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Morris v. McMillin/Opinion of the Court

The bill was filed against the appellants to restrain the infringement of letters-patent granted to John S. Miller, one of the appellees, dated April 16, 1867, for 'a new and useful improvement in applying steam-power to the capstans of steam-boats and other crafts.' The invention, as described generally in the specification, consisted 'in connecting the capstan with the freight-hoisting engine or other engine of steam-boats by means of shafts and cog-wheels, so as to operate the capstan by steam-power instead of hand-power, as has been generally used heretofore.'

'The following is the descriptive part of the specification, which will be readily understood by reference to the accompanying drawings, in which the same letters refer to like parts in each:

'A is the deck; A, the boiler-deck; B, the capstan; C, the hoisting-engine; F, the wooden frame-work of the engine; D, the engine-shaft; E, E, the hoisting-rollers, connected with engine-shaft by the cog-wheels, a and b; G is a vertical shaft extending from the hold of the boat to the cargo-wheel shaft,g. With the latter it is connected-the bevel-wheels, c, d; H is a horizontal shaft in the hold of the boat at the middle bulk-head, extending from the vertical shaft, G, to the capstan, B. With the former it is connected by the bevel-wheels, e, f, and with the latter by the bevel-wheels, g, h. The capstan is permanently fastened to its shaft, J. The vertical shaft, G, is so arranged that it can be lifted or lowered by means of a set screw, l, whereby the bevel-wheels, c, d, and e, f, can be set out or in gear at leisure, interrupting or establishing the connection with the engine. K, K, are the bearings of the shaft; i, i, are hooks, which can be taken off, and the cargowheel shaft lifted aside, so that any of the hoisting-rollers may be disengaged.'

'The operation is as follows, viz.: When the engine is set in motion the same is communicated by the described shafts and wheels to the capstan. The line is thrown over the capstan as usual, and one man to pay off the line and another to attend the engine are all the hands necessary in the operation.'

The claim was as follows: 'Rotating a capstan placed on deck of a boat by means of an auxiliary engine, and capstan and engine are placed forward of the steam boilers of said boat, substantially as hereinbefore described, and for the purposes set forth.' The first application for the patent sued on was filed July 23, 1855. Its claim was for 'the application of the steam-power of a hoisting or other engine of steam-boats, or other crafts, to the capstan, by communicating the power of the engine to the capstan by means of the shafts, G and H, and the bevel-wheels, c, d, e, f, g, h, or by any other means.' This application was rejected. On February 7, 1856, the application was amended by striking out the claim originally made and substituting the following: 'I do not claim the application of steam-power to the capstan as a principle, but what I do claim is: the arrangement and combination of machinery employed to communicate rotary motion to the capstan from the hoisting or other engine of steam-boats and other crafts, namely, the shafts, G and H, and the bevel-wheels, c, d, e, f, g, and h,' etc. This amended application was also rejected, and no change therein was made until February 4, 1867, when it was stricken out, and the claim of the patent sued on was substituted by way of amendment. During all this time the drawings and specifications of the first application remained unchanged, and are embodied in the letters patent.

One of the defenses relied on by the appellants to defeat the patent was that it was invalid for want of novelty and patentability. Upon final hearing the circuit court rendered a decree for the complainants, and the defendants appealed. We are of opinion that the patent is open to the fatal objection that the device covered thereby did not, in view of the state of the art, involve the exercise of invention, and was therefore not patentable. The simply working of a capstan by means of steam is not claimed, but in the amended specification filed February 7, 1856, is expressly disclaimed. The capstan and the auxiliary engine are both old. The device, consisting in an arrangement of shafts and cog-wheels by which the power of the engine is applied to the capstan, was, as averred in the answer, in common public use in flour and grist mills, and cotton and woolen factories, long prior to the alleged invention of McMillin. The testimony shows that both capstans and auxiliary engines have been commonly placed forward of the boilers of the boat, and that, as early as the year 1847, an auxiliary engine had been used for rotating a windlass, both the engine and the windlass being forward of the boilers. In view of these facts, which are either matters of common knowledge or well established by the evidence, the only field of invention left for the patent to cover was the application, by the old and familiar arrangement of shafts and cogwheels, of the power of an auxiliary engine to a capstan instead of a windlass. A capstan differs from a windlass in this respect only: that its barrel or shaft is vertical, while that of the windlass is usually horizontal. It is plain, therefore, that no such ingenuity as merited the issue of a patent was required for this improvement, but only the ordinary judgment and skill of a trained mechanic.

The following cases illustrate the grounds upon which we base this conclusion: It was said by Mr. Justice BRADLEY, in delivering the judgment of this court in Atlantic Works v. Brady, 107 U.S. 192, S.C.. 2 SUP. CT. REP. 225: 'The process of development in manufactures creates a constant demand for new appliances which the skill of ordinary head workmen and engineers is generally adequate to devise, and which, indeed, are the natural and proper outgrowth of such development. Each step forward prepares the way for the next, and each is usually taken by spontaneous trials and attempts in a hundred different directions. To grant to a single party a monopoly of every slight advance made, except where the exercise of invention somewhat above ordinary mechanical or engineering skill is distinctly shown, is unjust in principle and injurious in its consequences.' In the case of Pennsylvania R. Co. v. Locomotive Truck Works, 110 U.S. 490, S.C.. 4 SUP. CT. REP. 220, Mr. Justice GRAY, speaking for the court, declared it to be the result of the decisions of the court that 'the application of an old process or machine to a similar or analogous subject, with no change in the manner of application and no result substantially distinct in its nature, will not sustain a patent, even if the new form of result has not been before contemplated.' In Hailes v. Van Wormer, 20 Wall. 353, where the patentee had taken a fire-pot from one stove, a flue from another, and a coal reservoir from the third, and had put them into a new stove, where each fulfilled the office it had fulfilled in its old situation, and nothing more, the patent was held void for want of invention. In the case of Phillips v. Detroit, 111 U.S. 604, S.C.. 4 SUP. CT. REP. 580, the patent sued on was for an improvement in street and other highway pavements. The improvement consisted in using round blocks of wood, formed of the sections of small trees, set vertically upon a foundation of sand or gravel, and filling the spaces between the blocks with sand or gravel. The court said that the use of blocks, such as were described, set vertically, was old, that the foundation was old, and the use of filling between the blocks was old, and that the only thing left for the patent to cover was the bringing together, in the construction of a pavement, of these three old and wellknown elements; and held that this did not require invention, and that the patent was void. See, also, Hotchkiss v. Greenwood, 11 How. 248; Phillips v. Page, 24 How. 164; Smith v. Nichols, 21 Wall. 112; Dunbar v. Myers, 94 U.S. 187; Heald v. Rice, 104 U.S. 737, 754-756.

Upon the ground stated, we think the letters patent upon which this suit is based are void. The decree of the circuit court, by which the patent was sustained, must therefore be reversed, and the cause remanded, with directions to dismiss the bill; and it is so ordered.

title: Morris v. McMillin/Opinion of the Court


text: Talk:Morris v. McMillin/Opinion of the Court

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Connecticut Mutual Life Insurance Company v. Union Trust Company of New York

Mr. JUSTICE HARLAN delivered the opinion of the court.


text: Talk:Connecticut Mutual Life Insurance Company v. Union Trust Company of New York


text:
Connecticut Mutual Life Insurance Company v. Union Trust Company of New York/Opinion of the Court

This is an action upon a policy of life insurance in which a verdict and a judgment were rendered for the plaintiff. The policy was taken out on the twenty-first of February, 1878, by the Union Trust Company of New York, for the benefit of the children of William Orton who might survive him. The insured died on the twenty-second of April of the same year. In the application signed by the trust company and by Orton the following question (the seventh) was propounded: 'Have you ever had any of the following diseases? Answer (yes or no) opposite each.' Then follows a list of diseases about which the applicant was asked-apoplexy, paralysis, insanity, epilepsy, habitual headache, fits, consumption, pneumonia, pleurisy, diphtheria, bronchitis, spitting of blood, habitual cough, asthma, scarlet fever, dyspepsia, colic, rupture, fistula, piles, affection of liver, affection of spleen, fever and ague, disease of the heart, palpitation, aneurism, disease of the urinary organs, syphilis, rheumatism, gout, neuralgia, dropsy, scrofula, small-pox, yellow fever, and cancer or any tumor. As to colic, fistula, and fever and ague, the answer was 'yes,' and as to all the other diseases, 'no.' Being asked in the same question to state the number of attacks, character, and duration of all the diseases which he had had, the applicant answered: 'Had fistula in 1871, induced by intermittent fever; radically cured.' The eighth question was: 'Have you had any other illness, local disease, or personal injury; and if so, of what nature, how long since, and what effect on general health?' The answer was: 'Had colic for one day, October, 1877; no recurrence; general health good.' The fourteenth was: 'How long since you were attended by a physician; in what diseases? Give name and residence of such physician.' The answer was: 'October, 1877; for colic; Dr. Hasbrouck, of Dobbs' Ferry; sick one day.' The fifteenth was: 'Is there any fact relating to your physical condition, personal or family history, or habits which has not been stated in the answers to the foregoing questions, and with which the company ought to be made acquainted?' The answer was: 'No; nothing to my knowledge.' The sixteenth was: 'Have you reviewed the answers to the above questions, and are you sure they are correct?' The answer was, 'yes.' The application concluded in these words: 'It is hereby declared and warranted that the above are fair and true answers to the foregoing questions; and it is acknowledged and agreed by the undersigned that this application shall form a part of the contract of insurance, and that if there be, in any of the answers herein made, any untrue or evasive statements, or any misrepresentations or concealment of facts, then any policy granted upon this application shall be null and void, and all payments made thereon shall be forfeited to the company.' Upon the back of the application were several indorsements, among them the following: 'PROOFS OF DEATH REQUIRED.-Blanks for the several certificates required to be made in proof of death will be furnished upon request.' The policy purports to have been issued in consideration of the representations and declarations made in the application, and of the payment of the annual premium at the time designated therein. It purports, also, to have been issued and accepted upon certain express conditions and agreements, among which are: 'That the answers, statements, representations, and declarations contained in or indorsed upon the application for this insurance-which application is hereby referred to and made part of this contract-are warranted by the assured to be true in all respects, and that if this policy has been obtained by or through any fraud, misrepresentation, or concealment, then this policy shall be absolutely null and void.'

