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Gates v. Goodloe/Opinion of the Court

The original decree in the second Chancery Court of Shelby County, Tennessee, for $8,821.49, was rendered against S. M. Gates, A. M. Wood, and Milton McKnight, partners under the name of Gates, Wood, & McKnight, and on appeal to the Supreme Court of Tennessee, it was, to the extent of $7,840.25, affirmed Oct. 13, 1875. On the 1st of August, 1876, Gates and Wood received discharges in bankruptcy, releasing them individually from all provable debts and claims existing against them on the 22d of April, 1876, other than those which, by law, were excepted from the operation of such a discharge. The present writ of error was sued out Oct. 30, 1876, by all the partners. The defendant in error now moves to dismiss it, upon the assumption that the assignee in bankruptcy could alone prosecute it. Undoubtedly, the assignee had the right to prosecute that rit, so far, as least, as it concerned those whom he represented. If the bankrupts could not themselves, under any circumstances, properly sue it out after their discharge (and upon the question we express no opinion), all difficulty, in that respect, has been removed by the application of the assignee for an order here substituting him as a plaintiff in error. His application is now granted, and he is allowed to prosecute the writ in behalf of the bankrupts. Independently, however, of that application, we are not prepared to say that McKnight, the partner against whom no bankruptcy proceedings were instituted, might not have sued out the writ, using for that purpose, if necessary, the names of all the parties against whom the original decree was rendered. With both the assignee in bankruptcy and McKnight before the court, there is no sound reason why the cause should not proceed to a final determination upon the errors assigned.

Coming, then, to the merits of the case, we find that the original plaintiffs in error specially claimed a right or immunity in virtue of an authority exercised under the United States. The right or immunity, so claimed, was denied, first in the court in which the suit originated, and subsequently in the Supreme Court of the State of Tennessee.

The facts upon which that claim rests, or out of which it arises, are, briefly, these:--

On the 6th of June, 1862, military possession was taken of the city of Memphis by the Union forces then engaged in suppressing armed insurrection against the national authority. During the succeeding month General Sherman, having been previously assigned by competent military authority to the command of the district of West Tennessee, reached that city with reinforcements, and assumed control of the forces in that locality.

Shortly thereafter he published orders, reopening trade and communication with the surrounding country, and prescribing rules in conformity with which travel in and out of the city should be conducted. On the 7th of August, 1862, pursuant to orders from General Grant, his superior officer, specific instructions were issued by him to the quartermaster in charge at Memphis, concerning vacant stores and houses in that city, and also as to buildings which were occupied, but the owners of which had 'gone South,' leaving agents to collect rent for their benefit. With reference to the latter class of buildings his instructions, or rather orders, were: 'Rent must be paid to the quartermaster. No agent can collect and remit money South without subjecting himself to arrest and trial for aiding and abetting the public enemy.'

The object of these regulations was thus distinctly set forth by General Sherman in his letter of instructions: 'I understand that General Grant takes the rents and profits of this class of real property, under the rules and laws of war, and not under the Confiscation Act of Congress; therefore the question of title is not involved,-simply the possession, and the rents and profits of houses belonging to our enemies, which are not vacant, we hold in trust for them, or the government, according to the future decision of the proper tribunals.' He concluded his letter in these words: 'We have nothing to do with confiscation. We only deal with possession, and, therefore, the necessity of a strict accountability, because the United States assumes the place of trustee, and must account to the rightful owner for his property, rents, and profits. In due season courts will be established to execute the laws, the Confiscation Act included, when we will be relieved of this duty and trust. Until that time every opportunity should be given to the wavering and disloyal to return to their allegiance to the Constitution of their birth or adoption.'

These instructions do not appear in the present transcript, although they constitute a part of the archives of the War Department, and belong to the public history of the late civil war. Some question may be made as to our right to take judicial notice of the in the determination of this case. But, apart from them, the record sufficiently establishes the fact that the military authorities adopted the general policy indicated by General Sherman's letter of instructions, and a rental agent, designated by those authorities, was charged with the duty, among others, of collecting rents of houses which, although occupied, belonged to persons who had 'gone South.' To that class of property belonged a storehouse, occupied by Gates, Wood, & McKnight, under a lease executed at Memphis, in 1859, by R. C. Brinkley, the testator of defendant in error, for a term of five years, and for the stipulated rent of which the lessees had executed their several promissory notes, payable quarterly during the whole period of the lease. Brinkley, upon the approach of the Union forces, left his home in Memphis, and went within the lines of the Confederate forces, where he remained until 1864.

Gates, Wood, & McKnight were notified by the military rental agent, in the summer of 1862, to pay him the rents going to Brinkley. They refused to recognize that order, or to so pay the rents, and, by reason of such refusal, were dispossessed by the military authorities. Those of their sub-tenants who expressed a willingness to comply with the order were permitted to remain in the occupancy of the premises, paying rent, however, directly to the rental agent of the United States. From the time the lessees were thus dispossessed, until July 11, 1863, the property remained under Federal military control, and all rents arising therefrom were collected by the rental agent, who, in the exercise of his functions, was recognized and sustained by the general commanding the Union forces in that district. During that intermediate period the lessees were neither in possession of the premises, nor permitted by the military authorities to receive any rents accruing therefrom. Their rent notes, covering the period during which they were thus kept out of possession, remained, however, outstanding, in the hands of the lessor or his agent. They constitute the foundation of the judgment or decree in this suit.

Are the lessees liable to the estate of Brinkley for rent, as stipulated in the lease of 1859, for the period when the storehouse was under control of the Federal military? There is no claim here for rents subsequent to July 11, 1863, since, on that day, possession was delivered or control surrendered to the lessor's son, under an arrangement made by him with the military authorities. After the return of the lessor to Memphis, in 1864, the latter took control of the property, and enjoyed the rents. Upon the solution of the foregoing question this case depends.

The Supreme Court of Tennessee was of opinion that the lessees were not discharged from liability upon their contract with Brinkley, by reason of the action taken by the military authorities touching the rents accruing from the property in question. That court recognized the hardship of the case upon the lessees, but consistently with its views of the law the relief asked for could not be given.

We are unable to give our assent to the conclusion reached by that learned court. It is inconsistent with our decision in Harrison v. Myers (92 U.S. 111), where we held that the lessee was discharged from liability to the lessor for rent of certain property in New Orleans during the period when the rents and profits arising therefrom were required by the Federal military authorities, occupying and controlling that city in the year 1862, to be paid directly to them. There is some difference in the facts of the two cases, but in their essential features they are alike. That case, it may be here observed, was determined in this court after the rendition of the present decree by the Supreme Court of Tennessee.

Brinkley, in his answer, claims to have gone within the insurrectionary lines as a private citizen and upon private business. He testified that he 'never had the honor to go or act in any other capacity, then, before, o since.' It was, however, shown that in 1861 he became a member of a military board organized in hostility to the United States. It does not appear when his connection with that body terminated, or when the board itself ceased operations. But it does appear from his own admissions that he had, prior to the occupation of Memphis by the Union forces, contributed money towards the equipment of military companies organized in that State with the avowed purpose of resisting the authority of the national government. When he abandoned his home, and entered the military lines of the enemy, he was, beyond question, in full sympathy and active co-operation with those who sought, by armed force, to overthrow the Union. Neither in his answer nor in his deposition does he intimate that he had any sympathy with the United States in its efforts to suppress insurrection. He was, therefore, in the very fullest legal sense, an enemy of the government during his stay within the military lines of the rebellion, liable to be treated as such both as to his person and property. His remaining there was in plain violation of law and in disregard of duty. In The William Bagaley (5 Wall. 377), we said that 'it was the duty of a citizen when war breaks out, if it be a foreign war and he is abroad, to return without delay; and if it be a civil war, and he is a resident in the rebellious section, he should leave it as soon as practicable, and adhere to the regular established government.'

