And in The Kalorama, and The Custer, this court held that it was no objection to the assertion of an admiralty lien against a vessel for supplies, that the owner was present and ordered them.

2. The proceeds in the registry cannot be attached by the process issued from a common-law court. In The Albert Crosby, Dr. Lushington said: 'I should certainly interfere by attaching any person who would meddle with any registrar.'

3. The District Court should have transferred the proceeds of the sale of the steamer Lottawanna to the registry of the Circuit Court. If the cause was one proceeding in rem, the res involved (or the proceeds if converted into money), passed from the District Court to that of the Circuit Court.

We therefore ask of this court that the decree of the District and Circuit Courts be reversed; that the claim of Kennett & Bell be dismissed; that they deposit in the registry of the Circuit Court the amount which they received, with interest; that the claims of the appellants be recognized as admiralty liens against it, and that the money be paid over to them in proportion to their respective claims.

1. The point decided by the District Court in its confirmation of the commissioner's report was, that where interveners in admiralty have no admiralty lien the proceeds of the sale of the steamboat will not be distributed, if there is any opposition to such distribution. That was quite right as the cases cited by him show. It is clear that the powers and jurisdiction of a bankruptcy or of an equity court would be engrafted upon our admiralty courts, were they to attempt to make distribution of the proceeds of the sale in their registries, in the mode contended for by appellees, in all cases in which a surplus should result. Suppose, for example, that a vessel should be libelled at her home port upon a claim for maritime wages of $50, and should be sold for $20,000, and the proceeds in the registry, amounting to $19,950, should be claimed by creditors of the owners who had no admiralty liens, it is obvious that by indirection the creditors would be extending and enlarging the jurisdiction of the admiralty court so as to embrace causes which could not have been enforced directly and in the first instance as against the vessel. This would be a great abuse of the admiralty jurisdiction. The admiralty judge, when there is no admiralty lien, can only proceed to the distribution of the surplus in the registry when an act of Congress directs him so to do.

2. Holding the money of the owners in the registry of the admiralty liable to the garnishee process under execution, of the same or any other admiralty court, is within the necessary incidental jurisdiction of the admiralty. The analogy is perfect between the present case and that of Jones v. Andrews.

Mr. Justice CLIFFORD delivered the opinion of the court.

Complicated, as the record is, it will be impossible to state the questions presented for decision, in a manner to be understood, without referring to the original proceedings in the District Court, as the suit, when it was commenced, was a libel in rem filed by two mariners, J. D. Cox and J. N. Geren, against the steamboat Lottawanna, her tackle, apparel, machinery, and furniture, in a cause of subtraction of wages, civil and maritime.

Prior to the institution of the suit the allegation is that the steamer had been engaged in commerce and navigation between the port of New Orleans and various other ports and places on Red River and its tributaries, and that the libellants, during that period, were duly employed by the master as the pilots of the steamer, and that they continued in that employment for the respective periods and at the monthly wages specified in the libel. They also allege that they faithfully performed their respective duties, as such pilots, and that there is due to them the respective sums charged in the schedule exhibited in the record. Wherefore they pray for process against the steamer, &c., and that she may be condemned and sold to pay their respective claims.

Pursuant to the prayer of the libel a warrant was issued, and the return of the marshal shows that he seized the steamer and that he published a monition, citing and admonishing the owners, and all others claiming any right, title, or interest in the steamer, to appear, on a day therein named, at the District Court, and show cause, if any they have, why the prayer of the libel should not be granted. Subsequently, on the same day, the libellants filed a petition in the District Court, representing that the steamer was expensive to keep and perishable, and prayed for an order that she might be sold.

On the same day, also, Moses Morgan filed an affidavit in the case, stating that he owned three-fourths of the steamer, and that he had no objection that she should be sold, and the record shows that the court immediately passed an order that the steamer be sold by the marshal, he giving legal notice of the sale, and that the proceeds be deposited in the registry, subject to the further order of the court. Nothing is exhibited to show that there was any irregularity in the sale, and it appears that the proceeds, amounting to ten thousand five hundred dollars, were deposited in the registry of the court.

Before the other owner of the steamer, Philip Work, appeared, seventeen libels of intervention were filed in the court against the proceeds of the sale of the steamer, embracing some forty interveners, with claims for wages as mariners, and claims for materials for repairs, and for stores and supplies, and for money loaned for the steamer, or for the individual owners, and to pay for debts contracted by the master, or owners, for repairs and supplies during a period of two or more years.