This action was brought to recover the amount insured-due notice and satisfactory evidence of death having been given. The company resisted recovery upon two grounds: (1) That the answers to the seventh, eighth, fourteenth, and sixteenth questions were false and untrue, and known to be by Orton, in this: that so far from his general health being good at the time of the making and delivery of the application and of the issuing of the policy, he had, for many years immediately prior thereto, suffered with piles, affection of the liver, and habitual headache, and within less than 18 months prior to the application had been seriously ill for weeks, during which period several physicians attended him; that the illness in October, 1877, continued for some days; that he visited Europe upon one or more occasions for the benefit of his health, and by reason of disease was much enfeebled in body; that at the time of issuing the policy defendant did not know or have reason to believe that said statements, answers, and declarations, or any of them, were untrue, but, believing them to be true, issued the policy; and that by reason of these facts it was null and void. (2) That in the application it was declared that the statements therein were correct and true, and that there was not, to the knowledge of the insured, any fact relating to his physical condition, personal or family history, or habits, not stated in answer to the questions in the application, with which the officers of the defendant ought to be made acquainted; yet he had been and was subject to and afflicted with the diseases therein specified; had a very serious illness and been attended by several physicians; was ill in October, 1877, much longer than stated; and had visited Europe for his health; which facts were within his knowledge, and were material circumstances in relation to the past and present state of his health, habits of life, and condition, rendering an insurance on his life more than usually hazardous, and with which the officers of the company should have been made acquainted; that these facts were concealed from, and misrepresented to, the company by Orton, whereby it was injuriously influenced, and induced to omit such examinations and precautions in reference to his condition and health as would have prevented the issuing the policy upon the considerations and conditions therein set forth; and that, by reason of such concealment and misrepresentation, the policy was and is absolutely null and void.

A. C. Brown, for plaintiff in error.

W. H. Peckham, for defendant in error.

HARLAN, J.

1. In support of the defense, physicians, who had attended the insured professionally, were examined as witnesses; and the first assignment of error relates to the refusal of the court to permit them to answer questions, the object of which was to elicit information, which would not have been allowed to go to the jury, under section 834 of the Code of Civil Procedure of New York, had the action been tried in one of the courts of the state. That section provides that 'a person, duly authorized to practice physic or surgery, shall not be allowed to disclose any information which he acquired in attending a patient in a professional capacity, and which was necessary to enable him to act in that capacity.' It is not, and could not well be, seriously questioned that the evidence excluded by the circuit court was inadmissible under the rule prescribed by that section. Grattan v. ''Metropolitan Life Ins. Co. 92 N. Y. 274; Same v. Same, 80 N. Y. 281; Pierson v. People, 79 N. Y. 424; Edington v. AEtna Life Ins. Co. 77 N. Y. 564; Edington v. Mutual Life Ins. Co.'' 67 N. Y. 185. But it is suggested that truth and justice require the admission of evidence which this statutory rule, rigorously enforced, would exclude, and that it can be admitted without disturbing the relations of confidence properly existing between physician and patient; that it would not afflict the living nor reflect upon the dead, if the physician should testify that his patient had died from a fever, or an affection of the liver; and that the rule, as now understood and applied in the courts of New York, shuts out, in actions upon life policies, the most satisfactory evidence of the existence of disease, and of the cause of death. These considerations, not without weight, so far as the policy of such legislation is concerned, are proper to be addressed to the legislature of that state. But they cannot control the interpretation of the statute, where its words are so plain and unambiguous as to exclude the consideration of extrinsic circumstances. Since it is for that state to determine the rules of evidence to be observed in the courts of her own creation, the only question is whether the circuit court of the United States is required, by the statutes governing its proceedings, to enforce the foregoing provision of the New York Code. This question must be answered in the affirmative. By section 721 of the Revised Statutes, which is a reproduction of the thirty-fourth section of the judiciary act of 1789, it is declared that 'the laws of the several states, except where the constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision, in trials at common law, in the courts of the United States in cases where they apply.' This has been uniformly construed as requiring the courts of the Union, in the trial of all civil cases at common law, not within the exceptions named, to observe, as rules of decision, the rules of evidence prescribed by the laws of the states in which such courts are held. Potter v. National Bank, 102 U.S. 165; Vance v. Compbell, 1 Black, 427; Wright v. Bales, 2 Black, 535; McNiel v. Holbrook, 12 Pet. 84; Sims v. Hundley, 6 How. 1.

There is no ground for the suggestion that sections 721, 858, and 914 of the Revised Statutes may be construed as relating to the competency of witnesses rather than to the nature and principles of evidence. While in some of the cases the question was whether a witness, competent under the laws of a state, was not, for that reason, under the thirty-fourth section of the act of 1789, a competent witness in the courts of the United States sitting within the same state, in others the question had reference to the intrinsic nature of the evidence introduced. In McNiel v. Holbrook the court held the courts of the United States, sitting in Georgia, to be bound by a statute of that state declaring, as a rule of evidence, that in all cases brought by an indorser or assignor on any bill, bond, or note, the assignment or indorsement, without regard to its form, should be sufficient evidence of the transfer thereof; the bond, bill, or note to be admitted as evidence without the necessity of proving the handwriting of the assignor or indorser. And in Sims v. Hundley a notary's certificate, held to be inadmissible as evidence under the principles of general law, was admitted upon the ground that, having been made competent by a statute of Mississippi, it was competent evidence in the circuit court of the United States sitting in that state. We perceive nothing, in the other sections of the Revised Statutes to which attention is called, that modifies section 721, except that, by section 858, the courts of the United States, whatever may be the local law, must be guided by the rule that 'no witness shall be excluded in any action on account of color, or in any civil action because he is a party to or interested in the issue tried;' and by the further rule, that 'in actions by or against executors, administrators, or guardians, in which judgment may be rendered for or against them, neither party shall be allowed to testify against the other as to any transaction with, or statement by, the testator, intestate, or ward, unless called to testify thereto by the opposite party, or required to testify thereto by the court.' 'In all other respects,' the section proceeds, 'the laws of the state in which the court is held shall be the rules of decision as to the competency of witnesses in the courts of the United States in trials at common law, and equity and admiralty.' As to section 914, it is sufficient to say that it does not modify section 721 in so far as the latter makes it the duty of the courts of the United States, in trials at common law, to enforce-except where the laws of the United States otherwise provide-the rules of evidence prescribed by the laws of the states in which they sit. For these reasons, it is clear that the circuit court properly refused to permit physicians called as witnesses to disclose information acquired by them while in professional attendance upon the insured, and which was necessary to enable them to act in that capacity.

2. The widow of the insured having been called as a witness on behalf of the company, it is contended that the court erred in not allowing her to answer this question: 'Did you not understand from your husband the nature of the disease?' That question, it is claimed, called for information derived from the insured as to the nature of any disease under which he may have been suffering at a particular time prior to his application. If she was a competent witness, and if the statements of the insured to her were admissible upon the issue whether he had concealed any fact in his personal history or condition with which the company ought to have been made acquainted, or upon the issue whether he had made fair and true answers to the questions put to him, still the queston did not call for his statements, but only as to what the witness understood from him as to the nature of his disease. Her statement of what she understood may not have been justified by what the insured actually said, and may have been nothing more than the unwarranted deduction of her own mind. The objection to the question was properly sustained.

3. This brings us to the consideration of questions more directly involving the merits of the case. The first of these relates to the refusal of the court to instruct the jury that if they 'believe, on the evidence, that the insured ever had had affection of the liver before the presentation to the defendant of the application for insurance, the policy is void, and the defendant is entitled to a verdict.' This instruction was refused, and the court among other things said to the jury that disease implied a substantial attack of illness, or a malady, which had some bearing on the general health of the insured, not a slight illness or temporary derangement of the functions of some organ. The defendant's request for instruction was properly denied, for the reason that it might have been construed as requiring a verdict for the company, upon its appearing simply that the insured, prior to his application, had experienced a slight, temporary affection of the liver which had no tendency to shorten life, and all the symptoms of which had disappeared, leaving no trace whatever of injury to health. The insured was directed to answer 'Yes' or 'No,' as to whether he had ever had certain diseases, among which was included 'affection of liver.' It is difficult to define precisely what was meant by 'affection of liver' as a disease, and the difficulty is not removed by the evidence of the only physician who testified upon the subject. While he would ordinarily understand affection of the liver to mean some chronic disease of that organ, yet it is not, he says, strictly a medical term, but a general expression, which by itself may include acute as well as chronic disease of the liver. He describes it as 'a big bag to put many diseases in,' and observes that it 'would cover anything in the world the matter with the liver.' It seems to the court, however, that the company by its question sought to know whether the liver had been so affected that its ordinary operations were seriously disturbed or its vital power materially weakened. It was not contemplated that the insured could recall, with such distinctness as to be able to answer categorically, every instance during his past life, or even during his manhood, of accidental disorder or ailment affecting the liver, which lasted only for a brief period, and was unattended by substantial injury, or inconvenience, or prolonged suffering. Unless he had an affection of the liver that amounted to disease,-that is, of a character so well-defined and marked as to materially derange for a time the functions of that organ,-the answer that he had never had the disease called affection of the liver was a 'fair and true' one; for such an answer involved neither fraud, misrepresentation, evasion, nor concealment, and withheld no information as to his physical condition with which the company ought to have been made acquainted. The charge, upon this point, was in accordance with these views, and no error was committed to the prejudice of the company.