The general commanding the Union forces at Memphis was charged with the duty of suppressing rebellion by all the means which the usages of modern warfare permitted. To that end he represented for the time, and in that locality, the military power of the nation. He did not assume authority to confiscate Brinkley's rents, nor did he seize them as booty of war; but, by his subordinates, collected and held them subject to such disposition as might be thereafter made of them by the decisions of the proper tribunals. They were seized, flagrante bello, in that portion of the territory of the United States the inhabitants whereof had been declared to be in insurrection. There was no such 'substantial, complete, and permanent military occupation and control' as has been sometimes held to draw after it a full measure of protection to persons and property at the place of military operations. 16 Wall. 495. No pledge had then been given by the constituted authorities of the government which prevented the commander of the Union forces from doing all that the laws of war authorized, and that, in his judgment, under the circumstances attending his situation, was necessary or conducive to the successful prosecution of the war. He was not bound to risk the possibility of Brinkley's rents being transmitted to him beyond the Union lines. To have permitted the latter to enjoy the benefit of them in any form during his voluntary absence within the military lines of the insurrection might have encouraged him to remain under the protection of the enemy, adding by his presence and means to the enemy's ability to continue the struggle against the government. If, therefore, in the judgment of the commanding general, the security of his own army, or the diminution of the enemy's resources, required that he should prevent those within the Confederate military lines from receiving or using in any way, while there, rents accruing from real estate within the Federal lines, it would be difficult to show that the mode adopted by him to effect that result was not a proper military precaution, entirely consistent with the established rules of war, and having direct connection with the great end sought to be accomplished by the war; to wit, the destruction of armed rebellion, and the complete restoration of the national authority over the insurrectionary district.

The action of the military authorities in seizing the rents arising from the property which Brinkley had leased to Gates, Wood & McKnight not being, then, in violation of law,-that which was don being regarded as having been done by the authority of the United States in lawful defence of the national existence against armed insurrection,-it results, necessarily, as we think, that the lessees, when dispossessed by military authority and deprived of all future use and control of the leased property, were discharged from liability to the lessors for rent accruing during, at least, the period of such dispossession. They were not discharged from liability for rent which had previously accrued. But since the consideration for their promise to pay rent, from time to time, was the possession and use of the leased property during the term and upon the conditions specified in the lease, and since such enjoyment and use were materially interrupted and prevented by the interference of the law, or of lawful public authority, to which both parties were amenable, the lessees, it seems to the court, ought to be protected against liability for the rent stipulated in the contract of 1859, for the period they were thus kept out of possession and enjoyment of the property. The events and contingencies causing that result were not such as the parties anticipated, nor such as we can suppose were in contemplation when the contract was made. Otherwise they would, it must be assumed, have been provided for in the contract.

The conclusion thus reached is abundantly sustained by authority. Indeed, many of the authorities would justify us in holding the action of the military authorities to have worked the dissolution of the entire contract of lease from the moment the lessees were dispossessed.

In Melville v. De Wolf (4 El. & Bl. 844), the plaintiff sued for wages agreed to be paid to him as a mariner and carpenter on board of a foreign ship going to the Pacific Ocean. In the course of the voyage complaint was made to a British consul, at a foreign port, of an offence alleged to have been committed by the master of the ship. The consul, in pursuance of a British statute, and having power and jurisdiction so to do, caused the master to be conveyed to England, under restraint, to be there proceeded against in respect of the offence charged; and the consul, having power and jurisdiction so to do, caused the plaintiff to leave the ship, and proceed to England as a witness. The latter did not return to the ship, or render any further services thereon for the defendant. The question in the case was as to the liability of the defendant for wages according to the articles signed, for the period subsequent to the departure of the plaintiff for England under the direction or order of the consul. The Court of Queen's Bench, speaking by Lord Campbell, C. J., said: 'The money paid into court covered the plaintiff's demand for wages during the whole time that he had served on board the ship; and we think that, upon the facts proved, the ship-owners were not liable to pay him wages for a longer period. By authority of the British legislature he was then separated from the ship at a foreign port and sent to England, without any reasonable possibility of his ever being able to rejoin the ship during the voyage in which he was engaged. No blame is to be imputed to him, and there has been no forfeiture of wages; but he cannot be considered as having earned the wages in dispute. After he was sent home from Montevideo to England, he neither served under the articles actually or constructively; and as from that time the relation of employer and employed could not be renewed within the scope of the original hiring, we think that the contract must then be considered as dissolved by the supreme authority of the State, which is binding on both parties.' Again: 'Then, an act being done by public authority, which rendered any further performance of the contract impossible, we think that the contract was dissolved.'

Exposito v. Bowden (7 id. 763) has some bearing upon the question. Bowden, a British subject, contracted to make a voyage to Odessa, a Russian port, and bring from there goods belonging to the other contracting arty. Before the voyage was completed, war between England and Russia intervened. Bowden thereupon declined to execute the contract, and was sued for damages for failing to do so. The Court of Queen's Bench said: 'As to the mode of operation of war upon contracts of affreightment made before, but which remain unexecuted at the time it is declared, and of which it makes the further execution unlawful and impossible, the authorities establish that the effect is to dissolve the contract, and to so absolve both parties from further performance of it.'

The same doctrine was announced in Barker v. Hodgson (3 Moo. & S. 267), where Lord Ellenborough said: 'If, indeed, the performance of this covenant has been rendered unlawful by the government of this country, the contract would have been dissolved on both sides, and this defendant, inasmuch as he has thus been compelled to abandon his contract, would have been excused for the non-performance of it, and not liable in damages.'

In his treatise on the law relative to merchant ships and shipping (11th ed., by Shee, 453), Lord Tenterden says: 'If an agreement be made to do an act lawful at the time of such agreement, but afterwards, and before the performance of the act, the performance be rendered unlawful by the government of the country, the agreement is absolutely dissolved.'

To the same effect speak Chancellor Kent (3 Kent, 248) and Mr. Chitty. Chit. Contr. (11th Am. ed.) 1077. The last-named author says: 'So the non-performance of a contract will be excused where such non-performance is occasioned by an act done by public authority.'

Further citation of authorities would seem to be unnecessary. The reasons assigned in the adjudged cases, and by elementary writers, in support of the principles announced in the foregoing authorities, apply to this case, and should control its determination. The lessees having been permanently deprived, by competent public authority, of the possession of the leased property, the use of which was the sole consideration for the notes sued on, they were discharged from liability upon the notes, which represented the rents accruing during the period of military occupancy and control.

The decree of the Supreme Court of Tennessee will be reversed, with directions to enter, or to cause to be entered in the proper court, a decree of perpetual injunction in accordance with the principles of this opinion; and it is

So ordered.

title: Gates v. Goodloe/Opinion of the Court


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Jones v. New York Guaranty and Indemnity Company

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

The New York Kerosene Oil Company and the New York Guaranty and Indemnity Company were corporations organized pursuant to the laws of New York.

On the 15th of February, 1867, Abraham M. Cozzens, as the president of the Oil Company, applied to the Guaranty Company for a loan of $100,000. The sum of $50,000 was advanced to him, and he thereupon delivered to the Guaranty Company the note of the Oil Company for that amount, of the date above mentioned, payable to and indorsed by A. M. Cozzens & Co., and having sixty days to run. At the same time he gave to the Guaranty Company a memorandum signed by him as such president, whereby he stipulated that he would cause to be prepared a mortgage by the Oil Company to the Guaranty Company on the real estate of the former therein mentioned, for the sum of $100,000, to be held by the latter as security for the $50,000 so lent, and for any further loan thereafter made by the Guaranty Company to the Oil Company. Cozzens thereupon procured a formal order to be made by the trustees of the Oil Company that such a mortgage should be executed, and the written consent of the holder of more than two-thirds of the stock of the Oil Company was given to the same effect. Both were necessary to the validity of the mortgage.

The capital stock of the Oil Company was $500,000, and Cozzens owned of it $493,000.

