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

The power of Congress to direct by law the price at which the mail service here in question should be performed was expressly reserved as a condition of the land grants, which formed, in part, their motive and consideration. But when Congress authorized the Postmaster-General to fix the price by contract, within specified maximum rates, and for a period of four years, it was an agreement on the part of the United States that the stipulated compensation should not be withheld during that period, which it could not refuse to perform without a breach of the public faith. The contract was an exercise of the reserved power, with an added obligation not to exercise it otherwise for the period agreed on, and we are unable to perceive any ground on which its validity can be denied. The stipulations in the contract on the part of the railroad company transcend its necessary obligations, growing out of the acceptance of the conditions of the land grant, and furnish a sufficient and distinct consideration for the promise of the government not to disturb the rates of the contract during the period of its existence; for there are several stipulations collateral to the service to be rendered, which the government could not have exacted as due by previous obligation and irrespective of the assent of the company.

The power to establish the price includes the power also to declare the period of its duration; and if it be said that any contract which fixes both the price and its duration must be construed as subject to the continuous control of the power which made it, it must also be admitted that no change can be made without the abrogation of the contract. The government, whatever power it may reserve over its own agreements, cannot impose new contracts upon those with whom it deals. It might by a repeal of the contract, expressly stipulated, restore the previous state, and claim the bare rights it had before; but it cannot do more than that. It certainly cannot retain the obligation of the contract as against the company, and at the same time vary its own, unless it has reserved the right to do so in the contract itsl f.

Some claim of this kind is put forward in the present case, and the ninth clause in the contracts is referred to as containing such a reservation. Clearly this confers power upon the Postmaster-General to discontinue or curtail the service, in whole or in part, he allowing, as an indemnity to the contractor, a month's extra pay on the amount of service dispensed with, and a pro rata compensation for that retained and continued. But this is not a power to reduce the compensation for the full service performed, or to alter the terms of the contract. It is true, that under this reservation the Postmaster-General would be authorized to discontinue the entire service contemplated by the contract, and the practical effect of that would be to terminate the contract itself, on making the indemnity specified. But in that event, the contract being at an end, the company would no longer be under any obligation except that imposed by the original conditions accepted with the land grants, and the government could rightfully impose upon it no others. There is, therefore, in the contract itself, no power reserved to alter the amount of compensation, except by a reduction of the required service. If the government insists upon full performance of that, it can be only upon the terms fixed by the contract.

It is argued, however, on the part of the government, that the legal effect of what was done was to abrogate the old contracts and make new ones. It is claimed that the passage of the acts of Congress of July 12, 1876, c. 179, and of June 17, 1878, c. 259, and the notices from the Post-Office Department that the reductions assumed to be contemplated by them would be insisted on; the fact that they were made in the adjustment of accounts, and that the railroad company, notwithstanding its protest, continued to perform the service,-had the effect to supersede the contracts of 1875, and substitute new ones in their stead, on the basis of the reduced compensation. Such, in substance, was the view taken by the Court of Claims.

In our opinion, that view cannot be maintained. The contracts of 1875 were for four years, and were expressly authorized by law. They were, therefore, valid, and binding on the United States as well as upon the railroad company. They contained, within themselves, a mode for lessening, or, if deemed best, for discontinuing entirely, the described service; and provided for a proportionate reduction of the stipulated compensation. In no other mode could the contract be changed, except by the mutual assent of the parties. Any change attempted by either, otherwise, would have been merely a breach of the agreement; and the United States would have been liable to damages for its breach, on the same principles and to the same extent as a private party, for which a suitable remedy was provided by law in the jurisdiction conferred upon the Court of Claims. In this respect, the relation between the parties was that of perfect equality in right.

If, in these circumstances, the government not merely accepted, but demanded, the performance of the contract service, the presumption is that it meant to pay the contract price. It would require positive and express words to negative that presumption. We find none such in the statutes of 1876 and 1878. Their language may be well satisfied by confining them to cases where no time contracts for service were then in existence, and to contracts thereafter to be entered into. They do not legitimately apply to contracts then existing, whose terms had not expired, such as those in the present case.

Such was the opinion of Mr. Attorney-General Taft, to whom the Postmaster-General submitted one of the contracts on which this suit is founded, for his opinion, whether it was affected by the act of 1876. He replied in the negative, saying:--

'In my opinion, Congress did not intend it to have this effect. The contracts, of which that with the Chicago and Northwestern Railway submitted by you for inspection is a sample, were authorized by the law in force at the dates of their execution. They bound both parties. A breach of them by either would subject the delinquent to a claim for damages. The act of July 12, 1876, was apparently passed with a view to reduce the public expenses. But it would not have this effect if an equivalent to the reduction of pay were recoverable under the name of damages, with, perhaps, the expenses of litigation added. Therefore I conclude that the construction most consistent with justice and fair dealing is the true one, viz., that, as to existing contracts, the rate remains as stipulated in the agreement during the term therein mentioned, but that in those cases where no contract prevailed the reduction should be made.' 15 Op. Atty.-Gen. 182.

Of course, if it was not the intention of the acts of Congress referred to, to affect the contracts of the company, the erroneous interpretation of them by the Postmaster-General, and his action under it, cannot give to them any different effect, for the rights of the parties depend on the law itself. And the performance by the company of the service required by its contract, notwithstanding the notice of the intended reduction of the compensation by the Postmaster-General, cannot be construed as a waiver of its rights or an acquiescence in new proposals; and that whether it had protested against the erroneous construction of the law or not. For it had no option. It was bound by its contract to perform the service, and its performance was demanded. It was not in a position absolutely to refuse to carry the mails, for it was bound to carry them, if offered, on some terms, either prescribed by law or fixed by contract; and it had the right to do so, without prejudice to its lawful claims, leaving the ultimate right to future and final decision. It was not the case of a voluntary payment of an illegal exaction, where the maxim, consensus tollit errorem, prevents a recovery; because in such case there is the legal presumption of an abandonment of the claim. Volenti non fit injuria. But here the service was to be performed, at all events, just as it was performed, but under which of two claims was in dispute. Its performance was a condition of both, and cannot, therefore, be a bar to either.

We are of opinion, for these reasons, that the Court of Claims should have rendered judgment in favor of the appellant for its whole claim.

Judgment reversed, and cause remanded with instructions to render a judgment in conformity with this opinion.


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

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


text:
Chicago Milwaukee and St Paul Railway Company v. United States

APPEALS from the Court of Claims.

The facts are sufficiently stated in the opinion of the court.

The Solicitor-General for the United States.

Mr. John W. Cary, contra.

MR. JUSTICE MATTHEWS delivered the opinion of the court.


text: Talk:Chicago Milwaukee and St Paul Railway Company v. United States


text:
Chicago Milwaukee and St Paul Railway Company v. United States/Opinion of the Court

The action in the Court of Claims was brought by the Chicago, Milwaukee, and St. Paul Railway Company to recover compensation withheld by the Postmaster-General, claimed to be due upon a written contract for mail service, entered into July 1, 1875, for the period of four years.

The amount in controversy had been retained by the Postmaster-General as a reduction of the ten per cent on the previous rates, under the provision in the act of July 12, 1876, c. 179, and of the further reduction of twenty per cent on the remainder, under the thirteenth section of that act, it being insisted that the company's road had been constructed, in whole or in part, by the aid of a grant of public lands by Congress.

The Court of Claims found that the company had not been aided in the construction of its road by a land grant, and that it was, therefore, not subject to the deduction from its compensation made on that account. From that part of the judgment the United States appealed.

It also found that the Postmaster-General was entitled to make the deduction of ten per cent From that part of the judgment the company appealed.

This case is covered by the decision in Chicago & Northwestern Railway Company v. United States (supra, p. 680), where it is held that the deduction under that section could not be made against a company whose road had been the subject of a land grant, when the service had been rendered during the term of a written contract for four years, which had not terminated when the act took effect.

The question in the present case, therefore, whether the railroad of the company was or was not the subject of a land grant becomes immaterial; although were it otherwise we should have no hesitation in affirming the finding of the Court of Claims upon that point, for the reasons set forth in its opinion.

Upon the question of the ten per cent deduction, the Court of Claims held that the act of July 12, 1876, operated as a notice that the service would be discontinued under the old rates, and would be continued, if at all, under the new rates; and that, as the claimants continued to render the service under the new law without dissent or protest, it was to be presumed that they acquiesced in its provisions and accepted the change which it made in their contract.

We are unable to agree with this view, for the reasons already stated. That act was not intended to apply to the case of contracts previously made for a term of years, not expired when it took effect.

The judgment of the Court of Claims must, therefore, be reversed, and the cause remanded with instructions to render a judgment in favor of the claimants for the full amount of their claim; and it is

So ordered.


text: Talk:Chicago Milwaukee and St Paul Railway Company v. United States/Opinion of the Court


text:
Mason v. Sargent

ERROR to the Circuit Court of the United States for the District of Massachusetts.

The facts are stated in the opinion of the court.

Mr. George Putnam for the plaintiffs in error.

The Solicitor-General, contra.