On the fourth of February, 1871, more than a month after the original libel was filed, Philip Work appeared and filed a claim that he was the owner of the other undivided fourth part of the steamer, and he excepted to all of the libels of intervention except the one filed by the mariners, being the libel of intervention first named in the record, and upon three grounds, and prayed that the interventions might be dismissed: (1.) Because the court was without jurisdiction, ratione materiae, of the matters alleged in the several libels. (2.) Because the court was without jurisdiction to entertain the interventions or to adjudicate thereon, for the reason that all of the owners of the steamer, at the date of the several causes of action set forth, were citizens of that State and resided in the city of New Orleans, at which port the steamer was registered and enrolled. (3.) Because the respective interveners did not, on filing their libels, give stipulations, with sureties, to abide the final decree rendered in the case, and to pay costs, as required by the rules in admiralty proceedings.

Intervention was subsequently claimed by other parties and other directions were given, which it becomes important to notice, in order to have a full view of all the material proceedings in the District Court.

Libels in personam were also filed by the appellees and by John Chaffee and Charles Chaffee, who are the last-named appellants. By the transcript it appears that the libel of the appellees was filed on the sixth of February, 1871, and that the libel of the said appellants was filed on the following day. Service of the original monition was made January first, 1871, and on the seventh of February succeeding the court passed an order that the delay allowed by law having expired, and no answer having been filed, that all persons interested in the property seized be pronounced in contumacy and default, and that the libel in the principal case be adjudged and taken pro confesso.

On the thirteenth of the same month he court entered a decree in favor of the libellants, as follows: that J. D. Cox recover the sum of one thousand three hundred and six dollars, and that J. N. Geren, the other libellant, recover the sum of six hundred and seventy-four dollars and twenty-eight cents, from which decree neither the libellants nor the owners of the steamer have ever appealed.

On the third of March, 1871, subsequent to the said decree, Jesse K. Bell filed a libel of intervention, claiming the sum of two thousand two hundred dollars, as paid by him on two claims for fuel furnished to the steamer by the persons named in the libel. Leave was granted to the applicant to file the libel, and on the same day the court passed an order that the cause be referred to a commissioner to report upon a tableau of distribution, and to classify the various claims according to law, giving all parties a right to take further evidence before the commissioner.

Since that time further libels of intervention have been filed as follows, to wit: one by J. Sharp McDonald, on the eighteenth of the same month, for five hundred and forty boxes of coal; another by Thomas Onley & Co., on the thirty-first of the same month, for services, the account being approved by the master and by the mate; and one other by Christian & Hyatt, on the second of May in the same year, for stationery furnished for the use of the steamer.

Besides the libel filed by the two pilots, a libel in rem was also filed by the mate against the steamer, on the thirtieth of December, 1870, for the balance due him for wages, and the record shows that the court, on the tenth of February next after the commencement of the suit, entered a decree in his favor for the amount claimed and taxable costs.

Morgan and Work failed to answer the suit in personam of Kennett & Bell against them, and the court, on the twentieth of November, 1871, passed an order that the libel be taken pro confesso, and that a decree be entered in favor of the libellants, and three days later it was ordered that the suit be consolidated with the record in the original suit in rem against the steamer.

Different proceedings took place in the suit in personam commenced by Chaffee & Brother, as Joseph Morgan appeared on the same day and confessed judgment in favor of the libellants for the sum of ten thousand eight hundred and ninety-six dollars and fifty-six cents, with eight per cent. interest from the twenty-third of January preceding. Judgment was accordingly rendered in their favor against Morgan for that amount. Work made default, and a decree, dated June 1st, 1871, was entered against him for the same amount in favor of the same libellants.

Report in due form was made by the commissioner, on the fourth of May in the same year. He decided that none of the creditors, presenting claims for repairs and supplies, had any right to libel the steamer in her home port, and recommended that the proceeds in the registry of the court be distributed as follows: First, that all legal costs be paid in full. Secondly, that all claims of the seamen for wages be paid in full. Thirdly, that all claims for labor, supplies, and materials for repairs, be paid pro rata, according to the schedule of claims annexed to the report.

Exceptions of various kinds were filed to the report of the commissioner: (1.) That certain claims were allowed which were not due from the owners of the steamer, or were, in whole or in part, improperly classified as claims for stores or for supplies and repairs. (2.) That the schedule improperly includes claims not having any maritime lien on the steamer or the proceeds in the registry of the court, nor entitled to any preference by attachment or otherwise. (3.) That the compensation charged by the commissioner is excessive.