Passing by some intermediate details not necessary to be particularly stated, Cozzens caused to be prepared the bond and mortgage here in question, and both were duly executed. The counsel who prepared them made the mortgage describe the individual obligation of Cozzens as the liability to be secured instead of the debt of the company; but the mortgage recited that the Oil Company had authorized the giving of the mortgage to secure a loan of $100,000, and that Cozzens had given to the Guaranty Company his personal bond in that sum to secure advances, not to exceed that sum, to be made to Cozzens, upon the conditions in the bond mentioned, and that the requisite consent of stockholders had been given. The mortgage was conditioned for the payment by the Oil Company, and not by Cozzens, of the amount that might be due upon the instrument secured by it. The bond is set out at length in the record. It states that it was given to cover any advances then made or thereafter to be made by the Guaranty Company to Cozzens to the amount of $100,000 or less, on the condition that whenever any sum was so advanced the amount and date of the advance should be indorsed on the bond and signed by Cozzens, and that when any payment was made by Cozzens such payment should be indorsed in like manner, and that the amount which, according to the indorsements, should appear to be due on the bond should be considered as the amount due, 'and for which the premises which have this day been conveyed to the said New York Guaranty and Indemnity Company, by the New York Kerosene Oil Company, by indenture of mortgage bearing even date herewith, shall be liable, and for no greater sum.'

The mortgage and bond bear date on the 29th of April, 1867, but were delivered and took effect on the 11th of May following. The indorsements on the bond show that Cozzens received from the obligee three several advances,-one of $50,000, and two of $25,000 each. No credits are indorsed. The note of the Oil Company, indorsed and delivered to the Guaranty Company on the 15th of February previous, when the first loan of $50,000 was made, was renewed when the bond and mortgage were delivered, and the amount was indorsed on the bond as an advance of that date. It was renewed several times subsequently, and the Guaranty Company holds the last renewal. When one of the advances of $25,000 was made, a note of the Oil Company for that amount to Cozzens & Co. was indorsed and delivered as collateral. That note was also renewed from time to time, and the last renewal is held by the Guaranty Company.

When the other advance of $25,000 was made, a warehouse receipt for oil, given by the Oil Company to Cozzens, was indorsed and delivered as a collateral. The receipt proved worthless. Nothing was ever received upon it. It is not controverted that the Oil Company owed Cozzens more than $100,000 for his advances to it, nor that every dollar of the loans in question were used for its benefit. Not the slightest taint of dishonesty is shown in these transactions, nor is any thing disclosed which warrants the suspicion of such a purpose.

The Oil Company was expressly authorized by the act under which it was organized to secure the payment of its debts theretofore or thereafter 'contracted by it in the business for which it was incorporated, by mortgaging any or all real estate of such corporation,' and it was declared that 'every mortgage so made shall be as valid to all intents and purposes as if executed by an individual owning such real estate.'

In March, 1868, Cozzens and the Oil Company became insolvent. Their paper went to protest. The business of the latter for the time was ruinous, and both were engulfed in the vortex of common disasters. Cozzens died about a week afterwards. 'His death was caused by his failure. His physician said so.' The unsecured creditors attacked the validity of the mortgage. The Circuit Court sustained it, and the controversy has been brought here for review.

Mr. Benjamin F. Tracy for the appellant.

Mr. George F. Comstock and Mr. William Allen Butler, contra.

MR. JUSTICE SWAYNE, after making the foregoing statement, delivered the opinion of the court.


text: Talk:Jones v. New York Guaranty and Indemnity Company


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Jones v. New York Guaranty and Indemnity Company/Opinion of the Court

The analysis of this case in the preceding statement divests it of all extraneous considerations, and presents it in the nakedness and simplicity of its material facts.

The central and controlling questions to be determined are:--

Whether the Oil Company had the power to give a mortgage for future advances; and,

Whether the mortgage here in question is, in the view of a court of equity, for the debt of the Oil Company or for the debt of Abraham M. Cozzens.

The oral arguments of the eminent counsel who appeared before us were addressed principally to these subjects. Numerous other points are made by the counsel for the appellant in his brief, and have been fully discussed in the printed arguments upon both sides. They are minor in their character, and we think involve no proposition that admits of doubt as to its proper solution. We are satisfied with the disposition made of them by the Circuit Court, and shall pass them by without further remark.

At the common law, every corporation had, as incident to its existence, the power to acquire, hold, and convey real estate, except so far as it was restrained by its charter or by act of Parliament. This comprehensive capacity included also personal effects of every kind.

The jus disponendi was without limit or qualification. It extended to mortgages given to secure the payment of debts. 1 Kyd, Corp. 69, 76, 78, 108; Angell & Ames, sect. 145; 2 Kent, Com. 282; Reynolds v. Commissioners of Stark County, 5 Ohio, 204; White Water Valley Canal Co. v. Vallette, 21 How. 414.

A mortgage for future advances was recognized as valid by the common law. Gardner v. Graham, 7 Vin. Abr. 22, pl. 3. See also Brinkerhoff v. Marvin, 5 Johns. (N. Y.) Ch. 320; Lawrence v. Tucker, 23 How. 14.

It is believed they are held valid throughout the United States, except where forbidden by the local law.

The statute under which the Oil Company came into existence made it 'capable in law of purchasing, holding, and conveying any real and personal estate, whenever necessary to enable' it to carry on its business; but it was forbidden to 'mortgage the same, or give any lien thereon.' This disability was removed by the later act of 1864, which expressly conferred the power before withheld. This change was remedial, and the clause which gave it is, therefore, to be construed liberally with reference to the ends in view.

The learned counsel for the appellant insisted that a mortgage could be competently given by the Oil Company only to secure a debt incurred in its business and already subsisting. This, we think, is too narrow a construction of the language of the law. A thing may be within a statute but not within its letter, or within the letter and yet not within the statute. The intent of the law-maker is the law. The People v. Utica Insurance Co., 15 Johns. (N. Y.) 357; United States v. Babbit, 1 Black, 55.

The view of the court in Thompson v. New York & Hudson River Railroad Co. (3 Sandf. (N. Y.) Ch. 625) was sounder and better law. There the charter authorized the corporation to build a bridge. It found one already built that answered every purpose, and bought it. The purchase was held to be intra vires and valid. Here the object of the authorization is to enable the company to procure the means to carry on its business. Why should it be required to go into debt, and then borrow, if it could, instead of borrowing in advance, and shaping its affairs accordingly? No sensible reason to the contrary can be given. If it may borrow and give a mortgage for a debt antecedently or contemporaneously created, why may it not thus provide for future advances as it may need them? This may be more economical and more beneficial than any other arrangement involving the security authorized to be given. In both these latter case the ultimate result with respect to the security would be just the same as if the mortgage were given for a pre-existing debt in literal compliance with the statute. No one could be wronged or injured, while the corporation, whom it was the purpose of the law to aid, might be materially benefited. Is not such a departure within the meaning, if not the letter, of the statute? There would be no more danger of the abuse of the power conferred than if it were exercised in the manner insisted upon. The safeguard provided in the required assent of stockholders would apply with the same efficacy in all the cases. The object of the loan, the application of the money, and the restraints imposed by the charter in those particulars, would be the same, whether the transaction took one form or the other. According to our construction the company could give no mortgage but one growing out of their business, and intended to aid them in carrying it on. In legal effect the difference between the two constructions is one merely of mode and manner, and not of substance.

Such securities are not contrary to the law or public policy of the State. Many cases are found in her reported adjudications where both judgments and mortgages for future advances have been sustained.

Our view is not without support from the language of the statute, that 'every mortgage so made shall be as valid to all intents and purposes as if executed by an individual owning such real estate.' If this mortgage had been given by individuals, the question we are examining doubtless would not have been brought before us for consideration.

When a deed is fatally defective for the want of a sufficient consideration to support it, such a consideration subsequently arising may cure the defect and give the instrument validity. Sumner v. Hicks, 2 Black, 532. It is not necessary to go through the form of executing a second deed to take the place of the first one. This principle applies to the mortgage after all the advances had been made, conceding that it had before been invalid for the reason insisted upon.