MR. JUSTICE MATTHEWS delivered the opinion of the court.

title: Mason v. Sargent


text: Talk:Mason v. Sargent

title: Talk:Mason v. Sargent


text:
Mason v. Sargent/Opinion of the Court

The action was brought by William P. Mason and Walter C. Cabot, to recover back the amount of a legacy tax, paid, under protest, by them to John Sargent, the defendant, as collector of internal revenue for the Fourth Massachusetts District.

The facts upon which the judgment was rendered in the court below, it was agreed, were as follows: William P. Mason, the plaintiffs' testator, died Dec. 4, 1867. By his will, duly proved and allowed, the personal property upon which the tax in question was levied was bequeathed to plaintiffs in trust for his widow for her life, and upon her death one-half to the plaintiff, William P. Mason, and one-half to Elizabeth R. Cabot, children of the testator of full age at his death. The widow died on June 17, 1872. In April, 1873, the tax in question was assessed by Jonathan H. Mann, assessor of said district; and, May 13, 1873, plaintiffs paid defendant said tax under protest, to avoid distraint or other forcible process to collect the same. May 19, 1873, plaintiffs duly made claim upon the Commissioner of Internal Revenue for the refunding of said tax, for the reason that the said property did not vest in possession in the plaintiffs' cestuis que trust, until the death of the testator's widow, which occurred after Oct. 1, 1870, the date at which the repeal of the legacy succession tax went into effect, and that the tax had not accrued at said date so as to come within the saving clause of the act of repeal. Act of July 14, 1870, sect. 17. Aug. 5, 1873, the Commissioner of Internal Revenue rejected the appeal, 'for the reason that the tax accrued under the 124th section of the act of June 30, 1864, and was saved by section 17 of the act of July 14, 1870, and, still existing, was properly assessed.' Judgment was rendered in favor of the collector, and the plaintiffs sued out this writ of error.

The tax in question was imposed by sect. 124 of the act of June 30, 1864, c. 173 (13 Stat. 223, 285), upon legacies or distributive shares of personal property exce ding the sum of $1,000, passing, after the passage of the act, from a decedent, either testate or intestate, in the hands of an executor, administrator, or trustee, varying in rate, as the party beneficially entitled was less or more remote in consanguinity, or a stranger in blood, to the person from whom it passed; with a proviso that legacies or distributive interests in intestate estates, passing to husband or wife, should be exempt from such tax.

Section 125 of the same act, as amended by the act of July 13, 1866, c. 184 (14 id. 98, 140), provides that this legacy tax or duty 'shall be due and payable whenever the party interested in such legacy or distributive share or property or interest aforesaid shall become entitled to the possession or enjoyment thereof, or to the beneficial interest in the profits accruing therefrom,' &c. It also provides that it shall be a lien for twenty years, unless sooner paid, upon the property taxed; and the executor, administrator, or trustee, having charge of the property, is required, within thirty days after he shall have taken charge of the trust, to give notice thereof to the assessor of the district in which the deceased last resided. He is also required, before payment of the legacy to the legatee, to pay the tax to the collector. As a preliminary to the payment of the tax to the collector, he is further required to make out in duplicate a schedule, list or statement, containing the names of every person entitled to any beneficial interest in the property, together with the clear value of such interest, the original of which he renders to the assessor, and the duplicate of which 'shall be by him immediately delivered, and the tax thereon paid to such collector.' The collector gives him a receipt, which is his voucher for that much paid on account of the legacy in his settlement with the legatee.

By the third section of the act of July 14, 1870, c. 255 (16 id. 256), the taxes imposed by the laws then in force on legacies and successions, among others, were repealed 'on and after the first day of October, eighteen hundred and seventy;' and by the seventeenth section of that act (p. 261) it was enacted that 'all acts and parts of acts relating to the taxes herein repealed, and all the provisions of said acts, shall continue in full force for levying and collecting all taxes properly assessed, or liable to be assessed, or accruing under the provisions of former acts, or drawbacks the right to which has already accrued, or which may hereafter accrue, under said acts, and for maintaining and continuing liens, fines, penalties, and forfeitures incurred under and by virtue thereof. And this act shall not be construed to affect any act done, right accrued, or penalty incurred under former acts, but every such right is hereby saved.'

The court below decided that the tax in question had been properly exacted and collected on the ground that the right to it had accrued to the United States before Oct. 1, 1870, when the repealing act took effect, and was within the saving clauses of the seventeenth section.

The contention of the plaintiffs in error, on the other hand, is that, until the legacy itself became payable, the tax upon it did not become a claim in favor of the government; and as the legacy was vested in the widow during her life and the payment of it was postponed until her death, which occurred June 17, 1872, after the repealing act had taken effect, no right that could be saved by the exceptions had at that time accrued.

It is our opinion that the tax was illegally demanded and collected.

The property or fund which is the subject of the legacy was expressly exempt from tax or duty, in the hands of the trustee, during the life of the testator's widow. It seems to us very plain that the trustee was not bound to make return of the legacy upon the schedule, list, or statement specified in sect. 125 of the act of 1864, until, by the death of the owner of the life-estate, the legacy became payable to those entitled in remainder; for the delv ery of that list or statement to the assessor is to be followed immediately by a delivery by the trustee of its duplicate to the collector, and the tax paid thereon to such collector; whereas, by the express terms of the section, as amended by the act of 1866, the tax or duty becomes due and payable only when 'the party interested in such legacy, &c., shall become entitled to the possession or enjoyment thereof,' &c. The return for assessment and the actual payment of the tax, therefore, are made by the law so nearly simultaneous as that one follows the other in immediate succession; and it cannot well be said, upon the terms of the act, that the right to the tax has become vested until the obligation arises to list the property for taxation. The subject of the tax is the interest of the legatees in remainder; but it is not taxable as a remainder, for by the terms of the law it does not become a subject of taxation until the right accrues to reduce it to possession. Until then it is expressly exempt from taxation.

The amendment to sect. 125 of the act of 1864, made by the act of 1866, which requires the trustee to give written notice to the assessor of his trust within thirty days after he shall have taken charge of it, is not material to the argument, because it does not appear that this requirement has any other purpose than to give information to the officer for future use. It does not seem to have any connection with the present assessment and collection of the tax.

The provision in sect. 125 of the act of 1864, that the tax or duty thereby imposed shall be a lien or charge upon the property bequeathed for twenty years, or until the same is paid within that period, determines nothing as to the time when the tax accrues. It becomes a lien only from that time; for the lien presupposes the existence of the tax, for which it is a security, and is a charge upon the property, out of which it is payable and upon which it is imposed. In the present case it is clear beyond dispute that during the life-estate of the widow there was no lien upon the fund, because during that period it was expressly exempt from the tax.

In the case of Clapp v. Mason (94 U.S. 589), a similar question, as to the liability of these parties under the same will, for a tax collected on their succession to the real estate of the testator, devised upon the same limitations, was decided in their favor. The court in that case said: 'It is manifest that the right does not accrue until the duty can be demanded, that is, when it is made payable.' p. 592.

The statement is equally applicable here, and leads to a similar result.

No right to the payment of the tax had accrued at the date when the repealing act took effect; and, therefore, none to collect it can be deduced from its saving clauses.

Judgment reversed, with instructions to render a judgment upon the agreed statement of facts, in favor of the plaintiffs, for the amount therein specified.

title: Mason v. Sargent/Opinion of the Court


text: Talk:Mason v. Sargent/Opinion of the Court


text:
Merritt v. Welsh

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

The facts are stated in the opinion of the court.

The Solicitor-General for the plaintiff in error.

Mr. William M. Evarts, Mr. Stephen G. Clarke, and Mr. Edwin B. Smith, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Merritt v. Welsh


text: Talk:Merritt v. Welsh

title: Talk:Merritt v. Welsh


text:
Merritt v. Welsh/Opinion of the Court

This was an action brought by S. & W. Welsh, the plaintiffs below, to recover back duties alleged by them to have been illegally exacted by Merritt, the defendant below, as collector of the port of New York, on certain sugars imported by them. The importations were made in 1879, and were subject to the duties imposed by schedule G, sect. 2504, of the Revised Statutes, and by the third section of the act of March 3, 1875, c. 127, which are in the following words:--

'SECT. 2504: Schedule G:

'Sugar not above number seven, Dutch standard in color: one     and three-quarter cents per pound.

'Sugar above number seven, and not above number ten, Dutch     standard in color: two cents per pound.

'Sugar above number ten, and not above number thirteen, Dutch     standard in color: two and one-quarter cents per pound.

'Sugar above number thirteen, and not above number sixteen,     Dutch standard in color: two and three-quarter cents per      pound.

'Sugar above number sixteen, and not above number twenty,     Dutch standard in color: three and one-quarter cents per      pound.'

The following sections of the Revised Statutes were appended as provisos to the original acts from which the above articles were taken:-- 'SECT. 2914. The standard by which the color and grades of     sugar are to be regulated shall be selected and furnished to      the collectors of such ports of entry as may be necessary, by      the Secretary of the Treasury, from time to time, and in such      manner as he may deem expedient.

'SECT. 2915. The Secretary of the Treasury shall, by     regulation, prescribe and require that samples from packages      of sugar shall be taken by the proper officers, in such      manner as to ascertain the true quality of such sugar; and      the weights of sugar imported in casks or boxes shall be      marked distinctly by the custom-house weigher, by scoring the      figures indelibly on each package.'