Pending the hearing of the exceptions to the report of the commissioner the court passed an order that the claims for costs and the claims of the seamen for wages should be paid, and it appears that the order was promptly carried into effect, but the residue of the report was finally referred back to the commissioner for further proceedings. In the meantime the appellees here, having obtained judgment against the owners of the steamer in their suit in personam, sued out a garnishee process from the sixth District Court of the State, and attempted to attach the proceeds as money in the hands of the clerk of the District Court. All parties were again heard by the commissioner, and, on the fourth of June following, he made a supplemental report. In his second report, he decided that, where there is a maritime lien upon the vessel, the lien will attach to the proceeds in case the vessel is sold, and the proceeds are paid into the registry of the court, but where there is no maritime lien upon the vessel, that the proceeds should not be distributed, if the owners make opposition to the application, unless the applicants prove that they have some legal or equitable interest in the subject-matter, and the commissioner being of the opinion that the interveners had no maritime lien, reported that the proceeds remaining in the registry of the court could not be distributed for their benefit in this case, and recommended that the court order either that the proceeds be paid over to the owners of the steamer or to the sheriff who seized the same in the hands of the clerk acting as registrar, under the garnishee process.

Seasonable exceptions were filed to the report by many of the interveners opposed in interest to its conclusions, including the last-named appellants. Due notice having been given, the parties were heard, and the court entered a decree that all the interventions in the cause, founded on claims which are not liens in admiralty, be dismissed at the cost of the respective parties. All such parties, including the last-named appellants here, claimed an appeal to the Circuit Court, and the record shows that the appeal in their behalf was duly allowed, and that they filed an appeal bond, executed to the owners of the steamer and the appellees in this court. Certain other interveners also petitioned for an appeal, and the court passed an order granting it, without requiring any additional bond, in consequence of which omission the present appellees, on the twentieth of December following, moved the District Court to set aside and dismiss the last-named appeal, and the record shows that the court, on the twenty-fifth of January following, granted the motion and vacated and annulled the appeal.

Seamen's wages and costs having been paid, the interveners whose appeal was allowed moved the court, on the eleventh of January, 1872, that the fund in the registry of the court be transferred to the Circuit Court, which motion was for a time held under advisement. During that period the District Court, on the sixth of February following, entered a decree that the proceeds in the registry of the court be applied, first, to the satisfaction of the judgment of the present appellees against the owners of the steamer; and, second, that the balance, if any, be paid over to Chaffee & Brother, seizing creditors, next in rank.

Application for an appeal by Chaffee & Brother was made on the following day, and on the twenty-sixth of the same month the court overruled the motion to transfer the fund into the Circuit Court, and the last-named motion for an appeal, and ordered that the fund be paid over as directed in the order previously given upon that subject. Chaffee & Brother, however, were among the petitioners for the appeal which was previously allowed by the court, and their names appear in the bond which was filed to prosecute the appeal, but they were libellants in personam and not strictly interveners in the original suit prosecuted in rem by the two pilots.

Copies of all the material orders, directions, and proceedings in the original suit, and in the several suits of Allen v. The Steamer, Kennett & Bell v. The Owners, and Chaffee & Brother v. The Owners, were sent to the Circuit Court under the certificate of the clerk of the District Court, together with copies of all documents filed and of the minutes of all the evidence introduced in those several cases, and the case was entered in the Circuit Court, on the twenty-ninth of May, 1872, under the title of J. D. Cox et al. v. The Steamer, which is the title of the original suit in the District Court, from which no appeal was ever taken, either by the libellants or the owners.

Appearance was entered by Kennett & Bell, and they moved to dismiss the appeal for the following reasons: (1.) Because the appeal was discharged in the District Court, which is not sustained by the record. (2.) Because the bond filed is irregular and not such as the law requires; and the Circuit Court having affirmed the decree of the District Court granted the motion to dismiss.

Immediate application for an appeal to this court was made by the present appellants, which was allowed by the Circuit Court, and the petitioners gave bound with surety to the present appellees et als. to pay all such damages as they may recover against the appellants, in case it should be decided that the appeal was wrongfully obtained.

