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


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Heidritter v. Elizabeth Oil-Cloth Company

E. A. Day and John R. Emery, for plaintiff in error.

John F. Dillon and J. T. Richards, for defendant in error.

This is an action of ejectment for the recovery of certain real estate and the improvements thereon, situated in the City of Elizabeth, in New Jersey, brought by the plaintiff in error against the defendant in error in the supreme court of that state, and removed thence into the circuit court of the United States on the ground that the case was one arising under the constitution and laws of the United States. The cause was submitted to the court, the intervention of a jury having been waived, and a judgment rendered for the defendant below. The facts appear by special findings of the court and bills of exception duly taken to its rulings. So far as material, they are as follows: Both parties claim title under Charles L. Sicher, who, being the owner of the premises, commenced the erection thereon of a building which he subsequently used as a distillery. The plaintiff claims under a deed from the sheriff of Union county, in which the premises are situated, dated September 24, 1873, made to him as purchaser at a sale under two special writs of fieri facias, issued upon two judgments against Sicher: one in favor of August Heidritter for $1,711.22, signed June 14, 1873; the other in favor of Ferdinand Blancke for $272.95, signed June 18, 1873. The actions in which these judgments were severally rendered were commenced, one on February 21, 1873, the other on March 15, 1873. They were, in form, actions of assumpsit, the declarations in each, however, containing additional averments, showing that they were brought to enforce mechanics' liens upon the building and lot constituting the premises in controversy, according to the provisions of an act of the legislature of New Jersey of March 11, 1853, and the supplements thereto, the premises being specifically described and the accounts for labor and materials on which the actions were founded being set out, in the one case beginning June 21, 1872, in the other, September 7, 1872. The respective claims for these liens had been filed, pursuant to the statute, in the office of the clerk of the county: one on February 21, 1873; the other on March 13, 1873.

This statute of New Jersey-Nixon, Dig. (4th Ed.) 571; Rev. N. J. 668-provided for the enforcement of the claim filed agreeably to its provisions upon any lien created thereby by suit in a court of the county where such building is situated, to be commenced by summons, in a prescribed form, against the builder and owner of the land and building, containing a statement that the plaintiff claims a building lien for the amount set forth on the building and lands of the defendant described as in the claim on file. Two modes of service of this summons are specifically described in the act: one is called actual service, meaning thereby personal service on the defendant, or, if he cannot be found in the state, by affixing a copy thereof on such building, 'and also by serving a copy on such defendant personally, or by leaving it at his residence ten days before its return.' The other is styled legal service, which is, in case the defendant resides out of the state, by affixing a copy on such building and sending a copy by mail, directed to him at the post-office nearest his residence, or, in case his residence is not known to the plaintiff, then by affixing a copy to such building, and publishing it for four weeks in a newspaper circulating in the county. The judgment in the action, if for the plaintiff, in case the defendant has been actually served with the summons, shall be general, with costs, as in other cases; but when only legal service of the summons has been made, judgment against the owner and also against the builder 'shall be specially for the debt and cost to be made of the building and lands in the declaration described; and in case no general judgment is given against the builder, such proceedings or recovery shall be no bar to any suit for the debt, except for the part thereof actually made under such recovery.' When the builder and owner are distinct persons, they may make separate defenses,-the former that he does not owe the money, the latter that the building and land are not liable to the debt; 'and, in such case, it shall be necessary for the plaintiff, to entitle him to judgment against the house and lands, to prove that the provisions of this act requisite to constitute such lien have been complied with.' 'When judgment is entered generally against the builder, a writ of fieri facias may issue thereon as in other cases; and when judgment shall be against the building and lands, a special writ of fieri facias may issue to make the amount recovered by sale of the building and lands; and when both a general and special judgment shall be given, both writs may be issued, either separately or combined in one writ.' It is further provided that under such special fieri facias the sheriff shall advertise, sell, and convey said building and lot in the same manner as directed by law in case of lands levied upon for debt, and that the sheriff's deed shall convey to the purchaser the estate of the owner in the lands and in the buildings which he had at any time after the commencement of the building, subject to all mortgages and other incumbrances created and recorded or registered prior thereto. The building upon the premises in controversy was commenced June 25, 1872, from which time it is conceded the mechanics' liens dated, to enforce which the judgments were rendered.

It appears that the summons in the two cases was legally, but not actually, served upon Sicher, his residence not being known to the plaintiff, by affixing a copy thereof to the building, and by a publication for four weeks of a copy. At the times when these claims for mechanics' liens were filed in the office of the county clerk, and when the actions were commenced to enforce them, the premises in controversy were in the actual custody and possession of the United States marshal for the district of New Jersey under the following circumstances. The building erected by Sicher on the premises in controversy was intended for and was used by him as a distillery, when, on January 24, 1873, they, with the contents of the building, were seized by the collector of internal revenue for the Third collection district of New Jersy, for a forfeiture incurred under the laws of the United States. On February 4, 1873, an information to enforce that forfeiture was filed in the district court of the United States for the district of New Jersey, and on February 5, 1873, process of attachment was issued to the marshal, who made return of the same on February 19, 1873, that he had taken possession of the property therein named, including the premises in controversy. On February 25, 1873, a sentence of condemnation and forfeiture to the United States was passed, and a writ of execution ordered to issue to sell the same. On March 10th following that writ was issued, and was returned June 9, 1873, by the marshal, with the indorsement thereon that he had sold the premises to one Edward G. Brown. The proceeds of the sale, after payment of costs, were ordered to be paid to the collector of internal revenue for the use of the United States, and the marshal, on May 29, 1873, executed and delivered a deed to the purchaser, conveying the lands and tenements in fee-simple. The sale took place on May 22, 1873. The defendants in error, by mesne conveyances, have acquired the title of the purchaser at this sale.

[Argument of Counsel from pages 298-299 intentionally omitted]

MATTHEWS, J.

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text: Talk:Heidritter v. Elizabeth Oil-Cloth Company


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Heidritter v. Elizabeth Oil-Cloth Company/Opinion of the Court

The information alleged violations of numerous sections of the internal revenue laws, which it is not necessary to mention further than to say that on its face it disclosed a case for a forfeiture under those laws of the property described in it, clearly within the jurisdiction of the court. The precise question thus arising is whether the plaintiff in error acquired the legal title to the premises in controversy, by virtue of the deed from the sheriff of Union county, and the judgments and proceedings on which it was based. These proceedings, so far as against the owner of the property they undertook to enforce the plaintiff's claim as a lien upon his interest in it, were in the nature of proceedings in rem, though not so, perhaps, in technical strictness, for they did not profess to conclude all the world. Such, particularly, was their nature, in the cases under consideration, where the owner and builder were one person, and he was served with process only constructively, not actually, being presumably without the jurisdiction of the court. It was declared so to be in Gordon v. Torrey, 2 McCarter, (15 N. J. Ch.) 112. 'The proceeding in such cases,' said Mr. Justice FIELD, delivering the opinion of the court in Pennoyer v. Neff, 95 U.S. 714-730, 'though in the form of a personal action, has been uniformly treated, where service was not obtained and the party did not voluntarily appear, as effectual and binding merely as a proceeding in rem, and as having no operation beyond the disposition of the property, or some interest therein. And the reason assigned for this conclusion has been that which we have already stated, that the tribunals of one state have no jurisdiction over persons beyond its limits, and can inquire only into their obligations to its citizens when exercising its conceded jurisdiction over their property within its limits.' That jurisdiction is called into exercise judicially, and attaches, as elsewhere stated in the same opinion, (page 727,) 'where property is once brought under the control of the court by seizure or some equivalent act. The law assumes that property is always in the possession of its owner in person or by agent; and it proceeds upon the theory that its seizure will inform him not only that it is taken into the custody of the court, but that he must look to any proceedings authorized by law upon such seizure for its condemnation and sale. Such service may also be sufficient in cases where the object of the action is to reach and dispose of property in the state, or of some interest therein, by enforcing a contract or lien respecting the same, or to partition it among different owners, or, where the public is a party, to condemn and appropriate it for a public purpose. In other words, such service may answer in all actions which are substantially proceedings in rem.'

In Cooper v. Reynolds, 10 Wall. 308-318, it is said by Mr. Justice MILLER, delivering the opinion of the court, that, in such cases, where there is no appearance of the defendant and no service of process on him, 'the case becomes, in its essential nature, a proceeding in rem,' and that, (page 317,) 'while the general rule in regard to jurisdiction in rem requires an actual seizure and possession of the res by the officer of the court, such jurisdiction may be acquired by acts which are of equivalent import, and which stand for and represent the dominion of the court over the thing, and, in effect, subject it to the control of the court.' This may be by the levy of a writ, or the mere bringing of a suit. 'It is immaterial,' said this court, by Mr. Justice McLEAN, in Boswell's Lessee v. Otis, 9 How. 336, 'whether the proceeding against the property be by an attachment or bill in chancery. It must be substantially a proceeding in rem.'