To the foregoing duties twenty-five per cent was added by the third section of the act of March 3, 1875.

The plaintiffs claimed that the sugars imported were all below number 7, Dutch standard in color, and were, therefore, chargeable, under schedule G, with only a duty of one and three-quarter cents per pound, with the addition of twenty-five per cent, under the act of 1875. The defendant, under general instructions from the Treasury Department, rated them at a higher grade, and charged a duty of two cents upon some of them, and two and one-quarter cents upon others, with the addition of the twenty-five per cent, under the act of 1875. His action was based on the position that the sugars in question had been colored by artificial means, so as to reduce them, in appearance, below the grade of the Dutch standard to which they properly belonged according to the amount of crystallized sugar which they contained, as shown by chemical test by the polariscope.

The treasury instructions under which the test was applied were issued on the 19th of July and the 2d of September, 1879. After premising that it had been decided by the courts that the term 'Dutch standard in color,' as used in the statutes, means the color of the sugar obtained by the ordinary processes of manufacture as practised at the time of the enactment of the law, and that any means used to degrade the color of sugars during or after the process of manufacture is a fraud upon the revenue, the instruction of July 19, 1879, declares that—

'All sugars containing ninety per cent, and not more than ninety-four per cent, of crystallizable sugar, the apparent color of which is not above No. 7, Dutch standard in color, shall be classified as above No. 7 and not above No. 10, Dutch standard in color.

'All sugars containing more than ninety-four per cent of crystallizable sugar, the apparent color of which is not above No. 10, Dutch standard in color, shall be classified as above No. 10 and not above No. 13, Dutch standard in color.'

As the presence of water in the sugars was found to interfere with uniform results, the instruction was changed in September, as follows:--

'All sugars the apparent color of which, as imported, is not above No. 7, Dutch standard in color, and which contain over ninety-three per cent, and not over ninety-seven per cent, of crystallizable sugar in one hundred parts of the dry substance, shall be classified as No. 7 and not above No. 10, Dutch standard.

'All sugars the apparent color of which, as imported, is not above No. 10, Dutch standard in color, and which contain over ninety-seven per cent of crystallizable sugar in one hundred parts of the dry substance, shall be classified as above No. 10 and not above No. 13, Dutch standard.'

It was shown beyond dispute, on the trial, that, so far § their color was concerned, the sugars were below No. 7 of the Dutch standard,-a grade chargeable, by the statute, with only one and three-quarters cents per pound; but the court allowed the defendant to prove, if he could, that the color of the sugars was an artificial color, imparted after the process of manufacture, or after they became the sugars of commerce. As no proof was offered to show that they were artificially colored after the process of manufacture was completed, the court instructed the jury to find a verdict for the plaintiffs for the difference of duty.

The defendant offered to prove that color was imparted to the sugars in the course of manufacture, by the use of an extra quantity of lime (some quantity of which is always used to neutralize acids) or by the introduction of molasses, and increasing the temperature of the vacuum-pan or boiler; but this evidence the court held to be incompetent. To narrow the point of difference, he offered to show that coloring matter, namely, molasses, was introduced into the vacuum-pan or boiler after the mass had been brought to the state of sugar, but before its final passage through the coolers and the centrifugal tubs, the last process through which it goes; but this evidence was also decided to be incompetent.

The position and argument of the defendant may be more fully shown by the instructions which his counsel asked the court to give the jury, and which were severally refused. They were as follows:--

'1. That if the jury shall find from the evidence that the true color of the sugar in suit, as ascertained by comparing them in every respect with the standard selected by the Secretary of the Treasury, and actually used in ascertaining and determining their dutiable character, was not sugar 'not above number seven Dutch standard in color,' they shall find a verdict for the defendant.

'2. That if they shall find from the evidence that on December 22, 1870, and prior thereto, the sugars of commerce were comprised substantially of crystallized sugar and molasses, and that the color of the different grades of such sugar was produced by molasses, the highest grades being No. 20, Dutch standard in color, having no molasses in them, and the lower grades being 16, 13, 10, and 7, Dutch standard in color, having molasses in them, each of the lower grades having more molasses than the other, so that the greatest quantity of molasses was contained in the lowest grades;

'And if the jury shall also find from the evidence that the sugars in suit were not generally known as the sugars of commerce in December 22, 1870, and prior thereto, and that their color at the time of importation was not produced by molasses, but was produced by the introduction of some foreign substance after the sugars were made for the purpose of giving to them a color darker than their true color;

'And if the jury shall also find from the evidence that the true color of said sugars is different from their apparent color, and that the true color of said sugars at the time of their importation was above No. 7, Dutch standard in color, they shall find a verdict for the defendant.

'If the jury shall find that the sugars were colored with burnt molasses, and were manufactured prior to the time when the burnt molasses was introduced into the vacuum-pan, and that the same was so introduced into the pan merely for the purpose of producing a dark surface-color upon the sugars, so that the sugars, the true color of which was above No. 7, Dutch standard in color, appeared to the eye by comparison with the Dutch standard in color to be sugars not above No. 7, Dutch standard in color, and shall also find that the true color of the sugar when it became manufactured was above No. 7, Dutch standard in color, they shall find a verdict for the defendant.

'The court ruled there was no evidence to submit to the jury tending to show that the color was not imparted to the sugar during the process of manufacture.

'4. If the jury shall find from the evidence that the Dutch standard consiss of sugars in which the color indicates the grade of the sugar, and shall also find that the color of the samples in suit does not indicate at all the grades of the sugar, but that the sugars in suit are in fact of a high grade, say No. 16, as indicated by the Dutch standard, but have a surface-color of the lowest grade, say not above No. 7, Dutch standard in color, which surface color was imparted to it after the crystals of sugar were found in the vacuum-pan at a time when the boiling of the sugar was completed, they shall find a verdict for the defendant.

'5. That the surface or external color of the sugars in suit was not necessarily the color by which their dutiable character was to be ascertained, but the true color of the sugars in suit, as ascertained by comparison with the standard which was in use by the collector, and was actually used for the purpose of ascertaining the duitable character of the sugars in suit, was the color to guide him in ascertaining and levying duties upon them.

'6. That if the jury shall find from the evidence that the surface or external color of the sugars in suit was produced by the introduction of a foreign substance at a time subsequent to the manufacture of sugar, and shall also find from the evidence that when said foreign substance is removed from the surface of said sugars, that they have not a color of sugars not above No. 7, Dutch standard in color, but do have a color of sugars above No. 7, Dutch standard in color, they shall find a verdict for defendant.

'The court ruled there was no evidence to submit to the jury tending to show that the color was not imparted to the sugar during the process of manufacture.

'7. That for tariff purposes centrifugal sugars are required to have a color obtained by the process of manufacture, without the introduction of any foreign substance in the process of manufacture for the purpose only of obtaining a darker color than that which the sugars would have obtained in the natural process of manufacture.

'8. That if the jury shall find from the evidence that a foreign substance was introduced into the sugars in suit, during the process of the manufacture, which made them darker in color than they would have been but for the introduction of such foreign substance, and shall also find from the evidence that but for the introduction of said foreign substance the apparent color of the sugars in suit would not have been that of sugars not above No. 7, Dutch standard in color, but would have been of a higher grade, they shall find a verdict for the defendant.

'9. The jury may examine the samples of the sugars in suit, and themselves compare them with the sugars of the Dutch standard; and that if the jury find as a matter of fact that the sugars in suit are not of the color of any of the colors of the Dutch standard, they may find as a matter of fact whether the defendant erred in his classification.

'And that if they find the collector did classify the sugars in suit according to their true color from the best means in his control, they may find for the defendant.

'10. Sugar is above No. 7, Dutch standard in color, within the intent of the statute, if it be above that number when reduced mechanically to the same fineness and packed in the same manner as such standard.

'11. Sugars composed of crystals larger than those of the standards furnished by the Secretary of the Treasury may properly be reduced to the same fineness as those of such standards, and packed in bottles in the same manner for comparison with such standards, in order to determine the color or classification.'

It will be perceived that the real question in the case is, wether (supposing that sugars are not artificially colored for the purpose of avoiding duties after being manufactured) their dutiable quality is to be decided by their actual color, graded by the Dutch standard, or by their saccharine strength as ascertained by chemical tests. The plaintiffs maintain the former proposition; the defendant, the latter.

The test dec ribed by the statute is, 'Dutch standard in color.' The first question that naturally arises is, if Congress desires the application of the chemical test, in order to determine the saccharine strength of the sugar, why does not Congress say so? There are two very distinct and different modes of distinguishing sugar,-by its color, and by the intrinsic percentage of specific crytalline sugar in the mass. One is determined by a color standard, the other by a chemical standard. Which of these did Congress adopt? We think, clearly, the former.

Perhaps Congress may have acted under a mistaken idea that color would always indicate quality. Perhaps, up to the time that the law was passed, as the processes of manufacture had been conducted, color was an approximate, or general, indication of quality. Suppose this to be so, does it derogate from the fact that color was the standard which Congress, with the lights which it had, saw fit to adopt? Does it not tend to fortify that fact? If it be found by experience that the standard is a fallacious one, can the executive department supply the defects of legislation? Congress alone has the authority to levy duties. Its will alone is to be sought.