4. There was evidence before the jury tending to show that the insured visited Europe in 1874 under the advice of Dr. Baner, a physician, and that he was ill in 1875 as well as in the month of October, 1876. At the trial the defendant read in evidence, without objection, the proofs of loss received by it from the trust company. The proofs were made on forms supplied by the insurance company. Among them was a certificate from Dr. Baner, who attended the insured in his last illness. That certificate was made up of questions to and answers by the physician. One of the questions required him to state the remote cause of death; if from disease, to give the predisposing cause, the first appearance of its symptoms, its history, and the symptoms present during its progress. His answer was: 'The fatal attack was preceded by severe and protracted mental work, and by several attacks of malarial fever, accompanied in each instance by considerable cerebral engorgement.' He also stated, in the certificate, that the immediate cause of death was cerebral apoplexy; that he did not think the insured had any other disease, acute or chronic, or had ever had any injury or infirmity; and that there was nothing in his habits or mode of life predisposing him to disease, except a tendency to overwork.

Several instructions were submitted by the company touching this part of the case. In the form asked they were refused; but such refusal would not constitute ground for reversing the judgment, if the propositions they involved, so far as correct, were embraced by the charge. The jury were instructed, upon the whole case, that the insured warranted the truth in all respects of each answer, statement, representation, and declaration contained in the application, which was a part of the policy; that any inquiry as to their materiality or his good faith was removed, by the agreement of the parties, from the consideration of the court or jury; that the truth of each answer was an express condition to the existence of liability on the part of the company; and that if the answers, or any of them, were, in fact, untrue, the contract was at an end, although the insured, in good faith, believed them to be true. Their attention was particularly called to the answer to the eighth question in the application, in which the insured, responding to the inquiry whether he had had any other illness, local disease, or personal injury, stated nothing more than that 'he had colic for one day, October, 1877; no recurrence; general health good.' The court said: 'Illness is a word which may include, properly, an attack of a less grave and serious character than a disease; an illness may be slight or severe; in either case it is an illness.' Referring, also, to a question which required the insured to state any fact relating to his physical condition, personal or family history, or habits, not already disclosed, and with which the company ought to be made acquainted, the court, almost in the language of defendant's eighth request, charged the jury that if they believed, on the evidence, 'that the trip to Europe advised by Dr. Baner, the illness in 1875, or the illness in 1876, or the suffering of several attacks of malarial fever, accompanied by cerebral engorgement, (if those attacks occurred, or either of them,) were facts relating to the physical condition and person history of the insured of importance to the ascertainment of the condition of his health at the time of his application, the omission of those facts, or either of them, from the application avoids the policy, and the defendant is entitled to recover.' After reviewing all the evidence, the court concluded its charge by instructing the jury that, if they found affirmatively that the insured 'did not answer one of these questions truly, then there is nothing more for you to do except to find for the defendant; if you find affirmatively that he was guilty of concealment in his answer to the fifteenth question, then you will find for the defendant.'

We are of opinion that the charge-the most important parts of which we have quoted-was not one of which the company had any reason to complain; and the plaintiff, having recovered a verdict, makes no objection to it. In reference to that portion of the charge referring to the statements in the certificate of Dr. Baner, made part of the proofs of loss, the point is made that the court erroneously instructed the jury that they could not, upon that certificate,-made without cross-examination and simply to inform the company of the death of the insured,-find as an affirmative fact that the malarial attacks therein referred to as a remote cause of death, existed. Without determining whether this certificate, so far as it assumes to state the causes of the death of the insured, was required by the contract as a condition of the plaintiff's right to sue on the policy, or whether, under the circumstances of this case, it was proof of all the facts stated in it, it is sufficient to say that the objection that the court in effect discredited that certificate as prima facie evidence of the facts stated, cannot be entertained. No one of the requests for instructions submitted by defendant covers the precise point now made, nor was any exception taken at the time to that part of the charge which, it is claimed, refers to the certificate of the attending physician. The only exception taken by the defendant to the charge was 'to the charge of the eighth proposition, as modified by the court and embraced in his general charge.' The eighth proposition submitted by the defendant was given in the words already quoted from the charge, with the modification that the jury were to determine, on the evidence, whether the insured had had the before-mentioned attacks of malarial fever, accompanied by cerebral engorgement. That modification was entirely proper, since it was the province of the jury to determine the weight of the evidence. Cushman v. United States ''Life Ins. Co.'' 70 N. Y. 77. If the subsequent part of the charge, which is now referred to as discrediting Dr. Baner's certificate as evidence of the facts stated in it, was regarded at the trial as a modification of the defendant's eighth proposition, or as objectionable in itself, the exception taken should have been more specific. The attention of the court should have been called to the particular point by something more definite than the general exception taken. Beckwith v. Bean, 98 U.S. 284; Lincoln v. Claflin, 7 Wall. 132; McNitt v. Turner, 16 Wall. 362; Beaver v. Taylor, 93 U.S. 46.

No error was committed in overruling the instructions asked by the defendant, since whatever they contained that ought to have been approved, was embodied in the charge to the jury. We find no error in the record of which this court can take cognizance, and the judgment must be affirmed.


text: Talk:Connecticut Mutual Life Insurance Company v. Union Trust Company of New York/Opinion of the Court


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Board of Suppliers of Grenada Company v. Brown

H. P. Branham, for plaintiffs in error.

R. O. Reynolds, for defendants in error.

HARLAN, J.


text: Talk:Board of Suppliers of Grenada Company v. Brown


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Board of Suppliers of Grenada Company v. Brown/Opinion of the Court

This action was brought to recover the amount of certain bonds and interest coupons issued under date of May 1, 1872, in the name of Grenada county, Mississippi, by its board of supervisors, and made payable to the Vicksburg & Nashville Railroad Company or bearer, at its agency in the city of New York. Each bond, signed by the president of the board and countersigned by its clerk with his official seal affixed, recites that it is one of a series issued and delivered to the Vicksburg & Nashville Railroad Company by Grenada county, to meet and pay off the amount subscribed by the county to the capital stock of the railroad company aforesaid, 'in pursuance of an act of the legislature of the state of Mississippi, entitled 'An act to aid in the construction of the Grenada, Houston & Eastern Railroad,' now Vicksburg & Nashville Railroad, approved February 10, 1860, and of an act amendatory thereof, passed March 25, 1871, and in obedience to a vote of the people of said county at an election held in accordance with the provisions of said acts.' The county disputes its liability on the bonds or coupons, although the plaintiffs, who are defendants in error, became holders for value without notice of any defense except such as the law implies. The defense rests mainly on the ground that the subscription was made and the bonds issued without previous legislative authority conferred in conformity with the constitution of Mississippi.

The history of the issue of these securities, as disclosed by legislative enactments, the proceedings of the board of supervisors of Grenada county, and the bill of exceptions, is substantially as will be now stated. The Grenada, Houston & Eastern Railroad Company was incorporated by an act approved February 6, 1860, with power to construct a railroad from Grenada, in Yallobusha county, to Houston, in the county of Chickasaw, thence eastwardly to the Alabama line, and with authority to connect or consolidate with any other company upon such terms as might be mutually agreed upon, not inconsistent with the laws of the state. Laws Miss. 1859, 1860, pp. 394, 402. By the act approved February 10, 1860, the boards of police of Yallobusha, Calhoun, Chickasaw, and Monroe counties were authorized for their respective counties to subscribe, upon such terms as they saw proper, to the capital stock of the company in an amount not exceeding $200,000 for any one county, to be paid by taxation; provided a majority of the qualified electors voting at an election held for that purpose, upon due notice, should first assent thereto, in which event it was made the duty of the board to make the subscription. Id. 412. On the first day of December, 1869, a new constitution for Mississippi went into operation, article 12, § 14, of which declares that 'the legislature shall not authorize any county, city, or town to become a stockholder in or lend its credit to any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a special election or regular election to be held therein, shall assent thereto.' On the ninth of May, 1870, the county of Grenada was created out of parts of Yallobusha, Tallahatchie, Carroll, and Choctaw counties. Laws Miss. 1870, p. 124.

By an act approved March 25, 1871, amending the preceding statutes, it was declared, among other things, that the act of February 10, 1860, should apply, in all its provisions, to Grenada county and its officers; and it was made the duty of the board of supervisors of that and other counties along the line of the Grenada, Houston & Eastern Railroad, upon the petition of 25 or more citizens, to cause an election to be held in their respective counties to take the sense of the legal voters, whether a sum not exceeding $200,000 to each county shall be subscribed to the capital stock of said railroad company, to be paid by taxation; also, that whenever, in the act of February 10, 1860, any duty is required of, or authorized to be performed by, the boards of police, or the president thereof, of any of the counties therein named, the same should apply to the board of supervisors of the different counties and to the president thereof; further, that 'all such elections when held shall be conducted in all things as required in the act of which this is amendatory, and of the constitution and laws of this state in force at the time so held.' Section 1. The fourth section authorizes the board of supervisors of any county voting the tax to issue bonds, maturing at such times, not beyond 10 years, and for such sums, as the board deemed necessary, to pay off the subscriptions of said counties, respectively, for capital stock in the Grenada, Houston & Eastern Railroad, the bonds to be signed by the president of the board of supervisors issuing the same, and made payable to the company and their successors and assigns. The sixth section provides that bonds may be issued with interest coupons attached, and, when issued, paid over and delivered to the railroad company in satisfaction of the subscription to the extent of the principal of the bonds; the board taking from the company certificates of stock for the shares paid for, and the stock to be deemed the property of the municipality paying for it.