Indeed, so far as the proceedings in question sought to bind the land by enforcing the plaintiff's claim as a specific lien thereon, and to dispose of the premises in satisfaction thereof by a sale, they were substantially in rem, whether there was personal or merely constructive service of process upon the defendant owner. The kind of process and mode of service could be material only with reference to the nature of the judgment. He could be bound personally only by his coming or being brought personally within the jurisdiction of the court. But the land might be bound, without actual service of process upon the owner, in cases where the only object of the proceeding was to enforce a claim against it specifically, of a nature to bind the title. In such cases the land itself must be drawn within the jurisdiction of the court by some assertion of its control and power over it. This, as we have seen, is ordinarily done by actual seizure, but may be done by the mere bringing of the suit in which the claim is sought to be enforced, which may by law be equivalent to a seizure, being the open and public exercise of dominion over it for the purposes of the suit. When, however, the proceedings were begun for the enforcement of the mechanics' liens against the premises in controversy, by the issuing of the summons and the filing of the declaration, the property over which the state court sought to exert its jurisdiction was in the actual custody and possession of the district court of the United States for the district of New Jersey. It had been seized by an officer of the United States for an alleged offense against its laws. It was proceeded against as forfeited to the United States, and to declare and enforce that forfeiture judicially, it had been taken possession of by the court. This proceeding was undoubtedly in rem, and it is quite immaterial whether the law authorized an absolute forfeiture of the res, including all interests and estates in it, so as to overreach antecedent liens and adverse claims, or only of the actual interest of the owner charged with the violations of law at the time of the alleged offenses. In either view, and for either purpose, the court had taken possession of the property itself, and that possession was necessarily exclusive. The res was thereby drawn into the exclusive jurisdiction and dominion of the United States; and, for the purposes of that suit, it was at the same time withdrawn from the jurisdiction of the courts of New Jersey. Any proceeding against it, involving the control and disposition of it, in the latter, while in that condition, was as if it were a proceeding against property in another state. It was vain, nugatory, and void, and as against the proceedings and judgment of the district court of the United States, and those claiming under them, was without effect.

In this aspect, the case is directly within the rule of decision established in Wiswall v. Sampson, 14 How. 52. That was a controversy as to the title to real estate, one party claiming under a sale upon execution issued on judgments rendered in the circuit court of the United States, the property being at the time of this sale in the possession of a receiver of a state court, under whose subsequent decree and sale the defendant claimed title. It is a significant fact, in that case, that, at the time of the appointment of the receiver by the state court, the executions upon the judgments had been issued and levied, and were a subsisting lien upon the premises. It was said in that case by Mr. Justice NELSON, delivering the opinion of the court: 'It has been argued that a sale of the premises on execution and purchase occasioned no interference with the possession of the receiver, and hence no contempt of the authority of the court, and that the sale, therefore, in such a case should be upheld. But, conceding the proceedings did not disturb the possession of the receiver, the argument does not meet the objection. The property is a fund in court to abide the event of the litigation and to be applied to the payment of the judgment creditor who has filed his bill to remove impediments in the way of his execution. If he has succeeded in establishing his right to the application of any portion of the fund, it is the duty of the court to see that such application is made. And, in order to effect this, the court must administer it independently of any rights acquired by third persons pending the litigation. Otherwise the whole fund may have passed out of its hands before the final decree, and the litigation become fruitless.' And the conclusion was: 'It is sufficient to say that the sale under the judgment, pending the equity of the suit, and while the court was in possession of the estate, without the leave of the court, was illegal and void.' And the same conclusion must prevail here, for, although the sale under the judgments in the state court was not made until after the property had passed from the possession of the district court by delivery to the purchaser at the sale under the decree, yet the initial step on which the sheriff's sale depended-the commencement of the proceedings to enforce the mechanic's lien, asserting the jurisdiction and control of the state court over the property sold-took place when that property was in the exclusive custody and control of the district court; and, by reason of its prosecution to a sale, was an invasion of the jurisdiction of that court. No stress is laid on the fact that notice of the proceeding by affixing a copy of the summons upon the building, which was required by the statute, could only be made by an actual entry by the sheriff upon the property, to that extent disturbing the possession of the marshal, because the same result, in our opinion, would have followed if no such notice had been required or given. The substantial violation of the jurisdiction of the district court consisted in the control over the property in its possession, assumed and asserted, in commencing the proceedings to enforce against it the lien claimed by the plaintiffs in those actions, prosecuting them to judgment, and consummating them by a sale. The principle applied in Wiswall v. Sampson, ubi supra, must be regarded as firmly established in the decisions of this court. It has been often approved and confirmed. Peale v. Phipps, 14 How. 368; Hagan v. Lucas, 10 Pet. 400; Williams v. Benedict, 8 How. 107; Pulliam v. Osborne, 17 How. 471; Taylor v. Carryl, 20 How. 583; Yonley v. Lavender, 21 Wall. 276; People's Bank v. Calhoun, 102 U.S. 256; Barton v. Barbour, 104 U.S. 126; Covell v. Heyman, 111 U.S. 176; S.C.. 4 SUP. CT. REP. 355.

But it is to be understood, as a qualification of what has been said, that we do not mean to decide that the plaintiffs in the actions in the state court might not, without prejudice to the jurisdiction of the district court, commence their actions, so far as that was a step required by the mechanics' lien law of New Jersey, for the mere purpose of fixing and preserving their rights to a lien: provided, always, they did not prosecute their actions to a sale and disposition of the property, which, by relation, would have the effect of avoiding the jurisdiction of the district court under its seizure. That was the course, under similar circumstances, adopted and sanctioned by the supreme judicial court of Massachusetts in Clifton v. Foster, 103 Mass. 233, where a petition to enforce a mechanic's lien, which, by statute, it was necessary to file within a fixed time in order to preserve it, was permitted to be filed after the property, by the bankruptcy of the owner, had passed into the custody of the district court; but all further proceedings thereon were stayed to await the action of that court in the bankruptcy proceedings, on the ground that such seasonable filing was necessary to keep the lien alive, and that, without further proceedings, it could not be construed as an encroachment upon the jurisdiction of the bankruptcy court. The distinction seems to us reasonable and just, and is supported by the decisions in Williams v. Benedict, 8 How. 107, and Yonley v. Lavender, 21 Wall. 276. In conformity with it, we refrain from pronouncing the proceedings in the state courts of New Jersey invalid, so far as they do not affect the legal title of the purchaser at the marshal's sale to the premises in controversy. We decide, not that they are invalid for the purpose of declaring and establishing the lien, but that they are not good for the purpose of enforcing it, as was attempted, by a sale and conveyance of the premises in controversy. This view, though decisive of the case and resulting in the affirmance of the judgment of the circuit court, proceeds upon assumptions the most favorable which can be indulged to the plaintiff in error. It is merely an application of the familiar and necessary rule, so often applied, which governs the relation of courts of concurrent jurisdiction, where, as is the case here, it concerns those of a state and of the United States, constituted by the authority of distinct governments, though exercising jurisdiction over the same territory. That rule has no reference to the supremacy of one tribunal over the other, nor to the superiority in rank of the respective claims in behalf of which the conflicting jurisdictions are invoked. It simply requires, as a matter of necessity, and therefore of comity, that when the object of the action requires the control and dominion of the property involved in the litigation, that court which first acquires possession, or that dominion which is equivalent, draws to itself the exclusive right to dispose of it, for the purposes of its jurisdiction. It was in accordance with this principle that, in Pulliam v. Osborne, 17 How. 471, this court confirmed the legal title of land to a purchaser under an execution upon a judgment rendered in the state court, because first actually levied as against one claiming under an execution out of the district court of the United States, which had a priority of lien by reason of having been first issued.

We therefore now determine that the plaintiff in error does not hold the legal title of the premises in controversy, as against the defendant in error, claiming under the marshal's sale and the decree of the district court; and we decide nothing beyond that. The other questions argued at the bar-whether the forfeiture decreed by the district court operated to transfer the whole title of the premises against all claimants; whether, if it operated only upon the interest of the owner at the time the alleged offenses were committed, subject to all valid liens then existing, nevertheless, those liens were transferred to the proceeds of the sale, and the claimants were bound at their peril to intervene in their own behalf in that proceeding; or whether the sale, as made, passed the legal title, subject to all existing liens, including those sought ineffectually to be enforced by the proceedings under which the plaintiff in error claims; and whether, in that event, these may be enforced against the land or present owners, and if so, in what mode-we have passed by without considering, as not necessary to the decision of the case.

The judgment of the circuit court is accordingly affirmed.


text: Talk:Heidritter v. Elizabeth Oil-Cloth Company/Opinion of the Court


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East Tennessee Company v. Southern Telephone Company (112 U.S. 306)

W. A. Gunter and H. C. Semple, for motion.

Gaylord B. Clark, in opposition.