The statute of 1864 neither expressly forbids nor declares void mortgages for future advances.

If the one here in question be ultra vires, no one can take advantage of the defect of power involved but the State. As to all other parties, it must be held valid, and may be enforced accordingly. Silver Lake Bank v. North, 4 Johns. (N. Y.) Ch. 370; National Bank v. Matthews, 98 U.S. 621. In the latter case this subject was fully examined.

A corporation can act only by its agents. If there were any such technical defect as is claimed touching the execution of this mortgage, it has been cured by acquiescence and ratification by the mortgagor.

No one else can raise the question. All other parties are concluded. Gordon v. Preston, 1 Watts (Pa.), 385.

Where money had been obtained by a corporation upon its securities which were irregular and ultra vires, but the money was applied for the benefit of the company, with the knowledge and acquiescence of the shareholders, the company and the shareholders were estopped from denying the liability of the company to repay it. And the same result follows where such securities are issued with the knowledge of the shareholders, so far as the money thus raised is applied for the benefit of the company. In re Cork & Youghal Railway Co., Law Rep. 4 Ch. 748.

A court of equity abhors forfeitures, and will not lend its aid to enforce them. Marshall v. Vicksburg, 15 Wall. 146. Nor will it give its aid in the assertion of a mere legal right contrary to the clear equity and justice of the case. Lewis v. Lyons, 13 Ill. 117.

The second point to be considered is whether the mortgage was for the debt of Cozzens or for the debt of the Oil Company.

Cozzens occupied a twofold relation to the latter. He owned all the stock but a trifle, and was the president of the company. At the same time he was largely its creditor. When he applied to the Gua anty Company, he appeared in his official character, and proposed a present loan to the Oil Company of $50,000 upon its note, and further advances thereafter to the amount of $50,000, making in the aggregate the sum of $100,000, the whole to be secured by a mortgage from the company upon all its real estate.

This offer was accepted. The proposition as to the mortgage was in writing, and signed by Cozzens as president. It mentioned a loan of $50,000 as already made to the Oil Company, and spoke of 'any future loan you may make to our company,' as the liabilities to be secured.

Let us pause for a moment and consider the position of the parties at this point of time. So far, all that had been done and all that had been proposed and agreed to be done was in form and substance solely for the Oil Company. Nothing had been done or proposed for Cozzens individually. There is no ground for the allegation or suspicion that the transaction was in aught otherwise than as we have stated it. It is true the Guaranty Company held the indorsement, not of Cozzens, but of Cozzens & Co. on the note of the Oil Company for $50,000. But the Oil Company was primarily liable. Cozzens & Co. were responsible as indorsers and sureties, and were liable to be called upon only in the event of the default of the principal debtor. Until that occurred, they could not be required to respond; and in that contingency they would have been liable as any other sureties are under the same circumstances. The Oil Company was the principal debtor.

When the agreement between the Oil Company and the Guaranty Company came to be carried out, the scrivener by whom the papers were prepared without the request or knowledge of the Guaranty Company, described in the mortgage the penal bond of Cozzens as the thing to be secured, but the mortgage recited that the president had been authorized to make the loan and to execute the mortgage to secure its payment, and that the requisite consent of the stockholders had been given, and the condition of the mortgage was that the Oil Company, and not Cozzens, should pay whatever might become due upon the bond. It is true that Cozzens covenanted personally in the mortgage to pay, while there was no such covenant on the part of the company.

The first indorsement upon the bond was made upon the renewal of the company's note of $50,000, held by the Guaranty Company. One of those of $25,000 was for that amount advanced upon the note of the Oil Company for the like sum. The remaining indorsement was for that amount advanced upon a warehouse receipt for oil given by the company to Cozzens and by him transferred to the Guaranty Company.

All the moneys thus advanced were applied exclusively for the benefit of the Oil Company.

There can be no question as to the first indorsement on the bond of $50,000 being the debt of the mortgagor. It was the same debt which subsisted when the first note was delivered to the Guaranty Company, and the character of the debt was not changed by the renewal of the note and the indorsement on the bond then made.

If a note secured by a mortgage be renewed or otherwise changed, the lien of the mortgage continues until the debt is paid. Changes in the form of the instrument are immaterial. Equity regards only the substance of things, and deals with human affairs upon that principle. The same state of things in effect occurred with respect to each of the other sums advanced by the Guaranty Company. The note and warehouse receipt given for them were the note and receipt of the Oil Company, and it was responsible accordingly. Its needs were the motive, and were at the foundation of every loan that was made; and whether Cozzens acted as its agent in making them, or transferred the securities as a creditor acting for himself, is quite immaterial. The result is inevitably the same. In either case the Oil Company became directly liable upon the securities, and to that amount, the principal debtor to the mortgagee.

The condition of the mortgage being that the c mpany should pay and not that Cozzens should, it could not be broken without the company's default. Until that occurred, there could be no remedy upon it either by foreclosure or ejectment. If Cozzens made default, no such consequence would follow. He could be sued on his covenant, but the rights and remedies of the mortgagee with respect to the mortgaged premises would be neither more nor less on that account. The covenant of Cozzens was collateral to the liability of the company. No such covenant was needed from the Oil Company, because the mortgage pledged its entire real estate, and the mortgagee held in addition a direct liability for each advance upon which a judgment at law could be taken. As before remarked, there could be no breach of the condition of the mortgage without the default of the Oil Company; and if it had paid the amount due that would have extinguished the collateral liability of Cozzens and of Cozzens & Co., and if the tender had been refused, it would have extinguished the mortgage, though not the debt. Kortright v. Cady, 21 N. Y. 343.

In all that Cozzens did he acted as the agent of the Oil Company, and it would involve an utter perversion of the facts to hold that he and not that company was the principal debtor to the Guaranty Company.

We are satisfied beyond a doubt that it was the debt of the Oil Company and not his debt that was intended to be secured and was secured by the mortgage.

In examining this point, it was proper to consider all the evidence in the record. This was objected to by the counsel for the appellant. He insisted that the scope of our view must be limited to the face of the mortgage and the obligation secured by it.

It is common learning in the law that parol evidence is admissible to show that a deed absolute on its face is a mortgage, to establish a resulting trust, to show that a written contract was without consideration, that it was void for fraud, illegality, or the disability of a party, that it was modified as to the time, place, or manner of performance or otherwise, or that it was mutually agreed to be abandoned; also to show the situation of the parties and the surrounding circumstances when it was entered into and to apply it to its subject, to show that a joint obligor or maker of a note was a surety, and that the acceptor or indorser of a bill or the maker or indorser of a note became such for the accommodation of the plaintiff. Where a party has entered into a written contract, it may be so shown that he did it as the agent of another, though the agency was concealed and the principal not disclosed, and the principal, in such case, may be held liable upon it. A mortgage or a judgment may be assigned by parol.

These are but a small part of the functions which such evidence is permitted to perform.

In no class of cases is it admitted with greater latitude and effect than in that to which the one here in hand belongs.

In Shirras v. Caig & Mitchell (7 Cranch, 34), Mr. Chief Justice Marshall said: 'It is true that the real transaction does not appear on the face of the mortgage. The deed purports to secure a debt of 30,000 sterling, due to all the mortgagees. It was really intended to secure different sums, due at the time to particular mortgagees, advances afterwards to be made and liabilities to be incurred to an uncertain amount.'

After remarking that such an instrument was liable to suspicion, he proceeds:--

'But if, on investigation, the real transaction shall appear to be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed of his real equitable rights, unless it be in favor of a person who has been in fact injured by the misrepresentation. That cannot have happened in the present case.'

The decree of the court was that the mortgagees were entitled to have the mortgaged premises sold, 'and to apply the proceeds of said sale to the payment of what remains unsatisfied of their respective debts,' &c.