Under an order made by the board of supervisors of Grenada, in conformity with the petition of more than 25 of its citizens, the question was submitted to the qualified voters, at a general election held November 7, 1871, whether the board, by its president, should subscribe, in behalf of that county, $50,000 to the capital stock of the Grenada, Houston & Eastern Railroad Company, and a like sum to the capital stock of the 'Vicksburg & Grenada Railroad Company,'-each subscription to be met and paid off in eight annual installments, with 8 per cent. interest upon the amount due January 1, 1873, or from the date of the county bonds, if any should be issued, payable annually by taxation upon the property of the tax-payers. The board, at its December term, 1871, caused it to be entered upon its records that the election had been duly advertised and regularly held according to law; that 'a constitutional majority of two-thirds of the legal and registered voters of said county were cast' for each subscription; and that the board, by its president, 'subscribe for $50,000 each of the capital stock of the Grenada, Houston & Eastern Railroad Company and of the Vicksburg & Grenada Railroad Company for and on behalf of Grenada county, to be met and paid by taxation as aforesaid,' etc. When the election was held, there was no such corporation as the Vicksburg & Grenada Railroad Company; but the bill of exceptions-setting out what the parties agree are the facts established by the evidence-states that, 'for a long time previous to said vote, a scheme had been agitated in said county for such a railroad, with its termini at Vicksburg and Grenada, as well as for the construction of the Grenada, Houston & Eastern Railroad; * *  * and on the third day of January, 1872, the projectors and managers of the railroad, so designated and intended in said vote, were incorporated by an act of the legislature entitled 'An act to incorporate the Vicksburg, Yazoo Valley & Grenada Railroad Company."

By an act approved January 27, 1872, the Grenada, Houston & Eastern Railroad Company was authorized to extend their road from Grenada via Yazoo City to Vicksburg, thus enabling it to cover the route proposed to be occupied by the so-called Vicksburg & Grenada Railroad, or the Vicksburg, Yazoo Valley & Grenada Railroad. By the same act the name of the Grenada, Houston & Eastern Railroad Company was changed to that of the Vicksburg & Nashville Railroad Company, giving the company all the rights by the latter name which it had under its old name. Its fourth section is as follows: 'Sec. 4. Be it further enacted, that, inasmuch as the question of subscription or no subscription for fifty thousand dollars to aid in the construction of a railroad from Vicksburg to Grenada, in this state, was, by the board of supervisors of Grenada county, submitted to the qualified voters of Grenada county, and the same was sustained by a majority of two-thirds of the qualified voters of said county at a general election held therein on the seventh day of November, 1871, it shall and may be lawful for the board of directors of the Vicksburg & Nashville Railroad Company, by resolution made and entered in the minutes of said board at a regular meeting thereof, sanctioned by a majority of said board of directors, to accept all the provisions of this act, and adopt, as a part and portion of the Vicksburg & Nashville Railroad, the extension specified in this act from Grenada to Vicksburg; and when, after such acceptance and adoption, the said so-called Vicksburg & Grenada Railroad shall form and constitute a part and portion of the Vicksburg & Nashville Railroad, and shall be constructed, owned, and held by the Vicksburg & Nashville Railroad Company; and it shall be lawful for, and it is hereby made the duty of, the board of supervisors of Grenada county, through the president of said board, upon the application of the president or other authorized agent of the Vicksburg & Nashville Railroad Company, to subscribe for fifty thousand dollars of the capital stock of the Vicksburg & Nashville Railroad Company, based upon the submission to and the approval of the vote of two-thirds of the qualified voters of said county, which is hereby ratified and confirmed to the Vicksburg & Nashville Railroad Company so heretofore had on behalf of the Vicksburg & Grenada Railroad as aforesaid, and bonds of said county to secure the payment of said subscription for the stock and interest thereon, and also certificates of stock in said company shall be used as in other cases provided for in this act.'

On the fifth of March, 1872, the Vicksburg, Yazoo Valley & Grenada Railroad Company was consolidated with the Vicksburg & Nashville Railroad Company, the articles of consolidation binding the consolidated company-which retained the name of the Vicksburg & Nashville Railroad Company-among other things, to construct the contemplated road from Vicksburg to Grenada. Subsequently, in the year 1872, the board of supervisors, by its president, executed and delivered to the Vicksburg & Nashville Railroad Company bonds of the county (those in suit being a part of them) in payment of the subscriptions which had been voted at the election in November, 1871, the county receiving certificates of stock therefor. In 1872 and 1873 the county assessed and collected taxes to pay the coupons maturing at these respective periods on all the bonds in suit. The coupons for those years have been fully paid. The county, by its duly-accredited agent, was represented at all the stockholders' meetings of the company, and voted a stock subscription of $100,000. There has been no meeting of stockholders since 1874, nor of the directors since July 6, 1875. About five miles of the Vicksburg & Nashville Railroad westward from Okolona was graded and ironed. The iron so laid was purchased from plaintiffs, and they received in payment the bonds in suit.

Under the acts in question, assuming them to be constitutional, the county had authority, upon certain conditions, to make a subscription to the capital stock of the Grenada, Houston & Eastern Railroad Company, now the Vicksburg & Nashville Railroad Company, and its board of supervisors was invested with power to determine whether those conditions were performed, and, upon their being performed, to issue bonds in payment of such subscription. According to the settled doctrines of this court, the county is estopped, as against the plaintiffs, to say that the conditions were not duly performed; for the recitals in the bonds import that they were issued in pursuance of the acts of 1860 and 1871, and in obedience to a vote at an election held in accordance with the provisions of said acts. Coloma v. Eaves, 92 U.S. 484; Buchanan v. Litchfield, 102 U.S. 278; Northern Bank v. Porter Tp. 110 U.S. 617; S.C.. 4 SUP. CT. REP. 254; Otoe Co. v. Baldwin, 111 U.S. 1; S.C.. 4 SUP. CT. REP. 265. Upon this general question there seems to be no disagreement between this court and the supreme court of Mississippi. City of Vicksburg v. Lombard, 51 Miss. 126; Cutler v. Board Sup'rs, 56 Miss. 123. But it is contended that the act of March 25, 1871, in violation of the constitution of Mississippi, authorized-by its reference to the act of February 10, 1860-a subscription upon the assent thereto of a bare majority of its qualified electors voting, and, consequently, the recitals in the bonds do not protect even a bona fide holder. This is not, in our judgment, a proper interpretation of that act. Its express requirement is that elections to determine the question of subscriptions be held and conducted, in all things, as required by the act of which it is amendatory, and by 'the constitution and laws of this state in force at the time so held.' As Grenada county came into existence after the constitution of 1869 went into operation, it could not, even under legislative sanction, make a valid subscription to the stock of a corporation unless two-thirds of its qualified voters, at a special or general election, assented thereto. That the legislature, when passing the act of 1871, had in mind the constitutional provision relating to municipal subscriptions to the stock of corporations, is plain from the second section of the act, which authorizes certain incorporated towns, including the town of Grenada, to subscribe to the stock of the Grenada, Houston & Eastern Railroad Company, when such subscription should be approved by 'a constitutional majority of two-thirds of the votes polled at an election regularly held,'-a provision which this court adjudged, in Carroll Co. v. Smith, 111 U.S. 556, S.C.. 4 SUP. CT. REP. 539, to be consistent with the constitution of Mississippi. It cannot be supposed that the legislature intended to invest the town of Grenada WITH POWER TO MAKE A SUBSCRIPTION WHEN Assented to by two-thirds of the electors voting, and, in the same act, to invest the county with authority to subscribe upon the assent of a bare majority of the electors voting. And yet the argument imputes such diverse purposes to the legislature of the state, if the act of 1871 be construed as authorizing, in violation of the state constitution, a county subscription upon the assent of a bare majority of the electors voting. The act of 1860 required 20 days' notice of the election, of the amount proposed to be subscribed, and in what number of installments to be paid. These provisions were left untouched by the act of 1871. But the requirement in the latter act of conformity, in all things, to the constitution and laws in force when the election was held, implies that the legislature did not intend to authorize a municipal subscription upon the vote of a bare majority, but only upon the condition prescribed in the constitution; namely, a two-thirds majority of the electors of the county.

It certainly cannot be said that a different construction is required by the obvious import of the words of the statute. But if there were room for two constructions, both equally obvious and reasonable, the court must, in deference to the legislature of the state, assume that it did not overlook the provisions of the constitution, and designed the act of 1871 to take effect. Our duty, therefore, is to adopt that construction which, without doing violence to the fair meaning of the words used, brings the statute into harmony with the provisions of the constitution. Cooley, Const. Law, 184, 185; Newland v. Marsh, 19 Ill. 384; People v. Supervisors, 17 N. Y. 241; Colwell v. May, 4 C. E. Green, 249. And such is the rule recognized by the supreme court of Mississippi in Marshall v. Grimes, 41 Miss. 31, in which it was said: 'General words in the act should not be so construed as to give an effect to it beyond the legislative power, and thereby render the act unconstitutional. But, if possible, a construction should be given to it that will render it free from constitutional objection; and the presumption must be that the legislature intended to grant such rights as are legitimately within its power.' Again, in Sykes v. Mayor, 55 Miss. 143: 'It ought never to be assumed that the law-making department of the government intended to usurp or assume power prohibited to it. And such construction (if the words will admit of it) ought to be put on its legislation as will make it consistent with the supreme law.'

It is worthy of observation that the board of supervisors of Grenada county understood the act of 1871 as requiring conformity to the constitution, for they were careful to make a record of the fact that the proposed subscriptions had been sustained by 'a constitutional majority of two-thirds of the legal and registered voters of said county.' It results that, in respect of such of the bonds in suit as, according to the evidence, were issued in payment of the subscription to the stock of the Grenada, Houston & Eastern Railroad Company, that there was valid legislative authority as well for the subscription as for the issue of the bonds; consequently the county is liable upon them.