Irrespective of the question whether the appeal is regular or irregular it is quite clear that the decree of the Circuit Court must be reversed, as one part of it is repugnant to another part. Plainly, if the appeal was regular, it was error to dismiss it; and if it was so irregular that it became the duty of the court to dismiss it, the Circuit Court had no jurisdiction to affirms the decree of the District Court. Cases of admiralty and maritime jurisdiction, where the matter in dispute, exclusive of costs, exceeds the sum or value of fifty dollars, may be removed from the District Court into the Circuit Court by appeal, and the provision is that such appeals shall be subject to the same rules, regulations, and restrictions as are prescribed by law in case of writs of error. Jurisdiction in such cases is given to the appellate court by the appeal or writ of error, as the case may be, which ceases to exist, even if regular, when the appeal or writ of error is dismissed, or if not regular in essential particulars, then jurisdiction does not attach for the purpose of affirming the decree upon the merits. Argument to support these conclusions is not necessary, as they are self-evident, but inasmuch as the case must be remanded for a new hearing, it becomes necessary to examine some of the questions which the anomalous proceedings present for consideration.

Most of the claims of the interveners were for stores, materials for repairs, or for labor and supplies furnished to the steamer, either at the request of the master or at the request of one or both of the owners, in the home port of the vessel. More than half a century ago this court decided, i The General Smith, that where repairs and supplies are furnished to a ship in her home port, or in a port of the State to which the ship belongs, that no maritime lien is implied, nor any other lien unless it is given by the local law, by which the rights of the parties in such a case is altogether governed. Where necessary repairs have been made or necessary supplies furnished to a foreign ship, or to a ship in a port of a State to which the ship does not belong, the general maritime law, as all agree, gives the party a lien on the ship itself for his security, which may be enforced in the admiralty by a proceeding in rem; but the court decided, in the case before mentioned, that as to such repairs and supplies furnished to a ship in her home port, or in a port of the State to which the ship belongs, the case is governed by the local law, and that no lien arrises unless given by the local law. All the Federal courts were governed by those rules for years, and little or no difficulty arose in practice, as most or all of the States enacted laws giving a lien for the protection of material-men in such cases, and this court adopted a rule authorizing a proceeding in rem against domestic ships, 'where by the local law a lien was given to secure the payment of contracts in such cases for supplies, repairs, or other necessaries.' Since that time, however, that rule has been repealed and a new one adopted in its place, which does not authorize a proceeding in rem, except where there is a claim founded on a maritime lien against a foreign ship, or against a ship in a foreign port, or the port of a State other than that to which the ship belongs. Attempts were made by the States to obviate the embarrassment which grew out of the repeal of that rule, and the adoption of the new rule withdrawing the use of the process in rem from the District Courts to enforce the payment of claims for repairs and supplies furnished to domestic ships, but this court decided in several cases that the State legislatures could not create a maritime lien, nor could they confer jurisdiction upon a State court to enforce such a lien by a suit or proceeding in rem as practiced in the admiralty courts.

Much embarrassment has existed ever since the old twelfth admiralty rule was repealed, as the new rule makes no provision to enforce the payment of contracts for repairs and supplies furnished to domestic ships, except by a libel in personam. Repeated judicial attempts have been made to overcome the difficulty, none of which have proved satisfactory, because they failed to provide a remedy in the admiralty by a proceeding in rem. Inconveniences of the kind have been felt for a long time, until the bench and the bar have come to doubt whether the decision that a maritime lien does not arise in a contract for repairs and supplies furnished to a domestic ship is correct, as it is clear that the contract is a maritime contract, just as plainly as the contract to furnish such repairs and supplies to a foreign ship or to a domestic ship in the port of a State other than that to which the ship belongs. Such a remedy is not given even in the latter case, unless the repairs and supplies were furnished on the credit of the ship, and it is difficult to see why the same remedy may not be given in the former case if the repairs and supplies were obtained by the master on the same terms. These and many other considerations have had the effect to create serious doubts as to the correctness of the decision made more than fifty years ago, that a maritime lien does not arise in such a case.

Expressions, however, to the same effect are found in other opinions of this court, and inasmuch as the question is not satisfactorily put in issue in the pleadings in this case, and does not appear to have been directly presented to the Circuit Court by either party, the court here is not inclined to enter more fully into the consideration of it at the present time.