In Gordon v. Preston (supra), it appeared that the mortgage was for a greater amount than was owing to the mortgagee. Chief Justice Gibson said the mortgage was good 'for the sum actually due.' He said further: 'But the mortgage was in fact given for the benefit of other creditors, whose debts are not disputed, and though the trust is not expressed in the instrument, evidence was proper to explain the true nature of the transaction and negative any imputation of actual fraud.'

In Hurd et al. v. Robinson et al. (11 Ohio St. 232), the condition of the mortgage was: 'Provided always, and these presents are upon the condition, that whereas the said Robinson is indebted to said bank for money loaned, and for divers bills of exchange and promissory notes, now if the said Robinson shall discharge his said several liabilities in six months from this date, these presents shall be void, otherwise, to remain in full force and virtue.' The condition was held to be sufficiently definite, and the mortgage was sustained. The opinion of the court is able and elaborate. Gill v. Pinney (12 id. 38) is to the same effect.

Other like cases might be multiplied to an indefinite extent. It is unnecessary to incumber this opinion with further references. The grounds upon which they proceed are, that a thing is to be regarded as certain which can be made certain; that evidence can be adduced to apply the contract to its subject; that where there is enough to put those concerned upon inquiry, the means of knowledge and knowledge itself are, in legal effect, the same thing.

A multo fortiori was it proper to receive the evidence referred to in the present case.

See, in this connection, also, Chester and Others v. The Bank of Kingston, 16 N. Y. 336, and Horn v. Keteltas, 46 id. 605.

Decree affirmed.


text: Talk:Jones v. New York Guaranty and Indemnity Company/Opinion of the Court


text:
Lumber Company v. Buchtel

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

The facts are stated in the opinion of the court.

Mr. Emery A. Storrs for the plaintiff in error.

Mr. Mitchell J. Smiley, Mr. O. H. Simonds, and Mr. N. A. Fletcher, contra.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Lumber Company v. Buchtel


text: Talk:Lumber Company v. Buchtel

title: Talk:Lumber Company v. Buchtel


text:
Lumber Company v. Buchtel/Opinion of the Court

On the 23d of September, 1874, William Buchtel, the plaintiff in the court below, the defendant in error here, contracted to sell to the Big Rapids Improvement and Manufacturing Company, a corporation created under the laws of Michigan, several hundred acres of pine land in that State for the sum of $12,273.84, payable as follows: $3,068.46 on the first of the following January, and the balance in three equal annual instalments, with interest. Nothing was paid by the company at the time, and the contract provided for the execution of a conveyance to it only upon the payment of the sums stipulated as they became due, and it prohibited in the mean time the cutting or removal of the timber without the written permission of the vendor.

Two days after its execution, the contract was assigned in writing by the Improvement and Manufacturing Company to the defendant, the Mason Lumber Company, also a corporation of Michigan. To this assignment the vendor assented, and gave permission to the Lumber Company to enter upon the lands and cut and remove the timber; and in consideration of this permission, that company guaranteed the payments stipulated in the contract. In the negotiation which resulted in the execution of the guaranty, the Improvement and Manufacturing Company was represented by its vice-president, Mr. Bronson; and the Lumber Company by its president, Mr. Mason.

The payment due on the first of January, 1875, not having been made, the present action was brought by the vendor, Buchtel, upon the guaranty, against the Lumber Company. The company pleaded the general issue, and gave notice that it would give in evidence, and insist as a defence to the action, that it was induced to enter into the undertaking by the false and fraudulent representation of the plaintiff that the lands contained 5,700,000 feet of good merchantable pine timber; whereas, in fact, there were only 1,500,000 feet of such timber on the land, and that thereby it had sustained damages to the amount of $20,000, which it would recoup against the claim of the plaintiff and ask to have the balance certified in its favor.

By the law of Michigan, damages, whether liquidated or not, claimed by a defendant as arising out of the contract or transaction upon which an action is brought, may be set up by way of recoupment against the demand of the plaintiff; and, if found to exceed such demand, the defendant can have judgment for the balance. The case was, by stipulation of parties, tried before a referee, who reported in favor of the plaintiff for the amount claimed, with interest. He also found, as a matter of fact, that Bronson, who acted for the Improvement and Manufacturing Company in the transaction in which the assignment and guaranty were made, exhibited at the time to Mason, who acted for the Lumber Company, a plat of the lands in the presence of the plaintiff, and represented that they contained 5,000,000 feet of good merchantable pine timber; whereas, as a matter of fact, they contained only 1,237,197 feet of such timber; but that there was a large quantity of additional timber which was poor, the defects of which could not be discovered until after it was cut. He further found that the plaintiff had never seen the lands, and that the Lumber Company was aware of the fact; and that all the knowledge he had of the quantity of the timber was derived from an estimate furnished to him by his grantor. The referee also states in his report that 'he does not find' that the plaintiff's attention was called to the plat exhibited, or that he made any representations in relation to the quantity of timber on the land, or that he had any knowledge of the quantity at the time, or that the estimate furnished to him by his grantor was before him, or that he alluded to it, or that the representations of Bronson to Mason as to the quantity of the timber were made in his hearing. Exceptions were taken to the report, and overruled by the court below.

The only questions presented by the record which merit consideration are,--

1st, Whether the false and fraudulent representations assuming that they were fraudulent as well as false-of the agent of the Improvement and Manufacturing Company to the agent of the Lumber Company, as to the quantity of timber on the lands purchased, in which representations the plaintiff did not participate, released the defendant from liability on its guaranty; and,

2d, Whether the report of the referee is fatally defective because it finds certain facts inferentially and not directly.

Neither of the questions thus raised is at all difficult of solution. The contract of guaranty of the Lumber Company was executed to the plaintiff as a consideration for his permission to enter upon the land and cut and remove the timber in advance of the stipulated payments. The provision against the cutting or removal of the timber, without such consent, was a most important one to him. It secured him against a possible loss if the payments were not made. The granting of permission to the Lumber Company was releasing that security, and giving to the company the principal value of the property in advance of payment. The guaranty was a reasonable exaction for it. The representations of the Improvement Company, through its officers, to the officers of the Lumber Company, as to the supposed amount of timber on the land, to induce the latter to execute the guaranty and thus obtain the permission of the plaintiff, cannot be allowed to mar or defeat the contract with him, as he knew nothing of their being made, and was ignorant of the subject to which they related. It was the same thing to him whether insufficient or adequate consideration passed between the two companies. He gave to the Lumber Comp ny a valuable consideration for the guaranty, and has, therefore, a right to hold that company to the liabilities it assumed.

The cases cited by counsel to show that a misrepresentation of material facts inducing a contract, though made in ignorance, may, in many cases, be the foundation of a suit for its cancellation or modification, have no bearing on the questions here presented. They apply only where the contract, of which a rescission or modification is sought, was obtained by the party claiming its benefit, and the misrepresentations related to the consideration given for it.

Thus, in the first case cited, that of Smith v. Richards, reported in the 13th Peters, the misrepresentation related to land containing a gold-mine, and was made by the owner to the vendee to induce its purchase by him. And so it will be found in all the other cases cited, that the misrepresentations came from the party holding the contract complained of, and related to the consideration upon which it was executed.

In the case before us neither of these particulars exists. The misrepresentations alleged did not come from the plaintiff, the holder of the contract, nor relate to the permission given to cut and remove the timber. Neither as to the nature or value of his reserved right to withhold such permission were any representations made by him, nor could there have been any misapprehension of the nature and extent of the guaranty assumed. Whatever related to other matters which took place between the two companies was unknown to him and in no way concerned him.

The report of the referee is undoubtedly defective in the form in which the statement is made of the plaintiff's want of knowledge as to the misrepresentations of the officers of the Improvement Company. The findings should have the precision of a special verdict, and specify with distinctness the facts found, and not leave them to be inferred. 'I do not find' that the plaintiff knew certain facts, is a defective statement, and ought not to be received as equivalent to a direct finding that the plaintiff did not know the facts mentioned; although it is probable that the referee intended it to have that meaning. But defects of this character in the finding should have been called to the attention of the court below, and a more definite finding required of the referee. They cannot be considered here for the first time. It was for the defendant to see that findings were had on all matters material to its defence, as it was for the plaintiff to see that findings were sufficient to support the judgment in his favor.