It only remains to determine whether the county is liable upon such of the bonds in suit as were delivered to the Vicksburg & Nashville Railroad Company in discharge of the subscription of $50,000 voted in aid of the construction of the 'so-called Vicksburg & Grenada Railroad.' We have seen * that when that subscription was voted there was no such corporation as the Vicksburg & Grenada Railroad Company, but that the vote had reference to an organization or scheme, the managers of which proposed to construct a railroad connecting the cities of Grenada and Vicksburg; that these managers were shortly thereafter incorporated as the Vicksburg, Yazoo Valley & Grenada Railroad Company, which was subsequently, and before the bonds were issued, merged in the Vicksburg & Nashville Railroad Company. We have also seen that the Vicksburg & Nashville Railroad Company was empowered to construct a railroad from Grenada to Vicksburg, and by the term of the consolidation agreement with the Vicksburg, Yazoo City & Grenada Railroad Company obligated itself to do so.

Such were the circumstances attending the passage of the act of 1872, the fourth section of which confirmed and legalized the action of the voters of Grenada county and its board of supervisors in the matter of a county subscription in aid of the construction of a railroad from Grenada to Vicksburg. The evident purpose of that act was to give effect to the will of the voters, as expressed at the election of 1871, by a majority large enough, under any construction of the constitution, as a basis for a valid municipal subscription to the stock of a railroad corporation. The act of 1872 recites that the proposed subscription was approved by the requisite constitutional majority. Had the action of the voters and of the board of supervisors been taken under legislative authority previously conferred, there could be no doubt of the validity of the subscription, or of the power of the board of supervisors to issue bonds; for, it is to be observed, the state constitution of 1869 does not prohibit municipal subscriptions to the stock of railroad companies under all circumstances, but only forbids the legislature from authorizing them except where two-thirds of the qualified voters of the municipality assent thereto. 'It is not an open question in this state,' said the supreme court of Mississippi, 'that the legislature may authorize a county or town to aid a railroad. That power was held to exist under the former constitution, and the present constitution distinctly recognized it.' ARTICLE 12, § 4. ' * *  * IF IT WERE NOT foR the cONSTITUTIONAL RESTRIction the legislature could authorize a county, city, or town to aid, in any of these modes, railroads, or other public enterprises, without the assent of the qualified voters.' N. O. & R. R. Co. v. McDonald, 53 Miss. 245, 246. Thus the constitution recognized subscriptions to railroad companies as within the scope of the powers which municipal corporations might exercise under legislative sanction. While the legislature could not, after the adoption of the constitution of 1869, have legalized a municipal subscription assented to by a less majority of legal voters than is prescribed in that instrument, its power, by retrospective enactment, to confirm and legalize a municipal subscription to the stock of a railroad corporation to which the constitutional majority of electors had assented at an election of which due notice was given, cannot, we think, be successfully disputed. Since what was done in this case by the constitutional majority of qualified electors, and by the board of supervisors of the county, would have been legal and binding upon the county had it been done under legislative authority previously conferred, it is not perceived why subsequent legislative ratification is not, in the absence of constitutional restrictions upon such legislation, equivalent to original authority.

In Sykes v. Mayor, 55 Miss. 137, it was held that, after the constitution of 1869 took effect, the legislature could not, by retrospective enactment, make valid an issue of municipal bonds executed prior to the adoption of that instrument, without legislative authority; because, said the court, 'the measure of its power was the constitution of December, 1869, and it could not ratify an act previously done, if, at the date it professed to do so, it could not confer power to do it in the first instance. It could authorize a municipal loan conditionally. In order to ratify and legalize a loan previously made, it was bound by the constitutional limitation of its power.' Further, in the same case: 'The idea implied in the ratification of a municipal act performed without previous legislative authority is that the ratifying communicates authority which relates back to and retrospectively vivifies and legalizes the act, as if the power had been previously given. Such statute is of the same import as original authority. * *  * If the constitution had altogether denied to the legislature the delegation of such power to counties, cities, and towns, it is manifest that it could not vitalize and legalize a subscription made before its adoption, and without authority of law. If that be so, it follows that, in dealing with the subject at all, it is bound by the limitation of section 14 of article 12 of the constitution.' In Cutter v. Board Sup'rs, 56 Miss. 115, the question was as to the power of the legislature to ratify and legalize certain municipal bonds issued to a railroad corporation by a county board of supervisors in pursuance of a vote of the people, with interest coupons attached, payable semi-annually. The statute under which the board proceeded authorized bonds with interest payable annually. The people, however, voted for bonds with interest payable semiannually. The court sustained the constitutionality of the curative act. It was said: 'This is far from being an effort to impose a debt on the county without its consent. The agreement of the people of the county to incur the debt, in the precise shape which it assumed, has been expressed. Their representatives, the county authorities, in execution of that will, have delivered the bonds, and the legislature afterwards affirmed. If there has been any departure from the letter of the original authority, it acquiesces in such deviation, cures the irregularity, and makes valid the bonds. The principles announced in Supervisors v. Schenck, 5 Wall. 776, 789, fully support these views.' These doctrines are in accord with the views of this court as indicated in several cases. Ritchie v. Franklin, 22 Wall. 67; Thompson v. Lee Co. 3 Wall. 327; City of Lamson, 9 Wall. 485; St. Joseph v. Rogers, 16 Wall. 663 Campbell v. City of Kenosha, 5 Wall. 194.

Our conclusion is that the act of 1872, requiring bonds of Grenada county to be issued to the Vicksburg & Nashville Railroad Company, in payment of the subscription voted in 1871 by the constitutional majority of its voters for a railroad from Grenada to Vicksburg, is not in conflict with the constitution of Mississippi. Consequently, there is no ground upon which the county can escape liability upon them to the plaintiffs, who are bona fide holders for value. Indeed, there is nothing of substance in the defense made by the county, beyond the question of legislative authority for the subscriptions, in payment of which the bonds in suit were issued, and passed to the plaintiffs for iron used on one of the proposed roads. Other questions of minor importance are discussed in the very able brief of counsel for the county. But they do not, in our opinion, affect the right of plaintiffs to judgment, and need not be noticed. We perceive no error in the record, and the judgment is affirmed.


text: Talk:Board of Suppliers of Grenada Company v. Brown/Opinion of the Court


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Grame v. Mutual Assurance Society of Virginia Goddin

''Wm. B. Webb, Enoch Totten, and John Howard'', for plaintiffs in error.

''Geo. F. Edmunds, W. A. Maury, Wm. W. Crump, and W. Hallett Phillips'', for defendants in error.

WAITE, C. J.


text: Talk:Grame v. Mutual Assurance Society of Virginia Goddin


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Grame v. Mutual Assurance Society of Virginia Goddin/Opinion of the Court

We have no jurisdiction in these cases. The suits were brought on policies issued by the Mutual Assurance Society of Virginia, one to John Grame and the other to Seymour P. Vial, insuring certain buildings of the respective parties against such losses or damages as might be occasioned by accidental fire or lightning, but expressly excepting from the risks losses which resulted from riots, civil commotions, insurrections, or from the invasion of a foreign enemy. The defense was that the loss was not occasioned by an accidental fire, but that it resulted from a fire purposely set by the confederate authorities on the evacuation of Richmond in April, 1865, as a war measure, for the destruction of tobacco and military stores which were liable to capture by the forces of the United States. Neither party set up or claimed in the pleadings 'any title, right, privilege, or immunity * *  * under the constitution, or any treaty or statute of, or commission held or authority exercised under, the United States.' On the trial it was conceded that the buildings were destroyed in the progress of a fire purposely set by order of the confederate state government on the evacuation of Richmond 'in pursuance of its laws and policy to destroy military stores and tobacco which were liable to capture by the forces of the United States.' The buildings insured were not actually set on fire by the confederate authorities, but they caught from a fire that was so set. On these facts the supreme court of appeals of Virginia decided that the society was not liable under its policies. In the opinion filed the court said: 'It is plain that this fire, from which the appellants' buildings were burned, resulted from the act of these military officers, acting under express orders and by virtue of an act of congress of the confederate states of America. Certainly it cannot be said that the fire which consumed the buildings of the appellants was an accidental fire or a fire by lightning. The question is, how did such fire result, and how was it occasioned? If it was occasioned by accident or by lightning, the company is responsible. It is not responsible if occasioned by or resulted from riots, insurrection, civil commotion, or the invasion of a foreign enemy.' Then, after considering the facts, it is further said: 'I suppose that 'civil commotion' must necessarily arise where there is civil war. It is true, there may be civil commotion without civil war, but certainly there cannot be civil war without civil commotion, and I think no man who lived in the late decade would say that there was no civil commotion between 1861 and 1865. But the company not only protected itself against liability for loss occasioned by riots, insurrection, and civil commotions, but against the 'invasion of a foreign enemy.' In the light of history and of facts, familiar to every man who opens his eyes and sees material facts before him, is it not plain that the late war was a war of invasion, and that it was the invasion of an enemy, and that it was the invasion of 'a foreign enemy?" And again: 'Now, many authorities and opinions might be quoted to the same effect, but I think those already referred to are sufficient to show that the confederate states of America were, certainly as long as the war lasted, a separate and independent government, and foreign to the United States of America.'

It is upon these expressions in the opinion of the court, and others like them, that our jurisdiction is supposed to rest; but it must be borne in mind that the only question for decision was whether the society was liable on its policies for losses which resulted from such a fire as that in which the insured buildings were destroyed. The inquiry was not as to the rights of the respective parties under the constitution and laws of the United States, but as to what was meant by certain words used in the contracts they had entered into; not whether secession was constitutional, and the confederate government, which grew out of it, a lawful government, having authority to order the fire to be set; but whether that government did so order, and, if it did, whether the fire which followed was a fire which resulted from civil commotion, insurrections, or the invasion of a foreign enemy, within the meaning of those terms as used in the policies sued on; not whether the entry of the forces of the United States into Richmond was in fact the invasion of a foreign enemy, but only whether it was so in its legal effect upon the rights of the parties under their contracts. These are clearly questions of general not federal law, and, such being the case, the decision of them by the court of appeals is not reviewable here.