None of the interveners alleged in direct terms that they had a maritime lien upon the steamer or the proceeds in the registry of the court. Many libels of intervention were filed subsequent to the sale of the steamer, and some of them contain a prayer that the court will decree the payment of the claim of the libellant, with privilege on the steamer or the proceeds, but in no case does the libellant allege in terms that the contract set forth in the libel constitutes a maritime lien upon the steamer or the proceeds in the registry of the court, nor does the libellant pray for process to enforce any such lien.

Doubtless the maritime lien is, in many cases, well described as a privilege in the thing, but the State law, which cannot be enforced in the admiralty, also gives material-men a privilege or lien in such cases, and in view of that fact it may well be questioned whether the allegation in the libels is sufficient to apprise the owners of the specific nature of the interest which the libellants claim in the proceeds, as the rule of decision in the Federal courts has been for many years that a maritime lien does not arise in such a case. Any person having an interest in the proceeds may intervene pro interesse suo, but he ought to allege enough to apprise the owner of the nature of the interest claimed.

Most or all of the claims were referred to a commissioner to report a tableau of distribution, and no exception was taken to the order of the court appointing the commissioner. He decided that none of the claims, except those for seamen's wages, constituted a maritime lien, and none of the libellants excepted to the report upon that precise ground. On the contrary they seem rather to have acquiesced in that part of the report; and in the view adopted by the district judge, that it was competent for him to decree that the respective claims should be paid out of the proceeds in the registry of the court, irrespective of the question whether the claimants had or had not any maritime lien or other legal interest in the same. Such must, it would seem, have been the view of the district judge, as he ultimately confirmed the report and directed the proceeds to be paid to two claimants, both of whom were libellants in personam and judgment creditors of the owners. By confirming the report he decided that none of the libellants whose claims were for repairs and supplies had any maritime lien, but in the decree ordering the payment of the two claims he departed from the report of the commissioner, as the latter decided that, inasmuch as opposition was made by the owners, the proceeds could not be distributed among the interveners who had no maritime liens. Apparently the district judge must have been of the opinion that the proceeds were subject to his order of distribution among the creditors of the owners, or that the two claimants acquired some right or interest in the proceeds, either by their judgments against the owners or by virtue of the proceedings under the garnishee process against the clerk as the registrar of the District Court.

Beyond doubt maritime liens upon the property sold by the order of the admiralty court follow the proceeds, but the proceeds arising from such a sale, if the title of the owner is unincumbered and not subject to any maritime lien of any kind, belong to the owner, as the admiralty courts are not courts of bankruptcy or of insolvency, nor are they invested with any jurisdiction to distribute such property of the owner, any more than any other property belonging to him, among his creditors. Such proceeds, if unaffected by any lien, when all legal claims upon the fund are discharged, become by operation of law the absolute property of the owner.

Subsequent to the seizure any person may enter an appearance to protect any interest he may have in the property, or he may commence a second or subsequent suit to enforce any claim he may have against it, or he may take legal measures to prevent the release of the property under arrest, or to prevent the payment of the proceeds out of the registry. Defence may be made to a suit in rem by any person who has an interest in the thing seized; as for example, a mortgagee may appear and defend a salvage or wages suit, or the assignee of a bankrupt owner may appear and contest any claim against the property of the bankrupt, or underwriters, if they have accepted the abandonment, may also appear and defend against any claims adverse to their interest in the property, but a person who has merely a collateral interest in some question involved in the suit and has no actual concern in the subject-matter of it, cannot be allowed to intervene in the proceedings.

Where the property is already under arrest and a second or subsequent suit is instituted, it is not necessary to take out a second warrant of arrest, as a citation in rem is sufficient, instead of a warrant, commanding the marshal to cite all persons who have, or claim to have, any right, title, or interest in the property, to enter an appearance in the cause on or before the day therein named, the service of which is sufficient to protect the rights of the intervener. Notice to the owners in some form must be given in such cases, else the decree will not conclude the owners.