It appears very clear, from the evidence, that the Dutch standard is a color standard only. As applied to the sugars of the Island of Java, brought to the mother country, it was undoubtedly a very fair standard of the quality of sugar. The juice of the cane was reduced in open boilers, and the viscous or molasses matter was expelled by drainage, assisted by percolation of water from a covering of white clay, which improved the sugar both in quality and color. The sugar-merchants of Holland adopted a scale of colors from No. 1 to No. 20, which is exhibited in small sqnare bottles, containing sugar of the different shades of color, from dark up to nearly white. These bottles were prepared by leading firms of high standing in Holland, and were accepted by the trade as the true standard by which to estimate the grade of sugars. Other nations adopted it as a matter of convenience. It was not an infallible test of quality; because some sugars had a higher color than their intrinsic charater entitled them to; whilst others had a lower. Nevertheless, no more convenient standard was at hand; and if, by the feel, or the taster, or other physical indications, the merchant had reason to believe that the standard was not a strictly accurate test of quality in a particular case, he exercised his own judgment as to the price he would give, or take, for the article.

In process of time new modes of manufacture were adopted: the vacuum-pan in place of the open boiler, for condensing the liquor; the centrifugal tube in place of the old inverted cone, or leech-tub, for expelling the molasses; and animal charcoal, instead of clayey infiltration, for refining and whitening the result. The perfection of the refining process as now practised renders color in raw sugars a matter of little consequence, provided they contain abundance of saccharine matter. The color standard has come to be a precarious one. Still, if the government chooses to adhere to it, it is bound by it. If Congress, as it has done, adopt the color standard, it is not for the customs department to adopt a different one. When Congress chooses to do this, it will be time enough for the customhouse to follow. As before said, Congress alone had the power to lay taxes and duties.

Great stress is laid on the charge that sugars are manufactured in dark colors on purpose to evade our duties. Suppose this is true; has not a manufacturer a right to make his goods as he pleases? If they are less marketable, it is his loss; if they are not less marketable, who has a right to complain? If the duties are affected, there is a plain remedy. Congress can always adopt such laws and regulations as it may deem expedient for protecting the interests of the government. If, in the case under consideration, a color standard is insufficient, a different one is ready to hand,-that of the polariscop, or other chemical test. If the quantity of saccharine matter in sugar, or its state of advancement from the raw state to a condition of refinement, is desirable as a dutiable standard, let it be so declared by the laws; and then the merchant will know on what he has to depend. Uncertainty and ambiguity are the bane of commerce. Discretion in the custom-house officer should be limited as strictly as possible. It has been said with much truth, 'Where law ends, tyranny begins.'

It is argued that, although the Dutch standard of color is named in the statute, yet the intent of the law was to adopt it as a standard of quality; and if, in consequence of changes in the mode of manufacture, it ceases to be such, the reason of the law ought to prevail, and quality ought to be still the test. And that quality was the object sought is inferred from the language of sects. 2914 and 2915 of the Revised Statutes.

This reasoning would be very good if the law prescribing the standard were not explicit in its terms. Whatever may have been in the minds of individual members of Congress, the legislative intent is to be sought, first, from the words they have used. If these are clear, we need go no further; if they are obscure or ambiguous, then the intent may have to be sought out by reference to the context, to previous or concurrent enactments, to the history of the art or trade, to general history, to anything that will throw light on the meaning of the obscure or ambiguous terms use. But there is no obscurity or ambiguity here. Two tests for fixing the dutiable grade of sugars were open to the legislative choice,-that of color and that of constitution or chemical quality. Congress chose the former. It is not strange that it did so: the color test had long been used, and it was well calculated to designate quality in the old sugars, manufactured in the old way. But in making its election, Congress did not leave any room for doubt as to its meaning. It used apt terms to express it; terms free from all ambiguity and obscurity. If the test adopted fails to effect the desired object, the it can be changed at any treasury, need only be temporary: it can be changed at any moment. And it is better to submit to a temporary inconvenience than to set the laws all afioat by laying down a canon of construction which leaves the plain words, and seeks to spell out, or guess at, the supposed intent of the legislature, contrary or supplementary to that which is clearly embodied in the words it has used.

We see nothing in the sections referred to to change this plain and simple view of the subject. Sect. 2914 merely directs that the standards to be used by the collectors shall be furnished by the Secretary of the Treasury. This was to insure certainty and uniformity in the selection of the Dutch standards. The evidence shows that the Secretary performed this duty by procuring the standards from the proper parties at Amsterdam, and furnishing them to the collector. They were exactly the same, however, as those procured by private dealers. It cannot be justly contended that this section authorized the Secretary to adopt a different standard from that prescribed by Congress; to wit, a standard of chemical constitution indicated by a polariscope, instead of a standard of color indicated by the Dutch glass bottles, carefull sealed, graded, and numbered. This would be to give to the section an unnatural force, and cause it to overrule the primary section to which it was a proviso. In like manner, when sect. 2915 authorizes the Secretary, by regulation, to require that samples from packages of sugar shall be taken in such manner as to ascertain the true quality of such sugar, there is no indication of an intent to change the dutiable standard adopted in the purview of schedule G. Even if it be conceded that the word 'quality,' as here used, has reference to saccharing purity or strength, the most that can be inferred is, that it was the aim of Congress, by this clause, to enable the officers to take samples from the packages n such manner as to secure a knowledge of their entire contents, in the interior and in every part, as well as on the surface; in other words, to see that there was no fraud in making up the packages. It was supposed that the true quality of an entire package could be ascertained by proper care in taking out the samples,-by the manner in which they were taken out. Whether the quality was to be ascertained by any other test than that of the color is not stated; and, if it was, there is no indication that a different standard from that of the Dutch standard of color, prescribed in the principal section, was to be used in fixing the amount of duty. It may have been the object of sect. 2915 to detect the use of artificial coloring on the surface of the packages, applied after the sugar was manufactured and after the packages were made up. At all events, we think that there is nothing in either of these sections that modifies or qualifies the plainly prescribed standard by which imported sugars were to be graded and assessed for duty.

We have examined the prior legislation on the subject from the act Dec. 24, 1861, c. 2, down to that of Dec. 22, 1870, c. 6, which is substantially reproduced in the Revised Statutes; but, without reviewing the laws in detail, it suffices to say that we find nothing in this legislative history to change or affect our views. The concession that Congress may have supposed that the Dutch standard of color would be a sufficient test of quality, answers all that can be deduced from the prior statutes. If experience shows that Congress acted under a mistaken impression, that does not authorize the Treasury Department, or the courts, to take the part of legislative guardians, and, by construction, to make new laws which they imagine Congress would have made had it been properly informed, but which Congress itself, on being properly informed, has not, as yet, seen fit to make. It may be that our tariff of duties is evaded by giving to sugars, in the process of manufacture, a law grade of color. If this be so, it is no more than every manufacturer does; namely, so to manufacture his goods as to avoid the burden of high duties, provided he can do it without injuring their marketability, or injuring it less than the duties involved. So long as no deception is practised, so long as the goods are truly invoiced and freely and honestly exposed to the officers of customs for their examination, no fraud is committed, no penalty is incurred. Heretofore, it has been thought desirable, in order to make sugars more marketable, to use artifical processes for bleaching them. The percolation of clay water through the mass was one of the means adopted. The sprinkling of refined syrups in the form of spray on the sugar in the centrifugals is another. If the manufacturer uses these bleaching processes in order to make his sugars more salable, why may he not omit to do so in order to render them less dutiable; nay, why may he not employ an extra quantity of molasses for that purpose? If after the sugars are manufactured, especially after being put up in packages, coloring matter is artificially imposed, it might be a different matter. The sugars would then have a different color from that which belonged to them when manufactured. This might be held to be a fraud on the revenue. But it is unnecessary to decide this question in this case.

A better remedy than that of making a forced construction of the law is in the power of Congress. All that has to be done is, to change the law so as to reach the goods in their new form, if it is thought desirable to do so. If the law is found defective, let it be altered so as to attain the result desired.

The argument that the sugars in question are not 'sugars' in the sense of the law, because the standard adopted by the law for fixing the grade is, as to the sugars in question, defective in its application, is too metaphysical to be of weight in the consideration of the question. They are sugars of commerce, and the complaint of the custom-house is, h at they are better sugars than they appear to be.

We think that the decision of the court below was right, and the judgment is

Affirmed.

MR. JUSTICE MATTHEWS, with whom concurred MR. JUSTICE HARLAN, dissenting.

title: Merritt v. Welsh/Opinion of the Court


text: Talk:Merritt v. Welsh/Opinion of the Court


text:
Merritt v. Welsh/Dissent Matthews

MR. JUSTICE MATTHEWS, with whom concurred MR. JUSTICE HARLAN, dissenting.

It seems not to be denied by the opinion of the majority of the court, as it was expressly conceded by the court below, that if an artificial color had been imparted to the sugar after its manufacture, by which it was made identical in appearance with the color of the sample of the Dutch standard of a particular number, below that with which it would have been classified but for such adulteration, the government would have been entitled to prove the fact, and exact duties according to the classification of sugar of equal grade in its natural color.