The motions to dismiss are granted.


text: Talk:Grame v. Mutual Assurance Society of Virginia Goddin/Opinion of the Court


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Exchange National Bank of Pittsburgh Pa v. Third National Bank of the City of New York

John R. Emery and ''Thos. N. McCarter'', for plaintiff in error.

A. Q. Keasbey, for defendant in error.

The Exchange National Bank of Pittsburgh, Pennsylvania, brought this suit against the Third National Bank of the city of New York, in the circuit court of the United States for the district of New Jersey, to recover damages for the alleged negligence of the defendant in regard to 11 drafts or bills of exchange indorsed by the plaintiff to the defendant for collection. The suit was tried before the court without a jury. It made a special finding of facts and rendered a judgment for the defendant, to review which the plaintiff has brought this writ of error.

The facts found are these, in substance: The drafts were drawn by Rogers & Burchfield, at Pittsburgh, to the order of J. D. Baldwin, and by him indorsed, on 'Walter M. Conger, Sec'y Newark Tea Tray Co., Newark, N. J.,' and were discounted before acceptance, by the plaintiff, at Pittsburgh, for the drawers. They bore different dates, from June 8, 1875, to September 20, 1875, and were in all other respects similar except as to the sums payable, and in the following form:

'$1,042.75.

PITTSBURGH, June 8, 1875.

'Four months after date, pay to the order of J. D. Baldwin     ten hundred and forty-two 75-100 dollars, for account      rendered, value received, and charge to account of

ROGERS & BURCHFIELD.

To Walter M. Conger, Seo'y Newark Tea Tray Co., Newark, N.     J.

They were transmitted for collection at different times before maturity by the plaintiff to the defendant in letters describing them by their numbers and amounts, and by the words 'Newark Tea Tray Co.' They were sent by the defendant to its correspondent, the First National Bank of Newark, inclosed in letters describing them generally in the same way, except that, in two of the letters, they were described as drawn on 'W. M. Conger, Sec'y.' The drafts were received by the defendant in New York within a day or two of the time of discounting them. They were presented by the First National Bank of Newark to Conger for acceptance, who, except in one instance, accepted them by writing on the face these words: 'Accepted, payable at the Newark National Banking Co. WALTER M. CONGER.' When the acceptances were taken, the time of payment was so far distant that there was sufficient time to communicate to the plaintiff the form of the acceptance, and for the plaintiff thereafter to give further instructions as to the form of acceptance. The Newark bank held the drafts for payment, but the plaintiff was not advised of the form of acceptance until, on the thirteenth and nineteenth of October, two of them were returned to it by the defendant. At that time the drawers and indorsers were insolvent, but the drawers were in good credit when the drafts were discounted by the plaintiff. The drafts were duly protested for non-payment, but none of them were paid. The Newark Tea Tray Company is a New Jersey corporation doing business in that state, and Walter M. Conger is its secretary. The drafts were represented to the plaintiff by Burchfield, one of the drawers, who offered them for discount, to be 'the paper of the Newark Tea Tray Company' drawn against shipments of iron by Rogers & Burchfield to that company, and were discounted as such by the plaintiff. He also represented that Walter M. Conger was the person who examined the shipments of iron and 'accepted the drafts,' and that they were drawn in this form for the convenience and accomodation of the company. On drafts of Rogers & Burchfield on the 'Newark Tea Tray Co.,' dated May 4, 1874, May 20, 1874, and June 30, 1874, discounted by the plaintiff, and transmitted for acceptance to the defendant, and by it sent to the same Newark bank, that bank took acceptances from Walter M. Conger individually, without notice to the plaintiff; and Conger, during the time drafts sent by the plaintiff to the defendant, addressed to the 'Newark Tea Tray Co.' and to 'Walter M. Conger, Sec'y Newark Tea Tray Co., Newark, N. J.,' were in the hands of the Newark bank to procure acceptance, informed the cashier of the Newark bank that he would not accept these drafts in his official capacity as secretary.

[Argument of Counsel from pages 278-280 intentionally omitted]

BLATCHFORD, J.


text: Talk:Exchange National Bank of Pittsburgh Pa v. Third National Bank of the City of New York


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Exchange National Bank of Pittsburgh Pa v. Third National Bank of the City of New York/Opinion of the Court

The negligence alleged consists in not obtaining acceptance of the drafts by the Tea Tray Company, or having them protested for non-acceptance by that company, or giving notice to the plaintiff of such non-acceptance, and in failing to give notice to the plaintiff that the company would not accept the drafts, or that Conger would not accept them in his official capacity. The decision of the circuit court proceeded on the ground that, at most, the defendant erred in judgment as to the import of the address on the drafts; that it had no information to qualify or explain such import; that for it to regard the drafts as addressed to Conger in his individual capacity was not a culpable error, because it followed decisions to that effect made by courts of the highest standing in New Jersey and New York and elsewhere; that it exercised intelligent and cautious judgment on the information it had; and that the plaintiff knew who was the intended drawee, as understood between it and the drawers, and ought to have advised the defendant, but failed to do so. 4 Fed. Rep. 20.

The only question presented by the record is that of the sufficiency of the facts found to support the judgment. It is contended by the defendant that its liability, in taking at New York for collection these drafts on a drawee at Newark, extended merely to the exercise of due care in the selection of a competent agent at Newark, and to the transmission of the drafts to such agent, with proper instructions; and that the Newark bank was not its agent, but the agent of the plaintiff, so that the defendant is not liable for the default of the Newark bank, due care having been used in selecting that bank. Such would be the result of the rule established in Massachusetts, (Fabens v. Mercantile Bank, 23 Pick. 330; Dorchester Bank v. New England Bank, 1 Cush. 177;) in Maryland, (Jackson v. Union Bank, 6 Harr. & J. 146;) in Connecticut, (Lawrence v. Stonington Bank, 6 Conn. 521; East Haddam Bank v. Scovill, 12 Conn. 303;) in Missouri, (Daly v. Butchers' & Drovers' Bank, 56 Mo. 94;) in Illinois, (AEtna Ins. Co. v. Alton City Bank, 25 Ill. 243;) in Tennessee, (Bank of Louisville v. First Nat. Bank, 8 Baxt. 101;) in Iowa, (Guelich v. National State Bank, 56 Iowa, 434; S.C.. 9 N. W. Rep. 328;) and in Wisconsin, (Stacy v. Dane County Bank, 12 Wis. 629.) The authorities which support this rule rest on the proposition that since what is to be done by a bank employed to collect a draft payable at another place cannot be done by any of its ordinary officers or servants, but must be intrusted to a subagent, the risk of the neglect of the subagent is upon the party employing the bank, on the view that he has impliedly authorized the employment of the subagent; and that the incidental benefit which the bank may receive from collecting the draft, in the absence of an express or implied agreement for compensation, is not a sufficient consideration from which to legally infer a contract to warrant against loss from the negligence of the subagent.

The contrary doctrine, that a bank, receiving a draft or bill of exchange in one state for collection in another state from a drawee residing there, is liable for neglect of duty occurring in its collection, whether arising from the default of its own officers, or from that of its correspondent in the other state, or an agent employed by such correspondent, in the absence of any express or implied contract varying such liability, is established by decisions in New York, (Allen v. Merchants' Bank, 22 Wend. 215; Bank of Orleans v. Smith, 3 Hill, 560; Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; Commercial Bank v. Union Bank, 11 N. Y. 203, 212; Ayrault v. Pacific Bank, 47 N. Y. 570;) in New Jersey, (Titus v. Mechanics' Nat. Bank, 6 Vroom, 588;) in Pennsylvania, (Wingate v. Mechanics' Bank, 10 Pa. St. 104;) in Ohio, (Reeves v. State Bank, 8 Ohio St. 465;) and in Indiana, (Tyson v. State Bank, 6 Blackf. 225.) It has been so held in the second circuit, in Kent v. Dawson Bank, 13 Blatchf. C. C. 237, and the same view is supported by Taber v. Perrot, 2 Gall. 565, and by the English cases of Van Wart v. Woolley, 5 Barn. & C. 439, and Mackersy v. Ramsays, 9 Clark & F. 818. In the latter case, bankers in Edinburgh were employed to obtain payment of a bill drawn on Calcutta. They transmitted it to their correspondent in London, who forwarded it to a house in Calcutta, to whom it was paid; but that house having failed, the bankers in Edinburgh, being sued, were by the house of lords held liable for the money, on the ground that, they being agents to obtain payment of the bill, and payment having been made, their principal could not be called on to suffer any loss occasioned by the conduct of their subagents, between whom and himself no privity existed.