WAITE, C. J.


text: Talk:East Tennessee Company v. Southern Telephone Company (112 U.S. 306)


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East Tennessee Company v. Southern Telephone Company (112 U.S. 306)/Opinion of the Court

Sections 1930, 1931, 1932, of the Code of Alabama, give telegraph companies incorporated by other states a 'right of way over the lands, franchises, and easements of other persons and corporations, and the right to erect poles and to establish offices, upon making just compensation, as now provided by law.' Sections 3580 to 3600, inclusive, prescribe the mode in which such a company may appropriate private property within the state for its uses. Application must be made therefor by petition to the probate court or to the circuit court of the proper county, both of which courts are invested with jurisdiction for that purpose. The proceedings in the court after the filing of the petition are to be in rem, and must 'conform as nearly as may be, except as herein otherwise provided, to the proceedings in rem in the admiralty courts, and be conducted according to the rules of such courts so far as practicable.' Section 3581. Provision is them made for notice of the filing of the petition to the owner of the property (section 3583) and for the impaneling of a jury, 'who, under the direction of the judge, shall well inquire, and true assessment make, of the damages and compensation which the owner * *  * shall be entitled to have for the appropriation, *  *  * ; and the assessment of compensation for any right of way shall be made irrespective of any benefit from any improvement proposed by the petitioner.' Section 3586. 'The owner * *  * may intervene in the cause for his interest therein, and evidence may be offered on either side; but no delay in the assessment to be made by the jury shall be caused by any controversy or evidence in respect to the title or ownership of the land, or of any part thereof.' Section 3587. 'The verdict * *  * shall be immediately entered in proper form upon the minutes of the court, to be kept for such causes, and the amount thereof for each parcel shall constitute the compensation to be paid therefor, as hereinafter directed, before the appropriation thereof shall be made by the petitioner.' Section 3589. It is specially made the duty of the court to speed the cause. Section 3590. 'An appeal to correct errors of law only may be had, if applied for within three months after the assessment, to either the circuit court of the same county or the supreme court; * *  * but no appeal shall, during the pendency of it, prevent or hinder the petitioner from occupying the land involved therein, and proceeding to work thereon; but the petitioner, before doing so, shall pay into the court, for the person or persons entitled thereto, the amount of damages and compensation by the jury therefor assessed.' Section 3593. The amount assessed may be paid to the person entitled thereto, or to the clerk of the court. Section 3594.

The Southern Telegraph Company, a New York corporation, being desirous of erecting a line of telegraph from Montgomery, Alabama, by way of Selma to Meridian, in the state of Mississippi, filed in the probate court of Montgomery county, Alabama, an application for the proper proceedings under the Code to enable it to acquire the right of way for that purpose along a line of railroad in Alabama operated by the East Tennessee, Virginia & Georgia Railroad Company from Selma to the Mississippi state line. Upon this application being made the necessary notices were served on the railroad company to appear on the tenth of April, 1884, and a jury was summoned for an inquiry into the amount of compensation to be paid the company for the appropriation sought. On the day named the railroad company intervened for its interest, and showed cause against the appropriation, and averred in its intervention that the value of the property to be appropriated was $12,000, and that this was the proper measure of the compensation and damages it was entitled to if the prayer of the petition should be allowed. On the same day the railroad company filed in the probate court a petition for the removal of the cause to the circuit court of the United States for the Middle district of Alabama, on the ground that the value of the matter in dispute exceeded the sum of $500, and the telegraph company was a citizen of New York, and the railroad company a citizen of Tennessee. Under this petition a removal was effected, and a jury impaneled in the circuit court of the United States 'to inquire, and true assessment make, of the damages and compensation' the railroad company was entitled to have for the appropriation. The compensation was assessed by the jury at $500, and this amount, as well as the costs, was paid to the clerk of the court. Thereupon a judgment was entered that the telegraph company have and enjoy 'the rights, ways, and easements claimed in the petition.' From that judgment this writ of error was brought. The telegraph company now moves (1) to dismiss the writ, because the value of the matter in dispute does not exceed $5,000, and, if that motion is not granted, then (2) that the supersedeas herein may be modified so as to allow it to occupy the right of way involved in the proceedings, and to work thereon pending this writ of error.

The value of the matter in dispute in this court is the difference between the amount of compensation claimed by the railroad company on its intervention and the amount assessed by the jury. Hilton v. Dickinson, 108 U.S. 165; S.C.. 2 SUP. CT. REP. 424. There is nothing in the record to show that the alleged value of the property is not the true measure of the compensation to be assessed. As this amount is $12,000, and the jury allowed only $500, it follows that the value of the matter in dispute is sufficient to give us jurisdiction. This is a proceeding under the statute of Alabama to ascertain the amount of compensation to be paid the railroad company for the appropriation of its property to the uses of the telegraph company. That is the single question to be settled. The remedy is statutory only, and every court which takes jurisdiction for its enforcement is limited in its powers by the statute under which alone it can act. It must be assumed for all the purposes of the proceeding that the telegraph company has the right to make the appropriation, and that, as soon as just compensation is made, it may enter on the property and put up and work its lines. It is a proper exercise of leg islative power to provide a way in which the amount of compensation shall be ascertained where the parties are themselves unable to agree. In Alabama, this is to be done by a jury impaneled in a probate court or in a circuit court. The legislature might have made the action in these courts final, and not subject to review on appeal or writ of error. If that had been done, the assessment of the jury, when recorded in the proper court, would settle finally the amount of compensation to be paid for the appropriation, unless the assessment should be set aside for fraud, or other sufficient cause, in some appropriate independent proceeding instituted for that purpose. But it has been provided that an appeal may be taken 'to correct errors of law only,' the effect of which shall not be, however, to prevent the appropriating company from taking immediate possession and proceeding with its works on payment into court of the sum allowed by the jury.

The courts of the United States, on removal of the proceeding from the probate court, were clothed with no greater power in the premises than the courts of the state would have possessed if their jurisdiction had been preserved. It follows that, as an appeal from the probate court to the state circuit court, or to the supreme court, would not have operated to prevent the telegraph company from taking possession of the property appropriated, and erecting its wires pending the appeal, the supersedeas on a writ of error from this court to the circuit court of the United States should be limited in the same way. This provision of the statute is by no means an unusual one, and was intended to prevent delays in the progress of a public work while the parties were litigating in the higher courts as to the correctness of a preliminary assessment of compensation to be paid an owner of property taken for the public use according to the forms of law.

The motion to dismiss because the value of the matter in dispute does not exceed $5,000 is denied; but it is ordered that the supersedeas upon the writ of error from this court shall not, during the pendency of the writ, prevent or hinder the telegraph company from occupying the premises appropriated for its use, and proceeding to erect and operate its line of telegraph thereon, after it has paid into the circuit court, for the person or corporation entitled thereto, the amount of damages and compensation assessed by the jury impaneled in the circuit court.


text: Talk:East Tennessee Company v. Southern Telephone Company (112 U.S. 306)/Opinion of the Court


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Ogdensburg Company v. Nashua & Lowell Railroad Corporation

Sidney Bartlett, for appellant.

F. A. Brooks, for appellee.

MILLER, J.


text: Talk:Ogdensburg Company v. Nashua & Lowell Railroad Corporation


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Ogdensburg Company v. Nashua & Lowell Railroad Corporation/Opinion of the Court

This is an appeal from a decree of the circuit court for the district of New Hampshire, dismissing the bill of appellant, who was complainant below. The plaintiff is the owner of a railroad commencing at Ogdensburg, on Lake Ontario, and terminating at Plattsburgh, on Lake Champlain. The defendant owns a road between Nashua and Lowell. The Vermont & Canada Railroad Company, the Vermont Central Railroad Company, the Northern Railroad Company of New Hampshire, the Concord Railroad Company of New Hampshire, the Nashua & Lowell of New Hampshire, and the Boston & Lowell of Massachusetts, were all largely interested in the freight and passenger business which came over the Ogdensburg road from the great lakes for points in New England and Canada, and which went from the latter to the lakes. The Vermont Central and the Vermont and Canada companies were in the hands of receivers, or trustees, appointed by courts under whose control they were, and these trustees had a lease of the Ogdensburg road for 20 years from March 1, 1870. In this condition of the affairs of these companies a contract was made between them all except the Concord Company, the object of which was to secure an increased traffic over all these roads by obtaining control of the Northern Transportation Company of Ohio, which was also a party to the contract, and which was engaged in steamboat transportation on the Western lakes. One of the items of this agreement was that the Ogdensburg Company should advance a sum not exceeding $600,000 to secure this control, which it did, and the only question on the present appeal is whether, by virtue of the contract, the several railroad companies which were parties to it, were bound to repay to the appellant this money at all events, or were only bound to pay out of receipts from the traffic which came to them severally from this transportation company over the Ogdensburg road. This requires a careful examination of the contract, and a consideration of the circumstances under which it was made. The agreement is as follows:

'Articles of agreement between the Northern Transportation Company of Ohio, a corporation established under the laws of Ohio, party of the first part; J. Gregory Smith, of St. Albans, Vermont, and George Stark, of Nashua, New Hampshire, parties of the second part; and the trustees and managers of the Vermont Central and Vermont & Canada Railroad Companies, the Northern Railroad of New Hampshire, (the Concord Railroad Corporation of New Hampshire, provided they execute this agreement,) the Nashua & Lowell Railroad Corporation of New Hampshire and Massachusetts, and the Boston & Lowell Railroad Corporation of Massachusetts, parties of the third part; and the Ogdensburg & Lake Champlain Railroad Company, the party of the fourth part.