This admission is not gratuitous, but is required upon any just construction of the law. And yet I cannot perceive what difference there ought to be if, during the process of manufacture, the same color is artificially produced by foreign matter, not necessary to the production of the sugar, and introduced for the express purpose of counterfeiting a color of a lower grade, in order to evade the law and escape the duties imposed by it. This is precisely what the plaintiff in error offered to prove on the trial, and what, by the rulings of the court, he was not permitted to do. In my opinion, this was error, for which the judgment should be reversed.

The admission that it would be unlawful to produce artificially the color of the Dutch standard, after manufacture, to disguise the grade of the article, is inconsistent with with the proposition that the color of that standard, as a visual impression, is the sole ground of distinction for rating duties on sugar; and yet that proposition is the only foundation that supports the judgment of the court below.

The phrase 'No. 7 Dutch standard in color,' and other similar phrases in the act of Congress, were not, in my opinion, intended to establish mere sensible color as the test for distinguishing the grades of sugar, for the purposes of the act; so as to embrace every description of sugar that could not, by the unaided eye, be differentiated in color from the sample. If so, sugar of the highest grade in other respects might be painted on the surface of its grains, after its manufacture was complete, without affecting its nature or quality commercially as sugar, so as perfectly to imitate an article of inferior strength and value, whose color had been naturally produced, and thus be imported at a lower rate of duty than would otherwise be lawful. For it mere color is the sole test to be regarded at the custom-house, as it may be determined by the eye alone, on comparison with the color of the standard, the officer has no right to inquire when or how the color was produced, so that it does not destroy the commercial character of the article. If the article is, and continues to be, sugar, and corresponds in color with the color of the sample used as the standard, it is to be rated accordingly.

A color imparted to sugar artificially, either during the process of manufacture or after its completion, and which it would not contract by means of any of the processes necessary merely to the production of sugar, is, in my opinion, not its natural color, and not the real and true color of the Dutch standard, however closely it may resemble it, or however impossible it may be, by sight merely, to distinguish it from the color of the sample. It is a mere imitation and counterfeit of the Dutch standard in color; for that means, not merely an abstract color, of a certain hue, but a concrete color inhering in, and belonging only to, sugar when produced according to the processes which, in the Dutch standard, result in differences of color, according to differences in the quality of the sugar itself. Congress, by the use of the phrase in question, intended to refer to color as resulting from and indicating a certain quality of sugar, considered in reference to its strength and corresponi ng value; and hence used words, not descriptive of color, in reference to the various hues into which the ray of light is divided by the differences of refrangibility as it passes through the prism, and which are represented as primitive colors to the human eye, and designated by their associated names. Congress did not mean to scale the duty, as the sugar might be considered, according to such a standard, light yellow, yellow, dark yellow, light brown, brown, dark brown, &c. It meant to divide sugars for purposes of duties, according as they corresponded with certain samples of other sugars, produced according to a certain known mode of manufacture and designated in commerce, as well as in the statute, as of the Dutch standard, and classified by numbers, according to a gradation of color, resulting from that mode of manufacture, and not otherwise. So that to correspond with the color designated as a particular number of the Dutch standard, the sample produced must have to the sight not merely a color so like it that the eye cannot distinguish between them, but the resemblance must be, in all respects, such that it is manifest that it is not a mere similarity by reason of imitation, but an identity of color, because it has resulted from the necessary processes of the manufacture, and belongs, by necessity of its nature, to the sugar itself, and not to a foreign ingredient, mixed with it as a coloring matter. In other words, sugar which is classed as No. 7, Dutch standard in color, must be sugar of that quality in other respects, which, in the Dutch standard, has a color known as No. 7.

For these reasons I feel compelled to dissent from the opinion of the court.

title: Merritt v. Welsh/Dissent Matthews


text: Talk:Merritt v. Welsh/Dissent Matthews

title: Talk:Merritt v. Welsh/Dissent Matthews


text:
Savings Bank v. Archbold

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

The facts are stated in the opinion of the court.

Mr. Lewis Sanders and Mr. William M. Evarts for the plaintiff in error.

The Solicitor-General, contra.

MR. JUSTICE FIELD delivered the opinion of the court.

title: Savings Bank v. Archbold


text: Talk:Savings Bank v. Archbold

title: Talk:Savings Bank v. Archbold


text:
Savings Bank v. Archbold/Opinion of the Court

The plaintiff is a savings bank, incorporated by the legislature of New York, and the defendant was in 1876 a collector of internal revenue in the district in which the plaintiff did business. The present action is brought to recover the amount of certain taxes and penalties collected by him from the bank in that year. Its determination involves the construction of the concluding clause of sect. 3408 of the Revised Statutes, exempting deposits of money in savings banks, under $2,000, from the tax imposed by the provious clause of the same section on deposits generally. The section declares that a tax of one twenty-fourth of one per cent shall be levied each month on the average amount of deposits of money, subject to payment by check or draft, with any person, association, company, or incorporation engaged in the banking business. The concluding clause provides that deposits in savings banks 'having no capital stock, and doing no other business than receiving deposits to be loaned or invested for the sole benefit of the parties making such deposits, without profit or compensation to the association or company, shall be exempt from tax on so much of their deposits as they have invested in securities of the United States, and on all deposits not exceeding $2,000 made in the name of any one person.' The plaintiff is a savings bank of the character here mentioned, but the language used in expressing the exemption is not as happy as could be desired. 'Deposits in. . . savings banks. . . shall be exempt from the tax on so much thereof as they have invested in securities of the United States,. . . and on all deposits not exceeding $2,000,' is the form in which the law is given. 'Deposits on deposits' not exceeding a certain amount is not a felicitous mode of expressing the legislative purpose. The bank, believing that the exemption extended to $2,000 of all deposits, reported the balance as the amount of its deposits subject to the tax, ad paid the sum of $253, assessable thereon. The collector of internal revenue took a different view of the law, and held that the exemption applied only to such deposits as amounted to $2,000 or under that sum. He, accordingly, levied upon all other deposits a tax, which amounted to $5,236; and although the savings bank acted on the advice of counsel, and, as the court specifically finds, in good failth, without any fraudulent intent, and readily informed the collector, at his request, of the amount of all its deposits, that officer added to this $5,236, a penalty of one hundred per cent, as though the return made by the bank had been a false and fraudulent one; and, also, a further penalty of five per cent, for a failure to pay the tax assessed within the prescribed period, and interest upon the whole, making the gross sum of $10,838.52. This amount being collected by distraint, the present action is brought to recover it.

The concluding clause of the section in question, in our judgment, intended to exempt from the tax all deposits to the extent in which they were invested in United States securities, and also to the extent of $2,000. We think that the term 'deposits,' as it is last used, is to be taken as equivalent to the terms 'sums deposited' or 'sums,' and the clause be read as if the language were: 'The deposits in. . . savings banks. . . shall be exempt from tax on so much thereof as they have invested in securities of the United States, and on all sums not exceeding $2,000 deposited in the name of any one person.'

This construction gives a clear meaning to the clause and avoids the inconsistency of holding that the addition of a single mill to $2,000 would subject the whole deposit to the tax, even though such addition might be the accumulation of interest. It upholds, also, the policy of encouraging and protecting savings by exempting those of each depositor to a certain amount; and is in harmony with the amendment made by the act of March 1, 1879, c. 125, to obviate the possibility of the construction which the defendant adopted. That amendment declares that savings banks shall be exempt from tax on so much of their deposits 'as they have invested in securities of the United States, and on two thousand dollars of savings deposits, and nothing in excess thereof, made in the name of and belonging to any one person.' 20 Stat. 327, 352.

But the section, as it originally stood, meant, in our judgment, the same thing. The interpretation we give to it secures, equally with the amendment, uniformity in the tax, and lays its burdens alike upon all. An interpretation which accomplishes this end in the operation of tax laws should be preferred to one leading to a different result.

It follows that the defendant erred in his construction of the law; that the assessment of the tax on all deposits which exceeded $2,000, without any deduction of that amount, and the imposition of a penalty for not making a return in accordance with his views, were illegal, and that the moneys thus exacted from the savings bank should be returned. We express no opinion as to the legality of imposing a penalty where no fraud was intended. As a general thing, the imposition of a penalty implies delinquency by the party on whom it is imposed. Its consideration, however, is immaterial, in view of the construction we give to the law.

Upon the agreed statement of facts, the plaintiff was entitled to recover the amount exacted from him, with interest. The judgment of the court below must, therefore, be reversed, and the cause remanded with directions to enter judgment in his favor accordingly; and it is

So ordered.


text: Talk:Savings Bank v. Archbold/Opinion of the Court


text:
Printing House v. Trustees

APPEAL from the Circuit of the United States for the District of Louisiana.

The facts are stated in the opinion of the court.

Mr. J. D. Rouse and Mr. William Grant for the appellant.

Mr. Edwin T. Merrick, Mr. George W. Race, and Mr. John A. Compbell for the appellee.