The question under consideration was not presented in Bank of Washington v. Triplett, 1 Pet. 25; for, although the defendant bank in that case was held to have contracted directly with the holder of the bill to collect it, the negligence alleged was the negligence of its own officers in the place where the bank was situated. In Hoover v. Wise, 91 U.S. 308, a claim against a debtor in Nebraska was placed by the creditor in the hands of a collecting agency in New York, with instructions to collect the debt, and with no other instructions. The agency transmitted the claim to an attorney at law in Nebraska. The attorney received the amount of the debt from the debtor in Nebraska, in fraud of the bankrupt law, and paid it over to the agency, but the money did not reach the hands of the creditor. The assignee in bankruptcy having sued the creditor to recover the money, this court (three justices dissenting) held that the attorney in Nebraska was not the agent of the creditor, in such a sense that his knowledge that a fraud on the bankrupt law was being committed was chargeable to the creditor, on the ground that, the collecting agency having undertaken the collection of the debt, and employed an attorney to do so, the attorney employed by it, and not by the creditor, was its agent, and not the agent of the creditor; and the creditor was held not to be liable to the assignee in bankruptcy for the money. In the opinion of the court it is said that the case falls within the decisions in the above-mentioned cases of Reeves v. State Bank, 8 Ohio St. 465; Mackersy v. Ramsays, 9 Clark & F. 818; Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; Commercial Bank v. Union Bank, 11 N. Y. 203; and Allen v. Merchants' Bank, 22 Wend. 215; and it is said that those cases, the first three of which are stated at length, show 'that where a bank, as a collection agency, receives a note for the purposes of collection, its position is that of an independent contractor, and the instruments employed by such bank in the business contemplated are its agents, and not the subagents of the owner of the note.' The court proceeds to say that those authorities go far towards establishing the position that the collecting agency was an independent contractor, and that the attorney it employed was its agent only, and not in such wise the agent of the defendant, as to make the defendant responsible for the knowledge of the attorney in Nebraska. The court then cites, as a case in point, Bradstreet v. Everson, 72 Pa. St. 124, as holding that, where a commercial agency at Pittsburgh received drafts to be collected at Memphis, and sent them to its agent at Memphis, who collected the money and failed to remit it, the agency at Pittsburgh was to be regarded as undertaking to collect, and not merely receiving the drafts for transmission to another for collection, and as being liable for the negligence of its agent at Memphis. It also cites, as to the same purport, Lewis v. Peck, 10 Ala. 142, and Cobb v. Becke, 6 Adol. & E. 930. It then says that these authorities fix the rule, before stated, on which the decision is rested. So far from there being anything in that case which goes to exonerate the defendant in the case at bar, its reasoning tends strongly to affirm the principle on which the defendant must be held liable. Indeed, its language supports the view that the Newark bank, in this case, would not be liable directly to the plaintiff. It that be so, and the defendant is not liable, the plaintiff is without remedy.

The case of Britton v. Niccolls, 104 U.S. 757, is cited to show that the defendant is not liable. In that case, the defendants, bankers in Natchez, Mississippi, received from the plaintiff, a resident of Illinois, for collection, two promissory notes, dated at Natchez, but not stating any place of payment. They were sent to the defendants, through a banking-house in Bloomington, Illinois, with instructions to collect them, if paid, and, if not, to protest them and give notice to the indorsers. The defendants placed the notes in the hands of a reputable notary in Natchez, to make demand of payment and give notice to the indorsers. It was held that the defendants were not liable for negligence on the part of the notary, whereby the liability of a responsible indorser was released. The negligence consisted in not presenting the notes to the maker at maturity and demanding payment. The maker resided 12 or 15 miles from Natchez, and had no domicile or place of business in Natchez. No information as to his residence was given to the defendants with the notes, and the plaintiff was ignorant of it. All the instructions which the defendants gave to the notary were given on the several days the notes matured, when they handed the notes to the notary, with instructions to demand payment, and, if they were not paid, to protest them and send notice of nonpayment to the indorsers. The notary knew where the maker resided, and that he had no place of business in Natchez; but he inquired for him at three public places in Natchez, and, not finding him, protested the notes for nonpayment, and gave notice to the indorsers. The defendants had inquired at Natchez as to the residence of the maker, but had not learned it, and had sent notices to him, through the post-office there, of the amount and date of maturity of the notes a reasonable length of time in advance. On these facts, it is apparent that the only question raised was as to the liability of bankers, in Natchez, in respect to a note sent to them for collection, dated at Natchez, and not payable at any specified place there or elsewhere, for the negligence of a public notary there. The suit was not against the banking-house in Bloomington, which was only the agent to transmit the notes to the defendants for collection. The opinion of the court states the question to be as to 'the liability of the collecting bankers for the manner in which the notary to whom the notes are delivered for presentment and protest discharges his duty.' The court says: 'The notes being dated at Natchez, the presumption of law, in the absence of other evidence on the subject, is that that was the place of residence of the maker, and that he contemplated making payment there. The duty of the bankers, as collecting agents, was, therefore, to make inquiry for his residence or place of business in that city, and, if he had either, to make there the presentment of the notes, but, if he had neither, to use reasonable diligence to find him for that purpose.' The court then refers to the case of Allen v. Merchants' Bank, 22 Wend. 215, in the court of errors of New York, as declaring the doctrine that a bank receiving paper for collection is responsible 'for all subsequent agents employed in the collection of the paper,' and states that, though that decision has been followed in New York, and its doctrine has been adopted in Ohio, it has been generally rejected in the courts of other states. The case of Dorchester Bank v. New England Bank, 1 Cush. 177, is then cited as holding that, if a bank acts in good faith in selecting a suitable subagent at the place where the bill is payable, it is not liable for his neglect; and the opinion states that this doctrine has been followed in the supreme courts of Connecticut, Maryland, Illinois, Wisconsin, and Mississippi.

The court, however, does not adopt either of these views, or rest the decision of the case before it on the latter view; for, it proceeds to say: 'In the New York case, in the court of errors, it was conceded that the general liability of the collecting bank might be varied and limited by express agreement of the parties, or by implication arising from general usage, and, in some of the cases in other states, proof of such general usage of bankers in the employment of notaries was permitted, and a release thereby asserted from liability of the bank for any neglect by them.' The court then states that there was in the case no proof of any general usage of bankers at Natchez as to the employment of notaries public in the presentment and protest of notes left with them for collection. But, as there was a statute of Mississippi, passed in 1833, authorizing notaries to protest promissory notes, and requiring them to keep a record of their notarial acts in such cases, and making the record admissible in evidence in the courts as if the notary were a witness, and, as the courts of that state had held, (Tiernan v. Commercial Bank, 7 How. (Miss.) 648;Agricultural Bank v. Commercial Bank, 7 Smedes & M. 592; Bowling v. Arthur, 34 Miss. 41,) under that statute, that it was a part of the duty of the notary, when protesting paper, to give all notices of dishonor required to charge the parties to it, and that a bank receiving commercial paper, as an agent for collection, properly discharged its duty, in case of non-payment, by placing the paper in the hands of such notary, to be proceeded with in such manner as to charge the parties to it, and that the bank was not liable in such cases for the failure of the notary to perform his duty, the court says that, 'judged by the law of Mississippi,' the defendants 'discharged their duty to the plaintiff when they delivered the notes received by them for collection to the notary public,' and adds, 'what more could they have done, as intelligent and honest collecting agents, desirous of performing all that was required of them by the law, ignorant as they were of the residence or place of business of the maker of the notes, and having unsuccessfully made diligent inquiry for them?' It further says: 'The notary was not, in this matter, the agent of the bankers. He was a public officer, whose duties were prescribed by law, and when the notes were placed in his hands, in order that such steps should be taken by him as would bind the indorsers if the notes were not paid, he became the agent of the holder of the notes. For any failure on his part to perform his whole duty, he alone was liable.' On these grounds the court held that the defendants were not guilty of negligence, and were not liable for the negligence of the notary. The decision was not placed on any general rule of commercial law, but rested on the fact that the notary was a public officer, with duties prescribed by statute, and has no application to the case at bar. No reference was made to the case of Hoover v. Wise, nor any suggestion that the views stated in the opinion in that case were doubted or dissented from. There is, in the case at bar, no negligence of a notary, or of a public officer, or of any person whose duties or functions are prescribed by statute; and the question of the liability of the defendant is to be determined on principles not involved in the actual decision in Britton v. Niccolls.

The question involves a rule of law of general application. Whatever be the proper rule, it is one of commercial law. It concerns trade between different and distant places, and, in the absence of statutory regulations, or special contract, or usage having the force of law, it is not to be determined according to the views or interests of any particular individuals, classes, or localities, but according to those principles which will best promote the general welfare of the commercial community. Especially is this so when the question is presented to this tribunal, whose decisions are controlling in all cases in the federal courts. The agreement of the defendant in this case was to collect the drafts, not merely to transmit them to the Newark bank for collection. This distinction is manifest; and the question presented is whether the New York bank, first receiving these drafts for collection, is responsible for the loss or damage resulting from the default of its Newark agent. There is no statute or usage or special contract in this case, to qualify or vary the obligation resulting from the deposit of the drafts with the New York bank for collection. On its receipt of the drafts, under these circumstances, an implied undertaking by it arose, to take all necessary measures to make the demands of acceptance necessary to protect the rights of the holder against previous parties to the paper. From the facts found, it is to be inferred that the New York bank took the drafts from the plaintiff, as a customer, in the usual course of business. There are 11 drafts in the case, running through a period of over three months, and the defendant had previously received from the plaintiff two other drafts, acceptances of which it had procured from Conger, at Newark, through the Newark bank. The taking by a bank, from a customer, in the usual course of business, of paper for collection, is sufficient evidence of a valuable consideration for the service. The general profits of the receiving bank from the business between the parties, and the accommodation to the customer, must all be considered together, and from a consideration, in the absence of any controlling facts to the contrary, so that the collection of the paper cannot be regarded as a gratuitous favor. Smedes v. Bank of Utica, 20 Johns. 372, and 3 Cow. 662; McKinster v. Bank of Utica, 9 Wend. 46, and 11 Wend. 473. The contract, then, becomes one to perform certain duties necessary for the collection of the paper and the protection of the holder. The bank is not merely appointed an attorney, authorized to select other agents to collect the paper. Its undertaking is to do the thing, and not merely to procure it to be done. In such case, the bank is held to agree to answer for any default in the performance of its contract; and, whether the paper is to be collected in the place where the bank is situated, or at a distance, the contract is to use the proper means to collect the paper, and the bank, by employing subagents to perform a part of what it has contracted to do, becomes responsible to its customer. This general principle applies to all who contract to perform a service. It is illustrated by the decision of the court of king's bench, in Ellis v. Turner, 8 Term R. 531, where the owners of a vessel carried goods to be delivered at a certain place, but the vessel passed it by without delivering the goods, and the vessel was sunk and the goods were lost. In a suit against the owners for the value of the goods, based on the contract, it was contended for the defendants that they were not liable for the misconduct of the master of the vessel in carrying the goods beyond the place. But the plaintiff had judgment, Lord KENYON saying that the defendants were answerable on their contract, although the misconduct was that of their servant, and adding: 'The defendants are responsible for the acts of their servant in those things that respect his duty under them, though they are not answerable for his misconduct in those things that do not respect his duty to them.'