Decided cases may be found which afford some support to the proposition that the proceeds in the registry of the court, if the lien claims are all discharged, may be distributed equitably among the intervening creditors of the owners, but the court is of the opinion that the rule that the proceeds in that state of the case belong to the owner is correct in principle, and that the weight of authority is in its favor, notwithstanding those cases, of which The John is the one most frequently cited. But in that case there was no opposition by the owners, nor was the question much considered. Directly opposed to that case is the case of The Maitland, in which the admiralty court refused to follow it, remarking that there is no solid distinction between original suits and suits against the proceeds, where there is opposition. Mere remnants, if unclaimed by the owner, may stand upon a different footing, and it is upon that ground that the admiralty courts have sometimes decreed the payment of small unclaimed sums to a creditor of the owner having a clear equity, to prevent the same from being indefinitely impounded in the registry of the court. Exactly the same point was decided, in the same way, in the case of The Neptune, in which all of the authorities to that time were carefully examined. Where the ship is sold the proceeds are in the hands of the court, which holds the fund in trust, and the court in the following case added that the owner is in some sense entitled to the same, but finally decided that inasmuch as he cannot obtain the fund without the order of the court, that it cannot be attached under the garnishee process.

Supplemental suits in the nature of a suit in rem may unquestionably be entertained in favor of parties having an interest in the proceeds, as was held by this court in the case of Andrews v. Wall, in which this court said that such suits may be entertained to ascertain to whom the proceeds belong and to deliver the same over to the parties who establish the lawful ownership to the property, as in the case of the sale of a ship to satisfy claims for seamen's wages, or for a bottomry bond, or for salvage services, or to discharge a lien for repairs and supplies, the rule being that after the original demand is paid if a surplus remains in the registry, the court may determine to whom the same belongs. Other lien claims are also mentioned for which the ship may be sold, but it is unnecessary to recapitulate them, as those enumerated are sufficient to explain the principle adopted by the court.

Different views have in some few instances been adopted by the District Courts, but the right of the court to decree that third persons who could not have proceeded against the property in rem may recover a proportion of the proceeds to satisfy their claims against the owner, in a case where the owner appears and opposes the application, seems to be repugnant to every sound principle of judicial proceeding, and it is certainly opposed to the great weight of authority.

Reference is sometimes made to the case of Place v. Potts, as supporting the opposite rule, but the court here is not able to regard the case as having any such tendency, as the judgment in that case in the court of original jurisdiction was founded almost entirely upon the decision of the admiralty judge in the case of The Dowthorpe, which is nothing but a simple apportionment of the different liens upon the ship and freight.

Suppose that is so, still it is contended that the appellees acquired the right of preference in the fund by virtue of the proceedings under the garnishee process, as more fully set forth in the record; but the court is entirely of a different opinion, for several reasons:

1. Because the fund, from its very nature, is not subject to attachment either by the process of foreign attachment or of garnishment, as it is held in trust by the court to be delivered to whom it may belong, after hearing and adjudication by the court.

2. Because the proceeds in such a case are not by law in the hands of the clerk nor of the judge, nor is the fund subject to the control of the clerk. Moneys in the registry of the Federal courts are required by the act of Congress to be deposited with the Treasurer of the United States, or an assistant treasurer or designated depositary, in the name or to the credit of such court, and the provision is that no money deposited as aforesaid shall be withdrawn except by the order of the judge or judges of said courts respectively, in term time or vacation, to be signed by such judge or judges and to be entered and certified of record by the clerk. Regulations substantially to the same effect have existed in the acts of Congress for more than half a century, and within that period it is presumed that no proceeding to attach such a fund by a creditor of the owner has ever been sustained.

3. Judgments were never a lien upon personal property, unless made so by attachment under mesne process, which is all that need be said in respect to the proposition that the appellees acquired a right of preference to the proceeds in the registry of the court by virtue of their judgment against the owners.

Mention should also be made of another error, which ought if possible to be promptly corrected. Where an appeal is taken from the decree of the District Court in a proceeding in rem to the Circuit Court, the property or proceeds thereof follows the cause into the Circuit Court, where it remains until the litigation is ended, as it does not follow the cause into the Supreme Court. Application was made to the District Court to send up the proceeds, and the record shows that the court overruled the same, which is a plain error and one which ought to be promptly corrected, unless the proceeds have been paid over as directed by the court, and if so, they should be recalled, if practicable, and restored to the registry, and then sent up to the Circuit Court, as the Circuit Court in such cases executes its own decree.

Imperfectly tried, as the case has been, the court here is of the opinion and directs that leave be given to both parties to amend their pleadings, and if need be to take further proofs. Error was also committed by the Circuit Court in affirming the decree of the District Court, as it is plain it should have been reversed. For these reasons the decree of the Circuit Court is in all things REVERSED, and the cause remanded for further proceedings

IN CONFORMITY TO THIS OPINION.

title: The Lottawanna/Opinion of the Court


text: Talk:The Lottawanna/Opinion of the Court