Judgment affirmed.


text: Talk:Lumber Company v. Buchtel/Opinion of the Court


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Railway Company v. United States

APPEAL from the Circuit Court of the United States for the Middle District of Tennessee.

The facts are stated in the opinion of the court.

Mr. James E. Bailey for the appellant.

The Attorney-General and Mr. Edwin B. Smith, Assistant Attorney-General, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Railway Company v. United States


text: Talk:Railway Company v. United States

title: Talk:Railway Company v. United States


text:
Railway Company v. United States/Opinion of the Court

On the 10th of November, 1871, the United States recovered a decree in an equity suit in the court below against the Nashville and Chattanooga Railroad Company, for $1,000,000, to be paid one-half in ten years, and one-half in twenty years, with interest semi-annually at the rate of four per cent per annum. By an arrangement between the parties, bonds with coupons attached were issued by the company to represent the amounts thus to be paid, and it was provided in the decree that if the company should 'make default for the period of ninety days in the payment of any of the instalments of interest or of principal of said debt, or any part thereof, after the same shall have become due and payable, according to the tenor and effect of said bonds and coupons, then the United States, on filing with the clerk of the court any of said coupons or bonds, past due and unpaid for ninety days, shall have the right to have issued an order for the execution of this decree to the extent of such default by the sale of the railroad,' &c. Default having been made in the payment of fifty-seven coupons, of $100 each, representing a part of the semi-annual interest on the bonds so issued, the United States, on the 12th of June, 1876, filed the coupons in the clerk's office, and asked for execution of the decree to that extent. Thereupon the Nashville, Chattanooga, and St. Louis Railroad Company, the successor of the original defendant company, and representing its debts and assets, appeared, and, by petition, asked that a debt which the United States owed the petitioning company for services performed in military transportation and carrying the mails since the date of the decree, might be applied to the payment and cancellation of the coupons in default and on file. From the petition itself it appears that the United States refused to make the application because of an alleged defence they had to the claim, and the evident purpose of the company is to have the validity of that defence determined in this proceeding.

In our opinion the court below properly d clined to entertain the petition. The claim of the railroad company does not arise out of the decree. There is no connection between the demand of the United States on the one side and that of the railroad company on the other. The United States ask for no new decree, but execution because of default in the payment of an old one. Upon their application the only question is whether there has been default for the requisite time in the payment of the coupons filed. The railroad company admits the default, but insists, in effect, that the United States ought to apply the coupons to the payment of a debt they owe the company, and thus cancel the default. This the United States decline to do, because they claim they do not owe the debt set up by the company. Clearly this dispute between the parties could not, even before final decree, be made the subject of a cross-bill, because it does not grow out of the original suit. A cross-bill cannot be used to bring in new and distinct matters. Ayers v. Chicago, supra, p. 184; Rubber Company v. Goodyear, 9 Wall. 788; Cross v. De Valle, 1 id. 5. Neither can the petition be treated as an original and independent suit, for the United States cannot be sued on contracts except in the Court of Claims. If the United States had sued the railroad company on the coupons, other questions might have arisen; but they did not do so. All they have done has been to file their coupons with the clerk in order to get execution on their old decree.


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


text:
Kennedy v. Creswell

APPEAL from the Supreme Court of the District of Columbia.

The facts are stated in the opinion of the court.

Mr. Richard T. Merrick and Mr. Martin F. Morris for the appellant.

Mr. Enoch Totten, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Kennedy v. Creswell


text: Talk:Kennedy v. Creswell

title: Talk:Kennedy v. Creswell


text:
Kennedy v. Creswell/Opinion of the Court

The appellees filed a bill in equity for themselves and other creditors against the executor and the devisees of the will of James C. Kennedy, deceased, praying for an account of the personal estate of the testator, a discovery of his real estate, and the application thereof to the payment of his debts. The bill stated that the complainants were the holders of a note of the testator for $12,000, with interest, which was due and not paid; that the defendant, Harvey Kennedy, as executor, had proved the testator's will, and entered upon the execution thereof; that the personal property was insufficient to pay the debts, and that he was paying some debts in full and leaving others unsatisfied; and that the testator left a large amount of real estate, some of which is described and pointed out.

To this bill the defendants filed a plea, the material part of which is as follows:--

'That the executor aforesaid has in his hands assets of the estate of the said James C. Kennedy, deceased, amply sufficient to pay and discharge the claims of the complainants and all other claims that have been brought to his notice, and that he is ready and willing to pay the said claim of the complainants whenever and as soon as the same shall have been proved and established by a tribunal of competent jurisdiction according to law; but the said executor disputes the said claim, and denies the justice and validity thereof, and has for such cause rejected the same; and the said complainants have not sought in any manner to enforce the said claim against the said executor and the assets in his hands by proper proceedings at law:

'Wherefore, these defendants aver and plead the premises in bar of the complainants' bill; and they pray that the complainants be required to enforce their claim against the said executor by proper proceedings at law, and they pray also the judgment of the court whether they (these defendants) should be compelled to make any further or other answer to the said bill, and that they be hence dismissed with their reasonable costs in this behalf wrongfully sustained.'

To this plea the complainants filed a replication, and proceeded to prove the note held by them and its non-payment, and also produced in evidence the accounts filed by the executor in the office of the register of wills and the exceptions filed by the complainants thereto. In the executor's account he charged himself with assets to the amount of $31,794.62, and claimed credit for moneys paid and for commissions to the amount of $27,014.75, showing a balance in his hands of only $4,729.87. The defendants offered no testimony, and the court on final hearing made a decree that the executor should pay to the complainants the full amount of their claim. From this decree the executor appealed.

The appellant insists that, according to the rules of equity pleading, the complainants by taking issue on the plea admitted its sufficiency; and as the decree was based upon the admission of assets contained in the plea, it was an affirmation of its truth; and therefore it should have been in favor of the defendants, and the bill should have been dismissed.

This argument is very ingenious, but it is not sound. The defendants not only failed to prove the truth of their plea, but, on the contrary, the complainants, by the executor's own sworn accounts, filed in the probate office, proved, so far as such proof could go, that the plea was untrue. These accounts show that the executor had not sufficient personal estate in his hands to pay one-third of the complainants' claim alone. So that according to the strictest rules of equity pleading the complainants were entitled to a decree in their favor. The executor may have had sufficient assets in fact; but he did not see fit to disclose them, or prove that he had them. His admission that he had assets may be taken against him for the purpose of charging him with a liability, but it cannot serve him as evidence to prove the truth of his plea. His mere allegation cannot be received as proof of its own truth where the fact is directly in issue, and the burden of proof is on him.

Since, then, the complainants were entitled to a decree, the question is, what decree? If a defendant plead a false plea, and it be so found, what is next to be done? Is it to be merely overruled, and an order made that he answer further, as in case of overruling a demurrer, or of overruling a plea for insufficiency? This is not the usual course. Having put the plaintiff to the trouble and delay of an issue, the defendant cannot, after it is found against him, claim the right to file an answer; although, if the complainant desires a discovery, which the plea sought to avoid, he may undoubtedly insist upon it. But that is the complainant's right, not the defendant's. Lord Hardwicke said: 'All pleas must suggest a fact; it must go to a hearing; and if the party does not prove that fact which is necessary to support the plea, the plaintiff is not to lose the benefit of his discovery, but the court may direct an examination on interrogatories in order to supply that.' Brownsword v. Edwards, 2 Ves. 243. This statement is adopted by Lord Redesdale, Mr. Beames, and all subsequent writers on equity pleading. Mitf. (4th ed.) 302; Beames, Pleas in Equity, 318; Story, Eq. Pl., sect. 697. If the plea is found to be false, it would seem to be just and equitable that the case should stand as if the defendant had admitted the allegations of the plaintiff. Sir Thomas Plumer states the matter thus: 'Supposing a plea to be correct in form, but proved false, it seems to be conceived that the course at the hearing is to take it up just as if there was no answer. That is not correct. Upon a plea found false the plaintiff is entitled to a decree; and if a discovery is wanted, the defendant is ordered to be examined upon interrogatories.' Wood v. Strickland, 2 Ves. & Bea. 150. Chancellor Walworth, in a case before him, where the defendant produced no evidence to establish the truth of his plea, said: 'Where a plea in bar to the whole bill is put in, if the complainant takes issue thereon he admits the ufficiency of the plea, and leaves nothing in question but the truth thereof. If at the hearing the plea is found to be true, the bill must be dismissed. But if the plea is untrue, the complainant will be entitled to a decree against the defendant in the same manner as if the several matters charged in the bill had been confessed or admitted. If a discovery is necessary to enable the complainant to obtain the relief sought for by his bill, the defendant cannot evade answering by putting in a plea which turns out to be false. In such a case, after the plea is overruled as false, the complainant may have an order that the defendant be examined on interrogatories before a master as to the several matters in relation to which a discovery was sought by the bill.' Dows v. McMichael, 2 Paige (N. Y.), 345.