The distinction between the liability of one who contracts to do a thing and that of one who merely receives a delegation of authority to act for another is a fundamental one, applicable to the present case. If the agency is an undertaking to do the business, the original principal may look to the immediate contractor with himself, and is not obliged to look to inferior or distant under-contractors or subagents when defaults occur injurious to his interest. Whether a draft is payable in the place where the bank receiving it for collection is situated, or in another place, the holder is aware that the collection must be made by a competent agent. In either case there is an implied contract of the bank that the proper measures shall be used to collect the draft, and a right on the part of its owner to presume that proper agents will be employed, he having no knowledge of the agents. There is, therefore, no reason for liability or exemption from liability in the one case which does not apply to the other. And, while the rule of law is thus general, the liability of the bank may be varied by consent, or the bank may refuse to undertake the collection. It may agree to receive the paper only for transmission to its correspondent, and thus make a different contract, and become responsible only for good faith and due discretion in the choice of an agent. If this is not done, or there is no implied understanding to that effect, the same responsibility is assumed in the undertaking to collect foreign paper and in that to collect paper payable at home. On any other rule no principal contractor would be liable for the default of his own agent, where, from the nature of the business, it was evident he must employ subagents. The distinction recurs between the rule of merely personal representative agency and the responsibility imposed by the law of commercial contracts. This solves the difficulty and reconciles the apparent conflict of decision in many cases. The nature of the contract is the test. If the contract be only for the immediate services of the agent, and for his faithful conduct as representing his principal, the responsibility ceases with the limits of the personal services undertaken. But where the contract looks mainly to the thing to be done, and the undertaking is for the due use of all proper means to performance, the responsibility extends to all necessary and proper means to accomplish the object, by whomsoever used.

We regard as the proper rule of law applicable to this case, that declared in Van Wart v. Woolley, 5 Barn. & C. 439, where the defendants, at Birmingham, received from the plaintiff a bill on London, to procure its acceptance. They forwarded it to their London banker, and acceptance was refused, but he did not protest it for non-acceptance or give notice of the refusal to accept. Chief Justice ABBOTT said: 'Upon this state of facts it is evidence that the defendants (who cannot be distinguished from, but are answerable for, their London correspondent) have been guilty of a neglect of the duty which they owed to the plaintiff, their employer, and from whom they received a pecuniary reward for their services. The plaintiff is, therefore, entitled to maintain his action against them, to the extent of any damage he may have sustained by their neglect.' In that case there was a special pecuniary reward for the service. But, upon the principles we have stated, we are of opinion that by the receipt by the defendant of the drafts in the present case for collection, it became, upon general principles of law, and independently of any evidence of usage or of any express agreement to that effect, liable for a neglect of duty occurring in that collection, from the default of its correspondent in Newark.

What was the duty of the defendant, and what neglect of duty was there? An agent receiving for collection, before maturity, a draft payable on a particular day after date, is held to due diligence in making presentment for acceptance, and, if chargeable with negligence therein, is liable to the owner for all damages he has sustained by such negligence. Allen v. Suydam, 20 Wend. 321; Walker v. Bank of the state of New York, 9 N. Y. 582. The drawer or indorser of such a draft is, indeed, not discharged by the neglect of the holder to present it for acceptance, before it becomes due. Bank of Washington v. Triplett, 1 Pet. 25, 35; Townsley v. Sumrall, 2 Pet. 170, 178. But, if the draft is presented for acceptance and dishonored before it becomes due, notice of such dishonor must be given to the drawer or indorser, or he will be discharged. 3 Kent, Comm. 82; Bank of Washington v. Triplett, 1 Pet. 25, 35; Allen v. Suydam, 20 Wend. 321; Walker v. Bank of the State of New York, 9 N. Y. 582; Goodall v. Dolley, 1 Term R. 712; Bayley, Bills, (2d Amer. Ed.) 213. Moreover, the owner of a draft payable on a day certain, though not bound to present it for acceptance in order to hold the drawer and indorser, has an interest in having it presented for acceptance without delay, for it is only by accepting it that the drawee becomes bound to pay it, and, on the dishonor of the draft by non-acceptance, and due protest and notice, the owner has a right of action at once against the drawer and indorser, without waiting for the maturity of the draft; and his agent, to collect the draft, is bound to do what a prudent principal would do. 3 Kent, Comm. 94; Robinson v. Ames, 20 Johns. 146; Lenox v. Cook, 8 Mass. 460; Ballingalls v. Gloster, 3 East. 481; Whitehead v. Walker, 9 Mees. & W. 506; Walker v. Bank of the State of New York, 9 N. Y. 582. In view of these considerations, it is well settled that there is a distinction between the owner of a draft and his agent, in that, though the owner is not bound to present a draft payable at a day certain, for acceptance, before that day, the agent employed to collect the draft must act with due diligence to have the draft accepted as well as paid, and has not the discretion and latitude of time given to the owner, and, for any unreasonable delay, is responsible for all damages sustained by the owner. 3 Kent, Comm. 82; Chit. Bills, (13th Amer. Ed.) 272, 273.

The defendant being thus under an obligation to present the drafts for acceptance, and having, in fact, presented them through the Newark bank to Conger, the secretary of the company, was bound not to take the acceptances it did, but to treat the drafts as dishonored. The plaintiff was, at least, entitled to an acceptance in the terms of the address on the drafts. Walker v. Bank of the State of New York, 9 N. Y. 582. The defendant had notice, from the description of the drafts by the words 'Newark Tea Tray Co.' in the letters sending them for collection, that the plaintiff regarded the drafts as drawn on the company; and the defendant recognized its knowledge of the fact that the drafts were drawn on the company by describing them by the words 'Newark Tea Tray Co.,' in its letters to the Newark bank, in every instance but two. If, on the face of the drafts, the address was ambiguous, it was not for the defendant to determine the question, as against the plaintiff, by taking an acceptance which purported to be the acceptance of Conger individually, especially in view of the information it had by the words 'Newark Tea Tray Co.' in the letters sending the drafts to it for collection. It appears that the drafts were discounted by the plaintiff as drafts on the company, and, if it could have had an acceptance in the terms of the address, it would, in a suit against the company, have been in a condition to show who was the real acceptor. But, with the information given to the Newark bank by Conger, while that bank had in its hands for acceptance drafts drawn in the same from as those here in question, that he would not accept such drafts in his official capacity as secretary, the Newark bank chose to take acceptances individual in form. This was negligence, for which the defendant is liable to the plaintiff in damages, no notice of dishonor having been given. The defendant was bound to give such notice to the plaintiff. Walker v. Bank of the State of New York, 9 N. Y. 582.

The question as to whether the company would have been liable on the drafts, if they had been accepted in the terms of the address, is not one on the determination of which this suit depends; nor do we find it necessary to discuss the question as to whether, on the face of the drafts, the company or Conger individually is the drawee. The very existence of the ambiguity in the address, and of the question as to whether the company would be liable on an acceptance in the terms of the address, is a cogent reason why the defendant should not be allowed, without further communication with the holder, to do acts which may vary the rights of the holder, without responding in damages therefor. The risk is on the defendant and not on the plaintiff. It is, therefore, plain that the judgment must be reversed. But judgment cannot be now rendered for the plaintiff for damages. There must be a new trial. Although there is a special finding of facts, it does not cover the issue as to damages. No damages are found. The action is one for negligence, sounding in damages. Although the complaint alleges that the drawers and the indorser are discharged for want of notice of non-acceptance, and although it is found that the drawers were in good credit when the drafts were discounted, and that the drawers and indorser had become insolvent by the thirteenth and nineteenth of October, 1875, there is nothing in the finding of facts on which to base a judgment for any specific amount of damages. On the new trial that question will be open, and we do not intend to intimate any opinion on the subject.

The judgment of the circuit court is reversed, with direction to award a new trial.


text: Talk:Exchange National Bank of Pittsburgh Pa v. Third National Bank of the City of New York/Opinion of the Court


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Tradesman's National Bank of Pittsburgh Pennsylvania v. Third National Bank of the City of New York

John R. Emery and ''Thos. N. McCarter'', for plaintiff in error.

A. Q. Keasbey, for defendant in error.

BLATCHFORD, J.


text: Talk:Tradesman's National Bank of Pittsburgh Pennsylvania v. Third National Bank of the City of New York


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Tradesman's National Bank of Pittsburgh Pennsylvania v. Third National Bank of the City of New York/Opinion of the Court

This suit presents, in all material respects, the same facts and questions as the case of ''Exchange Nat. Bank against Same Defendant, ante'', 141. The only points of difference, as to the facts found, are these: The drafts are seven in number, and bear different dates, from June 21, 1875, to August 10, 1875. The letters from the plaintiff to the defendant, transmitting them for collection, described them by their numbers and amounts, and one of the letters from the defendant to the Newark bank described the inclosed draft as 'Conger, Tr.' There is no finding that when the acceptances of Conger were taken by the Newark bank, the time of payment of the drafts was so far distant that there was sufficient time to communicate to the plaintiff the form of acceptance, and for the plaintiff thereafter, if such communication had been made, to give further instructions as to the form of acceptance. The plaintiff was not advised of the form of the acceptance until the first draft was protested for non-payment and returned to it, at which time the drawers and indorser were insolvent. There is no finding as to the taking by the Newark bank of any acceptances from Conger individually, of drafts drawn on the Newark Tea Tray Company, and there is a finding that when the drafts were presented to Conger by the Newark bank he declined to accept them in his official capacity. These differences are immaterial under the views held in ''Exchange Nat. Bank v. Third Nat. Bank, supra''.

The judgment of the circuit court is reversed, with direction to award a new trial.