'Whereas, the above-named railroad companies and trustees and managers, which have become parties to agreements hereto annexed, bearing date the twenty-fourth day of February, A. D. 1870, and whose tracks form a large part of the connecting line between Boston, in Massachusetts, and Ogdensburg, in New York, depend largely for their business upon the regular transportation, by steamers, of freight and passengers between said Ogdensburg and the western cities and towns upon the great lakes; and whereas, the party of the first part was chartered to carry on the business of such transportation, but by reason of financial embarrassments is unable to carry it on efficiently, and it is feared that its steamers may be taken from this line; and whereas, the parties of the third part and the party of the fourth part believe it to be for their and the public interest to advance or lend to the parties of the second part some portion of the gross receipts for the transportation of freight and passengers to be brought to and from their line by the steamers of the party of the first part, in order to secure the most regular, efficient, and permanent service by steamers between Ogdensburg and said western cities and towns for the term of nineteen years from the first day of March, A. D. 1871; and whereas, the parties of the second part have agreed to use all sums advanced or lent to them to secure the ownership or the control of the stock of said party of the first part, and otherwise to secure the most efficient management of its business to carry out the purposes of this agreement, and for no other purposes, and to hold all said stock which they may hold or control, and all other property or rights which they may purchase or otherwise acquire with said funds, except debts due from said party of the first part, in trust to secure the repayment of all sums which may be so advanced or lent, as aforesaid, with interest, as hereinafter provided:

'Now, therefore, in consideration of the premises, it is covenanted and agreed between said parties as follows:

'Article First. That the party of the first part shall, during said term, continue to hold and own as many and as serviceable steamers as it now has, and will keep them properly equipped, seaworthy, and in good running order, and will make such addition to the number of said boats as the business shall require, and will run them for the transportation of freight and passengers between said Ogdensburg and said western cities and towns, at such time and in such manner, and at such rate of freight and fare as shall be satisfactory to the executive committee of the parties of the third part for the time being; or, if there be no such executive committee, or there is any legal impediment to their action, to the satisfaction of the presidents, for the time being, of the third and fourth parties, or a majority of them. And that the party of the first part will keep all other property owned by it in good repair and in serviceable condition, and that, so far as may be practicable during said term, it will send all freight and passengers for points east of Ogdensburg over the lines of the roads of the parties of the third and fourth parts.

'A schedule of said steamers and other property is hereto annexed.

'Article Second. That the parties of the third part will, during said term, semi-annually reserve out of the gross receipts, either upon said line or upon any road now leased or operated, or which may hereafter be leased or operated by the parties of the third part, or either of them, for the transportation of freight and passengers brought to said line at Ogdensburgh by the steamers of the party of the first part, the sum of one hundred and fifty thousand dollars, or so much thereof as shall be adequate for the purposes herein set forth, and pay over the same to the parties of the second part to be used for the purpose of securing regular, efficient, and adequate service to and from said Ogdensburg as aforesaid; and the party of the fourth part will, in case it shall be necessary to secure the regular and efficient running of said steamers to and from said Ogdensburg, when called upon by parties of the second part, advance from time to time sums not in all exceeding six hundred thousand dollars, to be used by said parties of the second part for the same purposes as said semi-annual payments, and to be pro tanto in lieu thereof, and to be repaid out of said semi-annual reservation as hereinafter provided, it being understood and agreed that each of said parties of the third part shall only be liable to reserve and advance or pay to the parties of the second part, or to the party of the fourth part, as the case may me, its share of such reservation, advance, or payment, to be ascertained by the proportion which said gross receipts of each of said parties bear to the entire amount of said gross receipts between Ogdensburg and points eastward, upon the roads owned, leased, or operated by any of said third parties.

'Article Third. That the parties of the second part shall hold all stock and rights to control stock of the party of the first part which they now have or shall purchase or acquire, and all other property or rights that may be purchased or otherwise acquired under this agreement, except debts due from the party of the first part as aforesaid, in trust, to secure the repayment of all sums which the parties of the third and fourth parts, either or any of them, lend or advance under this agreement, and interest thereon at the rate of ten per cent. per annum, payable semi-annually, and shall apply all dividends which they shall receive on said stock and income from other property to repay the same, and in case said sums shall not all have been repaid with interest, as aforesaid, on or before the expiration of said term, or at any time, in case of failure of the third parties, or either of them, to perform the stipulations of this agreement, then said parties of the second part shall, in case the parties hereto of the third and fourth parts shall not otherwise agree, sell said stock and other property at public auction in said Ogdensburg, after advertising the same for at least thirty days in some newspaper published in said Ogdensburg, and a newspaper published in said Boston, and divide the net proceeds among the parties entitled thereto, but any change may at any time, and from time to time, be made in said trust funds by sale, purchase, or otherwise, by said parties of the second part, with the written consent of the presidents for the time being of the parties of the third and fourth parts.

'That while the parties of the third part continue to pay the semi-annual interest to the party of the fourth part, and the semi-annual payments to the trustees of the sinking fund as herein provided, the parties of the second part shall pay any dividends or income which they may receive to the parties of the third part, but in case of any default on the part of the parties of the third part said dividends and income shall be paid directly to said Ogdensburg & Lake Champlain Railroad Company and to said trustees of said sinking fund in proportion to the amount of the semi-annual payments to them herein provided, and to be received by them pro tanto in place of said semi-annual payments.

'Article Fourth. That in case of vacancy in the number of the parties of the second part, or their successors, by death, resignation, or otherwise, the party of the second part or his successors continuing in the trust may fill the vacancy, subject, however, to the approval of the parties of the third and fourth parts, and that the parties of the second part or their successors are to assume no personal liability to repay the money advanced by the parties of the third and fourth parts, but to apply the same according to the terms of this agreement, and to hold said stock, rights, and other property in trust, and apply the same and the dividends thereon and income thereof as aforesaid.

'Article Fifth. That in case the party of the fourth part shall advance any sum or sums amounting to six hundred thousand dollars, or any part thereof, under this agreement, then the parties of the third part are to pay to the party of the fourth part so much of said semi-annual payments reserved from gross receipts as aforesaid as will pay the semi-annual interest on said sum or sums so advanced by the party of the fourth part at the rate of eight per cent. per annum, and shall pay to the persons who may for the time being hold the offices of president and treasurer of the Boston & Lowell Railroad Corporation, and of the Ogdensburg & Lake Champlain Railroad Company, as trustees, such sums semi-annually as will, in the judgment from time to time of said two presidents and treasurers for the time being, when invested as a sinking fund, pay all excess of the advances of the party of the fourth part over five hundred thousand dollars within two years from the date hereof, and the remainder of the principal of said advances on or before the expiration of said term of nineteen years, and also such further sum semi-annually as will, when invested as a sinking fund, in the judgment of said two presidents and treasurers as aforesaid, purchase the existing mortgage bonds of the party of the first part, amounting to four hundred thousand dollars, within ten years from the date hereof, which bonds so purchased shall be held by said trustees of the sinking fund for the security of the parties hereto, as if held under article seventh of this agreement, and that said semi-annual payments are to be made to the party of the fourth part and to said trustees of said sinking fund in place of advances to the same amounts to the parties of the second part, as hereinbefore provided, and are to be ultimately repaid to the parties of the third part out of the dividends, income, and securities purchased or otherwise acquired by the parties of the second part, as herein provided, whether the same shall be held by them or transferred to the trustees of said sinking fund. In no case shall payments to a sinking fund be less than amounts which invested at six per cent. per annum will produce the sum to be paid out of such sinking fund.

'Article Sixth. That if, at the end of said term, the sums advanced to the parties of the second part under this agreement shall not have been repaid to the parties of the third part, with interest, as hereinbefore provided, from the dividends of the stock of the party of the first part, or otherwise, the party of the fourth part shall have the right, for six months after the expiration of said term, to purchase at the actual cost thereof, from the parties of the third part, one hundred and twenty-four hundred and fourth parts of the claim for said advances, and, in any event, shall have a like proportionate interest on the same terms under any new arrangement which may be made, and a like proportionate interest in the securities for said claim, or in securities, property, or rights acquired under this agreement, on paying a like proportion of the cost thereof.

'Article Seventh. That it shall be the duty of the parties of the second part, if practicable, to procure an extension of the time of payment of the mortgage bonds of the party of the first part, which shall not have been purchased for the sinking fund for five years from the date of maturity; but if it shall be necessary, in order to secure the running of said steamers as aforesaid, for the parties of the second part to use any of the funds advanced to them as aforesaid to purchase or otherwise acquire any debts due from said party of the first part, whether secured by mortgage or not, said parties of the second part shall forthwith assign and transfer all said debts, and all evidences thereof, and all securities therefor, to the persons who may for the time being be trustees of said sinking fund, to be held by them in trust-first, to secure the repayment of all advances or loans made under this agreement by the party of the fourth part, and, after the full payment of said advances or loans, with interest, as aforesaid, to the party of the fourth part, to secure the repayment of all sums paid, advanced, or lent under this agreement by the parties of the third part, with interest, as aforesaid, and that, as long as the semi-annual payments of interest shall be duly made by the parties of the third part to the party of the fourth part, and the semi-annual payment to the sinking fund, as provided in the fifth article of this agreement, said trustees may extend, by renewals or otherwise, the payment of both the principal and interest of said debts of said party of the first part, at their discretion, for a period not exceeding ten years from the date thereof: but, in case of default by the parties of the third part to make said payments of interest and to the sinking fund, as provided in article fifth, said trustees of said sinking fund shall forthwith, if requested, in writing, by the party of the fourth part, proceed to collect said debts, and out of the sums collected pay, from time to time, said semi-annual interest, as provided in article fifth, to the party of the fourth part, and hold the balance, if any, as a part of said sinking fund, and that all of said sinking fund shall finally, at the end of said term, be applied to pay all advances made by the party of the fourth part, and, if any balance shall remain, the same shall be divided among the parties of the third part in such proportions as they shall be entitled to, and, if said sinking fund shall prove insufficient, the parties of the third part shall make up the deficiency out of gross receipts from said business brought by steamers as aforesaid.