MR. JUSTICE BRADLEY delivered the opinion of the court.

title: Printing House v. Trustees


text: Talk:Printing House v. Trustees

title: Talk:Printing House v. Trustees


text:
Printing House v. Trustees/Opinion of the Court

This case was instituted in May, 1876, by a bill in equity filed by the American Printing House for the Blind, a Kentucky corporation, against the Louisiana Board of Trustees of the American Printing House for the Blind, a Louisiana corporation, praying from an account and payment of moneys alleged to be in the hands of the defendant, which had been raised by contributions for the benefit of the complainant. An amended bill was filed in December, 1876, adding as defendants Henry B. Foley, Valsin J. Dupuy, Nathaniel Cropper, of Louisiana, who, claiming to be original contributors to the fund in question, had sued the defendant corporation for a return of their several contributions; also, Magruder and Richardson, a law firm, who represented other contributors making the like claim; also, the Attorney-General of the State of Louisiana, which had contributed to the same fund, and had brought suit to recover its contribution; also, finally, the American Printing House for the Blind and the American University for the Blind, a corporation of the District of Columbia, which made some claim to the fund.

The claim of the original and amended bills was based upon an allegation to the effect that in the year 1858 the complainant received a charter from the State of Kentucky to enable it to raise and collect funds for establishing at Louisville, Ky., a publishing house for printing and publishing books in raised letters for the use of the blind in the United States; that said charter contemplated, and was granted in expectation of aid and co-operation from other States, particularly Tennessee, Mississippi, and Louisiana; that the original defendant was chartered by the legislature of Louisiana in 1859 for the express purposes of collecting funds to aid the Kentucky corporation to carry out its benevolent enterprise; and that the funds in question had been collected and were held for that purpose, and no other, and ought in equity to be paid over to the complainant, who, it was alleged, had complied with all the conditions required to entitle it to the money.

The Louisiana board filed an answer, in which the principal point of defense set up was, that, although the moneys in question had indeed been collected for the purpose indicated by the bill, yet that after their collection, and in the year 1861, the Kentucky corporation obtained a new charter materially different from the original one, and subversive of the rights which the Louisiana board were to enjoy in the administration of the scheme, and which were expressly named in their own (Louisiana) charter as a condition of entering into said scheme and contributing to it. They also set up the delay of fifteen or sixteen years in making any demand for the fund as a fatal objection to any such demand being sustained now. The rights referred to as having been abrogated by the new charter are specially set forth in the answer; being the right of visitation, supervision, and control over the affairs and management of the central institution at Louisville, to be exercised by the presidents of the several State boards of trustees contributing to the general scheme, who were to constitute a board of visitors, with the right to visit the printing house, examine the books, and investigate the proceedings of the trustees, and of discharging them and vacating their offices and appointing new trustees in case of finding them guilty of mismanagement, malfeasance in office, or neglect of duty. The answer alleges that all this was abrogated by the new charter of 1861, and the right of visitation, instead of being left to the presidents of the State boards of trustees, was given to governors of States of North America contributing the smallest aid in sustaining the printing house, and superintendents of institutions devoted exclusively to the education of the blind, and State auxiliary boards. The answer also contended that the the new charter created a new and different corporation by the substitution of e w names of corporators in place of those contained in the original charter.

The allegations of the answer, in point of fact, are clearly proven; but the complainant contends that, in point of law, no such change was made in the new charter as to exonerate the defendants from the duty of paying over the funds collected by them; and that the defendants, in their litigation with the original contributors, acknowledged the rights of the complainant, and are estopped from denying them.

The other defendants filed answers and cross-bills, in which they contend that the complainant failed to perform the conditions on which the money was contributed,-as, that the sum of $25,000 should be raised within seven years, and that a permanent printing establishment should be erected and in operation within nine years, from the date of the charter; and they claimed to have their several contributions restored to them with interest.

This is a general description of the litigation. Considerable evidence was taken, much of it being directed to the supposed admissions of the Louisiana board as to the right of the complainant to the money. On final hearing the court below dismissed the bill. The complainant appealed from that decree.

In order to a proper understanding of the controversy, it will be necessary to examine somewhat more minutely the charters of the respective parties, and the acts and proceedings which led to their formation, and to the collection of the fund sought to be recovered.

The scheme for establishing a general printing house for printing books for the blind of the United States, which led to the organizations referred to, originated in Mississippi as early as 1857, if not earlier. A Mr. Dempsey B. Sherrod took much interest in the subject, and visited several of the Southwestern States, for the purpose of getting up organizations and collecting funds. His operations were commenced in Mississippi, and extended thence to Kentucky, Tennessee, Louisiana, and other States. In December, 1859, he was appointed by the Kentucky board agent to organize auxiliaries in Missouri, Illinois, Indiana, and Ohio; and acted as such during the year 1860. But he had previously been appointed agent for the Mississippi board, which was the first organized, and afterwards by the Louisiana board. The Mississippi board was chartered Nov. 14, 1857. The preamble of the charter recites as follows: 'Whereas it is contemplated to establish at Louisville, Kentucky, a publishing house to print books in raised letters for the use of the blind in the United States; and whereas, to establish said publishing house upon a permanent basis, and with a sufficient capital, contributions from various States of the Union will be necessary; to effect which object act on incorporation like this will be applied for in other States, the object of which incorporation will be to aid in collecting and effectually securing for such object the money which may be contributed in each State:' therefore it was declared (sect. 1), that the Hon. C. P. Smith, Hon. William L. Sharkey, and three others named, and their successors, &c., should be a body corporate under the name of the 'Board of Trustees to aid in establishing a publishing house to print books, &c., for the benefit of the blind,' with power to use a common seal, and to make such contracts as might be necessary to effect the objects of their corporation. By sect. 3, Dempsey Sherrod was appointed general agent of said board to solicit subscriptions and contributions for the above purpose in this and other States of the Union, and to apply to other States for similar acts of incorporation. Upon his death or resignation the board should have power to appoint another. By sect. 6, the board of trustees were authorized to receive contributions in money, &c., for the purpose aforesaid, and, until $25,000 should be raised in this and other States, were to invest the same at interest. By sect. 7, if the sum named should not be raised within seven years, and the publishing house should o t be established within nine years, the contributions should be returned to the contributors with interest. By sect. 8, it was declared that, so soon as the legislature of Kentucky should pass an act incorporating trustees for establishing said publishing house in Louisville, and this board had evidence that $25,000 were raised, the fund in the hands of this board should be transferred to the board of trustees incorporated by the State of Kentucky, in such sums as might be needed to carry on the business; provided, if Kentucky should not pass such a law incorporating said board, the Mississippi board might select some other place for publication in such State as might pass such act.

At the same time the legislature of Mississippi passed an act, by which, after reciting that $12,000 had been subscribed by private individuals, they appropriated $2,000 to the board of trustees in aid of the object.

It may be remarked here that only about $1,000 of the money raised in Mississippi were ever paid to the Kentucky institution. What was the cause of this does not clearly appear. From the evidence of Mr. Bullock, the president of the complainant, it appears that the Kentucky board became dissatisfied with Sherrod after 1860, and he was no longer employed as their agent. Mr. Foster, a witness for the defendant corporation, and one of its trustees from its organization, testifies that after the war they learned from Mr. Sherrod that the trustees at Louisville had changed their charter, making material changes which affected the whole institution, and he, Mr. Sherrod, had withdrawn entirely his connection from it; so had the parent society, organized in Mississippi, and he had established another institution called the American Publishing House and American University for the Blind, in the District of Columbia. It may be that this explains the discontinuance of co-operation on the part of the Mississippi board.

Although a board of trustees was chartered in Tennessee, and an appropriation of $2,000 was made by the legislature of that State in 1858, and a law was passed making an annual appropriation of $10 for every blind person in the State, according to the census, which amounted in seven years to the sum of $38,780; yet, for some unexplained reason, no money was ever contributed from that State to the Kentucky institution, and in 1867 the law was repealed.

The first charter granted by Kentucky, and under which the complainant claims to have been organized, was an act of the legislature, passed Jan. 26, 1858. As this charter is important, because it was in force when that of the Louisiana board of trustees was adopted, and when the funds in question were mostly contributed, it will be proper to give the exact language of its most important provisions. It commenced with the following recital:--

'Whereas the State of Mississippi has by law made an     appropriation of 2,000 dollars to aid in establishing in      Kentucky a national institution to print and circulate books      in raised letters for the blind; and whereas said State has      incorporated a board of trustees to receive said money, and      12,000 dollars which have been subscribed for the aforesaid      purpose by citizens of Mississippi, and to transfer said fund      to said institution in Kentucky; and whereas it is      anticipated that other States will make donations and      incorporate trustees to aid in this enterprise.'

It then enacted,--

'SECT. 1. That an institution under the name of the American     Printing House for the Blind be established in Louisville,      Kentucky, or its vicinity, and that James Guthrie, William F.      Bullock, Theodore S. Bell, Bryce M. Patten, John Milton, H.      T. Curd, and A. O. Brannin, and their successors, be, and      they are hereby, declared a body corporate under the name and      style of the Trustees of the American Printing House for the      Blind, with the right as such to use a common seal, to sue      and be sued, to plead and be impleaded, in all courts of      justice and in all cases in which the interests of the      institution are involved. The said trustees are hereby full     empowered to receive, by legacies, conveyances, or otherwise,      lands, money, and other property, and the same to retain,      use, and apply to the publishing of books in raised letters      for the blind in the United States. Said trustees are authorized to purchase land     and erect, purchase, or rent buildings for the use of said      institution, and to make all such contracts as may be      necessary to accomplish the purposes of their incorporation. . ..