In the present case, the complainants did not see fit to insist on a further discovery. Being entitled to a decree pro confesso as to the principal charges of their bill, and the executor having admitted sufficient assets to pay the debts of the estate, they were content to take a decree against him for the amount of the debt. The executor's admission, as we have before said, was a good ground for charging him with the liability, though he could not urge it as evidence in support of his plea. And as an admission of assets renders the executor personally liable, a decree against him was proper. The usual decree on a creditor's bill is for an account; but, as said by Vice-Chancellor Wigram in a similar case, 'The reason for and the principle of the usual form of decree have no application where assets are admitted, for the executor thereby makes himself liable to the payment of the debt. In such a case, the other creditors cannot be prejudiced by a decree for the payment of the plaintiff's debt; and the object of the special form of the decree in a creditor's suit fails. . . . I am satisfied that in this case there ought to be a decree for immediate payment.' Woodgate v. Field, 2 Hare, 211; Story, Eq. Jur., sect. 548 a. Had it been contended or shown in this case that the estate of the testator was insolvent, so as to require a pro rata payment among all the creditors, there might have been room for the objection that the ordinary decree was not made. But no such point is made in the case, and we think that the decree was properly rendered for the debt of the complainants alone.

As to the objection that the bill was not formally dismissed as to the devisees, we do not think it can be raised here by the executor, who alone appealed from the decree.

The point taken by the appellant, that the court below, sitting as a court of equity, had no jurisdiction of the case, is not well taken. The authorities are abundant and well settled that a creditor of a deceased person has a right to go into a court of equity for a discovery of assets and the payment of his debt. When there, he will not be turned back to a court of law to establish the validity of his claim. The court being in rightful possession of the cause for a discovery and account, will proceed to a final decree upon all the merits. Thompson v. Brown, 4 Johns. (N.Y.) Ch. 619; 1 Story, Eq. Jur., sect. 546; 2 Wms. Exrs. 1718, 1719. The allegations of the bill in this case were sufficient to give the court jurisdiction; and the accounts of the executor show that the complainants had reasonable cause for making those allegations. They went into the court for the discovery of assets; and the object of the bill was attained by the admission of the executor that he had sufficient assets. It would be strange indeed if that admission could be made a ground for depriving the court of its jurisdiction. If it could, the discovery, by proof of assets concealed by the executor, would have the same effect; and the result would be that a bill in equity could be defeated by proofs showing that there was good ground for filing it.

In conclusion, we will state that we have found nothing in the local law of the Distr ct of Columbia, or the jurisdiction of the Probate Court, that is, of the Supreme Court of the District acting as such, inconsistent with the views expressed.

Decree affirmed.


text: Talk:Kennedy v. Creswell/Opinion of the Court


text:
Imhaeuser v. Buerk

APPEAL from the Circuit Court of the United States for the Southern District of New York.

This is a suit, commenced July 5, 1872, by Jacob E. Buerk against William Imhaeuser, Theodore Hahn, and Charles Keinath doing business as Imhaeuser & Co., for the alleged infringement by them of letters-patent No. 48,048, granted to him June 6, 1865, for an improvement in watchman's time detectors.

The drawings and specification of his letters are as follows: -

'No. 48,048.

'The Schedule referred to in these Letters-patent and making part of the same.

'To all whom it may concern:

'Be it known that I, Jacob E. Buerk, of Boston, in the county of Suffolk and State of Massachusetts, have invented a new and improved watchman's time detector, and I do hereby declare that the following is a full, clear, and exact description thereof, which will enable others skilled in the art to make and use the same, reference being had to the accompanying drawings forming a part of this specification, in which,--

'Figure 1 represents a face view of this invention.

'Figure 2 is a vertical central section of the same, the line x x, Figure 1, indicating the plane of section.

'Figure 3 is an inverted plan of the movement.

'Figure 4 is a face view of the same.

'Figure 5 is a diagram representing the keys necessary for the operation of this invention.

'Similar letters of reference indicate like parts.

'This invention relates to an improvement in that class of watchman's time detectors on which a patent has been granted to John Buerk, Jan. 1, 1861. In that case a strip of paper is used stretched on the circumference of a drum to which a rotary motion is imparted by a clock or watch movement, and a series of spring points serve to perforate this strip according to the time when these points are operated by a series of keys of peculiar shape. On the strip are marked the hours, corresponding to hours on the dial of the clock or watch, and the time when one or more of the spring points have been actuated can be ascertained after the strip has been taken off. This construction necessitates a drum in addition to the ordinary clock or watch movement, whereby the expense of the mechanism is increased, and, furthermore, the operation of applying and removing the strips of paper is tiresome and requires much care.

'These difficulties are avoided by using a clock or watch with a stationary index and revolving dial. On this revolving dial are fastened removable dials of paper or other suitable material, with a series of circles corresponding to the positions of the spring points, and these spring points are concealed under the stationary index. By inserting one of the keys and turning the same round, the paper dial is pierced by one or more of the spring points, and the time when this takes place can be ascertained by examining said dial when the watch or clock is opened. The perforations in the paper dial are made from below under the stationary hand, leaving a slight barb on the upper surface, and a similar perforation cannot be produced even if the watch or clock be opened, except if the paper dial is taken off.

'A represents a clock or watch movement made in the ordinary manner, and provided with a revolving dial, B, which is mounted on the centre shaft, C, in place of the ordinary hands, and which rotates under the stationary iindex, D. The dial is marked with figures from 1 to 12, and it revolves once in twelve hours. From this dial project two or more points, a, which serve to retain a false dial, E, of paper or other suitable material, and this dial is held in place by a disk, b, which slips over the centre shaft, and which is provi ed with little holes or sockets to correspond in number and position to the points a. The paper dial, E, is marked with figures from 1 to 12, like the main dial, and with a series of concentric rings, c, corresponding in number to the stations in the beat. The paper dial shown in the drawing is marked with six rings, to correspond to six different stations.

'The spaces between the rings, c, correspond in number and position to a series of spring points, d, the points of which are situated under the index D, and made to project through a slot in the dial-plate B'. When left to follow their own elasticity, said spring points do not reach above the surface of the dialplate, but they are so arranged that one or more of them can be forced up simultaneously and made to penetrate the paper dial, different keys, K, being provided, each of which serves to raise one of said spring points, or of a combination of two or more of them.

'One of the keys is intended to be fastened by a chain or other suitable means to a post or other fixed part on each station in the beat of the watchman, and the watchman carries the watch. On arriving at a station he inserts the key, and by turning the same a perforation is produced which gives a record of the time when the watchman has visited the station. The watch, of course, is intended to be locked, so that the watchman cannot get at the paper dial in order to produce fraudulent perforations to cover a neglect of his duty, and the keys, simple as they look, are so shaped that they cannot easily be imitated, for the slightest difference in the height or position of the bit would produce a different action.