'Article Eighth. That the parties of the third part, in order to secure the payment to the party of the fourth part, and to the trustees of the sinking fund, of the amount agreed upon semi-annually as hereinbefore provided, will deposit with the manager of the Boston & Lowell Railroad Corporation at Boston, or the person for the time being performing the duties now performed by said manager, before the last day of June and the last day of December of each year of said term, from funds in their hands received from feights and passengers brought to or carried from the line aforesaid by the party of the first part, the amount of the semi-annual payments to be made to the party of the fourth part and to the trustees of said sinking fund; and the party of the fourth part and said trustees are hereby authorized to draw the same, on the first days of each of the following months, on the manager or other person as aforesaid, who is hereby authorized to, and it is hereby agreed shall, make the payments in this article provided for out of sums so deposited, or, in case of failure to make such deposits, out of and to the extent of any funds in the hands of said Boston & Lowell Railroad Corporation, collected in behalf of each of the parties of the third part from joint freight and passengers brought to and from the steamers of the party of the first part.

'Article Ninth. The trustees of said sinking fund shall invest the same, so far as shall be found to be reasonably practicable, in any mortgage bonds of the party of the first part, and in the bonds of the party of the fourth part which shall be issued after the date hereof, which last-mentioned bonds, when so purchased, shall be canceled by said trustees of said sinking fund, and, when so canceled, be delivered to the party of the fourth part, and the party of the fourth part shall give a receipt for the amount of the bonds so canceled, and said receipt, filed with the trustees of said sinking fund, shall represent said sinking fund to the amount of the said canceled bonds; and if any other investment of said sinking fund shall be made by said trustees, special regard shall be had to the absolute safety of such investment.

'The compensation of said trustees shall be fixed and paid by the parties of the third part, and said trustees shall annually make a written or printed report of their investments and doings to the parties of the third part and party of the fourth part, and such further special reports of said investments and doings as said parties of the third part and party of the fourth part, or either of them, may require.

'In witness whereof, the said corporations, parties to this agreement, have respectively caused their corporate seals to be hereto affixed, and their corporate presents to be signed.

'Signed, executed, and delivered by their respective presidents hereunto duly authorized, and the said trustees and managers of the Vermont Central and Vermont & Canada Railroad Companies, and the said J. Gregory Smith and George Stark, have hereunto set their hands and seals at Boston, in the common wealth of Massachusetts, this twenty-fourth day of February, A. D. eighteen hundred and seventy-one.'

The Ogdensburg road advanced the $600,000, and it was used for the purpose mentioned in the agreement. The transportation company became bankrupt in the year 1874, the business was broken up, and has never been resumed under the contract. A part of the money advanced by the Ogdensburh Company has been paid to it. It made settlements with some of the companies, or their trustees, in regard to its claim, and it brought this suit against the Nashua & Lowell Company for what it alleges to be its proportion of the sum unpaid. It is not asserted by the plaintiff that the parties who are described in the agreement as the partis of the third part are jointly liable for this deficiency. If so, no suit could be maintained against the defendant here without joining the others. It is not asserted that there are any words of express promise to pay by either of those companies the whole or any definite part of this $600,000. The argument of counsel is that there arises an implied promise out of the nature of the transaction. We have looked in vain for anything in the language of the agreement which requires or justifies such an implication. If there were in the agreement any words which showed that the party of the third part had borrowed this money from the party of the fourth part, or that the latter had loaned it to the former, the argument would be of weight. But the language of article 2, which relates to this part of the transaction, is that 'the party of the fourth part will, in case it shall be necessary to secure the regular and efficient running of said steamers to and from Ogdensburg, when called on by the parties of the second part, advance, from time to time, sums not exceeding in all six hundred thousand dollars, to be used by said parties of the second part for the same purposes as said semi-annual payments, and to be pro tanto in lieu thereof, and to be repaid out of said semi-annual reservations as hereinafter prescribed, it being understood and agreed that each of said parties of the third part shall only be liable to reserve and advance or pay to the parties of the second part or to the party of the fourth part, as the case may be, its share of such reservation, advance, or payment, to be ascertained by the proportion which said gross receipts of each of said parties bear to the entire amount of said gross receipts between Ogdensburg and points eastward, upon road owned, leased, or operated by any of said third parties.'

It is to be observed, in the first place, that the transaction is here called an advance, and not a loan; and, secondly, that the advance is made to the party of the second part, and not to the party of the third part. This party of the second part was J. Gregory Smith and George Stark, who were made trustees to receive this money, and see to its investment in securing the service of the transportation company, and who were to receive and refund to the Ogdensburg Company, for this advance, a certain proportion of the gross receipts of the railroad companies constituting the party of the third part, which was relied on to repay that company in full. This same article, in the very sentence in which the Ogdensburg Company agrees to advance the money to Smith and Stark, declares that each of the parties of the third part shall only be liable to reserve and advance or pay to the parties of the second part, or to the parties of the fourth part, its share of such reservation, to be ascertained by its proportion of said gross receipts. It is here also said that this advance is to be repaid out of said semi-annual reservation as hereinafter provided. We thus see, in this single article, that the money is to be advanced to the trustees, what use is to be made of it, that it is to be repaid out of a fund called the semi-annual reservation to be after wards provided, and that neither to the trustees nor to the Ogdensburg Company are the parties comprising the third party to become liable beyond its share of this reservation. This reservation is described in the same article of the agreement as a semi-annual sum not exceeding $150,000, or so much as may be adequate for the purposes herein set forth, 'out of the gross receipts either upon said line or upon any roads now leased or operated by the parties of the third part, or either of them, for transportation of freight and passengers brought to said line at Ogdensburg by the steamers of the party of the first part.' By article 4 these trustees are required to hold all the stock of the transportation company which they now have or may acquire, and all other property or rights which they may acquire under this agreement, to secure the repayment of the sums advanced by the Ogdensburg Company and by the parties of the third part, with interest thereon at 10 per cent. per annum. Article 5 makes a further provision for payment, out of this reservation from the gross receipts of the semi-annual interests of this advance by the Ogdensburg Company, and for a sinking fund to pay all in excess of the loan over $500,000, within two years, and the remainder within the nineteen years the contract had to run. It will be observed that this agreement was intended to expire at the same time that the lease of the Ogdensburg road expired. In all this it will be perceived that, while the mode of the repayment of the advance of $600,000 is carefully and repeatedly stated, and the security provided, it is nowhere hinted that the railroad companies of the third part are to be liable for it if these sources of payment fail. Indeed, the third article provides for security for advances which they may make in the same terms that it provides for the party of the fourth part, which is the Ogdensburg Company; and the language we have cited from article second, that each of the parties of the third part is liable only on this account for its proportionate reservation from the proceeds of traffic derived from the Ogdensburg road, leaves little room for further doubt that these resources were alone bound for the repayment of this advance.

The learned counsel for appellant makes a forcible argument against this view, based on the assumption that the Ogdensburg company had no interest in the traffic of the roads embraced in this agreement, because, its road being leased for a period coincident with that of this contract, the lessees received all its benefits and the company none. It must be confessed that if the Ogdensburg company had no other interest in the transaction than to secure the repayment of a loan of money and the interest on it, as if made by any other capitalist, the suggestion would be entitled to much weight; but in this assumption counsel is in error. The preamble recites, as one of the main inducements to making the agreement, that 'by reason of financial embarrassments the transportation company will be unable to continue its business, and its steamers will be withdrawn; and whereas, parties of the third part and the party of the fourth part (the Ogdensburg Company) believe it to be for their interest and the public interest to advance,' etc. The interest of the Ogdensburg company is here clearly stated as the cause of its advance of the money, though at the time the agreement was executed its road had already been leased a year, and the fact of the lease is recited in the agreement. Though this lease was for a fixed annual rent, the lessees were the trustees of two other railroad companies which were insolvent, and these trustees could only rely on the profits or receipts arising from this road to enable them to pay the rent. Indeed, so well founded was the apprehension of failure of rent arising from this fact, that in a few weeks after the withdrawal of the boats of the Northern Transportation Company the lease was rescinded, the road restored to the company, and the trustees of the two Vermont railroad companies released from any further liability on the contract we are now trying to construe. It is reasonably certain that the Ogdensburg Railroad Corporation had a deep interest in the success of the enterprise inaugurated by this contract, and probably a larger interest than any other party to the agreement, and clearly saw that it must make this advance, the only thing it did in the matter, at the risk of the success of the adventure, with such security for obtaining a return out of the proceeds of it as the contract gave. A stipulation of the parties was made on submitting the case to the court below, that, if that court held that no liability under the contract attached beyond that for a proportion of the gross receipts, there were no such receipts in defendant's hands, and the bill should be dismissed without requiring an accounting.