'SECT. 2. The trustees shall elect, annually, a president, a     treasurer, and a secretary, who shall hold their offices      until their successors shall be elected and duly qualified. Said trustees may prescribe the duties and fix the     compensation of said officers. ..

'SECT. 6. It shall be the duty of the board of trustees,     before commencing the publication of any book, to request the      superintendent of every institution for the education of the      blind in the United States to make out and send to the      trustees of the printing house a list of such books as he may      deem most desirable for the use of the blind; and said      trustees shall select for publication the book that shall      have received the greatest number of superintendents in its      favor. This mode of selecting books for publication shall be     repeated at least once every year.

'SECT. 7. Every school for the blind located in a State whose     legislature or citizens contribute to the funds of the      American Printing House shall, in proportion to the funds, by      entitled to copies of every book published by said house, to      be distributed gratuitously to such blind persons as are      unable to purchase them. And the superintendents of said     schools shall be required to report to the trustees of said      house the names and residences of all persons to whom books      may be thus distributed. The prices of books published by     this institution shall be made so low as merely to cover the      cost of publication and other incidental expenses of the      institution.

'SECT. 8. It shall be the duty of the board of trustees to     make an annual report of its proceedings, which shall embrace      a full account of the receipts and disbursements, the funds      on hand, the number of books sold, and the number distributed      gratuitously, and a general statement of the condition of the      institution; and they shall transmit copies of said reports      to the General Assembly of Kentucky, to the governors of the      several States of the Union, the president of each State      board of trustees, to the superintendent of every institution      of the blind in the United States, and to every person who      shall have made to the institution a donation of more than      five dollars the previous year.

* *  *  *  *

'SECT. 10. The presidents of the State boards of trustees     shall, ex officio, constitute a board of visitors, each      member of which shall at all times be authorized to visit the printing house,      examine the books, and investigate the proceedings of the      trustees; and the president of the oldest State board of      trustees shall, at the written request of a majority of the      visitors, call a meeting of the board of visitors, who shall      be fully empowered to investigate the proceedings of the      trustees of the institution, and in case they shall find said      board or any member thereof has mismanaged the affairs of      said institution, by malfeasance in office or neglect of      duty, they may, a majority of three-fourths of all the      members concurring, declare the office or offices of said      trustee or trustees vacant, and proceed to fill such vacancy      by election from the citizens of Louisville or its vicinity. Notice of all meetings of the board of visitors shall be sent     by mail to all the presidents of the State boards and to all      the trustees of the printing house at least one month before      the time appointed for said meetings.

'SECT. 11. The trustees of said printing house shall continue     in office until their offices shall become vacant by      resignation, death, or removal from office as hereinbefore      provided for. All vacancies caused by resignation or death     shall be filled by the remaining members of the board.

SECT. 12. Be it further enacted, that each donor shall be     entitled to his donation, with the interest, after the      deduction of the necessary expenses are paid, provided said      publishing house is not established within nine years from      the passage of this act; and should the board refuse to make      said distribution among the donors according to their      respective interests, then, and in that event, said donors      may have the right to proceed to recover the same by legal      proceedings instituted in any of the courts of this      Commonwealth having jurisdiction thereof.'

The provisions of the tenth section of this act are especially material in the determination of this cause. It was the change made therein by the subsequent act of 1861, as will hereafter appear, on which the defendants principally rely for refusing to pay over to the complainant the moneys in controversy. It will be seen that direct reference was made to it in the Louisiana charter. This charter was taken out under the general corporation law of the State of Louisiana, and is dated Jan. 3, 1859. It recites as follows:--

'Whereas, it is contemplated to establish at Louisville, in     the State of Kentucky, a publishing house, to print and      publish books in raised letters for the use of the blind in the United      States; and whereas, to establish said publishing house on a      permanent basis, and with sufficient capital, contributions      from various States of the Union are anticipated; and      whereas, it is proper and just that a portion of said funds      should be contributed by the citizens of the State of      Louisiana, and believing the object to be worthy the      consideration and liberality of a generous public, and      desiring to cooperate in the accomplishment of the proposed      enterprise, we, the undersigned citizens of Louisiana, do      hereby associate ourselves together, and constitute ourselves      and our successors a body corporate, under the provisions of      an act of the legislature of the State of Louisiana, approved      March 14, 1855, entitled 'An Act for the organization of      corporations for literary, scientific, religious, and      charitable purposes,' and we do hereby agree to the following      article of corporation:--

'1. The name and style of this corporation shall be 'The     Louisiana Board of Trustees of the American Printing House      for the Blind,' by which name it shall be known, and be      capable to sue and be sued, and the domicile of this      corporation shall be in the city of New Orleans.

'2. The object of this association and corporation shall be     to raise funds for, and otherwise to aid in, the permanent      establishment and successful management at Louisville,      Kentucky, of a publishing house for the printing and      publication of books in raised letters for the use of the      blind in the United States.

'3. The trustees shall annually elect, by ballot, from their     own number, a president, on whom all legal process shall be      served, a treasurer and secretary, provided that said      officers shall continue in office until their successors      shall have been elected and qualified.

'4. The trustees shall have power to fill all vacancies     occurring in the board by death, resignation, or otherwise;      to adopt by-laws for their own government, and prescribe the      duties of its officers and members, and they shall be      empowered to receive by donation, bequest, purchase, or      otherwise, and to hold and use properties, real and personal,      to the amount of one hundred thousand dollars.

'5. The trustees shall hold the funds and properties of the     corporation for the purposes thereof, and until the sum of      twenty-five thousand dollars is raised in this State and      other States of the Union, the same may be safely invested at      the discretion of the trustees; that so soon as the trustees      are officially informed by the trustees of the American Printing House for the Blind, at      Louisville, Kentucky, that the sum of twenty-five thousand      dollars has been raised, they shall then remit for funds and      properties received by them to said trustees at Louisville,      in such sums as may from time to time be required to §      tablish and carry on said publishing house; provided that      should sum of twenty-five thousand dollars not be raised      within seven years from the date of this incorporation, or      said publishing house not be established within nine years      from said date, then the donations and contributions      received, together with the interest thereon accrued, after      deducting expenses of the incorporation, shall be returned to      the contributors and donors thereof.

'6. The trustees reserve to themselves at all times the     right, through their president, of visiting the      establishment, or printing and publishing house, at      Louisville, and inspecting the books and management of the      same, and, in conjunction with the presidents of other boards      that may be formed, the supervision and administration of the      affairs thereof, in accordance with the provisions of the      tenth section of the charter of 'The Trustees of the American      Printing House for the Blind,' as incorporated by the General      Assembly of the State of Kentucky.'

From the sixth article, above quoted, it clearly appears that the Louisiana board regarded the provisions of the tenth section of the Kentucky charter as material and fundamental. It gave them, through their president, in conjunction with the other State boards, through their presidents, the ultimate control and management of the central institution; and they expressly reserve to themselves at all times this vital prerogative. It may be fairly presumed that without it they would never have engaged to pay over their contributions to the Kentucky board.

The question then is, whether this provision has been materially altered by the Kentucky legislature in the new or amended charter which was granted to the Kentucky board in April, 1861.

A glance at this amended charter is sufficient to decide the question. It is a recast of the whole incorporating act. After copying the preamble of the original charter, it proceeds to name the corporators, substituting two new names in place of two others in the original. Perhaps this is a change of but little moment; though the defendants regard it as a change of the corporation. The general objects of the association and duties of the trustees are substantially the same as those contained in the original act. It is observable, however, that in referring to States that may become interested in the institution, and to institutions for the education of the blind which it is anticipated will share in its benefits, the States of North America are named instead of the States of the Union, or of the United States; and institutions for the education of the blind in North America, instead of institutions in the United States, evidently contemplating the possibility of a disintegration of the United States, and the establishment of another government in its territories. But without further reference to this noticeable change, we proceed to copy the ninth section, which replaces the tenth of the original act. It is in these words:--

'The superintendents of State institutions devoted     exclusively to the education of the blind, and the governors      of the States that aid in sustaining the American Printing      House for the Blind, and the presidents of the State      auxiliary boards of trustees, shall, exofficio, constitute a      board of visitors, each member of which shall be at all times      authorized to visit the printing house, examine the books,      and investigate the proceedings of the trustees; and the      president of any State board may, at the request of a      majority of the visitors, call a meeting of the board of      visitors, who shall be fully empowered to investigate the      proceedings of the trustees of the institution, and in case      they shall find that said board, or any member thereof, has      mismanaged the affairs of the institution by malfeasance in      office or neglect of duty, they may, a majority of      three-fourths of all the members present concurring, declare      the offices or office of said trustees or trustee vacant, and      proceed to fill the vacancy, by election from the citizens of      Louisville or its vicinity. Representatives from a majority     of the States that contribute to the support of the American      Printing House for the Blind shall constitute a quorum of the      board of visitors, and each State represented shall be      allowed one vote in the action of the board. Notice of every     meeting of the board of visitors shall be sent by mail to all      the members of the board, and to the trustees of the American      Printing House for the Blind, at least one month before the      time appointed for the meeting.' This is certainly a material change in the supervisory government and control of the institution; indeed, it may be denominated a subversion of the original constitution. By the original charter, the State boards of trustees, through their presidents, were constituted the board of visitors, with absolute supervisory control, even to the extent of discharging from office the entire board of trustees of the central institution for mismanagement of its affairs, malfeasance in office, or neglect of duty. By the new charter, the presidents of the State boards have a seat in the board of visitors, it is true; but their power, which before was exclusive, is now in effect taken from them, and shared by the governors of all the States that aid in sustaining the institution, and the superintendents of all State institutions devoted exclusively to the education of the blind. In a matter so important as the government of the institution, such a change cannot be said to be immaterial, or anything less than fundamental. It is more especially important in this case because made the subject of an express reservation in the charter of the defendants.