'Having thus described my invention,

'I claim as new and desire to secure by letters-patent,--

'1st, The use of a false revolving dial, E, in combination with the stationary index, D, and spring points, d, constructed and operating substantially and for the purpose set forth.

'2d, Producing the perforations on the paper dial, or its equivalent, from the inside out instead of from the outside in, as before.' The bill was taken as confessed against Keinath. Imhaeuser and Hahn filed an answer denying the infringement and setting up that the indicators manufactured by them were made under letters-patent No. 117,442, granted July 25, 1871, to Anton Meyer, of Stuttgart, Germany, for an improvement in watchman's time checks; and that the complainant's letters are void for want of novelty, the invention therein claimed having been anticipated by a French patent granted to one Nolet in 1847; another granted in the same year to one Schwilgue; English letters No. 957, granted in 1852 to John Rowbotham; English letters No. 1431, granted in 1862 to Thomas Buckney; and in a German work by Emanuel Schreiber, entitled, 'Dr. Friedrich Wilhelm Barfuss's Geschechte der Uhrmacher Kunst von den altester Zeiten bis auf unsere Tage,' published in the year 1856 by Bernh. Friedr. Voeght, in Weimar, Germany.

The drawings and specification of Meyer's letters are as follows:--

'Specification forming part of Letters-patent No. 117,442, dated July 25, 1871.

'To all whom it may concern:

'Be it known that I, Anton Meyer, of Stuttgart, in the empire of Germany, have invented a new and useful improvement in watchman's time detectors; and I do hereby declare the following to be a full, clear, and exact description thereof, which will enable those skilled in the art to make and use the same, reference being had to the accompanying drawing forming part of this specification, in which drawing—

'Figure 1 represents a face view of this invention. Fig. 2 is a similar view of the same, the dial-plate being partially broken away to expose the marking-dies. Fig. 3 is a transverse central section of the same. Fig. 4 is a detached section of the cam-shaped bridge.

'Similar letters indicate corresponding parts.

'This invention consists in the arrangement of one or more stationary marking-die in the face-plate of a watch or clock in combination with a cam-shaped bridge extending over the marking-die or dies, and with one or more keys, the bit or bits of which correspond in position to the marking die or dies in such a manner that, by affixing a disk of paper or other suitable material to the movable dialplate of the watch or clock, and causing said disk to revolve between the stationary marking die or dies and the cam-shaped bridge, the key or keys, on being introduced into the watch or clock-case and turned in the proper direction under the cam-shaped bridge, will depress the paper or other material on the marking-die corresponding to the position of its bit, and the exact time when the watchman has visited a certain room or station on his beat will be recorded on the disk of paper or other material.

'In the drawing, A designates the case of a watch or clock, in which is firmly secured a stationary face-plate, a, the central part of which is cut out to make room for a disk, b, which is secured to an arbor, c. This arbor connects by suitable gear with the clock-movement, and it revolves once in twelve hours. The surface of the disk b is flush with the surface of the stationary face-plate a, and it is provided with two or more points, d, so that a dial, e, of paper or other suitable material can be readily attached to it, and that, when such dial is placed on the disk, it will be compelled to follow the motion of the same. From the face-plate a project one or more stationary dies, f, the faces of which have engraved or otherwise produced in them figures, letters, or other suitable characters, and which, when more than one such die is used, are set in a radial direction, as shown in Fig. 2 of the drawing. These dies are situated beneath a bridge, g, which is firmly secured to the case a, and which is perforated with a hole, h, to receive the key K. The under surface of the bridge is cam-shaped, as shown in Fig. 4, and the upper surface of the key is rounded, so that, when the key is inserted into the key-hole and turned round under the bridge, the projection i on said key will be depressed toward the die, and the dial, e, which is carried through between the dies and the bridge, will receive an impression to correspond to the face of the die. The position of the projection i on the key, of course, must correspond to the position of the die, and if more than one die is used several keys have to be prepared, one for each die. These keys are intended to be secured in the various rooms or stations composing the beat of the watchman, the watchman carrying the clock or watch, the case of which is locked by a key in the possession of the superintendent or proprietor of the place. On reaching a certain station the watchman inserts the key in his clock, and, by turning it, a mark is produced on the dial e indicating the station. On the dial is also marked a time-table, j, and the bridge g may serve as the index pointing on the divisions of the time-table. As the dial is carried around by the clock-movement, the time when a mark is produced on the dial by one of the keys can be read off from the time-table, and the movements of the watchman on his beat can be controlled. If the number of stations in the beat exceeds the number of the marking-dies in the clock, keys can be prepared with two or more projections, and with six marking dies a large number of stations can be controlled. If desired, the bridge g may be made yielding, so that its action on the key will depend not only on its cam-shaped face, but also on the action of a spring having a tendency to force said bridge in toward the marking die or dies.

'I am aware that a watchman's time detector has been heretofore made in which spring marking-points are used to indicate the different rooms or stations in the beat, such as described in the patent of J. E. Buerk, June 6, 1865. For these spring marking-points I have substituted stationary dies r presenting figures or letters, whereby the stations of a beat are readily recognized; and, furthermore, the stationary dies are easier made than the spring marking-points, they are less liable to get out of order, and the impressions produced by them cannot be forged without having exact counterfeits of the dies.

'I disclaim every thing shown and described in the patent of J. E. Buerk, above mentioned.

'What I claim as new, and desire to secure by letters-patent, is—

'The stationary marking die or dies, situated beneath a camshaped bridge, in combination with a suitable key or keys and with a dial passing through between the marking die or dies and the bridge, substantially as herein shown and described.'

The court passed a decree in favor of the complainant, and granted him a perpetual injunction restraining the defendants from making, manufacturing, or causing to be manufactured, using, or vending to others to be used, watchman's time detectors embracing, containing, or using the invention described in and secured by the said letters-patent No. 48,048.

Imhaeuser thereupon appealed to this court.

Mr. Arthur v. Briesen for the appellant.

The complainant's patent is void. Mere duplication of devices is not patentable.

Invention, in the sense of the patent law, is the finding out, contriving, devising, or creating by an operation of the intellect something new and useful which did not exist before. Ransom v. Mayor, 1 Fish. Pat. Cas. 252. A contrivance which does not require the exercise of inventive power is not patentable. The Corn-Planter Patent, 23 Wall. 181. Enlargement of the organization of a machine does not afford any ground, in the sense of the patent law, for a patent. Phillips v. Page, 24 How. 164. The mere change of location of an old device is not patentable, if the result is the same as before. Marsh v. Dodge et al., 6 Fish. Pat. Cas. 562. The mere transfer of a mode of constructing wooden slides and metallic slides is not invention. Carter v. Messinger, 11 Blatchf. 34. There is nothing new in the multiplication of parts. Wilbur v. Beecher, 2 id. 132.

The defendant's device does not infringe. Form, when of the essence of the invention, is necessarily material; and if it be inseparable from the successful operation of the machine, the attainment of the same object by a machine different in form is not an infringement. Werner v. king, 96 U.S. 218. Every man has the right to make an improvement in a machine and evade a previous patent, provided he does not invade the rights of the patentee. Burr v. Duryee, 1 Wall. 531; Seymour v. Osborne, 11 id. 516; Johnson v. Root, 1 Fish. Pat. Cas. 351.

Where the defendant in constructing his machine omits entirely one of the ingredients of the plaintiff's combination without substituting any other, he does not infringe; and if he substitutes another in the place of the one omitted, which is new or which performs a substantially different function, or, if old, was not known at the date of plaintiff's invention, as a proper substitute for the omitted ingredient, then he does not infringe. Gould v. Resse, 15 Wall. 187; Fuller v. Yentzer, 94 U.S. 288, 297, Carver v. Hyde, 16 Pet. 513; Brooks v. Fiske, 15 How. 212.

Mr. J. Van Santvoord, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: Imhaeuser v. Buerk


text: Talk:Imhaeuser v. Buerk

title: Talk:Imhaeuser v. Buerk