The circuit court construed the contract as we do, and its decree dismissing the bill is therefore affirmed.

BLATCHFORD, J., took no part in the decision of this case.


text: Talk:Ogdensburg Company v. Nashua & Lowell Railroad Corporation/Opinion of the Court


text:
Bates Company Missouri v. Winters

G. G. Vest and John R. Shepley, for plaintiff in error.

T. K. Skinker and J. B. Henderson, for defendants in error.

WAITE, C. J.

title: Bates Company Missouri v. Winters


text: Talk:Bates Company Missouri v. Winters

title: Talk:Bates Company Missouri v. Winters


text:
Bates Company Missouri v. Winters/Opinion of the Court

This case was before this court at the October term, 1877, and is reported as County of Bates v. Winters, 97 U.S. 83. It came up then on a special finding of facts, and the judgment below was reversed because it did not appear that the county court had actually subscribed to the capital stock of the Lexington, Chillicothe & Gulf Railroad Company before the consolidation. Instead, however, of directing a judgment to be entered in favor of the county on those findings, as would have been the proper practice in the absence of any showing to the contrary, (City of Fort Scott v. Hickman, ante, 56,) a new trial, 'according to the views expressed in the opinion,' was ordered. We must presume that this was done for sufficient reasons. In the findings then presented the order of the county court for the subscription, and the appointment of Betz to make the subscription on the books of the company, are set forth substantially as in those which are now before us. The same is true of what was done by Betz, at the meeting of the directors of the company, when he presented the copy of the record of the proceedings of the county court, and the directors refused to allow him to withdraw his papers. His presence at the latter meeting was also stated, as well as his final report to the county court, and the action of the court thereon. The ground of the reversal is apparent from the following extract from the opinion of the court, (page 90,) which was delivered by Mr. Justice HUNT: 'The county court did not intend their action, in June, 1870, to be final, and did not understand that a subscription was thereby completed. Their vote was a declaration that the power to subscribe should be exercised, and was an authority to their agent to perfect a contract with the railroad company on the conditions set forth. No acceptance was made by the railroad company, no notice of acceptance was given, nor was there any act or fact which afforded a pretext for saying that the railroad company was bound by the contract of subscription. While it refused to allow the agent to withdraw his evidence of authority, it said nothing and did nothing to indicate that the minds of the parties had met upon the terms of a subscription. The county court was precise and particular in requiring those conditions to be copied in full on the books of the company, as the conditions on which the subscriptions were made; and there could be no mutual contract until the railroad company assented, on its part, to those conditions.'

In considering what was necessary to complete a valid subscription, the cases of Nugent v. Supervisors, 19 Wall. 241, and County of Moultrie v. Savings Bank, 92 U.S. 631, were cited, and the rule upon that subject, as recognized in those cases, was in all respects approved. That rule may be stated thus: An actual manual subscription on the books of a railroad company is not indispensably necessary to bind a municipality as a subscriber to the capital stock. If the body or agency having authority to make such a subscription passes an ordinance or resolution to the effect that it does thereby, in the name and on behalf of the municipality, subscribe a specified amount of stock, and presents a copy of that ordinance or resolution to the company for acceptance as a subscription, and the company does, in fact, accept, and notifies the municipality, or its proper agent, to that effect, the contract of subscription is complete, and binds the parties according to its terms. From the findings in this case on the new trial it appears that the county court passed an order 'that the sum of ninety thousand dollars be, and the same is hereby, subscribed to the capital stock of the Lexington, Chillicothe & Gulf Railroad Company in the name and in behalf of Mount Pleasant township, * *  * subject to and in pursuance of all the terms, restrictions, conditions, and limitations of the petition of the tax-payers and residents;' and it at the same time authorized and directed Betz, who was the agent of the county to represent its interests in the company, to make the subscription on the stockbooks of the company, and in making the subscription to have copied in full the orders of the court of the fifth of April, 1870, as the conditions on which the same was made. As was very properly said when the case was here before, this order 'was not intended to be final and self-executing.' It needed an acceptance by the company to make it complete and binding as a subscription. On the new trial such an acceptance was shown, and in the findings then made it appears that Betz was present, for the purpose of making the subscription, at a meeting of the directors of the company on the seventeenth of June, 1870; that he presented to the board for acceptance a copy of the record of the proceedings of the county court at the meeting on the fifth of April, and at the meeting when the subscription was ordered, and he was directed to make it on the books of the company. Upon the presentation of these orders of the county court they were read, and, after the reading, 'were ordered by the board to be spread upon the record-books of this company, and, on motion, the subscriptions made and specified in the * *  * orders to the capital stock of the Lexington, Chillicothe & Gulf Railroad Company were accepted by the board of directors of the said company.' At the same time, by order of the directors, the secretary indorsed on the back of the papers, 'Filed and accepted June 17, 1870.'

It is difficult to see what more was necessary to bind the parties. Undoubtedly, if there had been at that time any book prepared in which subscriptions were to be made, Betz would have entered the subscription of the county court in that book in proper form. But what he did was in its legal effect the same. He presented the action of the county court in respect to the subscription for acceptance. That action was in the form of a present subscription upon certain conditions, and in his presence it was, when presented, formally accepted by a resolution of the directors as and for a subscription to the capital stock of the company. We say it was done in the presence of the agent. That is the fair inference from the record. The finding is that Betz went on the fourteenth of June to make the subscription. The meeting of the directors was held on the seventeenth of that month, and the minutes show that he presented the papers from the county court at that meeting. He was also appointed at that time to act as the agent of the company in obtaining municipal subscriptions. According to the minutes, the orders of the county court were read on their presentation, and at once, on motion, accepted as a subscription made. It also appears from the findings that another meeting of the directors was held on the twenty-fifth of August, at which Betz was present. At this meeting the minutes of the preceding meeting, which was presumably that of the seventeenth of June, were read and approved. Those minutes contained at length the orders of the county court which had been presented by Betz, and the acceptance thereof by the board. If the minutes of the board are correct, and it does not appear that any attempt was made to impeach them, 'the minds of the parties met' on the seventeenth of June, and the county subscribed $90,000 to the capital stock of the Lexington, Chillicothe & Gulf Company, before the consolidation, on certain conditions, and the subscription received the formal acceptance of the company. It is undoubtedly true that Betz, as well as the county, supposed that an actual subscription on the books was necessary, and that he afterwards went to the office of the company to make it, and while there, for reasons satisfactory to himself, concluded not to do so. All these facts, save, perhaps, the action of the directors on the seventeenth of June, he reported to the county court, and the court approved what he had done; but supposing something more was necessary to complete the subscription, another agent was appointed for that purpose, who finally made a formal subscription to the stock of the consolidated company. That, however, did not avoid the subscription which had actually been made before. This court decided in Harshman v. Bates Co. 92 U.S. 569, and County of Bates v. Winters, supra, that this last subscription was invalid, but never until the last trial of this case has it been shown that another and a valid subscription had been made at the earlier date which rendered another unnecessary. The former decisions have all been upon the assumption that the last was the only subscription ever made, and as it was made to the consolidated company, when the vote only authorized a subscription to the Lexington, Chillicothe & Gulf Company, it was held to be inoperative and not binding on the township for which the court was acting as agent.

As Betz, the agent of the county court, was present at the meeting when the subscription was made and accepted, no other notice of the acceptance of the subscription was necessary. He was present as the agent of the county court, and notice to him was notice to the court. The case stands in this particular precisely as it would if Betz had in form subscribed to the stock on the books of the company, and in making such subscription had copied in full, as he was instructed to do, the orders of the county court. The acceptance of such a subscription from him by the company would certainly be enough. No further notice of acceptance was required. As Betz was authorized to make the subscription, he was authorized to receive notice of its acceptance. What was in fact done amounted in law to the making of a valid subscription by him for the county court and its acceptance in his presence by the company. As the Lexington, Chillicothe & Gulf Company was organized under the general railroad law of Missouri, which authorized consolidations, the subsequent consolidation of that company with another organized under the same law did not avoid the subscription which was made to its stock on the seventeenth of June, and the bonds in payment of the subscription were property delivered to the consolidated company. That has been many times decided. New Buffalo v. Iron Co. 105 U.S. 76, and the cases there cited.

The judgment is affirmed.


text: Talk:Bates Company Missouri v. Winters/Opinion of the Court


text:
Hart v. Pennsylvania Railroad Company

Melville C. Day and G. M. Stewart, for plaintiff in error.

E. W. Pattison and Newton Crane, for defendant in error.

Lawrence Hart brought this suit in a state court in Missouri against the Pennsylvania Railroad Company, to recover damages from it, as a common carrier, for the breach of a contract to transport, from Jersey City to St. Louis, five horses and other property. The petition alleges that, by the negligence of the defendant, one of the horses was killed and the others were injured, and the other property was destroyed, and claims damages to the amount of $19,800. After an answer and a reply, the plaintiff removed the suit into the circuit court of the United States for the Eastern district of Missouri, where it was tried by a jury, who found a verdict of $1,200 for the plaintiff; and, after a judgment accordingly, the plaintiff has brought this writ of error. The property was transported under a bill of lading issued by the defendant to the plaintiff, and signed by him, and reading as follows:

'BILL OF LADING.