In view of the facts above detailed, the question still remains, whether, after such a fundamental change in the constitution of the central organization, affecting so materially the rights of the auxiliary boards in regard to the control of the institution, they are bound to pay over to that institution the funds committed to their charge. If an individual should subscribe to a charitable scheme upon certain conditions as to its organization and control, and those conditions are violated before the payment of his subscription, it can hardly be doubted, that he would be discharged from his obligation to pay it. Whatever power the legislature may possess to modify the organization of an established charity in point of form, it cannot change an executory contract to contribute to such charity. The power to do this would, in effect, be a power to make a contract for a party which he is himself unwilling to make. The authorities which affirm the legislative power to modify the forms of public and charitable institutions, do not apply to such a case.

The position of the defendants is somewhat anomalous. They are not themselves the original contributors; but they represent them. They are their trustees, as well as trustees for the benefit of the proposed foundation. The money of the contributors has been deposited in their hands to be applied to a proposed charity on certain conditions. The defendant board, as the representatives of the contributors, occupy a relation to the general foundation similar to that of a subscriber to its funds. They stand upon the terms of an agreement, or contract, by which, in effect, they engage, upon certain conditions, to contribute and pay over to the central institution the money intrusted to them. They cannot be considered as bound, in law, to pay it over at all events. They certainly would not be so bound if the character of the charity should be materially changed. It is difficult to see how they can be so bound if its constitution and government are so changed as to deprive the defendants of that participation in the control which it was stipulated they should have. If the original contributors were all willing to waive the objection, the case might be different; but the original contributors are claiming a return of their contributions; and if they were not doing this, it would nevertheless be difficult to ascertain their united will. He duty and only a fe course of the defendant trustees is, to withhold the contributions in their hands if they see that there has been a clear violation of those conditions upon which such contributions were made. By their own constitution, they have certain distinct rights and duties,-rights which they not only may, but ought to, insist on; because they are not only theirs, but, representatively, those of their constituents, the donors of the found. They are not part and parcel of the Kentucky institution; though they were to have had an important share in its control. They are a separate organization, existing under distinct laws. It is apparent from the evidence in the case that the several State contributions, and incorporations of trustees, whilst looking to a common and general foundation, or charity, for the benefit of the blind in the United States, had also special reference to the benefit of that class in the particular State. The legislative appropriations which were graduated by the number of blind in the State, which were made in most of the States interested, indicate this. The provision of the Kentucky charter securing to schools for the blind in a contributing State a gratuitous distribution of books in proportion to the amount contributed, indicates the same thing. Reciprocal benefits were evidently expected in consideration of the amount of aid to be contributed. This is shown by the entire testimony. Mr. Bullock, president of the complainants, whilst complaining of the unwillingness of the Louisiana board to pay over their fund, says: 'From the beneficial agencies of our institution the blind of Louisiana have been almost entirely shut off through the unwillingness of the Louisiana board to give up the money in their hands.' Again: 'It is easy to see that if the Louisiana board gives us the money raised for us, every dollar will be returned to the blind of Louisiana in the shape of books and apparatus for their education, undiminished by any tax for the expenses incurred in starting our enterprise. The institution for the education of the blind in Baton Rouge, La., is in need of books, maps, slates, models, and educational appliances of all kinds. The funds held by the Louisiana board should be sent to us to supply these wants.' The testimony of the defendants' witnesses, Adams and Foster, who were members of the Louisiana board from its first organization, is to the same effect in regard to the special advantages expected to accrue to the blind of Louisiana by joining with the boards of other States in the establishment of a general institution. In fine, the Louisiana board, by virtue of their distinct organization, their separate position, the local character of their operations, and their just expectations of special benefit to the blind of their own state, not only had a right, but were under an obligation, to take due care that the institution to which their fund should be intrusted was such an institution in its objects and constitution as was contemplated when the scheme was undertaken and entered into, and not one materially different therefrom in either respect.

We think, therefore, that the defendants, when they found that the constitution of the Kentucky corporation had been materially changed, and their share in its management and control had been superseded by a totally different arrangement, in which their influence was, or might be, totally annihilated, hilated, were justified in refusing to pay over to such alleged body the funds in their hands.

The complainants, however, contend that the actual trustees of the Louisiana board have admitted the right of the complainants, and are therefore estopped from setting up the defence which we have been considering. It is very questionable whether the personal admissions of the individual trustees are entitled to any weight in such a case. But a careful examination of the whole evidence convinces us that no admissions of the kind, made under a full and fair knowledge of the circumstances, have been made by the Louisiana trustees. Id eed, the argument might well be retorted, that the complainants, by their great delay in demanding the fund,-a delay of fourteen or fifteen years, or, throwing out the period of the civil war, a delay of eleven years, are estopped from prosecuting for it now. No formal demand was made until the year 1876. An agent was sent to New Orleans in 1871, it is true, to get aid from the Louisiana board, and to inquire into their mutual relations. But the latter always referred to legal impediments which would at least require the aid of legislation to remove. What the nature of these impediments were does not clearly appear. But we may presume that the Louisiana board had in view the change which Mr. Sherrod reported to them had been made in the Kentucky charter, the nature of which, however, had not been distinctly explained to them. In answer to a communication from Mr. Huntoon, secretary of the Kentucky board, Mr. Foster, the secretary of the Louisiana board, wrote the following letter in 1872, which seems to throw some light on the subject:--

'DECEMBER 22, 1872.

'B. H. HUNTOON, Esq.,

''Sec't'y Am. Printing House for the Blind, Louisville, Ky.:''

'DEAR SIR,-Your favor of Dec. 11th is at hand, and contents     noted, but board of trustees are not in condition at present      to appropriate funds to any purpose. When the board meets,     your communication will be laid before them. Though not     authorized to speak on their behalf, I may add that the      change in your charter may be found upon examination      probably, to seriously change the relations of our board to      yours.

'Our board will probably have a meeting in course of the     coming spring.

'W. H. FOSTER,

'Secretary, &c.'

This was certainly a very pregnant intimation of the objection which lies at the foundation of the defence in the present case.

It is true that in 1876, when the defendants were sued by several of their original donors for the recovery of their contributions, on the ground that the conditions of raising $25,000 within seven years, and of establishing a printing house within nine years, from the date of the charter, had not been complied with, the Louisiana trustees made inquiry as to these points from the complainants. They also had, or some of them had, a conference with Mr. Barrett, the treasurer of the Kentucky corporation, and inquired of him as to the change in their charter, which had been reported by Mr. Sherrod. They testify that Mr. Barrett assured them that Sherrod was entirely mistaken; that no material change had been made in their charter, and that they were acting under the original charter of 1858; at least, so he was understood by them. The defendants' counsel, acting on the supposition that these representations were correct, prepared the defence of the board accordingly; and being satisfied that the amount of $25,000 had been raised within the seven years, and that an establishment sufficient to answer the requirements of the charter had been started within the nine years, on that basis contested the suits brought by the donors. During the progress of that litigation, however, having procured and examined the amended Kentucky charter of 1861, his views were entirely changed on the subject of the right of the Kentucky corporation to demand the fund.

This is, in substance, the admission which is relied on by the complainants. We think it is quite satisfactorily explained in the testimony of Judge Merrick and Mr. Adams; and that it cannot, in the slightest degree, affect the rights of the parties in this case.

It is unnecessary to inquire what should be done with the fund in question. The original scheme has failed. The cross-bills of the donors, who were made defendants in the case, were dismissed without prejudice, and they have not appealed. The legislature of Louisiana, by an act passed May 14, 1878, authorized the trustees, in their own exoneration, to pay the whole fund into the State treasury so far as the same remained in their hands unclaimed by the contributors; and appropriated the same as a special an inviolable fund for the sole and exclusive benefit of the Louisiana Institution for the Blind and the Industrial Home for the Blind, domiciled at Baton Rouge in said State. An additional section provides for paying to any original contributor, on judicial proof of his claim, the amount contributed by him, with interest. We have no doubt that the fund will be properly administered and disposed of under the laws of Louisiana, to whose superintending care the matter rightfully belongs.

It is proper to add that, in our view of this case, the general doctrine of charities has nothing to do with its decision. When a charitable trust has been fully constituted, and the funds have passed out of the hands and control of the donors, and into the hands of the proper institution, or organization, intended for its administration, the Court of Chancery, or some analogous jurisidiction, becomes its legal guardian and protector, and will take care that the objects of the trust are duly pursued, and the funds rightfully appropriated. But where contributions to a charity are proposed to be made upon certain express conditions, the rights of the donors stand upon contract; and if the conditions are not performed, their obligation to contribute is discharged.

Decree affirmed.


text: Talk:Printing House v. Trustees/Opinion of the Court