'Form No. 39, N. J.

'Limited Liability Live-Stock Contract for United Railroads     of New Jersey Division. (No. 206.)

'JERSEY CITY STATION, P. R. R., ___, 187 _.

'Lawrence Hart delivered into safe and suitable cars of the     Pennsylvan a Railroad Company, numbered M. L. 224, for      transportation from Jersey City to St. Louis, Mo.,      live-stock, of the kind, as follows: one (1) car, five      horses, shipper's count; which has been received by said      company, for themselves and on behalf of connecting carriers,      for transportation, upon the following terms and conditions,      which are admitted and accepted by me as just and reasonable:

'First. To pay the freight thereon to said company at the     rate of ninety-four (94) cents per one hundred pounds,      (company's weight,) and all back freight and charges paid by      them, on the condition that the carrier assumes a liability      on the stock to the extent of the following agreed valuation:      If horses or mules, not exceeding two hundred dollars each;      if cattle or cows, not exceeding seventy-five dollars each;      if fat hogs or fat calves, not exceeding fifteen dollars      each; if sheep, lambs, stock hogs, or stock calves, not      exceeding five dollars each; if a chartered car, on the stock      and contents in same, twelve hundred dollars for the      car-load. But no carrier shall be liable for the acts of the     animals themselves, or to each other, such as biting,      kicking, goring, and smothering, nor for loss or damage      arising from condition of the animals themselves, which risks, being beyond      the control of the company, are hereby assumed by the owner,      and the carrier released therefrom.

'Second. Upon the arrival of the cars or boats containing     said stock at point of destination, the shipper, owner, or      consignee shall forthwith pay said freights and charges, and      receive said stock therein, and unload the same therefrom;      and if, from any cause, he or they shall fail or refuse to      pay, receive, or unload, as aforesaid, then said company or      other carrier, as the agent of such shipper, owner, or      consignee, may thereupon have them put and provided for in      some suitable place, at the cost and risk of such shipper,      owner, or consignee, and at any time or times thereafter may      sell the same, or any number of them, at public or private      sale, with or without notice, as said agent may deem      necessary or expedient, and apply the proceeds arising      therefrom, or so much thereof as may be needed, to the      payment of such freight and charges, and other necessary and      proper costs and expenses.

'Third. When necessary for said stock to be transported over     the line or lines of any other carrier or carriers to the      point of destination, delivery of the said stock may be made      to such other carrier or carriers for transportation, upon      such terms and conditions as the carrier may be willing to      accept: provided, that the terms and conditions of this bill      of lading shall inure to such carrier or carriers, unless      they shall otherwise stipulate; but in no event shall one      carrier be liable for the negligence of another.

'Fourth. All live-stock transported under this contract shall     be subject to a lien, and may be retained and sold for all      freight or charges due for transportation on other live-stock      or property transported for the same owner, shipper, or      consignee.

'Fifth. This company's liability is limited to the     transportation of said animals, and shall not begin until      they shall be loaded on board the boats or cars of the      company. The owner of said animals, or some person appointed     by him, shall go with, and take all requisite care of, the      said animals during their transportation and delivery, and      any omission to comply herewith SHALL BE AT THE OWNER'S RISK. WITNESS My hand and seal, this     twentieth daY of October, 1879.

LAWRENCE HART, Shipper. [L. S.]

'Attest:

'E. BUTTER.

'W. J. CHARMERS, Company's Agent.'

At the trial the plaintiff put in evidence the bill of lading, and gave testimony to prove the alleged negligence, and how the loss and injury occurred. He then offered to show that the actual value of the horse killed was $15,000; that the other horses were worth from $3,000 to $3,500 each; and that they were rendered comparatively worthless in consequence of their injuries. The defendant objected to this testimony, on the ground that it was not competent for the plaintiff to prove any damage or loss in excess of that set out in the bill of lading. The court sustained the objection and the plaintiff excepted. It appeared on the trial that the horses were race-horses, and that they and the other property were all in one car. It was admitted by the defendant that the damages sustained by the plaintiff were equal to the full amount expressed in the bill of lading. The court charged the jury as follows: 'It is competent for a shipper, by entering into a written contract, to stipulate the value of his property, and to limit the amount of his recovery in case it is lost. This is the plain agreement that the recovery shall not exceed the sum of two hundred dollars each for the horses, or twelve hundred dollars for a car-load. It is admitted here by counsel for the defendant, under this charge, that the plaintiff is entitled to recover a verdict for twelve hundred dollars, and also, under the charge of the court, the plaintiff agrees that that is all. It is simply your duty to find a verdict for that amount.' The plaintiff excepted to this charge. The errors assigned are that the court erred in refusing to permit the plaintiff to show the actual damages he had sustained, and in so charging the jury as to restrict their verdict to $1,200.

[Argument of Counsel from page 335 intentionally omitted]

BLATCHFORD, J.

title: Hart v. Pennsylvania Railroad Company


text: Talk:Hart v. Pennsylvania Railroad Company


text:
Hart v. Pennsylvania Railroad Company/Opinion of the Court

It is contended for the plaintiff that the bill of lading does not purport to limit the liability of the defendant to the amounts stated in it, in the event of loss through the negligence of the defendant. But we are of opinion that the contract is not susceptible of that construction. The defendant receives the property for transportation on the terms and conditions expressed, which the plaintiff accepts 'as just and reasonable.' The first paragraph of the contract is that the plaintiff is to pay the rate of freight expressed, 'on the condition that the carrier assumes a liability on the stock to the extent of the following agreed valuation: If horses or mules, not exceeding two hundred dollars each; * *  * if a chartered car, on the stock and contents in same, twelve hundred dollars for the car-load.' Then follow, in the first paragraph, these words: 'But no carrier shall be liable for the acts of the animals themselves, or to each other, such as biting, kicking, goring, or smothering, nor for loss or damage arising from condition of the animals themselves, which risks, being beyond the control of the company, are hereby assumed by the owner, and the carrier released therefrom.' This statement of the fact that the risks from the acts and condition of the horses are risks beyond the control of the defendant, and are therefore assumed by the plaintiff, shows, if more were needed than the other language of the contract, that the risks and liability assumed by the defendant in the remainder of the same paragraph are those not beyond but within the control of the defendant, and therefore apply to loss through the negligence of the defendant. It must be presumed from the terms of the bill of lading, and without any evidence on the subject, and especially in the absence of any evidence to the contrary, that, as the rate of freight expressed is stated to be on the condition that the defendant assumes a liability to the extent of the agreed valuation named, the rate of freight is graduated by the valuation. Especially is this so, as the bill of lading is what its heading states it to be, 'a limited liability live-stock contract,' and is confined to live-stock. Although the horses, being race-horses, may, aside from the bill of lading, have been of greater real value than that specified in it, whatever passed between the parties before the bill of lading was signed, was merged in the valuation it fixed; and it is not asserted that the plaintiff named any value, greater or less, otherwise than as he assented to the value named in the bill of lading, by signing it. The presumption is conclusive that if the liability had been assumed on a valuation as great as that now alleged, a higher rate of freight would have been charged. The rate of freight is indissolubly bound up with the valuation. If the rate of freight named was the only one offered by the defendant, it was because it was a rate measured by the valuation expressed. If the valuation was fixed at that expressed, when the real value was larger, it was because the rate of freight named was measured by the low valuation. The plaintiff cannot claim a higher valuation on the agreed rate of freight.

It is further contended by the plaintiff that the defendant was forbidden, by public policy, to fix a limit for its liability for a loss by negligence, at an amount less than the actual loss by such negligence. As a minor proposition, a distinction is sought to be drawn between a case where a shipper, on requirement, states the value of the property, and a rate of freight is fixed accordingly, and the present case. It is said that, while in the former case the shipper may be confined to the value he so fixed, in the event of a loss by negligence, the same rule does not apply to a case where the valuation inserted in the contract is not a valuation previously named by the shipper. But we see no sound reason for this distinction. The valuation named was the 'agreed valuation,' the one on which the minds of the parties met, however it came to be fixed, and the rate of freight was based on that valuation, and was fixed on condition that such was the valuation, and that the liability should go to that extent and no further. We are, therefore, brought back to the main question. It is the law of this court that a common carrier may, by special contract, limit his common-law liability; but that he cannot stipulate for exemption from the consequences of his own negligence or that of his servants. ''New Jersey Steam Nav. Co. v. Merchants' Bank'', 6 How. 344; York Co. v. Central R. R. 3 Wall. 107; Railroad Co. v. Lockwood, 17 Wall. 357; Express Co. v. Caldwell, 21 Wall. 264; Railroad Co. v. Pratt, 22 Wall. 123; Bank of Kentucky v. Adams Exp. Co. 93 U.S. 174; Railway Co. v. Stevens, 95 U.S. 655.

In York Co. v. Central R. R. 3 Wall. 107, a contract was upheld exempting a carrier from liability for loss by fire, the fire not having occurred through any want of due care on his part. The court said that a common carrier may 'prescribe regulations to protect himself against imposition and fraud, and fix a rate of charges proportionate to the magnitude of the risks he may have to encounter.' In Railroad Co. v. Lockwood, 17 Wall. 357, the following propositions were laid down by this court: (1) A common carrier cannot lawfully stipulate for exemption from responsibility when such exemption is not just and reasonable in the eye of the law. (2) It is not just and reasonable in the eye of the law for a common carrier to stipulate for exemption from responsibility for the negligence of himself or his servants. (3) These rules apply both to carriers of goods and to carriers of passengers for hire, and with special force to the latter. The basis of the decision was that the exemption was to have applied to it the test of its justness and reasonable character. It was said that the contracts of the carrier 'must rest upon their fairness and reasonableness,' and that it was just and reasonable that carriers should not be responsible for losses happening by sheer accident, or chargeable for valuable articles liable to be damaged, unless apprised of their character or value. That case was one of a drover traveling on a stock train on a railroad to look after his cattle, and having a free pass for that purpose, who had signed an agreement taking all risk of injury to his cattle and of personal injury to himself, and who was injured by the negligence of the railroad company or its servants. In Express Co. v. Caldwell, 21 Wall. 264, this court held that an agreement made by an express company, a common carrier in the habit of carrying small packages, that it should not be held liable for any loss or damage to a package delivered to it, unless claim should be made therefor within 90 days from its delivery to the company, was an agreement which the company could rightfully make. The court said: 'It is now the settled law that the responsibility of a common carrier may be limited by an express agreement made with his employer at the time of his accepting goods for transportation, provided the limitation be such as the law can recognize as reasonable, and not inconsistent with sound public policy.' It was held that the stipulation as to the time of making a claim was reasonable and intrinsically just, and could not be regarded as a stipulation for exemption from responsibility for negligence, because it did not relieve that carrier from any obligation to exercise diligence, fidelity, and care.

On the other hand, in Bank of Kentucky v. Adams Exp. Co. 93 U.S. 174, it was held that a stipulation by an express company that it should not be liable for loss by fire could not be reasonably construed as exempting it from liability from loss by fire occurring through the negligence of a railroad company which it had employed as a carrier. To the views announced in these cases we adhere; but there is not in them any adjudication on the particular question now before us. It may, however, be disposed of on principles which are well established, and which do not conflict with any of the rulings of this court. As a general rule, and in the absence of fraud or imposition, a common carrier is answerable for the loss of a package of goods, though he is ignorant of its contents, and though its contents are ever so valuable, if he does not make a special acceptance. This is reasonable, because he can always guard himself by a special acceptance, or by insisting on being informed of the nature and value of the articles before receiving them. If the shipper is guilty of fraud or imposition, by misrepresenting the nature or value of the articles, he destroys his claim to indemnity, because he has attempted to deprive the carrier of the right to be compensated in proportion to the value of the articles and the consequent risk assumed, and what he has done has tended to lessen the vigilance the carrier would otherwise have bestowed. 2 Kent, Comm. 603, and cases cited; Relf v. Rapp, 3 Watts & S. 21; Dunlap v. Steam-boat Co. 98 Mass. 371; Railroad Co. v. Fraloff, 100 U.S. 24. This qualification of the liability of the carrier is reasonable, and is as important as the rule which it qualifies. There is no justice in allowing the shipper to be paid a large value for an article which he has induced the carrier to take at a low rate of freight on the assertion and agreement that its value is a less sum than that claimed after a loss. It is just to hold the shipper to his agreement, fairly made, as to value, even where the loss or injury has occurred through the negligence of the carrier. The effect of the agreement is to cheapen the freight and secure the carriage, if there is no loss; and the effect of disregarding the agreement, after a loss, is to expose the carrier to a greater risk than the parties intended he should assume. The agreement as to value, in this case, stands as if the carrier had asked the value of the horses, and had been told by the plaintiff the sum inserted in the contract.

The limitation as to value has no tendency to exempt from liability for negligence. It does not induce want of care. It exacts from the carrier the measure of care due to the value agreed on. The carrier is bound to respond in that value for negligence. The compensation for carriage is based on that value. The shipper is estopped from saying that the value is greater. The articles have no greater value for the purposes of the contract of transportation between the parties to that contract. The carrier must respond for negligence up to that value. It is just and reasonable that such a contract, fairly entered into, and where there is no deceit practiced on the shipper, should be upheld. There is no violation of public policy. On the contrary, it would be unjust and unreasonable, and would be repugnant to the soundest principles of fair dealing and of the freedom of contracting, and thus in conflict with public policy, if a shipper should be allowed to reap the benefit of the contract if there is no loss, and to repudiate it in case of loss. This principle is not a new one. In Gibbon v. Paynton, 4 Burr. 2298, the sum of £100 was hidden in some hay in an old nail-bag and sent by a coach and lost. The plaintiff knew of a notice by the proprietor that he would not be answerable for money unless he knew what it was, but did not apprise the proprietor that there was money in the bag. The defense was upheld, Lord MANSFIELD saying: 'A common carrier, in respect of the premium he is to receive, runs the risk of the goods and must make good the loss, though it happen without any fault in him, the reward making him answerable for their safe delivery. His warranty and insurance is in respect of the reward he is to receive, and the reward ought to be proportionable to the risk. If he makes a greater warranty and insurance he will take greater care, use more caution, and be at the expense of more guards or other methods of security, and therefore he ought, in reason and justice, to have a greater reward.' To the same effect is Batson v. Donovan, 4 Barn. & Ald. 21.

The subject-matter of a contract may be valued, or the damages in case of a breach may be liquidated, in advance. In the present case, the plaintiff accepted the valuation as 'just and reasonable.' The bill of lading did not contain a valuation of all animals at a fixed sum for each, but a graduated valuation according to the nature of the animal. It does not appear that an unreasonable price would have been charged for a higher valuation. The decisions in this country are at variance. The rule which we regard as the proper one in the case at bar is supported in Newburger v. Howard, 6 Phila 174; Squire v. ''New York Cent. R. Co.'' 98 Mass. 239; Hopkins v. Westcott, 6 Blatchf. 64; Belger v. Dinsmore, 51 N. Y. 166; Oppenheimer v. U.S. Exp. Co. 69 Ill. 62; Magnin v. Dinsmore, 56 N. Y. 168, and 62 N. Y. 35, and 70 N. Y. 410; Earnest v. Express Co. 1 Woods, 573; Elkins v. Empire Transportation Co. 81 * Pa. St. 315; ''South & North Ala. R. Co. v. Henlein'', 52 Ala. 606; Same v. Same, 56 Ala. 368; Muser v. Holland, 17 Blatchf. 412; Harvey v. Terre Haute R. Co. 74 Mo. 538; and Graves v. ''Lake Shore Ry. Co.'' 137 Mass. 33. The contrary rule is sustained in Southern Exp. Co. v. Moon, 39 Miss. 822; The City of Norwich, 4 Ben. 271; U.S. Exp. Co. v. Backman, 28 Ohio St. 144; Black v. ''Goodrich Transp. Co.'' 55 Wis. 319; S.C.. 13 N. W. Rep. 244; Chicago, St. L. & N. O. R. Co. v. Abels, 60 Miss. 1017; Kansas City R. Co. v. Simpson, 30 Kan. 645; S.C.. 2 Pac. Rep. 821; and Moulton v. St. Paul, etc., R. Co. 31 Minn. 85; S.C.. 16 N. W. Rep. 497. We have given consideration to the views taken in these latter cases, but are unable to concur in their conclusions. Applying to the case in hand the proper test to be applied to every limitation of the common-law liability of a carrier-its just and reasonable character-we have reached the result indicated. In Great Britain, a statute directs this test to be applied by the courts. The same rule is the proper one to be applied in this country, in the absence of any statute.

As relating to the question of the exemption of a carrier from liability beyond a declared value, reference may be made to section 4281 of the Revised Statutes of the United States, (a re-enactment of section 69 of the act of February 28, 1871, c. 100, 16 St. 458,) which provides that if any shipper of certain enumerated articles, which are generally articles of large value in small bulk, 'shall lade the same, as freight or baggage, on any vessel, without, at the time of such lading, giving to the master, clerk, agent, or owner of such vessel receiving the same a written notice of the true character and value thereof, and having the same entered on the bill of lading therefor, the master and owner of such vessel shall not be liable as carriers thereof in any form or manner, nor shall any such master or owner be liable for any such goods beyond the value and according to the character thereof so notified and entered.' The principle of this statute is in harmony with the decision at which we have arrived.

The plaintiff did not, in the course of the trial, or by any request to instruct the jury, or by any exception to the charge, raise the point that he did not fully understand the terms of the bill of lading, or that he was induced to sign it by any fraud or under any misapprehension. On the contrary, he offered and read in evidence the bill of lading as evidence of the contract on which he sued. The distinct ground of our decision in the case at bar is that, where a contract of the kind, signed by the shipper, is fairly made, agreeing on a valuation of the property carried, with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, the contract will be upheld as a proper and lawful mode of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and of protecting himself against extravagant and fanciful valuations. Squire v. ''New York Cent. R. Co.'' 98 Mass. 239, 245, and cases there cited.

There was no error in excluding the evidence offered, or in the charge to the jury, and the judgment of the circuit court is affirmed.


text: Talk:Hart v. Pennsylvania Railroad Company/Opinion of the Court